Nicolls v. McDonald

Mr. Justice Mercur

delivered the opinion of the court, December 30th 1882.

This is an attempt by the plaintiff below to recover land against a deed made by himself, absolute on its face. He alleges no fraud or mistake in its execution; but claims although apparently indefensable, yet it was executed under an agreement which in law makes it a mortgage. There is no attempt to prove the alleged defeasance by any instrument in writing ; but wholly by parol evidence. The rule is well settled in Pennsylvania prior to the Act of 1881, that a grantor may prove by parol that his deed which purports to be a conveyance is in reality only security for a debt or liability. When the attempt is made he claims as a mortgagor seeking to redeem. Although the action may be ejectment in form, yet in substance it is a bill in equity to compel a reconveyance of the land from the mortgagee in possession. Each form of procedure is subject to the same equitable principles. If the parol evidence be insufficient to move a chancellor to decree a reconveyance it is insufficient to justify a recovery in ejectment. In each case the judge administers equitable powers. It is in the discretion of a chancellor whether he will send an issue to the jury. When sent, their province is to aid him in ascertaining the facts; but their verdict is advisory only. It is not conclusive on him. He is still judge both of the equity and of the facts. So on the trial of an action of ejectment, founded on an equitable title, it is the duty of the judge to consider and to weigh the facts for himself. They must be proved to his satisfaction as well as to the satisfaction of the jury. If he be of opinion that the evidence does not make out a case which would induce a chancellor to decree a conveyance, it is his duty to give the jury binding instructions to that effect: Brawdy v. Brawdy, 7 Barr 157; Todd v. Campbell et al., 8 Casey 250. When a party sets up title against a deed absolute in its terms and seeks to convert it into a mortgage the proof of the alleged agreement necessary to change its character must be clear, explicit and unequivocal. It should not rest on the subsequent admissions and declarations of the alleged mortgagee only; but must establish an agreement substantially eotemporaneous with the execution.and delivery of the deed. Less than this will defeat the wise provisions of the statute of frauds: Plumer v. Guthrie, 26 P. F. Smith 441. It is not sufficient that the jury may be convinced on the evidence given; but the question is, ought they to have been convinced?

It appears McDonald had been convicted of selling liquor contrary to law, and a fine imposed on him, which was unpaid. He was again arrested, charged with a like offence, and desired Nicolls to pay the fine, and become bail for his appearance on the latter charge. He was otherwise indebted, and owned two pieces of .land. Some agreement was entered into whereby Nicolls was to make some payments and assume liabilities, and take a conveyance of the lands. The main contention is whether the conveyance was intended as an absolute sale and purchase, of the lands, or as a mortgage only.

McDonald testified that Nicolls asked for a deed; but he refused and said he would give a mortgage; and when the deed was executed a few days thereafter, he was told by Mr. Richmond who drew it, that it would be for security only, and when the debt was paid the property should be reconveyed to him.

George Dean, a tenant of McDonald and living on the lands, was present and heard the agreement. Both he and Nicolls positively and unequivocally contradict McDonald, and swear the sale was to be absolute. Each swears that Nicolls absolutely refused to assume any obligation to accept the lands as security, lie declared if he took the land he must take it just as he would-buy from any other person, and would not give McDonald any chance to redeem it. The latter then asked how much he would give. Nicolls replied sixteen hundred dollars and not a dollar more. He concluded to accept it. The execution of the deed was postponed until the records should be searched. Nicolls was to assume certain obligations and give his note for the residue, amounting to $350. The writings were prepared by Mr. Richmond, a reputable member of the bar, a few days thereafter, and were executed in his presence on the 23d May 1879. They wore three in number to wit: the deed from McDonald to Nicolls, and an agreement and note of the latter to the former. The agreement, after reciting whereas Nicolls had purchased two several farms of McDonald, proceeded to say: “ Now in consideration and full satisfaction of said purchase” said Nicolls agreed to pay the fine and costs in the case of the Commonwealth v. McDonald; the fees and charges of Richmond & Sons; six lien judgments specified; to receipt McDonald’s indebtedness to him, and to give him his note for $350, payable in two years, “ with the understanding that any liability said Nicolls may incur by becoming bail for McDonald’s appearance at the next court shall be a payment on said note.” The note of $350, given by Nicolls at the same ’ time, recited the same “ understanding.” Mr. Richmond testified : “ I read to him (McDonald) the papers and explained them to him; and these are the papers and he understood them; I not only read them, but explained them and their purport.” Thus not only is the evidence of Richmond in conflict' with that of McDonald as to what occurred at the execution of the papers; but Nicholls also swears that there was no agreement in any way or form, at the making of the deed, that the land should be reconveyed to McDonald; The note and agreement were left in the custody ’of Mr. Richmond, when the writings were executed.

