Wallace v. Wilson

• Decision Date: 31 July 1860
• Citation: 30 Mo. 335
• Parties: WALLACE, Respondent, v. WILSON et al., Appellants.
• Court: Missouri Supreme Court

30 Mo. 335

WALLACE, Respondent,

v.WILSON et al., Appellants.

Supreme Court of Missouri.

July Term, 1860.

1. One B. held a receipt issued to him by the receiver of the United States land office upon the entry by him of a tract of forty acres; also the register's certificate of the location by him of a military land warrant. No patents had been granted by the United States. B. assigned said receiver's receipt to W. by written endorsement as follows: “For value received, I assign the within to W. as collateral security, this 15th day of May, 1857. [Signed] B.” At the same time he assigned the register's certificate by an endorsement identical with the above, with the exception that it was assigned “as counter security.” Held, that parol evidence might be adduced to show that these assignments were made to secure two certain promissory notes executed by said B. in favor of said W.; that the said assignments created an equitable lien or mortgage in favor of W. upon the lands embraced in said receipt and certificate.

2. To entitle a person to invoke the aid of the rule that protects a bona fide purchaser as against a prior equity, it must appear that he made his purchase and paid the purchase money before he had knowledge of such prior equity; he should in his answer be full and explicit as to the time and terms of his purchase, and the payment of the purchase money.

Appeal from Bates Circuit Court.

Elisha Blevins and Willis J. Peak were indebted to Thomas B. Wallace upon two promissory notes, each for $616.86, one dated May 14, 1857, payable in three months; the other dated May 15, 1857, payable in six months. Said Blevins was in possession of a receiver's receipt, issued to him by the receiver at the land office at Warsaw, Mo., on the entry by him of a tract of forty acres. This receipt was dated March 24, 1856. He also was possessed of a register's certificate of the location by him of a military land warrant at the same office. The land warrant was for one hundred and twenty acres; it was dated May 1, 1856. Said Blevins assigned said receipt by endorsement, as follows: “For value received, I assign the within to Thomas B. Wallace as collateral security, this 15th day of May, 1857. [Signed] Elisha Blevins.” The register's certificate was assigned by endorsement, as follows: “For value received, I assign the within to Thomas B. Wallace as counter security, this 15th day of May, 1857. [Signed] Elisha Blevins.” Wallace recovered judgments against said Blevins on said notes. On the 21st of July, 1857, Blevins conveyed the tracts of land embraced in said certificate and receipt to Simeon Wilson. By the deed the said tracts were described by the section, fractional section, township and range. The receipt of the consideration was recited.

Plaintiff, Wallace, seeks in this action to subject the land in Wilson's hands to the payment of the said promissory notes. He prays the foreclosure of his equity of redemption and the sale of said land. He alleges in his petition that the defendant Wilson purchased with notice of his equitable mortgage. Parol evidence was introduced by plaintiff to show that the debts intended to be secured by the assignment of the receipt and certificate were those evidenced by the promissory notes above referred to.

The court found in favor of plaintiff, that the defendant purchased with notice of plaintiff's equity, and decreed the sale of the land.Colman & Ballou, for appellants.

I. The facts alleged in the petition, or proven, do not and should not constitute a cause of action. The doctrine of equitable mortgages created by a deposit of title deeds or legal titles, from its first inception in England, has been lamented, and never has been recognized in this state, and has been repudiated in Kentucky; (Vanmeter v. McFadden, 8 Mon. 438; Bowers v. Oyster, 3 Penn. 239;) also in Pennsylvania. (3 Barr, 233; see 19 Ves. 211; 11 Ves. 403; 8 Greenl. 250; 2 Story Eq. § 1020; 1 R. C. 1855, p. 364, § 40, 41, 42.) Parol mortgage is not good. The duplicate and certificate of the land warrant are not legal titles, or title deeds at common law, and their mere deposit, without any thing more, would not constitute an equitable mortgage. This would be going beyond the English doctrine, and the courts of England have refused to extend it. If, then, this duplicate and certificate are not at common law legal titles, a deposit, even with a parol agreement showing for what debt, &c., it was deposited to secure, would not constitute the deposit an equitable mortgage even in England, and should not in this state. But if it be insisted that the assignments constitute a legal mortgage, they are void, not being under seal; nor are they any conveyance of the land, and are also void for uncertainty, not specifying for what demand, or debts, or the amounts, to whom or when due, nor where payable, as it requires parol testimony to establish all these facts, which is not allowable under the statute of frauds and perjuries in this state. R. C. 1855, p. 806; 7 Mo. 389; 11 Vesey, 403; 1 Ham. 281.) Even if the deposit of title deeds should be allowed to operate or constitute an equitable mortgage, it should not be extended to an assignment and deposit of duplicates and certificates of location of land warrants. (4 Litt. 169.) This deposit, as it is termed, and the assignments as they are, must be an interest in land, or else it is no lien, and should have been so fully reduced to writing as to make it valid and good against the statute of frauds and perjuries. One assignment is as “collateral” and the other as “counter;” “counter security” is not collateral. It can not be construed as meaning collateral but contrary; but the court changed its meaning and made the land in this certificate of location liable also for the debt, and that, too, upon parol testimony. If it be true that it is ambiguous, parol evidence in this case ought not to be allowed to utterly change its meaning, and the court should have pronounced that assignment at least void.

