Case ID: ohio_20/html/0394-01.html
Source: Caselaw Access Project
Author: {"author": "Spalding, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Moses Cotterell and John Cotterell v. Enoch Long et al.
    If a contract for the conveyance of land be intended as security for a debt, it is a mortgage, whatever may be its form or the name given it by the parties.
    This is a bill of review, reserved in the county of Clermont.
    The following is a concise statement of the case:
    On April 7, 1829, William Cotterell, the father of complainants, executed and delivered to Thomas Morris the following instrument:
    “ This shall oblige me, my heirs, executors, etc., to make or cause to be made to Thomas Morris, his heirs or assigns, a good and sufficient deed of conveyance for a certain tract or parcel of land, lying in the township of Miami, in the county of Clermont and State of Ohio, supposed to contain thirty acres—it being the'same tract of land devised or left to me by the last will and testament of my father, Thomas Cotterell, and of which I am to have the possession on the death of Peggy Cotterell, the widow and relict of my said father ; or I will pay to the said Thomas Morris $100' in two years from this date, and in default of payment of the above sum at the time stipulated for payment, then this obligation for the conveyance of the land aforesaid shall be absolute. In witness whereof, I have hereunto set my hand and seal this April 7, 1829.
    “William Cotterell. [l. s.]
    “Witness: J. D. Morris.”
    On August 11, 1832, Thomas Morris, in consideration of $100, assigned this obligation to Moses Long, and bound himself, his-heirs, etc., to cause to be made and completed to him, the said Moses Long, a good and sufficient title to the land therein described, “with the exception therein mentioned.”
    *On November 5,1833, Moses Long, in consideration of one hundred dollars, assigned to Enoch Long all his right and title to said obligation, and bound himself to cause to be made to said Enoch Long a good and sufficient title to the land, “ with the exception therein mentioned.”
    On November 6,1833, Enoch Long filed, in the court of common-pleas of Clermont county, his bill in chancery against Thomas Morris, Moses Long, and Mary Ann, Moses and John Cotterell, infant heirs of William Cotterell, deceased, setting forth the obligation, the assignment, and the failure of William Cotterell to execute the deed or to pay the money; and calling upon all the defendants to answer under oath, and praying that the legal title in said tract of land might be perfected in the petitioner.
    At the same term of court, on motion of counsel for complainant, Owen T. Eishback, Esq., was appointed guardian ad litem. to the infant defendants.
    At the August term, 1834, Thomas Morris filed his answer, in which he stated that William Cotterell, in his lifetime, gave him the title-bond mentioned in the bill, and that he assigned the same to Moses Long; that he never did, at any time, receive from the said William Cotterell any part of the said sum mentioned in said bond, but that he sold the same, in good faith, to Moses Long, and verily believed that the complainant was justly entitled to a decree for the land.
    At the same term of court, Moses Long answered and acknowledged the assignment from himself to complainant, and expressed his belief that his assignee was entitled to the land.
    
      On September 5, 1834, the guardian ad litem filed an answer in behalf of the-infant heirs of William Cotterell, deceased,-in which be stated that he had seen and inspected the title-bond mentioned in complainant’s bill, and that it appeared to him to have been fairly executed; that he knew nothing about the original transaction, nor did he know any reason why the complainant should not obtain the relief he ^sought, saving to the infant heirs such fights as they might be entitled to on their arrival at full ,age.
    At the same term, to wit, the August term, A. D. 1834, the court ■of common pleas, upon said bill, answers, and exhibits, rendered a decree in which they found the equity of the case with the complainant, and ordered, adjudged, and decreed that the land mentioned in his bill, to wit, thirty-seven acres of land in the county of Clermont, on the waters of the Little Miami, being a part of surveys,' etc., bounded, etc., “of right belongs to tho complainant, and that the said infant heirs of William Cotterell, deceased, do each, three months after coming of full age, make and execute to said complainant, a quitclaim deed for the land hereinbefore described, and in default of making such conveyance, then this decree to operate as such.”
    To reverse this decree, this bill of review is brought, and tho following are the errors relied upon to sustain it :
    1. There was no service of process upon the infant defendants.
    2. Tho personal representatives of William Cotterell were not made parties.
    3. The bond or agreement of Cotterell was nothing more than a security for the payment of the one hundred dollars; and thero was no finding by said decree of the amount duo thereon, and there was no day given for the payment of the money.
    4. Tho decree does not find that the assignments of said bond, •by Morris and Long, were, in fact, made.
    5. The decree does not find the execution and delivery of the •bond by Cotterell to Morris.
    6. If the bond had been properly executed, and the assignments, duly made, all that the complainant would have been entitled to by said decree would have been the amount specified therein, with interest; and a day should have been given for the payment •of tho same, and, in default of payment, a sale of the land ordered.
    
