115 Minn. 342 | Minn. | 1911
Lead Opinion
This is an application to register title to lot 5, township 58 north, range 15 west. After issue joined and trial, the court, by amended findings and decree, determined that Russell M. Bennett was the ■owner of an undivided seven-eighteenths of lot 5, Edmund J. Long-year of an undivided seven-eighteenths, and William H. Daniels of an undivided four-eighteenths, subject to certain mining leases and .agreements for the payment of royalties; and, further:
“That the interest of said Russell M. Bennett and Edmund J. Longyear in the two-thirds (§) of the fee of said lands, acquired by the deed from William J. Atwell to Rolliú N. Dow, and the deed from Rollin N. Dow to said Bennett and Longyear, is subject to the right of said defendant George L. Chesebrough and said defendant William Harrison to have from them a deed or conveyance of an un*344 divided two-ninths (%) of an undivided two-thirds (%) of the fee of said land, the same being an undivided four twenty-sevenths (%r) thereof, upon the payment to them by said Chesebrough and said Harrison of the sum of $8,777.77, with interest thereon from October 3, 1906, at .the rate of five per cent, per annum; and th® right of said Chesebrough and said Harrison to have such conveyance and deed upon such payment is hereby adjudged.”
After unsuccessfully moving for certain amendments, the applicants Bennett and Longyear moved that the decision be vacated, and that a new trial be had. This motion being denied, they bring the case to this court by their appeal from, the order denying such motion.
The applicants claim that, under the facts as shown by the evidence and found by the trial court, the defendants Chesebrough and Harrison have no right or interest in the fee of the land involved, and that the portion of the decision above quoted is not sustained by the evidence or findings of fact. The facts found by the trial court hearing on this contested point are:
“That in the month of September, 1906, said defendant Chesebrough called the attention of said applicants Bennett and Longyear to the matter of purchasing the fee of said William J. Atwell in a two-thirds (%) of said lands; that said defendant Chesebrough had no interest in the fee of said Atwell, had no contract or 'agreement of any kind, either verbal or written, for the purchase or sale thereof, and had no property right therein or claim thereto; that said Chesebrough was engaged as a broker in the buying and selling of mining lands; that he had no acquaintance or connection with said Atwell; that he then knew that said A. P. Cook was the one through whom Atwell could likely be reached and a purchase made, and said defendant Chesebrough was then in a favorable position for obtaining title to the said Atwell interest; that said Bennett and Long-year were not in a position where they could likely obtain title without the aid of some one; that he then represented to them that he thought the fee of said Atwell could be purchased for the sum of $25,000, and that he would be able, as in fact he was, to secure the same through said Cook; that in case said Atwell interest should be*345 purchased, he, said Chesebrough, would be unable to obtain any commission, and that he desired to acquire for himself an interest therein; that said applicants Bennett and Longyear were desirous of obtaining title to said Atwell interest; that it was thereupon agreed orally between said applicants Bennett and Longyear and said defendant Chesebrough that said defendant should and would do what he was able to do in securing a transfer and conveyance of the At-well interest; that said property should be purchased of said Atwell in the name of said applicants Bennett and Longyear, or in the name of the clerk of one of them; that said Bennett and Longyear should pay the purchase price thereof; that said defendant Chesebrough should have a two-ninths (%) interest in the two-thirds (%) interest of said Atwell, being a four twenty-sevenths (%?) of the whole fee of said lands, and should pay two-ninths of the purchase price thereof to said Bennett and Longyear at any time within three years from said date, with interest thereon at the rate of five per cent, per annum; that upon such payment said Chesebrough should have a deed of such interest from said Bennett and Longyear, or from the person in whose name title should be taken.”
Facts further found in detail, briefly stated, are: Upon completion of the purchase, a contract was to be given. Chesebrough, containing^ the foregoing agreement, and Chesebrough was to give Bennett and Longyear, as security for the payment to be made by him, certain royalty agreements. Chesebrough, in attempting to secure a transfer of the Atwell interest, learned, it could not be secured for less than $35,000. Bennett and Longyear thereupon agreed with him that it should be purchased at that price under the same arrangement. Chesebrough then had Cook procure a deed of the At-well interest made to Bennett and Longyear’s clerk, who later conveyed to Bennett and Longyear, and Bennett and Longyear paid the $35,000 purchase price.
