Conner v. Chase

15 Vt. 764

• Court: Supreme Court of Vermont
• Decided: March 15, 1843
• Status: Published

Opinion

The opinion of the court was delivered by

Williams, Ch. J.

This cause has been elaborately argued at this term and at two previous terms. It would have been decided at the last argument but that the members of the court who heard it, immediately separated and had not the opportunity for consultation which was desired. At every argument the court, or at least a majority of them, have been agreed in the result to which we have now arrived, and in this result the court, are at this time, unanimous. It appears that in the year 1823, the orator purchased a tract of land of about five acres, in Sheffield, on which was a saw-mill privilege. On the 22d day of January, 1824, he conveyed the same by deed of warranty, absolute on its face, to John Chase. John Chase, on the 2d day of May, same year, 1824, by a like deed of warranty, conveyed the same premises to Elihu Granger. Granger, on the 8th of November, 1825, by a similar deed of warranty, conveyed to Martin M. Miles, and Miles, on the 8th November, 1828, by a like deed, conveyed to Isaac and Joseph G. Kinaston, two of the defendants; and in 1830, Isaac Kinaston, deeded one fourth of the mill to Jesse G. Kinaston, another of the defendants. The object of this bill is to prove that the conveyance from Conner to Chase, in 1824, was intended only as a mortgage to secure Chase for what Conner then was, or might be, indebted to him, and that when Chase conveyed to Granger, is was understood between Conner and Granger, that Granger should hold the same, only as security for what Conner might be owing him ; that Miles and the Kinastons had knowledge that such was the nature of those conveyances ; and the prayer is that the defendants may be treated as as mortgagees, account for the rents and profits, and that the orator may be at liberty to redeem the premises. .It is to be observed that the several deeds before-mentioned were recorded in the town clerk’s office, and the several grantees entered into and remained in the actual possession during the time they owned the same.

To entitle the orator to the relief prayed for, the court are called on to decide that a deed conveying, or purporting to convey an estate unconditionally, may nevertheless, be proved by parol evidence, to be a conveyance of an estate upon J , , J ,. . condition, or, in other words, a mortgage, subject to all the incidents of a mortgage ; and that this character shall attach to it, notwithstanding the estate has passed to several successive grantees, and possession followed the deeds, if, by parol evidence, it can be proved that these grantees have either knowledge or notice of the claim on the part of the first grantor to be considered as a mortgagor. The court are of opinion that neither the principles of law or equity, or the facts proved in the case, would warrant them in granting the orator the relief prayed for.

In the first place, it would be an obvious perversion of the well established rule of evidence that the intent of the parties as expressed by their writings, cannot be controlled by parol evidence, as well as a direct infringement of the statute of frauds.

In the second place, if the deed from the orator to Chase could have been treated as a mortgage between them, at the time it was executed, it would not have that character as to subsequent purchasers under Chase, nor would they be affected by any agreement between the orator and Chase, or between the orator and Granger, unless the purchasers had full knowledge of the character and nature of the contract and agreement between the parties, and purchased fraudulently, and with the intent thereby to defeat the right of the grantor, the orator in this bill. Under our recording system, a purchaser of one who has the legal title and possession, is not to be affected by the disputes and claims between the legal owner and the claimant in equity, when no suit is pending between them. The proof of the equitable claim rests wholly in parol, to be proved alone by the testimony of witnesses, and the purchaser has no fraudulent intent to defeat the equitable claim.

