Sweetzer's Appeal

71 Pa. 264, 1872 Pa. LEXIS 142

• Court: Supreme Court of Pennsylvania
• Decided: May 13, 1872
• Status: Published

Opinion

The opinion of the court was delivered, by

Thompson, C. J.

The origin of this controversy arose out of the pecuniary embarrassment of the plaintiff, who is the appellant about 'the year 1862 or 1863, and which resulted in an effort on his part to borrow a sum of money of about $12,000 to relieve himself. He applied to several gentlemen for this purpose, and having failed, applied to Joseph H. Scranton, Esq., of the city of Scranton, and urged him to make an effort in New York or elsewhere to procure for him such a loan on mortgage of his Washington Hall property in the city of Scranton. Mr. Scranton says he told him on one occasion that in the depressed condition of real estate in Scranton, it would be difficult to get New York parties to make loans upon it, but that he would do anything in his power to promote his wishes and secure his interests. He says, he, the appellant, made repeated applications subsequently to him about the loan, and that he, Scranton, held several conversations with Mr. Sherrerd, the attorney for “our company,” the Lackawanna Iron and Coal Company, with regard to the title and security the Washington Hall property would afford, and that he became satisfied that it would be inexpedient to attempt to procure a loan for the sum mentioned, and for the time proposed five years, on its security, and the matter was virtually dropped.

Afterwards, Scranton says, Thomas Jiffkins came to him and stated that Sweetzer was in trouble in regard to his indebtedness, which was mostly in liens on this property, and that he was very considerably indebted to their firm, of Jiffkins & Sons, besides liabilities incurred by them as endorsers for him, and unless something could be done by which these judgments could be satisfied or arranged, they, the Jiffkins, “ would be swamped.” “ I,” the witness says, “ told him I was tired of making efforts to borrow the $12,000 upon the property, but that if he and Sweetzer would see Sherrerd and arrange so that the title would be secure, viz., of the Washington Hall property, and Jiffkins would give a judgment which would cover their property also, I would probably be able to make a loan. Still later I was informed it was arranged, that the property was to be sold at sheriff’s sale, and which I understood was done. I was not there. It was bid off by Mr. Sherrerd in my name. Subsequently Jiffkins’s judgment-bonds were given and the loan was obtained.” That is to say, the loan was obtained on a mortgage of the Washington Hall property, bid in as above stated for Scranton at $50, and conveyed by him to Jiff-kins for $18,000, upon which they, the Jiffkins’s, gave a mortgage for $16,200, due in five years, including interest at the rate of 10 per cent, per annum. The mortgage was accompanied by the bonds of the Jiffkins’s, together with a bond for $1800, to make up the consideration in the deeds. The loan was in fact $12,000, the sum originally attempted to be obtained by Sweetzer on the property, the included interest for five years making that sum or near it.

As further showing the nature of the transaction, Mr. Sherrerd, a witness for the defence, says, alluding to the failure o’f obtaining the loan for Sweetzer, that “ subsequently to this, Mr. Scranton applied to me professionally with reference to a loan to be effected by the Messrs. Jiffkins, who proposed to take the property and secure it (the loan) by a lien, not only upon that property, but upon other property they held in Scranton.” This was what Scranton had suggested to Thomas Jiffkins before the sale of the property of Sweetzer had taken place; and Scranton’s movement to have the property placed in other hands than that of Sweetzer, accords with Scranton’s advice to Sweetzer to this effect, and was with a view to befriend both Sweetzer ,and the Jiffkins’s. After this conference or conferences on the subject, Mr. Sherrerd says “ we came to the conclusion that the property itself, together with a lien on Jiffkins’s other property, with a policy of insurance on the buildings of Washington Hall, would undoubtedly be safe, whereas that property alone might not be entirely safe. I suggested, then, as a means of effecting the transfer, that a sale should be made by the sheriff on the writ then in his hands, and on which the property was then advertised, to the best of my knowledge and belief. I am positive that I suggested a sheriff’s sale, but whether it was then advertised or not, I am not certain. I suggested that Scranton should become the purchaser at the sheriff’s sale; should then convey the property to the Messrs. Jiffkins, and take a mortgage from them for the amount of the purchase-money, thus making it undoubtedly the first lien on the property.”'

