Court Opinion

ID: 4887946
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:45:52.078865+00
Date Added: 2024-06-11T08:06:19.956945
License: Public Domain

Wheeler, J.
The record presents a multiplicity of rulings *497and exceptions, which have been assigned as error. But the view we entertain of the principal questions in the case, which involve the merits of the controversy, and on which its ultimate decision must depend, will dispense with the necessity of considering all these various rulings, which relate to questions of practice and the admissibility of evidence, and will become immaterial, by our judgment on the merits.
The rulings of the Court, which it is deemed material to consider, are 1st. The striking out of certain portions of the defendants’ answer; 2nd. The rejection of evidence offered by the defendants; and 3rd. The refusal of instructions asked by them.
1. The propriety of the ruling on the sufficiency of the answer, depends upon the inquiry, whether it was competent for the defendants, being, as appears by their answer, purchasers with notice of the alleged fraudulent conveyance from Hal-stead to Stoneum, to avoid that conveyance on the ground that it was made to defraud creditors. This involves an inquiry as to the true construction of the second Section of the Act to preventfrauds and fraudulent conveyances. (Hart. Dig. Art. 1452.) This statute embraces the substance of the 2nd Section of the statute of 13 Eliz. ch. 5 and 27 Eliz. ch. 4. It is proper, therefore, to consult the decisions of the English and American Courts, upon the construction of those statutes, in determining upon the construction to be given to our statute upon the same subject. By the statute of 13th Elizabeth, gifts of goods and chattels, made to defraud creditors, were rendered void as against the persons defrauded thereby. The statute of 27th Elizabeth was made to prevent fraudulent conveyances of lands, to defeat subsequent purchasers. (Rob. on Fraudulent Conveyances, Ch. 1, Sec. 1, n. a, b; 2 Kent, Com. 440.) Our statute embraces both objects. It declares that “ Every gift, grant or “ conveyance of lands, slaves, tenements, hereditaments, goods “ or chattels,” &c., made “ to delay, hinder and defraud creditors of their just and lawful actions, suits, debts,” <fcc., “ or to defraud or to deceive those who shall purchase the same *498“ lands, slaves,” &e., “ shall he deemed and taken only as “ against the person or persons,” &c., “ whose debts, suits, de“mands, estates, interests,” shall or may be thereby “dis- “ turbed, hindered, delayed or defrauded, to be clearly and ut- “ terly void.”
The statute thus protects the rights of creditors and subsequent purchasers, as fully and effectually, and in very nearly in the same terms, as they were protected by the statutes of 13th and 27th Elizabeth ; and it extends its protection to subsequent purchasers of slaves as well as of lands. In reference to the construction of the statute of 27th Elizabeth, Judge Story says, “ It was for a long period of time, a much litigated “question in England, whether the effect of the statute was “ to avoid all voluntary conveyances, (that is, all such as were “made merely in consideration of natural love and affection, “or were mere gifts,) although made bona fide, in favor “ of all subsequent purchasers, with, or without notice: or “ whether it applied only to conveyances made with a fraud- “ ulent intent, and to purchasers without notice. After no “ inconsiderable diversity of judicial opinion, (he adds) the “ doctrine has, at length, been established in England, (whether “in conformity with the language or intent of the statute is “ exceedingly questionable,) that all such conveyances are “ void, as to subsequent purchasers with, or without notice, “ although the original conveyance was bona, fide, and with- “ out the slightest admixture of intentional fraud ; upon the “ ground that the statute, in every such case, infers fraud, and “ will not suffer the presumption to be gainsaid. The doctrine, however, has been admitted to be full of difficulties; “ and it has been confirmed rather upon the pressure of au- “ thorities, and the vast extent, to which titles have been ae- “ quired and held under it, than upon any notion that it has “ a firm foundation in reason and a just construction of the “ statute. The rule, stare deoisis, has been applied, to give “ repose and security to titles fairly acquired, upon the “ faith of judicial decisions. In America, (he adds,) a like *499“ diversity of judicial opinion has been exhibited. Chancel- “ lor Kent has held the English doctrine obligatory, as the “ true result of the authorities. But, at the same time, he is “strongly inclined to the opinion, that, where the purchaser “ has had actual (and not merely constructive) notice, it ought “ not to prevail.” (1 Story, Eq. Sec. 426, 427.)
