BltOW.N V. DAVIS.
5L9
filing original bill, and the failure to take a second decree pro confesso against Smith after filing the so-called amended bill, and before final submission of the cause. lVe do not think that the failure to make a tender before the filing of the original bill necessarily defeats complainant's equity, under the circumstances developed. On a remanding of the cause, which is necessary in our view of the case, and particularly if the case was heard in the circuit court before issue joined, it will not be too late, before entering another decree, to take a pro confesso against Smith. Our conclusion on the whole case is that the decree appealed from should be reversed, and the cause remanded to the circuit court, with instructions to enter a decree in favor of the complainant, to the effect that an account be taken of the amounts of the several liens due on the 15th of July, 1887, on the property described in complainant's bill and held in the names of the defendants Johnston, Williams, and the First National Bank of Columbus, or either of them, crediting upon the· same the sum or sums paid on account thereof by tM complainant, Gordon, and the defendant Smith, or either of them, together with such deductions for rents and profits as equity may require, and, after such accounting, that complainant, Gordon, be allowed to payoff the said liens, as so ascertained, and 'redeem the lands described in the bill, within a reasonable day, to be named by the court, and, further, that the amount of said liens, when paid by the complainant, Gordon, shall be added to his own lien for $5,000, with interest, and that the property described in the complainant's bill be sold to satisfy said complainant's lien, as so ascertained and determined; and it is so ordered.
BROWN v. DAVIS et a1. (Circuit Court of Appeals, Fifth Circuit. June 5, 1894.) No. 235. EQUITy-GOOD FAITH OF COMPLAINANT-EsTOPPEL BY SILENCE.
D., owning land on which M. held a vendor's lien and also a duly-recorded deed of trust, applied to R for a loan on a deed of trust of the land, representing that there was no lien thereon except the vendor's lien; and B. consented to make the loan, without obtaining the usual abstract of title. relying on a partial abstract previously received in relation to a loan to another. M., being informed by both parties of an intent to pay off the vendor's lien, claimed payment also of an unsecured debt, and obtained from D. an order on B. for the amount of both, which B. paid; and thereupon M. executed to D. a release of his vendor's lien, but made no mention to R of the deed of trust in his favor. Held, that a bill filed by R for relief against M.'s deed of trust, making reckless charges of fraud and conspiracy against M. and others against whom he had no equity, impugning their personal and professional integrity, followed by reckless evidence in support thereof, which the slightest investigation would have shown him to be wholly unfounded, was properly dismissed. without regard even to the question whether M. was estopped by bis silence, as R, making such a presentation of the facts. was not en.titled to a favorable consideration of such partial equity, even if it were otherwise well founded.
520
ll'EDERALREPORTER,
vol. 62.
Appeal from the Circuit Court of the United States for the Eastern District of Texas. This was a suit by J. Gordon Brown against Cornelius Davis and others to restrain enforcement of a deed of trust and for cancellation thereof. The circuit court dismissed the bill. Complainant appealed. This suit was commenced In the clrcultcourt of the United States in and for the eastern district of 'fens, April 6, 1891, by the filing of a bill by the appellant, J. Gordon Brown, which bill alleged that J. Gordon Brown is a citizen of the kingdom of Great Britain, and that Cornelius Davis, Adelaide DaVis, Harris Masterson, and AI'chie R.. Masterson, are citizens of the county of Brazoria, In the state of Texas. 'l'hat Cornelius Davis applied to J. Gordon Brown, In 1890. for a loan 01' money, ·;}fI'ering to secure the payment thereof by a deed of trust upon a parcel of land In Brazoria county, Tex., particularly to the complainant, under described by metes and bounds, and oath, in writing, that said land was of all incumbrances except a vendor's lien in favor of Harris Masterson for $700. That in making said application for said loan, Harris Masterson aided and assisted the said Cornelius Davis, and negotiated with the complainant therefor; he, as well as the said Cornelius r>avis, representing to the complainant that the said land was clear of incumbrances except the said sum ot $700, due him as aforesaid; he and the said Cornelius Davis agreeing with the complainant that, should such loan 1:Ie granted, he, the said Harris Masterson, should be paid the said sum of $700 as a cancellation of the said lien, and that thereupon the said Harris Masterson would release and relinquish the said lien which he and the said Cornelius' Davis l'epresented and led the complainant to believe was the only incumbrance upon the said property. That the defendant Archie R. Masterson, an attorney at law, at the instance of said Cornelius Davis and Harris Masterson, was employed by the complainant to prepare for him a full and complete abstract of all transfers in said Brazoria county appertaining to said land, and in compliance with said employment the said Archie R. Masterson, on the 27th day of January, 1890, did prepare and deliver to the