Court Opinion

ID: 6539367
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:14:20.109991+00
Date Added: 2024-06-11T15:55:46.301329
License: Public Domain

Mr. Justice Compton delivered the opinion of the court. On the 25th January, 1842, James C. Anthony made his promissory note to the Bank of the State of Arkansas, for $15,264 93, due at six months, and renewable according to the rules and regulations of the Bank, to secure the payment of which, he executed his mortgage, dated 22d March, 1842, on certain real estate in the city of Little Pock, known as the Anthony House property. The mortgage contained á .power of sale, in case of default, and provided for possession by the mortgagor until sale under the power. On the 1st July, 1842, James C. Anthony conveyed the Anthony House property, by deed in fee simple, to Philip L. Anthony, who engaged to pay off the note of J ames C. Anthony to the Bank, as part of the consideration agreed to be given by him for the property. The note remained unpaid, however, and being in arrear, the officers of the Bank, on the 30th December, 1847, assigned it and the mortgage to John Brown, who. assumed the debt to the Bank. On the 2d May, 1848, Brown assigned the note and mortgage to Mrs. Mary S. Anthony, in consideration of which she assumed the Bank debt, then amounting to $16,244 91, and gave her note to the Bank in that sum. She went into possession, and, under the power of sale contained in the mortgage, sold the premises at public sale, on the 4th August, 1848, and William A. Anthony became the purchaser, to whom she made a deed.’ No money, however, was paid by him. He purchased for the benefit of Mrs. Anthony, it being her object to vest in herself, by means of the sale, the legal title to the property, which she afterwards sold for the sum of $18,000. The object of the bill is to have the purchase by Mrs. Anthony of the mortgage executed to the Bank, and subsequent sale of the Anthony House property under the power contained in it, declared a mortgage for the security of money loaned by her to Philip L. Anthony, and to recover any surplus of the rents and proceeds of the sale of the mortgaged premises, that may be ascertained after deducting the money thus secured. Whether the transaction between the parties is to be regarded as an absolute divestiture of the title of Philip H Anthony, the complainant, or as a mere security for the payment of money, and, therefore, a mortgage, is a question which must depend upon the evidence adduced. After his purchase, in 1842, the complainant took possession of the Anthony House property — which was a hotel — and being pressed for the means to carry on the business of the establishment, and to pay the incumbrance the Bank held upon the property, obtained directly, and indirectly, divers logns and advances from Mrs. Anthony, who was his mother, for those purposes; to secure which he executed to her a mortgage on the Anthony House and other property, dated 10th January, 1843. On the 11th October, 1845, the complainant obtained a further loan of $1500 from Mrs. Anthony, then residing in Tennessee, aud besides delivering to her the, note of James Lawson for $1500, as collateral security, executed and delivered, at the same time, the following paper writing: “ I Philip L. Anthony hereby obligate myself, for and in consideration that my mother, Mrs. Mary S. Anthony, now makes me an advance of fifteen hundred dollars, that I will have the property known as the Anthony House, situated in the city of Little Bock, and State of Arkansas, sold at sheriff’s sale at the coming term of the Circuit Court of Pulaski County, if practicable, and if not practicable, then at the term of said Court next following, and to procure and record for her a deed from the said sheriff, conveying to her a full legal title to said property, subject, however, to the claim of the Bank of the State of Arkansas, which claim amounts to the sum of twelve thousand nine hundred dollars; and I hereby obligate myself to pay off all the executions against the property older than the one under which the property may be sold, and to apply the rents of the property, deducting repairs, first to the extinguishment of the debt due the State Bank, and lastly, those due the said Mary S. Anthony, and certain other debts due to William A. Anthony, James G-. Anthony,- and Thomas A. Anthony: and, after the payment of the above debts, then the said Mary S. is to re-convey to the said Philip the right she holds in said property ; but it is herein expressly stipulated that the said Philip does not part with his equitable right in said property, but procures to the said Mary the legal right for the security of the debt due her, and in the event a sale can be effected, of the property, for the payment of the debts due, the said Philip obligates himself to make such sale, and pass all the interest he herein reserves. In witness whereof, I have hereunto subscribed my name, this 11th day of October, 1845. PHILIP L. ANTHON5T.” The property, however, was not sold as provided for in this instrument, but remained encumbered until the 4th August, 1848, when, as we have .seen, it was sold by Mrs. Anthony under the power of sale in the mortgage she had purchased from the Bank.