This it is plain was the mode adopted to create a mortgage on the plaintiff’s property on which the desired loan of $12,000 might be obtained, and it is abundantly shown that the object was to save the property from sale on unfriendly process. By this means also, the Jiffkins were expected to be eventually secured from being “swamped” as they feared. The whole scheme was a means to effect an object, and that, as already said, to save Sweetzer’s property from sale and the Jiffkins from ruin, viz. by a loan on the property of the former, strengthened by the bonds of the latter.

Now what was the transaction in this view of it ? An adverse sale and absolute transfer of Sweetzer’s property, or only a mode of pledging it to raise money to satisfy creditors, leaving an equity of redemption in Sweetzer ? If it was the latter, the deed to Scranton was affected with the defeasance agreed upon, and so was his deed to the Jiffkins, who knew all about the arrangement. It gave to the Jiffkins only the power to mortgage it, instead of Sweetzer. It put them in Sweetzer’s stead so far as mortgaging the property was concerned. The purpose of this was to secure a loan for the benefit both of Sweetzer and them, keeping Sweetzer out of sight, for reasons of policy, but in fact using his property for the purpose. This is just the nature of the scheme devised by Sherrerd, assented to and acquiesced in by Sweetzer and the Jiffkins, as well as the creditors of the former. It is no objection to this construction of the transaction that it was effectuated through the medium of a sheriff’s sale. That was needed, and did not in the least change the real character of the transaction. Authority is not needed to prove this.

It is not at this day an open question, that a conveyance absolute on its face may be shown to be a security for money loaned, and that this may be made to appear by oral testimony: Kunkle v. Wolfersberger, 6 Watts 126; Hiester v. Madeira, 3 W. & S. 384; Houser v. Lamont, 5 P. F. Smith 311; Harper’s Appeal, 14 Id. 315, and numerous other cases to the same effect. The rule does not impinge on the Statute of Frauds, for the deed, if the proof be sufficient, was never a conveyance, but simply a security for money. It was necessary so to hold the law to prevent frauds. If the entire arrangement shows the purpose of a transfer of property, by deed or otherwise, to be as security merely, it would be simply hypercritical to contend that this would not be evidence of the fact as fully as if expressly declared in so many words. Deductions from facts, accurately drawn, may establish a fact as conclusively as words; nay, more certainly. Unaided by corroborative declarations, and alone on the undisputed details of the arrangement in this case, it seems to us that but one conclusion upon the testimony is possible, namely, that the sole object of the transaction was to procure a loan of money on the property of plaintiff, now in dispute, and not to effect a sale of it. This being the purpose, it would be a fraud on him to permit it to fail. Equity will not allow this.

But testimony aliunde which must be regarded; is superabundant to relieve the mind of doubt as to the nature of the transaction. A. S. Halstead testifies to his presence at a conversation between Sweetzer and one of the members of the firm of Jiffkins & Sons, in which it was agreed that an arrangement was to be made by which there was to be a transfer of the property in question to the Jiffkins, in which a loan was to be obtained to pay off the liens on it; that the Jiffkins were to hold the property, collect the rents for five years, he thinks, to pay debts, keep the property in repair, keep an account of moneys collected, and moneys expended on the property, and at the end of that time Sweetzer was to settle with them, pay them for their trouble, pay up all indebtedness against the property that might remain, and they to reconvey it to him. “Afterwards,” says the witness, “ I understood from a conversation between the Jiffkins and Sweetzer that they had entered into the arrangement, and subsequently that the property was sold at sheriff’s sale; and I understood from the first conversation that the transfer was to be made in this way.” This witness does not appear to have been discredited in any manner, but' is substantially corroborated by Moore, Colley, Burt, Sweetzer, Hetzel, Fitzgerald, Hurd, Welsh, Freeman, Nat. Halstead and others, who testify to conversations and declarations of the Jiffkins, that they held the property only for a term of years, in trust for Sweetzer, and that they would make no further repairs on it,&c. It is also an uncontradicted fact, that they retained in the building its furniture, which did not pass to them by the sale, and as some evidence of the understanding of all parties, Sweetzer’s wife took care of the building, sweeping and cleaning it for a considerable length of time after the mortgage was executed on the property by the Jiffkins, and they in possession of it under the arrangements referred to.

