Case Name: Yarbrough vs. Newell
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1837-12
Citations: 10 Yer. 376
Docket Number: 
Parties: Yarbrough vs. Newell.
Judges: 
Reporter: Tennessee Reports
Volume: 18
Pages: 376–382

Head Matter:
Yarbrough vs. Newell.
Nashville,
December, 1837.
Although a bill of sale of slaves be absolute on its face, yet as between the parties, it may be shown by parol proof or by a parol defeasance to be a mortgage.
In all cases where an absolute deed is executed to secure the payment of a debt or money loaned, the contract will be valid and effectual in equity as a mortgage.
The statute of limitations will not bar a bill filed to redeem mortgaged property.
Incases of direct trust, the mere denial by the trustee of the right of the cestui que trust will not be sufficient to protect the possession of the trustee, he must in order to make his possession adverse, show that the cestui que trust knew that he was holding adversely for himself and not as trustee.
Where a party constitutes another his agent merely for the purpose of tendering redemption money due on a mortgage, which he does, and the mortgagee denies the mortgagor’s right to redeem, this is not such notice to the mortgagor of a denial of his right to redeem as will constitute an adverse holding by the mortgagee.
To change the relations which exist between mortgagor and mortgagee, and to constitute the possession of the latter adverse to the former, there must be actual personal knowledge by the mertgagee that the mortgagor is holding adversely to his right — constructive notice will not be sufficient.
The bill charges that on the 24th of May, 1831, the complainant being indebted to sundry persons and in need of money, and for fear his property would be sacrificed at execution sale, and owning a negro girl, Caroline, that he knew would be the first seized upon and sold by the officers to satisfy the claims in their hands for collection, he applied to the defendant for a loan or to get him to satisfy his debts, and of- negro girl as security for his advances, and small amount due Newell, not in all exceeding $250, which said Newell agreed to; that the transaction was a loan on the one side and a conveyance on the other, with condition that he should have liberty to redeem in six months.
That betook from said Newell a paper writing which New-ell told him was to bind him to pay $250; that he cannot read or write., and that the paper writing does not contain the true contract between the parties; that he applied to Newell to redeem and tendered him the money and he refused to return the negro, alleging the money was not paid within the six months; that said Newell has had possession of said negro ever since.
The defendant in his answer expressly, denies that the transaction was a mortgage or conditional sale, but says it was absolute and unconditional, and that the two instruments of writing contains the whole contract, that he refused to advance money and take a mortgage on the negro, but stated the sale was absolute, and that if complainant repurchased her, he must -contract for her as any other person.
The facts proved, in relation to the question whether this was intended as-a mortgage or not, and also in delation to the statute of limitations, are stated in the opinion of the court.
The chancellor’s decree was in favor of complainant.
G. Boyd, for complainant.
Courts of equity in deciding what is, or what is not a mortgage, look to the real intention of the parties at the time of making the contract, and they will not permit a conveyance designed to be a security for money lent or advanced, to stand as an absolute sale of property, whatever its form may be, and parol proof may be introduced to show the real intention and true meaning of the contract. 4 Kent, 142: 3 Yer. Rep. 513, 525: 4 John. Ch. Rep. 167: 5Binney: 699 Yer. 172: 2 Yer. 215. The depositions in the pause prove beyond doubt, that the conveyance from Yar-brough to Newell, though absolute upon its face, was in truth understood between them as a pledge or security for the money to be advanced in payment of Yarbrough’s debts. When it is once-ascertained that the instrument is to be considered and treated as a mortgage, then all the consequences apper- ... . ° . . , , , in equity to a mortgage, are strictly observed, and the Qp rec¡emption is regarded as an inseparable incident. 4 j£eut. 143: Fonb. Eq. 530-1.
2. The mortgagor’s right of redemption is not barred by the statute of limitations. 3 Yer. 513, 525. These two cases decided by our supreme court, are directly in point, and if not overruled must settle the question in this case. See also 9 Wheat. 489: 1 Wash. 14:1 Powell on Mort. 360, a 4 Cranch, 415, decided upon the Georgia statute of limitations which may be seen in the same book it page 367: 1 Hawks. 17.
