Case Name: Albert Horn, respondent, agt. William A. Keteltas, appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1871-12-04
Citations: 42 How. Pr. 138
Docket Number: 
Parties: Albert Horn, respondent, agt. William A. Keteltas, appellant.
Judges: 
Reporter: Howard's Practice Reports
Volume: 42
Pages: 138–154

Head Matter:
N. Y. COURT OF APPEALS.
Albert Horn, respondent, agt. William A. Keteltas, appellant.
It is now too late to controvert the proposition that a deed absolute upon its face may, in equity, be shown by parol or other extrinsic evidence, to have been intended as a mortgage; and Iraud or mistake in the preparation, or as to the form of the instrument, is not an essential element in an action for relief, and to give effect to the intention of the parties. The courts of this state are fully committed to this doctrine.
Such a case is distinguishable between the case of a mortgage and a trust; and it has been decided that while a deed absolute in terms, could be shown to be a mortgage, a trust in favor of the grantor could not be established by parol.
And the rule does not conflict with that other rule which forbids that, a deed or other written instrument shall not be contradicted or varied by parol evidence.
In 1859, the plaintiff applied to the defendant for a loan of $10,000 upon the security of certain real estate in Brooklyn, estimated then to be worth $¿0,000, and after some negotiation the sum of $10,000 was advanced to the plaintiff upon the delivery of an absolute deed—the defendant,' by an agreement executed and delivered simultaneously with the deed, but bearing date a day or two later, covenanting to sell and convey the same property to a third person, who was acting as agent or attorney for the plaintiff—upon the payment by him within one year of $12,500, and interest thereon, together with all taxes and assessments, upon the premises which the defendants should have paid:
Meld, that the fact being established by competent evidence that the money advanced as a loan, and not in the purchase of the lands, the relation of debtor and creditor was established ♦, and that relation being established, it necessarily followed, that the conveyance in connection with the agreement to re-convey, was intended by the parties as, and was, a security for the debt, and the maxim lt once a mortgage, always a mortgage” secured the debtor a right of redemption, until his equity was foreclosed by the judgment of a court of competent jurisdiction; although there was no agreement in the defeasance for the payment of the debt.
Argued November 28, 1871.
Decided December 4, 1871.
In the fall of 1859 the plaintiff, owned certain real estate in New York and Brooklyn. He became greatly embar rassed, and applied to the defendant for a loan of. $10,-000 upon the Brooklyn property. The defendant, after examining the premises, proposed to purchase. Plaintiff declined unless he could get what the property had cost him, which was upwards of $30,000. It was worth at least $20,000 at the time. The plaintiff and his witnesses stated that defendant expressly agreed to loan him $10,000 and take the Brooklyn property as security, and that it was finally arranged that instead of taking a mortgage he should receive an absolute deed, and, at the same time, an agreement should be given back to T. D. Pelton, Esq., plaintiff’s counsel to hold in trust for him, to the effect that he should have the option to purchase the property within one year for $12,500. This was done to avoid the question of usury which was discussed between the parties. When the agreement came to be executed defendant had concluded to purchase one and to loan on four others of the New York parcels. Defendant’s counsel examined the title and charged plaintiff for the service upon the four New York lots and upon the Brooklyn property, but did not charge anything for searching title to New York lot which was purchased.
The plaintiff proceeded without reference to the conveyance, and made contracts for filling and grading the Brooklyn lots, calling the property his own, and work was performed thereunder for him as late as 1863,
At the end of the year (Oct., 1860) plaintiff could not pay. He paid defendant a sum, equal to the taxes, for 1859, and interest on the $12,500 for one month. Some time after the expiration of that month he paid a sum equal to the interest for three months longer. Upon the back of the agreement were two. indorsements to the effect, that in consideration of these payments Felton’s rights thereunder were extended one and three months respectively. The latter one was not signed by Pelton. At the end of the three months plaintiff had become wholly unable to perform.
Defendant held the premises until June, 1869, when, with out notice, he sold them to Dunscomb for $65,000. He had, in the meantime, paid all the other taxes and assessments, and, in other respects, treated the property as his own. His deed to Dunscomb contained no covenants of title. He covenanted only against his own acts.
