(78 Hun, 496.)

#### WATKINS et ux. v. JONES.

(Supreme Court, General Term, Fifth Department.

June 20, 1894.)

Equity—Canceling Mortgage.

A mortgage by plaintiff to defendant will be canceled, as procured by fraud, where it appears that an action had been brought against plaintiff on a fictitious claim for the purpose of extorting money from him; that plaintiff at the time was an old man, not accustomed to litigation, and was greatly disturbed by the action; that defendant, his son-in-law, who lived with him, and had been accustomed to advise him, represented that it was necessary to cover the property by mortgage, so as to place it beyond the reach of any judgment that might be recovered in the pending action; that, when such claim was defeated or disposed of, he would release the mortgage, and that afterwards he refused to do so,—the rule that equity will not aid persons in pari delicto not being applicable to such case.

Appeal from special term, Monroe county.

Action by Moses B. Watkins and Catherine, Ms wife, against T. Frank Jones, to set aside a bond and mortgage. From a judgment in favor of defendant, plaintiffs appeal.

Reversed.

Argued before DWIGHT, P. J., and LEWIS, HAIGHT, and BRADLEY, JJ.

H. L. Bennett, for appellants.

J. A. Barhite, for respondent.

DWIGHT, P. J.

The action was to set aside a bond and mortgage for $5,000 and upwards, executed by the plaintiffs to the defendant, on the ground of want of consideration, and of fraud, artifice, and undue influence on the part of the mortgagee. At the trial the complaint was dismissed on the facts alleged therein, as not being sufficient to constitute a cause of action; and the very proper practice was adopted by the trial judge of finding as facts all those alleged in the complaint, and, as a conclusion of law, that the defendant was entitled to judgment thereupon. The following is a brief narrative of the facts thus adjudged to be the facts in tMs case: The plaintiffs, at the time of the execution of the bond and mortgage, were aged people, living on a farm of 65 acres, in the town of Webster; in Monroe county, which was owned by the plaintiff Moses, subject to a mortgage of $2,500, and in which the plaintiff Catherine had an inchoate right of dower. The income from the farm was barely sufficient to pay the interest on the mortgage, and to furnish- a support to the plaintiffs, and they had little or no other property. In November, 1892, a woman of bad character, for the purpose of extorting money from the plaintiff Moses, commenced an action against him in this court, in which she falsely charged him-with a criminal assault upon her, with intent to violate her person, and claimed damages in the sum of $10,000. The plaintiff Moses appeared and answered in the action, denying all the allegations of the complaint; and on the trial of the issues joined a verdict was rendered in his favor, and he had judgment thereon, dismissing the complaint on the merits. Pending that action the defendant herein, who was the husband of the plaintiffs’ only child, *558and was living in the same house with them, and upon whom they relied as their business adviser and friend, designing and contriving to cheat them out of their farm, falsely and fraudulently represented to them that the woman above mentioned would probably succeed in her action, and would get the farm, unless it was covered by a mortgage, or otherwise placed beyond the reach of the judgment to be recovered by her; and he urged them to execute a bond and mortgage to him, promising that when the woman’s action was got rid of, and her claim defeated or released, he would either surrender up and discharge the bond and mortgage, or assign them to the plaintiff Catherine, as they should direct. The plaintiffs, being ■old and feeble, and unaccustomed to litigation, and being greatly alarmed by the defendant’s representations, and having entire confidence in his judgment and integrity, and in the sincerity of his motives towards them, and relying upon his promise in respect to the final disposition of the bond and mortgage to be given to him, did on the 13th day of February, 1893, execute, acknowledge, and deliver to the defendant a bond, with a mortgage on the farm above mentioned as collateral thereto, conditioned for the payment of the sum of $5,277:15 as follows: $200 in six months, and the balance in five years with semiannual interest, with the further condition that should default be made in the payment of interest, taxes, or insurance, as therein provided, the whole sum should thereupon become due, at the election of the defendant; and the defendant received the bond and mortgage, and caused the latter to be recorded in the clerk’s office of Monroe county. The bond and mortgage were wholly without consideration, and were given and accepted on the express understanding that they were not to be enforced, but were to be surrendered or assigned as before stated. After the termination of the action against the plaintiff Moses, as above stated, the defendant refused, on the request of the plaintiffs, to surrender up and discharge the said bond and mortgage, but declared his purpose to enforce those securities against the plaintiffs and their farm.

