Case ID: wis_13/html/0264-01.html
Source: Caselaw Access Project
Author: {"author": "DIXON, C. J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Knowlton vs. Walker.
    A deed of land contained a proviso that if the grantee should fail io pay a certain sum of money according to the conditions of a bond executed at the same time by the grantee to the grantor, then the conveyance and the estate created thereby should cease, and be of no effect, and the grantor or his legal representatives should have the right to re-enter into the premises, and sell and convey the same to any other person, and retain all moneys paid thereon without recourse either in law or equity. Held, that the grantor had the rights of a mortgagee in the land, and the grantee, those of a mortgagor,
    upon default in payment of the money secured by such bond, the grantee in the deed had an equity of redemption, which the grantor might foreclose in the usual manner; and if he found the premises vacant, the grantor might enter with the rights of a mortgagee in possession.
    
      Itogajn vs. WoZker, 1 Wis., 52Y, as to these points, approved.
    Such a conveyance should be recorded as a deed, and not as a mortgage, in order to protect the rights of the grantee therein.
    No form of words in the instrument, if it was designed to be a security for a loan of money, will prevent a court of equity from granting relief, nor will any lapse of time, short of the period of limitation fixed by law, affect the right of redemption.
    
      A bill to redeem is not demurrable because it alleges that;‘tbe bond secured by the mortgage was usurious, and prays to be relieved from it according to the usual course of equity in such cases.
    The statute of limitations does not begin to run against the owner of an equity of redemption, until the mortgagee takes actual, open and notorious possession of the mortgaged premises. If, after he has done so, the mortgagor permits him to remain thus in possession for ten years, without proceeding to redeem or requiring an account of the rents and profits, his right of action is barred, but not till then.
    APPEAL from tbe Circuit Court for Dane County.
    
      Knowlton filed Ms bill, August 31, 1855, in tbe circuit court for Hock county, against Walker, Baker, Leake, Smith, Story and Hicks, to redeem certain lands situate in that county. Tbe complainant claimed title tbrougb several mesne conveyances from one Belding; and tbe written instruments which are relied upon in tbe bill, and referred to in tbe opinion of tbe court, as creating tbe relation of mortgagor and mortgagee between Walker and Baker on tbe one side and Belding on tbe other, are in substance as follows : 1. A bond executed by Belding to Walker and Baker, in tbe penal sum of $1200, dated February 20tb, 1889, with a condition that if Belding should pay to tbe obligees,' on tbe 18th of February, 1843, tbe sum of $600, and in each year tbe sum of $42 as interest thereon, and would pay all' taxes that might be legally imposed upon tbe premises that day conveyed by said Walker and Baker to said Belding, the bond should be void. 2. A deed from Walker to Belding, executed on tbe same day as tbe bond, by wbicb it was recited that said Walker, in consideration of “ tbe conditions of a certain bond therein-after named,” and of one dollar, bad bargained and sold, and did thereby bargain and sell to said Belding, bis heirs and assigns, tbe land in controversy, “provided always, anything herein contained to tbe contrary notwithstanding, that if tbe said Henry Belding shall fail to comply with tbe conditions, or any part thereof, of a certain bond bearing.even date with this indenture and hereinafter described, then tbe said conveyance, and tbe estate therein created, shall cease, determine and be of no effect, $nd tbe said party of tbe first part shall have tbe right to re-enter and take possession of tbe said premises, and to sell and convey the same to any other person, and to keep and retain all moneys paid there- , on, without recourse either inlaw or equity ; which bond i§ in the words and figures following[here the bond was recited at length.] This deed was duly acknowledged and recorded in the record of deeds of Rock county, January 22d, 1846. There were other allegations in the bill, designed to show that the transaction between Walker and Baker and Belding was really a loan of money from the former to the latter, and that the land was* purchased by Walker, at the U. S. public land sales, with the money so lent, and the title taken by Walker as security for its repayment; but this portion of the bill is sufficiently stated in the opinion of the court. The bill also alleged that the amount of money advanced or loaned by Walker and Balcer for the purchase of the land was only $300, and that the agreement that Bel-ding should pay to them double that sum with seven per cent, interest, was usurious, and void except as to the $800, with seven per cent, interest tb ereon. The bill also alleges that the complainant “ is and always has been ready and willing to pay the said Walker all such sums of money as he is legally and equitably entitled to have and receive upon the said bond and his equitable mortgage, and hereby offers to pay the same when, where and how the court shall direct, and to bring the same into court in redemption of said real estate,” &c.; that he has frequently applied to said Walker “ to settle and adjust the said matter in relation to said bond and equitable mortgage, and receive such sum as should be due him thereon; ” but that Walker has refused to do so, and denied that the complainant had any right or title in the premises. The bill also states that Walker, in June, 1854, conveyed a part of the premises to the defendant Leake (who had gone into possession), and had entered into certain contracts for the sale of the residue, under which the other defendants had gone into possession, and claimed some interest in the land. Other allegations of the bill are stated in the opinion of the court The prayer was, among other things, that the amount due to Wallcer and Balcer on the bond might be declared by the court; that the complainant might be permitted to redeem the land by the payment of tbat amount; tbat tbe defendants be decreed to deliver up possession of tbe land to tbe complainant;. and for general. relief
    Leake, Hicks and Story filed answers to tbe bill, and tbe defendant Walker demurred to it for want of equity, and because the bill stated the existence of a trust not cognizable by tbe courts of common law, and tbe ’cause of action accrued more than ten years before tbe-filing of tbe bill; and because tbe bill was in other respects insufficient.
    On tbe 8d of February, 1858, tbe complainant not appearing to prosecute bis suit, tbe bill was,- for tbat cause, dismissed. On tbe 26tb of November, 1858, upon motion, notice of wbicb was served on tbe defendants, and upon an affidavit made by an attorney of tbe plaintiff, tbe court set aside tbe order dismissing tbe bill, and re-instated tbe action. Subsequently tbe venue was changed to tbe circuit court for Dane county, where tbe demurrer of Walker was overruled, and be appealed.
    
