Case Name: Quirk v. Rodman
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1856-02
Citations: 5 Duer 285
Docket Number: 
Parties: Quirk v. Rodman.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 12
Pages: 285–294

Head Matter:
Quirk v. Rodman.
When the owner of a bond and mortgage, made by a third person, applies to another to make a loan on the security thereof, but refuses to do so, but purchases them, at less than their face, and takes a transfer which recites a sale, at a sum named, and conveys them in pursuance thereof, the transaction will not be treated as being, in effect, a mortgage, merely because the purchaser gives his covenant to the vendor, to resell them to the latter, within a time named, and on conditions specified.
In the absence of all evidence of the inadequacy of the consideration paid, and of any personal liability of the vendor to refund, in any event, the money received as the price of the transfer, the covenant will be treated as a conditional sale.
(Before Oakley, Ch. J., Dueb and Boswokth, J.J.)
February, 1856.
This action came before the court on appeal, by the defendant, from a judgment in favor of the plaintiff. It was tried before Mr. Justice Hoffman, without a jury, on the 16th of February, 1856.
On the 14th of May, 1849, Jas. A. Morse executed to Amos Hogins, a bond for $800, payable in one year, with interest, and he and his wife executed a mortgage upon real estate in Albany, N. Y., to secure the payment of the money. The mortgage was duly recorded.
On the 16th of July, 1849, Hogins applied to Robert Prince, one of the executors of Abraham Cargill, deceased, for a loan of money, on the security of said bond and mortgage. Prince refused to make a loan, but suggested to Hogins that if he wished to sell the bond and mortgage, absolutely and Iona fide, for $500, he would persuade one of the heirs to such estate to buy them. As a result of the negotiations, Hogins, by an instrument of transfer, sold and assigned the bond and mortgage to Prince, as executor, for $500.
In the afternoon of the same day, Prince executed and delivered to Hogins a paper, reciting such purchase, and containing a covenant to resell them to Hogins on the day they matured, or "within two months thereafter, for $500, and interest thereon, and to allow the amount of any interest the obliger might pay in the mean time, but stipulated that Prince should not be bound to resell, after the lapse of the specified time. Hogins did not repurchase.
In October, 1854, the bond and mortgage were sold to the plaintiff, for $500, who then paid for the same, but the assignment of them was not executed until the 17th of April, 1852.
On the 27th of May, 1852, the premises were sold, on the foreclosure of a prior mortgage, and bought by A. Mann, Jr., for $2,150 sufficient to pay the previous mortgage, and the amount due upon the bond and mortgage in question, according to these terms.
The sum which the plaintiff claimed to be then due to him, was $590.89.
The defendant, who had acquired the equity of redemption, and was, also, a subsequent mortgagee, and was entitled to any surplus there might be, after satisfying the two mortgages, insisted that the transaction between Hogins and Prince was, in legal effect, and in equity, a loan, by Prince, to Hogins, and that, after charging Prince and the plaintiff, as the assignee of his rights, with the sums paid on account of such loan, only $135.35 was due to the plaintiff.
The defendant executed and delivered to the plaintiff, thereupon, an agreement to pay any sum which, by an action on such agreement, he should establish to have been due to him, at the time of such foreclosure and sale, upon the bond and mortgage in question. This action is brought on that agreement, to have that question adjudicated, and the balance due ascertained.
The whole case turned upon the nature and effect of the negotiations, and transactions, between Prince and Hogins.
• Prince was examined at the trial. As his evidence was not substantially varied by the other testimony, it is given entire, so far as it relates to those matters.
Robert Prince testified as follows: Some days prior to the 16th July, 1849, Amos Hogins applied to me, to borrow some money on a mortgage he held of $800 from the estate of Abraham Cargill; I was one of the executors; the other executors were sons of Car-gill ; I told him there had been arrangements made between the heirs, whereby the three sons were to have the use of the personal property, and the widow the real estate, as that was to be divided ; we had no money to loan; he wished to borrow money on this mortgage in question; I told him, if he had a disposition to make a bona fide sale of the mortgage, and would sell it for $500,1 would persuade one of the boys to buy it, on his agreeing to sell it for $500 absolutely; I told them they had better buy it, and, on my advice, they agreed; I accordingly drew the assignment in my name, and Valentine Cargill, one of the executors, gave him a check for $500, on the Seventh Ward Bank. After perfecting the agreement, they did not consider they had any bargain, and I proposed if, in the time the mortgage had to run, Hogins would buy it back for the money and interest, he could do so; they consented to it, and I did it; Hogins is dead; I have never said to any one it was a loan, and I never intended it to be so; Mr. Hogins could not have understood it to be a loan; I expressly told him it was not a loan; I told him, if he wanted to sell it, I would try to find him a purchaser.