The defendant denied the plaintiff’s story about the agreement for a loan, and said that the purchase was absolute, and that such was the agreement.
In Dec., 1868, plaintiff filed his bill, alleging that the deed of the Brooklyn property was a mortgage in fact, and given under the above agreement. He also alleged that the loan was usurious, though he did not claim to avoid the debt on that account. There was no pretence that the papers were given under any mistake, fraud, accident, or surprise. They were precisely as the parties intended them.
The action was tried at Kings special teim in May, 1869, before Justice Hilbert, who found that the deed was given under the circumstances above stated. The judgment allowed defendant all his disbursements, &c., with interest on each of these items. It charged him with the purchase money in the deed to Dunscomb and interest, and adjudged him indebted to plaintiff for the balance, $39,297.21.
The defendant appealed to general term, where judgment was affirmed. From that affirmance he appealed to this court.
A. J. Vasderpoel, for appellant.
I. It is not intended to dispute or question the rule, that though a' conveyance be absolute, a defeasance may be shown by parol.
This rule grew up at a time when there existed in England what can hardly be said now practically to exist, a class of persons called “ money scriveners,” who were always dealing between borrowers and lenders in these transactions, and who were always inventing contrivances to the prejudice of the borrowers, and in favor of the lenders for whom they were acting in the transaction (Kindersley V. C. Gossip agt. Wright, 2 New R., 153), eessante ratione legis cessat ipse lex.
1. This case presents another question—here the parties,' by their written agreement, under their seals have shown, that no defeasance was intended.
It was merely to give to the plaintiff a right of redemption or repurchase at a fixed price, at his option, on any day within a period of twelve months from the date of that agreement.
The agreement expressed just what the parties intended it should, and it is not pretended that the plaintiff was not acting under the advice of competent counsel.
It is asserted, and found, that the parties did not intend to make an agreement which could be at all subject to the charge or taint of usury.
It is not found, that any usurious agreement was made, nor that there was any mistake or fraud on the part of the defendant.
(a.) We submit that, in the absence of fraud, accident or mistake, and when the written agreement is in the precise form in which the parties intended and agreed that it should be, the court is not authorized to receive oral testimony, to contradict the writing.
[b.) In the only cases in which the question has been before the court of appeals, so far as we are aware, it has been simply determined, that according to the rule in equity, parol evidence is admissible to show that a deed, absolute on its face, is a mortgage.
There was no other written agreement defining and describing the right of the parties presented in the case [Hodges agt. The Tenn. Marine and Fire Ins. Co., 8 N. Y., 416; Despard agt. Walbridge, 15 N. Y., 374; Van Dusen agt. Worrall, 3 Keyes, 311).
But, although it would be inadvisible to clog the equity of redemption with any condition, where a conveyance has only been made by way of mortgage security, still a distinction must be made between a stipulation for a limited redemption and a collateral agreement for a re-purchase. If the sale be absolute, it would seem that it will not be converted into a mortgage merely, because the vendee has entered into a covenant to re-convey the estate, provided the same price which he paid is tendered to him by the vendor within a certain time; then, if the tender be not made within the time prescribed, the vendee is not bound afterwards to re-convey, there being no interest to be paid, nor any covenant on the part of the first owner oí the estate to repay the money. The absence of a covenant for repaymnt of the money (though such a covenant be not absolutely essential to constitute a mortgage) is material, as going in explanation of the nature of the transaction and the intention of the parties. For to constitute the relation of mortgagor and mortgagee, their remedies ought to be reciprocal, and where an estate has been conveyed absolutely, there would be little equity in allowing one party to treat it (if he thought fit) as a mortgage, and come for a redemption, when the other party had no .remedy for his money, which, without a covenant to that effect, he could not recover (Hovenden on Frauds, 181.)
2. The whole subject was examined very carefully by the general term of the supreme court, and it was adjudged, that neither at law nor in equity, can parol evidence be received to show that a deed or assignment, absolute on its face, was agreed to be a mortgage when the parties intended that the instrument should be in the form in which it is; but that where there was an agreement to execute a defeasance, or that a mortgage should be given, and by fraud, accident or mistake, the agreement is not carried out, equity will give relief, and must, necessarily' allow parol evidence to prove the agreement and fraud, accident or mistake (Cook agt. Eaton, 16 Barb., 139; Taylor agt. Baldwin, 10 Barb., 582; Webb agt. Rice, 6 Hill, 219).