- The assignment of the mortgage was procured and the sale under it effected at the suggestion of the complainant, who participated actively in the entire transaction, and represented Mrs. Anthony in conducting the sale. Samuel Oldham, a witness, testifies, that in a conversation with Mrs. Anthony, she said she had been induced to enter into the Anthony House transaction, solely with the view to her son’s interest, and to use her own language, “ to save something tor Philip, poor fellow.” ■ This conversation, the witness says, occurred shortly after the transaction, “ probably after the lapse of some three or four weeks.” James Oldham testifies that Mrs. Anthony declared to him that her object was to secure the property, known as the Anthony House, to her son Philip. Mrs. Susan U. Thornton states that she understood from Mrs. Anthony that she had, and was to make "advances to save the Anthony House property, and that she was acting as a “ trustee ” — that she was to pay off the debts and receive what was due her, and that the balance would belong to Philip. On cross-examination, she says, Mrs. Anthony “was to disencumber the property for Philip’s benefit, remunerate herself and return the balance to Philip.” The witness could not state the precise time she learned these facts from Mrs. Anthony. John S. Thornton states that Philip L. Anthony was the owner of the Anthony House property, and had become involved, and that Mrs. Anthony left Tennessee to go to Arkansas to pay his debts, and after paying them, the surplus of the property was to go to Philip. The witness derived this information from conversations in Mrs. Anthony’s family, but could not positively assert that he heard her say anything on the subject. Although the answer of Mrs. Anthony is unsatisfactory, in that it is argumentative, and, in some particulars, evasive, still, her admissions, as proven by the witnesses, would not be sufficient, if standing alone, to overturn the denial of the answer. Considering these admissions, however, in connection with the corroborating circumstances above mentioned, and others more minute, apparent in the record, the court is satisfied that there was a contract prior to the purchase of the mortgage of the Bank and the sale under it, by which it was agreed that Mrs. Anthony should acquire, by means of such purchase and sale, the unencumbered legal title to the Anthony House property, to be held by her as security for the money she had;;#dype.ed to the complainant. Consequently, the transaction between the parties, though in form an absolute sale of the property, was essentially a mortgage. The mode by which the complainant’s title was conveyed, was immaterial; for, although he divested himself of the legal title when he executed the mortgage to the Bank, the equitable title remained in him, and the sale under the mortgage, after it had been assigned to Mrs. Anthony, was as effectual to divest that equitable title as a deed voluntarily executed by himself would have been to divest the legal title had there been no mortgage; and, in either case, if an agreement be phown, though in parol — as was done here — that the conveyance was to operate as a security for the loan of money, such conveyance is a mortgage. Loyd vs. Currin, 3 Hump. 462; Overton vs. Bigelow, 3 Yerg. 513; Russell vs. Southard, 12 How. (S. C.) 139; Whettick vs. Kane, 1 Paige 202; Flagg vs. Mann, 2 Sumn. 538; Wright vs. Bates, 13 Verm. 341. The court below took this view of the case, and ordered an account, directing the master that no matters of dealing between the parties, except those which related to the Anthony House property, should be allowed to come into the account. Under this order, Mrs. Anthony was not permitted to establish several items of indebtedness against the complainant, other than the debts secured by the conveyance of the property, which she claimed and proposed to prove. In the direction to the master, we think the court erred. If a mortgagor goes into equity to redeem, he will not be permitted to do so, but upon payment, not only of the mortgage debt, but of all other debts due from him to the mortgagee. It was so expressly held in Lee et al., vs. Stone et al., 5 Gill & John. 1. And in Walling vs. Aiken, 1 McMull. Eg. Rep. 1, which was a bill by the mortgagor to redeem, the court, upon an examination of the earlier English cases, held, that the complainant was not at liberty to redeem until he had paid, not only the amount intended to be secured by the instrument, which — in. that case as in this — was declared to be a mortgage, but also all other sums due from him to the mortgagee. Similar decisions were made in Scripture vs. Johnson, 3 Con., 211; and Ogle vs. Ship, 1 A. K. Marsh. 287. These cases rest upon the principle “ that he who seeks equity must do equity,” and this principle may be forcibly applied to the case before us. The complainant was deprived of his real estate, and was without remedy at law, and though the bill is not strictly to redeem, it nevertheless seeks a recovery of the rents and proceeds of the sale of the mortgaged premises, and these a court of equity will not decree, except upon condition that the complainant will discharge his entire indebtedness to the mortgagee, as well that which is not, as that which is secured by the mortgage. This equitable principle has no application, however, where the mortgagee seeks a foreclosure in chancery, and hence, in such case, the mortgagor is permitted to l’edeem upon payment of the mortgage debt alone, no matter to what amount, on other accounts, he stands indebted to the mortgagee. And so where a subsequent mortgagee, or judgment creditor files a bill to redeem, he will be allowed to do so upon payment of the mortgage debt only. Lee et al. vs. Stone et al., supra. Nor does this principle apply to a case like Nolly vs. Rogers, 22 Ark., 227, where, on a bill by the beneficiary in a trust deed against the grantor, this court held, that “ nothing but the demands provided for in the trust deed, ought to be, or could be charged upon the trust property,” and that if the beneficiary had other demands, he should be required to prosecute them at law, or wherever an appropriate remedy could be administered. But if the grantor had brought his bill to redeem or disencumber his property, then, in that case as in this, the principle, that he who seeks equity must do equity, would have applied, and he would have been required to pay, not only the demands provided for in the trust deed, but all others due from him to the beneficiary. So much of the decree as declares the conveyance.of the Anthony House property a mortgage, will be affirmed, and the decree in all other respects, will be reversed and the cause i’emanded, with instructions to the court below to order an account between the parties, as herein above indicated. Mr. Justice Fairchild did not sit in this case.