Cross-examined.—Hogins first applied for a loan, at his dining-saloon ; he spoke two or three times before he got the money; I told him, decidedly, the first time, that he could not have the money; Hogins told me he had lent money to Morse, and Morse had made a poor man of him; had forged checks on him; I did not, at the time I agreed to buy the mortgage, also agree to resell it; the assignment by Hogins was executed in the forenoon; the stipulation to resell it was drawn and signed in the afternoon of the same day; the assignment was executed in Cargill’s store in Water street, and was delivered there; the store was in Water, near Beekman street, and Hogins’ saloon was in Beekman street, under the Fulton market; the stipulation was- drawn in Cargill’s store, at the desk; the assignment I drew the day before, at my house; the check was for $500; I went with Hogins to draw this money from the bank, and he gave me $25, for my trouble, for selling the mortgage; Morse never paid any money on the bond and mortgage that was not endorsed on the bond; Quirk did not pay me for this bond and mortgage; he gave his note to Valentine Cargill for $500 and interest, all amounting to $505.84, and payable to Valentine Cargill in two months from October, 1851; the assignment was not given to Quirk: till the following spring; I kept the assignment till the next spring; I gave Quirk the assignment when he asked for it; the note was paid to Valentine Cargill, because he was the owner of the bond and mortgage; they were charged to him in the accounts of the executors at $500; Mr. Quirk now owns the bond and mortgage; the estate of Cargill has no interest.
The court decided, that the plaintiff was the legal owner of the bond and mortgage in question, and that the' amount due to him thereupon, on the 27th of May, 1854, was $590.89, and, deducting the $135.35, then paid .to him, there remained due, for principal and interest, the sum of $479 nnr, for which judgment was entered.
The defendant excepted to so much of the decision as “finds that the plaintiff is the lawful holder and owner of the bond and mortgage, mentioned in the complaint herein as belonging to the plaintiff, and that there was due to the plaintiff thereon, on the 27th May, 1854, the sum of five hundred and ninety dollars and eighty-nine cents, and that there is now due thereon the sum of four hundred and seventy-five dollars and eighteen cents, and renders judgment for the plaintiff for that amount, with interest, besides costs,” and appealed from the judgment to the General Term.
Mr. Justice Hofmait rendered an opinion in support of his decision as follows:—
On the 14th May, 1849, James A. Morse made and delivered his bond and mortgage to Amos Hogins, for the sum of $800, payable in one year from date, with interest; on the 16th of July, 1849, Hogins transferred and assigned the bond and mortgage to Robert Prince, one of the executors of Abraham Cargill; and on the 17th of April, 1852, Prince assigned the same to the plaintiff. The property was sold upon a foreclosure of an older mortgage. The defendant claimed an interest as subsequent mortgagee; and the question is, how much must be paid out of the surplus purchase money to discharge themortgage of Moore now held by the plaintiff ? The defendant insists that the balance due is only the sum of $135.35; the plaintiff claims $479.10. The question depends upon the following instrument and facts:
On the 16th of July, 1849, when Hogins transferred the bond and mortgage to Prince, the latter executed to him this agreement :—
New York, July 16,1849.
This is to certify, that I have this day purchased, (as one of the executors of the estate of Abraham Cargill, deceased,) from Am os Hogins, a certain bond and mortgage, drawn by James A. Morse and Sarah his wife, in favor of the said Amos Hogins, for the sum of five hundred dollars cash. Now this memorandum is given, to the intent, that should the said Amos Hogins desbe to repurchase from me, or either one of the other executors, acting with me as above, the said bond and mortgage, on the day it may arrive at maturity, or within two months thereafter, for the sum of five hundred dollars, and the interest thereon, at the rate of seven per cent., deducting therefrom the interest which may have been paid thereon agreeably to the conditions thereof: in such case, I hereby promise to resell the same to him, for the said sum of money and interest, as above expressed; but I am not bound to resell the same to him, the said Amos Hogins, the said bond and mortgage, unless the above conditions are strictly complied with, within the • time herein limited for the repurchase of the same.
Signed and sealed, &c.
Some parol testimony has been taken of what passed at the sale upon foreclosure, on the 27th of May, 1854, and touching the cfrcumstances connected with the execution of the agreement. This evidence, even if unobjectionable, does not vary the case, which must be decided by the written contract. It raises the question, whether there is here a mortgage or a conditional sale.