Solemn instruments between parties able to contract, must, in the presumption of every court, declare the truth in regard to the subject matter of their contract, until error, mistake or imposition be shown (McDonald agt. McLeod, 1 Iredell, Eq., 221).
In harmony with the rules hereinbefore referred to, the court adjudged in the case of McDonald agt. McLeod, that where a bargainor executes a deed absolute on its face, and asks a court of equity to declare it a mortgage, he must show that the real intent of the parties was, that it should only be a security, and that it put on the form of an absolute deed by reason of the ignorance of the draftsman or from mistake of the parties, or because of undue advantage taken of the necessities of the debtor.
There is no suggestion in the evidence in this case that the defendant knew that the plaintiff was at all embarrassed. It can only be claimed that he had notice from the fact of the application that he wanted the sum of $10,000. It is only fair, on the part of the plaintiff to argue, that from the evidence it appears that he was in great need of some money, not that he communicated to the defendant this special necessity.
IT. In the present case it is not the subject of dispute upon the evidence, nor is there anything in the findings contradictory to the following positions:
1st. That the agreements were in the form in which the parties intended they should be.
2d. That there was neither fraud, accident, nor mistake, which prevented the carrying out of the agreement.
3d. That there is nothing in the case to warrant an attack upon the consideration of the transaction upon the ground that it was usurious.
1. The court will never intend that the parties designed to make an usurious agreement. This court has adjudged that in order to prove the usurious character of a mortgage, it is not sufficint to show that at the time it was given a less sum than the amount of its condition was paid by the mortgagee to the mortgagor. There must be evidence of an intention to reserve more than the lawful interest (Booth agt. Sweezey, 8 N. Y., 276).
So it has been held that the grantor, in an absolute conveyance of land, not alleging fraud or mistake, cannot prove by parol that the grant was in trust for himself (Sturtevant agt. Sturtevant, 20 N. Y, 39).
2. There is no difficulty in this case in determining from the face of the written agreement whether it was intended to secure to the plaintiff a right to re-purchase or a right of redemption.
3. In many of the cases there is a doubt upon the face of the agreement whether the parties intended to make what in some of the cases is called a conditional sale or defeasible purchase, and in such a case, to determine the construction to be placed upon the written instrument, the court will look upon the relation existing between the parties and the negotiations leading to the contracts; but in a case of this character, where the agreement is clear upon its face, there is no occasion to look outside of the papers; there is no occasion to violate that general rule of evidence, that parol evidence is inadmissable to contradict or vary a written instrument.
Here the rule is to be applied, that where the parties have reduced their intentions to writing, the terms of the written instrument, if clear and unambigious in themselves, are to be deemed the best evidence of what was intended, and the writing cannot be contradicted or varied by parol evidence aiming to show that something different was designed.
When the- writing is clear there is no occasion to look at the surrounding circumstances, and the pre-existing relation between the parties, to see what they meant by their written expression.
4. It will not be disputed, that conditional sales or defeasible purchases, as they are also commonly called, are valid, and to be taken strictly as independent dealings be tween strangers, and the time limited for the re-purchase must be precisely observed, or the vendor’s right of reconveyance of the property will be lost (Saxton agt. Hitchcock, 47 Barb., 225, 226). .
And it is well settled, that an agreement to reconvey, with or without an advance in price, will not turn an absolute conveyance into a mortgage.
The case of Alderson agt. White, (2 Be Gex and Jones, 97-105), was a stronger case in favor of the pretended mortgage than the present, and still the court dismissed the bill. In that case, A sold to B by absolute deed ; on the same day by another instrument, B covenanted that A might, at or upon the 25th of March, in any year, &c., re-purchase for the same amount which was the consideration in the deed from A to B. B died, and his will spoke of his purchase from A as “ subject to redemption” on payment of 64,739, and “interest,” and called it a “security,” &c., from which, together with the positive oath of A, that it was intended as a mortgage, it was insisted that it was so.
