Case Name: Shaw v. Walbridge
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1877-12
Citations: 33 Ohio St. 1
Docket Number: 
Parties: Shaw v. Walbridge.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 33
Pages: 1–6

Head Matter:
Shaw v. Walbridge.
1. A deed having been given, absolute upon its face, the grantor claimed it ’ was a mortgage; in a proceeding to establish that claim, it was competent for the grantee to show, that although originally a mortgage, the equity of redemption had been released by a parol agreement.
2. There is no rule of law which prevents a mortgagor from disposing of his equity of redemption to a mortgagee by private arrangement, but courts of equity will not permit a mortgagee to take advantage of his position so as to wrest from the mortgagor his equity, by an uncon- ■ scionable bargain. The transaction will be jealously scrutinized, but if the agreement is a fair one, under all the circumstances of the case, it will be upheld.
Error to the District Court of Lucas county.
The original action was commenced in the Court of Common Pleas of Lucas county, March 13, 1872, by one John B. Marston, against John H. Shaw and others, to subject certain real estate to the payment of a judgment recovered by said John B. Marston, against said John II. Shaw.
Horace S. Walbridge, the defendant in error, was made a party defendant to said action ; and the petition alleges against him, among other things, that the said Shaw had conveyed to the said Walbridge, by a deed, absolute on its face, but, in fact, intended as a security for the repayment of money, lots numbered from 105 to 131 inclusive, in Shaw’s'Monroe Street Addition to Toledo, and asks that said property may be subjected to the payment of said judgment.
Said Walbridge, on May 23, 1872, answered said petition, and alleged as follows : “ On or about the first day of December, a. d. 1868, as security for the sum of $2,500, then loaned by defendant to said Shaw, the said Shaw and wife conveyed to this defendant lots numbered consecutively from 105 to 131 inclusive, in Shaw’s Monroe Street Addition to the city of Toledo ; that thereafter, to wit, on or about the fifteenth day of May, a. d. 1869, for said sum of $2,500, this defendant purchased of said Shaw said lots in Monroe Street Addition to Toledo, numbered consecutively from 107 to 131 inclusive; and the said loan of money being fully paid and settled, on or about said last mentioned date, defendant reconveyed to said Shaw said lots in Monroe Street Addition to Toledo, numbered 105 and 106. And so, the defendant alleges, that prior to the commencement of this suit, he became the absolute owner in fee of the said above described premises, as above stated, and that he does not now hold the same or any portion thereof in trust for said Shaw, or otherwise than as such owner.”
Said Shaw, on May 18, 1872, filed an answer and cross-petition in said case, alleging that said conveyance to Walbridge, though absolute on its face, was intended as security for the repayment of borrowed money, and is now held by said Walbridge solely for that purpose, and asking that the said deed may be declared null and void, on the payment to said Walbridge of the sum of money which said deed was given to secure, but alleging no tender or offer to pay what should be found to be due.
To the cross-petition of said Shaw, an answer was filed by said Walbridge, denying that said deed was still held by him as security, and repeating the above allegations contained in his answer to the petition.
At the May term, a. d. 1872, of said court, the said cause was tried to the court, and judgment rendered in favor of said Walbridge; and the petition of the plaintiff and the cross-petition of said Shaw were severally dismissed.
From this judgment the said John H. Shaw alone appealed to the district court.
Pending the said appeal, the said John H. Shaw died; and at the April term, A. D. 1873, of the district court, the said action was revived in favor of Eliza A. Shaw and William A. West, devisees of said John H. Shaw, deceased.
At the April term, a. d. 1874, of the said district court, said 'cause was again tried, and judgment rendered therein in favor of said W albridge.
Said Eliza A. Shaw made a motion for a new trial, -which was overruled.
To reverse said judgment of the district court, this proceeding is instituted.
Lockwood § Everett, for plaintiff in error :
Parol agreement to release the equity of redemption insufficient. Brown on Stat. of Frauds, § 229 ; Kelly v. Stanberry, 13 Ohio, 408; Hughes v. Moore, 7 Cranch, 176; Marble v. Marble, 5 N. H. 374; Scott v. McFarland, 13 Mass. 309; 11 Mass. 342 ; Washburn on R. P. 507, 508.
The contract was oppressive and voidable. Haldridge v. Gellippe, 2 Johns. Ch. 29 ; 19 Vt. 9 ; 4 Kent’s Com. 143.
Kent, Newton ¿f Pugsley, for defendant in error :
Parol agreement to release the equity of redemption was admissible. 1 Wash, on R. P. 520, 521; Marshall v. Stewart, 17 Ohio, 356; 109 Mass. 130; 7 Allen, 46; Stat. of Frauds, § 4; 13 M. & W. 284 ; 3 Ohio, 5 ; 2 Ohio, 506 ; 5 Ohio, 375; 1 Greenl. on Ev. § 302: Brown on Stat. of Frauds, § 433; Sugden on Vendors, 173; 3 Met. 494; 2 Gray, 302 ; 9 Cush. 31.

Opinion:
Wright, J.