      *7. The decree does not find that the money due on said bond had not been paid.
    8. The decree directed said infant defendants to convey said land, when William Cotterell had nothing but a life estate therein, by the will of Thomas Cotterell, and said defendants, by said will,, had the- fee simple.
    9. No day was given said defendants to show cause against the decree, after their arrival at full age.
    Sundry depositions are introduced on either side, but if strictly admissible in a proceeding of this sort, they are of no essential importance, any further than to show the respective ages of the present complainants, Moses and John Cotterell, and the nature of the indebtedness of William Cotterell to Thomas Morris, at the time the bond was executed. It appears from the deposition of Joseph Cotterell, who was the brother of William Cotterell, deceased, that Moses Cotterell was born in the year 1824, and John in the year 1827. The bill of review was filed September 19, 1849.
    On cross-examination by defendants in error, Joseph Cotterell was asked by them this question: Did not William Cotterell give Thomas Morris his interest in this land for his services in the case in which he was charged with killing his wife? To which the witness answered, that he understood he was to give him $100; and to secure that amount, he signed him his interst in the land. The will of Thomas Cotterell gives this land to his wife, Peggy Cotterell, for life; remainder to his son William, and his heirs. Peggy Cotterell lived to an advanced age, and died in 1847 or 1848.
    Fishbaok, Swing & Fishback, for complainants:
    I. It is the well-settled doctrine, both of English and American courts, that whenever the rights of infants are sought to be affected by proceedings in court, they must be brought before the court by actual or constructive process upon them, or publication of notice against them. Ontario Bank v. Strong, *2 Paige’s Ch. 304; Grant v. Vanschoonhoven, 9 Paige’s Ch. 255; Walker v. Hallett, 1 Ala. N. S. 379; Walker v. Bank of Mobile, 6 Ala 452; Collard’s Heirs v. Groom, 1 J. J. Marsh. 487; Graham et al. v. Sublet, 6 J. J. Marsh. 44; Jones v. McGrisky, 3 Dana, 425; Huston v. McClasty, 3 Litt. 274; Carrington’s Heirs v. Brents, 1 McLean, 174; Hollingsworth v. Barbour, 4 Pet. 466.
    
      II. The personal representatives of William Cotterell were necessary parties to said bill. Massie’s Heirs v. Donaldson, 9 Ohio, 377; Huston v. McClasty’s Heirs, 3 Littell, 274.
    Ill and VI. The third and sixth errors aré of the same character, and present the question :—What was the true nature and character of the obligation from Cotterell to Morris? It was a mere security, in the character of a mortgage, for the payment of money ; and was so intended by the parties. Hughes et al. v. Edwards and wife, 9 Wheat. 489; Morris v. Nixon, 1 Howard’s U. S. 118; Miami Exporting Co. v. Bank of United States and Ruffnor, Wright’s S. C. 249; Jarbrough v. Newell, 10 Yerg. 376; King v. Newman, 2 Mumf. 240; Ketchum v. Johnson, 3 Greene. Ch. 370; Wright v. Bates, 13 Vt. 341; McIntyre v. Humphreys, 1 Hoff. Ch. 31; Henry v. Davis, 7 Johns. Ch. 40; Oldham v. Halley, 2 J. J. Marsh. 113; Secrist v. Tromer, Ib. 471; Edrington v. Harper, 3 J. J. Marsh. 353; Bishop v. Rutledge, 7 Ib. 217 ; Harrison v. Loeman, 3 Blackf. 51.
    The condition of defeasance exists in the agreement; but should it be doubtful whether it be a conditional sale or mortgage, this court will construe it a mortgage. Skinner v. Miller, 5 Littell, 84; Flagg v. Mann, 2 Sumner, 486; Conway’s Executor and Devisees v. Alexander, 7 Cranch, 218.
    No bond to pay the money from Cotterell to Morris, or covenant to pay, in the instrument itself, is necessary to constitute the contract a mortgage. Flagg v. Mann, 2 Sumner, 534; 4 Kent, 145. These authorities are not changed by the case of Walton et al. v. Coulson, 1 McLean, 120.
    IV, V, VII. The fourth, fifth, and seventh errors are of the *samc character. The execution of the bond and the assignments thereof should have been duly proven, and those facts should have been specially found in the decree. The answer of a guardian ad litem is not binding upon infant defendants, and no decree can be pronounced on its admissions without service of process. Wright v. Miller, 1 Sandf. Ch. 103; 1 Dan. Ch. Pr. 217, 219; 2 Ib. 1217 ; Mills v. Dennis et al., 3 Johns. Ch. 367.
    VIII. As to the eighth error, see 15 Gris. Ohio, 559.
    IX. A decree, directing infants to make a conveyance, must give them a day after their arrival at full age to show cause against it. 1 Dan. Ch. Pr. 209 ; 2 Ib. 1214 ; Bing, on Infancy, 135 ; Kelsall v. Kelsall, 2 Mylne & Keen, 409; 2 Vern. 232, 342; 2 P. Wms. 403; Coffin v. Heath et al., 6 Met. 76; Mills v. Dennis, 3 Johns. Ch. 367; Pope v. Remaster, 5 Litt. 77; Collard’s Heirs v. Groom, 2 J. J. Marsh; 487 ; 1 Amer. Dec. 121, 122.
    The proof shows that all of the complainants were minors when the bill of review was filed, but if only one of them had been within, the “saving clause” of the statute, his right to review the decree would inure to all. Williams et al. v. Phillips, 3 Ham. Ohio, 50; Massee v. Matthews’ Ex’r et al., 12 Stant. Ohio, 351; 2 Bibb, 371.
    John W. Lowe, for defendants:
    Errors 3, 6, and 7 do not exist in fact, because nothing was ever due on the bond—there is no promise or obligation on the part of Cotterell to pay the $100 mentioned in it. The bond was never regarded between the parties to it, nor intended by them as a security for the payment of $100. Morris, with this bond in his possession, could not have sued Cotterell either on the bond or for his professional services. The tender of a deed would have discharged it.
    