The Lord Chancellor said: “ The rule of law is, that prima facie an absolute conveyance containing nothing to show, that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance, merely because the vendor stipulates that he shall have the right to re-purchase * * * *
“Here, the first instrument was on the face of it an absolute conveyance; the second gave the right to re-purchase on payment, not of what should be due, but of the full amount of the purchase money, ¿64,739.
“The defendant’s case is that Crump (the purchaser) refused to lend, but consented to purchase, subject to a right of re-purchase. Was it impossible that Newman (the vendor) should agree to these terms !”
HI. There is nothing in the evidence in this case tó show, that the relation of debtor and creditor existed. The fact, that the original application was for a loan of money is not inconsistent with the statement, that the defendant refused to make the loan, and would only deal in the character of a purchaser. There is nothing in the written evidence to show that a loan was intended.
The writing gave to the plaintiff the option to determine whether he would or would not buy the property; there was no obligation on his part to buy the property.
If the defendant had sought to convert these paper wrrittngs' into a mortgage, would not the provisions of the written agreement have prevented him from so doing 1
Under these paper writings we submit, he would not have had a remedy against the plaintiff for a deficiency on a sale (Goodman agt. Grierson, 2 Ball & B., 274).
In Holmes agt. Fresh, (9 Missouri, 206), where a loan having been refused and a conditional sale made at an inadequater price, the court held, that the vendee had a right to make his own terms, and that the contract would not be set aside in the observance of evidence, that it was merely color-able, or the result of undue influence exerted on the vendor (See Flagg agt. Mann, 14 Pick, 467).
IV. It is submitted, that where the conclusion of law by the court or referee, can only be sustained upon the assumption, that the defendant has been guilty of misdemeanor, that fact should be affirmatively established, and no presumptions should be indulged in, in favor of a judgment (Walsh agt. Powers, 43 N. Y., 23; Huffy agt. Masterson, 44 N. Y., 556).
The judgment should be reversed.
John L. Hill, for respondent.
It is too late to question the power of equity, to declare an absolute conveyance to be a mortgage whenever and however the fact appears that it was so intended by the parties (Van Dusen agt. Worrall, 3 Keyes, 311). Courts of equity will' not limit themselves to the writings between the parties iu determining this question (King agt. Newman, 2 Mumford, 40; Prince agt. Reardon, 1 A. K Marshall, 170; Oldham agt. Halley, 2 J. J. Marshall, 114; Flagg, agt. Mann, 2 Sumner, 540; same in equity as 14 Pick, 467; Greenl. Cruise on Real Prop., Title XV. Mortgages, chap. 1 § 38, note, Ed. of 1851, rol. 2, p. 92; Robertson agt. Campbell, 2 Call. 354; Wharf agt. Howell, 5 Pinny, 503; Holmes agt. Grant, 8 Paige, 257, (* 258), and cases cited post). It is not necessary that there should be any ground of equity, except that parties so intended. The fact, that the parties have knowingly given the transaction the form of a conditional sale, will not alter this rule. Fraud, accident, mistake or surprise are not the only grounds upon the which the courts proceed in such cases. Cook agt. Eaton, (16 Barb., 439, citing Alderson agt White, 2 De Gex & Jones, 97; Hunt agt. Rousmanieres, Admtr., 1 Peters, 13, and Lord Dunham agt. Child, 1 Brown, Ch. 92), does not state the true rule in this class of cases. The parol evidence does not contradict the deed. It runs parallel with the deed. It is not as though we sought to show the converse. In such case, it would contradict (1 Hilliard on Mortgages, p. 72). But if it were necessary to proceed on the ground of fraud, the case can be sustained. There was an agreement partly performed. To adhere to the old rule at law would be to turn the statute of frauds into an instrument of fraud and oppression (Ryan agt Dox, 34 N. Y., 307).
But the court was justified in considering the fact found upon parol evidence or other grounds. The writings between the parties were raid. They were only a cover for the usury (2 Cow. & Hills’ notes to Phil. on Ev., 1447; 1 R. S., 772, § 5). We alleged the usury simply to open the transaction to the inspection of the court; but we disavowed its further effect upon the transaction.
