Peugh v. Davis

Citation96 U.S. 332,24 L.Ed. 775
PartiesPEUGH v. DAVIS
Decision Date01 October 1877
CourtUnited States Supreme Court

APPEAL from the Supreme Court of the District of Columbia.

This was a suit in equity, brought June 28, 1869, to redeem certain real property in Washington City. The defence consisted in an alleged release of the equity of redemption, to establish which, in addition to the testimony of the parties, the defendant relied principally upon the following papers:——

'Whereas the undersigned, Samuel A. Peugh, of the city of Washington, in the District of Columbia, having heretofore sold and conveyed to Henry S. Davis, of the said city, two certain squares of ground in said city, the same being squares numbered nine hundred and ten (910) and nine hundred and eleven (911) in the said city, the said sale and conveyance having been by the said Peugh made with full assurance and promise of a good and indefeasible title in fee-simple, though the said conveyance contains only a special warranty, the said conveyance to said Davis bearing date on the fourth day of March, A.D. 1857, and being recorded on the seventh day of September, A.D. 1857.

'And whereas the title to the said squares so conveyed as aforesaid to said Davis having been now questioned and disputed, the said Peugh doth now, for himself, his heirs, executors, and administrators promise, covenant, and agree to and with the said Henry S. Davis, his heirs and assigns, in the manner following; that is, that he, the said Samuel A. Peugh, and his heirs shall and will warrant and for ever defend the said squares of ground and appurtenances as conveyed, as aforesaid, unto the said Henry S. Davis, his heirs and assigns, from and against the claims of all persons whomsoever.

'And, further, that the said Peugh, and his heirs, executors, and administrators, shall and will pay and refund to said Davis, his heirs or assigns, all and singular the loss, costs, damage, and expenses, including the consideration in said deed or conveyance, which or to which the said Davis, his heirs or assigns, shall lose, incur, pay, or be subject to, by reason of any claim or litigation against or on account of said squares of ground, or either of them.

'And for the full and faithful observance and performance of all the covenants and agreements aforesaid, and for the payment of all the sum or sums of money as therein provided, in the manner prescribed as aforesaid, the said Samuel A. Peugh doth hereby bind himself, his heirs, executors, and administrators, and each and every of them, firmly by these presents.

'In testimony whereof, the said Samuel A. Peugh doth hereto so set his hand and seal on this ninth day of February, in the year of our Lord 1858.

'S. A. PEUGH. [SEAL.]

'Signed, sealed, and delivered in the presence of

'FRANCIS MOHUN.

'WM. H. WARD.'

'WASHINGTON, D. C., Feb. 9, 1858.

'Received of Henry S. Davis $2,000, the same being in full for the purchase of squares Nos. 910 and 911 in the city of Washington.

'$2,000.

S. A. PEUGH.'

The other facts sufficiently appear in the opinion of the court.

The decree at special term dismissing the bill was at general term affirmed; and the complainant appealed to this court.

Mr. Richard T. Merrick and Mr. T. T. Crittenden for the appellant.

1. A deed which is in fact security for a loan is a mortgage, in contemplation of a court of equity, and whether a conveyance absolute on its face will take effect as a mortgage depends primarily if not exclusively, on the nature of the consideration. Morris v. Nixon, 1 How. 118; Babcock v. Wyman, 19 id. 289; Price v. Robinson, 13 Cal. 116; Huntley v. Wheelwright, 29 Md. 341.

2. A court of equity will not allow the right of redemption to be defeated by any agreement making that which is really a mortgage a conditional sale, but, where the transaction is doubtful, will incline to give effect to the instrument as a mortgage. Russell v. Southard, 12 How. 139; Dougherty v. Colgan, 6 Gill & J. (Md.) 275; Artz v. Glover, 21 Md. 456; Baugh v. Merryman, 32 id. 185.