In the third place, the length of time in which these defendants, and those under whom they claim, have had the premises in question as absolute owners, not recognizing any rights in the orator, — for it seems by the testimony of one witness, that in May or June, 1824, Granger forbade this orator from going into the mill or removing any thing out of it, — affords a strong presumption either that the orator never had any equitable claim, such as he now asserts, or that it was abandoned ; and requires of this court to leave him to assert whatever claim he may have, as a personal claim agajns( Granger, The rights of these parties are not reciprocal on the principles contended for by the orator, as the defendants, Kinastons, cannot be considered as the assignees of a mortgage,- or as having any debt against the orator, Conner, which they can enforce at law or in equity.-

In the fourth place,as the answerdenies that either the deed to Chase, or from Chase to Granger, was subject to any condition or trust, the orator, if entitled to any relief, would be under the necessity of proving not only the trust, but notice of the trust in every one in the chain of title. A grantee of an absolute title may sell to one having notice, and the latter will hold the estate free from the trust. There is no sufficient evidence of any such knowledge in Martin M. Miles, except the answer of Miles, and this is no evidence against the' present holders of the estate.

That the introduction of parol testimony, of the nature of that relied on in the case, to show that either the deed to Chase, or from Chase to Granger, was not absolute, but defeasible, would contravene the rule of law, in relation to- the effect of deeds and writings, as well as militate with the provisions of the statute of frauds, appears to me very clear. The case itself and the testimony, admonish us of the danger of making any further inroads on the rule of law as well as on the statute, and shows the uncertain and unsatisfactory tenure by which real estate is held, if it is liable to be changed, altered or destroyed by the slipping memory of witnesses, or through the mistakes or falsehoods of men on whom no reliance was placed by the parties, to remember or retain the evidence of their agreement, contract or understanding. The proposition that parol evidence is admissible to show that an absolute deed was intended only as a mortgage, has been laid down too loosely and unguardedly by elementary writers; and learned judges have sometimes, rather incautiously, stated the proposition, without guarding it from misconceptions and misconstructions, by shewing in what cases it does, and in what cases it does not obtain ; and the extreme length to which this doctrine has been carried in the state of New-York has inclined one of their learned judges to dissent entirely from the doctrine, 21 Wen. 36, and another, to speak of it as “ latitudinary,” 3 Cowen & Hill’s notes,1433. Out of that state the proposition has not met with much favor. Where, through fraud, accident, or mistake, a deed or any written instrument is made differently from what the parties meant to make it, or where a deed is executed and the other party refuses to execute a defeasance, such being the contract between the parties, a court of equity will afford the requisite relief, either by reforming the instrument or setting it aside, as the case may require; and a resort to parol proof may be had to discover the fraud, accident, or mistake. Where an absolute conveyance has been made, and the party admits in his answer, that a security only was intended, or where the grantee has, in writing, on the deed, admitted it to be for security, or where, by other writing, he has made the same admissions, courts of equity have treated it accordingly. These decisions, however, have proceeded wholly on the ground that, through mistake or fraud, the deeds were made to express an intent different from what the grantor really did intend, or that the evidence was sufficient under the statute. But where a man gives an absolute deed, and there is no fraud in obtaining it, and no agreement in relation to executing a defeasance, nor any writing between the parties, and no admission in an answer in chancery, and they have conducted as though an absolute sale was intended, I cannot think parol evidence admissible to show such a deed a mortgage, in order to give the grantor a right of redemption. The leading case upon this subject, and on which the opinion of the elementary writers, and the dictum of some judges, has been founded, as warrantingthe admission of parol proof in such a case, is Montacute v. Maxwell, reported in Pere Williams, 618; 1 Strange, 236; 1 Eq. Cases Abr. 19 pi. 4-5; 2 Eq. Ca. Abr. 592, pl. 6, The case itself was a bill brought by a wife to compel the defendant, her husband, to execute an agreement made before the marriage, in relation to her separate estate. The statute of frauds was pleaded to the bill, and was allowed at the first hearing— Lord Chancellor Parker observing, “ that where there is no ‘ fraud, only relying on the honor, word, or promise of the ‘ defendant, the statute making these promises