Since the case in which Chancellor Kent delivered the opinion, referred to by Judge Story, the English doctrine has not been followed to that extent in New York. It was there opposed by the opinion of Chief Justice Spencer ; the doctrine of whose opinion has since been asserted in the Supreme Court of that State. (12 Johns. R. 536, 554 to 559 ; 4 Cowen, R. 603, 604; 8 Id. 406.) The Supreme Court of the United States, in the case of Cathcart v. Robinson, (5 Peters, R. 264,) declined to adopt the then received English construction of the statute. The Court (Chief Justice Marshall delivering their opinion) held, that the received construction of statutes in England at the time they were adopted and admitted to operate in this country, and up to the time of our separation from England, might very properly be considered as accompanying the statutes themselves and forming an integral part of them; but that, however they might respect subsequent decisions, the Court did not admit their absolute authority. They, therefore, adopted the construction of the statute which prevailed at the American Revolution; which, they held, went thus far, that, “ A subsequent sale, without notice, by a person who had made a settlement, not on a valuable consid- “ eration, was presumptive evidence of fraud ; which threw “ on the party claiming under the settlement the burden of “ proving, that it was made bona fide." (Id. 280, 281.)
It seems that the rigorous doctrine at that time understood to be the established construction at Westminster Hall; and as stated in the text quoted from Story, has been since relaxed by the English Courts. (2 Kent, Com. 5th Am. Edit. 241, n. c.) And it is believed that this doctrine, that a subsequent sale for a valuable consideration, by a person who had made *500a voluntary conveyance, is conclusive evidence that the former conveyance was fraudulent, and void even as to a purchaser with notice, has not been adopted generally by the American Courts ; but that the better American doctrine is, that such subsequent sale is only prima facie evidence, which may be rebutted by showing that the former conveyance was made in good faith, and not intentionally to defraud. (4 Kent, Comm. 464, n. d; 2 Id. 440 to 442 and notes; 1 Sm. L. Cases, 1, Am. Notes to “ Twyne’s Case;" 1 Story’s Eq. Ch. 7.) And this accords with the doctrines maintained by this Court in the case of Bryan v. Kelton. (1 Tex. R. 415.)
In the conflict of judicial opinion, we feel free to adopt that construction which seems to us best to comport with the true intent and meaning of the statute. For, whatever force there may be in the reason assigned for adhering, in England, to their received construction of the statute, that, to depart from it, would be, to unsettle the rights of property, and disturb the repose of society, that reason has no application here.
We have not the same reason to adhere to any particular course of decisions, which has constrained the English Courts to apply to their decisions the maxim, stare decisis.
But it is unnecessary, at present, to enter upon a review of the decisions, in order to ascertain what is the better opinion upon the construction of the statute; or what should be held to be its effect upon voluntary conveyances generally, in reference to- subsequent purchasers. We are, at present, only concerned with the question, whether a conveyance, intended to defraud creditors, is to be held to be void, under the statute, as to subsequent purchasers, with actual notice of the prior fraudulent conveyance. Upon this question, the English doctrine, and that of some of the American Courts, seem to be, that such a conveyance is void as to subsequent Iona fide purchasers, that is, (it is said,) purchasers, strictly and properly so called, whether with or without notice. (1 Story Eq. Sec. 433, n. 2; Twyne’s case, in 1 Sm. L. Cases, 1, and notes; 4 Kent Com. 463.) But this doctrine as to purchasers *501with notice, appears to be founded on the supposition, that a conveyance made intentionally to defraud, is, to all intents and purposes, absolutely void, and, consequently, a nullity. This being assumed, it follows, of course, that it is immaterial whether the subsequent purchaser had notice of it or not: for if he knew of its existence, he also knew, it may be said, that it was void; and no one is obliged to respect a thing which is, to every intent, and as to all persons, utterly and absolutely void. But this is not the case of (with) a fraudulent conveyance. It is valid and binding as between the parties and their legal representatives. “Although,” (says Story, 1 Eq, Sec. 371,) “voluntary conveyances are, or may be, void, as to “ existing creditors, they are perfect and effectual, as between “ the parties, and cannot be set aside by thegrantor, if he should “ become dissatisfied with the transaction. It is his own folly “ to have made such a conveyance. They are not only valid “ as to the grantor, but also as to his heirs, and all other per- “ sons claiming under him, in privity of estate, with notice of “ the fraud. A conveyance of this sort, (it has been said, “ with great truth and force,) is void only as against creditors ; “ and then only to the extent, in which it may be necessary “ to deal with the conveyed estate for their satisfaction. To “ this extent, and to this only, it is treated, as if it had not “ been made. To every other purpose it is good. Satisfy the “ creditors, and the conveyance stands.” (Ib.; 12 Vesey, 103.)