complainant what he represented as being a full and complete abstract of said property, showing, on the 27th day of January, 18<:J0, by his certificate, that there were no liens affecting the said lands, except the one stated in said abstract. That the defendant well knew that the complainant relied upon the aforesaid representations of Cornelius Davis, Harris Masterson, and Archie R. Masterson with reference to the liens upon the said property, and that, relying thereon, the complainant made said loan to said Cornelius Davis, and paid the said sum of money, on or about April 7, 1890, whereupon the said Cornelius Davis and his wife, Adelaide Davis, made and executed their certain promissory notes for said sum of money due, with 10 per cent. attorney's fees, aggregating the sum of $2,200, and bearing interest at the rate of - - per centum per annum from date, which deed of trust was filed for record on the 19th day of April, 1890, and duly recorded in Book 3, pages 29, 30, 31, and 32 of the Mortgage Records of Brazoria County, Tex,; and that the complainant is still the owner aJld holder of said notes. That all of the aforesaid representations of were faithfully and implicitly relied upon by the complainant as being true, and, believing this, he loaned said sum of money as aforesaid; otherwise he would not have done so, and this defendants knew. That all of said representations made by the defendants were wholly false and untrue. and that at the time of making said representations defendants knew that they were false; but, nevertheless, knowing that complainant relied upon them as true, said defendants made said false representations with the deliberate intention of cheating, swindling, and defrauding the complainant. That the complainant now finds that at the time said application for the loan of money by said Cornelius Davis and wife the said Harris Masterson had in his possession, duly signed, executed, and delivered, a deed of trust by and from the said Cornelius Davis upon the identical land which was offered to and accepted by the complainant as his security for the said loan of money by the said Cornelius Davis and wife, which deed of trust was made, executed, and delivered on the 10th day of September, 1889, to secure the sum of $3,321.75,
BROWN
v.
DAVIS.
521
with 12 per cent. interest. That, so conspiring and combining with the other defendants to cheat, sWindle, and defraud the complainant, the said Harris Masterson retained said instrument in his possession in total ignorance of complainant, failing to file the same for record until the 21st day of Janu" ary, 1891, a period of six days before the said Archie R. Masterson certified that there were no liens upon said property, except as hereinbefore stated. That at the time of soliciting and negotiating for said sum of money from the complainant the defendants· well knew that the said deed of trust for $3,321.70 in the possession of said Harris Masterson was an incumbrance upon said property, besides the lien of $700 before stated, but nevertheless concealed such fact from the complainant, and designedly failed to place said lien on record until just in time to acquire precedence over the lien of complainant. That said Harris Masterson was and is the beneficiary in said deed of trust of $3,321.75, and the said Archie R. Masterson, who prepared and delivered to the complainant the aforesaid false and fraudulent certifi· cate, is a brother of said Harris Masterson, and is the trustee in said deed of trust securing said sum of $3,321.70. That while so employed by complainant as his attorney, and at the time he made said false and fraudulent abstract and certificate, the said Archie R. Masterson well knew that said deed of trust in which he was trustee, securing his brother in the sum of $3,321.70, was in the possession of Harris Masterson, and knew that the same was to be and was placed upon the record anterior to the complainant's deed of trust, and was so of record, and constituted a lien upon the said property, at the time he made said false and fraudulent abstract and certificate; and that in making the same he colluded, conspired, and combined with the other defendants herein for the purpose of aiding them in their schemes to cheat, SWindle, and defraud the complainant. That said deed of trust of Cornelius Davis to Harris Masterson, given to secure the sum of $3,321.75 aforesaid, as a matter of fact is a pretext and pretense on the part of the defendants to affix and establish a prior lien upon said property, and to have said property sold thereunder, and thereby to cheat and defraud the complainant out of his said sum of money loaned to said Cornelius Davis and Wife, and intending to force the sale of said land under the said deed of trust, and buy the same in themselves, and thereby deprive the complainant of his money loaned upon said land, or force the complainant to buy the same at an exorbitant sum, sufficient to cover both debts, While the fact is that said Cornelius Davis, at the time of executing the said deed of trust, was not indebted to said Harris Masterson, except in the sum of $700, Which was to be paid by the complainant, and for which said Harris Masterson executed a release. And that the said Archie R. Masterson, defendant, as trustee in the said deed of trust securing the sum of $3,321.75, due on the 13th of March, 1891, posted his certain notices upon the courthouse door of Brazoria county, and on other places in the county, as provided by