The defendant in error seeks to assail by his own evidence not only the absolute character- of the deed, but to contradict the written contract and note executed by Nicolls “ in consideration and full satisfaction of said purchase.” The vendor is the only witness who testifies, that either before, or at the time of, the execution of the deed, there was any agreement whereby it was to be given or accepted as a mortgage. The vendee and another witness present at the alleged parol agreement, and the vendee and conveyancer present at the execution of the writings, each not only expressly and positively denies any such understanding, but swears to an agreement in entire harmony with all the written instruments. Thus the material facts averred by the vendor are not denied by the vendee alone, but also by another witness present at the agreement and at the execution of the deed. The evidence of what occurred contemporaneously with the making of the agreement and' the execution of the deed is overwhelmingly against the version now given by the vendor. It is very clear, upon all the evidence referred to, that no chancellor should reform the deed or change its absolute character.

It is, however, contended by the defendant in error that there is other evidence tending to sustain his view. There is some; in fact the value of the.property appears to have been much more than $1,600; and there is some evidence of subsequent admissions of the vendee indicating that he held it as security. Yet all these are overthrown by the declarations and acts of the vendor. Some of them may be stated. A few days after the execution of the deed the vendor and the vendee went together to the farm on which Dean was residing, and stated to him that Nicolls bad purchased it, and Dean was thereafter to be his tenant, and that McDonald was to have nothing more to do with the farm ; that Dean must look to, and transact his business with Nicolls. The vendor further saying to Dean that he had sold the property to Nicolls as they had tallied on the occasion when he was present. Thenceforth, for a year Dean did continue in possession as the tenant of Nicolls without any interference or molestation .on the part of McDonald.

Mr. Richmond testifies that some time after the execution of the deed, McDonald said to him he would like to “buyback” one piece of the land, called the homestead, and asked if he thought Nicolls would sell it to him. At that time he made no allegation or claim of any right to redeem the land.

On the 20th September following, the parties made a written agreement whereby Nicolls agreed to sell and McDonald to buy the homestead lot. On that day they appear to have settled all purchase-money due from Nicolls on his note and contract of 23d May. McDonald gave a written order on Kichmond requesting him to “ deliver to S. Nicolls one note, in favor of John McDonald, for three hundred and fifty dollars, against S. Nicolls; also, one other paper with statement for purchase, and payments on farms for which I have received satisfaction this day, and also my books and receipts.”

There is evidence of some other admissions by each party. On the one side indicating the original transaction was considered an absolute purchase, and on the other side that the transfer was merely as security ; but they are wholly insufficient to destroy the force and effect of the testimony to which we have referred.

The unsatisfactory and strongly contradicted evidence of the vendor, as to alleged facts contemporaneous with the making of the deed, is still further weakened by his subsequent acts. The operation of the statute of frauds cannot be suspended, nor a title to real estate by deed absolute on its face be destroyed by such evidence. The learned judge should have given binding instructions to that effect, and have affirmed the point covered by the first specification of error. It is therefore unnecessary to consider the remaining specifications.

Judgment reversed.