Case Name: Spencer vs. Fredendall and others
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1862-10-11
Citations: 15 Wis. 666
Docket Number: 
Parties: Spencer vs. Fredendall and others.
Judges: 
Reporter: Wisconsin Reports
Volume: 15
Pages: 666–670

Head Matter:
Spencer vs. Fredendall and others.
A purchased B’s homestead at a foreclosure sale, upon au oral agreement that he would hold it as security for the repayment of the money advanced by him. After the money was repaid, there was an oral agreement between A and B taht A should retain the title to the property as security for another debt which B owed him. B brought an action to compel a reconveyance of the land by A without having paid such other debt. Held, that the plaintiff-was entitled to such reconveyance.
Whether or not a mortgage once paid can, in any case, be revived and made a security for a new debt by a mere verbal agreement of the parties, a mortgage upon a homestead once paid cannot be revived by the agreement of the husband alone, either verbal or written, as the statute requires the signature of the wife to render such a lien valid.
Dixon, C. J., dissented from the decision.
APPEAL from tbe County Court for Bock County.
Action to compel tbe defendants to convey a bouse and lot to tbe plaintiff in pursuance of a parol agreement. Tbe cause was referred to a referee for bearing and determination. He reported tbe material facts to be as follows: Tbe bouse and lot referred to, and certain mill property belonging to tbe plaintiff, were bid off at a foreclosure sale in August, 1848, by tbe defendants Fredendall and A. M. Parshall, under a verbal agreement that they should bold tbe property for two years after tbe sale as security for tbe repayment of tbe amount of tbeir bid, with interest at twelve per cent., with a right during that time to occupy tbe mill property jointly with tbe plaintiff, and that tbe plaintiff should have a right to redeem all said property at any time within said two years, by paying said defendants the amount of tbeir bid with tbe interest; that in January, 1860, it was verbally agreed on tbe part of tbe defendants, that if tbe plaintiff would release all claim to tbe said mill property, they would convey to him said bouse and lot, which then was and continued to be the plaintiff’s homestead; that tbe plaintiff did thereupon release all claim to said mill property; but that tbe defendants have refused to convey said bouse and lot to him. Tbe referee further found that in February, 1860, tbe plaintiff and said defendants had an accounting together concerning certain items of indebtedness which accrued after said foreclosure sale, and said Fredendall transferred bis in terest to tbe defendant B. F. Parshall, and tbe plaintiff was thereupon found to be indebted to said B. F. Parshall to an amount exceeding $600; and tbat tbe plaintiff, at tbe time of sucb transfer, verbally agreed tbat tbe defendants might retain tbe title to bis homestead as security for tbe payment of said last mentioned sum, which still remained unpaid. As conclusions of law, the referee found tbat tbe defendants, having sold tbe mill property with tbe consent of tbe plaintiff, and thereby received full payment for their bid at tbe foreclosure sale, with interest, were bound to convey tbe said homestead property’ to tbe plaintiff according to their • agreement. 2. Tbat tbe verbal agreement made at tbe time of tbe accounting in February, 1860, tbat tbe deed made by tbe plaintiff for said homestead property should stand and be retained as security for said debt of $600, or thereabouts, was void, notwithstanding B. F. Parshall, at tbe time of making said verbal agreement and in consideration thereof, purchased of said Fredendall all bis interest in sucb indebtedness, and paid him therefor. —The defendants excepted to tbe finding of facts and to tbe conclusions of law.
Tbe report of tbe referee was confirmed, and judgment rendered accordingly.
Bennett, Gassoday & Gibbs, for appellant,,
made tbe following among other points: Tbe defendant’s equity in this case cannot be defeated by tbe fact tbat the premises in question were claimed by tbe plaintiff as a homestead. After tbe foreclosure sale, a judgment against tbe plaintiff would not have become a lien upon tbe property while tbe title was in tbe defendants. Tbe plaintiff could not have sold or mortgaged the property to a third person. He therefore did not own tbe premises within tbe meaning of sections 23 and 24, chap. 134, E. S.
Shan, Patten & Bailey, contra,
cited E. S., chap. 134, sec. 24; Dreutzer v. Bell, 11 Wis., 114; Green v. Lyndes, 12 id., 404. • As to tbe general doctrine tbat a mortgage, after being satisfied, cannot, by parol agreement between tbe mortgagor and mortgagee, be revived and made a security for a different indebtedness, they cited Ex parte Whitbread, 19 Yesey, 211; James v. Morey, 2 Cow., 246-324; 2 Seld., 449; id., 147; Averill v. Louchs, 6 Barb., 19.
October 11.

