Case Name: Crassen v. Swoveland
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1864-05
Citations: 22 Ind. 427
Docket Number: 
Parties: Crassen v. Swoveland.
Judges: 
Reporter: Indiana Reports
Volume: 22
Pages: 427–436

Head Matter:
Crassen v. Swoveland.
Mortgage—What Costitutes.—Where A borrows of B a sum of money, and gives his note therefor, and at the same time executes a deed conveying certain real estate, to B, reciting in the deed a consideration just equal to the note, and, at the samo time B executes a bond to A, conditioned that, upon the payment by A of said note, he would reconvey said real estate to him, the facts, taken together, ' constitute prima facie a mortgage of the real estate by A to B.
Practice—Amendment.—An amendment of a complaint by leave of the Court, pending a trial, if the amendment added nothing to the material averments of the complaint, could not be a fatal error, nor, in such case, could the failure to re-swear the jury after such amendment.
Practice—Judgment upon Answers oe Jury to Interrogatories.—Where specific interrogatories are propounded to a jury to be answered by them unconditionally, and they seem to be so framed as to cover what appears to be the substance of the whole ease, and they are fully answered by the jury, but the jury make no general verdict, the Court may well render judgment in accordance with such answers, because the course of the parties in the premises would fairly indicate an intention -or consent to waive a general verdict.
Contract—Action—MoRTGAGE.-v-Where A borrows money of B, and executes his note to B, and by deed conveys certain land to him, and takes-from B a bond to re-c'onvey the land on payment of the note, such transaction amounts prima facie to a mortgage, and if B, said bond not being recorded, sells and conveys said land to G, without notice of the nature of said transaction, for a sum much larger than the sum borrowed, A will be entitled to recover of B the difference between said sums.
Yendors and Purchasers—Notice—Possession of real estate is only constructive notice to all the world of the rights of the party in possession; but it is held that the continued possession by the grantor of land after the making "5f his deed, will not be notice of a defeasance held by him which is not recorded.
APPEAL from the Blackford Circuit Court.

Opinion:
Worden, J.
On the 20th of March, 1858, Benjamin Sivoveland borrowed of Elliott Crassen and Equa Crassen the sum of about 188 dollars, for which he gave them his promissory note for the sum of 200 dollars, payable in sixty days. At the same time Swoveland executed to the Crassens a conveyance in fee simple for eighty acres of land; the conveyance reciting that it was for the consideration of 200 dollars. At the same time the Crassens executed to Sivoveland a bond in the penalty of 500 dollars, conditioned as follows:
"The condition of the above obligation is such that whereas the said obligee has this day purchased of Elliott Crassen and Equa Crassen the following real estate, (here the land is described as in the deed from Sivoveland to the Crassens,) for the sum of 200 dollars, on the following terms, to-wit: one note of hand' to be paid in sixty days from the above date. Now if, upon full payment of said purchase money, without any relief from valuation or appraisement laws, according to the tenor and effect of said promissory note, we shall make and deliver a good and sufficient deed of conveyance in fee simple for said real estate, then the above obligation to cease and be void, otherwise to be in full force," &e.
After the transaction above stated, the Crassens sold and conveyed the land to one Mordecai Whitney, for the sum of 1,000 dollars.
This action was brought by Swoveland to recover from the Crassens the amount thus received by them from Whitney for the land, less the amount due them from Sivoveland for the borrowed money.
That is what the plaintiff recovered, and we think the complaint, although objection was made to it by demurrer, was sufficient to authorize such recovery. Copies of the deed and bond were set out. Objection is made that the amount due from Swoveland to the Crassens, for the borrowed money, was not brought into Court. If the complaint were for a redemption of the land merely, the objection might require examination, but as that was so framed as to authorize a recovery of the money from the Crassens, it was not at all necessary for that purpose that Swoveland should bring into Court what he owed them.
Certain evidence was objected to on the trial, having for its object to show that the transaction was a mortgage, as that it was the intention of the plaintiff that it should operate only as a mortgage.
This testimony was harmless, if not legitimate. The transaction, including the borrowing of the money by Swoveland, the giving of his note, the execution of the deed by him, and the execution of the bond by the Crassens for a reconveyance upon the payment of the money, amounts, in law, prima facie, to but a mortgage. 1st Washburn on Real Prop. 494, sec. 18; Watkins v. Gregory, 6 Blackf. 119. Even illegal evidence that a thing was intended to be what it really is, could do no one any harm.
On the trial the Court permitted the plaintiff to insert, as an amendment to his complaint, an allegation to the effect that the deed and bond were designed as a security for the payment of the money and intended to operate as a mortgage. This amendment was objected to, and especially that the jury were not 're-sworn. The amendment added nothing to what already appeared, as on the face of the papers, they amounted to only a mortgage, hence the permission so to amend, or the failure to re-swear the jury, could not be a fatal error.
