Madigan v. Mead

• Decision Date: 05 September 1883
• Citation: 16 N.W. 539,31 Minn. 94
• Parties: Michael Madigan v. John Mead, impleaded, etc
• Court: Minnesota Supreme Court

16 N.W. 539

31 Minn. 94

Michael Madigan v. John Mead, impleaded, etc

Supreme Court of Minnesota

September 5, 1883

Plaintiff brought this action in the district court for Houston county, to redeem certain premises from a conveyance which the complaint alleged was a mortgage in fact although a deed in form, and for an accounting by defendant Mead, who held the title. The defendants made default, and the action was referred to a referee to take proofs and an accounting. The referee having found the facts as recited in the opinion the court, Farmer, J., presiding, ordered judgment for plaintiff, which was entered, and the defendant Mead appealed.

Judgment affirmed.

Hugh Cameron and G. J. Lomen, for appellant.

The complaint alleges neither fraud, surprise nor mistake without which a deed absolute on its face cannot be shown to be intended for a mortgage. McCane v. White, 5 Minn. 139, (178;) Gray v. Stockton, 8 Minn. 472, (529;) Belote v. Morrison, 8 Minn. 62, (97;) Russell v. Schurmier, 9 Minn, 16, (28;) Glover v. Payn, 19 Wend. 518.

A parol agreement by grantee to hold in trust for grantor will not create a trust enforceable in equity, though there is no consideration paid by the grantee. 2 Story, Eq. Jur. § 792; Titcomb v. Morrill, 10 Allen, 15; Gen. St. 1878, c. 43, §§ 3, 16. The deeds do not constitute a defeasible purchase or conditional sale. There was no limitation as to time or amount. Slowey v. McMurray, 27 Mo. 113; Slutz v. Desenberg, 28 Ohio St. 371; Watson v. Dickens, 12 S. & M. (Miss.) 608; Powell on Mortgages, 130.

The facts do not constitute the deeds mortgages. The relation of debtor and creditor did not exist. Glover v. Payn, Slutz v. Desenberg, supra. The debts were unliquidated, and no time fixed for payment. Bethlehem v. Annis, 40 N.H. 34. Defendant had no power to foreclose. If plaintiff did not pay the debts, and the rents and profits were not sufficient to pay them, the defendant had no remedy by foreclosure or otherwise, and consequently plaintiff had no power to redeem, because the right to foreclose and the right to redeem are reciprocal. King v. Meighen, 20 Minn. 237, (264.) The deeds were not treated as mortgages. A mortgagee is not entitled to possession before foreclosure.

If the deeds were mortgages, the right of redemption is barred by the statute of limitations. If there was a debt, it became due on the day of the date of the deed. Kennedy v. Williams, 11 Minn. 219, (314;) King v. Meighen, supra; 2 Story, Eq. Jur. § 1028.

James O'Brien, for respondent.

OPINION

Vanderburgh, J.

In 1871, the plaintiff, owning the house and lot in controversy, which were heavily incumbered with mortgages and judgment liens, and being otherwise also indebted, entered into an agreement by parol with the defendant Roach, by which, as he alleges in substance, the latter would take a conveyance of the premises as security for all sums which should be advanced by him in the payment of such debts, and, on being reimbursed therefor out of the rents of the premises, or by repayment thereof by plaintiff, together with interest and expenses, he should reconvey the same to plaintiff. The defendant Roach, accordingly, received a conveyance of the premises from plaintiff, and entered into possession. Thereafter, on the first of April, 1872, by the mutual agreement and understanding of all the parties, and at the request of the defendant Roach and the plaintiff, the defendant Mead, being fully advised in the premises, accepted a conveyance of the land in question upon the same terms and conditions, and thereafter entered into possession, paid off all the debts and liabilities of plaintiff, together with certain sums for taxes and insurance, and in the mean time, and to the time of the commencement of the action, received the rents. The consideration expressed in the deed is the sum of $ 400. Such conveyance is not necessarily fraudulent, and may be interpreted to be a mortgage.

1. That a deed absolute on its face may be shown to have been intended as security merely, and be established as a mortgage, is well settled. Phoenix v. Gardner, 13 Minn. 396, (430;) Holton v. Meighen, 15 Minn. 50, (69.) And it is not material whether the security be intended for an existing debt, for future advances, or indemnity for a contingent or uncertain liability, nor that a money consideration is recited in the deed which is not in fact paid. If the purpose is an honest one, and the instrument is really intended for security, whether for a present or future, actual or contingent, liability, the real nature of the transaction may be shown in equity, because its real character must be determined by the actual facts, and not by words merely. Parol evidence may, therefore, be permitted, not to contradict the terms of the writing, but to show the plaintiff's equities in the case, or, as it is sometimes said, to establish an equity superior to the terms of the deed, and because it would be a fraudulent act, which a court of equity would not permit, for the holder of the deed to use it contrary to the terms and understanding upon which he received it. 1 Jones on Mortgages, §§ 285, 288. It is enough, however, to say, as held in Peugh v. Davis, 96 U.S. 332, 24 L.Ed. 775, that, as the equity upon which the court acts arises from the real character of the transaction, either parol or written evidence is admissible to establish it.

2. Any conveyance intended to be a security for the payment of money, or the performance of some duty, is a mortgage. 2 Washb. Real Prop. (4th Ed.) 42. And, in order to carry out the actual intention in such case, an enlarged view of the facts constituting the transaction will be taken by the court. Steel v. Steel, 4 Allen 417; Lanfair v. Lanfair, 18 Pick. 299; Wilcox v. Bates, 26 Wis. 465.

In the case at bar, assuming the complaint to be true, the intention of the parties must be construed to be that the defendant was to take the deed as security for his advances and expenses in settling and paying off the incumbrances against the property, and other debts of plaintiff, and, on being reimbursed therefor, to reconvey the land to the plaintiff....