The only difficulty in this class of cases, consists in distinguishing a mortgage from a conditional sale. If “ the relation of debtor and creditor exists,” “if the real transaction was a loan,” “if the instrument was intended as security for a debt,” “ if the intention appear to make the estate redeemable,” it is a mortgage (Robinson agt. Cropsy, 2 Ed. Ch., 138; Id., 6 Paige; Clark agt. Henry, 2 Cow., 324; Holmes agt. Grant, 2 Cow., 324; Walker agt. Murray 31 N. Y., 401). The following facts existing in this case have been held criteria to indicate a mortgage. (1.) Defendant was was a' money lender (Conway’s Exrs. agt. Alexander, 7 Cranch, 237). (2.) Plaintiff was in great pecuniary embarrassment (Holmes agt. Grant, 8 Paige, 257; Stoever agt. Stoever, 9 Serg. & Rawle, 447; Hall agt. Van Cleve, 11 N. Y, Leg. Obs., 283; Crane agt. Ronnell, 1 Green’s Chan. Rep., 267 ; Conway’s Exrs. agt. Alexander, 7 Cranch, 240; Clark Henry, 2 Cow., 324; Vernon agt. Bethill, 2 Eden., 110; Skinner agt. Miller, 5 Littels, 88; McDonald agt. McLeod, 1 Ired. Eg., 226; Poindexter agt. McCannon, 1 Dev., Eg., 373; Kunbrough agt. Smith, 2 Id., 562). (3.) Plaintiff’s aplication was for a loan (Holmes agt. Grant, 2 Cow. 324; Robinson agt. Cropsey, 2 Ed. Ch., 138; Conway’s Exrs. agt. Alexander, 7 Cranch, 237; Thompson agt. Davenport, 1 Wash., 125 ; Id., 14). (4.) Plaintiff remains in possession. (5.) There was excessive inadequacy of price, (consideration $10,000, value $20,000). (2 Greenl Cruise on Real Prop., Title XV. Mort. chap. 1, § 38, note; Clark agt. Henry, 2 Cow. ,324; Conway’s Exrs. agt. Alexander, 7 Cranch, 237; Flagg agt. Mann, 2 Sum., 537; 14 Pick. 467 ; Wharf agt. Howell, 5 Binny, 503; Holmes agt. Grant, 8 Paige, 257; Glover agt. Payne, 19 Wend, 520; Edrington agt. Harper, 3 J. J. Marshall, 354; Webb agt. Peterson, 7 Humph., 435; 3 Watts, 197; 2 J. J. Marshall, 114; 1 Eden, 58, 169; 11 N. Y., Leg., Obs., 282; 6 Metc., 482; 19 Ves. Jr., 413; Pow. on Mort. 138, note, 1). (6.) To these circumstances may be added others developed by the evidence. For example : The most serious difficulty for the parties was, how to fix the usury question: Plaintiff paid the expenses of examining the title in pursuance of custom between borrowers and lend ers on real estate : Plaintiff pays interest upon the loan, and the taxes for one year: Defendant avoided giving covenants of title—when he came to convey to Dunscomb.
All such conveyances are narrowly watched (Glover agt. Payne, 19 Wend., 520; Clark agt. Henry, 2 Cow., 324; Longuet agt. Scawen, 1 Ves. sr., 402), and if it be even doubtful upon the face of the transaction, whether a mortgage was intended, courts will preserve the equity of redemption (2 Greenl. Cruise, (supra), Dev. Eq„ 373; 5 Lit., 88; 2 J, J. Marshall, 471; 3 Id., 354; 1 Greene, Ch. 264 ; Holmes agt. Grant, 8 Paige, 257; Flagg agt. Mann, 14 Pick, 464; 1 Kent Com., *144). Judge Stoky, m Flagg agt. Mann, (2 Sum., p. 355), says, that the burden of proof rests upon the defendant.
Plaintiff did not rely upon the writing between Keteltas & Pelton to make out a defeasance. He relied upon the oral agreement with himself. The writing was void as a cover for usury {supra).
