Saunders v. Gould , 134 Pa. 445 ( 1890 )

Opinion,

Mr. Justice Clark:

This is an action of ejectment for a certain lot of ground and the appurtenances, known as No. 928 South Fifth street, in the city of Philadelphia, the title to which, on and prior to the 8d of February, 1873, is admitted to have been vested in Charles W. Hepburn. On the 3d of February, 1873, certain judgments and mortgages against the property remained of record unsatisfied ; they were entered in the order following:

No. 1. Mortgage, Charles W. Hepburn to William L. Brown, for $6,000, dated October 19,1868; same day recorded.

No. 2. Judgment, Allen v. Charles W. Hepburn, for $500; entered October 26, 1868.

No. 3. Judgment, J. Alexander Simpson v. Charles W. Hepburn, for $650; entered July 21, 1869.

No. 4. Mortgage, Charles W. Hepburn to Silas Betts, dated January 1, 1870, for $1,200; recorded January 23, 1870. A judgment upon the bond accompanying this mortgage was entered January 3, 1870.

No. 5. Judgment, J. Alexander Simpson v. Charles W. Hepburn, for $500; entered March 8,1870.

No. 6. Judgment, William L. Brown v. Charles W. Hepburn, for $6,000; entered upon the bond accompanying above-named mortgage designated as No. 1, July 18,1870.

On the said 3d of February, 1873, the premises in dispute were sold on a fieri facias issued upon the Simpson judgment, No. 5 in the foregoing statement, and were purchased by one Henry F. Hepburn; the sheriff’s deed, however, on the 19th of April, 1873, in pursuance of some arrangement between Henry F. Hepburn and Samuel M. Gould, was made to Gould, and it is under this deed the defendant claims. Henry F. Hepburn had been and was, at the time of the sheriff’s sale, the attorney for Charles W. Hepburn, and it is alleged that his purchase was made to enable him more advantageously to sell or pledge the property to raise money to pay his client’s debts.

The lien of the judgment entered on the bond accompanying the Betts mortgage, No. 4, expired on the 3d of January, 1875, but a judgment of revival was entered as against Charles W. Hepburn in December, 1879, and the same property was again levied upon as the property of Charles W. Hepburn on a fieri facias issued thereon, and on the 10th of February, 1883, a sheriff’s deed was made to Oscar P. Saunders, under whom the plaintiff claims. The plaintiff’s contention is that the deed to Gould was not an absolute conveyance, but a mere security for the payment of $4,000 loaned to Hepburn, and was therefore, in effect, nothing more than an unrecorded mortgage. Whether this was so or not, as the case was tried, is the first and principal question in the cause.

The plaintiff, after exhibiting the title of Charles W. Hepburn, gave in evidence the Betts mortgage and judgments, together with the execution effecting the sale to Saunders; he followed this with the sheriff’s deed of the 10th of February, 1888, to Oscar P. Saunders, and deeds showing that the Saunders title was now vested in Mary Tilden Wagner, the use plaintiff, and rested his case. The defendant thereupon gave in evidence the various liens against Charles W. Hepburn, particularly the Simpson judgment, No. 5, with the execution thereon, and the sheriff’s return of the sale of the premises in dispute to Gould, dated April 19, 1873. The defendant, Gould, was then called to the stand, apparently to show possession taken under this purchase; when, under cross-examination, the plaintiff’s case in rebuttal was anticipated, and the defendant’s version of the transaction of 1873-74 was fully developed. This method of trial was, perhaps, somewhat irregular, but it was pursued without objection, and therefore does not concern the present consideration of the case. The case was given to the jury with peremptory instructions to find for the plaintiff.