law, Whereby he announces and gives notice that he will proceed to sell said property under said deed of trust on the first Tuesday in April, 1891, at the courthouse door of Brazoria county, and that, unless restrained by the court, he will so proceed to sell said property. The bill prayed for an injunction; that the defendants should answer; and that the complainant, on hearing, should have judgment perpetuating the injunction and canceling the deed of trust executed by Cornelius Davis to Archie R. Masterson, as trustee, to secure the said Harris Masterson the sum of $3,321.75; and for general and special relief. This bill was unqualifiedly sworn to by the complainant, J. Gordon Brown, as being true. Upon the presentation of the bill in chambers, the district judge granted an injunction restraining Archie R. Masterson, trustee, from making the sale of the property. Archie R. Masterson filed a sworn answer to the bill, wherein he generally and categorically denied all the allegations charging his connection with the transactions as set forth in the bill. Harris Masterson filed a sworn answer, admitting bis relationship with Archie R. Masterson; the existence of the deed of trust in his favor as charged by the complainant; that the complainant made the loan of $2,000 to Cornelius Davis, and that he received $1,285 of the money borrowed from complainant in satisfaction of a vendor's lien, which was released by him; but he generally and specially denied all the aIle-
522
FEDERAL
gatlClnBlIn,tbo,biUc)ulrgingbim or his brCltl:lerwith fraudulent dClings. Thereafter, :on: May ''I'th.the complainant,J. Gqrdon Brown,by leave, (If, the court, tiled an ameU!lUlent to his bin of and therein, in apdition to the allegatIons. in bi$9l'iginal· bill, he furtl\er that, '. besides, the, tionsmade by Cornelius Davis In his application for a·loan, he made to one E. L. Dennis, the agent of the compiainant, the same representations, upon which representati()ns 'complainant also relied; and that for.sev,el'li.l months prior to the application of Corne!i.us Davis for said loan of money the defendant Han'it; had been acting all correspondent of the complainant and of his firm of Brown Bros. in car1'Ying through for his clients loans stlcured by real. estate ill Brazoria lind adjoining counties; complainant relied upon said Harris Masterson's good faith, and frequently consulted and advised with him upon said applications for loanS, That the said Harris Masterson, in his correspondence, assured the complainant and his firm that they might rely upon his good faith. the said defendant Harris Masterson. at and during the time he was so actin.... "leU knew, and so informed, ,nat the complainant would not loan w()I).ey on pnor illcumoerea propeny, but in aU cases he required ,a. first U\ortgagelienor deed of trust to secure him in the loan of money; .and that,in'Cl;l!3.e the application was made for a loan of money on incumberedprope).'ty, complainant required that said incnmbranct) be paid ofl', .liquidated, and discharged, otherwise be wguld not make the loan thereon, it being'the established.,rule of the complaiIJant and his said firm, and wbicb the said Harris. knew, that he must, hare in as security, and that the comevery case a. prior, lien upon property plainant would not IQan money secured by property upon wjlioh there existed any prior lien. or preferred, :lien. . Tbatthe said Harris MlLiltet'SOn knew the value of the property offered and given :by Cornelius Da.vis to complainant. and well. knew tb:1t the complainant would not loan exceeding 40 .:per cent. of the value of property received .as security; alld that In the.estimated value of the property as security it mustllil all cases clear of prior mortgages. That during the of the said 8IIlllllication' of, ,Cornelius Davis to the. complninant for a loan of $2,000, E.L. DennlEl,:of Houst(jn, Tex., was appointed representative of eomplalnant and his fiNn to negotiate loans for his clients in the country contiguous to tbe City of Houston1,ineluding Brazoria CQunty. That during the pendency of said application .for a loan by Cornelius, Dljtvis the said Harris Masterson received from the complainant a letter requesting bim in fUture to \ilpndJl\S applicMions f01" lOIlUSto said E. L. Dennis·. and that negotiations anddlrrespondence relating tbereto sbould be made through the said E. L. Dennis,and that fOIl a long Per1o(l, thereafter, including llli the time in for a lOan was peIJding, the said which the said Cornelius Davis' Harris Masterson continued to assist said E. L; Dennis in negotiating loans fortlle complainant, actlngin conjunction with E. L.Dennis. That, pending the negotiation of tl1e 10aI!- of $2,000 to Cornelius Davis, which was negotiated. principally through E. L. Dennis, said Harria Masterson well knew the terms and conditi()ns upon which said loan was being made, and ,well knew the value, of thepl'opex:ty ofl'ered for security, and well knew the amount of money that the said complainant was loaning to the said Cornelius' Davis on said security. Tll811Un November, 1889, said Harris Masterson negotiated with and 'for the complainant a loan of $5,000 wsaid Cornelius Davis, secured by land in Matagorda county, the .greater part or all of which money was received by said Masterson biU\se).f.1n consideration (jf a release of a lien wbich he held on said land. And otherw1serepeating the charges made in the original bill with regardtoi the want of knowledge on the part of· the complainant, the.abundanceof knowledge on the part of Harris Masterson, and further alleging that the said Harris Masterson stood idle by, and induced and perto Cornelius mitted the complninant to' expend and loan the sum of· DaVis under'false and fraudulent representations, and received and kept most of the proceeds of said loan, the complainant, J. Gordon Brown, again swore to the truth of the facts as set forth in the amended bill. . HalTisMastersonau.swered this amended bUl, and denied therein that he ever c01!Tes:r;Jondlldwlthor wrote to the complainant, J. 'Gordon Brown, upon any subject whatever, but admitted 'that he had .written to BrOWI!- Bros., loan agents, relative to making' loans ·for, different parties! and he denied tbatthere was ever