The leading English cases which I have examined are, King v. Lees, 3 P. Wm. 358; Méllor v. Lees, 2 Atk. 484; Goodman v, Gierson, 2 Ball & Beatty, 274; and Williams v. Owens, 10 Simons, 386, and 5 Mylne & Craig, 306. The earlier cases are referred to by Mr. Fonblanque, (2 Tr. Eq. 261, n. s.)
Goodman v. Gierson, (2 Ball & Beatty, 274,) has always been a leading case upon this subject. Lord Manners said, “The fab criterion to decide whether the deed be a mortgage or not, is: Are the remedies mutual and reciprocal? has the defendant all the remedies a mortgagee is entitled to ?”
If a foreclosure and sale took place, what remedy would there be for any deficiency ? There was no covenant or bond, nor would even an implied assumpsit lie. In this case, lands were conveyed in lieu and satisfaction of a portion charged upon them, with a clause of redemption if the portion was paid within ten years. A redemption bill was dismissed. Williams v. Owens, (10 Simons, 386, and 5 Mylne & Craig, 306,)' is among the latest and most material English cases. The Vice-Chancellor held that the instruments created a mortgage. On appeal, his decision was reversed, and it was decreed that there was only a conditional sale.
The father of the plaintiff was indebted to the defendant in the sum of $200. By an indenture, of the 14th of June, 1821, it was recited that the said father had agreed to sell to the defendant the premises in question, for the sum of $550, and the premises were then conveyed, in fee simple, to the defendant, with the usual covenants.
On the same day (14th June; 1821) an agreement was entered into, between the defendant and the father, reciting the conveyance and describing it as an absolute conveyance, and that, upon the treaty for the sale, it was mutually agreed that, in case the father should pay to the defendant the like sum of $550, within twelve months, and $13, the expenses of the conveyance, then the defendant would reconvey the premises to the father; and it was provided that, upon such payment, the defendant would reconvey the property, or cancel the former conveyance. The defendant was to retain the rents till the time fixed for the payment, instead of interest, if he preferred this to interest.
The defendant took possession. The plaintiff’s father lived for three years after the deed, and the plaintiff was an infant until shortly before the bill was filed. The bill was for a redemption and reconveyance.
Lord Cottenham observed, that the court would treat a transaction as a mortgage, although it was made so as to bear the appearance of an absolute sale, if it appeared that the parties intended it to be a mortgage; but it was equally clear, that if the parties intended an absolute sale, a contemporaneous agreement for a repurchase, not acted upon, will not, of itself, entitle the vendor to redeem. He goes through the leading cases, and, among other things, says: “ If the transaction was a mortgage, there must have been a debt; but how could Owen (the defendant) have compelled payment ?”
The principal cases in the courts of out own state are, Robinson V. Cropsey, (2 Edw. Rep. 138 ;) Glover v. Payne, (19 Wend. 518 ;) Holmes v. Grant, (8 Paige, 243;) Brown v. Dewey, (1 Sandf. Gh. Rep. 56, and 2 Barb. Rep. 28;) Henry v. Davis, (7 John. 0. R. 40';) Clarice v. Davis, (2 Oow. 324.)
Assistant Vice-Chancellor Sandford examined the case with great care in Brown v. Dewey, and held that there was a mortgage constituted by the documents. Justice Harris, on appeal, reversed the decree, (2 Barb. 28.) In Henry v. Davis, chiefly relied upon by the counsel for the defendant, there was an accompanying written agreement to reassign upon payment of the money advanced.
In my opinion, the weight of authority is decidedly in favor of treating the transaction, in this case, as a conditional sale, and I apprehend that the tendency of modern adjudications is, to hold parties more rigidly to the fulfilment of contracts of this character than at an earlier period prevailed.
The amount must be adjusted according to the principles of the plaintiff, and judgment entered for that sum and interest.
The appeal was argued by
A. Mann, Jr., for appellant.
F. W. Burke, for respondent.

Opinion:
By the Court. Bosworth, J.
The question in this case is, was the transaction of the 16th of July, 1849, between Hogins and Cargill, a sale of the bond and mortgage made by Morse, or a transfer of them, as security for the repayment of a loan of $500, and interest ?
The instrument, executed by Hogins to Cargill, in terms, sells and transfers the bond and mortgage, absolutely, to the latter.
The instrument, of the same date, executed by Cargill to Ho-gins, gave him the privilege of purchasing the bond and mortgage, within two months after they fell due, or on or before the 14th of July, 1850, " for the sum of five hundred dollars, and the interest thereon, after the rate of seven per cent, deducting therefrom the interest which may have been paid thereon, agreeable to the conditions" of such bond; but it was expressly declared that such privilege was not to continue beyond that time.