The deed was absolute in form. It was not direct from Hepburn to Gould, but from the sheriff. But it was competent for the plaintiff to show that the sheriff’s conveyance was only a means employed by the parties to secure payment of the money loaned: Logue’s App., 104 Pa. 136; that the deed was, in fact, merely a mortgage, and was so intended by the parties; for it would be a fraud on the part of the grantee to set up an instrument as indefeasible which was delivered and accepted as a defeasible conveyance: Rowand v. Finney, 96 Pa. 192; Stewart’s App., 98 Pa. 377. The strong presumption is, that the deed was what it purports to be, an absolute conveyance of the interest of the defendant in the execution to the sheriff’s grantee, and that presumption will prevail until the contrary is established. The burden of proof was therefore upon the plaintiff, and he was obliged to establish the issue of fact thus raised by clear, precise, and indubitable testimony. That is to say, if the case is submitted to the jury, the evidence must carry clear conviction to the minds of the jurors that the witnesses are credible; that the facts are distinctly remembered, and are truly and accurately stated; and, to the mind of the court, that if the facts alleged are true the matters in issue are definitely and distinctly established: Cullmans v. Lindsay, 114 Pa. 166. The case should, however, be withheld from the jury, unless the proof is such as would justify a decree to that effect. The judge, in such a case, performs the functions of a chancellor, and, as a judge, he will not permit the jury to do what he, as a chancellor, could not sanction. When the facts are sufficient in character, and are admitted, or are clearly established according to the measure of proof required, the judge may so instruct the jury, and direct the verdict: when they are not sufficient, or the evidence on which they rest is not of the character required, he should give binding instructions to'that effect; but, where the evidence in relation to the facts alleged, although sufficient if established, is conflicting and contradictory, and where the credibility of the witnesses is involved, the case should go to the jury upon the disputed facts: Reno v. Moss, 120 Pa. 49; Hess v. Calender, 120 Pa. 138. These rules of equity practice are now well settled, and it remains for us, upon a review of the whole case, to determine whether or not, under the evidence, the court was right in giving binding instructions to find for the plaintiff.

Mr. Gould testifies that the property was sold by the sheriff on the 3d of February, 1873, and was struck off to Henry F. Hepburn; that on the 12th of April, 1873, Henry F. Hepburn waited upon him, and stated that he had bought this property on Fifth street, with others on Lombard and on Montgomery avenue, at the sheriff’s sale, on his private account, and that he wanted to sell to him, (Gould.) He said he would turn them over for $4,000. Gould went and examined the several properties, and on the 17th of April, 1873, agreed with Hepburn to take them at $4,000. On the 19th of April, 1873, Gould paid $2,000 to Hepburn, and took his receipt. Hepburn’s bid was at once turned over to Gould as if he had been the bidder at the sale; Gould’s name was inserted in the sheriff’s return, and the deed was, on the same day, executed and acknowledged. All this occurred in the daytime of the 19th of April; in the evening of the 19th, they met again, and then, for the first time, Gould says, he learned that Henry F. Hepburn was acting in the interest of Charles W. Hepburn; Gould then signed an agreement, at the instance of Henry F. Hepburn, to sell the property back to Charles W. Hepburn on certain terms, which were modified in some respects by another agreement of the 23d of May. The price or consideration was $4,450, and the agreement was conditioned upon the payment of the money, on or before the 19th of September, 1873. On the 1st of May thereafter, Gould agreed that Charles W. Hepburn should receive the rents until September 19th; this, he says, was done for the reason that Charles, who was in need of money to live on, wanted the property and expected an award of $16,000, or thereabouts, from the city of Philadelphia, for street damages to his other property, out of which he expected to pay Gould. On the 2d of June, 1873, Gould paid the remaining $2,000 to Henry F Hepburn, and it was then agreed that, in consideration of Charles receiving the rents, the purchase price of the property should be $6,000 instead of $4,450, as previously agreed upon. On the next day (June 3d) the sheriff’s deeds were delivered by Henry F. Hepbu-rn to Gould. The time for payment of the money was several times extended hy agreement. On the 31st of December, Charles received $13,500 on the award of damages from the city. “ Then,” says Gould, “ I supposed, of course, he would pay me, as I wanted money very much. I- supposed he would take up the contract; it was an obligation; but months rolled on. I called on Henry often during the months of January and February, and I could get neither money nor words out of him; he was mum. He had his money in his pocket, and I could get no satisfaction out of him. He got his money from the award, but he would not take up that contract, although he knew I was suffering at that time in paying a fearful bonus to the broker.” The whole transaction, as related by Gould himself, shows that the conveyance, although at first, perhaps, spoken of and intended as a sale, was, in reality, consummated as a pledge of the property to secure a loan; and all these facts, taken with the judgment note of April 19, 1873, the recitals of the bill in equity after-wards filed, the notice given at the sheriff’s sale, and the defendant’s letter to Henry F. Hepburn, dated 27th of January, 1883, and also the testimony of Henry F. Hepburn and the other witnesses in the cause, constitute a body of proof which is conclusive on this question : the testimony to this effect and to this extent may well be characterized as clear, precise, and indubitable.