      A debt must exist before it can be secured, and this instrument can not be considered a mortgage or a security until there *is Some debt to secure. The title-bond provides for nothing but the making of a deed; a court of equity could compel a conveyance, but not the payment of money. The principle sustained by the authorities is, that, if an instrument is given to secure a debt, it may be regarded as a mortgage ; but no such case is made out.
    As to the ninth error it is claimed that the decree did give three months to the minors, after arriving at the age of majority, to execute a quitclaim deed, and during that time they could show cause against the decree.
    The errors assigned relate, first, to the jurisdiction of the court over the infants at the time of decree; and secondly, to the character of the obligation upon which the decree was rendered.
    I. The original bill shows that a praecipe for a subpena, against all the defendants, was filed, and it was doubtless issued and served, though it does not appear in the record. In Trumpon v. Barton, 18 Grisw. Ohio, 425, the court say “ they would hardly reverse a former decree unless some benefit might by possibility result to those seeking it.”
    II. The authorities cited do not sustain the position that this bond is a mortgage. There are authorities in point that it is not. Walton & Payne v. Coulston, 1 McLean, 120; 9 Pet. 62 ; 7 Cranch. 218, 237; 9 Ohio, 28; Glover v. Paine, 19 Wend. 518; Flemming v. Litton, Dev. & Battel, 623; Sug. on Vend. 187; 5 Leigh, 434; Hickman v. Cantrell, 9 Yerg. 172; 1 Mad. Ch. 517; Bennett v. Robb, 2 Yerg. (Tenn). 6; 4 Kent, 144.
    In a defeasible purchase, the condition must be strictly performed at the day, or no relief will be granted. Chapman v. Turner, 1 Call, 192; David v. Thomas, 1 Russ. & M. 506; Conway v. Alexander, 7 Cranch, 218; Chit. on Cont. 728. This bond was but a conditional sale, or rather a sale with a privilege to repurchase; within a given time, at a stated price.
   Spalding, J.

In the view wo take of this case, it only becomes necessary to notice the third ground of error, in the ^assignment of errors by counsel for complainants, to wit, that the agreement was nothing more than security for the payment of the $100.

It is true that it nowhere appears among the papers that the infant heirs were served with process in the suit which so vitally affected their interests; and, under other circumstances, this omission would have received our serious consideration. As it is, the whole case will be made to turn upon the character of the instrument executed by William Ootterell to Thomas Morris, on April 7, 1829.