After receiving such deed, Bennett and Longyear refused to execute a contract to Chesebrough pursuant to the agreement, and refused to convey an interest in the land to Chesebrough, although Chesebrough demanded such contract, “after doing all the things required of him by said agreement.” And, further, “that when said
It is further found that the defendant Chesebrough thereafter .transferred to the defendant Harrison one-half of his interest under such agreement.
By his memorandum the trial judge indicated that the theory on which the right of Chesebrough and Harrison to a deed of an undivided four twenty-sevenths of the land was adjudged is that the facts found created an equitable mortgage. ■
j The defendants Jake the position that the transaction constitutes an equitable mortgage, Cmt, if not, that the facts establish an oral agreement to convey land, which is taken out of the statute of frauds by the part performance on the part of Chesebrough,
The applicants take the position, first, that no equitable mortgage was created because at the time of the transaction claimed to constitute a mortgage Chesebrough had no estate or right in the land, has never had any mortgageable interest therein, and the arrangement made was within the statute of frauds; second, that specific performance of the oral agreement to convey cannot be decreed because there was no such partial performance of the agreement as to take it out of the statute of frauds^,.;
The findings of fact are relied upon by the defendants as sufficient to sustain the conclusion upon either position taken by them; that is, as showing an equitable mortgage or an oral promise to •convey. There is no specific finding that the claimed interest of Chesebrough was agreed to be held as security, or that it was so held. Chesebrough’s version of the conversation which constituted the agreement contains some phrases tending to characterize it as a mortgage, and others equally apt to characterize it as a privilege to buy in the future at a specified price. The applicants claim that from the evidence nothing could be found beyond an oral promise to sell an undivided interest to Chesebrough, if they acquired the land, made on the representation of Chesebrough that he would be unable to obtain a commission from the seller. The applicants further claim from the evidence that Chesebrough, contrary to such rep
While a number of the errors assigned by the applicants go to the refusal of the trial court to change or add to the findings, yet their main claim is, as stated above, that the facts found do not sustain the ■decision on any theory, and counsel for the defendants and' applicants have discussed fully their Conflicting claims as to the decision being sustained by the facts found upon either theory — that of an ■equitable mortgage, or a right to specific performance of a promise to convey. We will dispose of the case as thus submitted. It will not be necessary, therefore, to consider whether, under the evidence, the findings should be limited to a finding of the existence of one or the other agreement.
Considering, first, thé claim chiefly urged by counsel for defendant Chesebrough that the decision made may be sustained as •a decree for the specific performance of an agreement to convey land: This claim assumes that the oral promise made by Bennett and Longyear to convey to Chesebrough an undivided two-ninths of the Atwell interest was so in.part performed by Chesebrough as to take the agreement out of the statute of frauds. The equitable doctrine thus invoked rests on the ground of fraud. “The underlying principle is that, where one of the contracting parties has been induced or allowed to alter his situation on the faith of an oral agreement
The courts have not attempted to define what extent or character of change in the situation induced by the oral agreement will be sufficient to estop the party inducing such change from questioning the validity of the oral promise. It must be a change of such character and to such an extent that the interposing of the defense of the statute would be a fraud. The mere denial of the right promised by the oral-agreement, the loss of that which existed only by virtue of the oral promise, being deprived of the bargain, does not create an exceptional situation as to the statute, but the very situation the statute covers. To take a case out of the statute because of such resulting loss or injury annuls the statute. The injury or loss which would result from the enforcement of the statute must arise from the acts done in performance or in pursuance of the oral agreement, and such acts must so far alter the situation of the parties seeking to avoid the statute that it would be unjust and against conscience to allow the other party, who has permitted such change to take place in pursuance of his oral agreement, to thereafter refuse to perform on his part. Brown v. Hoag, supra; Slingerland v. Slingerland, 39 Minn. 197, 39 N. W. 146; Thomas v. Rogers, 108 Minn. 132, 121 N. W. 630, 133 Am. St. 421.