The first error assigned is upon a question of evidence. After the case was appealed, John H. Shaw, principal defendant, died, and his wife, Eliza A. Shaw, and others, were made parties, as " devisees." Walbridge, between whom and Shaw tile controversy was, being a witness, was asked what was said and done between himself and Shaw as regards the matter in dispute. This was objected to. If we understand the ground of the objection, it is, that Shaw being dead, Walbridge was an incompetent witness, Mrs. Shaw being a devisee of deceased. Section 313 of the code, as it was amended in 1871 (68 Ohio L. 127), was as follows: "No party to a civil action shall be allowed to testify by virtue of section 310, in any action where the adverse party is the guardian or trustee of a child or children of a deceased person, or if an idiot or a lunatic, or if a deaf and dumb person, or is the executor or administrator of a deceased person, or is a party claiming or defending as heir, grantee, or devisee of a deceased person, except," etc. Under this section, of course, Mrs. Shaw, being a " devisee of a deceased person," Walbridge would be incompetent to testify against her. But the case before us was tried 15th April, 1874, and ten days earlier, April 13, 1874, the above law was repealed, and re-enacted, leaving out the words " or is a party claiming or defending as heir, grantee, or devisee of a deceased person." Walbridge, therefore, was a competent witness, and there was no error in admitting his evidence.
John TI. Shaw had conveyed to Walbridge the lots in question, by a deed, absolute upon its face, Walbridge giving back a contract to reconvey on the payment of a certain sum. As is seen in Ms answer, 'Walbridge admits that the transaction was, in fact, a mortgage of the property, but he further asserts that there was a subsequent parol agreement, by which the contract to reconvey was canceled, and the equity of redemption actually sold by Shaw to himself. It is claimed by Shaw's representatives, that a parol agreement to release an equity of redemption is insufficient under the statute of frauds, being an attempt to convey an interest in real estate without writing, and there are authorities to that effect. Brown on Stat. Erauds, §229 ; Marble v. Marble, 5 N. H. 374; Scott v. McFarland, 13 Mass. 309.
The better opinion is, however, the other way. Harrison v. Trustees of Phillips Academy, 12 Mass. 456; Trull v. Skinner, 17 Pick. 213; Falis v. Conway Mut. Fire Ins. Co., 7 Allen, 46 ; Green v. Butler, 26 Cal. 593; West v. Peed, 55 Ill. 242.
But it is not necessary to rest the case on this ground alone. Walbridge holds an absolute deed to these lots. Shaw conies into a court of equity, asserting that it is not a deed, in fact, but a mortgage. He who seeks equity, must do equity, and when Walbridge claims that the transaction, although once a mortgage, has changed its character —that the debt has been paid, and the parties have agreed that the property shall pay it, that the contract to reconvey has been canceled by mutual consent — equity will adjust the rights of the parties as they really are.
Again, it is claimed that an agreement by the mortgagor to convey his right of redemption to the mortgagee will not be countenanced by a court of equity.
It is true that at the time the mortgage is made no agreement can be made to deprive the mortgagee of his right to redeem. 1 Wash. R. Prop. (4th ed.), ch. xvi, § 1, par. 23, page 61; 1 Jones on Mort. § 251; Peugh v. Davis, S. C. U. S., April 15, 1878 ; The Reporter, vol. 5, page 673.
But it is equally true that he may subsequently part with this right, and the rule upon the subject maybe thus stated: Courts will scrutinize such a transaction, and will not allow the mortgagee to take any undue advantage ; he will not be allowed to use his position as creditor to oppress, or to drive an unconscionable bargain. But where such a sale is a fair one, under all the circumstances, it will be sustained. This, we take it, is the result of the authorities. West v. Reed, 55 Ill. 242 ; 1 Jones on Mort. § 252, 1046 ; 1 Wash. R. Prop. 62; 1 Powell on Mort. 122, note n; Hyndman v. Hyndman, 19 Vt. 1: Green v. Butler, 26 Cal. 595 ; Revisen v. Hay, 2 Edw. Ch. 535; Peugh v. Dams, supra; Thompson v. Lee, 31 Ala. 292 ; Villa v. Rodriquez, 12 Wall. 323.
In 2 White & Tudor's L. C. in Eq. (pt. 2) 1984, notes to Thornborough v. Baker and Howard, v. Harris, under the head, " when right of redemption exists," this subject is discussed, and the authorities collected.
In Riley B. Wilson v. Peter O. Carpenter, decided in the Supreme Court of Indiana, not yet reported, it was held: The proposition that a deed aud defeasance taken together constitutes a mortgage is well established. But the rule once a mortgage always a mortgage " does not preclude any subsequent bona fide agreement in respect to the estate between the parties; and where a mortgagor voluntarily cancels the instrument of defeasance which he holds, it gives to the deed which it was intended to defeat the effect of an original absolute conveyance, as between the parties.
There can, therefore, be no objection to the sale of this equity of redemption and cancellation of the contract to reconvey, if the agreement was a fair one. As to the evidence upon the subject, we think it sustained the action of the courts below, and the judgments will be affirmed.
Judgment accordingly.