BROWN 11. DAVIS.
523
at any time confidential relations between himself and Brown Bros. further than that which eXisted generally between business men who are strangers to each other, writing to each other on business' matters. He denIed that he knew any rule of thtl complainant, in his individual business in loaning money, relative to taking property as security upon which existed a prior lien. He de· nied that he was aware, except by the allegations made by the complainant, When the negotiations between Cornelius Davis and J. Gordon Brown commenced; that he ever represented J. Gordon Brown personally in anything at any time, and ever represented Brown Bros. in anything at any time further than to make inquiries if they desired loans and to give names of parties wishing to borrow money; and he further denied that he had ever consulted with J. Gordon Brown or Brown Bros., or COlTesponded with them, relative to or concerning any applications made direct to Brown Bros. or through other parties thanhimselt. He admitted that he knew the valne of the property in question: when. the complainant made his loan upon it, but alleged that he was in absdlute ignorance of aDy and all negotiations between the complainant and Cornelius Davis until the loan was closed. He again denied that the complainant. J. Gordon Brown, or the firm of Brown Bros., ever consulted "r conferred wIth him about the $2,000 loaned to Cornellus Davis on the property in questiob, or its value, or the title of said property on which said loan was made, further than to ask a release of the vendor's lien of $700 and interest, which was given. He admitted that In the early part of 1890 he wrote to Brown Bros; relative to business matters, and was referred by them to E. L. Dennis as the sole agent for that part of the country; but he denied that he assisted E. L. Dennis in making any loan to anyone, except that he had assisted one Terry in obtaining a loan from Brown Bros., which loan, l1e said, had no connection whatever with the Davis loan. He reiterated his previous denials With regard to knowledge of the terms and conditions upon which the Davis loan was being. made, and with regard to the knowledge of the rules and intentions of the complainant in the matter of loaning money. He admitted that he made a loan for Cornelius DaVIs with Brown Bros., in 1&)0, for $5,000, on Matagorda county property, and that a part of the money was received by him in payment of a lien held by him on that property; but he said that, be represented Davis in making the loan, and that in relation thereto, in .his opinion, said Brown Bros. are entirely safe and secure. He denied that he .executed any release of the 535 acres of land in question for any other purpose than that expressed in said release Itself, or with any othCi" view than that declared in said release, and he alleged that he made no representations whatever to E. L. Dennis, or anyone else, that he would do more than release the vendor's lien on payment of $700 and interest. He denied that he ever had more than one interview with E. L. Dennis touching this matter, and said all that transpired then was that he presented to said Dennl9 the draft of Cornelius Davis on Brown Bros., and the release of the vendor's lien attached thereto, and that at said interview nothing was said by either Darty about the title of this land, its value, incumbrance thereon, or anything else concerning it further than aforesaid. He further alleged that he had nothing whatever to do with the loan of Davis. made suggestions or inquiries, deeming it none of his business. He denied that he ever made any loan In Davis name to raise money for himself and to secure It by the land of Davis, and alleged that .all of the loans that he ever had any connection with for sald Davis were made to procure money for Davis to pay his honest and just debts. to. whomsoever he owed them. He denied that E. L. Dennis, as agent of Brown Bros., relled upon him In faith and confidence, or had any reason so to do, relative to the loan of Davis. He closes his answer with a reatl1rmation that the deed of trust In favor of Archie R. Masterson from Cornelius Davis, Harris Masterson, cestui que trust, was given to secure an honest, just, and valid debt, made in good faith, long prior to any lien or claim of complainant, and the debt for which It was given is still due and unpaid. TWs answer was filed on the 12th of May, 1891, and thereafter, on No"'ember 2, 1891, the defendant Harris Masterson filed a general and speelal demurrer to the complainant's original and amended bill of complaint. This demurrer, complainant moved to take from the files, as coming after answer filed, and too late. On December 7, 1891, the complaInant moved
524
REPORTEB,yo,l.