The court of common pleas of Clermont county, in making their decree, treated it as a conditional sale. In this we think they erred. The deed is in equity a mortgage. Upon its face it is really no more than a security for the payment of $100 in two years, although it commences with an undertaking to convey land-. This undertaking to make conveyance of the land, however, it must be remarked, is exceedingly limited. It is only in default of payment of the $100 by the time stipulated (two years), that the obligation to convey becomes absolute. How does this differ in effect from the ordinary mortgage deed? In the case of this latter instrument, the lands are first actually transferred with covenants of seizin and warranty; but then a simple condition is inserted, that if a certain sum of money be paid by the grantor to the grantee in a given time, the whole conveyance shall be void.

In the agreement we are considering, there is only a promise for a deed, and then a stipulation that, if the money be paid in two years, this promise for a deed is not to be considered an absolute promise. In the language of the instrument: “ On default of payment of the above sum, at the time stipulated, then this obligation for the conveyance of the land aforesaid shall be absolute.”

Who can fail to see that the object of Thomas Morris, in taking this obligation from William Cotterell, was to obtain security for his debt? And if so, the instrument is a mortgage, no matter what shape it may have assumed.

*Chief Justice Buchanan, in Dougherty v. McColgan, 6 Gill & Johns. 281, asserts this doctrine: “Whenever the intention is to take a security for a subsisting debt, or for money lent, and to avoid or restrict the equity of redemption, chancery, seeking to protect the debtor against the rapacity of the creditor, and to do full and equal justice between the parties, will defeat such intention, by treating the transaction as a mortgage, and extending to the debtor the benefit of the equity of redemption.”

See also Page v. Foster, 7 N. H. 394, wherein the judge remarks : “If it was intended as a security, it is a mortgage.”

And so in Flagg v. Mann, 2 Sumn. 533, where Judge Story lays down the rule: “ If a transaction resolve itself into a security, whatever may be its form, and whatever name the parties may choose to give it, it is in equity a mortgage. If it be not a security, then it may be a conditional or an absolute sale.”

It is true that the agreement to convey the land is followed by a seeming alternative, to bo adopted by the obligor, at his option, within two years: “ Or I will pay to the said Thomas Morris $100 in two years,” etc. But the legal effect of this phraseology is to create a defeasance, as much as if the words were, on condition,” or “provided, however,” etc. Chief Justice Shaw, in Nugent v. Riley, 1 Met. 110.

Again, it is urged that this deed from William Cotterell to Thomas Morris was not a mortgage, inasmuch as there was no personal obligation given for any debt, from the former to the latter. This the law does not require. “A mortgage is the conveyance of an estate by way of pledge for security of a debt, and to become void on the payment of it.” 3 Kent’s Com. 129. “It is none the less a mortgage because there was no collateral personal security for the debt taken at the time.” Rice et al. v. Rice, 4 Pick. 349; Smith v. People’s Bank, 11 Shep. 195.

If the claim of Morris to the $100 could have been enforced either in personam or in rem, it would have been *a subsisting debt between the parties, and the conveyance of land would be construed a mortgage. See Judge Story’s opinion in 2 Sumner, 534, already cited. But, as the same learned judge remarks elsewhere, it is well known that courts of equity lean against construing contracts of this sort to be conditional sales; and, therefore, unless the transaction be clearly made out to be of that nature, it is always construed to be a mortgage.” So Lord Hardwicke laid down the doctrine in Longuet v. Scawen, 1 Ves. 406, and it has never been departed from. The onus probandi, then, is on the defendants to establish it to be a conditional sale.

The assignees of Thomas Morris have given us no such proof. Nay, the very assignment of Morris to Moses Long contains no slight evidence that the assignor, himself an astute lawyer, was fully conscious that, although his contract for a conveyance had, by its terms, become absolute, an equity of redemption still subsisted in the heirs of William Cotterell. It makes a show of warranting a title to Long, his heirs and assigns, but winds up with this pregnant reservation: “ with the exception therei n mentioned.’

What need of alluding to the stipulation that the payment of a $100, if made within two years, would relieve the land, the time having elapsed, if the parties regarded the transaction as a conditional sale ?

On the whole, we are unanimously of the'opinion, without reference to the depositions, that the contract executed by William Cotterell to Thomas Morris, on April 7, 1829, was intended by the parties as security for the payment of a debt, and consequently, in equity, must be regarded as a mortgage. The decree of the court of common pleas of Clermont county is erroneous and will be reversed.

The cause will be remanded to that court, with directions to take an account of the money due, by reason of the original debt of $100, and interest, and to charge said land therewith as upon a mortgage.