The following opinion was delivered at March term 1855.
Dewey, J.
The plea of the defendant sets up, by way of defence to this bill, that there is no right in equity vested in the plaintiff enabling him to maintain the bill. It alleges that the only title of Edmund N. Clark, under whom the plaintiff claims as second mortgagee, was by virtue of a deed from the defendant to Clark, conveying the estate to him upon a condition subsequent; that the condition was broken, and an entry having been duly made therefor by the grantor, the interest of Clark was wholly defeated, and the defendant restored to his former absolute estate. This deed is fully set forth in the bill, and it sufficiently appears that the title of Clark was under a deed upon condition subsequent; and the plea avers a breach of the condition, and entry for forfeiture.
Such being the case, the further questions are: 1st. What was the effect of the defendant’s subsequently taking a mortgage from Clark to himself of the same premises, to secure certain liabilities therein described ? 2d. If the taking of such mortgage did not operate to defeat the condition in the deed from the defendant, and there has been a breach of such condition, and an entry therefor, can there be any relief in equity for such forfeiture? We are therefore first to inquire whether there was any such merger, resulting from the taking of a mortgage subsequently, as to extinguish the condition in that deed.
It is attempted to establish the affirmative of this proposition, upon the principle that the unity of estates resulting therefrom would extinguish all conditions or servitudes annexed to the original deed. But this position cannot be maintained with reference to the case before us. An absolute deed from Clark to the defendant might have had such effect. But not so as to a mortgage not foreclosed. After a breach of the condition of the mortgage deed, there was yet, by the statute, a right to [51]*51redeem such mortgage at any time within three years after the breach, and during that period there would be no such merger. Such merger or unity of estate would only arise when the entire estate had absolutely vested in the defendant, and all right of redemption had been lost. It is not enough that there has been a breach of the condition of a mortgage, so that, in one sense, the equitable estate has become a legal one in the mortgagee, to cause a perfect unity of title in the defendant. This distinction between the character of an estate held in mortgage, after breach, but before foreclosure perfected, and that which arises after all rights of redemption are lost, is one well understood, and has a direct bearing upon the question of merger in the present case. To effect a merger by unity of title, the newly-acquired estate must be a permanent estate, not one defeasible. But this mortgage estate was defeasible, and so no merger resulted from having the two estates. Ritger v. Parker, 8 Cush. 145.
The further inquiry is, whether the condition in Carlton’s deed to Clark, being merely to secure the payment of money, the forfeiture is one relievable'by the payment of principal and interest due thereon. Many English authorities upon this point were cited by the counsel for the plaintiff, tending to establish this doctrine ; though it is obvious that the cases more usually have been those of forfeitures of leasehold interests for the nonpayment of rents.
The plaintiff also relies upon our own case of Atkins v. Chilson, 11 Met. 112, which was an action at law to enforce the restoration of the possession of certain premises, alleged to be forfeited by nonpayment of rent on the day stipulated; and in which the court ordered all further proceedings to be stayed upon payment of the rent due and interest thereon. The case of Sanborn v. Woodman, 5 Cush. 36, is more directly to the point that, where the forfeiture is designed to secure the payment of money merely, relief may be given against the forfeiture ; and that such relief is not confined to forfeitures occasioned by nonpayment of rent, but is equally applicable to a forfeiture in the case of a deed upon condition subser-uent,where the con[52]*52dition is to secure the payment of money merely. The proceed» ings in that case were however at law in a writ of entry; and tb-2 mode of giving relief was by ordering a stay of proceedings, upon payment of all sums due, as well interest as principal.
In the present case, the question arises upon a bill in equity to redeem a mortgage; and the forfeiture of the estate by failure to perform the condition in a prior deed is set up as a defence to the bill; and if it exists, and the party cannot be relieved from it, it is fatal to the bill. In such a case, it seems to us that this court should at least adopt as liberal principles in granting relief, as if the proceedings were in the form of an action at law.
