Court Opinion

ID: 7276360
Source: CourtListenerOpinion
Date Created: 2022-07-25 19:59:56.376349+00
Date Added: 2024-06-11T16:18:52.636716
License: Public Domain

Mr. Justice Morris
delivered the opinion of the Court:
There is no difficulty in regard to the facts in this case. By the demurrer and the election of the appellants to stand *171by that demurrer tbey are conceded to be as tbey are stated to be by the appellee in his bill of complaint and the amendment thereto; and from those facts there is but one inference to be drawn for our present purpose, namely, that a clear case is presented for the intervention of a court of equity by the process of injunction. If John H. G-lick were living, and he sought to enforce the payment of these promissory notes from the appellee notwithstanding the circumstances under which they were executed and delivered to him, such action would be a gross fraud upon the appellee. No such fraud or fraudulent purpose, of course, is to be imputed to the appellants. We have no doubt that they are honestly seeking to perform what they deem to be their duty. Even if they have personal knowledge of the facts and circumstances as stated, it may be that, for their own protection in their accounting in the Orphans’ Court, it was a prudent precaution for them to have the judgment of a court of competent jurisdiction in respect of the enforcement of these notes. But their right to such enforcement's no greater than would have been the right of their testator; and the equity which would have precluded him from holding the appellee liable is equally binding upon the appellants as his personal representatives. This proposition, apart from the rigid rule of law which they seek to invoke, we do not understand to be controverted by the appellants.
The question made by the appellants, is, that, notwithstanding the facts and circumstances which have been stated, there is a rigid rule of law applicable to the case, and applicable alike in a court of equity as in a court of common law —■ the rule that “ parol evidence is inadmissible to contradict or substantially vary the legal import of a written agreement ” —■ which is the rule of all the text-books, and which has been repeatedly indorsed and applied by the Supreme Court of the United States. See Sprigg v. Bank of Mt. Pleasant, 14 Pet. 201; Hendrickson v. Hinckley, 17 How. 443; Richardson v. Hardwick, 106 U. S. 252; Baltzer v. Raleigh, etc., RR. Co., 115 U. S. 634. But this contention is *172based upon a total misapprehension of the nature and extent of the rule. Precisely the samé argument has been made unsuccessfully in many similar cases, as in the matter of deeds delivered in escrow and not to take effect except upon the happening of some contingency (Pawling v. United States, 4 Cranch, 219), and in the matter of deeds absolute on their face but intended to operate as mortgages (Peugh v. Davis, 96 U. S. 332), and in numerous other similar cases, where the purpose is not to attack the written instrument or to question its validity according to its true legal import, but to set up some collateral agreement to explain the object of the parties in executing and receiving the instrument. The Supreme Court of the United States, speaking by Mr. Justice Field, in the case of Peugh v. Davis, 96 U. S. 332, has clearly stated the distinction. The controversy in that case was whether a deed absolute on its face was not a mortgage; but in disposing of the case the Supreme Court laid down the law generally in regard to the rule cited concerning the inadmissibility of parol testimony, and said:
“ It is an established doctrine that a court of equity will treat a deed absolute in form as a mortgage, when it is executed as security for a loan of money. That court looks beyond the terms of the instrument to the real transaction; and when that is shown to be one of security, and not of' sale, it will give effect to the actual contract of the parties. As the equity, upon which the court acts in such cases, arises from the real character of the transaction, any evidence, written or oral, tending to show this is admissible. The rule which excludes parol testimony to contradict or vary a written instrument has reference to the language used by the parties. That can not be qualified or varied from its natural import, but must speak for itself. The rule does not forbid an inquiry into the object of the parties in executing and receiving the instrument. Thus, it may be shown that a deed was made to defraud creditors, or to give a preference, or to secure a loan, or for any other object not apparent on its face. The object of parties in *173such cases will be considered by a court of equity; it constitutes a ground for the exercise of its jurisdiction, which will always be asserted to prevent fraud or oppression, and to promote justice. Hughes v. Edwards, 9 Wheat. 489; Russell v. Southard, 12 How. 139; Taylor v. Luther, 2 Sumn. 228; Pierce v. Robinson, 13 Cal. 116.”
The object of the parties to the transaction in the present case was not to perpetuate any personal liability on the part of the appellee, but to avoid possible entanglements that might result if Click had dealt directly with the syndicate or its members. The course pursued was not unusual or extraordinary, although somewhat hazardous to the person put forward as an intermediary. It is not unusual, in order to effect some such purpose as that entertained by John II. Click in this instance, to put forward a man of straw, as the expression is, who is financially irresponsible, or whose financial responsibility is distinctly eliminated from the transaction, to take title and execute notes and deeds for the payment of purchase money, when the purpose is for the vendor of property to look to the property itself, and not to the purchaser, for the payment of the deferred purchase money. The promissory notes issued in such a case are intended chiefly as a measure of value, and for the convenience of a transfer of interest, if such transfer be desired, and not. to secure the personal liability of the maker of the notes. And if such be the fact, as in the present case it is fully conceded to be, it would be strange if the par-ties should be precluded from putting their contract in that shape by a rule of law intended merely to secure certainty in the construction of written instruments. The written instrument in such cases is not the whole contract between the parties. The arrangement comprises not only the instrument of writing, but also collateral matters, more or less independent of the writing, which determine the object for which the wilting is to be used. Equity intervenes, not to overthrow the writing, but to enforce the whole contract, when the enforcement of the writing alone *174without the remainder of the contract would be a fraud upon the person bound by the writing.
The jurisdiction of equity in such cases is so well established and so universally recognized that citation of authority in support of the proposition would be useless and unnecessary. It is sufficient for us that the Supreme Court of the United States has laid down the law on the subject as distinctly and positively as it has done in the case of P&ugh v. Davis, before cited. It only remains to be determined in the particular instance under consideration whether a. case has been made out for the application of the principle. That such .a case has been made out in the proceeding now before us seems to us to be too clear to need elaboration. A case is admitted where it would be a gross fraud upon the appellee to enforce the written instrument in disregard of the collateral agreement between the parties to the transaction; and it is plainly a case that calls for the intervention of a court of equity.
We are of opinion that there'was no error in the decree appealed from, and that such decree should be affirmed, with costs. And it is so ordered.