■ In the instant case, Ohesebrough had no interest in the Atwell land. He had a broker’s chance to attempt to buy it if he found some one ready to buy, for whom he could act. His knowledge of or information as to the situation was that one Cook was in position to negotiate with the owner, and that the land probably could be bought. Under these circumstances, Ohesebrough stating that he would be unable to get a commission from the owner, Bennett and Longyear made the oral agreement with him that, if he succeeded in buying the Atwell title for them, they would give him a contract for the purchase of an undivided two-ninths. Thereafter he did successfully negotiate, through Oook, the purchase by Bennett and Longyear of the Atwell title. Clearly neither the services per
It is urged, however, that Chesebrough, in reliance on the oral promise of Bennett and Longyear, lost an opportunity to buy the land himself, or to find other purchasers who would give him an interest in the land. While this opportunity affords a wide range of conjecture and speculation as to possible results, its surrender does not bring Chesebrough within the principle here invoked. He lost a broker’s chance to find a buyer and get in touch with Cook and make a sale — a chance open to others. Every broker who succeeds in closing a deal evidences a somewhat favorable position with reference to that deal. This opportunity was clearly something indefinite, general, and unsubstantial. There must be a definite and substantial change in situation, in performance, or in furtherance of the oral agreement before it can be said that it would be a fraud to invoke the statute against such agreement. Browne, Statute of Frauds, §§ 445, 460; Lanz v. McLaughlin, 14 Minn. 55 (72); Thomas v. Rogers, supra; Dunphy v. Ryan, 116 U. S. 491, 6 Sup. Ct. 486, 29 L. ed. 703.
In the cases (Slingerland v. Slingerland, supra, and White v. Poole, 74 N. H. 71, 65 Atl. 255) greatly relied on by respondents’ counsel as sustaining his claim herein, acts clearly resulting in a substantial definite change in situation were performed in pursuance of the oral agreement. In this fundamental particular, these cases differ from the instant case.
The other ground on which it is claimed the decision may be sustained is that the transaction between Chesebrough, on the one hand, and Bennett and Longyear, on the other, constituted an equitable mortgaging of two-ninths of the Atwell title by Chesebrough to Bennett and Longyear, By the decision the right of Chesebrough and
Prior to the making of the oral agreement, Chesebrough had no> title to or interest in the Atwell land. Through the Atwell deed to Bennett and Longyear’s clerk, Chesebrough lost, conveyed, or allowed to lapse no equitable or legal title or interest in the property included in the Atwell deed. Atwell, when he deeded, neither intended to nor did convey any right or interest belonging to- Chesebrough, nor intended to nor did convey any right or interest to Chesebrough. If any right or interest in the land ever did vest in Chesebrough, it is solely through the oral promise of Bennett and Long-year; that is, through the oral promise of the persons against whom the promise is sought to be enforced. Upon this point there can be no difference in statement under the facts of this case. But it is claimed that, because Bennett and Longyear’s promise to Chesebrough was to hold the land as security, thereby such oral promise to convey on payment by Chesebrough becomes enforceable against the persons making the promise, as conferring an equity of redemption. The very apparent departure from recognized rules governing the transfer of interests in realty involved in this claim, coupled with the fact that the court below makes it the basis for a decree transferring a considerable interest in lands, invites a careful consideration of the principles governing the creation of equitable mortgages.
It is elementary that any interest in real estate which may be sold or assigned may be mortgaged; and, conversely, that some estate or interest capable of being mortgaged, held by the mortgagor, is essential to the existence of a mortgage. When a transaction constitutes a mortgage, therefore, there must be, either, independently of the transaction, some interest in the mortgagor capable of being mortgaged, or through the transaction itself such interest must be acquired by the mortgagor. Courts of equity have long been concerned with preserving from forfeiture this interest in the mortgagor. The designation given that interest — equity of redemption • — -suggests the history of its preservation rather more clearly than its nature. In accord with other principles of equity affording protection to the interest of the mortgagor, it is the established law that,
As stated in Fisk v. Stewart, 24 Minn. 97, “nor is it at all important as affecting the rights and obligations of the party taking-the conveyance that he received it from another, who happens to hold the legal title, instead of the borrower, in whom is vested the equity of redemption, so that it is obtained through the instance and request of the latter and for his benefit.”