void, equity ‘ will not interfere.” The bill was amended, setting forth other facts, and also setting forth a letter of the defendant; and this letter the chancellor considered as taking the case out of the statute, and ordered the plea to stand for an answer. The case itself affords no authority for admitting parol evidence, to show an absolute deed intended as a mortgage, but the reverse. In deciding the case, however, the Lord Chancellor is reported to have said, probably as illustrating his views in that case, that when a man treated to lend money on a mortgage, and the conveyance proposed was an absolute deed from the mortgagor, and a deed of defeasance from the mortgagee, and after the mortgagee had got the conveyance he refused to execute the defeasance, yet Lord Nottingham decreed it against him on the fraud. So when an absolute conveyance is made, for £100, to A., and instead of entering and receiving the profits, A. demands interest for the money and has it paid to him, this will be admitted to explain the nature of the conveyance. To these dicta no possible objection can be made. It presented a case of direct fraud, where the deed was fraudulently obtained and the testimony in relation to receiving interest, was admissible, with other competent testimony, to explain the nature of the transaction. In the cases of Walker v. Walker, 2 Atk. 99 Young v. Peachy, 2 Atk. 257; Joyner v. Strafan, 3 Atk. 389; Dickson v. Parker, 2 Vesey, 225, no point either arose in the case, or was decided in relation to a mortgage; but the chancellor, in each of those case, referring to the case of Montacute v. Maxwell, recognizes and reiterates the principle, that when the agreement between the parties was, that a mortgage should be executed by a deed and defeasance, and the deed is executed, and the party fraudulently refuses to execute a deed of defeasance, or, taking advantage of the ignorance of the mortgagor, omits to insert a clause of redemption, the court, in the exercise of their acknowledged and undisputed power to relieve against fraud, correct mistakes, and make written instruments conform to the intent of the parlies, as they should have been made in the first place, will inquire into the transaction, and grant such relief as may be necessary. In the case Cottrill v. Purchase, Talbot’s Ca. 60, the question arose principally upon the construction of a deed. The first deed between the parties had been exe euted, and admitted to be a mortgage, I should think probably by a deed and defeasance, as it is said those deeds were cancelled, and the Lord Chancellor expresses himself decidedly against that mode of making a mortgage. The deeds .first executed were cancelled, and, some time after, another deed, in consideration of a further sum, was executed, which was absolute, but with a covenant in it which, it appears to me, showed very clearly that an absolute purchase was not intended. The master of the rolls was, however, of opinion, from the evidence, that an absolute purchase was intended, and dismissed the bill brought for redemption ; and the chancellor affirmed his decree. I do not find in this case, any authority to extend the principle of admitting parol testimony in the case of a mortgage, further than it was admitted in the case of Montacute v. Maxwell, before mentioned. On the authority of these cases, and on the admissions in the answer of the defendants, Chancellor Kent, in the case of Strong v. Stewart, 1 Johns. Ch. R. 167, admitted a party to redeem, although the conveyance was absolute in its terms. But in the case of Marks v. Pell, 1 Johns. Ch. R. 594, the same learned chancellor, while he admits that it is competent to show by parol proof, that a deed was taken as a mortgage, and that the defeasance was destroyed by fraud or mistake, refused to decree a redemption when the grantee was in possession, on proof of the confessions of the party, observing that the acknowledgments of the party as to title to real property, are generally a dangerous species of evidence, as it would counteract the beneficial purpose of the statute of frauds. In the case of Day v. Dunham, found in 2 Johns. Ch. R. 182, and 15 Johns. R. 555, this question was in no way involved. A defeasance was executed subsequently to the deed, but was unrecorded ; the point on which the court of errors and court of chancery differed, was whether the notice contained in the record of the absolute deed should be considered as a notice of the mortgage under the registry act of New York. I do not perceive in the subsequent cases of James v. Johnson, 6 Johns. Ch. R. 417, or Henry v. Davis, 7 Johns. Ch. R. 40, that, in the absence of any fraud, and without any proof in writing, and without any admission in an answer, a court of chancery would decree an absolute deed a mortgage, and let the grantees in to redeem, merely on parol proof that such was the intention of the parties. That subsequent decisions in New York have extended the principle much further, I have already noticed, but Nelson, J., in Patchin v. Pease, 12 Wendell, 61, 64, thought that parol proof in such a case, was proper only in case where there was fraud in the grantee.