But the defendant, Gould, testifies, further, that on the 26th of May, 1874, he made a final settlement of this matter with Henry F. Hepburn, who, from the 19th of April, 1873, throughout the entire transaction, represented Charles W. Hepburn, and conducted the business for him. Mr. Gould testifies that he had no business communications or even personal acquaintance with Charles W. Hepburn, and never saw him until the time of the trial of the first ejectment. On the 26th of May, 1874, it appears that Gould relinquished his title to the properties on South Third street and Moyamensing avenue, and agreed to, and afterwards did, convey the same to Henry F. Hepburn; and Charles W. Hepburn, on the same day, executed a quit-claim deed of all his right and title, legal or equitable, in the Fifth-street and Lombard-street properties to Gould. The quit-claim deed itself is not in evidence, but the fact was shown without objection that such a paper was executed and delivered to Gould. The agreements of the 19th of April, 23d of April, and 2d of June, 1873, already referred to, and which constituted the defeasances, were destroyed, and it was agreed that Gould’s title to the Fifth-street and Lombard-street properties should be absolute. Gould thereupon entered into the possession of these properties and into the receipt of the rents. As to this, the testimony is practically undisputed. Mr. Henry F. Hepburn was called by the plaintiff, inter alia, expressly to establish this fact, and his testimony is substantially in accord with that of Gould in this respect. It is plain, then,, that Hepburn, on the 26th of May, 1874, surrendered his equity of redemption, and abandoned his right to regain his estate in the premises, intending, as upon a foreclosure, to vest the entire title, legal and equitable, in Samuel M. Gould.

An absolute deed, subject to an unrecorded defeasance, on the execution of the release of the equity of redemption, before any other right has attached, vests an absolute estate in the grantee: Caverow v. Insurance Co., 52 Pa. 287; Saunders v. Gould, 124 Pa. 237. It is proper, therefore, to consider what liens were subsisting against the property on the 26th of May, 1874, when the defendant’s defeasible title became indefeasible. It appears that on the 2d of December, 1872, which was prior to all the transactions to which we have yet referred between Hepburn and Gould, upon a venditioni exponas issued upon the judgment of J. Alexander Simpson, No. 5, already referred to, certain other property of Charles W. Hepburn on Sixteenth street had been sold by the sheriff for $2,500, and on the 5th of January, 1873, the sheriff, from the proceeds, paid the judgments Nos. 2 and 3, taking a receipt upon his private docket. The judgments, however, stood open and unsatisfied on the record, and were open and unsatisfied on the 3d -of February, 1873, when the Fifth-street property was sold to Henry F. Hepburn, and they still remain unsatisfied on the record. There is nothing in the sheriff’s return or elsewhere on the record to show how the money arising from this sale was applied. It is alleged that Henry F. Hepburn had actual knowledge of the sale, and of the manner in which the money had been applied; but it does not appear, nor is it alleged, that Gould, to whom the bid was turned over and the deed made, had any knowledge of the fact, nor do we think that the state of the record was such as to affect him with notice or put him upon inquiry. It was the duty of the holder of the Betts mortgage, if he desired to preserve and continue his lien under the first section of the act of April 6, 1830, P. L. 293, to give notice of the actual application of the money to the intervening judgments, for he knew that the effect of the sale, in the existing state of the record, was to discharge it. Nor was Gould affected with notice of the receipts entered on the private docket of the sheriff. A purchaser is not bound to look beyond the record. The payment of a prior lien, not satisfied of record, will not protect a subsequent mortgage from being discharged by the sale: Magaw v. Garrett, 25 Pa. 319; Geopp v. Gartiser, 35 Pa. 133. He had a right, in the absence of notice, to assume that the liens were as they appeared upon the record, and the judgment docket was the criterion. A purchaser at a sheriff’s sale of lands sold upon execution to satisfy a judgment is ordinarily charged with the inspection of the record of that judgment and of the execution, and is, in general, affected with notice of any rights which it plainly discloses: Biddle v. Tomlinson, 115 Pa. 299. Gould was chargeable, therefore, with knowledge of the sale of the Sixteenth-street property; but, non constat, that the sale was or would be executed by delivery of a deed, and if the deed was delivered he was not bound, in his examination of the record, to know in advance what distribution would be made of the money. The sale was under the . control of the court, and, upon a proper application, it would have been restrained until distribution, partial or otherwise, was made.

