Court Opinion

ID: 6234316
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:28:58.576695+00
Date Added: 2024-06-11T08:57:59.680960
License: Public Domain

The opinion of the court was delivered, May 13th 1872, by
Agnew, J.
The master in this case found, and his finding was affirmed at Nisi Prius, that the original transaction between Mrs. Elizabeth Steinruck and Edward Thiele was a loan, and the deed of June 23d 1854 was a mortgage. The case comes down,* therefore, to the deed of release, and the agreement between the parties on the 1st of March 1855. The master came to the conclusion that these instruments did not change the former character of the transaction, and that they also constituted a mortgage. Our brother at Nisi Prius inclined to think, hut did not decide, that the new arrangement was by way of a compromise, and instead of ordering an account, while the question remained in doubt, considered that it was better to let the case come into the co'urt in banc by appeal, reserving his own opinion until that time. The decree at Nisi Prius was therefore merely pro *299forma, and we are left to decide the case on the report of the master and the evidence.
Were it not for the presence of eminent counsel when the release and agreement of March 1st 1855 were consummated, I would say. they were a fraud upon Mr. Steinruck. The evidence tends to show that false vouchers were produced by Thiele to a large amount, and Thiele denied strenuously what the evidence now convinces us of, that the original transaction wasg that of loan and mortgage. The new agreement was intended by counsel to end that controversy, but it is not at all clear that the counsel themselves were not imposed upon by the false vouchers. Indeed the evidence now convinces me of that fact. Clearly Mr, Steinruck did not owe Thiele the sum of $1919.18,-or the half of it, on the 1st of March 1854. But passing by this part of the case, and suffering the agreement of that date to stand as a valid resale of the premises, the plaintiffs on the facts are entitled to an account and to a decree for a reconveyance on the payment of any balance that may be found to be due Thiele, on the ground of a fraudulent execution of the terms of this agreement by Thiele. This will appear by an examination of its character and the conduct of Thiele under it.
It is very clear that by its terms the interest of Thiele in the property was reduced to the sum of $1919.18 in money with interest from date; and that the net rents of the premises were the property of Mrs. Steinruck, the agreement itself providing that the net rent after payment of the taxes, &c., should be a credit on the purchase-money. And besides this, she was entitled to a public sale of the property before the expiration of the term of credit (three years) for the very obvious purpose of enabling her to realize her large interest in the property above the money to be paid Thiele in case of her inability to raise the means to pay him. It is evident that the time of payment of this sum of $1919.18, was made of the essence of the contract, but it is equally true that this sum was not the entire value of the property, but was merely a stated sum of money, at which Thiele’s interest in the property was fixed by the contract. It is obvious, therefore, that in equity he did not own the property out and out, though by the compromise and the making of time of the essence of the contract, he would become so, on the failure of Mrs. Steinruck to make payment, if his title were not in the mean time intercepted by the execution of the contract through the public sale it provided for.
This being his true relation to the contract, it is manifest that equity will require of him the utmost fairness in the execution and enforcement of the contract by public sale, and will set the sale aside and decree a reconveyance if he has fraudulently used the public sale as a means of vesting title in himself.
In view of these principles let us examine the facts. In the *300year 1857, Mrs. Steinruck left Philadelphia,' and in 1858 was residing in Ohio. She came to Philadelphia before the termination of the three years’ credit to obtain a settlement with Thiele.
By the terms of the agreement she was entitled to a credit for the surplus rent in payment of the money coming to Thiele, and this necessarily involved the settlement of an account by him. She called on him but could obtain no satisfaction. Under the advice of counsel she then went to him to demand a settlement and to tender payment. He refused in a coarse and improper manner to have anything to do with the matter. In February 1858, before the expiration of the time, her counsel notified Thiele to make a public sale of the property according to the terms of the agreement. Mrs. Steinruck denied the authority of her counsel to do so, but this has become immaterial since the sale was in fact made under his notice.
Thiele offered the property for sale in April, and then at the instance of counsel continued the sale until the 25th of May 1858, when the property was knocked down to Jacob Shandein for the sum of $150, subject to a ground-rent of $186, and the mortgage of the Germania Building Association of $6800. The auctioneer’s advertisement called for a peremptory sale, subject to the $186 ground-rent and $6800 mortgage. In pursuance of this sale Thiele conveyed to Shandein by deed dated June 4th 1858. The master reports that it was admitted before him “ that the sale to Shandein should be treated as if it had been made directly to Thiele, to whom Shandein in fact made over the bargain.” Accordingly, Shandein and wife conveyed the property to Mrs. Sophia Thiele, the wife of defendant, by deed dated January 31st 1859. At that time the cost value of the property as found by the master, upon the evidence, was $11,700; and the ground, he adds, had doubled in value between 1852 and 1'858.
The mortgage, as the master reports, could not then have exceeded $2235, and the balance due to Thiele was but $681.18 after crediting the net rents and $500 paid in cash by Mrs. Stein-ruck. At the time when the testimony was taken the property was proved to be worth $18,000.
In view of all the facts, the conclusion is irresistible that the sale to Shandein was a mere sham, and its result was to invest Mrs. Thiele with the title for the sum of $150, without a settlement of any account between Thiele and Mrs. Steinruck, or anything to inform bidders of the true situation of the property and the extent of the real encumbrances upon it. Thiele, in his answer, insists on the nominal sum in the mortgage, $6800, as the true amount, on the ground that the stock in the Germania Association was his own, and it was at his option, therefore, whether the stock should be applied (as it was subsequently) to the payment of the mortgage. But in this assertion he is contradicted by his own *301account, in which he took credit for $850 paid to Gr. Seubert for thirty-four shares of the Grermania Association, and $3.50, the fees of the transfer. Thus by withholding an account and by unfairness in the sale, he has contrived, by an apparent execution of the contract, under the notice of Mrs. Steinruck’s attorney, to invest his wife with a title to the whole property, for a mere nominal sum paid by himself, no consideration whatever passing from her. This he did when his own mere money demand had been reduced by rents and payment to the small sum of $681.18. Clearly this is such unfairness and bad faith as will set aside the sale as false and merely colorable, and will prevent him from raising any question of specific performance. Having himself executed the contract by a sham sale, he is estopped from denying the title of Mrs. Steinruck on the ground of fraud, and will be compelled to render an account and to reconvey upon payment of all that is fairly due and unpaid to him.
It is therefore now ordered and decreed that the decree at Eisi Prius be reversed, that the bill of the plaintiffs be restored, and that the defendant, Edward Thiele, do account for the rents and profits of the premises before a master of this court, and for this purpose James Parsons, Esq., is appointed master, to take and state the account, and to report a final decree for a reconveyance of the premises by the defendants in fee simple, upon such terms as shall .appear to be just and equitable, according to the circumstances, and that the costs abide the further order of the court.