Osgood v. Thompson Bank , 30 Conn. 27 ( 1861 )

Ellsworth, J.

After examining this case with care, we are well satisfied that the petitioner can take nothing by his bill.

The land in question, situated in Minnesota, was originally conveyed by Albert Fuller & Co. to Samuel F. Morse of Boston, by an absolute deed, in order to secure him to the amount of five thousand dollars for money advanced them; the condition being in parol. After this the grantors, wishing to obtain larger advances, arranged with Joseph B. Gay, (who was then the cashier of the Thompson Bank,) for such advances, and Gay made them from time to time by his acceptances to the extent of some fourteen thousand dollars. When Fuller & Co. paid Morse his five thousand dollars, he, at their request, released and conveyed the land in question by a like absolute deed to Gay ; the parties agreeing at the time that Gay was to hold it only as Morse had done, that is, as security for five thousand dollars, but afterwards agreeing that it should be held as security for all acceptances then made and thereafter made by him for them. By reason of further acceptances by Gay for them, Fuller & Co. finally became indebted to him to the amount of $22,000, and in settling their account with him gave him their notes, one for six thousand dollars, two for five thousand each, and two for three thousand each. The six thousand dollar note was soon after passed by indorsement and transfer to the petitioner, to secure him for an indebtedness from Gay of five thousand dollars, he assuring the petitioner at the time that this six thousand dollar note was secured by the land in question in Minnesota. Subsequently, it being discovered that Gay was largely indebted to the Thompson Bank, the president of the bank in behalf of the bank obtained from Gay one of the five thousand dollar notes, which was indorsed and delivered to the bank, to apply on the indebtedness of Gay to the bank, under assurances from him that it was secured by the conveyance which he held of this land, and a few days after Gay conveyed the land by a like absolute deed to the president of the bank, to make the security of the bank for the note which he had transferred to the bank more perfect and complete. The other notes given in settlement of the $22,000 are outstanding in the hands of bona, fide holders.

We need hardly remark, what is so obvious from these facts, that the president of the Thompson bank, in taking the deed to hiniself as security for the five thousand dollar note, acted as the agent of the bank, and that he now holds the title for the bank as fully as if the deed had been given to the corporation itself. He can not deny their right, nor can the petitioner interpose any objection founded on a distinction between the principal and agent, to impair, the security.

Upon these facts it is apparent that if no deed had been given for the greater security of the bank, the bank and the petitioner would stand on the same footing in equity in relation to the security, for each party took his note, one the six thousand and the other the five thousand dollar note, under the same assurances that it was secured by the conveyance held by Gay, and neither party had knowledge of the existence or transfer of the note now held by the other. If this were all the parties would be entitled to share proportionally in the security. But there is a most vital difference between the two cases. The bank took care to perfect its security by getting a deed of the land, which was done bona fide, and thus they acquired an advantage of which they can not be deprived. Had Gay sold and deeded the land for a full consideration to a person ignorant of any equity attached to it, the purchaser would have taken a clear title, and so it would be in the case of a mortgage, as, we have recently decided in a case not yet reported,^* whether given, to secure an existing debt or one contracted at the time.

Much has been said about the admission of parol evidence to show that an absolute deed may be treated as a mortgage. It has not been necessary to consider the question in disposing of the present case, and we shall therefore pass it by, remarking only that such evidence is held admissible in courts of equity in England, certainly, if not generally in this country, though I do not know precisely on what ground this exception is j>laced; but though this be the law elsewhere, it may or may not be so here. No objection was made to the parol evidence on the trial, and we do not know that either party wished then to raise the question. At all events it is not important to the present decision.

We advise that the bill be dismissed.

In this opinion the other judges concurred ; except Sanford, J., who did not sit. '

* Bridgeport City Bank v. Welch, since reported in 29th Conn. R., 475.