Wherever there are concurrent remedies in law and equity, and the party sleeps upon his rights till the bar attaches at law, equity will follow the law and refuse relief; but in cases of mortgage aqd of express technical trusts, created by contract, which are the exclusive creatures of a court of chancery, and where the courts of law afford no redress, the statutes of limi-itations do not apply. 3 Hay. 152, 58: 1 Yer. 296, 3 Yer. SÍQ1: 7 John. Ch. Rep. 125: 20 John. Rep. Murray ys. Coster,
W. A. Cook, for defendant, Contended,
1. That the bill of sale is absolute on its face. To allow parol evidence to contradict it and to prove that it was intended as a mortgage, is dangerous in the extreme; the evidence therefore should be strong, irresistable and conclusive, particularly where the answer denies positively that a mortgage was intended. Yide Lane vs. Dickerson, decided by this court, He insisted that the evidence in this case was not of that character. (The qounsel here examined and commented on the testimony.)
2. The complainant’s right to redeem is barred by the act of limitations, The defendant has held the slave adversely to the complainant’s right more than three years, and from the situation of the parties, the complainant must have known that the defendant disclaimed any right upon his part to redeem. This right was explicitly denied to complainant’s agent. The possession from such denial was adverse. Demaresl vs. Wim-_ T 1 /~íi T. , _ ,r . coope,3 John. Ch. Rep. 129. Laman vs. Jones, 3 Harris' andM’Henry, 328: Beckforcl vs. Wade, 17 Yes. 99: Lytton vs. Lytton, 4 Bro. Ch. Rep. 458: Hodel vs. Healy, 3 Ves; and Beames, 536: Murray vs. Terrel, 4 Yer. 104: Hughes vs. Edwards, 9 Weat. Rep. 489: Elmendorf vs. Tayler, 10 Wheat. Rep. 152: Cholmondely vs.^ Clinton, 2 Jac. and Walker, 1.
3. Courts of equity act in obedience to the statute of limitations. The same length of time will bar a right in equity that would bar it if the remedy were a legal one. 1 John. Ch. Rep. 129: 2 Yes. Rep. 472: 3 Bro. Ch. Rep. 639: 6 Ves. Rep. 199: 10 Ves. Rep. 453: 2 Mereval’s Rep. 358: 3 John. Ch. Rep. 137: 2 Sch; and Lefroyj 607, 630: 1 Swanston, 312:17 Yes. 87: Angel on Lim. 132.
4. Three years possession by our act of limitations, vests the right and does not simply bar the remedy * Our statute in this respect is stronger than the statute of fines, and cuts oiF all equities. Kegler vs. Miles, Mar. and Yer. Rep. 426: Porter vs. Badget, 4 Yer. Rep. 174: Hardeson vs. Hays, 4 Yer. Rep. 504: Davis vs. Mitchel, 5 Yer. Rep. 281, Lawrence vs. Beidleman, 3 Yer. Rep. 496.
Reported ante page.

Opinion:
Green, J.
delivered the opinion of the courti
This bill is brought to redeem a negro girl Caroline, which fcomplainant alleges he had mortgaged to the defendant to secure to him the payment of certain sums paid by defendant to the creditors of complainant. The answer denies that the negro was mortgaged, and insists that defendant purchased the girl for a full price, and took from complainant an absolute bill of sale. The proof shows that defendant had advanced fconiplainant some money, and that he took an absolute bill of sale for the girl, agreeing to advance other monies in payment of complainants debts, to the amount of $250. It was also agreed that the complainant should be permitted to redeem the girl in six months from the date of the bill of sale. We have no doubt from the facts in this case, but that the negro was taken by the defendant as a security for the money he had advanced, and if so taken, it is well settled that the contract shall be valid and effectual as a mortgage as between the parties, although the mortgagee took a deed absolute on its face, and registered it asa deed. Nor does the fact' that the de-feasance rests in parol, alter the questionfor if such Was the real understanding of the parties, it may be established by pa-rol evidence. 4 Kent's Com. 142; Ocerton vs. Bigelow, 3 Yer. Rep. s13: Hammond vs. Hopkins, 3 Yer. Rep. 535: 4 John. Ch. Rep. 567: Hickman vs. Cantrell, 9 Yer. Rep. 172.
2. But as more than three years elapsed' front the time limited in the contract for the redemption to be made, before this bill was filed, it is insisted' that the statute of limitations-is a bar to the redemption sought. In the case of Overton vs. Bigelow, 3 Yer. Rep. 513, this court expressly decided that the statute of limitations cannot be pleaded to a bill to redeem a mortgage.