Such a conveyance vests in the grantee a good and perfect title, defeasible only at the instance of the person, to whose prejudice it has operated. “ It is now the settled American “ doctrine, that a bona fide purchaser for a valuable consider- “ ation, is protected under the statutes of 13 and 27 Eliz., as “ adopted in this country, whether he purchases from a frau- “ dulent grantor or a fraudulent grantee.” (4 Kent, 464.) But if the conveyance was absolutely void, the fraudulent grantee could convey no title; for none would vest in him; and the fraudulent grantor could reclaim his property notwithstanding the conveyance.
*502That such a conveyance is not absolutely void, but is valid and effectual to vest a title in the grantee; and the distinction between things void and voidable only, are very clearly and forcibly illustrated by Chief Justice Spencer, in the case of Anderson v. Roberts. (18 Johns. R. 515, 527-8.) “ In my judgment,” (he said,) “ the error of those who assert, that a fraudulent “ grantee, under the 13th of Eliz., takes no estate, because the “ deed is declared to be utterly void, consists in not correctly “ discriminating between a deed which is an absolute nullity, “ and one which is voidable only. No deed can be pronounc- “ ed, in a legal sense, utterly void, which is valid as to some “ persons, but may be avoided at the election of others. In “ Lilly’s Abr. 807, and Bac. Abr. Tit. Void and Voidable, “ we have the true distinction. A thing is void which is done “ against law, at the very time of doing it, and where no per- “ son is bound by the act; but a thing is voidable, which is “ done by a person who ought not to have done it, but who, “ nevertheless, cannot avoid it himself, after it is done. Ba- “ con classes under the head of acts which are absolutely void “ to all purposes, the bond of a feme covert, an infant, and a “ person non compos mentis after an office found, and bonds “ given for the performance of illegal acts. He considers a “ fraudulent gift void as to some persons only, and says it “ is good as to the donor, and void as to the creditors. When- “ ever the act done takes effect as to some purposes, and is “ void as to persons who have an interest in impeaching it, “ the act is not a nullity, and therefore, in a legal sense, is not “ utterly void, but merely voidable. Another test of a void “ act or deed is, that every stranger may take advantage of it, “ but not of a voidable one. (2 Leo. 218 ; Viner., Tit. Void “ and Voidable, A. p. 11.) Again, a thing may be void in “ several degrees : 1st, void as if never done, to all purposes, “so as all persons may take ad ventage thereof; 2nd, void “to some purposes only ; 3rd, so void by operation of law, “ that he that will have the benefit • of it, may make it good. “ (Viner., Tit Void and Voidable, A. p. 18.) In Prigg v. *503“ Adams, (2 Salk. 674,) the defendant justified as an officer, “ under a ca. sa., on a judgment in the common pleas, upon a “ verdict of 5s., for a cause of action arising at Bristol. The “ plaintiff replied the private Act of Parliament, for erect- “ ing the Court of Conscience in Bristol, wherein was a clause, “ that if any person bring such action in any of the Courts at “ Westminster, and it appeared upon trial to be under 40s., “ no judgment should be entered for the plaintiff; and that, “ if it be entered, it shall be void. Upon demurrer the ques- “ tion was, whether the judgment was so far void, that the “ party should take advantage of it in this collateral action. “ The Court held that is was not void, but voidable only by “ plea or writ of error. Upon authority, therefore, I insist, “ that the expressions in the statutes of 13th and 27th Eliz., “ that conveyances, in contravention of those statutes, shall be “ deemed utterly void, &c., must necessarily be construed, as “ voidable by the party agrieved.”