3. The burden of proof is on the mortgagee, who claims a release of the equity of redemption, to show that it was made fairly, deliberately, and for an adequate consideration. Unless the transaction be fair and unmixed with any advantage taken by him of the use of his incumbrance, or of the necessitous circumstances of the mortgagor, equity will hold the parties to their original relation of debtor and creditor. Dougherty v. Colgan, 6 Gill & J. (Md.) 275; Mills v. Mills, 26 Conn. 213; Hyndman v. Hyndman, 19 Vt. 9; Villa v. Rodriguez, 12 Wall. 323; Williams v. Owen, 5 Myl. & Cr. 303; Russell v. Southard, supra; 2 White & Tudor, Lead. Cas. in Eq. (4th Am. ed.), pp. 1983, 1984, 1995.

Mr. Walter D. Davidge for the appellee.

The mortgagee was under no disability to purchase the equity of redemption; and the validity of the purchase does not, to use the language of this court, 'depend upon his ability afterwards to show that he paid for the property all that any one would have been willing to give.' Russell v. Southard, 12 How. 139. See also Villa v. Rodriguez, 12 Wall. 323; 3 Sugden, V. & P. (10th ed.) 227, 228; Knight v. Majoribanks, 2 Mac. & G. 10; Webb v. York, 2 Sch. & Lef. 661; Conway's Ex. v. Alexander, 7 Cranch, 218; Hicks v. Hicks, 5 Gill & J. (Md.) 85; Trall v. Skinner, 17 Pick. (Mass.) 213; Wynkoop v. Cavring et al., 21 Ill 570. Such a transaction will not be set aside, except for manifest unfairness, or gross inadequacy of price; and neither of those grounds for relief is averred. The complainant testified in his own behalf, but was silent upon the subject of the value of the property.

More than eleven years elapsed between the date of the transaction now sought to be impeached and the filing of this bill, and no explanation of the delay is furnished. The laches of the complainant, and his long acquiescence in the assertion of adverse rights by the defendant, are a bar to this suit. Badger v. Badger, 2 Wall. 87; Marsh v. Whitmore, 21 id. 178.

MR. JUSTICE FIELD delivered the opinion of the court.

This is a suit in equity to redeem certain property, consisting of two squares of land in the city of Washington, from an alleged mortgage of the complainant. The facts, out of which it arises, are briefly these: In March, 1857, the complainant, Samuel A. Peugh, borrowed from the defendant, Henry S. Davis, the sum of $2,000, payable in sixty days, with interest at the rate of three and three-fourths per cent a month, and executed as security for its payment a deed of the two squares. This deed was absolute in form, purporting to be made upon a sale of the property for the consideration of the $2,000, and contained a special covenant against the acts of the grantor and parties claiming under him. This loan was paid at its maturity, and the deed returned to the grantor.

In May following, the complainant borrowed another sum from the defendant, amounting to $1,500, payable in sixty days, with the same rate of interest, and as security for its payment redelivered to him the same deed. Upon this sum the interest was paid up to the 6th of September following. The principal not being paid, the defendant placed the deed on record on the 7th of that month. In January, 1858, a party claiming the squares under a tax title brought two suits in ejectment for their recovery. The defendant thereupon demanded payment of his loan, as he had previously done, but without success.

On the 9th of February following, the complainant obtained from the defendant the further sum of $500, and thereupon executed to him an instrument under seal, which recited that he had previously sold and conveyed to the defendant the squares in question; that the sale and conveyance were made with the assurance and promise of a good and indefeasible title in fee-simple; and that the title was now disputed. It contained a general covenant warranting the title against all parties and a special covenant to pay and refund to the defendant the costs and expenses, including the consideration of the deed, to which he might be subjected by reason of any claim or litigation on account of the premises. Accompanying this instrument, and bearing the same date, the complainant gave the defendant a receipt for $2,000, purporting to be in full for the purchase of the land.

The question presented for determination is whether these instruments, taken in connection with the testimony of the parties, had the effect of releasing the complainant's equity of redemption. It is insisted by him that the $500 advanced at the time was an additional loan, and that the redelivered deed was security for the $2,000, as it had previously been for the $1,500. It is claimed by the defendant that this money was paid for a release of the equity of redemption which the complainant offered to sell for that sum, and at the...

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