      H. K. Whiton, for appellant:
    This is not a suit to redeem from a mortgage after condition broken. Bogan vs. Walker, 1 Wis., 558, 595. Tbe conditions in Walker’s deed to Belding were conditions subsequent ; and on failure to perform them tbe fee re-vested in tbe grantor, but a court of equity, upon a consideration of all tbe equities, may relieve from tbe forfeiture. But tbe court will not grant such relief unless tbe vendor can, by tbe payment of interest, be put in as good condition as be would have been in bad tbe buyer made bis payments at tbe times stipulated. And if tbe vendor, having a right to do so, reenters and re-sells tbe premises to a third party who goes into possession, it is too late for tbe party in default to obtain tbe aid of a court of equity. 2 Story's Eq. Jur., § 1814; 3 Barb. (S. C.), 460. 2. One installment of interest being all tbat is claimed to have been paid to Walker during more than twenty years, tbe bill shows tbe grossest laohes on tbe part of Belding and bis assigns. 3. Tbe bill shows tbat tbe plaintiff is tbe speculating owner of a mere equitable claim, and as such is not entitled to tbe consideration wbicb Beld-ing might have claimed, and is in no better position than ass^Snee a mere chose in action. 3 Johns. Cb. R, 4. This case is very different from that of Bogan vs. Walker, in that the plaintiff never was in possession of the land, acquiesced for a series^ of years in Walker’s possession, and until Walker bad sold tbe whole of it. 5. The bill does not show that Leake and Hicks had any notice in fact of the complainant’s claim. See R. S. 1849, p. 319, sec. 10. The instrument given by Walker to Belding was recorded as a deed, while it should have been recorded as a mortgage, if intended to operate as such. James vs. Morey, 2 Cow., 246 ; 8 id., 260; 1 Paige, 551. And a party is not bound to take notice of the registry of a deed which is not in a regular chain of conveyances of the legal title. 10 Ohio, 83. 6. The bill seeks relief upon a contract which, at the same time, it claims is void for usury. If there was usury the parties were in pari delicto, and equity will not interfere in respect to the enforcement of the contract, except to relieve against the usury. 1 Story’s Eq. Jur., 296, 300; Bates vs. Chester, 5 Beavan, 103. And the plaintiff stands in the position of an assignee, and cannot set up usury between the original parties. 1 Barb., 271; 13 Mass., 104, 443, 515 ; 15 id., 96, 103 ; 10 Wheat., 367; 11 Paige, 635 ; 1 Johns. Ch. R, 158. At all events the bill should tender the highest legal rate of interest (which was 12 per cent.), and also costs. 1 Johns. Ch. R, 366 ; 18 id., 544. 7. The suit is barred by the statute of limitations. R. S. 1839, p. 263; R. S. 1849, p. 644; Spoor vs. Wells, 3 Barb. Oh. R., 199 ; Galkins vs. Galkins, 3 Barb. (S. C.), 305 ; Cow. & H.’s Notes, Pt. 1, pp. 350-2. The bar may be pleaded by way of demurrer. Humbert vs. Trinity Church, 24 Wend., 587. If Belding or his assignees had any equity of redemption, it should have been insisted on by a proper suit within ten years from the time of the default in payment, to wit, before the 18th of February, 1853. Fullerton vs. Spring, 3 Wis., 667 ; Sheldon vs. Sheldon, id., 699; Parker vs. Kane, 4 id., 1. 8. The order dismissing the bill was not appealed from, and it was not in the power of the ■ court at a subsequent term to vacate the order and reinstate the case. The order reinstating tie case is a nullity, and the order of dismissal is in full'force.
    