How far, and under what circumstances, courts of equity will give relief in cases of forfeiture by reason of nonperformance of a condition subsequent, seems to be a vexed question in the English courts. Certainly the broad ground of giving relief in all cases where a forfeiture has been occasioned by the nonpayment of money at the stipulated time, upon an offer to pay the same and the accruing interest, has not been fully sanctioned. While it is stated in 2 Story on Eq. § 1321, “that when the forfeiture is merely a security for the nonpayment of money (as a right of reentry for nonpayment of rent), then it is to be treated as a mere security, and in the nature of a penalty, and accordingly relievable,” it is also stated, in § 1323, as the present general doctrine of the English courts of equity, “ that in all cases of forfeiture for the breach of any covenant, other than a covenant to pay rent, no relief will be granted in equity unless upon the ground of accident, mistake, fraud or surprise, where the breach is capable of compensation.” For the authorities upon this point see the note to § 1323.
Under what precise limitations this power of relieving against forfeitures will be exercised by this court in cases within their jurisdiction, it is unnecessary, in the present position of the case before us, to decide. In Atkins v. Chilson, the relief was granted upon showing the failure to pay arose from mere accident, the party having tendered the amount two days too early. 11 Met. 112. In Sanborn v. Woodman, Mr. Justice Wilde, in giving the [53]*53opinion of the court, granting the relief, says, “ There is no reason to believe that the defendants knowingly and wilfully neglected to pay the interest.” 5 Cush. 42.
Whether the present case will fall within those principles under which relief is granted in cases of forfeiture, will be a question for future consideration. In the argument on the part of the defendant, reference is had to certain evidence relied on to show laches and wilful neglect on the part of Clark, and those claiming under him, to perform the condition of the deed to him; but we think that is not properly before us upon the question of the sufficiency of the plea. The question as to the facts will arise at a subsequent stage of the proceedings.
In the view we have taken of this case, the deed given by the defendant to Clark was a deed upon condition subsequent, and if a breach of the condition has occurred, and an entry under it, the estate will revest in the defendant, and of consequence defeat the right of the plaintiff to maintain this bill, unless relievable in equity from the consequences of the forfeiture upon such evidence as shall authorize and require this court thus to interfere But upon this point, we think, the case is not sufficiently before us.
The plea, to operate as a bar to maintaining the present bill, should state more directly and fully the existence of laches on the part of the plaintiff and his intestate, as a ground for refusing relief from the alleged forfeiture. This matter is essential to the issue, and is to be adjudged upon all the facts and circumstances of the case. The proper course will be therefore to rule that the defendant have the benefit of his plea at the hearing; and the entry will be “ plea to stand over till the hearing, saving to the defendant the benefit thereof.”
It may be proper to remark that this case raises no question of the general jurisdiction of this court as a court of equity to relieve from forfeitures at law, on a bill filed merely for that purpose, or under that specific head of equity; as this bill seeks to redeem an actual outstanding mortgage, and the question of relief from a forfeiture alleged to have arisen from a prior deed arises only collaterally, and as. an incidental inquiry. The de[54]*54fendant denies the right of the plaintiff to redeem at all, and the question is whether the plaintiff can now be relieved from the legal effect of a breach of the condition of that deed, and an entry under it, which are thus set up as a bar to his maintaining this bill. This question, thus incidentally arising, is therefore properly before the court, as was settled in the case of Holland v. Cruft, 20 Pick. 327. [See also St. 1856, c. 38.]
Choate & G. S. Hale, for the defendant.
Sewall, for the plaintiff.
Plea to stand over till the hearing, saving to the defendant the benefit thereof.
At November term 1855, the defendant suggested that the effect of this order was only to allow the plaintiff to avoid the plea by evidence of accident, mistake or surprise, and that the order of March 1854 excluded the plaintiff from taking any further evidence; and therefore moved that the bill be dismissed.
Shaw, C. J.
