Den Ex Dem. of Wall v. White , 14 N.C. 105 ( 1831 )

The defendant, Isaac, claimed under the defendant, Zachariah, as follows: First, under a mortgage made by the defendant, Zachariah, to one Bostick, dated 15 September, 1823, to secure $500, with a covenant for a reconveyance upon the payment of the mortgagee debt within five years; second, by a deed of bargain and sale dated 9 October, 1824, by Zachariah White and Bostick to himself, reciting the mortgage of the latter. Both these deeds were impeached as fraudulent, but it is unnecessary to state the testimony. The defendant, Isaac, was in possession.

The presiding judge charged the jury that if they believed the deeds under which the defendant, Isaac, claimed, or either of them, were fraudulent, the plaintiff was entitled to a verdict. A verdict was returned for the plaintiff, and the defendant appealed. Both the mortgage to Bostick and the deed to the defendant, Isaac, were so evidently fraudulent upon the evidence, and therefore void as to creditors, that we hear the proposition of the judge without any startling effect. But if true, it appears to me it may produce the most ruinous consequences. The proposition of the judge in effect is this: A. fraudulently mortgages to B. C. without any notice or suspicion that the mortgage was fraudulent, nay, without any knowledge that there was a mortgage at all, purchases the estate (106) from A. Fairly and bona fide, and within the time of redemption, as in this case. He is then informed of the mortgage, but not of its unfairness, and at the request of A. pays off the mortgage debt, pays the balance of the purchase money to A., and A. and B., the mortgagor and mortgagee, join in a deed to him. If this deed be affected with fraud, it must be upon some technical reasoning, beside the merits of the case, which I cannot perceive. The only plausible ground is, that the estate passed from the fraudulent mortgagee, and is therefore infected with the fraud in the hands of a bona fide holder. If the premises were correct, I think that the conclusion does not follow. But I believe, upon the strict and technical principles of conveyancing, the estate does not pass from the mortgagee, but from the mortgagor, as I am inclined to believe that upon payment of the mortgage money within the prescribed time the estate ceased in the mortgagee and revested in the mortgagor. For where there is a seizin in one person, to the use of another (I say to the use of another, because if a person is seized to his own use, a bare declaration will not change that use) the use may, by the terms of the conveyance fixing the seizin, change or shift from one person to another, and the seizin, that is the estate, will follow it. By the bargain and sale, the bargainor is seized to the use of the bargainee by virtue, it is said, of the consideration; but to what extent, whether for years, for life, or in fee, depends upon the declaration of the bargainor made in the deed; all the use not disposed of remains in the bargainor. For example, if a bargain and sale be made for life or years, the reversion of the use remains in the bargainor. The use for years or life is declared to the bargainee, and the statute carries to it the possession. When, therefore, the term for which the use was declared expires, the estate expires, certainly upon an entry, if not ipso facto without an entry. If in this case an entry was necessary, and the acknowledging satisfaction of the mortgage debt, and joining with the mortgagor (107) in a conveyance, do not amount to a waiver of an entry and a surrender of the estate, most certainly the entry of Isaac White under Zachariah's deed was sufficient. Because if we resort to the terms of the deed, the mortgagee money being paid, and that within the limited period, the mortgagee's estate had expired. He had nothing but a possession which the entry of Isaac put an end to. And the latter having entered, is in according to his estate and having a joint deed from the mortgagor and mortgagee, and the mortgage debt having been paid before the expiration of the time for repayment, his estate is from Zachariah White and not from Bostick, even if the estate had been in Bostick when the deed was made, for want of an entry to defeat it, and therefore it was the deed of Bostick, and only the confirmation of Zachariah White, as to passing the estate. When by the entry of Isaac, under their joint deed, Bostick's estate was put an end to, it then, for the same purpose, became the deed of Zachariah and the confirmation of Bostick. To come to a conclusion at once, even if Isaac took the estate from Bostick under the deed, for want of an entry to defeat Bostick's estate, as soon as he did enter under Zachariah, the mortgagee's estate vanished and he then held under Zachariah. And I am much deceived if Isaac could support an action, declaring in a seizin under Bostick, for his (Bostick's) estate no longer existed. If I am right, Isaac claims no estate from Bostick, and therefore that estate which he now holds is not infected with the fraud of Bostick, if he was not a privy nor party thereto; that is, he is not affected merely by having a deed from Bostick; for the interest derived from it, if any, has passed away and ceased.

But however this may be, on strict principles of conveyancing, I think that when we are expounding the contract in reference to the statutes against fraudulent conveyances, we should look upon a mortgage as a bare security for money, and that the mortgagee has an interest or estate for that purpose only; or to speak more properly, an incumbrance to that amount; and that if mortgagor and mortgagee join in a (108) conveyance, when the mortgage money is paid within the time limited, it is the deed of the mortgagor, and the confirmation of the mortgage; at least it becomes so immediately upon the entry of the grantee. If the mortgagee purchases the equity of redemption, most commonly to intends to extinguish it and hold the estate under the mortgagor. When the mortgagor pays off the mortgage debt, he intends most commonly to extinguish the mortgage and hold under his old title. But their deeds may give either character to their acts. I think that in this case the mortgage was put an end to, and that Isaac holds the estate from Zachariah; and if that transaction was fair and bona fide, he is entitled to hold the land against Zachariah's creditors. I repeat, that both these transactions bear the most evident marks of fraud; yet, for the reasons given, there must be a new trial.

PER CURIAM. Judgment reversed.

Cited: Walker v. Mebane, 90 N.C. 265.