      J. A. Sleeper, for respondent:
    1. The rights of the parties are settled b jxBogan vs. Wal-her, 1 Wis., 627, as those of mortgagor and mortgagee. The entry of the mortgagee after condition brokién, does not injuriously affect the mortgagor’s equity of redemption, unless the latter allows the mortgagee to continue in possession, without accounting for the rents and profits, so long that his action is barred by lapse of time, which would occur under our statute in ten years from such entry.' 2 Story's Eq. Jur., § 1028; Calkins vs. Calkins, 8 Barb. (S. C.), 307 ; Hod-son vs. Treat, 7 Wis., 268; Demarest vs. Wynkoop, 3 Johns. Ch. B., 129; Slee vs. Manhattan Co., 1 Paige, 48; Hughes vs. Edwards, 9 Wheat., 489. 2. Possession will be presumed to have continued in the mortgagor, and the mortgagee must show that the possession has been changed and that he has held under the mortgage during the whole term of the statute bar. Moore vs. Cable, 1 Johns. Ch. R, 385. The bill shows that Walker broke in and committed an injury upon the freehold in December, 1845 (less than ten years before this suit was brought), and then went away, and that from that time until his grantees went into possession, about a year before the bill was filed, the premises were unoccupied. 3. As to the charge of laches, the bill alleges that the plaintiff has frequently requested the defendant to adjust the matter and receive the sum due him on the bond, .&c., but that the defendant has refused. 4. The deed from Walker to Beld-ing was full notice to all parties who purchased from the former, and they can therefore have no rights against Beld-ing or his assigns, other than Walker himself would have. 5. If we admit that the relation of the parties is not that of mortgagor and mortgagee under a pure mortgage, the plaintiff, as cestui que trust, may maintain this bill against the defendant as a trustee, and this right is not barred by lapse of time. (1). The original transaction created that relation. Walker having purchased the land with money loaned by him to Belding, held the land in trust fqr the latter. He conveyed to Belding in execution of the trust, and the condition in tbe deed that upon failure to perform tbe conditions of tbe bond, tbe conveyance, &c., and the estate created thereby should determine, would at most" have the effect to revest in Wallcer the estate which he had before, which was a trust estate. His beneficial interest in the land would then be for the amount of his loan with interest, and for the residue he is bound to account to Belding or the assignees of his equitable estate. (2). The time for bringing the bill for this accounting would not commence until Wallcer had realized something out of the estate, unless the latter had previously denied that he held as trustee. Sheldon vs. Sheldon, 3 Wis., 699, 707-8. The prayer for general relief is sufficient to enable the court to grant this relief, though there is no special prayer for an accounting. 6. If the defendants wished to get rid of the order reinstating the suit,- they should have moved to set it aside, or appealed from it.
    January 2.
   By the Court,