Looking at the terms of the instrument alone, there was first an absolute sale of the bond and mortgage, and second, a covenant of the purchaser, that he would sell it to Hogins within a period named, but not after that, for the price that had been paid for it, with interest thereon.
Whether this was all that the security might reasonably be supposed to be worth, having reference to the value of the mortgaged property, the amount of prior incumbrances, and the estimated responsibility of the mortgager, we have no means of determining, with much certainty of arriving at an accurate conclusion.
Neither Prince nor Hogins could have anticipated that the bond and mortgage would be paid when they became due, for the privilege,' given to Hogins to purchase them, was to continue two months after that time would arrive.
Hogins entered into no contract to pay Prince any part of the $500, or of the interest thereon, if he should be unable to realize it from the bond and mortgage, or to collect it of Morse.
Prince did not advance his own money, nor was he personally interested in, or to be benefited by the purchase. The money belonged to an estate, of which he was an executor. Before Prince made the purchase, he advised with the persons who would be entitled to the money, and they consented to the purchase being made. Valentine Cargill took the bond and mortgage, at the price which had been paid for them, as so much money, and they were charged to him, in the accounts of the executors.
After the purchase had been made, and the transfer had been executed, Prince, before executing the covenant giving to Hogins a right to repurchase, consulted those entitled to the moneys, belonging to the estate of which he was an executor, and obtained their assent to his giving it.
Hogins never claimed the right to redeem, and Morse never claimed that, by force of that transaction, and of the subsequent conveyance of the mortgaged premises, he was legally or equitably relieved from liability to pay interest on more than $500 of principal, or to pay less than the whole principal.
The only facts proved to overcome all this, and show that the transaction was a mortgage, and not a sale, are, that Hogins, when he applied to Prince for money, applied for a loan; and that he obtained a covenant, giving him a right to purchase from his vendee, within a time named.
It is admitted that he applied for a loan, but such application was at once repelled. There is nothing to justify the inference, that the money was a loan, or that the transaction was so regarded by the parties at the time, except the naked fact that a loan was applied for. That was refused. And Prince told Hogins, if. he would sell it, out and out, for $500, he would try and persuade one of the boys to buy it.
Unless it is a principle of law or equity, that when a loan is applied for, on the security of a bond and mortgage, made by a third person, and money is received on a transfer of them by an instrument which declares it to be a sale, and which is made in pursuance of a clear agreement to sell, it is necessarily a mortgage, provided the person advancing the money subsequently, and on the same day, agrees to resell them to his vendor, within a time named; then it will be difficult to assign any satisfactory reason for reversing the judgment appealed from.
In Brown v. Dewey, (1 Sand. Ch. R. 73,) Vice-Chancellor Sand-ford assented to the proposition, acted upon in other adjudged cases, that the absence of a personal liability, as in this case of Hogins, for the repayment of the $500, and interest, is a strong circumstance in favor of holding the paper executed by Prince, a contract to sell, instead of holding the transaction a mortgage. That such a circumstance, in connection with the adequacy of consideration, would have been controlling with him, in that case, were it not for certain strongly marked features that appeared in it. These features were, first, the reservation of $175, annual interest, while the annual rent of the land conveyed was not worth over about $115; second, an agreement of the grantor, to expend annually, besides paying such interest, $50 in permanent improvements upon the premises; and third, taking a note of the grantor, with a surety, in the sum of $200, as a security that the grantee should receive, at the end of five years, $300, in addition to the $2,500 he had advanced, and the interest thereon.
Ho such marked features are found, in this case, to.rebut the effect deemed to be due to the fact, that Hogins was not personally liable to repay principal or interest, and to the absence of evidence to show that the consideration paid, was clearly inadequate.
It may be true, as was contended on the argument, that a person may mortgage property to secure the payment of a sum of money, without being personally liable for the payment of sueh money: that is, it may be true that a party executing an instrument, which is in terms a mortgage, to secure the payment of a sum named, if it contains no covenant to pay, nor acknowledges the existence of a debt, may not be liable on an implied covenant, to pay in the absence of an actual agreement to pay. But although this may be so, it is not obvious on what principle that consideration can aid the defendant in this case in arriving at the conclusion, that the instruments in question amount, in the intendment of the parties and in equity, to a mortgage, or render the fact of the absence of all personal liability of Hogins, to pay any portion of the sum advanced to him, less significant in this case, than it has been uniformly held to be, in similar cases which have been the subject of adjudication.
The principal authorities bearing on the question presented, are cited in the opinion of the Judge who tried this action at Special Term, and we agree with him, that they sustain the proposition, that this transaction, upon the facts and circumstances disclosed by the pleadings and proofs, was a conditional sale, and not a mortgage.
The judgment appealed from must be affirmed.