It has been, I apprehend, from not keeping in view this distinction, between a deed which is void, and one which is voidable only, that the opinion has prevailed to some extent, that a conveyance that is fraudulent, and therefore declared to be utterly void by the statute, is so even as to a subsequent purchaser with notice. It is difficult to conceive of any other principle, on which such an opinion could ever have obtained. There is nothing in the language of the statute, nor is there any general principle of law, which would seem to sanction such a doctrine. On the contrary, the language and declared object of the statute would naturally lead to the conclusion that it was intended to afford protection only to creditors and Iona fide purchasers, and such is the language generally, of the books. But how can one be said to be a purchaser in good faith, who purchases, knowingly and intentionally to defeat the previously acquired title of another ? In Sanger v. Eastwood, it was said by the Supreme Court of New York, that a purchaser with notice cannot claim to be a purchaser in good faith. “Clear (actual) notice of a prior *504“ claim,” (it was said,) “ is considered p&r se evidence of mala “ fides” Proof of such a fact ought rather to prejudice than advance the claims of a purchaser. (19 Wend. 515.) The general principle of law unquestionably is, that a purchaser with notice, takes the estate of his grantor, and no more. He acquires only such title as the latter had to convey; and he can stand in no better condition, in a Court of Equity. An innocent purchaser, without notice, is protected upon a different principle, from the supposed nullity of the grantor’s prior conveyance.
But the doctrine that the purchaser with notice can avoid the prior conveyance is not universally admitted. There is high authority opposed to it. The Supreme Court of Pennsylvania, in the case of Foster v. Walton, (5 Watts, 478,) determined the contrary, on principle, and upon reasons which seem unanswerable. They decided that, although a conveyance of land may be fraudulent and void as to creditors, by virtue of the statute of 13th Elizabeth, yet, under that statute, none but creditors can avoid the deed; and that the statute of 27th Elizabeth, does not afford a protection to a purchaser with notice of such prior conveyance. That was an action of ejectment in which both parties claimed under deeds from one Register; Walton, by a subsequent conveyance, but with a knowledge of the prior deed to the plaintiff, Register; which, he sought to avoid on the ground that it was made to defraud creditors. On the construction of the statute of 27 Eliz., as to its application to such a case, the Court said : “ If at the “ time he, (the defendant,) bought the land of Register, or “ even before he paid his money for it, he was apprised, as “ the evidence would seem to show he was fully, of the previ- “ ous conveyance of the land by Register to the plaintiff, then, “ according to the construction put on this latter statute, and >c the principles laid down by this Court in Lancaster v. Do“lan, the defendant has no claim to protection under it as a “ purchaser.” This case was decided after a very able and full discussion of the construction which ought to be given to *505this statute, and is now considered as having settled the law, on this point, in Pennsylvania. The Chief Justice, in delivering the opinion of the Court in it, shows by a course of reasoning, and by language that cannot be resisted, or easily forgotten, the injustice and iniquity that would necessarily follow from permitting a voluntary grantor to defeat his own conveyance, by making a subsequent sale of the land, because he is paid for it. He says, (1 Rawle, 246,) “ It is admitted that a ■ ‘ voluntary conveyance is good between the parties; and it is “ a common principle of equity, that an assignee with notice, “ must abide by the case of the assignor. But the pretended “ equity of a subsequent purchaser with notice, even as against “ a volunteer, would spring from an act, the consequence and “ design of which would be to enable the donor to cheat the “ donee. The purchase would be an act of collusion, and all “ the fraud would be on the side of the purchaser.” “ If the “ defendant in the present case had notice of the plaintiff’s con- “ veyance at the time he bought, or before he paid his money, “ there seems to be no circumstance which he can lay hold of, “ that would seem to relieve him from the imputation of fraud, “ which is so clearly shown here by the Chief Justice, to exist “ in such a case, on the side of the subsequent purchaser. It “ certainly cannot be considered a sufficient apology and justi- “ fication for him, havingfull notice, that he purchased, because “ the plaintiff had joined with Register in taking a conveyance “ from the latter for the purpose of defrauding his creditors. It “ is only the party who is likely to be injured by such convey- “ anee that can claim to have it annulled ; but if he does not “ choose to stir in the matter, why should any other be permit- “ ted to interfere % Surely no good can result from it. The “ peace and well being of the community is not affected by the “ act, so as to make it a public offence; and therefore, to permit “ a person who has no concern in the matter, to take the land “ from the party to whom it has been conveyed by the most “ solemn, wilful and deliberate act of the owner; and in effect, “ against the will of the grantee, to give it back in whole, or in *506“ part, again to the grantor, by paying him its full or half value, “ would be introducing a very extraordinary principle into our “jurisprudence, for regulating and transferring the rights of in- “ dividuals.- If such an interference were sanctioned, it would “ be productive of a new source, and continual state of strife “ and litigation. Besides the deed from Register to the plaintiff, “ being admitted by the Court below, and by every one, to be “ perfectly good and binding, as between the parties to it, to “ permit the grantor, by selling the land to one with notice, to “ set it aside, would involve the strange anomalism of enabling “ him to do by indirect means what he is prohibited from effect- “ ing directly. It may also be remarked that to permit this to “ be done, would be in contradiction to every principle of “ public policy, which makes, the act of the fraudulent grantor “ binding upon him, so far as he or his representatives are con- “ cerned, with a view to deter from and discourage such fraudu- “ lent acts. But if he can sell the land to whom he pleases, he “ is in effect the owner of it still, and has forfeited, or lost noth- “ ing by his fraudulent conduct. The law, however, has no such “ regard for him as to enable him, either directly, or indirectly, “ to annul his own conveyance, though fraudulent, with a view “ to promote his interest; and it is only where he has afterwards “ sold and conveyed the land to an innocent purchaser without “ notice, for a valuable consideration, that the law will interpose “ and set the voluntary, or fraudulent conveyance aside, in order “ to prevent a loss from falling on such innocent purchaser. “ It is, therefore, out of regard to this latter, and not the gran- “ tor, that the law deals thus with the fraudulent conveyance.” (5 Watts, 380, 381.)
To this reasoning there is no answer in any authority to which we have had reference: and it seems to us, that to admit the opposite doctrine, would be to hold out a powerful motive and inducement to the practicing of those frauds which it was the object and intention of the statute to prevent; and would thus defeat the great purposes of public policy in which it had its origin.
*507We therefore conclude that the defendants, being purchasers with actual notice of the prior conveyance, are not protected by the statute: and that the Court did not err in adjudging the answer, in so far as it sought to avoid that conveyance on the ground that it was fraudulent as to creditors, insufficient.
The question we have now been considering was decided by this Court in the case of McClenny v. Floyd. (10 Tex. R. 159.) That case, however, was decided without argument upon this point; and, at a time, when the presure of business afforded little opportunity to examine the authorities. It has been fully argued in the present case, and its importance, and the attention bestowed upon it by counsel, have seemed to -require a more critical examination; which has resulted in confirming us in our former opinion.
In the case referred to, the conveyance from McClenny was treated as fraudulent. But it was immaterial, as to the parties then before the Court, whether it was fraudulent, or merely voluntary. In either case it was binding and effectual to pass the title as between the parties; as the authorities, to which we have referred, abundantly show.