DIXON, C. J.

This a hill to redeem, filed under the old system, by the respondent, as the owner of the equity of redemption, against the appellant and one Bilis Baker, as original mortgagees, and Isaac E. Leake, Samuel D. Smith, Lewis Story, and John Hicks, as having or claiming some interest in the mortgaged premises under the mortgagees first named. The premises in controversy are two hundred and forty acres of land, situate in the county of Rock. So far as the written instruments are concerned, the transaction between the original parties is in all respects the same as that detailed in the case of Rogan vs. Walker, 1 Wis., 527. Those parties were Wallcer and Balter on the one side, and one Henry K. Belding on the other. The respondent, through several mesne conveyances, claims title as the owner of the equity of redemption under Belding. In addition to claiming that the written instruments themselves created the relation of mortgagor and mortgagee between Belding and the appellant and Baker, the bill likewise charges that the real transaction was a loan of money by the latter to the former, with the understanding that the money loaned was to be applied by the appellant to the purchase or entry of the lands in question, and that the title was subsequently to be-conveyed to Belding, who was to secure the repayment to the- appellant and of double the sum loaned, at the end of four years, with interest payable annually at seven per- cent., by a mortgage upon the premises. It is alleged that through the artful and fraudulent practices of the appellant;' -this agreement was never literally carried out, but that Belding was induced to accept the conditional conveyance as aryl for an absolute deed with a mortgage back, believing that in substance it amounted to the same thing. The view we have taken of the case, however, renders a notice of this branch of it unnecessary. The conveyance and bond were, executed the 20th day of February, 1839. The money became due the 18th day of February, 1843. It appears-from the bill that but one installment of interest has been paid. Belding resided upon and had a pre-emption claim to 160 aqres of the land, and was also in possession of the other 80 acres at the time of the entry and sale, and so remained until August, 1843, when he sold out, and possession was taken by the purchaser. This possession of Belding and of those claiming under him, was continued down to about the 11th day of December, 1845, when the premises were conveyed to the respondent. The bill alleges that about that time the appellant, with force and arms, entered upon the premises and tore down and destroyed the dwelling house in which Belding and others claiming under him had theretofore resided, and that since that time the premises have remained open and unoccupied. This entry and destruction of the house is charged to have been a wanton and malicious trespass, and not an entry in pursuance of the power reserved in the conveyance to Belding. The first attempted conveyance of any part of the land by the appellant, was in 1854, when he executed and delivered a deed of 80 acres to. the defendant Leake. This bill was filed on the 31st day-of August, 1855, and in it the respondent offers to pay to the appellant or such other persons as may be entitled thereto, such sums of, money as may be justly and equitably found due upon the original agreement of the parties. The case -comes before this court upon an appeal from an order of tbe circuit court over- . ruling tbe demurrer of tbe appellant to tbe bill.

In support of tbe demurrer two objections are principally urged. One is that it is not tbe case of a bill to redeem from a mortgage after condition broken and possession taken by tbe mortgagee; that tbe original transaction did not create tbe relation of mortgagor and mortgagee; but that it is more in tbe nature of a bill to enforce tbe specific performance of an executory agreement for tbe sale of lands, and that it discloses sucb negligence and omission of duty on tbe part of tbe respondent and those under whom be claims, as disentitles him to any relief at tbe bands of a court of equity. Tbe other objection is, that tbe claim' is barred by tbe statute of limitations. Besides these there are some of minor importance, which will also be noticed.

