Chase v. Hinckley

DaNFOBth, J.

This is a bill-in equity asking for the recision ■of an executed contract for the purchase of a mortgage, and that the defendant may be required to restore the consideration received therefor, on the ground of fraud. The fraud alleged is that false representations were made as to the amount due upon the mortgage. The answer explicitly denies the falsehood, and ■alleges that the truth was stated so far as known; that no specific sum was given as due, but substantially that the amount was in dispute.

The evidence in the case is clearly sufficient to overcome the answer and sustain the allegations in the bill. It is conceded that the plaintiff in the contract allowed substantially the amount which appeared to be due, and unless he so understood and-believed, his conduct would be inexplicable ; and the statement that he was informed that a less amount was due, or that the amount or a material part of it was in dispute would seem scarcely credible. This belief and conduct on the part of the plaintiff must have been induced by the acts and statements of the defendant, for he produced the notes with but the twenty-seven dollars indorsed. The defendant concedes that, that question as to the amount due was discussed and it does not appear that the plaintiff obtained any information from any other scource. Indeed it is now made an objection that ho did not inquire otherwheres. But where should he inquire with more probability of obtaining the truth than of him who was the owner of the notes, who presented them without indorsements, and whose duty it was to give the information sought? True, the notes were overdue and thus calculated to excite suspicion. That suspicion was excited, the proper inquiries were made and at the proper place, and it is not for the defendant to say the plaintiff was negligent in putting confidence in his ivord. That the defendant knew the truth is shown by his own testimony and is not denied.

The testimony as to whether the whole amount as shown by the notes was due is conflicting. But that the amount was in dispute is free from doubt and the balance of testimony shows that a material part of the amount had been paid. But it is sufficient for tbe plaintiff that there are good grounds for contesting the notes. He was not bound to take them with the almost certainty of litigation and the evidence shows that he took the proper precautions to prevent it.

It is thus clear that the plaintiff has the right to rescind the contract and is entitled to the decree he asks, if he lias taken the proper steps to do so. To do this it is incumbent for the rescinding party to restore tbe other to the position in which he was before the contract. In this case he must return the consideration he received for the land conveyed and note given. That consideration was the notes and mortgage. The material part appears to have been the mortgage. The case shows that it was legally assigned to the plaintiff. The - case also shows that the notes, mortgage and assignment, were tendered back to the defendant, but fails to show a reassignment of the mortgage. Nor does it appear that the assignment was-cancelled any farther than the tender may have that effect. Was this sufficient? The mortgage conveyed an interest in real estate; the assignment conveyed the same interest, an interest which can only be conveyed in writing. Before the assignment the defendant was the owner of the premises covered by the mortgage subject to the right of redemption. By the assignment that interest passed to the plaintiff and under the law could pass from him only by a written instrument. It follows that a mere tender back of the assignment from the defendant would not in law convey the title, though with the tender of the notes if accepted it might in equity.

In Hesseltine v. Seavey, 16 Maine, 214, Shepley J., says, " since the statute of frauds there is no doubt, that a surrender of a lease can be legally proved, only by deed or note in writing, or by act and operation of law.” Washburn in his treatise on Beal Property, vol. 3, p. 275, (3 ed.) says, "the cases in general, however, agree that mere cancelling or delivering back the grantor’s deed, does not divest the grantee’s title. In Sugden on Vendors, vol. 1, p. 256-7, 8th American edition, note e, it is said, " but it is clear from the above cases and others, that the mere cancellation of the deed, by the grantee without recourse, does not divest his title or vest it in the grantor.” See also, Barrett v. Thorndike, 1 Maine, 73; Nason v. Grant, 21 Maine, 160; Patterson v. Yeaton, 47 Maine, 308; Hatch v. Hatch, 9. Mass. 311; 1 Green. Ev. § 265; Greenleaf’s Cruise on Real Property, vol. 3, 8, note 1.

It is however true that the title to land may be changed, under certain circumstances, by cancelling the deed if not recorded in connection with other acts of the parties.

In New Hampshire it is held that where an unrecorded deed is voluntarily surrendered up by tlie grantee to the grantor, with a view of thereby revesting the estate in the grantor, it would have that effect upon the principle of estoppel. Bank v. Eastman, 44 N. H. 438. "Having voluntarily destroyed his deed, he cannot be permitted to show its contents by secondary evidence,” and thus the only evidence competent to sustain his title is gone. But cancellation is no reconveyance. Farrar v. Farrar, 4 N. H. 191; Munsey v. Holt, 4 Foster, 248.

So, when an unrecorded deed is cancelled and a new deed is given to another grantee, the title in him would undoubtedly be good, provided no rights of third persons had intervened. This principle is well stated by Shaw, C. J., in Trull v. Skinner, 17 Pick. 214, 215. On p. 215, he says, "such cancellation does not operate by way of transfer, nor strictly speaking by way of release working upon the estate, but rather as an estoppel arising from the voluntary surrender of the legal evidence, by which alone the claim could be supported; like the cancellation of an unregistered deed, and a conveyance by the first grantor to a third person without notice. The cancellation reconveys no interest to the grantor, and yet taken together, such cancellation and conveyance to a third person make a good title to the latter by operation of law; . . . it is good against the grantor and his heirs by force of the second deed, and it is good against the first grantee and all claiming under him, by force of the registry acts.” These two classes of cases arc clearly sustained by the authorities already cited as well as others. They are not inconsistent but rest upon sound principle.

The result is that the defendant has not been placed in his former position. He then had a title to the mortgage by deed. If he had accepted the tender he would not now have a title, but would be in a condition to hold the mortgage only because the plaintiff had so conducted that he could not assert his title for the want of the legal evidence. The defendant had the written evidence required by law to sustain his former title. The latter, if title it may be called, is dependent to a great extent upon the uncertainties of oral testimony. Besides the rights of the mortgagor are to some extent involved. It is conceded that something is due on the mortgage. Against whom will a process for redemption lie ? Shall the mortgagor at his peril ascertain from the testimony of different individuals of differing interests, to whom1 he shall make the necessary payment, or may he not rather look to that written evidence which the law provides for his protection ? Were he now to make payment to the plaintiff, in whom is the ■ legal title, must it not operate as a discharge of the mortgage? Smith v. Kelley, 27 Maine, 237; Lyford v. Ross, 33 Ib. 197.

It is therefore evident that the defendant has not only not been placed in his former condition,.but he is in one not its equivalent, and for that reason he was not bound to accept the tender.

But this is a process in equity. Under our present statute this court has full equity powers, and we see nothing in this case, notwithstanding these principles of law, to prevent the decree asked for on such conditions as may secure equity to the defendant. These conditions are that the plaintiff shall first restore to the defendant the mortgage by a reassignment or quitclaim deed of the premises therein described',''with covenants of warranty.' against all persons claiming under the' grantor and pay the ¡costs " of this suit. He will then be entitled to the decree prayed for in his bill. The case is remanded to nisi prius for further proceedings in conformity herewith^

Appleton, C. J., WalIon, .Virgin, Peters and Symonds, . JJ., concurred.