2. The principal question before the jury, upon the issues in the present case, was, as to the character of the instrument of the 12th of June, 1844, whether it was a mortgage or not. The Court held that it was not, -upon its face, a mortgage. If it was not a mortgage on its face, but was, in form, a conditional, or an absolute sale, it is too well settled to admit of a question, that parol evidence was admissible to show that it was, in fact, intended as a security for a subsisting indebtedness on the part of the grantor, and was, consequently, in substance, a mortgage. How, then, it can be supposed that the evidence, offered to prove such indebtedness, was irrelevant; or what good reason there could be for the exclusion of evidence, by which it was proposed to show, that at the date of the instrument, there was a settlement of accounts between the parties and an ascertained, antecedent indebtedness on the part of the maker, of the identical sum stipulated by the in*508strument to be paid by him, it is not easy to perceive. This was proposing to prove the fact, which is universally admitted to be the principal test, to determine whether the instrument was a mortgage or not. (Stamper v. Johnson, 3 Tex. R. 1; Stevens v. Sherrod, 6 Id. 294, and authorities there cited.) If this testimony had been admitted, it is scarcely possible to conceive that any mind could have resisted the conclusion, that the instrument was really given and intended as a security for the payment of money ; and was, necessarily, a mortgage. It would seem, therefore, that there was error in excluding the evidence.
But the ruling upon this question becomes unimportant, in the view we entertain of the remaining question, upon the true import and character of the instrument itself.
3. It remains to inquire whether the ruling, upon instructions asked by the defendants, that the instrument of the "12th of June, 1844, was not, on its face, and in effect, a mortgage, was correct. And, to determine this question, it is essential to ascertain what was the true character of the instrument, and, if in our legal nomenclature, it has a place and name, to ascertain what is its distinctive character and appropriate name.'
It may be the most convenient method of arriving at a satisfactory conclusion on this point, in the first place, to see what it is not. We may premise, that it must be either an absolute or conditional bill of sale, a contract to sell or convey, or a mortgage. Our legal vocabulary affords no other specific designation by which it may be supposed to be appropriately characterized.
It has not been, nor can it be, pretended that it is an absolute bill of sale. Its terms, and several stipulated conditions, import the contrary. It is not a conditional sale; for it does not presently pass the title: whereas a conditional sale passes the title to the vendee, in the first instance, with the reservation to the vendor of a right, to repurchase the property, at a fixed price, and specified time. (7 Cranch, 218; Luckett *509v. Townsend, 3 Tex. R. 119; Thompson v. Chumney, 8 Id. 389.) It is not a bill of sale, absolute or conditional from the plaintiff to Halstead ; for it does not pass, or profess to pass the title to the latter. On the contrary, it declares that the title is, and is to remain in the former. Neither is it, by its terms, or in form, a sale from Halstead to the plaintiff: for it declares that the title theretofore had been and was in the latter. Not being a conveyance in form, it cannot be made such by extrinsic evidence. Parol evidence is admissible to show that a deed, or bill of sale absolute, or conditional on its face, is a mortgage; but not e converso. (6 Watts, 130.) If an instrument does not contain the essential requisites of a conveyance, valid and effectual, in itself, to pass the title, it cannot be made so by extrinsic evidence. In fine, it evidently is not, in form or substance, either an absolute, or conditional sale. It does not purport to be a sale, or pass, or profess, per se to pass the title; and, therefore, it is not, and cannot be a conditional sale. In form it is a contract on the part of the plaintiff, to convey the property to Halstead, upon the performance of certain conditions, or stipulations, thereafter to be performed by the latter. But so regarded, being an executory contract for the sale of slaves, it would seem to be subject to the objection, that it comes within the operation of the first Section of the statute of frauds, and was not obligatory upon the plaintiff, because not signed by him. But, that this is not, really and truly, the character of the instrument, in fact and substance, will be apparent by attending to one or two of its stipulations and provisions. • It stipulates for the payment, by Halstead to Stoneum, of a sum of money, in annual instalments; and it further stipulates, that the negroes shall remain in the possession of Hal-stead during the time specified for the payment of the money ; but should he (Halstead) fail punctually to pay Stoneum, his heirs, executors, administrators or assigns, the several sums of money therein specified, then Stoneum, and in his absence, his agents, shall sell so much of the property, at public, or private sale, at their option, as will meet the payments accord*510ing to the tenor of the instrument. And it is further stipulated, that, should any of the negroes die, in the meantime, the loss shall be Halstead’s.
