Emerson v. Atwater

• Decision Date: 12 July 1859
• Citation: 7 Mich. 12
• Court: Michigan Supreme Court
• Parties: Curtis Emerson v. Samuel T. Atwater and others

7 Mich. 12

Curtis Emerson v. Samuel T. Atwater and others

Supreme Court of Michigan

July 12, 1859

Heard May 4, 1859; May 5, 1859; May 6, 1859; May 10, 1859; May 11 1859; May 12, 1859 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal in chancery from Saginaw circuit, where decree was given for complainant.

The pleadings and testimony in the case are so fully stated in the opinion, that it is deemed unnecessary to give any further abstract of them.

M. Wisner and C. I. Walker, for complainant:

1. The plea of defendant Green is not sustained by his evidence. His plea is of a bona fide purchase at the mortgage sales, for money paid down; and the proof is of the premises being struck off to him on the foreclosure of mortgages standing in his name, and without any payment whatever by him at the time. This defense must therefore fail. He can not change his position, and set up any other purchase, at any other time or this purchase for any other consideration, or that these deeds were made to him as security: 14 Johns. 501; 1 Cow. 711; 10 Wheat. 181; 9 Pet. 405; 3 Sandf. Ch., 305; 10 Pet. 177.

2. The defendant Green was not a purchaser without notice.

Emerson is shown by the evidence to have been in possession of the premises at the time; and such possession is implied notice of the rights, whether equitable or legal, of the occupant, although no actual notice is proved: 16 Ves. 249; 2 My. & K., 629; 5 Johns. 29; 2 Paige 300; 4 Blackf. 383; 8 Greenl. 94; 13 Ohio 408; 2 J. J. Marsh, 435; 1 Litt. 351; 7 Watts 384; 2 Hill Ch., 428.

But if there was any doubt upon this point, we prove, beyond all question, that, when Green received the deeds upon which he plants himself in his plea, he received them through the agency of Atwater, who was fully cognizant of all the facts.

When acting, therefore, as the agent of Green, he had full notice of our equities; and notice to the agent is notice to the principal: 2 Vern. 574; 3 Atk. 646; 1 Keen 154; 3 Russ. 493, note 1; 1 Hoff. Ch., 153; 9 Paige 319; 4 McLean 93; 27 Ala. 345.

3. Parol evidence is admissible to show that a deed absolute upon its face was intended as a mortgage, not only where the defeasance was omitted by fraud, accident, or mistake, but where it was omitted by design, on mutual confidence; and where the fact is established by such proof, it will be held as a mortgage: 4 Kent Com., (143), 146; 4 Johns. Ch., 167; 6 Ibid. 417; 1 Paige 77; 5 Ibid. 10; 6 Ibid. 480; 8 Ibid. 238; 36 Me. 123; 6 Humph. 99; 2 Sum. 233; 3 Story 290; 1 Hoff. Ch., 31; 1 How. 125; 12 Ibid. 147; 19 Ibid. 300; Harr. Ch., 113; 2 Lead. Cases in Eq., part 1, 533; 2 Lead. Cases in Eq., part 2, 436; 16 N. Y., 341; 5 McLean 282; 26 Ala. 312; 29 Ibid. 261; 21 Mo. 325; 1 Wis. 527; 2 Curt. 386; 6 Watts 130.

The fact that the grantee was to have the power to sell, to pay off indebtedness, does not affect the question, or alter the nature of the transaction: Ibid; 3 Pick. 490.

There is a striking similarity between the case cited from 19 Howard and the case at bar, as well in the facts as in the legal principles involved

The case of Fuller v. Parish, 3 Mich. 211, goes much further than we contend for, and may not be law since the case of Adair v. Adair, 5 Mich. 204; but the latter case does not conflict with our position.

We are also clearly entitled to a decree for a specific performance of the contract of Atwater, set up in the bill, and fully proved, on the ground of part performance: Lead. Cas. in Eq., (507), 557, 567.

G. C. Bates and J. Moore, on same side.

S. T. Douglass, for defendant Green:

1. Upon the bill, the conveyance from Emerson to Atwatet was a conveyance upon express trusts--that is, trusts created by express declaration or agreement, and not a conveyance upon implied trusts which arise by construction of law, or by "act or operation of law" upon the acts or situation of the parties: Willard Eq., 416; Hill on Trust., 91, 114: 1 Spence Eq., 508; Browne on Stat. Fr., ch. vi. As the bill makes a simple case of a conveyance upon express trusts, without alleging any facts out of which implied trusts could arise, evidence is inadmissible under it to make a case of implied trusts 1 Bro. Ch. Cas., 93; 5 Ga. 589, 598, 623; 3 R. I., 237; 6 Barb. 107; 2 Wis. 593.

