Ingersoll v. Tyler

47 App. D.C. 328, 1918 U.S. App. LEXIS 2414

Opinions

Mr. Chief Justice Smyth

delivered the opinion of the Court:

The consideration for the absoluto deed was the surrender of the note and the cancelation of tlu: debt. This avus not done, and hence the deed was without consideration. Peugh v. Davis, 96 U. S. 332, 24 L. ed. 775. This being so, Tyler holds the title in trust for Airs. Ingersoll. Starr v. Starr, 1 Ohio, 321.

Another view of the ease: The relation of debtor and creditor continued between the parties. Tyler admits that he refused to cancel the debt until he had learned that she had not encumbered the property subsequently to the giving of the trust deed. The manifest purpose of this was that he might enforce' the debt in the event that she had so encumbered the property. The keeping alive of the debt, although not conclusive, is a strong circumstance tending to indicate that the deed was intended as a mortgage. Ennor v. Thompson, 46 Ill. 214; Wright v. Mahaffey, 76 Iowa, 96, 40 N. W. 112. in such cases whenever there is doubt, a court of equity will decree the deed to he a mortgage, and preserve to the debtor the right of redemption. Hickox v. Lowe, 10 Cal. 197; Russell v. Southard, 12 How. 139, 151, 13 L. ed. 927, 932. I n the Peugh Case, supra, the court held: “It is an established doctrine that a court of equity will treat a deed, absolute in form, as a mortgage, when it is executed as security for a loan of money.” And again: “It is also an established doctrine that an equity of redemption is inseparably connected with a mortgage; that is to say, so long as the instrument is one of security, the borrower 1ms in a court of equity a right- to redeem the property upon payment of the loan. This right cannot he waived or abandoned by any stipulation of the parties made at the time, even if embodied in the mortgage. This is a doctrine from which a court of equity never deviates.” See also Conway v. Alexander, 7 Cranch, 218, 236, 3 L. ed. 321, 327; Babcock v. Wyman, 19 How. 289, 299; Russell v. Southard, 12 How. 139, 153, 13 L. ed. 927, 933.

Moreover, it might well be said that the transaction between Mrs. Ingersoll and Mx*. Tyler on February 13 amounted to a conditional sale. When we consider the testimony of both so far as it harmonizes, and the memorandum Avhich. he gave to her in the latter part of June, there can be no doubt that the understanding between them from the beginning Avas, in effect, that if Mrs. Ingersoll sold the property for more than enough to pay Tyler’s debt, he Avould reconvey it to her or the purchaser, as she might direct. This constitutes a conditional sale. Conway v. Alexander, supra; 19 R. C. L. sec. 35, p. 266; Hogan v. Jaques, 19 N. J. Eq. 123, 97 Am. Dec. 644. He admitted on the stand that he agreed sub silentio, as Avell as otherwise, that he Avould give her “xxntil the 1st of July to get rid of the property.” She claims no more. Before July 1st, Hill, a man of substantial financial standing, had signed a contract to purchase the property. This Avas sxifficient to satisfy the condition of the sale.

So, whothcr avc consider the traxxsaction of February 13 as resulting in a deed invalid because without consideration, a mortgage, or a coxxditional sale, .Mrs. Ingersoll is entitled to recover the title upon paying, Avithin a reasonable time, Avhat she owes to Tyler.

We should add, liOAvex-er, that there is nothing in the record Avhich justifies censure of Mr. Tyler’s acts. He befriended Mrs. Ingersoll financially when she needed such assistance. The present controversy is due solely to a misapprehension by him of his legal rights.

This leaves only the claim of the intervener, Mr. Dunigan, that he is an innocent purchaser from Tyler, to be disposed of. It presents no difficulties. He. says that on July 3, 1915, the day after Mrs. .'Ingersoll had sold the property to Hill, he entered into a contract Avitli' Tyler to purchase the same property for $1,525 cash and assume a mortgage thereon for $4,000; and that he deposited Avith Mr. Tyler $100 as earnest money, which the latter was to return to him in case he, Tyler, was unable to convey a valid title. Thus he is in the attitude of one who had paid no part of the purchase money. It is elementary that under such circumstances he cannot be considered as an innocent purchaser for value. In order that he might bring himself within the rule which protects such a purchaser, it was necessary for him to aver and prove “that the conveyance was by deed, and that the vendor was seized of the legal title; that all the purchase money was paid and paid before notice. There must not only be a distinct denial of notice before the purchase, but a denial of notice before payment. Even if the purchase money had been secured to be paid, yet if it be not, in fact, paid before notice, the plea of purchase for a valuable consideration will be overruled.” Smith v. Orton, 131 U. S. Appx. lxxv., Ixxviii., and 18 L. ed. 62, 64, citing many cases. Seo also Wright-Blodgett Co. v. United States. 236 U. S. 397, 403, 59 L. ed. 637, 640, 35 Sup. Ct. Rep. 339, and decisions therein referred to.

The decree of the lower court, therefore, is reversed at the cost of the appellee, with directions to that court to enter a decree awarding to Mrs. Ingersoll the right to redeem the property within fifty days by paying Mr. Tyler the amount which the court shall find is due to him from her for money loaned and advances of money made on account of the property, with interest; and ordering that, in the event of her redeeming within the time allowed, Tyler shall reconvey to her the property; but in case she fails to redeem within that time, all claims by her against the property shall be canceled and bold for naught, and the title to the property quieted in Tyler.

Reversed.