62.
the court for leave tptUe a.lilupplemental bill to set forth sundry facts that had happened since the 1lllil:t!tution of the suit; and afterwards, on the same day, moved the court to dirt;lct a repleader in the cause by all parties. This last motion was {,,'Tanted on the consent of .counsel for certain of the parties. On December 15, 1891, the complainant filed an amended bill of complaint. This bill of complaint reiterated the matters set forth in the original and amended blll. of complaint, but with more particularity. On the same day complainant filed a supplemental blll of ,complaint, alleging, in sUbstance, that one T. L. Smith had filed a suit in the district court of Brazoria county, state of Texas, claiming to have purchased from Harris Masterson the claim aglUnst. D.avis secured· by the deed of trust, and asking a decree for tUe foreclosure thereof: that the· complainant had been made a party defendant to said SUit; and that the prayer for relief was that the said deed of trust in favor of Masterson be decreed prior and superior in rank to the deed of trust made by CorneUus Davis to the complainant The supplemental bill further alleged that the transfer from Harris Masterson to Smith was made pending the suit, and that Smith had actual notice; that Harris Masterson was the attorney for Smith: and that thlJ proceedings In the district. court of Brazoria county were for the purpose of directly evading the injunction issued in the cause. After other and formal allegations, the supplemental bill prayed for an injunction against the further prosecution of the suit in the district court of Brazoria county. On the same day, the court being in session, an. order was entered granting the injunction, and citing Harris Masterson to show cause why he should not be held in contempt of court. On March 7, 1892, Harris Masterson and Archie R. Maaterson filed their separate answers to the amended bill of com· plaint, alleging, in substance, the same facts as contained in their former answers, and again denying generally and specifically: all allegations tending to charge them or either of them with fraudulent conduct. In August, 1893, the complainant filed an additional, supplemental bill of complaint, in substance, that during the pendency of the cause and the existence of the injunctions therein. the said T. L. Smith. acting by and through Harris Masterson, had procured a judgment in the district court of Brazoria county; that an order of sale had been issued under and by virtue of said judgment, and that the sheriff of Brazoria county was proceeding under said order of sale to sell said lands. The complainant prayed for an injunction against all parties, including the sheriff of Brazoria county and the clerk of said court, from proceeding to execute said judgment. On this supplemental· bill an injunlltion was granted by the district judge in chambers, as prayed for. Exculpatory answers were filed by the defendants to the supplemental bills, and general and special replications were filed to all the several answers; but no decree pro confesso appears to have been taken against Cornelius Davis or Adelaide Davis. I:d this condition of the pleadings the cause was submitted on the 24th of October, 1893. Therea.fter, on the 18th of November, 1893, the court filed its opinion, and on the same day entered a decree in favor of the defendants Harris Masterson, Archie R. Masterson, and T. L. Smith, dissolving and vacating all injunctions and restraining orders Issued in the case, and dismissing the complainant's bill and amended bill with costs. From this decree complainant, J. Gordon Brown, prosecutes this appeal, assigning errors as follows: "(1) '.rhe court erred In rendering judgment for the respondents and in dissolving the injunctions preViously granted in this cause, because the records of the case shoW conclusively that previous to the time of granting and paying the loan to Cornelius Davis by the complainant, Harris Masterson was 'occupying a fiduciary' relation towards the complainant, and was occupying said relation at the time of· granting and paying of said loan, and continued to occupy it forsorne time thereafter, and that, as such, it was his duty to impart to the, complainant any and all facts within his knowledge con· cerning incumbrances upon'said land offered for secUrity; the testimony shOWing that in Davis' application for said loan he made an affidavit, and filed with complainant, stating that said land was unincumbered; the testimony also showing that MaBterson knew that'the complainant was loaning said money upon the belief ,that said land Was unincumbered, and also
525
knowing that the complainant relied implicitly upon him, the Masterson, to impart all such information as he had, which would be ot interest to the complainant. That the said Harris Masterson was estopped to assert a lien in his own favor as against the complainant's lien, and the injunction against his enforcement of said lien should have been made perpetual. (2) The court erred in its conclusion that the respondent Harris Masterson was not estopped by reason of the fact that it was not shown that he was actually employed as attorney in this particular transaction, because, in the absence of employment, and in the absence even of a fiduciary relation towards the complainant under the facts of this case, he was in equity completely estopped from asserting his lien."