Upon the first question we have only to say, that it was fully determined by tbe learned judge who decided tbe case of Walker vs. Rogan, that tbe instruments in question did, in substance, amount to a mortgage with a right of foreclosure on tbe part of the appellant, and also of entry as mortgagee in case be found tbe premises vacant, and a right of redemption on tbe part of Belding, bis representatives and assigns. Being entirely satisfied with the principles there laid down, and tbe reasoning by which that branch of tbe case is supported, we shall enter upon no discussion of it. We are content to leave it where it is there left.

It being established that Belding, and those representing his interest, had a right of redemption, we are next to inquire within what time that right must be exercised, or whether, as it is insisted by counsel for tbe appellant, it may be lost within tbe period prescribed by the statute of limitation, by mere neglect to pay tbe principal and interest, or any part of it. In support of this principle, tbe counsel, for the most part, relies upon some remarks which occur in tbe opinion in Rogan vs. Walker. It is evident from the context and tbe manner in which those remarks are made, that they are not tbe result of any mature thought or investigation of tbe subject. At page 574, the judge expressly says that be does not undertake to determine whether tbe equity of redemption thus created is or is not precisely the same in kind, degree and duration as in tbe case of a purely technical mortgage. After a careful examination, we can find no authority for the distinction thus intimated. We are unable to see how it can be sustained on principle. An equity of redemption is an estate in the land itself, which may be devised, granted, and charged with the payment of other debts of the mortgagor or owner. It is a part of the law of the land, and as such it cannot, in case of a mortgage, in any way be provided by agreement, that a court of equity shall not give relief. Whenever therefore it is ascertained that a transaction is a mortgage, this equity at once arises, and courts cannot distinguish between one mortgage and another. The estate, if it be an equity of redemption, must in all cases be the same, and must be governed by the same rules which regulate other similar interests. It matters not what peculiar form the instrument evidencing the transaction may have taken, the substance of the inquiry always is, Was it a security for the loan of money or other property ? And this being answered in the affirmative, it is difficult to perceive why, in a court of equity, one borrower should stand upon a different footing from another, or why the estate of one owner of an equity of redemptionshould.be less durable and complete than that of another. The only practical difference between an equity under a pure mortgage and one under an impure one, or an instrument not technically a mortgage, is that the latter is often much more difficult to be established. But should it for that reason be less an estate ? Should the mortgagee be rewarded for an attempt to disguise the real nature of the transaction ? We think not We can discover no good reason for discriminating between the two. In the many cases to be found in the books, where deeds and other instruments absolute upon their face have been declared to be mortgages, and a right of redemption decreed, we do not remember any in which the distinction has been made. In the absence of fraud or other improper conduct on the part of the applicant, the only limit which has been prescribed to the exercise of the right to redeem is that fixed by the statutes or by courts of equity in analogy to them In tbe case of Russell vs. Southard, 12 How. (.U S.), 139, referred to in Roga/n vs. Walker, upwards of nineteen years bad elapsed after tbe execution and delivery of tbe deed, without a payment or tender of tbe principal and interest, before tbe action was commenced; and yet tbe complainant was permitted to redeem. Mere lapse of time, short of that fixed by the statute, unaccompanied by other circumstances, seems never to have been allowed to affect tbe right itself, although as in tbe case last referred to, it often has an important influence over tbe terms and conditions upon which a -redemption will be allowed. We must therefore treat tbe appellant tbe same as any other mortgagee. He has always bad tbe same remedies at band as other mortgagees, and lite them be must abide tbe consequences of bis neglect to use them.

We hardly need add that, since tbe case presents tbe question of a right to redeem, tbe authorities cited by counsel for tbe appellant as to tbe effect of laches in cases where a specific performance of executory contracts for tbe sale of lands is sought, and tbe arguments drawn therefrom, are wholly inapplicable. We are here dealing with an estate in tbe land, which is governed by fixed and definite rules, and over which, from its very nature, courts possess no dispensing power, and not with a matter which rests in our sound discretion.