It was immaterial, that the writing with Pelton was two days later than the deed, even if we are to look to that (Crane agt. Bonnell, supra; 4 Kent Com., 160, *141).
It was unimportant that it ran to Pelton instead of Horn (1 N. Y. Stat. at Large, p. 677, § 53 ; Ford agt. Harrington, 16 N. Y., 285; Roach agt. Cosine, 9 Wend., 232; Slee agt. Manhattan Co., 1 Paige, 56; Weed agt. Stevenson, Clarke, Ch., 166; Holmes agt. Grant, (supra).
The relation of debtor aud creditor was. created. The simplest test is to imagine what plaintiff could have said in defense to a foreclosure by defendant seeking to charge him with deficiency. He could only have said: u there is no covenant to repay”—and this was not necessary (Hone agt. Fisher, 2 Darb. Ch., 570; 9 Serg. & Rawle, 428; 2 Atk., 296; 2 Wash., 14; Flagg agt. Mann, 14 Pick., 467; 1 R. S., 738, § 130). On the other hand, he would have been met by the positive testimony of Pelton, that it was a loan; by equally clear proof that he had refused to entertain the idea of selling; that he called the property his own in his contracts for'filling and grading, after the expiration of the year. Omitting many other items of proof, how would he have appeared in view of his payment of two installments if interest and the taxes for 1859 ?
Plaintiff’s remedy was by a personal action (Whittick agt. Kane, 1 Paige, 202).
The facts have been settled according to the findings of Judge Gilbert. The evidence was conflicting. This court cannot interfere (Cox agt. James, 4 Alby. Law Jour., 127; Austin agt. Steamboat Co., 43 N. Y., 75; Brown agt. Vredenburgh, 43 N. Y., 195).
The parol evidence was not objected to.

Opinion:
Allen, J.
The action is for an equitable relief, and especially for an accounting by the defendant for the rents and profits, and the avails of the sale of lands in Brooklyn, conveyed by the plaintiff to the defendant by deed, absolute upon its face, but which the plaintiff claims was intended as a mortgage to secure a loan of money.
In 1859, the plaintiff applied to the defendant for a loan of ten thousand dollars, upon the security of the property, and after some negotiation, the sum required was advanced to the plaintiff upon the delivery of an absolute deed, the defendant by an agreement executed and delivered simultaneously with the -deed, but- bearing date a day or two later, covenanting to sell and convey the same property to Mr. Pelton, upon the payment by him within one year, of twelve thousand five hundred dollars, and interest thereon, together with all taxes and assessments upon the premises, which the defendant should have paid.
The premises greatly exceeded in value the consideration paid for the deed. The grantee, Horn was embarrassed and straightened for money. Mr. Pelton, the covenantee in the defendant's agreement, was his counsel in the transaction, aiding him in procuring the loan, and his testimony as well as that of the plaintiff was, that the agreement was taken by him for the use and benefit, and as the agent of the plaintiff and to avoid the question of usury which it was supposed Horn could raise if the agreement to reconvey was directly to him • and the judge has found, that the transaction took that form for that reason, and no other. This one circumstance tending strongly to show, that the parties regarded the advance of the money as a loan, and the conveyance a mortgage.
The judge has found upon testimony somewhat conflicting, but greatly preponderating in connection with surrounding circumstances, in favor of the findings that the advance of money was a loan, to be repaid at the end of one year; that the deed was delivered to and accepted by the defendant as a security for the repayment of the loan, with an additional sum agreed upon, and not as an absolute sale and conveyance of the property, and that the agreement for a conveyance to Pelton, was for the benefit of the plaintiff, and in place of an agreement to reconvey directly to him, and for the reason before stated, and that the papers were delivered simultaneously, and as parts of one transaction, and as a conclusion of law, it was adjudged, that the plaintiff was entitled to the account demanded, the property having been sold and a redemption impossible.
It is now too late to controvert the proposition that a deed absolute upon its face may in equity be shown by parol or other extrinsic evidence to have been intended as a mortgage and fraud, or mistake in the preparation, or as to the form of the instrument, is not an essential element in an action for relief and to give effect to the intention of the parties. The courts of this state are fully committed to the doctrine, and whatever may be the rule in other states, here in passing upon the question, we have only to stand upon the safe maxim of stare decisis.
