Court Opinion

ID: 7975925
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:59:44.749403+00
Date Added: 2024-06-11T16:34:48.455666
License: Public Domain

Lewis, J.
(dissenting).
I dissent. The decision reached by the majority is based upon the premise that it is essential to the existence of an equitable mortgage that some estate or interest in the debtor shall exist at the time of the creation of the mortgage relation. If this premise is sound, then the facts of this case are not within the rule, and the decision of the majority is correct. .But, if the doctrine of equitable mortgage is not based upon .the fact of a pre-existing interest in the mortgagor, then the argument of the opinion and the conclusions reached are not justified by the .facts.
In most of the 'cases where the doctrine has been discussed, it -was conceded that the mortgagor or debtor had an interest, or owned the land, and the title was conveyed under an agreement to hold it as *358security for a loan, and the discussion of the general principles involved in those decisions did not necessarily reach back to the roots of the doctrine. For instance, in Niggeler v. Maurin, 34 Minn. 118, there was no question but what Mr. Niggeler was the owner in fee of the property when he deeded it to Mr. Maurin, and the expression of the court that the plaintiff was vested with the equitable title and had an interest capable o'f being mortgaged was sufficient for the occasion.
It is admitted that Bennett and Longyear agreed to carry Chesebrough for the amount represented by two-ninths of the two-thirds purchased. They advanced the money for him, and agreed to hold the title in their own names as part security for the loan. There was talk of Chesebrough furnishing additional security, and the moneys coming in on the roylaties were to be applied in part payment. The transaction clearly amounted to a joint purchase of the two-thirds interest in the proportion of two-ninths by Chesebrough, and seven-ninths by Bennett and Longyear, they to hold his interest as security for the advancement by them. The transaction was not a purchase of the entire interest by Bennett and Longyear, and then a resale of the two-ninths to Chesebrough. Let us suppose that Atwell had conveyed the two-ninths interest to Chesebrough and the seven-ninths, interest to Bennett and Longyear, and that Chesebrough had executed a mortgage upon his two-ninths interest to Bennett and Longyear to secure them for the advancement to pay for his interest, would the transaction have been any more a mortgage than was accomplished by what actually did take place ? JJnder the arrangement Chesebrough acquired an interest in the purchase the instant Bennett and Longyear became the grantees, and the agreement that Bennett and Longyear hold that interest as security became at once effective. The transaction resulted in creating an equitable mortgage in favor of Chesebrough, although his interest and the mortgage relation were created at the same time by the same transaction.
In the majority opinion, reference is made to Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889, and to other cases from Wisconsin, Iowa, California, and Oregon, and it is stated that no *359one of the cases goes to the extent necessary to sustain the position ■of the decision in this case. It all depends upon the point of view. As I read most of those cases, they stand for the doctrine that the interest of the mortgagor may be created simultaneously with the ■agreement to hold that interest as security for a loan; that such an arrangement is just as effective to create an equitable mortgage as where the title has been conveyed by the debtor under an agreement that it be held as security. In Sehriber v. Le Clair, the court ignored the writing and went back to the original agreement, which was proved by parol.
The principle is stated in Krebs v. Lauser, 133 Iowa, 241, 110 N. W. 443, but it was held that the evidence was insufficient to meet the rule that an absolute deed cannot be established as a mortgage, except upon clear and satisfactory evidence.
The doctrine was applied later in Jones v. Gillett, 142 Iowa, 506, 118 N. W. 314, 121 N. W. 5. In that case Jones, desiring to purchase the land from one Davidson for $1,760, applied to Gillett for a loan of a part of the purchase money; it being verbally agreed between them that the defendant would advance the necessary amount at seven per cent, and take a deed for the land from Davidson as security. Subsequently the defendant agreed to advance the entire purchase price, and took a deed from the owner with that understanding, and secured himself for the payment of the interest by a nominal lease of the land at a rental which amounted to seven per cent, of the purchase price, and finally defendant repudiated the contract and attempted to hold the land. The court said that parol evidence was admissible to show that the deed was subject to an agreement that the defendant should hold the title as security only.
To the same effect is Hall v. O’Connell, 52 Ore. 164, 95 Pac. 717, 96 Pac. 1070. The facts were essentially the same as here, with the exception that in this case Ohesebrough bought only a part, instead of the entire, interest.
As I understand the case of Stitt v. Rat Portage Lumber Company, 96 Minn. 27, 104 N. W. 561, this principle was applied to the three tracts of land known as the “Loper & Rumery,” the “Mur*360ray,” and the “Houlton,” with respect to which Mr. Stitt had no interest, legal or equitable, and it was held that it might be shown by parol evidence that the company had taken title to those lands under an agreement to hold them as security. That part of the opinion dealing with the doctrine of equitable estoppel was written advisedly, and the case was not disposed of on the ground that the contract had been partly performed.