This brings us to tbe consideration of tbe statute of limitations, or whether it appears from the bill that it was filed at a time when the bar created by that statute had become effectual. Both counsel agree that the period prescribed is ten years, which is undoubtedly a correct interpretation of it, but there they separate. Eor the appellant it is insisted that it began to run from the time the money became due, viz., on the 18th day of February, 1843. For the respondent it is contended that it would only begin to run from the time that Walker re-entered, and took and continued in actual possession of the premises, and that inasmuch as the bill shows that he has not so repossessed himself, it has not yet commenced running. There is no doubt in our minds that in such case the statutory period dates only from the time tbe mortgagee takes actual, open and notorious possession of tbe premises. This is too well settled to admit of discussion. If after be bas done so, the mortgagor permits him thus to continue in possession for the period prescribed, without proceeding to redeem, or requiring an account of tbe rents, issues and profits, tbe bar is complete, but not till then. In this case therefore it is unnecessary to determine, whether tbe entry and destruction of tbe dwelling-house by tbe appellant in 1845, as set forth in tbe bill, is or is not to be considered as a re-entry and repossession of tbe premises under tbe deed; for conceding that it is, still tbe bill was filed within ten years after that date.

A question is made as to tbe manner in which tbe conveyance from tbe appellant to Belding was recorded. Tbe bill alleges that it was recorded as a deed in a book of deeds in tbe office of tbe register of Bock county. It is insisted for tbe appellant, and several cases are cited to show, that bn instrument executed and recorded as a deed, but intended as a mortgage, is not constructive notice to any person, and that subsequent purchasers and alienees without actual notice, will be protected notwithstanding such recording. This may be true, but tbe doctrine cannot be applied to this case, or if it could, it would only bo to the detriment of tbe appellant himself. He is tbe mortgagee, and if bis interest can only be preserved by having tbe instrument showing him to be such, recorded as a mortgage in tbe office of tbe proper register, then it would follow that Belding, or those claiming under him, could sell tbe premises in such a way that tbe purchaser would bold them clear of bis lien. This, however, cannot be so, for tbe reason that tbe very instrument on record which would show tbe purchaser that Beld-ing, or those bolding under him, bad title, would likewise show tbe nature of that title, and that tbe appellant, |.is grantor, reserved an interest in tbe premises equivalent to that of a mortgagee. But a better answer to this position,' perhaps, is that as to Belding and bis assigns, tbe conveyance' from tbe appellant was a deed. It was them proper title, and to make it effectual for tbe purpose of protecting their rights, it must be recorded as a deed.. If in so doing it should operate iucideutally to tbe injury of tbe appellant, it would certainly not be tbeir fault so far as tbe recording is concerned, and they clearly should not be the losers by it. instrument evidencing his mortgage interest, is in the form he chose to adopt, and if on account of its form there should be a failure to comply with the registry laws, and consequent loss, it would be upon him, and not upon them, that it ought to fall.

Another question is also made upon the allegation of usury contained in the bill. It avers that the original agreement was usurious and void, and the respondent prays tobe relieved from it according to the usual course of equity in such cases. This, it is said, cannot be done; that the respondent cannot seek relief upon a contract, and at the same time claim it to be void for usury. Without deciding whether the respondent can take advantage of the usury, if there was any — a question more proper to be determined hereafter than at this time — we may say that such a claim, however unfounded in law, does not render a bill demurra-ble. If it be otherwise good, and shows a valid claim for relief, it will not be vitiated because the complainant has asked for more than he is entitled to receive. But admitting that the respondent may take advantage of the usury, Ms el aim that the contract is void for that reason, does not preclude him from asserting that it is a mortgage, and demanding judgment that he be allowed to redeem. It would be strange indeed if the assertion that a mortgage was void for usury should be held to cut off the mortgagor’s equity of redemption, in case it should be decided that it was not.

The order of the circuit court is affirmed, with costs.