As this plea covers the whole bill, the effect of the order, that the plea stand over till the hearing, saving to the defendant the benefit thereof, is, that the defendant shall not be deprived of the benefit of his plea; but that the plaintiff shall be at liberty to file a replication, and proceed to the proof of the facts in reply to the plea ; and on such hearing, the plea is to be taken, prima facie, a good bar to the suit; but as there may possibly be circumstances which, in equity, ought to preclude the defendant from relying upon such plea, the question is left open until such hearing. Astley v. Fountaine, Cas. temp. Finch, 4. Cooth v. Jackson, 6 Ves. 18. Heartt v. Corning, 3 Paige, 572, 573. 2 Dan. Ch. Pract. 799, 800. Welf. Eq. Pl. 308. Story Eq. Pl. § 698. 2 Barb. Ch. Pract. 121.
There is nothing in the order of March term 1854, which affects the plaintiff's rights in this respect. Motion overruled.
The plaintiff then filed a general replication; and the case came on for a hearing before the chief justice, who made the following report thereof:
[55]*55“ Having given notice to the parties, I proceeded to take the proofs, consisting of deeds, documents and the testimony of witnesses.
“ The effect and operation of the plea was, by showing the nature and character of the plaintiff’s title, to show that his only title was a mortgage from Clark; that Clark held under a deed from Carlton to him, on this condition : ‘ Subject nevertheless to my several deeds of mortgage,’ (enumerating them, amongst which was one to Nathaniel Francis,) ‘ all which said principal sums, with the interest due and to grow due thereon, are to be assumed and paid by said grantee, his heirs and assigns, the same making part of the consideration above expressed; and this deed is on the condition that I, my heirs, executors and administrators, shall be forever indemnified and saved harmless from payment of said principal sums and interest, or any part thereof.’
“ At the same time, Clark gave back a mortgage to Carlton, to secure the payment of $31,800, another part of the said purchase money.
“ I consider that these two deeds were separate securities from Clark to Carlton, for different portions of the purchase money to be ultimately paid for the estate, upon which distinct remedies might be had by Carlton. Clark’s deed from Carlton was upon a condition subsequent, that Clark, the grantee, his heirs and assigns, should pay off and discharge sundry mortgages, then resting on the estate, amounting to between twenty five and twenty six thousand dollars, as they should become due, and indemnify the grantor from the payment of such mortgage debts and interest, all or the most of which, the grantor, as the maker of such mortgages, and of the personal securities given with them, would still be liable to pay, notwithstanding his alienation of the land to Clark.
“ The mortgage back was the mortgage of such conditional estate, to secure the payment of another and distinct sum.
“ Such being the title which John Hancock, Jr. the plaintiff’s intestate, took of Clark, the effect of the plea was to show that Clark, and through him Hancock, acquired a conditional title, [56]*56to be defeated, if he should fail to comply with the condition to pay off the subsisting mortgages, interest and principal, as they should fall due, and save the grantee indemnified and harmjess from such payment; that some of these mortgages did fall due; that Clark and Hancock had notice thereof, and did not pay them ; that Carlton, the grantor and the present defendant, was called upon to pay them, and did in fact pay them.
“ It was decided by the court, on the argument of the sufficiency of the plea, that the deed from Carlton to Clark was not a mortgage carrying with it a right of redemption for three years from the nonpayment of money, or nonperformance of any other condition ; but was a conditional grant, to be void in case the condition should not be complied with; and therefore prima facie, after such condition broken, would be forfeited and determined; and such was the estate which Hancock, by his deed of mortgage, took of Clark.
“ But inasmuch as, in equity, the nonpayment of money at the precise time fixed may be sometimes explained and excused by circumstances of accident or mistake, the plea was not held absolutely sufficient if any such circumstances should appear, upon the proof of the plea, to show that such noncompliance with the condition of the deed, by the payment of the interest or principal of either of the mortgages mentioned in the said condition, could be explained or excused.
“ With these views these proofs were taken. The deed from Carlton to Clark, duly executed, delivered and recorded, with the condition above stated, was proved. The mortgage back, given by Clark to Carlton, for the payment of $31,800 in five years, with semiannual interest, executed and recorded, was duly proved, dated the 12th of December 1846.
“ These deeds being on record when Hancock took his mortgage from Clark, it follows that Hancock had notice of them.