It is not enough in view of the fact, that the adjudications have entered into and controlled business transactions and become a rule of propriety to authorize a re-consideration of the questions that the rule has been authoritatively adjudged otherwise as a rule of evidence in common law courts, and that eminent judges contended earnestly against its adoption as a rule in courts of equity. Notwithstanding their protests the rule has been, upon the fullest consideration, deliberately established, and cannot now be lightly departed from.
The principle was recognized by the Chancellor in Holmes agt. Grant (8 Paige, 243), although it was not applied in that case, and had been before overruled under like circumstances (Robinson agt. Cropsey, 2 Ed. Chy. R. 138, affirmed, 6 Paige, 480). It was expressly adjudged in Strong agt. Stewart, (4 J. C. R., 167), that parol evidence was admissible to show that a mortgage was intended by an assignment absolute in terms, and to the same effect is Clark agt. Henry, (2 Cow., 324), which was followed by this court in Murray agt. Walker (31 N. Y., 399).' In Hodges agt. Tenn. Mar. and Fire Ins. Co., (4 Seld., 416) the court say that from an early day, in this state, the rule that parol evidence is admissible for the purpose named, has been established as the law of our courts of equity, and is not fitting that the question should be re-examined, and the cases in which it has been so adjudged are cited with approval; and in Sturtevant agt. Sturtevant, (20 N. Y., 39), the same judge delivering the opinion in the case last cited, distinguishes between the case of a mortgage and trust, and it was decided that while a deed absolute in terms could be shown to be a mortgage, a trust in favor of the grantor could not be established by parol. (And see Despard agt. Wallbridge, 15 N. Y., 374). The rule does not conflict with that other rule which forbids that a deed or other written instrument shall not be contradicted or varied by parol evidence.
The instrument is equally valid whether intended as an absolute conveyance or a mortgage, effect is only given to it according to the intent of the parties, and courts of equity will always look, through the forms of a transaction and give effect to it so as to carry out the substantial intent of the parties.
It is not objected that the agency of Felton for the plaintiff in the transaction could not be shown by parol, and that fact being established, the only question was whether the agreement with Felton, which was in truth with the plaintiff, was intended simply as an agreement to re-sell the premises at an advanced price or a defeasance, giving a right of redemption. The fact being established by competent evidence that the money advanced as a loan and not in the purchase of the lands, the relation of debtor and creditor was established, and that relation being established, it necessarily followed that the conveyance in connection with the agreement to re-convey was intended by the parties as, and was a security for the debt; and the maxim, " Once a mortgage, always a mortgage," secured the debtor a right of redemption until his equity was foreclosed by the judgment of a court of competent jurisdiction (Newcomb agt. Bonham, 1 Vern., 7; Clark agt. Henry, supra).
That there was no agreement in the defeasance for the payment of the debt, is a circumstance entitled to considerable weight, as tending to show that the conveyance was not intended as a mortgage, and that the relation of debtor and creditor did not exist. But it is only one of several circumstances to be considered, and is not conclusive, and the judgment of the court below, upon the question of fact, the decision of which involved the consideration of this, and the other circumstances, and the whole evidence in the case, is conclusive.
In Conways Executors agt. Alexander, (7 Cranch., 218), Ch. J., Marshall, says: "The want of a covenant to repay the money, is not complete evidence, that a conditional sale was intended, but as a circumstance of no inconsiderable importance."
And see per Putman, J., in Flagg agt. Mann, (14 Pick., 467). The question in this as in every case, was, whether the contract, was a security for the repayment of the money, or an actual sale, and the evidence fully sustains the judgment of the court below, that it was a mere security. The judgment is favorable to the defendant. The security might properly have been invalidated for usury and the plaintiff had judgment for the proceeds of the sale of the lands without deducting the money lent. But equity has been done, the defendant has been repaid by the money loaned, with interest, and the plaintiff has judgment, for the residue of the purchase money for which the mortgaged premises were sold, and the plaintiff does not complain.
The judgment must be affirmed.
All the judges concurred.