In this state, in the case of Williams &f Putnam v. Parish, decided in Orange county, it was decided, that when security was given by a deed absolute, if there was no ground to impute actual fraud, such conveyance might be good. Yet in the case Gibson v. Seymour, 3 Vt. R. 565, they considered taking security in that way strong evidence of fraud. In the case of Wright v. Bates et al., 13 Vt. R. 341, my decision as chancellor, and afterwards in this court where the cause came by appeal, was founded entirely on the belief that the writing executed by Bates, and the fact of Wright remaining in possessession, paying interest instead of rent, was sufficient evidence to show that the parties stood as mortgagor and mortgagee, that the contract was not, as contended for by the defendants, a conditional contract of sale. The case of Campbell v. Worthington, 6 Vt. R. 448, was decided on the construction of the contract between Campbell and the testator Watrous.

In the present case, the solicitor who framed the bill appears to have been fully aware of the principle of law in relation to this subject, as recognized in the court of chancery in Great Britain, and has drawn iiis bill with a view of bringing his case within these principles. He charges that Chase agreed to give him a written defeasance, and also that Granger agreed to give a written defeasance. It is sufficient to say there is no proof to establish that fact, either against them or against the Kinastons, except the answer of Chase. This answer, though artfully drawn, and evidently intended to affect the other defendants, is no evidence against them, as he has long since ceased to have any interest in the land, and no admissions by him, Granger or Miles, can affect any others but themselves. I apprehend, therefore, that the testimony, in this case, of the statements made by persons in the presence of witnesses, attended with the uncertainty whether the witnesses heard or recollect, or can now detail, the expressions made use of, is wholly inadmissible to change the character of the conveyance made by the orator to Chase, or by Chase to Granger; and although the court might rest satisfied in saying that the proof is not sufficient to establish the fact whieh the orator wished to establish, yet I deemed it proper to investigate the principle on which the orator relies, that from our omission to say any thing on the subject it might not be considered as the doctrine of the court, that a party who has conveyed land or other property by an absolute deed, is at liberty to come into a court of equity and, by proof of confessions, declarations and admissions of the other party, and that kind of hearsay and unsatisfactory evidence, claim to be treated as a mortgagor, and call his grantee to account for rents and profits.

But if the law on this point were otherwise, and Conner, the orator, could claim, as against either Chase or Granger, to be considered as a mortgagor, he would have no such claim against either Miles or the Kinastons. Granger had both the legal title and possession, and could transfer both to a purchaser. Conner’s claim was only on a parol contract. It is the object of our recording system that the titles to real estate should appear on record, and a person desirous of purchasing, finding from the records that the person,£in whom the apparent title is, has the actual possession, ought not to be affected by any disputes between the owner'and any third person; or any equitable claims between them, unless he purchases intending to defeat those equitable claims; otherwise there could be no valid sale or transfer, until one or the other should think proper to settle their disputes by a judicial determination. The rule laid down by the master of the rolls in Tolland v. Stainiridge, 3 Vesey, Jr., 478, is, that in order to let in a prior deed unrecorded against a subsequent deed recorded, the person who registers the subsequent deed must have known the situation of the persons having the prior deed, and knowing that, registered in order to defraud them of that title which he knew at the time was in them. This was in accordance with the principle previously laid down by Lord Hardwick, in Hine v. Dodd, 2 Atk. 275; and this rule will apply to the present case, where it is not insisted that the defendants had any notice of a prior, unrecorded deed, or purchased of one not having the legal title, but only that they had notice of a parol agreement or contract.

