Mooney v. Byrne

• Decision Date: 01 May 1900
• Citation: 57 N.E. 163,163 N.Y. 86
• Parties: MOONEY v. BYRNE et al.
• Court: New York Court of Appeals Court of Appeals

163 N.Y. 86

57 N.E. 163

MOONEY

v.BYRNE et al.

Court of Appeals of New York.

May 1, 1900.

Appeal from supreme court, appellate division, Second department.

Action by Mary J. Mooney against Anastasia Byrne and others. From a judgment of the appellate division in favor of defendants (44 N. Y. Supp. 1124), plaintiff appeals. Reversed.

William S. Maddox, for appellant.

John M. Shedd and William F. Dunning, for respondents.

VANN, J.

The case made by the complaint was that of a mortgagor with a right to redeem from a mortgagee or his devisees in possession. The defendants denied that there was any mortgage, alleged an absolute conveyance from the plaintiff to one Owen Byrne, and a subsequent conveyance from the latter to a bona fide purchaser. They also pleaded the statute of limitations, and specified the period of six and ten years as the limit exceeded by the plaintiff in bringing her action. The facts agreed upon by the parties and admitted by the pleadings are in substance as follows: On the 14th of August, 1878, the plaintiff owned and was in possession of a parcel of land in the city of New York worth $10,000 and upward, and at the same time she was indebted to Owen Byrne in the sum of about $3,000, secured by three mortgages on said premises, which were under process of foreclosure. In order to secure the payment of this indebtedness she conveyed the land to said Byrne at his request by a deed dated on the day last named and duly recorded. ‘The said deed was given as security,’ and for no other purpose. It contained full covenants, subject to said mortgages, which, as it was declared, ‘shall not merge in the fee, but shall remain valid and subsisting liens.’ Said Byrne at the same time gave back a defeasance of even date, whereby he agreed to reconvey to the plaintiff upon the payment to him, within one year, of said indebtedness, certain advances which he agreed to make for her benefit, and the costs of the foreclosure proceedings. It was stipulated that she should be relieved from personal liability on the bonds, and that no judgment for deficiency should ‘be claimed or entered against her in any action that may be taken upon said bonds or mortgages, so long as she and all persons claiming under her shall not dispute or contest the title of the’ said Byrne ‘or his assigns to said mortgaged premises, or the amounts due him on said mortgages. * * *’ Said instrument also provided ‘that, as to the agreement by the’ said Byrne ‘to reconvey said premises, time is of the essence thereof, and, further, that this instrument shall not be recorded by or on behalf of the’ plaintiff, ‘and that for a violation of this provision, this agreement, so far as the same provides for such reconveyance, shall thereupon become utterly null and void.’ The defeasance was never recorded. Said Byrne at once took possession of the premises, and remained in possession thereof until the 13th of June, 1881, when he conveyed to one Walker by a deed duly recorded, but ‘said conveyance was made without the consent of the plaintiff, who had no knowledge of it until this action was begun’ on the 7th of March, 1895. Said Byrne died on the 11th of January, 1889, leaving a will by which he gave all his property, real and personal, to the defendants. His executor accounted, and has been discharged, and the property of the testator has been delivered to the defendants. The plaintiff claimed that the rents and profits of the premises received by Byrne amounted to more than the principal and interest of the debt secured. She alleged in her complaint that, if Byrne had conveyed the premises to any one, such conveyance was made without her knowledge or consent. She demanded an accounting as to the amount due from her, and that she might ‘be at liberty to redeem said mortgaged premises upon payment of whatever may upon such accounting be found due, which this plaintiff hereby offers to pay,’ and that the defendants be compelled to convey said premises to her. She also demanded alternative and general relief. Said Walker, who still owns the premises, was not made a party to the action. The trial judge dismissed the complaint upon the ground that ‘the statute of limitations is a conclusive defense,’ and the appellate division affirmed, on an opinion rendered in overruling a demurrer to the answer, when the case was in the First department. 15 App. Div. 624,44 N. Y. Supp. 1124; and 1 App. Div. 316,37 N. Y. Supp. 388.