J. M. Coleman, for appellant. B. T. Masterson and H. Masterson, for appellees. Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District Judge. PARDEE, Circuit Judge (after stating the facts). The complainant's original bill, and the answer thereto of Harris Masterson, ought to have been referred to a master, to be purged of scandal and impertinence, at the cost of the respective parties. In the record we find no note of evidence by either party, but we do find, in no particular order, ex parte affidavits, documents, depositions, and evidence taken orally before the examiner; and we also find the following certificate: "In the United States Circuit Court for the Eastern District of Texas, at Galveston, Texas. "Ch. No. 242. J. Gordon Brown v. Cornelius Davis et aL "This is to certify that, as trial judge sitting in the above numbered and styled cause at Galveston, Texas, in November, 1893, there was much oral testimony heard and considered by the court on the trial of said above numbered and styled cause that was not taken down by anyone in writing, neither tbe attorneys for complainant nor respondents requesUng that it be done; and that said oral evidence is not in the record of this cause, upon which, in part, the decision of the court was based. "Aleck Boarman, "Judge Sitting on the Trial of the Above Numbered and Styled Cause."
It was the duty of each party to prepare and file in the record a note of the evidence upon which he relied, and it was his further duty to see that that evidence was filed with the clerk in such shape that it could be embodied in the transcript of appeal. The evidence found in the record wholly fails to sustain the sweeping charges of conspiracy and fraud contained in the original and amended bills. As to Archie R. Masterson, it not only fails to establish the charges of conspiracy and fraud made against him, but it is so strong in his favor as to affirmatively relieve him of all suspicion of any conduct in any wise affecting his personal or professional integrity. There is not a particle of trustworthy evidence in the record showing or tending to show that Archie R. Masterson was employed by the complainant, J. Gordon Brown, at the instance of any person whatever, to prepare for him a full and complete abstract of all transfers in Brazoria county appertaining to the lands described in the bill, or that he was
526
FEDERAL, ;Rll1P0;R,+ER,
emploled by any; person whatever to' make any such abstract, or that, In compliance: with su.ch employment, or without such employment, he did' 'preparie Olmd deliver '. to complainant what he aspeing a of said property, or ever prepared or delivered to the complainant any abstract whatever. Nor is there any. evidence in the record showing or tendin'g#> show that Archie ,.n. Masterson knew anything about, or had Jlnything' to. do with, any loan that the complainant made to Oornelius Davis, prior to the making thereof. Theevidence affirmatively shows that Archie R. Masterson was not called upon by complainant to make any abstract at all in relation to any lands; that he made no abstract of the Davis lands; that he knew 'nothing Of the loan by. the complainant to Oornelius Davis; and that he was not even aware, at the time said loan was made, that he himself was named as trustee in the trust deed given by Oorneliul!l D3ryis in favor of ,Harris Masterson in September, 1889. The SO recklessly made against Archie R. Masterson have for a, only the fact that, prior to Cornelius Davis' ·.application JOI1 ,a loan, Archie R.' Masterson made an abstract, at the request of one Faickney, of the title to other l;tnds, and, quan ,of ,Faickney .to. another mortgage company for a loanr Upon fact of an, abstract made at the request of another company of the title of other lands for another borrower '. of money is built the whole ease of the complainant against Archie R. Masterson, by he 'seeks to throw the consequences of his own carelessness and inattention to business details upon an iiitiocent party. As to Harris Masterson, the complainant's ,case is but little better founded.. The evidence and conspiracy made wholly fails to support the charges against him. ttis not t:rue that Harris Masterson aided and assisted Cornelius Davis in ,his negotiation!;! with the complainant, J. Gordon Brown, for the loan of money upon lands described in the bill, or that he represented to complainant that said land was clear of incumprancesexcept the sum, of $700, or that he made any agreement with the complainant as to the payment of $700 in ca.se said 10alil should ,i;)egranted, or that. he represented to and led the compla,inant to believe that the said $700 was the only incumbrance, said property., It is not a fact that Harris Mastersoll induPeAthe complainant to employ ArchieR. Masterson for any purposewhateve,r. . It is not a fact that the complainant relied :upon any representations of Harris Masterson. Nor is it a fact, unde,r the the ease; ti\at Harris Masterson knew anything about the appliCation of Oornelius Davis for a loan, or had, whatevff, ..t9 do with. forwarding the The evidence does not show, that :aarrjs Masterson combined and conspired whatever to, cheat, swindle, or defraud i:n,J.'elationto:the Cornelius, Davis loan,or any other loan; !ind: as genllille the d,eeQ. Qf trust made and execute", by. Davis. to 4rcb,ie R.Masterson, trustee, on the lOth daY ot September,',1889, to:secure,,in fa.vor of Harris :MasterSOn, rthe sllIll with cent. interest; and
BROWN tI. DAVIS.