The court discover no evidence of any fraudulent intent to deprive the orator of any legal or equitable right in either Miles or the Kinastons. It is said they had such notice as 'should have put them on inquiry in relation"to the estate of Conner; and it is undoubtedly true, as a general principle, that when a man has sufficient information to lead him to a fact, he should be deemed conusant of it. If the purchasers had pursued the inquiry, and had had access to all the testimony which has been afforded us in this case, unless they were more fortunate than I have been, they would have been at a loss to discover what was the real understanding and agreement between Granger and Conner, — whether it was in relation to a sale by Granger to Conner on certain terms, or whether it was to give Conner a right of redemption, for we learn that they disagreed as to the terms of it in 1824, and ever after that time, Granger repudiated any claim of Conner, and forbade him from having any thing to do with it. There was nothing therefore, to put the defendant, Miles, or the Kinastons, on inquiry, nor is there satisfactory evidence that Conner then had any right in the mill, and there is no evidence that the defendants purchased with any intent to defraud him of any right he pretended to have ; and, moreover, if they hq.d full knowledge of all that is here pretended by the orator, they might safely purchase, according to the principle declared in Cordwell v. Mackerell, Amb. 515, as it was not a claim which they were bound to notice.

In the third place, the claim of the orator is evidently a stale claim, whatever right he had under any contract, existed as early as the spring of 1824, for at that tim.e, Granger set him at defiance and forbid his going into the mill. This bill was not brought until nearly twelve years from that time. All remedy at law on his debt or contract against Granger, if he had any, was barred by the statute of limitations, and although a sufficient time has not elapsed to bar an undoubted right of redemption, yet this period of time affords very strong evidence against the claim now set up by the orator. Granger, it is stated in the bill, has now gone out of the country. A very different complexion might have been given to this transaction, if a suit, either at law or in equity, had been instituted while Granger was in the country. Length of time short of the period in which a redemption is barred, was much relied on in the case of Colterell v. Purchase, by Lord Chancellor Talbot, to refuse the application of the plaintiff for a redemption. Whether any thing is or was due from Conner to Granger; whether the mill was or was not more than a compensation to Granger, for what was due him from Conner, and whether it was intended as a compensation, can only be ascertained in a suit between' them. .Granger assigned no claim against Conner to Miles. It would be highly inequitable to permit this subject, at this distance of time, to be litigated and inquired into, in a suit in equity between Conner and the Kinastons.

I have remarked that there is no evidence that Miles had any knowledge of any equitable claim of Conner, except his answer, and that this was no evidence against the present holders of the estate. It is undoubtedly true that, if Miles had no notice of any equitable claim to the estate he purchased of Granger, the estate was vested in him, and he might sell to the Kinastons and convey a good title to them, notwithstanding they had notice of the orator’s claim. Hence it becomes necessary to prove this knowledge in Miles. Miles was not examined as a witness, but this orator relies on his answer which, like that of Chase, is very artfully drawn, and, intended to affect others besides himself, is hardly deserving to be treated as an answer in chancery — and relies on the authority of the case, Walley v. Walley, 1 Vern. 484. There is however, a very material distinction between the cases. The defendants deny any trust in Miles, or any knowledge, either in themselves or Miles, that Granger held the land by way of security, trust or mortgage. If a trust had been proved by legitimate testimony, and it had also been proved that the Kinastons had full notice of the trust in Granger, and they relied wholly on the want of notice of the trust in Miles, some of the remarks made in the case of Walley v Walley might have been applicable. Though it is to be remarked that it was expressly decided in that case, that the answer of----, one of the defendants, could not be read in evidence against the other defendant, the decision in the case will not warrant the position that the answer of Miles can be evidence in this case, that the estate received by him of Granger and conveyed to the Kinastons was encumbered by any trust, and’the answer does not disclose any such notice as would affect his title from Granger or that of his grantees. This point however, is comparatively unimportant in the decision of this case.

In every point of view in which we consider this case, we think that neither the law nor the evidence show any ground of equity in the orator against the Kinastons. The decree of the chancellor, so far as it dismissed them with their costs, is affirmed.