2. Under our statute of frauds such an express trust could only be created "by deed or conveyance in writing, subscribed by the party creating or declaring the same:" 1 Bro. Ch. Cas., 92; 1 Ves. 241; 1 H. Bl., 659; 4 Russ. 423; 3 P. Wms., 618; 3 Bro. Ch. Cas., 577; 1 Eden 515; 6 Ves. 332; 1 Johns. Ch., 339; 5 Ibid. 1; 6 Barb. 99; 13 Mass. 443; 5 Cush. 90; 2 Ibid. 232; 7 Ind. 308; 8 Ibid. 209; 2 Green Ch., 362; 2 Wis. 583; 3 Ibid. 576; 2 Bibb. 311; 9 Dana 108; 5 Ga. 341; 6 I bid., 591; 4 W. & Serg., 149; 5 Ibid. 427; 9 Watts 32; 1 Des. 333; 32 Me. 34; 1 Jones Eq., 193; 2 Ibid. 259; Ibid., 184; Busbee Eq., 259. It is conceded that there are authorities which can not be reconciled with this position, and which treat cases like that now under consideration as cases of constructive trust arising out of fraud. But these cases seem to us to be a manifest departure from sound principle. To lay the foundation for such a trust, the fraud must be not simply that which is involved in every breach of contract, but there must have been an original misrepresentation, by means of which the legal title was obtained; an original intent to circumvent and get the better bargain by the confidence reposed. And when such a trust is sought to be enforced, the fraud should be distinctly alleged and clearly proved: 1 Sugd. on Vend., 187; Browne on Stat. Fr., §§ 94 to 96, and p. 109, n. 3; 2 Lead. Cas. in Eq., pt. 1, pp. 585 to 588; Hill on Trust., 166; 6 Harr. & J., 255; Ibid., 422; 1 Rich. Eq., 91; 2 Ibid. 162; 1 Watts & S., 372; 10 Watts 313.

3. The conveyance to Atwater was not by way of mortgage merely. Upon the averments in the bill, it was a conveyance upon trust, and not a mortgage, in so far that it was a conveyance upon the terms that Atwater should take charge of the lands and manage the same, and sell portions thereof, and out of the proceeds pay what was due upon the Blackmar and Eaton Contract, take a title from them, and pay off the incumbrances upon the property: 5 Cush. 90; 18 How. 143; 11 Ohio 204; 17 Ohio 482; 4 W. & Serg., 149; 6 Ired. 224; 6 Barb. 99; 4 Russ. 423. If the only object of the conveyance had been to enable Atwater to sell and pay off Emerson's indebtedness to him, Atwater could not have maintained a bill to foreclose the equity of redemption, as may always be done in the case of a mere mortgage: 1 Hare 533; 11 Eng. L. & Eq., 297. He could have maintained ejectment before foreclosure, which the statute forbids in case of a mortgage: 11 Ohio 341. He could have conveyed the fee discharged of any equity of redemption in Emerson: 3 Kern 200.

Manifestly none of the objects and purposes of the conveyance, as alleged in the bill, could have been accomplished, unless it were construed as a conveyance upon trusts, and not a mortgage; and the following cases, in addition to those already cited, show that such was its nature: 2 Ball & Be., 279; 6 McLean 340; 3 Johns. Ch., 442; 3 Wis. 576.

4. Assuming that the bill makes a case of conveyance by way of mortgage merely, and not upon express trusts, we maintain that a conveyance absolute on its face can not be turned into a mortgage, merely by averment and proof of a cotemporaneous parol agreement between the grantor and grantee. It is conceded that upon this point there is much conflict of authorities, but, (1) There is great weight of authority, as well as of reason, in support of the proposition that a deed absolute on its face can in no case be shown to be a mortgage by parol evidence, unless upon averment and proof that the defeasance has been omitted through fraud (or oppression which is tantamount to fraud), ignorance, or mistake: 3 Atk. 389; 3 Bro. Ch. Cas., 92; 1 Ves. 241; 13 Mass. 447; 5 Cush. 90; 36 Me. 562; 7 Greenl. 435; 32 Me. 34; 2 N. H., 71; 5 Littell 74; 9 Dana 108; 2 Bibb 311; 1 Des. 340; Ibid., 337; 6 Harr. & J., 128; Ibid., 435; 3 Md. Ch. Dec., 511; 1 Jones Eq., 193; 7 Ired. Eq., 246; 6 Ibid. 283; 2 Jones Eq., 172,209, 256; 6 Ired. Eq., 38; 1 Ired. Eq., 290; 2 Ired. Eq., 560; 7 Ired. Eq., 13, 167; 6 Hill 27; 6 Barb. 105; 16 Barb. 439. (2) There is another view of this subject, which is sustained by a considerable weight of authority and plausibility of reasoning. It is substantially this: every conveyance of land which is in fact a security for a debt, whatever may be its form, is, in contemplation of equity, a mortgage. Whether a deed is to be regarded as an absolute conveyance, or a mortgage, depends upon the circumstances under which it was made, and the relations existing between the parties, and not exclusively, or even chiefly, upon the agreement. Hence the nature of those circumstances and relations may be shown by parol evidence; not for the purpose of contradicting the deed, but of raising an equity paramount to its terms. The fact to be established, to convert an absolute conveyance into a mortgage, is that the consideration on the conveyance was a debt, which continued to subsist as such after the conveyance was executed; and of course every collateral circumstance which tends to show that such was the nature of the consideration, may be proved by parol; such as the disparity between the consideration and the value of the land, possession continuing in the grantor after the conveyance, the demand of interest by the grantee, etc. The admission of parol evidence of facts and circumstances, of a nature to overrule the agreement of the parties, is deemed to be perfectly consistent with the statute of frauds, and to rest...