Haines v. Thomson

70 Pa. 434, 1872 Pa. LEXIS 62

• Court: Supreme Court of Pennsylvania
• Decided: February 12, 1872
• Status: Published

Opinion

The opinion of the court was delivered, February 12th 1872, by

Agnew, J.

This case is peculiar, having no exact counterpart in any found in our books. The master thought that the bill and answer neutralized each other, and being thus counterpoised, the case must be decided on the face of the deed and the so-called defeasance. Having arrived at this conclusion, he then pronounced the transaction to be a mortgage on the face *of the papers, as a security for advances by Mr. Thomson to Mrs. Hanson, with a power of sale on part of the former. The master says expressly, the only evidence before him touching the deed and agreement are the papers themselves. If this were the whole case, his conclusion would be justified by Colwell v. Woods, 3 Watts 188; Kerr v. Gilmore, 6 Id. 405, and other cited cases. In Brown v. Nickle, 6 Barr 390, this court, commenting bn Colwell v. Woods and Kerr v. Gilmore, remarked: “In the first of them it was determined that a conveyance and simultaneous covenant to reconvey on repayment of the purchase-money before a given day, must be construed to be a mortgage, though it appear by parol that the parties did not intend it to be so; and in the second, that it is not competent to the parties to prove by parol that the defeasance was a subsequent and independent agreement. These cases, said the court, are not to be resisted, yet we must suppose that there may be in some shape and under some circumstances, such a thing as a conditional sale. But the proof proposed in this instance was not of (distinctive acts which constitute it, but of the understanding of the parties. Their understanding, however, must be gathered from the writing, and if that be ambiguous on the face of it, it cannot be gathered from the parol proof.” The court also remarked that Kerr v. Gilmore “ pushed the doctrine to its utmost verge.” Now, if we turn to Kerr v. Gilmore, we find that the deed and defeasance were dated on the same day, and executed by the parties at the same time and before the same person's; and the offer was to prove that the deed was first executed, and then at the suggestion of one of the parties that ite would be a benefit to have the privilege of repurchasing, the agreement was put in writing and executed after the deed had been executed, and the parties then spoke of it as a sale. Such is the nature of the evidence held in Kerr v. Gilmore to be incompetent, and it is clear its true character was an attempt to prove the mere understanding of the parties against the legal character of the papers as it appeared on their face. Hence it was said by Justice Huston in the opinion, “ that it has become impossible to draw any conveyance, nay, to make any contract by which property shall be redeemable for a certain period, and cease to be so after that period has elapsed.” Yet in the same opinion we find qualifications which evidence the extent of the decision. In connection with his statement that two instruments — a deed and a defeasance of the same date — are necessarily a mortgage, he also says that “ all the cases show that all the circumstances of the whole transaction are inquired into in chancery and in our own courts.” In another part of the opinion he qualifies what he had said in these words: “ If a case can occur where such conveyance and defeasance do not constitute a mortgage, it must be one in which some time has elapsed, some circumstance has occurred, to satisfy the court and jury that the contracts were wholly separate; that the first was always intended as a real, actual sale, and the second bargain a real distinct agreement to purchase again property which had' once been actually sold; but the two bargains cannot be made in the same hour and day, nor evidenced by instruments executed as these were before the parties separated, and before the witnesses to the first instrument left the room, or any new information had been communicated.” That a case can arise wherein the first instrument can be shown to be a real sale, and the second, an unconnected resale, is proved by Spering’s Appeal, 10 P. F. Smith 199, where the first instrument was an actual sale under a power contained in a former pledge of stock, for the very purpose of conversion to redeem the pledge, and the second was an independent agreement to resell the same kind of stock, in order to give the former owner the rise of the market for a stipulated time. Reitenbaugh v. Ludwig, 7 Casey 132, shows also that even in a common-law action evidence will be received to prove the true nature of the transaction, when the deed and alleged defeasance are dated apart from each other. There Woodward, J., submitted the question of a sale or a security to the jury, and the judgment was affirmed. Harper’s Appeal, 14 P. É. Smith 315, relied on by the appellee as ruling the case before us, is another proof of the practice to hear the circumstances of the whole transaction where the deed and defeasance are not simultaneous in date. In all the cases it will be seen that the distinctive acts, as they are called in Brown v. Nickle, which characterize the transaction, have been treated as the proper subjects of evidence, and not the mere understanding of the parties, or their belief as to the legal effect of their acts; and in all, the sum of the matter has been to determine by the true nature of the transaction, whether the conveyance was an actual sale, or a mode of securing money lent, or a debt. The only exception is, where the instruments are of even date on their face, and where, being in terms a conveyance and a contract to reconvey on payment of the money passing between them, they are in legal contemplation a mortgage. In that case, being a mortgage on their face, parol evidence will not be received to convert them into a conditional sale.