II. Wilson had no notice that the plaintiff had any claim in the lands. (8 Johns. 137; 4 Kent, 172; 3 Ves. 472; 2 Atk. 275; 2 John. Ch. 181; 12 John. 452; 3 Pick. 149.) The defendant proves fully by the deeds that he was a purchaser for a valuable consideration as well as by other testimony, and the plaintiff has not proved that he had any notice of his particular claim. The purchase was made in June and a title bond from Blevins to Wilson was first taken. Wilson gave his notes for it; afterwards the deeds were made in July, which recited the payment of the purchase money, and these recitals are evidence of payment till the contrary is proved; and all this took place before any suit was brought. Defendant could not prove the payment except by the deeds; he could not by Blevins, for he is a co-defendant. When the defendant took possession, the plaintiff should have notified him of his claim, and if this had been done before the purchase money was paid, then there might have been some pretence to hold this land liable.

Hicks, for respondent.

I. The assignments of the land certificates and their delivery by Blevins to respondent, and the agreements then made, constituted a good equitable mortgage. (Sto. Eq. § 1020; Rockwell v. Hobbs, 2 Sandf. Ch. 9; Welch v. Usher, 2 Hill, S. C., 167; 10 Sm. & Marsh. 418; 4 Kent Com. 154.) Appellant at the time of his purchase from Blevins had notice of respondent's lien on the land. In fact the answer does not deny notice. (8 Mo. 303; 4 Mo. 62.) The purchase money was not paid before the institution of this suit, if it has ever been paid.NAPTON, Judge, delivered the opinion of the court.

The doctrine of equitable mortgages created by a transfer of the possession of title papers from a debtor to his creditor is not involved in the consideration of this case. The objection to that doctrine was, that it annulled or disregarded the statutes of frauds; yet it was firmly established in England, despite of the doubts of eminent chancellors, and in this country, according to Judge Story and Chancellor Kent, has been pretty generally adopted. The case before us, however, requires no investigation of the subject. It is not a deposit of legal title papers, with a parol agreement that the transaction shall be considered a mortgage. The legal title was in the United States. The only evidences of title was a receiver's receipt for forty acres of the land, and the certificate of the register for the location of one hundred and twenty acres under the military bounty land act of March 3, 1855. These papers were assigned to the plaintiff, by endorsement in writing, as collateral security, and the papers with their endorsements were delivered to plaintiff.

The parol evidence given on the trial, explanatory of the object of the assignment and the circumstances attending it, was unobjectionable. The testimony does not vary or contradict the effect of the writings, or add anything to their validity. Where an absolute deed is converted into a mortgage by parol evidence, there is certainly, to say the least, an apparent contradiction between the written instrument and the parol testimony, yet this may be done according to the weight of authority now. Here the assignment on its face purports to be made only as collateral or counter security, and these terms may with propriety be explained

But it is not material to the defendant whether the assignment was absolute or conditional. If it was absolute, his case is certainly not made any better, and to prove that it was conditional can not be productive of any injury to him. The main question, upon which the merits of the case depend, is whether the defendant Wilson is a bona fidepurchaser of this land from Blevins, without notice of plaintiffs' title. This question, under the old chancery practice, if tried by the chancellor without a feigned issue before a jury, would have...