Court Opinion

ID: 7962183
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:47:19.30379+00
Date Added: 2024-06-11T16:34:31.476744
License: Public Domain

By the Cowrt

McMillan, J.
As to what constitutes a mortgage, the law is so well settled as to obviate any necessity of discussing the question. The particular form of words of the conveyance are unimportant; and it may be laid down as a general rule, subject to few exceptions, that whenever a conveyance, or assignment, or other instrument transferring an estate, is originally intended between the parties as a security for money, whether this intention appear from the same instrument, or from any other, it is always considered in *27equity a mortgage. 2 Story Eq. Jur. sec. 1018; 4 Kent. 142; Whittick v. Kane et al. 1 Paige Ch. 203. In the case under consideration, the deed from Edwards to Bunker is, on its face, an absolute conveyance in fee simple; the bond from Bunker to Edwards is an ordinary bond for a deed, containing no reference in terms to the deed from Edwards, and upon its face does not appear to be in the nature of a defeasance to the deed, although executed at the same time. The answer, however, pleads an accounting between Bunker and the defendant Edwards, upon which the latter was found to be indebted to the former in the sum of four hundred and fifty dollars, and that for this sum the defendant made and delivered to Bunker, the promissory note mentioned in the bond, and an agreement between the parties by which Edwards was to secure the note by the conveyance of the land by deed in fee simple to Bunker and the latter was to execute to Edwards a bond for a re-conveyance of the land to him upon the payment of the note, and that the note, deed and bond, were severally executed pursuant to this agreement. It is urged that as no fraud in the transaction is charged in the answer, parol evidence is inadmissible to vary or contradict the deed, and the answer is, therefore, fatally defective. It may perhaps be conceded, that neither at law, nor in equity, can a written instrument be varied or contradicted by parol evidence, except in cases of fraud, accident or mistake. But this rule, we apprehend, is not applicable in this instance.
It appears upon the face of these instruments, and the fact is alleged in the pleadings, that the deed, note and bond, were all executed at the same time ; they are therefore parts of a single transaction, and are to be construed together. Applying this rule, there is no doubt that the instruments constitute a mortgage. The consideration expressed in the deed from Edwards to Bunker, is one thousand dollars ; the note described in the bond from Bunker to Edwards, upon the payment of which Bunker is to convey the premises to *28Edwards, is for four hundred and fifty dollars, with interest at the rate of two per cent, per month till paid, payable two years after date. To consider this as an absolute deed by Edwards, and the bond as a conditional sale by Bunker, we find Bunker paying for the premises one thousand dollars, and immediately contracting with Edwards for a re-sale of the same premises at four hundred and fifty dollars, or at the expiration of two years, for six-hundred and sixty-six dollars, not one-half of the purchase price of the premises. This, to say the least, is inconsistent with the usual mode of transacting business, and would tend strongly in itself to show that this transaction was not a sale. If the deed and bond in this case were contained in a single paper, there can be no doubt it would be a mortgage, differing but little in form from the usual mortgage deed. The fact that they are on separate papers, does not in equity change the nature of the transaction; they are to be read together, and the bond must be regarded as a defeasance to the deed. 1 Greenl. Ev. sec. 283, Holbrook v. Finney, 4. Mass. 566; Holmes v. Grant, 8 Paige Ch. 255; Kerr v. Gilman, 6 Watts 406; Kelly v. Thompson, 7 Watts 403; Friedly v. Hamilton, 1 Serg. & R. 70; Harrison v. Lemam and others, 3 Blackf. 51.
In this light the transaction assumes the natural features of a loan and security for money, and is in harmony with the ordinary course of business transactions of this character. The court below was therefore right in holding the transaction to be a mortgage. This being the case, and the instruments being properly on record, they were notice to the plaintiffs.
The equity of redemption is an incident inseparable from a mortgage; 2 Story Eq. Jur. sec. 1019; 4 Kent. 142, and when it is once determined that a given instrument or transaction is a mortgage, it is a familiar principle that it always remains a mortgage. The default of the mortgagor does not change nor defeat the equity of redemption. Newcomb v. Bonham, 1 Vern. Ch. 7. The instrument then being a mort*29gage, are the plaintiffs entitled to a foreclosure in this action ? They ask no such relief in their complaint, but demand the cancellation of the bond, as a cloud upon their title ; nor is there any general prayer for relief. But waiving the consideration of this point, we will examine whether there are facts stated in the complaint entitling the plaintiffs to a foreclosure. The complaint does not allege an entry into the premises after condition broken; nor does it .contain any averment of the transfer of the mortgage debt; nor does it in any manner refer to the mortgage debt, or show any intention that the debt should pass by the conveyance. But the action is based solely upon the theory that the deed to the plaintiff Elizabeth Hill, was a conveyance in fee of the premises, and vested in her the fee simple thereto. Assuming for the present, that a conveyance in fee is properly alleged, did it under these circumstances, pass any interest in the mortgage to the plaintiffs ? We regard the doctrine as settled by the great weight of authority, that a mortgage is a mere security for the debt, and the debt draws to it the mortgage as its incident. The mortgagee has no eowoeyable interest in the mortgaged premises, until foreclosure sale, or at least until entry after condition broken, and a conveyance of the premises by the mortgagee to a third party, unless, at least, intended to operate as an assignment of the mortgage and transfer of the mortgage debt, is entirely inoperative, and such intention must be made to appear. Story Eq. Jur. sec. 1016; Hilliard on Mortg. Ch. 11 sec. 10-40, and authorities cited. Bell v. Morse, 6 N. H. 210; Whittemore v. Gibbs, 4 Fost. 484.
Hnder the facts as they appear in this case, we think the conveyance did not operate as an assignment of the mortgage. This conclusion is only strengthened by the fact suggested in the plaintiffs’ briefj that it is not claimed that the conveyance to her was immediately from Bunker. The plaintiffs therefore have no right to a foreclosure. But there is another ground which disposes of this demurrer. The allegation of title con-*30tamed in the complaint is in the following form. After alleging the making of the bond as an executory contract of sale, and averring the failure of the defendant to perform the condition of the bond, the complaint proceeds, “ and the plaintiffs show that thereafterwards the said above described land was sold by said Robert Bunker ; and on the 29th day of September, A. D. 1864, for the consideration of $600, Elizabeth Hill, one of the plaintiffs, became and was 'the purchaser thereofj the deed whereof is recorded, &c., which said conveyance contains the usual covenants of seizin and warranty, &c.” The answer of the defendant expressly denies that Bunker at any time sold the premises to plaintiff, Elizabeth Hill, or that she at any time became the purchaser thereof from said Bunker, and denies that any deed of conveyance of said premises from Bunker to her is on record. If this is a good denial, it of course raises a vital issue. If it is not intended in the complaint to allege that the conveyance to Elizabeth Hill was immediately from Bunker, there is no allegation of title in the plaintiff, and no denial is necessary. It appears from all the pleadings that the title to the premises was originally in the defendant Edwards, and the complaint avers that the premises were conveyed by him to Bunker by the deed, which the defendant claims is a mortgage. The mere allegations of a sale by Bunker, without alleging a conveyance from him, is insufficient, and if the conveyance alleged to be to the plaintiff, is not a conveyance from Bunker, no other conveyance by him is alleged; the title therefore is still in him; a conveyance to the plaintiff by a stranger is immaterial; the plaintiff shows no title and the action must fail. But if the allegation is treated as an averment of a conveyance from Bunker to the plaintiff, Elizabeth Hill, then it is expressly denied by the answer, and a material issue is raised. In any event, therefore, the demurrer to the answer was properly overruled.