527
it shows that said deed of trust was· placed of record nearly one month prior to the application of Cornelius Davis to Brown Bros. for a loan upon the lands in question. The evidence in the case fails to show that, in regard to Brown Bros., or the complainant, the said Harris Masterson, at the time Cornelius Davis applied for a loan, occupied any relation of trust or confidence to the said Brown Bros. or to the complainant. We say "at the time Cornelius Davis applied for a loan," because that is sufficient for this case, as on that very day any confidential relations that may haye previously existed in l'elation to loans from Brown Bros. applied for through Harris Masterson were severed. The impression, howeYer, left on our minds by the evidence is that at no time did fiduciary relations exist between Brown Bros. and Harris Masterson, no matter how much confidence Brown Bros. or J. Gordon Brown may have had that Harris Masterson was a reliable man to deal with. The evidence rather tends to show that Brown Bros., in their transactions with Harris Masterson, treated and trusted him as the agent of the borrower, and not as their own, and in all respects dealt with him at arm's length. We have observed in other cases that this has been the practice with kindred concerns engaged in loaning money, where the rule invariably is to put all the expenses upon the borrower; and we find nothing in this record to show that Brown Bros., or the complainant, J. Gordon Brown, followed any other practice. Brown Bros., and their rules and dealings, necessarily come to the front in this case. It was with Brown Bros. that Harris Masterson had dealings from 1888 to 1890 on behalf of various borrowers whom he represented. It was to Brown Bros. that the letters of Harris Masterson, which appear in the record, were written. It was to Brown Bros. that Cornelius Davis made his application for a loan. n was Brown Bros. who made the loan to Cornelius Davis, and who paid off the vendor's lien which Harris Masterson h.eld. And the evidence in this case leaves a yery strong impression with us that Brown Bros. are the rl;aI complainants in this suit, and any other impression seems incompatible with the assumption that J. Gordon Brown and R. L. Brown testified fully and truly in giving evidence in the case. These conclusions necessarily dispose of all the alleged equities asserted by the complainant, except such as may arise from the following facts, developed by the evidence: Cornelius Davis owned a tract of land in Brazoria county, on which Harris Masterson held a vendor's lien for the sum of $700, of several years' standing, and also a deed af trust to secure the payment of a debt amounting to $3,321.75, which deed of trust was duly recorded in the records of Brazoria county on the 21st of January, 1890. On the 19th day -of February, 1890, Cornelius Davis made application to Brown Bros., money lenders, for a loan of $2,0(}O, to be secured by deed of trust on said lands; and in such application represented that there was no lien upon the said land except the vendor's lien in favor of Harris Masterson for $7(}O. Brown Bros. decided to make the loan ,requested by Cornelius Davis, but in so doing did not provide them-
528
FEDERAL REl'ORTER,
'an abstract of the title of COl.'neliu8 Davis, as is usual iDiSlleh'tftses, but relied upon a partial abstract received by them prior 'to tlte,appUcation of Cornelills Davis in relation to another loan to anothe'r party. Harris Mastel.'son was informed by the agent of Brown Bros. of an intent to payoff the vendor's lien of $700, and also received the same information from Cornelius Davis. Harris Masterson claimed from Davis the payment of an unsecured debt of $585 for amounts advanced for the payment of taxes, as well as the payment of his vendor's lien, and obtained from CorneliusDavis an order upon Brown Bros. for the sum of $1,285, the amount of the vendor's lien and the unsecured debt, which Brown Bros. paid; and thereupon Harris Masterson executed to Davis a release of his vendor's lien upon the land, but made no mention to Brown Bros., or to their agent, of the deed of trust in his favor on record in Brazoria county. The contention of the compJainant is that when Harris Masterson, knowing the purpose of the complainant to secure a prior lien upon the property, received the amount of his vendor's lien, it was his duty to make known that he also held a trust deed of record bearing upon the said land which would be prior in rank to the complainant's mortgage; and that by his silence with regard to the existence of the trust deed under the circumstances mentioned he is estopped in equity