And in Niggeler v. Maurin, 34 Minn. 118, 24 N. W. 369, “plaintiff, being vested with the equitable title, had an interest capable of being mortgaged. * * * It is entirely immaterial, under such circumstances, whether the trustee of the legal title should convey to the mortgagee directly by the arrangement of the parties, or that it should pass to him through the mortgagor.” Randall v. Constans, 33 Minn. 329, 23 N. W. 530; Sons of Temperance v. Brown, 9 Minn. 141 (151); 20 Am. & Eng. Enc. (2d ed.) 915, 943; Jones, Mortgages, §§ 136, 331.
The nature or extent of the interest in the premises, or the manner in which it is evidenced, is unimportant; but under the rule as-stated there must be some interest in the claimed mortgagor which,, but for the protection of a eourt of equity, would be surrendered and lost through the transaction. In the instant case, at the time of making the oral agreement with Bennett and Longyear, Ohesebrough had no right or interest, legal or equitable, in the land. was a stranger alike to Atwell and to Atwell’s title at that time. Therefore there was nothing belonging to Chesebrough, either actu
It is claimed on the part of the defendants that certain recent cases, including one in this state, show a departure from or denial of the rule that an interest in the mortgagor, created or evidenced by something outside of the oral mortgage agreement, is essential to the finding of an equitable mortgage. The decisions of other courts so relied upon are: Starks v. Redfield, 52 Wis. 349, 9 N. W. 168; Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889; Jourdain v. Fox, 90 Wis. 99, 62 N. W. 936; Schneider v. Reed, 123 Wis. 488, 101 N. W. 682; Jones v. Gillett, 142 Iowa, 506, 118 N. W. 314, 121 N. W. 5; Krebs v. Lauser, 133 Iowa, 241, 110 N. W. 443; Campbell v. Freeman, 99 Cal. 546, 34 Pac. 113; Watts v. Kellar, 56 Fed. 1, 5 C. C. A. 394; Hall v. O’Connell, 51 Or. 225, 94 Pac. 564.
The decision in no. one of these cases goes to the extent necessary to sustain the position of the defendants in the instant case. In each one the claimed equitable mortgagor was related to the title by some means other than the oral promise of the mortgagee — -the person against whom the promise was sought to he enforced. The opinions in these cases do not, as we understand them, announce
In the cases of Stitt v. Rat Portage Lumber Co. 96 Minn. 27, 104 N. W. 561, and Grout v. Stewart, 96 Minn. 230, 104 N. W. 966, this court had under consideration transactions constituting equitable mortgages, but the decision in neither case goes to the ex*-, tent necessary to sustain the title of the defendants in the instant case. In the Stitt case the parties claiming as equitable mortgagors contracted with the owners for the purchase of the lands involved; the money for such purchase being advanced by the other party, in whose name title was taken as security for the repayment of the purchase price so advanced. Further, under the arrangement, the claimed mortgagors, “pursuant to the agreement, procured deeds to the lands involved, went into possession thereof, built camps, cleared out logging and tote roads, constructed dams, cleaned out streams, opened up part of the lands as a farm, and raised crops.” They paid on the mortgage indebtedness a large sum. Prom these facts the conclusion that there was a part performance of the oral agreement was properly reached. Upon this argument it is urged that an examination of the record in the Stitt case discloses that in three tracts of the land the claimed mortgagors did not acquire an interest through contracts with the owners. If such be the fact, the decision of this court rendered in that case as to these three tracts is fully sustained within the general rule first stated, because of the part performance of the contract. In the Grout case the person who claimed as mortgagor had an interest in the land mortgaged prior to the transaction constituting the equitable mortgage.
A state of facts very similar to the facts in the instant case was before the supreme court of Illinois in the recent case of Heaton v.
And in Conkey v. Rex, 212 Ill. 444, 72 N. E. 370: “Defendant-in error calls our attention to the fact that a court of equity "disregards form and seeks the substance of the transaction, and argues, that it is therefore immaterial that the title to- the land in controversy was never in Bex. We are referred to a number of authorities in support of this proposition, and find that in each of those-cases, where the court has given the matter any consideration, the-party in whom the right of redemption was held to exist had some-interest in the real estate, legal or equitable, prior to the execution of the deed from the third party to the person held to be a mortgagee. * * * In the case at bar, at the time of the execution of' the deed from Carr to Conkey, Bex had no interest, legal or equitable, which he could assert, in the real estate; and as he had.nothing which could be mortgaged the deed in question cannot bte regarded as a mortgage from him to Conkey.”