“ It was proved, to my satisfaction, that after the execution of said conditional deed from Carlton to Clark, interest became due on one or several of the mortgages, to be paid by Clark; that the debt due to Francis on one of said mortgages became [57]*57due ; that a suit thereon was commenced against Carlton in the county of Middlesex at April term 1850 of the court of common pleas, judgment was recovered and execution issued, and that Carlton was obliged to pay and satisfy the same; so that Clark, the grantee, failed to pay and take up the said mortgages, and to indemnify Carlton. Nor did it appear in evidence that said Clark, or said Hancock, or any person in behalf of or claiming through or under Clark, holding by the said deed, has ever paid the said mortgages, or any one of them.
“ I am satisfied therefore, by the evidence, that all the material facts set forth in the plea were true, and are well proved.
“ Nor does it appear that either Clark or Hancock was prevented from complying with the condition contained in the deed of Carlton to Clark, by the payment of the interest or principal due on the said mortgage, through any fraud, accident or mistake.
“ Both Clark and Hancock had constructive notice of the existence of said mortgages, the persons to whom they were due, the amount due, and the times therein respectively fixed for the payment of interest and principal, because they were enumerated in the deed under which they claimed. It was further proved that Hancock, in his lifetime, had actual notice that some of these mortgages had become due, and were unpaid, and that Carlton relied on the condition of his deed for their payment; but no step was taken by him in his lifetime.
“ Personal notice came to the plaintiff, as administrator, of the nonpayment of these mortgages, when he received notice of the depositions on the 12th day of September 1850. No payment or offer of payment was ever made by him of either of these mortgages, until the commencement of this suit to redeem, on the 26th day of February 1853; and then an offer was made to redeem by the payment of such sum as on an account taken should be found to be due.
“ The ground relied on to take this case out of the direct operation of the condition, on the ground that, in equity, performance at the day was not necessary, was a mistake of the law by Hancock, namely, that he took the deed of Clark under [58]*58a mistaken belief that, in law, such a condition, being substantially a condition for securing the payment of money, though contained in the condition of a deed from grantor to grantee, in favor of the grantor, was yet a security, in the nature of a mortgage, and that he would have the term of three years, from the time of condition broken, to redeem.
“ It was testified by George L. Hancock, brother of the said John Hancock, Jr., who himself had studied law and been admitted to the bar in another state, that he, George L. Hancock, was of opinion that such a deed on condition was in the nature of a mortgage, and that Clark and his assigns would have .three years from the time of condition broken to redeem.
“ But I was of opinion that this mistaken opinion, in regard to the nature and character of his own title, if it existed, being an opinion of his own rights, which was strongly pressed upon the consideration of the court in the former argument upon the sufficiency of the plea, was not such a mistake as could be relieved against in equity. It was not an accident or mistake caused, or in any way promoted, by the defendant. He took an invalid title, he has contended for the correctness of it to the end, and it has been decided against him. The defendant cannot be restored to his legal rights by any payment of money, which can now be made.
“ On the contrary, the effect of that mistake has been that, from about 1849 or 1850 to the present time, the defendant has been obliged to pay a large amount which the plaintiff or his intestate ought to have paid; and, instead of the plaintiff’s paying and taking up said mortgages as they fell due, and saving the defendant harmless, the defendant has been exposed to all the ;ost, hazard and expense of paying or providing for them.
“ I am therefore of opinion that there are no equitable considerations, arising out of the circumstances in which the parties were respectively placed, to prevent the defendant from having the full benefit of the plea, founded on the breach of the condition of his deed to Clark, and the avoidance of the title of the plaintiff, claimed under it.
“ Supposing a mere mistake of the law, on the part of Han[59]*59cock, in regard to the nature and character of his title, not caused by any act or omission of the defendant, to be such a mistake as a court of equity will relieve against merely on the ground of mistake, then the evidence shows great laches on the part of the plaintiff and his intestate, inasmuch as no performance of the condition has ever been made or offered to the present time, except by the bill.