The facts agreed upon show that there was a mortgage; for a deed, although absolute on its face, when given as security only, is a mortgage by operation of law. Horn v. Keteltas, 46 N. Y. 605;Meehan v. Forrester, 52 N. Y. 277;Odell v. Montross, 68 N. Y. 499;Barry v. Insurance Co., 110 N. Y. 1, 5,17 N. E. 405;Kraemer v. Adelsberger, 122 N. Y. 467, 25 N. E. 859;Macauley v. Smith, 132 N. Y. 524, 30 N. E. 997; 15 Am. & Eng. Enc. Law, 791; 1 Rev. St. p. 756, § 3; Laws 1896, c. 547, § 269. While there was no covenant to pay the debt, none was needed, for the property was worth much more than the amount of the indebtedness, and the mortgagee could safely confine his remedy to the land. 1 Rev. St. p. 739. The absence of such a covenant, the conditional release of any claim for deficiency, and the agreement not to record the defeasance, are of no importance, in view of the express admission that the deed was given as security. The deed and defeasance were executed at the same time, and, as the latter in express terms refers to the former, they must be construed the same as if both were embodied in a single instrument. When read together in the light of the admission that the object was to secure a debt, it is clear that the transaction was not a conditionalsale, and that the covenant making time the essence of the contract to reconvey has no more effect than if it occurred in the defeasance clause of an ordinary mortgage. An instrument executed simply as security cannot be turned into a conditional sale by the form of a covenant to reconvey, and, even if there was a doubt as to the meaning, the contract would be regarded as a mortgage, so as to avoid a forfeiture, which the law abhors. Matthews v. Sheehan, 69 N. Y. 585. As was said by the supreme court of the United States: ‘It is an established doctrine that a court of equity will treat a deed absolute in form as a mortgage when it is executed as security for a loan of money. That court looks beyond the terms of the instrument to the real transaction, and when it is shown to be one of security, and not of sale, it will give effect to the actual contract of the parties. * * * It is also an established doctrine that an equity of redemption is inseparably connected with a mortgage; that is to say, so long as the instrument is one of security, the borrower has, in a court of equity, a right to redeem the property upon payment of the loan. This right cannot be waived or abandoned by any stipulation of the parties made at the time, even if embodied in the mortgage. This is a doctrine from which a court of equity never deviates.’ Peugh v. Davis, 96 U. S. 332, 336, 24 L. Ed. 775. The right to redeem is an essential part of a mortgage, read in by the law, if not inserted by the parties. Although many attempts have been made, no form of covenant has yet been devised that will cut off the right of a mortgagor to redeem, even after the law day has long passed by. Clark v. Henry, 2 Cow. 324, 331; Jones, Mortg. § 1039. Even an express stipulation not to redeem does not prevent redemption, because the right is created by law. For the same reason an express power to sell at private sale after default is of no effect. ‘If,’ said Chancellor Kent, ‘a freehold estate be held by way of mortgage for a debt, then it may be laid down as an invariable rule that the creditor must first obtain a decree for a sale under a bill of foreclosure. There never was an instance in which the creditor, holding land in pledge, was allowed to sell at his own will and pleasure. It would open the door to the most shameful imposition and abuse.’ Hart v. Ten Eyck, 2 Johns. Ch. 62, 100. The utmost effect claimed for the provision that the defeasance was not to be recorded is that it was a consent to a private sale after default. As was well said by a recent writer: ‘If the instrument is in its essence a mortgage, the parties cannot by any stipulation, however express and positive, render it anything but a mortgage, or deprive it of the essential attributes belonging to a mortgage in equity. The debtor or mortgagor cannot, in the inception of the instrument, as a part of or collateral to its execution, in any manner deprive himself of his equitable right to come in after a default in paying the money at the stipulated time, and to pay the debt and interest, and thereby to redeem the land from the lien and incumbrance of the mortgage. The equitable right of redemption after a default is preserved, remains in full force, and will be protected and enforced by a court of equity, no matter what stipulations the parties may have made in the original transaction purporting to cut off this right.’ 3 Pom. Eq. Jur. § 1193. So Mr. Thomas says that ‘it was a bold, but necessary, decision of equity that a debtor could not, even by the most solemn engagements entered into at the time of the loan, preclude himself from his right to redeem.’ Thom. Mortg. § 9. To prevent undue advantage through inadequacy of consideration, either with or without an an opportunity to repurchase, the courts are steadfast in holding that a conveyance, whatever its form, if in fact given to secure a debt, is neither an absolute nor a conditional sale, but a mortgage, and that the grantor and grantee have merely the rights, and are subject only to the obligations, of mortgagor and mortgagee. Lawrence v. Trust Co., 13 N. Y. 200.

In the case before us there was no purchase of the land by Owen Byrne, for the existing relation of debtor and creditor between himself...