Stinchfield v. Milliken

• Decision Date: 31 December 1880
• Citation: 71 Me. 567
• Parties: SETH STINCHFIELD in equity v. ELIAS MILLIKEN and another.
• Court: Maine Supreme Court

71 Me. 567

SETH STINCHFIELD in equity v. ELIAS MILLIKEN and another.

Supreme Judicial Court of Maine.

December 31, 1880

BILL IN EQUITY TO REDEEM. Heard on bill, answer and proof.

The facts appear in the opinion.

F A. Pike, for the plaintiff, cited: Greenlief's note to Cruise, vol. 2, p. 74; Poindexter v. McCannon, 1 Dev. Eq. Rep. 373; Skinner v. Miller, 5 Lit. 84; 2 J. J. Marsh, 471; Edington v. Harper, 3 J. J. Marsh 354; Crane v. Bonnell, 1 Green, c. 264; Robertson v. Campbell, 2 Call. 421; King v Newman, 2 Munf. 40; Prince v. Beardon, 1 A. K. Marsh. 169; Oldham v. Halley, 2 J. J. Marsh, 114; Thompson v. Davenport, 1 Wash. 125; Conway v. Alexander, 7 Cranch 218; 2 Edw. 138; Flagg v. Mann, 2 Sum. 533; Waters v. Randall, 6 Met. 479; French v. Sturdivant, 8 Me. 251; Kelleran v. Brown, 4 Mass. 443; Thomaston Bank v. Stimpson, 21 Me. 195; Richardson v. Woodbury, 43 Me. 211; Eaton v. Green, 22 Pick. 526; Story Eq. Jur. § 1018; 2 Washburn, R. P. 43.

A. McNichol, for the defendants.

The defendants hold the title to the real estate. They studiously avoided taking a mortgage or giving a defeasance under seal to make the transaction a mortgage. The contract given by the defendants to the plaintiff subsequent to all the other transactions did not constitute the whole transaction a mortgage at common law, which must be done before the court can apply equity. Flint v. Sheldon, 13 Mass. 443; Kelleran v. Brown, 4 Mass. 443; Erskine v. Townsend, 2 Mass. 493; Gardiner v. Gerrish, 23 Me. 46; Stackpole v. Arnold, 11 Mass. 27; Cotton v. McKee, 68 Me. 486; Shaw v. Erskine, 43 Me. 371; Bodwell v. Webster, 13 Pick. 411; Treat v. Strickland, 23 Me. 234; R. S., c. 90, § 1; McLaughlin v. Randall, 66 Me. 226; Conway v. Alexander, 7 Cranch, p. 236; Flagg v. Mann, 14 Pick. 479, authorities cited; Fales v. Reynolds, 14 Me. 89; Richards v. Smith, 9 Gray 315; Smith v. Burnham, 3 Sum. 435. Stat. 1874, c. 175, does not enlarge the equity jurisdiction of this court touching mortgages. It says: " Tenth, And shall have full equity jurisdiction according to the usage and courts of equity, in all other cases. " The jurisdiction of the court as to mortgages had previously been defined in the same section.

The steam engine and machinery became a part of the realty when placed in the mill. Davis v. Buffum, 51 Maine. 1607 Met. 40; Symonds v. Harris, 51 Me. 14; The foreclosure of a mortgage affects the whole mortgage. Spring v. Haines, 21 Me. 126; Rogers v. Saunders, 16 Me. 92.

PETERS J.

The following facts are deducible from the evidence in this case: The complainant purchased of the defendants, certain steam-mill machinery, for removal from Hallowell to Danforth, in this State. There was at the time a verbal agreement, that the complainant should build a mill, and put the machinery into it, on a lot of land in Danforth, bought by him of one Russell, who was to deed the lot directly to the defendants. The complainant was also to procure a deed of his home (another) lot to the defendants from the heirs of H. E. Prentiss, who held an absolute title thereof as security for the complainant's indebtedness to them, there being a small balance only unpaid, which the defendants were to pay for him. The defendants were to give an agreement, to convey to the complainant if he paid his indebtedness to them according to the tenor of certain notes to be given.

