Court Opinion

ID: 6683782
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:31:18.73734+00
Date Added: 2024-06-11T16:00:54.007512
License: Public Domain

The Chancellor :
These cases have been argued together, and are so connected, as, in the view of the counsel and the Court, to constitute but one suit.
The pecuniary interest involved is inconsiderable, but the questions which the cases present, are not unimportant. The general rule is too firmly established to be questioned, that no matter how absolute a conveyance may be on its face, if the intention is to take a security for a subsisting debt, or for money lent, the transaction will be regarded as a mortgage, and will be treated as such. Hicks vs. Hicks, 5 Gill. & Johns., 75; Dougherty vs. McColgan, 6 ibid, 275. And though the defeasance was by an agreement resting in parol, still as between the parties, the deed, though absolute on its face, will be considered a mortgage, for parol evidence is admissible to show that an absolute conveyance was intended as a mortgage, *511and the defeasance was omitted or destroyed by fraud or mistake. 2 Kent’s Com., 142, 143; Henderson vs. Mayhew et al., 2 Gill, 393. But it is likewise undeniably true, that unless accident, fraud, or mistake can be shown, or in case of trusts, parol evidence cannot, either at law or in equity, “ be admitted, to contradict, add to, or vary the terms of a will, deed, or other instrument.” Bend vs. The Susquehanna Bridge Co., 6 H. & J., 128; Watkins vs. Stockett, ibid, 435.
In this case, the transfer of the three stalls is absolute and unconditional, and if there was nothing in the answer of Mr. Eisher, to whom the transfers were made, and who acted as the agent of the Bank, in the negotiation with Suter, from which it could be fairly inferred that the object was to take a security for money loaned, or to be loaned, it would fall within the general rule, and the transfer could not be qualified by the introduction of parol evidence, neither fraud nor mistake being alleged. But looking to the pleadings in the case, and especially to the answer of Eisher to the bill filed by Whyte, as the permanent trustee of Suter, to set aside the transfer as fraudulent, in view of the insolvent laws, which answer is invoked in these causes, and has been read without objection; and there can, I think be no doubt that the transfer of the stalls was taken as security for the repayment of money due the Bank, and not absolutely by way of purchase. The language of the answer is, “ That the said sum of $3,000 was not lent specifically upon the security of the three stalls in different markets in the City of Baltimore, but on the joint security of said stalls, and other property of said Suter, which, at the time, was believed by this respondent to be bound by said judgment, the object of the Bank and Suter being, as understood by this respondent, to secure not only the money then advanced, but the debt previously due the Bank.”
It therefore clearly appears, that the transfer of the stalls was taken as security for a debt, and whether to secure the specific sum of $3,000 loaned Suter at that time, or the entire debt of $9,000, for which the judgment was confessed, still the intention of the parties was surely to give and to take a security for a debt, and consequently the transaction must be *512treated accordingly, that is, the transfer must be regarded as a mortgage or pledge to secure the payment of a debt, and not as passing the absolute title to the creditor.
The position that this was the intention of the parties, derives powerful support from the fact that the sum of $3,000 advanced at the time of the transfer, was included in the judgment confessed by Suter. Indeed, I do not understand it to be contended by the counsel of the Bank, that these three stalls were purchased by it for the sum of $3,000, because, if so, no conceivable reason could be assigned for including that sum in the judgment. His argument is, that the transfer was absolute, and that the Bank was to be at liberty to sell, and apply the proceeds of the sales to the extinguishment, so far as they would go, of the entire debt of $9,000, for which the judgment was rendered. If that was the character of the transaction, that is, if the stalls in the hands of the Bank, or its agent, Mr. Fisher, were affected with a trust to sell and apply the proceeds to the payment of the debt, still I should think that in the eye of a Court of Equity, the transfer would be regarded as a mortgage, being a mere security for the debt, and not an indefeasible transfer of the title. My opinion then, is, that this transfer of these stalls, though absolute in terms, must be treated as a security merely, and be subject to the consideration governing such transactions. And this conclusion is arrived at, without trenching upon the principle that parol evidence in the absence of fraud or mistake, is inadmissible to vary or contradict the clear import of a written instrument ; but upon the confessions and statements of the answers themselves, which, in my opinion, prove clearly that a security merely was intended to be taken, and if so, it follows that however absolute the form of the instrument, it will be dealt with as a mortgage.
The remaining question has reference to the right of the insolvent trustee of Suter -to sell this property, and administer the proceeds of the sale -under the control of the Court, by which he was appointed. And this depends upon the true construction of the 5th and 7th sections of the Act of 1805, ch. 110. It is conceded, and indeed could not be disputed, *513since the decision of the case of Alexander vs. G-hiselin et al., 5 Gill, 138, that if the transfer of this property is to be regarded as a mortgage or a pledge for the security of a debt, that it would be the right and the duty of the insolvent trustee to sell it, and pay off the liens and incumbrances thereon, the opinion of the Court of Appeals in that case being explicit to that effect. But it is urged that the transfer here, though made to secure a debt, is in the nature of a trust, and that the insolvent trustee has no authority to interfere with the trustee selected by the convention of the parties, whose right it is to proceed in the discharge of his duty, undisturbed by any such interference. It appears to me, however, that assuming this transaction to be such as the counsel for the Bank has characterized it, that is, that the property in question, though transferred to Mr. Bisher absolutely, was nevertheless affected with, and to bo regarded as subject to a trust, for the payment of the money due from Suter to the Bank, and that parol evidence is admissible for the purpose of showing the trust, still it seems clearly to come within the scope of the principles settled by the Appellate Court, in the case referred to. Looking to the design of the insolvent laws, as expounded in that case, which AYas to secure a prompt, single, and harmonious administration of the estate of the insolvent, which could only be effected by bringing all the parties interested before one and the same tribunal, it Avould seem to be essential that no one should be permitted to participate with the insolvent trustee, in the execution of the trust by Avhich, as observed by the Court in that case, “ adverse interests might be created, delays endangered, if not ensured, and probably different, and possibly conflicting tribunals consulted.”
John Nelson, for the Bank.
David Stewart, for the Trustee in Insolvency.
Considering that this question is in effect settled by the case in which these remarks were made, I shall pass an order dissolving the injunction issued upon the bill of the Bank of Westminster, and continuing that which issued upon the bill of the insolvent trustee.