Shields v. Russell

Herrick, J.

Eliza H. Elliott and John S. Elliott desired to borrow the sum of $1,000 from the defendant. He agreed to loan them that amount for two years. To secure it they were to give him a deed of certain lands, and he to give back a lease of them. Eliza H. Elliott owned the fee of the real estate in question. She gave a deed of it, her husband, John S., joining with her, to the defendant. At the same time the defendant gave to John S. Elliott a lease of the same premises for two years, by the terms of which John S. Elliott was to keep the property insured and in repair, to pay to the defendant $60 a year rent, and not to assign the lease. The defendant agreed that upon the payment of said rent, the performing of the other conditions of the lease, and the payment to him at the expiration of two years of the sum of $1,000, he would execute and deliver to said John S. Elliott, his heirs and assigns, a warranty deed in fee simple of the premises described in the lease. Eliza H. Elliott agreed with her husband that the lease should go to him, and she was present when it was made. The deed and the lease were made simultaneously, for the same purpose. It was intended by all parties that they should take the place of and operate as a mortgage to secure to the defendant the repayment to him of the $1,000 loaned to the Elliotts. The whole transaction constituted a mortgage, (Macauley v. Smith, 132 N. Y. 524, 30 N. E. Rep. 997; Thorn v. Sutherland, 123 N. Y. 236, 25 N. E. Rep. 362; Barry v. Insurance Co., 110 N. Y. 1, 17 N. E. Rep. 405;) and upon payment of the loan to the defendant his lien therefor would absolutely cease, and there would be no necessity for a reconveyance from him, except to clear up the record title, (Barry v. Insurance Co., 110 N. Y. 6, 17 N. E. Rep. 405; Shattuck v. Bascom, 105 N. Y. 39-43, 12 N. E. Rep. 283.) The cases cited holding that the defendant took no title, that he simply had a lien upon the property as a mortgagee, would be an insuperable objection to the plaintiff’s recovery in this case, except for the facts, already stated, that Eliza H. Elliott, who, under such authorities, must be considered the mortgagor, was a party to the whole agreement, consented to the lease given to her husband, in and by which lease it was agreed that the reconveyance should be made to her husband, his heirs and assigns, which agreement is just as binding as if it was contained in the deed itself,—both are to be construed together as one instrument; and the further fact, as stated by the learned justice before whom the ease was tried without a jury, that Mrs. Elliott, while upon the witness stand, disclaimed any right in the premises.

The plaintiff is the assignee of all the rights of John S. Elliott under the so-called “lease.” He has offered to pay the defendant the amount of his mortgage, and asks a conveyance to him of the property in question. The defendant says that John S. Elliott covenanted and agreed in and by the lease not to assign such lease, and that by assigning to the plaintiff all rights under the lease his right to a conveyance has been forfeited, and that the plaintiff is not entitled to a conveyance for that reason. Practically the defendant’s position, amounts to this: that by defaulting in one of the conditions of the lease or mortgage, that which was a mortgage has been turned into an absolute deed. In fact, the defendant stated that as his claim, upon the trial, in answer to a question of the court. “My opinion is that I am entitled to the ownership of the property, for the reason that the transfer from Elliott to Shields was' without my consent; and I propose to claim a forfeiture. No other reason in particular for mo refusing to deed to Shields, except that I should object to him as a tenant. If he would pay up in full, he would be no longer a tenant, as I understand it. So that there is no other reason except the ground of forfeiture by assignment without my consent. ” That position is one that finds no favor in equity. Once a mortgage, always a mortgage. Macauley v. Smith, 132 N. Y. 524-531, 30 N. E. Rep. 997. And a mortgagor, although he has not strictly complied with the terms of the mortgage, has a right of redemption. Matthews v. Sheehan, 69 N. Y. 585-590. As a covenant between landlord and tenant, the covenant not to assign would probably be good, and the plaintiff could not occupy the premises as a tenant of the defendant; but, as we have seen, the real position of the defendant is not that of a landlord, but of a mortgagee, the mortgagors remaining in possession of the property. I shall not discuss the question as to whether the clause forbidding an assignment was void as being in restraint of the power of alienation, nor as to what extent forfeitures are favored or frowned upon in law or in equity. While there is that covenant on the part of Elliott that he will not assign the lease, there is also a covenant upon the part of the defendant that upon the payment of $1,000 by Elliott or his assigns he will convey to Elliott, his heirs and assigns, the property in question. Of course, Elliott’s assigns could not pay, nor could the defendant convey to Elliott’s assigns, unless Elliott had assigned to some one. These provisions of the lease or mortgage being inconsistent, and as we have seen that equity does not favor an agreement that turns a mortgage into an absolute deed upon a default, (Macauley v. Smith, supra,) I think that the provisions of the lease or mortgage providing for a conveyance of the property to Elliott or his assigns upon his or their paying the amount of the mortgage should be held paramount, and that the plaintiff, as Elliott’s assignee, is entitled to a conveyance of the property in question. Let the judgment be affirmed, with costs. All concur.