“ A question arose, whether, on this issue, the defendant, in order to defeat the right of this plaintiff, was bound to show that he entered on the premises after the breach of the condition of his deed to Clark, in order to revest in himself the estate granted by that deed; and, if so, whether the defendant had entered, or done acts equivalent to such entry.
“ My impression is, that this question as to the sufficiency of the entry was considered and decided in the former opinion.
“ In order to consider this point, it becomes necessary to state the following facts : The fact must be kept in mind that the mortgage to secure the payment of $31,800, and the deed given by Carlton to Clark, on condition to pay the other mortgages and indemnify the grantor, were distinct, and did not work a merger. Carlton therefore was mortgagee, and had a right to enter for condition broken. In point of fact, the condition of the mortgage was broken by the nonpayment of interest due on the mortgage notes, whereupon Carlton, as mortgagee, entered and took actual possession of the premises on the 28th of February 1850.
“ Such was the state of the premises when some of the mortgages, principal or interest, fell due, the nonpayment of which constituted a breach of the condition of the deed from Carlton to Clark.
“ Carlton being in the legal and actual possession of the premises when the breach of his conditional deed to Clark took place, he could not, strictly speaking, enter upon himself; and it may perhaps be held that any manifestation of his intention to hold for such breach of condition would be sufficient, and as it was manifestly for his interest so to do, having in truth no other security for about $26,000, part of the purchase money, [60]*60it may be presumed, in the absence of other proof, that he did so intend.
“ But in point of fact he did make a formal entry, under the following circumstances : One of the mortgages having become due, and a suit commenced and judgment entered upon it against Carlton, he satisfied it. This being manifestly a breach of the condition, he took measures to avail himself of it by a formal entry. For this purpose, on or about the 22d of May 1850, he made an assignment of the mortgage given by Clark to him, for $31,800, to one Charles Lane, in due form of law. Inasmuch as he held these two securities as distinct, and to some extent independent, this assignment vested in Lane the mortgage in fee, which Carlton so held, and made Lane a good tenant to the freehold, he himself remaining entitled to the benefit of the condition in his deed to Clark. Such being the relation of the parties, Carlton, for the breach of the condition of his deed to Clark, in not paying the mortgages and indemnifying him, made a formal entry upon Lane, for the purpose of revesting the estate in himself, according to the condition in his deed to Clark. This was done in presence of two witnesses, who made a certificate thereof, which certificate was duly acknowledged. This was, in my judgment, a good and valid entry to revest the estate in him as grantor.
“ Evidence was offered on the part of the plaintiff that this assignment of the mortgage from Carlton to Lane was colorable and collusive; that in fact no pecuniary or other valuable consideration was given for it by Lane; and that without pecuniary or valuable consideration, in a few days after, Lane re-assigned Clark’s notes and mortgage to Carlton.
“ But I was of opinion that such evidence was immaterial, because the facts, if proved, would not affect the validity of this entry; that, so far as the assignor and assignee, Carlton and Lane, were concerned, the execution and delivery of this assignment, duly acknowledged and recorded, were good, as between them, to transfer the freehold, whether any pecuniary or other adequate consideration was paid for it or not; that its validity could not be impeached by a stranger, or other person, not [61]*61being a creditor, or otherwise so situated as to be deprived of any right by it; that Carlton had a legal right to assign his mortgage, retaining his interest in the condition; and that Lane was a legal tenant to the freehold, and the entry available under the breach of condition to revest the estate in Carlton.
“ Perhaps the same thing might have been done by notice to parties interested, that, being already in lawful possession of the freehold, he should henceforth hold for breach of condition ; but, though another course, equally available, might have been adopted, yet the method actually adopted was sufficient, the only purpose being to make an actual and formal entry on one for the time being holding a freehold ; inasmuch as it was hit' rested right, on the breach of condition, to enter on the estate for such breach, whether with the assent of the conditional grantee and his assigns or not.
“ Another ground taken by the learned counsel for the plaintiff is, that by the mortgage deed taken by Carlton of Clark, simultaneously with, though, in order of operation, after the conditional conveyance from Carlton to Clark, the mortgagee took covenants of Clark, expressly covenanting that the premises were free of all incumbrances, and that, either as a security of a higher nature, or as a waiver, or in some form, these covenants vacated, annulled or superseded the conditions contained in the first deed from Carlton to Clark, making the deed defeasible upon the nonperformance of the condition to take up the outstanding mortgages and indemnify the grantor.