from asserting that trust deed as against the trust deed in favor of the complainant. This view of the case is strongly supported by the authorities, although there are some qualifications. On the other hand, it is contended that Harris Masterson had good reason to believe that Brown Bros., who he supposed were making the loan, were fUlly advised of the existence of the trust· deed, as shQwn by the records, because he had every reason to suppose that, as prudent business men, and according to the general practices of careful money lenders in dealing with land, they had provided themselves, in .the matter of the loan to Davis, with the abstract and certificate usual in such cases, which abstract and certificate would have fully shown the true state of facts; and that Masterson, not being in any way connected with· the loan, and only applied to with reference to the payment of his vendor's lien, was not called upon to furnish information which he had .the right to suppose was already in their possession. There are some adjudged cases support· ing this view of the case. As the whole case was presented in the court below, and even in this court, we do not feel called upon to enter into the merits of this contention. If this were a case in which the complainant· had come into court with a fair presentation of the facts,evincing a disposition to assert his equities without injury; to others, and had presented the matter of. estoppel upon the .real facts of the case as above stated, we are inclined to the opinion that he would not have been turned out of court without consideration of his right to assert the estoppel in question. Such a case, however,is not the one in hand, but rather a case where the complainant, by his reckless charges of fraud; and conspiracy to cheat,swindle, and defraud, against Harris Masterson and other parties again.st whom he had no equity whatelfer, impugning their
XING.
529
personal and professional integrity, and following the same up with reckless evidence in support thereof, which the slightest investigation would have shown him to be wholly unfounded, presents himself as one more inclined to ask equity than to do equity, and one not in court with such clean hands as entitle him to demand of the court to consider favorably to him the partial equity suggested, even if it were otherwise well founded. Certainly, as the case was there presented, the decree of the circuit court dismissing the complainant out of court was properly given; and, even as the case is presented here, we see no sufficient reason to disturb the same. Affirmed. BROWN et al. v. KING et al. (two cases). (Circuit Court of Appeals, Pifth Circuit. May 29, 1894.) Nos. 224, 225. EQUITY PRACTICE-MASTER's FEES.
The permanent master appointed in two suits to foreclose mortgages on a railway was a young man, not a lawyer, and without experience in railway accounts. The suits were not contested, and no matter of importance was litigated before him. His office expenses had been paid, and he had received $6,000 on account of his compensation. The principal part of his work was done by the receiver's auditor, to whom was allOwed therefor more than $3,000. The master and the clerk of the court were appointed commissioners to sell the property, which was purchased at the upset price, $500,000, and each received $6,500 as commissions. His services extended very little over two years, during which he was absent five months or more; and he was also master in another railway foreclosure suit. Held, that his application for further compensation should be denied.
Appeal from the Circuit Court of the United States for the Northern District of Florida. This was a petition by John King, permanent master in two suits for foreclosure of mortgages against the Florida Southern Railway Company, for allowance of further compensation to him as such master. The circuit court made a decree allowing such further compensation. Brown and others, members of the committee who had purchased the property, appealed. T. M. Day, Jr., for appellants. E. P. Axtell, for appellee. Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District Judge. McCORMICK, Circuit Judge. On March 18, 1890, the New England Trust Company and the American Loan & 'Trust Company exhibited their respective separate bills against the Florida Southern Railway Company in the circuit court for the northern district of Florida, seeking to foreclose mortgages held by them on the properly of the railway company. A receiver was appointed to hold and operate the property, and the usual proceedings were had in the progress of the suits. On May 7, 1890, John King, the apv.62F.no.7-34