Fisk v. Stewart

• Citation: 24 Minn. 97
• Parties: JAMES L. FISK and Wife <I>vs.</I> JACOB H. STEWART.
• Decision Date: 13 August 1877
• Court: Minnesota Supreme Court

24 Minn. 97

JAMES L. FISK and Wifevs.

JACOB H. STEWART.

Supreme Court of Minnesota.

August 13, 1877.

This was an action begun in the district court for Ramsey county, September 30, 1875, wherein the plaintiffs demanded

that a conveyance of certain premises to the defendant be decreed a mortgage, and that an account be had of the income and profits of the land. The defendant demurred, but the court, Brill, J., presiding, overruled the demurrer, and the defendant thereupon appealed.

Horn & Billson and Bigelow, Flandrau & Clark, for appellant.

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Gilman, Clough & Lane, for respondents.

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CORNELL, J.

When the real nature of a transaction between the parties is confessedly that of a loan, advanced upon the security of real estate granted to the party making the loan, whatever the form of the instrument of conveyance taken as the security, it is always treated in equity as a mortgage, to which is annexed, as an inseparable incident, the right to the equity of redemption, which can only be extinguished by foreclosure, or voluntary surrender by the party vested with the right by some new agreement founded on an adequate consideration. Neither is it any the less a mortgage that the advance is made wholly upon the security, and without any personal obligation on the part of the borrower to make repayment. 2 Lead. Cas. Eq. (4th Am. Ed.) part 2, p. 1990. Nor is it at all important, as affecting the rights and obligations of the party taking the conveyance, that he received it from another who happens to hold the legal title, instead of the borrower, in whom is vested the equity of redemption, so that it is obtained through the instance and request of the latter, and for his benefit. Ryan v. Dox, 34 N. Y. 307; Carr v. Carr, 52 N. Y. 251. These principles are decisive of all the questions necessarily involved in the case at bar, save that of the statute of limitations.

This case is before us upon a demurrer to the complaint, by which, of course, all its material averments are admitted. The allegations of fact thus stated and admitted are substantially as follows: One Chase having purchased the premises in question at a mortgage foreclosure sale, subject to the right of redemption, and the plaintiffs, having become the owners of the equity of redemption some time prior to the expiration of the year allowed by law for such redemption entered into an arrangement with one Bennett to borrow of him the money necessary to redeem the premises from said sale, and to give him a mortgage or lien thereon to secure its repayment. To carry this arrangement into effect it was mutually agreed, by parol, by and between the plaintiffs, the said Bennett and the said Chase, that the title to said premises should mature in the said Chase, under said foreclosure sale, and that he should then receive a sheriff's deed therefor, and thereupon convey the same to Bennett, upon being paid the agreed amount of Chase's claim, to-wit, $910, and that Bennett should thereupon hold said title merely as a mortgage security for the repayment of said money and interest, and not otherwise; and that, in pursuance thereof, the title was allowed to mature in said Chase, under said foreclosure sale, who received thereupon the said sheriff's deed, which was duly recorded; that the said Bennett thereupon paid to the said Chase, for the plaintiffs, said sum so agreed upon, and the said Chase, at the request of said plaintiffs, then conveyed the legal title to said premises to Bennett, merely as security as aforesaid, and the said Bennett received the said deed of conveyance merely as such security, and not otherwise. At the time this transaction was entered into, one Murray, a brother-in-law of plaintiffs, was living on the premises, under a parol agreement, or understanding, that plaintiffs would convey a portion thereof to him whenever the incumbrances should be removed, and it was a part of the parol undertanding between plaintiffs and Bennett, at the time of the loan, that the latter, as a matter of form, should execute a written lease to Murray of the premises, with a provision that the latter should pay a yearly rental to Bennett equivalent to and as and for the interest agreed upon to be paid him upon the money by him advanced and loaned to plaintiffs, and also containing a stipulation giving Murray the privilege of buying the premises within the time of the lease for the sum of $910, and the rent. And the said lease was executed accordingly.

The defendant, an intimate friend of the plaintiffs and Murray, with full knowledge of these facts, and the fact that Bennett held the legal title to the property merely as security as aforesaid, representing to them...