“ It appears to me that there is no ground on which this position can be established. It is quite manifest that such could not be the intent of the parties; but that, on the contrary, it would defeat the purpose of the parties, to give it that construction. The two instruments were obviously made diverso intuitu; the one as the security for discharging the outstanding mortgages and for the indemnity of the grantor, to the amount of about $26,000; and the other to secure to Carlton the payment of a further sum of $31,800. By giving each its full effect, the entire purpose of the parties would be accomplished. And such, I think, is the legal operation of the two instruments.
[62]*62“ The covenants in the mortgage deed could only be coextensive with the estate granted in that deed. Then what was the estate thus conveyed ? Obviously the same conditional estate mortgaged back by Clark, which Carlton had just made to Clark by a deed of the same date; it was the estate, subject to the condition of taking up and cancelling the outstanding and enumerated mortgages. Of course, the covenant was against any other incumbrances which might impair the mortgage title, other than those which, by the operation of the conditional deed, when performed, would be extinguished and removed. Indeed the mortgaged premises, against incumbrances on which this covenant was intended to secure the mortgagee, consisted of the conditional estate, which of itself had provided for taking up these mortgages at his own charge; of course, they did not constitute incumbrances on the premises.
“ Again, as a test to determine whether the covenants in the mortgage deed contemplated the same incumbrances mentioned in the conditional deed, suppose the mortgage should be fully paid before any breach of the condition, so that the incumbrances, intended to be removed by the condition, should still remain outstanding, would these covenants in the mortgage deed afford Carlton a remedy for failure to take up those other enumerated mortgages ? Clearly, I think, not. There would either be no formal breach of such covenants, or, if there were a literal breach, it would be compensated by nominal damages.
“ Carlton’s interest in the condition to secure the discharge of the incumbrances was a security binding upon the estate, into whose hands soever it might come; whereas the covenants in the mortgage would be merely personal, binding Clark to Carlton and his personal representatives only. So far from being a higher security, it would be a much feebler security. But being separate securities for separate parts of this large purchase, each may have its full, proper and legal effect; the conditional estate in the land, to secure the indemnity against the outstanding mortgages; and the covenants, to secure from other incumbrances the conditional estate pledged for the payment of the mortgage money.
[63]*63“ 3. Supposing Carlton should assign his notes and mortgage immediately after they were made, as he might, the covenants would pass with it, and especially the covenant of warranty, on which he must mainly rely if he could not hold the land by force of the condition, would pass to the assignee, and of course afford him no remedy. On recurring to the deed, I find that in Clark’s mortgage deed to Carlton the specific covenant against incumbrances excepts the ‘ mortgages aforesaid.’
“ It appears to me therefore very clear that the covenants contained in the mortgage were not intended, and cannot legally operate, to deprive Carlton of his right to his real security on the land created by the condition in question.
“ Another ground taken by the counsel is, that at a later period, in May 1853, Carlton assigned his mortgage to Benjamin B. Mussey, thereby showing that he himself considered his mortgage as still subsisting.
“ Be it so; I do not perceive that that affects any question in this case. The mortgage was separate and distinct from his other interest in the estate, and must remain so till redeemed or foreclosed. His entry under his conditional deed, and his entry under the mortgage, were entries for the breaches of different conditions, and did not work a merger. So it was decided in the former hearing. This fact therefore, though it be as stated, has no bearing upon the result of this case.
“ The result is, that the plea is proved and is a good bar to the plaintiff’s right to redeem, and that the bill for that purpose cannot be maintained.”
Exceptions were taken by the plaintiff to the opinion of the chief justice, that the assignment of the mortgage by the defendant to Mussey was not a waiver of the breach of the condition in Carlton’s deed to Clark; and were argued at this term by Sewall, for the plaintiff, and Hale, for the defendant; and
Overruled by the full court.