The evidence is not before us, but the special answers of the jury to interrogatories, we here set out at large:
" 1st. Did Swoveland borrow any amount of money from the Crassens?
Ans. He did.
2d. If Swoveland borrowed money from the Grassens, how much did he so borrow?
Ans. He borrowed 183 dollars and some cents.
3d. Did Swoveland execute to the Grassens a note ?
Ans. He did.
4th. If so, how much was the note for?
Ans. He executed a note; amount, 200 dollars.
5th. Did the Grassens hold Swoveland's note after the making and delivery of the deed by Swoveland ?
Ans. They did.
6th. Did the Grassens hold the indebtedness for which the deed was made against Swoveland' after the execution of said deed* and bond ?
Ans. They did.
7th. Do not the Grassens yet hold the note against Swoveland for which the deed in controversy was made ?
Ans. They do.
8th. Was the deed in controversy intended as a security for the payment of the money received from the Grassens, or was it executed for the purpose of operating as an absolute and unconditional, or a conditional conveyance?
Ans.' The deed was given as security for the payment of the money borrowed from the Grassens.
9th. Were the deed and bond named in the complaint executed at the same time?
Ans. The bond and deed were made at the same time.
10th. What was the difference between the amount of money received from the Grassens and the note given?
Ans. The amount was 17 dollars, nearly.
11th. Was there more than 6 per cent, interest included in the note given by Swoveland to the Grassens?
Ans. There was more than 6 per cent, included.
12th. Ror what amount did defendants sell the land to Whitney ?
Ans. 1,000 dollars."
The defendants ask that the following interrogatories be answered by the jury:
"1st. If any amount of money was included in the note of 200 dollars, above the sum actually paid to Swoveland by the Crassens, was it for interest, or was it for the trouble and expense of the Crassens in procuring the money for Swoveland ?
Ans. The amount was for interest and expenses.
2d. "Were the deed and bond executed to operate as a mortgage, or was the deed to operate as a sale and conveyance of the laud in case the note was not paid at the end of sixtv days ?
Ans. To operate as a mortgage.
3d. Did Swoveland tenderlo defendants, or either of them, the amount of the note, or any other amount, on the day the note became due ? .(Ans. Yo.) Or at any other day, if so, when ?
Ans. There was a tender made before suit was commenced.
4th. Has any sum of money been paid into Court since the commencement of the action, for the purpose of paying the note ? ,
Ans. There was no money paid into Court since the action commenced.
5th, Have the Crassens, after the note for 200 dollars became due, and before the commencement of this action, for a valuable consideration, conveyed the land in controversy, to Mordecai Whitney, and, if so, had Whitney, either before or at the time of the conveyance, any notice that Swoveland had any claim upon the land, and, if so, what was the notice?
Ans. The Crassens sold the land after the note became due, and Whitney had no notice of Swoveland having any claim on the land at the time of sale.
6th. What was the cash value of the laud at the time of the conveyance to the 'Crassens ?
Ans. 650 dollars.'
7th. In whom was the title of the land at the commencement of this action, and in whom is it still?
Ans. The title was in Swoveland, and is still.
8th. Who has paid the taxes since the conveyance to the Crassens, and what amount has been paid?
Ans. The Crassens paid the taxes.
9th. Who has possession of the land, and rents and profits?
Ans. Swoveland.
10th. Have the Crassens been guilty of any fraud in procuring the deed,'bond and note, and were the papers executed by the parties in any thing different from what they were intended at the time?
Ans. Ho.
11th. Who was in possession of the land at the time Whitney bought it.
Ans. Swoveland.
12th. What amount of money was tendered the defendants by the plaintiff, and when made?
Ans. 200 dollars; before suit was commenced."
There was no general verdict, and the question arises, whether the answers of the jury to the foregoing interrogatories are sufficient to sustain the judgment of the Court? The mere fact that there urns no general verdict, we think, unimportant, inasmuch as the parties seem, by the course which they pursued, to have waived it. The parties did not ask to have their special questions answered in the event only of there being a general verdict, but unconditionally; and the special questions are so framed as to cover what seems to be the substance of the whole case. We think, from the course pursued, the parties were content to waive a general verdict, and rest their case upon the answers which the jury might give to the questions thus propounded to them; hence they can not complain that there was no general verdict:
We think the proposition is a very clear one, the transaction between Swoveland and the Grassens having the effect only of a mortgage, that, if the Grassens sold and conveyed the land to Whitney for 1,000 dollars, the purchase money being paid, and Whitney having no notice of Siooveland's claim, whereby Whitney would be enabled to hold the land, the Grassens are liable to Swoveland for the amount thus received by them, less the amount he owed them. This must be so on the plainest principles of equity. The Grassens, in respect to the matter, may be regarded as the trustees of Swoveland, and liable to account to him for whatever they have received, without making any profit to themselves. 1 Story's Eq., sec. 465. Where a sale is made of land by a mortgagee under a power, he holds the proceeds, after satisfying the mortgage debt, as a trustee for him who is entitled to the equity of redemption. 1st Washburn on Real Estate, 500. We are not prepared to say that Swoveland might not ratify the sale and hold the Crassens liable for the amount received by them, even if Whitney have notice, but this point is not necessary to be decided.
