Batty v. Snook ( 1858 )

Manning J.:

The bill in this case is very inartificially drawn; so much so, that, on first reading it over, one is at a loss to know whether it is for the redemption of mortgaged premises, for the specific performance of a contract, or to set aside certain transactions for fraud. We mention this, as the merits of a case may sometimes be overlooked, or lost sight of, by reason of the rubbish under which it is concealed. We think, however, there are sufficient facts stated, when separated from the irrelevant or immaterial matter, to enable us to treat it as a bill to have a certain deed and contract relative to real estate declared a mortgage, and for redemption of the mortgaged premises. As such we shall consider it.

Complainant purchased of the defendant Warner, in 1853, a lot in the village of Mt. Clemens, on which there was a saw mill. On the 5th of April, 1854, the premises were deeded by Warner to complainant, who, at the same time, to secure a part of the purchase-money, mortgaged the lot to Warner for $2331.26, payable with interest, — $500 on the 18th November, 1854; $500 in one year thereafter; the like sum in two years; and the balance, being $831.26, in three years. The complainant soon thereafter, and in less than a year, became embarrassed in his business, and was unable to pay Warner and his other creditors what he was owing them. He was indebted to Warner in a large sum, over and above the mortgage debt, and Warner, being aware of his pecuniary difficulties, was solicitous to get his debt secured — that is, that portion of it not included in the mortgage; and went twice from Saginaw, where he was residing, to Mt. Clemens, to see if he could not make some arrangement with complainant for that purpose. On his last visit a settlement took place between the parties, from which it appears complainant turned out property in part payment of what he was owing him, leaving a balance still due Warner of $2000. Warner, to effect the settlement, was induced to take the property at more than its value. In pursuance of this settlement, the mortgage from complainant to Warner was canceled, and the mortgaged premises were deeded hack to Warner by complainant. This deed bears date on the 6th February, 1855.

There is also a contract between the parties for the repurchase of the premises by complainant. This contract bears date February 7th — the day after the deed. Were the two instruments parts of one and the same transaction? or were they separate and distinct transactions? The difference in their dates favors the latter view, but it is by no means conclusive. The bill alleges both had their origin in the settlement, and that they are parts of the same transaction, and were intended as security for the payment of the $2000. The answer, instead of denying this in clear and explicit terms, as it should have done if it was not the truth, we think admits it. Referring to Warner’s second visit, the answer says, he (Warner) was about to return home when complainant stated to him he had a horse and buggy and a certain promissory note he would let him have, if “ he would release all complainant was owing him aside from the mortgage, and a part of the latter, and extend the payment due on the mortgage to the 1st of December, 1855.” The answer then proceeds: “That this defendant, thinking he could do no better, then and there agreed to take said note and horse and buggy, and a deed of said saw mill lot and mill, and entered into contract A.” (the contract of 7th February, 1855, already spoken of), “with the design and express understanding on the part of said complainant and this defendant, if he (the said complainant) failed in any particular in complying with said contract A., that he (the said complainant) should have no right at law or in equity to the said lands and saw mill; and said contract A. was particularly and expressly conditioned to be the same as an original contract for the conveyance of land, in which time should be material, and every requisite on the part of said complainant to be done and performed, should be by him literally complied with.”

Here is an admission, of complainant’s case by the answer. It admits the deed and contract are parts of one transaction, and that the object of them was to secure the balance of complainant’s debt to Warner. It also shows that if complainant failed to pay promptly when the debt became due, he was to forfeit all right at law and in equity to the premises he had conveyed to Warner, and that to effect this object, it was agreed the contract should be considered and treated as an original contract for the purchase of the premises, in which time should be material. When the arrangement was entered into there was but one payment due on complainant’s mortgage of the 5th April, 1854, and one other that would become due before the 1st December, 1855, when complainant was required to pay $500 on the contract of Ith February, which also provided for the payment of the remaining- $1500 in one year thereafter — nearly a year' before the last installment would have fallen due on the mortgage given in 1854. The contract contained a covenant for the payment of the $2000, and by it complainant was to retain possession of the premises, and was not to remove any buildings or machinery.

Other facts might be mentioned, to show the mortgage of ’54 was canceled, and the deed and contract of the 6th and Vtli February, ’55, were made to secure the $2000 complainant was owing Warner; but it is unnecessary to notice them, or to go into the proofs to establish what is admitted by the answer.

The only remaining question is, whether the case is one proper for the interposition of a court of equity.

Once a mortgage always a mortgage, may be regarded as a maxim of the Court. Equity is jealous of all contracts between mortgagor and mortgagee, by which the equity of redemption is to be shortened or cut off. The mortgagor may release the equity of redemption to the mortgagee for a good and valuable consideration, when done voluntarily, and there is no fraud, and no undue influence brought to bear upon him for that purpose by the creditor. But it can not be done by a cotemporaneous or subsequent executory contract, by which the equity of redemption is to be forfeited if the mortgage debt is not paid on the day stated in such contract, without an abandonment by the Court of those equitable principles it has ever acted on in relieving 'against penalties and forfeitures. What we now call a mortgage was at common law a conditional conveyance of the land, by which the title of the vendee was to tei’minate or become absolute on the performance or nonpei’formance of the condition of the grant by the vendor at the day. When such conveyance was made to secure a debt, or for the performance of some other act by the vendor, equity took cognizance of the transaction, and declared the conveyance a security merely for the payment of the debt, or doing of the act, and on the performance thereof by the vendor-, after the day had elapsed, and the estate had become absolute, would decree a re - conveyance of the premises. To allow the equity of redemption to be cut off by a forfeiture of it in a separate contract, would be a revival of the common law doctrine, using for that purpose two instruments, instead of one, to effect the object.

Snooks, the other defendant, to whom Warner conveyed on the 22d December-, 1855, purchased with full knowledge of complainant’s equities. He took possession soon after-, and has been in possession ever since.

The decree of the Court below, dismissing the complainant’s bill with costs, must be reversed, and a decree be entered declaring the deed and contract one transaction, and to be a mortgage, and that complainant is entitled to redeem; and the transcript must be remitted to the Court below for farther proceedings.

The other Justices concurred.