With these principles in mind, let us examine the facts before us. In doing this it will* be found that the error of the master was in treating the bill and answer as completely neutralizing each other, and (disregarding all other evidence) in deciding upon the deed and agreement as instruments of even date and creation (witnessing one and the same transaction on the same day) and thus falling within the principle of Colwell v. Woods, Kerr v. Gilmore, and some other cases. But the first paragraph of the plaintiff’s bill sets forth a strong, and in some respects, controlling fact admitted by the answer to be true; that there was an agreement for the sale of the property to the defendant, upon which the very deed in question was executed and dated May 31st 1858, and shortly afterward tendered to the defendant. The only difference between the bill and answer upon this point is, that the former alleges that Mr. Thomson refused to accept it, because the price of the property was too high, while the latter asserts that the tender was made to him when going to the cars on a journey westward, followed by a protracted absence; and that the refusal was only because the time and place afforded no fitting opportunity for its examination. That the deed was originally made and tendered on the footing of an actual sale, is undeniable. Now when we refer to the two instruments themselves, we find them dated widely apart — the deed on the 31st of May 1858, and the agreement on the 10th of October 1859. On the face of the deed there is nothing in date, recital or other circumstance to connect it with a transaction a year and five months later, and it is only in the agreement of October 10th 1859, at the foot we find a recital that the deed of May 1858 was delivered on the same day with the agreement. In the absence of controlling facts, this recital would establish their operation as a mortgage. The recital of simultaneous delivery is, however, an admission of. that fact only, and does not account for the widely discrepant dates and executions of the papers. This necessarily brings in the evidence to account for a fact on the face of the instruments themselves totally' at variance with the idea of their execution as contemporaneous parts of one transaction. This evidence is furnished by the admissions of the parties themselves, corroborated by the date of the deed, that it was executed upon a sale, and not as security for money, and that this is the same deed which was finally delivered. Now, if a deed of long antecedent date, founded upon an acknowledged sale, is to be made to play a new part at a much later day, and to take upon itself the form of a defeasible conveyance as a security for money lent or advanced, assuredly the burthen of proof falls upon the party averring the change in its character. On this question the bill and answer stand in direct contradiction to each other all the way through, the bill averring that the sale became a mortgage, and the answer expressly denying every fact and allegation set forth in the bill, to this effect. JS[p attempt has been made to disprove the answer in these material and positive denials, either by two witnesses or by one witness and circumstances equivalent to the testimony of a second, but the case is rested by the plaintiff wholly on the agreement itself of October 10th 1859. Yet this paper is not in form a defeasance, but an agreement to sell, and on its face bears evidence tending to deprive it of the character of a defeasance. In the first place, the consideration expressed in it is not the same as that set forth in the deed, but a greater one — that in the deed being $22,500, and that in the agreement, $24,030.75. This is not a strong circumstance, but it shows discrepancy, rendering it somewhat probable that the resale was for a greater sum than the sale. There is another fact of more weight. The agreement binds Mr. Thompson to convey to Mrs. Hanson only if the premises be not previously sold. Thompson, it seems, interlined the words “ if not previously sold,” as he says, to protect himself in his purchase. The interlineation is conceded to be his. The plaintiff contends that this expresses only a power, and that the instrument was a defeasance with a power of sale to the mortgagee. But this begs the question. If we assume that the deed is a mortgage, the words in the defeasance, of course, import only a power of sale. But on the primary question whether it was a sale or a mortgage, the words interlined in connection with the date of the deed, and the actual prior sale, strongly indicate a sale and an intention to prevent a question as to Thomson’s right to sell whenever and to whom he pleased. It, therefore, discloses Thomson’s intent to take the deed as it was originally intended, as a purchase; and to preserve his own control over the property. Having reached the point that these instruments, together with the admitted facts, tend to repel the allegation that the deed admittedly made upon a sale, was afterwards changed into a mortgage; we are now at liberty to consider certain other facts and circumstances corroborating the answer of Mr. Thomson, and strengthening the denial of the change into a mortgage. Hanson, the husband, is admitted to have been largely indebted to Mr. Thomson, and unable to pay his debts. In this situation the bill admits that his wife came forward to aid him by the sale of the house and lot in question. The property was not worth more than the price stipulated in the deed, to wit — $22,500— subject to a mortgage of $7500, making $30,000. The evidence of value taken would make it less valuable; but leaving that out of sight, and taking the purchase itself as Mr. Thomson’s admission of value at that time, and the assertion of the bill that he afterwards declined to take the property as being too high, it is very evident the price fixed in the deed was the full value of the property. In connection with this fact, which in itself repels the idea of a mere security for money, is the entire absence of any evidence of an obligation to pay the debt. No covenant was taken in the agreement; no bond or any other security for the repayment of the money. And to these circumstances we must add the money advanced by Thomson .to improve the property, which would.,be unsecured by the property if it was returned to Mrs. Hanson as a mere mortgage. But if it were a sale, Thomson, having reserved his right to sell, could sell, repay his outlay, and render to Mrs. Hanson the sum stated in the agreement. All these indicative facts seem to be utterly irreconcilable with the fact of a mortgage, especially when we consider one of the grantors in the deed was a married woman, and the other an insolvent man. Upon the whole case we are forced to the conclusion that the deed was not a mortgage, and the subsequent agreement was a new resale brought about by the delays and difficulties arising between the parties, and forced upon Mr. Thomson in order to close the sale, and also out of regard to the relation of Mrs. Hanson as a wife, and the owner of the property, coming to her husband’s assist-» anee, to enable her to regain it if she could pay for it.

The decree of the Court of Nisi Prius is therefore reversed, and it is now adjudged and decreed that the said deed of May 31st 1858 is a grant of the premises by way of a sale, and not a mortgage; and it is further decreed that the bill of the plaintiff be dismissed, with costs to be paid by the appellee.