These stipulations, it seems to us, fix the character of the instrument beyond a reasonable doubt. It is impossible to believe that any sane man would stipulate for the privilege of selling his own property to pay a debt due himself from another. It is not to be supposed that any man in his senses, (and it is not pretended that the plaintiff was insane,) would become a party to such an agreement. It admits of no rational interpretation upon any other supposition, than that the title to the property, notwithstanding the declarations in the instrument to the contrary, was," in fact, in Halstead, within the mutual, though private understanding and knowledge of the parties; and that the real intention of the instrument was to give a lien upon it, to secure the payment of a debt due by him to Stoneum. It is plainly inconsistent with any other supposition. If it had been a conditional sale from Stoneum to Halstead, or a contract to sell upon conditions to be performed by the latter; upon breach or failure of the conditions, the former would have been entitled to his property absolutely, discharged of the conditions; and there would have been no reason, or propriety, in his stipulating, himself to perform the condition, of which he alone could require the performance, by the sale of his own property. And the further stipulation, that, in case of the death of any of the negroes, the loss should be Halstead’s, is inconsistent with the idea that they were the property of Stoneum. There doubtless was, for some reason, known to. the parties, but which they have not disclosed by the instrument, a secret trust and confidence subsisting between them, and a mutual understanding that the property, though really Halstead’s, should be held out to the world as belonging to Stoneum ; and hence they resorted to the contrivance of this novel instrument, to avoid a disclosure of the true state of the case. But the instrument itself furnishes indisputable evidence of its real character, not*511withstanding the efforts of the parties, by their recitals and declarations, to conceal it. It evidently was, in fact and substance, a mere security ; and the law is, that where the instrument is, in substance, a security for the payment of money, no management or contrivance of the parties, no form or expression in the instrument, will avail to change its real character and effect.
We can entertain no doubt of the real character of the present instrument. But if it were doubtful whether the parties intended a mortgage or a conditional sale, a Court of Equity would incline to consider the transaction a mortgage, as more benign in its operation.
Applying, therefore, to this instrument, the established rules of construction, applicable in such a case, to ascertain whether it is a mortgage or not, which have been too often considered by this Court, and are too familiar to require repetition here we conclude that it must be held, by its stipulations and provisions, to be, in effect and on its face, a mortgage; and that the Court erred in refusing so to instruct the jury.
The petition was framed with a double aspect: asserting a title to the property absolutely, under the contract as a conditional sale discharged of its conditions ; and in the alternative, as a mortgage. The recovery was upon the former aspect of the case. This, in the view we have taken, was error. But the plaintiff was entitled to*maintain his action, in the other aspect of the case, for the foreclosure of the mortgage; and under the prayer for general relief, the appropriate relief might have been administered. But for the better presentation of the merits of his case, it may become necessary for the plaintiff to amend his petition. It contains no averment of the value of the property. And though the Court refused to entertain the demurrer, because the defendant had answered to' the merits, the omission of the averment might have become embarrassing to the plaintiff on the trial. This Court has often held, that exceptions to the legal sufficiency of the petition, in the due order of pleading, should, in general, precede the *512answer to the merits. But we have never decided, that exceptions, which go to the merits and foundation of the action, cannot be entertained after an answer to the merits. It would be idle to compel a defendant to proceed to trial, and drive him to his motion in arrest of judgment, upon a petition so defective as that, judgment could not be rendered upon it.
The ruling of the Court upon the plea in reconvention was correct, for the reason that the matters pleaded were, at the time of pleading them, barred by the statute of limitations. Eo damages were claimed for the alleged trespass, complained of in the amended answer, filed on the 28th of May, 1849, and referred to by that date in the bill of exceptions; but hire only was claimed for the use of the property, after it came into the possession of the plaintiff; and the ruling of the Court did not deprive the defendants of the benefit of the claim for hire. The reference in the bill of exception, therefore, to this amended answer was, doubtless, a mistake. It should have been to the plea in reconvention, filed in Eovember, 1849; which, for the reason before stated, was rightly adjudged insufficient.
There are other questions presented by the record, the consideration of which, however, may be dispensed with, as their determination is not essential to the present disposition and ultimate decision of the case. The judgment is reversed, and the cause remanded for further proceedings.
Eeversed and remanded.