We are of the opinion that upon these facts the plaintiffs were entitled to the relief sought by them in this action, and that it was error to dismiss their complaint. The rule that equity will not interpose in favor of either of two parties who are -in pari delicto in a scheme to defraud another, but will leave them in the position, relative to each other, in which they have placed themselves by their own acts, is in the interest of good morals and public policy, and will ordinarily be enforced, even though one of the. parties to the fraudulent scheme is thereby enabled to profit by his own bad faith towards the other. But this is, plainly, not such a case. On the facts here found the plaintiffs were not parties to a scheme to •defraud anybody. The woman who prosecuted the action against Moses B. Watkins was not his creditor, and had no claim against bim or his property. She was an adventuress, engaged in a wicked attempt to charge him, by perjury, with liability in damages for an offense of which he was innocent, and thus, by an abuse of the processes of the law, to rob him of the property upon which', he depended for the support of himself and his wife in their old age.

*559And it is to be observed that this statement of facts does not depend for its verity upon the result of the action referred to, which had not been reached when the bond and mortgage were executed, but that such are the actual facts found by the court in this case, irrespective of the verdict and the judgment in the other action. It is demonstrated, therefore, for the purposes of this appeal, that no fraud was perpetrated or intended by the plaintiffs here upon the plaintiff in that action,—and, if not upon her, then not upon any one,—and the case is thereby taken out of the operation of the rule which denies relief to a plaintiff who is found to have been in complicity with the defendant in an attempt to perpetrate a fraud upon third parties.

In this view of the case,—which seems to us unavoidable, under the findings,—we are relieved from a discussion of the question whether the plaintiffs were in pari delicto with the defendant. That was the question, the negative answer to which determined the issue in favor of the plaintiffs in the cases of Freelove v. Cole, 41 Barb. 318, affirmed 41 N. Y. 619, and Ford v. Harrington, 16 N. Y. 285. In those cases the question was pertinent, because, in each of them, it was found that the conveyance set aside was given and received with intent to hinder, delay, or defraud the creditors of the grantor, but that the grantee occupied such a position of trust and confidence in his relation with the grantor, and so availed himself of it to persuade the latter to make the conveyance, that though in delicto, the grantor was not in pari delicto with the grantee. But, if the question of pari delicto were in the case before us, we think the result would be the same as in the cases cited. In this case the -defendant, though not an attorney at law, was the trusted advisor of the plaintiffs in their matters of business. He was their near relative, and lived under the same roof. He assumed to possess a knowledge, superior to theirs, of the danger of their situation, and was able to operate upon their fears because they relied upon his superior judgment. He made the suggestion of a mortgage, and persuaded them to give it, with entire' confidence that he wuuld keep his faith with them.' If this had been a scheme to defraud creditors, it would be impossible to hold the plaintiffs in pari delicto with the defendant.

The case of Renfrew v. McDonald, 11 Hun, 254, which is specially relied upon by counsel for the defendant, is radically distinguished from this, in the respect first considered. In the language of the opinion, the case there presented was “a bald case of a conveyance of the property in question with an express intent to hinder, delay, and defraud the creditors of the plaintiff.” And, in the light of later authorities, we are not disposed to concur in the apparent doctrine of that case, to the effect that relief will be granted, as between the parties, only when the party obtaining the benefit of the fraudulent transfer stands in the relation of guardian, trustee, or attorney at law of the other party to the transaction. See Freelove v. Cole, supra; Fisher v. Bishop, 108 N. Y. 25, 15 N. E. 331; Kerr, Fraud & M. 377. The gross and palpable character of the wrong devised by the defendant against the plaintiffs is unques*560tioned, for the purposes of this review; and there is nothing, we believe, in the case which deprives the court of the power to rebuke and correct that wrong. The judgment should be reversed, and a new trial granted, with costs to abide the final award of costs. All concur. So ordered.