Also, as conclusive of these views of the arrangement, is the fact that the creditors, at least some of them, stood by and saw the property sold free and. clear of their liens, and neither counsel nor parties interposed an. objection. This cannot be accounted for, we think, in any other way than as alleged by the plaintiff’s counsel, that at the time of the sale it was made known to creditors that the property was simply being put in a shape to bring money on mortgage to pay Sweetzer’s debts. The master finds that at the sale the Jiffkins, Sherrerd and Sweetzer all represented that the sale was merely an arrangement for the relief of Sweetzer.

It would be preposterous to suppose that the property would have been allowed to go for $50, when the liens were large and numerous, not fixed liens, and therefore liable to be discharged by the sale, unless some well understood arrangement existed that the sale would enure to their benefit. The arrangement referred to, and prayed by Halstead and by the declarations of defendants as proved, accounts for this. Other facts corroborate this also. For instance, the costs of the sale were paid by Sweetzer after the sale. Judgments were bought up by the Jiffkins against Sweetzer, which were liens on this property, and assignments were • taken leaving them in full force against the property up until the hearing of this case, and perhaps yet. Why would the owner of property keep judgments on foot against his own property ? This fact is implicative of an arrangement to hold the property, as the testimony of Halstead and others expressly prove was the contract.

We are not troubled with the position suggested by the learned judge, viz.: that the contract set up by the plaintiff wants mutuality, and is therefore not within the redress sought. The answer to this is, that the plaintiff can have no redress without submitting to be bound as if by contract signed, and is sufficient to meet the objection. The nature of the transaction being once ascertained, the appropriate remedy follows. If the transfer of the property in the case was for the purpose of pledging it on mortgage, redemption in equity follows, and it will only be allowed on doing equity all around. The difficulty suggested cannot prevent it, else, the principle itself would be subverted.

A fact which I have hitherto omitted to notice, and which ought not to be overlooked, is the writing agreed by the Jiffkins to be given to Sweetzer of his continuing interest in the property; in fact the defeasance of the mortgage. The testimony of Sweetzer is positive as to this agreement, and is corroborated by Sherrerd, who says that on the day of the' sheriff’s sale one of the Jiffkins told him that Sweetzer was demanding the writing, and that he told Jiffkins he must give no writing; that it might give Sweetzer’s creditors a hold on the property. The witness cannot recollect whether Sweetzer asked him for the writing on that day, but recollects that he spoke to him about it several times.

How in the nature of things could all this be, if the transaction was, as the defendants allege it to have been, viz., an absolute sale to the Jiffkins? But it is just what would have occurred according to th.e plaintiff’s theory of the case. It was bad faith on the part of the defendants to refuse the execution* of such an agreement, and they will not be allowed any advantage from it. On the proofs, and substantially by the master’s finding, a writing was to be given to the plaintiff, showing his continuing interest in the property, which had been agreed upon before the sale. And the only reason given for refusing it, was that given by Sherrerd, that it might give the creditors a hold on the property as Sweetzer’s, and break up the arrangement made in the matter for his benefit, and that of the Jiffkins. That such an agreement was promised the plaintiff before the sale, is plainly deducible from the testimony, and this also proves that the arrangement was a pledge of the property as security, and not a sale of it. This is our judgment upon the whole facts in evidence, and it is a satisfaction to know, that in acting upon it, we take not a dime from the defendants that in equity they ought to retain, for they must he reimbursed all outlays after accounting for all moneys received, before they will be decreed to convey to the plaintiff. If any balance be due the defendants it must be paid, and then the plaintiff will be entitled to a conveyance of, and repossess his property.

We are aware that this convicts the master and courts of error in their conclusions upon the testimony; that is to say, we think their deductions from the facts constituting the transaction, were erroneous; that the whole taken together should have led to a different result. We feel convinced that the preponderance of testimony, that is, that which should properly lead to a true result, was with the plaintiff, and therefore we must reverse the conclusion arrived at below.

Now, to wit, May 18th 1872, the decree of the court below dismissing the plaintiff’s bill is reversed, and the bill is ordered to be reinstated, the case to be referred by the court below to the same master, or some other, to take an account of the rents, issues and profits received by the defendants from the property in question, together with an account of debts paid by them due by the plaintiff, with an equitable allowance for services rendered by the defendants; ascertaining the amount due by either party to the other, if any, so as to enable the Court of Common Pleas to make a final decree in the premises according to equity.