In the case of Saunders v. Gould, supra, through a misapprehension of the facts, we seem to have supposed the sheriff’s sale of the premises in dispute to have been made on one of the judgments, Nos. 2 and 3, which precede the Betts mortgage, and we there said: “ Assuming that Henry F. Hepburn knew or had the means of knowing that the money had been so applied, there is no evidence that Gould had any knowledge of that fact, and the state of the record was not such, we think, as to put him upon inquiry. Whilst a purchaser at a sheriff’s sale, with knowledge that the judgment upon which the sale is effected has been paid, may acquire no title, it has been held to be otherwise with respect to a bona fide purchaser from him without notice: ” Hoffman v. Strohecker, 7 W. 86; Gibbs v. Neely, 7 W. 305. It seems, however, that the opinion in that case was written under some misapprehension as to the facts; that the sale was upon No. 5, which was admittedly unpaid, and there can be no doubt as to the purchaser’s title; the only question is as to the extent to which the encumbrances were discharged by the sale. The very purpose of the sale was to discharge the liens so that the property could be sold or pledged to better advantage in raising the money to pay Charles W. Hepburn’s debts. The witnesses deny that the transaction was conducted in bad faith. The sale was open and public, and Henry F. Hepburn had a right to bid, and he did bid. He bought in his own name, and paid his bid to the sheriff; whether he used his own money or his client’s money is not important, as Gould does not appear to have known anything of that. Gould says that Henry F. Hepburn told him he had bought on his private account. He turned that purchase over to Gould for the benefit of his client, which he had a right to do if he chose. The effect of this sale of the 3d of February, 1873, to Henry F. Hepburn, or to Gould, whose name was inserted in the return, was to discharge all the liens against this property except the Brown mortgage, and the arrangement with Gould to hold the deed as a security could have no effect to restore them; nor was there any other lien entered or revived against Charles W. Hepburn, whilst the sheriff’s deed remained a mortgage, nor for several years after the defeasances were destroyed, and the title became indefeasible in Gould by the execution of the quit-claim deed. On the 26th of May, 1874, therefore, there were no liens against the premises in dispute excepting the Brown mortgage; and, if Charles W. Hepburn, having exhausted his efforts to pay the money, voluntarily executed and delivered the quit-claim deed to Gould, surrendering the equity of redemption existing under the several defeasances which were destroyed, we can, as we said in Saunders v. Gould, supra, see no good reason why the quit-claim deed was not effectual to accomplish this purpose of the parties. We are of opinion, therefore, that the court erred in giving binding instructions to find for the plaintiff. If we are right, the case should have gone to the jury, with instructions to find for the defendant.

Judgment reversed.

On May 28, 1890, a motion for a re-argument was refused.