The right to redeem, says the court, can only be enforced in a court of equity, and in such cases the statute of limitations is no bar. 20 John. Rep. 525: 4 Kent's Com. 180. The cases in the English books are by no means uniform in regard to the application of the statute of limitations to a bill to redeem a mortgage. Twenty years is the time limited by courts of equity, within which a'mortgage may be redeemed; ¿nd as that is the time fixed by the statute of limitations, it has some times been said that the right of redemption is barred by the statute of limitations. But it is manifest that those judges who have used this language, have been negligent as. to their mode of expression, and do not- state with precision the ground upon which the bar is placed. Their statute of limitations of twenty years "is assumed as a fit and proper ground for taking the length of possession therein mentioned as the presumption of right. 4 Kent. 187. This, Chancellor Kent says, is the general doctrine in England and in this country, in respect fo remedies in equity."
in- those States of the Union where the time fixed by the statute of limitations is twenty years, the courts of equity have taken the same time "as the presumption Of right" in a mortgagee. But we know of no case, either in this State or any of the other States, where the statute of limitations is for a shorter period, that the courts of equity have reduced the lime r _ ' ^ J _ within which a mortgage may be redeemed to that period.
The mortgagee is a trustee for the mortgagor. Angel on Lim. 123. His right is consistent with that of the mortgagor, nor does he hold adversely to him. The mere fact that the mortgagee holds possession of the property mortgaged, will not bar the equity of redemption, unless it has been held so long as to afford-a "presumption of right." So great a favorite with the courts of equity has the equity of redemption grown, and so highly is it cherished and protected, that it has become a maxim, "once a mortgage and always a mortgage." We therefore re-affirm the doctrince laid down in the case of Overton vs. Bigelow, that equity does not permit the statute of limitations to be pleaded to the relief which it affords to the right of redemption, but that it discountenances stale demands.
3. But it is said, that the defendant denied the right of the Complainant to redeem, and refused to receive the money tendered by his agent, and that from the time of such denial and refusal, he held adversely to the complainant, and that the statute-will run from the time such adverse holding commenced. If this were the case of a direct trust, the mere denial of the right of the ceslui que trust, would not be sufficient to protect the trustee by the statute of limitations; he must show that the ceslui que trust knew that he was holding adversely, and for himself, and not as trustee.' It does not appear from the evidence in this case, that Yarbrough had any knowledge tha't the defendant denied his right to redeem. Niblett, the only witness who speaks «pon that subject says, that he tendered $250, to the defendant as the agent of the complainant, and that Newell stated, the complainant had a right tore-deem but the time had expired." Phipps says that Newell said, "he had affirm bill of sale of the negro, and that no one but Yarbrough could redeem, or that he would not receive it from any body else. " Take this testimony together, and it would seem that though the defendant would not receive the money from Niblett, yet it did not follow that he would not have received it from Yarbrough. But without putting any stress upon this view of the subject, it is enough to say, that so far as the proof informs us, it does not appear that Yarbrough -was informed of Newell's denial of his right bf redemption. It is true, Niblett was his agent to tender the money, and it is also true, that in most cases notice to the agent is notice to the principal. But here the agent had no authority to sue for the negro. When he tendered the money he had discharged his agency. In such a case, this court, in the case of Duke vs. Harper, 6 Yer. Rep. 280, decide that notice to the agent is not sufficient. Judge Catron in delivering the opinion of the court says, "it is going far enough to say, Duke was holderi out so soon as he had knowledge Harper claimed adversely, and that this knowledge was equal to an actual turning out or holding out, on an attempt to enter for the forfeiture; but to hold that the refusal to pay rent to Tribble who had no authority to enter upon the land, or sue for it in Duke's name, is evidence of an actual ouster of Duke, is not warranted by any authority." In that case, Harper was Duke's tenant, and Tribble was Duke's agent to receive the rent. Harper had disclaimed Duke's title, and refused to pay rent to Tribble more than seven years before the suit was brought. The principle is that to change the relations of the parties in such cases, there must be actual personal knowledge that the possessor Is holding adversely and for himself. Constructive notice will not be sufficient.
The result of the foregoing discussion is, that the mere fact of the possession of the mortgaged property by the mortgagee, will not authorise him to plead the statute of limitations, but we do not determine that, an open adverse holding by the mortgagee, which is known to the mortgagor, will not operate a bar to the redemption within the time fixed by the statute of limitations.
That question not arising in this cáse, it is left open for future consideration.
Let the decree be affirmed.
Decree affirmed.