Taking the special answers of the jury as an entirety, they show, as we think, such a state of facts as would enable Whitney to hold the land as against Swoveland. It is found that the Grassens sold the land to Whitney for 1,000 dollars. The inference is that the money was paid down, as there is no finding, nor was any question put, as to there being a credit for all or any pai-t of it. It is also found that Whitney had no notice of Swoveland's claim. The fair interpretation of this finding is that Whitney had no actual notice, nor such constructive notice as would arise from a recording, within the proper time, of the bond, which operates as a defeasance. If Whitney had notice, either actual or constructive, he would have had notice, and this would contradict the finding.
But it is claimed that as it was found that Swoveland was in possession of the land at the time Whitney purchased it, this was constructive notice. As a general proposition, the doctrine that possession of real estate is constructive notice to all the world, of the rights of the party in possession, is conceded. But the doctrine has no application to the case before us. We take it for granted that the bond which operated as a defeasance, was not recorded so as to constitute a constructive notice to Whitney, for two reasons: 1st. There was no finding that it was so recorded; and, 2d. The jury have negatived any notice, which includes constructive as well as actual notice-. Our statute on the subject of registry, provides that: "When a deed purports to contain an absolute .conveyance of any estate in lands, but is made, or intended to be made defeasible, by force of a deed of defeasance, bond, or other instrument for that purpose, the original conveyance shall not thereby be defeated or affected, as against any person other than the maker of the .defeasance, or his heirs or devisees, or persons having actual notice thereof, unless the instrument of defeasance shall have been recorded, according to law, within ninety days after the date of said deed."' 1 G. & H. p. 261, sec. 17. This statute, it will be seen, requires actual notice, to 'defeat a purchaser, where the defeasance has not been duly recorded. Possession has never been held any thing more than constructive notice. Such constructive notice does not come within the statute. This is in accordance with the authorities, gays an elementary writer: "Nor will the continued possession by the grantor of land, after the making of his deed, be notice of a defeasance held by him, which is not recorded." 1 Wash, on Real Prop. p. 495, sec. 22. The-case of Hennesy v. Andrews, 6 Cush. 170, is directly in point, under a statute similar to our own.
'The fact, then, that Swoveland was in possession of the land at the time Whitney purchased it does not seem to effect the rights of the latter in the least.
But the jury found that at the commencement of the suit the title to the land was in Siooveland,,and is still in him. There is some apparent inconsistency between this and the other findings. We have already seen that there were findings abundantly sufficient to show that the title was in Whitney. We are inclined to regard the finding, as to the title being, in Swoveland, as a conclusion of law drawn by the jury from the fact that the deed and bond amounted to a mortgage only, and not an absolute conveyance. If the jury erred in that conclusion, that is no sufficient reason why the findings, taken together, should not authorize a judgment for the plaintiff.
The appellants insist that the Court erred in not allowing them credit for the amount .of taxes paid by them. There was a very good reason for not allowing them, which was that no data were furnished to enable the Court to make the allowance. The jury did not find how much the appellants had paid for taxes. The appellants asked, to be sure, that the jury find what amount of taxes had been paid. If there was no evidence before the jury to show the amount, the appellants had no right to expect the question to be answered. If there was evidence they should have insisted upon an answer to the question; as they did not, they waived it.
The case seems to have been fairly tried upon its merits; the judgment is right in principle, and we think there is no error in the record which requires a reversal.
The appellee has assigned a cross error upon the refusal of Court to allow him interest upon his claim against the Grassens. 'Without stopping to inquire whether it was a case in which interest should have been allowed, we may dispose of this question on another ground. There was nothing found by the jury, as in the case of the taxes, which would enable the Court to determine the amount of the interest. When the Crassens received the money, does not appear from any finding of the jury, except that they sold the land after the note became due and before commencement of this suit; hence the amount of interest which they should pay could only rest upon conjecture. The appellee seems to have been aware of this difficulty, for in his motion on this subject, he asked the Court to allow him interest on the money "from the time of the sale as shown by the evidence." The cause having been tried by a jury, we know of no practice that would authorize the Court to look partly to the verdict, and partly to the evidence for a basis on which to render judgment. No error was committed in overruling the motion.
Walter March, for the appellants
J. Brovmlee, for the appellee.
Per Curiam.
The judgment is affirmed, with 1 per cent, damages, and costs.