On June 15, 1875, the complainant gave to the defendants a mortgage on the machinery as personal property to secure the notes hereafter named, in order to protect a lien thereon until the machinery should be put into the mill to be built, and become a part of the real estate. And there was embodied in this mortgage, an agreement of the complainant to build the mill and put the machinery into it. On June 16, 1875, Russell conveyed the mill lot to the defendants. On August 2, 1875, Prentiss conveyed the home lot to them, they paying the balance of the Prentiss claim. On August 4, 1875, the defendants gave a writing to the complainant, agreeing to convey the property to him upon the condition that he would pay to them his notes on one, two, three, four and five years, respectively, with interest. The notes were given for the amount payable for the machinery, the sum paid to Prentiss, and for other loans and advances. The complainant went on and erected and completed a mill on the Russell lot, and the steam mill machinery became a part of it.

The complainant seeks to redeem the property, claiming the transaction to be a mortgage. The defendants contend that the transaction was not a mortgage, that it was a conditional sale.

It was not a legal mortgage: Because the defeasance has no seal. Warren v. Lovis, 53 Me. 463. And because the papers were not between the same parties. At law, the conveyance must be made by the mortgager and the defeasance by the mortgagee. Shaw v. Erskine, 43 Me. 371.

But the transaction was in equity a mortgage--an equitable mortgage. The criterion is the intention of the parties. In equity, this intention may be ascertained from all pertinent facts either within or without the written parts of the transaction. Where the intention is clear that an absolute conveyance is taken as a security for a debt, it is in equity a mortgage. No matter how much the real transaction may be covered up and disguised. The real intention governs. " If a transaction resolve itself into a security, whatever may be its form, and whatever name the parties may choose to give it, it is in equity a mortgage." Flagg v. Mann, 2 Sum. 533.

The existence of a debt is well nigh an infallible evidence of the intention. The intention here is transparent. The defendants have a debt and held the property as a security for its collection. A legal mortgage was avoided; an equitable mortgage was made.

Although different at law, in equity a mortgage is not prevented because the conveyance does not come from the equitable mortgager. It is sufficient that the debtor has an interest in the property conveyed, either legal or equitable. Having such an interest, if he procures a conveyance to one who advances money upon it for him, taking the property as security for the money advanced, he has a right to redeem. The grantee in such case, acquiring the title by his act, holds it as his mortgagee. Jones on Mort. 2d ed. § 331. Stoddard v. Whiting, 46 N.Y. 627; Carr v. Carr, 52 N.Y. 251.

It is denied that this court has the power to declare that an absolute deed shall be deemed to be a mortgage, allowing an equitable mortgager the right to redeem. At law, it has no such power. Nor, when the court had a limited jurisdiction in equity, was the doctrine admitted. It was always understood, however, that, in a case like the present, if, instead of a demurrer, an answer was filed admitting the facts alleged, the court had the power to apply the remedy. Thomaston Bank v. Stimpson, 21 Me. 195; Whitney v. Batchelder, 32 Me. 313; Howe v. Russell, 36 Me. 115; Richardson v. Woodbury, 43 Me. 206. But since the act of 1874 conferred general chancery powers upon the court, it has full and complete jurisdiction in such cases. Rowell v. Jewett, 69 Me. 293-303; Jones, Mort. (2d ed.) § 282.

Courts of equity generally exercise such power. While the grounds upon which the doctrine is admitted vary with different courts, there is a great concurrence of opinion as far as the result is concerned. In our judgment, it is a sound policy as well as principle to declare that, to take an absolute conveyance as a mortgage without any defeasance, is in equity a fraud. Experience shows that endless frauds and oppressions would be perpetrated under such modes, if equity could not grant relief. It is taking an agreement, in one sense, exceeding and differing from the true agreement. Instead of setting it wholly aside, equity is worked out by adapting it to the purpose originally intended. Equity allows reparation to be made by admitting a verbal defeasance to be proved. The cases which support this view are too numerous to cite. The American cases are collected in Jones, Mort. 2d ed. § 241, et seq. See Campbell v. Dearborn, 109 Mass. 130; and Hassam v. Barrett, 115 Mass. 256.

The complainant seeks to separate the articles originally mortgaged as personal property, and, being allowed the value of them, redeem the balance of the estate only. That would not be equitable. The personal became a part of the real as originally designed to be. It was affixed and solidly bolted thereto. The mortgage was evidently only to serve a temporary purpose. It was not just to...