Opinion:
By the Oowrt,
PAINE, J.
Tbe only question presented by tbe exceptions in this case is, whether the conclusions of law were right, upon the facts as found by the court below.
These facts were briefly these. The homestead and certain mill property of the plaintiff were bid off by the defendants at a foreclosure sale, upon an agreement that they were to take the title and hold the property by way of mortgage for the money advanced, which was advanced as a loan to the plaintiff. The relation of mortgagor and mortgagee was shown by parol evidence as to the real nature of the transaction, and was in fact not denied. See Sweet vs. Mitchell et al., ante, p. 641. While the property was so held, the parties made a new agreement, by which the mortgagees were to take the mill in payment of the loan and re-convey the homestead to the plaintiff. In pursuance of this agreement, they sold the mill, with the plaintiff's consent, to other parties. Afterwards the plaintiff agreed with them verbally, that they might still continue to hold the title to the homestead as security for another debt he owed them, which was previously unsecured.
The question of law is, whether it was competent in this manner to create a new lien upon the homestead for such additional debt, which should be enforced in equity ? The court below held it was not, upon two grounds: first, that after the mortgage is once paid, it cannot, by a mere verbal agreement of the parties, be transferred to a new debt, which it was not originally given to secure; and second, that even if this could generally be done, it could not be done with a mortgage upon the homestead, without the wife's consent, for the reason that it would violate that provision of law which makes void any conveyance of the homestead by the husband without the signature of the wife.
Without passing upon the first reason assigned, a majority of the court are of the opinion that the ruling was correct for the second reason. It seems scarcely to admit of question, that after a mortgage upon the homestead given in tbe ordinary form and signed by tbe wife, bad been paid, 'it would be incompetent for tbe busband alone, by a yerbal. agreement or otherwise, to revive tbe mortgage and attach its security to other debts. To bold otherwise, would defeat tbe clear intent of tbe statute. Eor whenever tbe signature of tbe wife could be once obtained to a mortgage upon tbe homestead, the prohibition would be substantially destroyed, as tbe husband could keep that mortgage in existence as a security for new debts to an indefinite amount. It seems clear that this cannot be done.
But should the facts that in this case tbe mortgage was created by an absolute deed taken on a foreclosure sale, and that tbe defeasance has to be shown by parol, lead to any different conclusion? I am unable to see that it should. It being once established that a mortgage may be thus created, when it is thus created it would seem to be as fully within tbe policy of the law preventing tbe busband from extending a mortgage on the homestead to different debts from those originally secured by it, without the assent of the wife, as is a mortgage in tbe ordinary form. The mere mode by which the mortgage is created, cannot be material in tbe determination of this question.
It is true, tbe language of the statute is, that "the mortgage or other alienation" of the homestead shall not be valid without tbe signature of the wife. It is also true that in a case like the one under discussion, there is, strictly speaking, no new mortgage executed, nor other alienation. But there is no difference in this respect between an ordinary mortgage and one like the present. If the husband can extend either to a new debt, there is no new mortgage executed, or other alienation, in either case; and if the court should, upon tbe literal construction, take either out of tbe prohibition, it must, to be consistent, take both out. I think there is much force in the reasoning of the court below, to tbe effect that a mortgage once paid is extinguished, and cannot in any case be transferred to another debt. But even if it can ordinarily be done, it is in substance and effect making a new mortgage, and should be so regarded within the meaning of the prohibition against mortgaging the homestead without the signature o£ tbe wife; and tbe mode by wbieb tbe mortgage was created should make no distinction in this respect.
The statute is a disabling one, and should not be extended by construction to cases not clearly within its intention. But cases which are clearly within its meaning should not be excluded upon the technical idea that the extension of a paid mortgage to a new debt is not strictly a mortgage of the homestead, though it is so to all intents and purposes within the design of this law. A court of equity might ordinarily seize upon an agreement like the one made here, and say that as it was just that the party should pay the debt, it would not aid him to get back his title, till he should pay it. But I think it has no right to say so where such an agreement relates to the homestead. It is just that men should pay their debts. The general policy of the law compels them to do so. But to this there is an exception growing out of another and special policy which is deemed of paramount importance, which is, to secure a homestead to the family. However sacred the obligation to pay debts, the law expressly designed to secure the homestead from being taken for that purpose without the consent not only of the debtor but of his wife. Whenever, therefore, the homestead is in such condition that the owner requires equitable aid to clear up his title, I do not think the court would be justified in imposing upon him as a condition, the payment of any debt not a lien upon it, no matter how just it otherwise might be. To do so would be to defeat the statute.
The judgment is affirmed, with costs.