Batty v. Snook

• Decision Date: 10 June 1858
• Citation: 5 Mich. 231
• Court: Michigan Supreme Court
• Parties: John Batty v. Thomas W. Snook and another

5 Mich. 231

John Batty v. Thomas W. Snook and another

Supreme Court of Michigan

June 10, 1858

Heard May 20, 1858; May 21, 1858; May 22, 1858 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal from Macomb Circuit in chancery.

The allegations of the bill, so far as they are material to illustrate the decision, are as follows:

That in 1853, complainant Batty bought of defendant Warner a lot in the village of Mt. Clemens, with sawmill thereon, for $ 3,750, and gave back a mortgage for part of the purchase money; that, in January, 1855, he owed Warner $ 2,331.26 on said mortgage, besides other sums in account; he was also otherwise largely indebted, especially to defendant Snook; that in his embarrassment, he applied to Snook and Warner, and pet himself into their hands for advice; that he followed their directions, settled with them as they dictated, and executed such papers as they advised; that he paid Warner, in property, all his debt except $ 2,000, and to secure him this sum he deeded back to him the mill lot (Warner releasing the mortgage thereon), and took from him a contract of purchase of said lot; which transaction was solely and only to secure to Warner the $ 2,000.

This contract, dated February 7th, 1855, provides as follows: That Warner shall sell to Batty said lot and mill, and Batty shall pay therefor $ 2,000, as follows: $ 500 at the store of said Snook, December 1st, 1855, and $ 1,500 on the 1st day of December, 1856, at same place; that, on the 1st day of December, 1855, Batty, on receiving a warranty deed from Warner, shall mortgage back the said premises for $ 1,500, and give other collateral security for $ 1,200 thereof, the sufficiency of which shall be determined by referees, if the parties do not agree; that said Batty shall also pay, by the 6th of August, 1855, a prior mortgage on said lot to A. J. Robertson, and cause the same to be discharged of record; and that he shall not remove any buildings or machinery from said lot.

The contract then reads as follows: "And it is further hereby covenanted and agreed, by and between the parties hereto, that time is now, and shall be at all times, considered and deemed a material part of this contract. That, in case default shall be made in paying off and discharging said indenture of mortgage, as above agreed, on the 6th day of August, 1855, and in case default be made in the payment of said sum of two thousand dollars and interest, at the times and place in this agreement specified; or in case default shall be made in fulfilling and performing any of the covenants and agreements herein contained and mentioned, to be kept, fulfilled, and performed on the part of the said party of the second part, and his legal representatives; then this agreement, and all preceding provisions hereof, shall be null and void, and no longer binding, at the option of the said party of the first part, his representatives and assigns, and all the payments which shall have been made hereon, or in pursuance hereof, absolutely and forever forfeited to the party of the first part." After a clause providing for re-entry in case of default, it goes on to say: "In case of such default, the said party of the second part shall be deemed as the tenant at will of the said party of the first part, at the yearly rent of ten dollars per annum; and after such default the party of the first part, his representatives and assigns, shall and may have and exercise all the powers, rights, and remedies provided by law to collect such rent or remove such tenant or tenants, the same as if the relation of landlord and tenant, hereby declared, were created by an original and absolute lease for that sole purpose, on a specified rent of ten dollars annually, payable quarterly."

The contract further provides, that, on the giving of the mortgage and collateral security; by Batty, Warner shall convey to him.

The bill further alleges that this contract was given solely as security for a balance of indebtedness, and was not in the nature of an original contract of purchase; that Snook was present at the making of the contract, and knew all its terms; that, on the 22d of December, 1855, Warner deeded said mill lot to Snook, who, on the 18th of January following, forcibly ejected complainant therefrom.

The bill then alleges the payment of the amount due from Batty to Snook; an attempt to tender to Warner the amount which fell due on his contract December 1st, 1855, which attempt was rendered abortive by the fraudulent acts of Warner and Snook; which allegations were not sustained by evidence.

The bill prays that Snook may be decreed to convey the premises to Batty, on being paid the $ 2,000 and interest, and that complainant may be put in possession, etc.

The answer of defendants admits the original purchase of the mill and lot by Batty of Warner; the indebtedness from Batty to Warner and to Snook, in January, 1855; denies that Batty even applied to them for their advice in his embarrassment, or put himself under their direction; denies that the conveyance of the mill and lot from Batty to Warner was for the purpose of securing the payment of the $ 2,000; but alleges, that, on or about the 7th of February, 1855, defendant Warner (as he had once before) made a journey from Saginaw, where he resided, to Mt. Clemens, for the express purpose of obtaining, if possible, payment or security of the indebtedness from Batty to himself; that he found Snook in possession of the mill property, under an arrangement with Batty and Batty refused to make any arrangement with him; that, as he was about to return home, Batty told him he had in the hands of Snook a horse, buggy, and note, which he would transfer to Warner, if the latter would release him from all his indebtedness besides the mortgage and extend the payment of the amount due on the mortgage to December 1st, 1855; that defendant Warner, thinking he could do no better, agreed to this, and entered into the contract set out in the bill, with the design and express understanding between him and Batty that, if complainant failed in any particular in complying with the contract, he should have no right at law or in equity to said mill premises; and said contract was expressly conditioned to be the same as an original contract for the conveyance of land, in which time should be material, and every requisite on the part of Batty to be done and performed, should be by him literally complied with; that, in consideration of said horse, buggy, and note, and the re-deeding of said premises, Warner released Batty from an indebtedness of more than $ 1,150, while the value of said personal property was only between $ 100 and $ 200, but Warner was compelled to take the same, or obtain nothing. And Warner denies that the re-deeding by him and the making of said contract were for the purpose merely of security for money, and avers that he directed it to be so drawn that time should be material, and Batty forfeit all rights under the same by any failure on his part.

Transactions between the parties, for some time before and succeeding the making of this contract, are also set forth in detail in the answer, but under the view taken of the case by the court, it is unnecessary to repeat the allegations here, or to give the evidence produced by the parties.

Decree of the court dismissing the complainant's bill with costs, reversed, and a decree entered declaring the deed and contract one transaction, and to be a mortgage, and complainant entitled to redeem; and the transcript remitted to the court.

Walkers & Russell, for complainant:

Whatever form a contract or instrument may have, if the attending circumstances show it to have been intended as security for a debt or loan of money, chancery will always decree a redemption: 4 Kent Com., 142; 2 Sum. 228; 1 Paige 48; 2 Lead. Cas. in Eq., Part 2, 432-435.

If there is a doubt as to the fact whether the transaction was in the nature of a mortgage, the presumption, in order to avoid a forfeiture, is always in favor of a permission to redeem: 4 Pick. 349; 2 Woodb. & M., 426, 443; 12 How. 139; 14 Ill. 428.

"Once a mortgage always a mortgage" is a maxim of equity too well established to be denied: 4 Kent Com., 158; 1 Hill. on Mort., 42; 2 Johns. Ch., 33; 27 Vt. 589; 7 Johns. Ch., 41; 2 Cow. 324.

Chancery looks upon the dealings between mortgagor and mortgagee with suspicion, and will not permit the latter to purchase the equity of redemption, unless the greatest fairness, the amplest consideration, and the absence of all oppression be fully and fairly shown: 3 Dana 174; 12 How. 154; 2 Johns. Ch., 33; 19 Vt. 9.

Chancery will never uphold an arrangement which was designed for and will result in cutting off mortgagor's right of redemption: 13 Vt. 341; 3 Dana 174; 6 Gill. & J., 275; 12 How. 139; 2 Johns. Ch., 33; ...