• No matter how much obscurity may arise from the application of
This principle that some right or interest of the mortgagor in the land mortgaged is a prerequisite to the creation of an equitable mortgage finds its importance, not merely as a definition of a mortgage, nor because it adds to the equities of the mortgagor. Many situations disconnected from any interest in the land may present equally serious and quite similar hardships if the form of the writings control the nature of the transaction in a given case. But if the rule were relaxed or abrogated to the extent necessary to sustain a finding of an equitable mortgage in the instant case — that is, a right to the fee in Chesebrough and a mortgage lien right in Bennett and Longyear— a fundamental change would thereby be made in the law governing the transfer of interests in land, and a change directly in conflict with the statute of frauds. It is frequently and correctly stated that the statute of frauds has no application to parol proof of an equitable mortgage, but this is for the obvious reason that such proof by establishing an equitable mortgage does not transfer to the mortgagor an interest in land. The oral proof simply limits the effect of a conveyance absolute in form to the agreed effect — a transfer as security. Glass v. Hulbert, 102 Mass. 24, 3 Am. Rep. 418; Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671.
Such is the stated rule in Stitt v. Rat Portage Lumber Company, supra: “That a deed, absolute on its face, can be shown by parol evidence to be in fact a mortgage is elementary. * * * Parol evidence is admissible for this purpose, notwithstanding the statute of frauds.”
But if a parol agreement, though containing the terms of a mortgage, is relied on to transfer the fee to.the mortgagor, to such agreement the statute of frauds is exactly applicable. Such agreement, in so far as it transfers an interest to the mortgagor, is not properly described as an agreement for an equitable mortgage. Equity never transferred a title to the mortgagor by the doctrine of
It is unnecessary to discuss the wisdom of the legislation requiring contracts for a transfer of real property to be in writing. The statute of frauds expresses the fixed legislative policy of the state, and-the court should not, by the extension of any equitable doctrine beyond established limits, interfere with such legislative policy. The instant case illustrates one of the very situations that the statute was passed to avoid. A valuable interest in land is made dependent upon the conflicting oral evidence of the interested parties. The
The facts found do not sustain the decision adjudging the defendants, on payment of a specified sum, entitled to a conveyance of an undivided four twenty-sevenths of the land involved in the application for registration, on either theory advanced by the defendants. The trial court was clearly correct in the opinion expressed that the facts found do not show a joint venture or partnership between Bennett and Longyear and Chesebrough in the Atwell land; nor could Bennett and Longyear be adjudged thereunder to hold an interest for Chesebrough as trustees. We conclude the decision of the court below is not sustained by the findings of fact.
The order appealed from is reversed and the cause remanded, with directions that the conclusion of law and decision be amended in accordance with this opinion, and judgment entered therein.
Dissenting Opinion
(dissenting).
I dissent. The decision reached by the majority is based upon the premise that it is essential to the existence of an equitable mortgage that some estate or interest in the debtor shall exist at the time of the creation of the mortgage relation. If this premise is sound, then the facts of this case are not within the rule, and the decision of the majority is correct. .But, if the doctrine of equitable mortgage is not based upon .the fact of a pre-existing interest in the mortgagor, then the argument of the opinion and the conclusions reached are not justified by the .facts.
In most of the 'cases where the doctrine has been discussed, it -was conceded that the mortgagor or debtor had an interest, or owned the land, and the title was conveyed under an agreement to hold it as
It is admitted that Bennett and Longyear agreed to carry Chesebrough for the amount represented by two-ninths of the two-thirds purchased. They advanced the money for him, and agreed to hold the title in their own names as part security for the loan. There was talk of Chesebrough furnishing additional security, and the moneys coming in on the roylaties were to be applied in part payment. The transaction clearly amounted to a joint purchase of the two-thirds interest in the proportion of two-ninths by Chesebrough, and seven-ninths by Bennett and Longyear, they to hold his interest as security for the advancement by them. The transaction was not a purchase of the entire interest by Bennett and Longyear, and then a resale of the two-ninths to Chesebrough. Let us suppose that Atwell had conveyed the two-ninths interest to Chesebrough and the seven-ninths, interest to Bennett and Longyear, and that Chesebrough had executed a mortgage upon his two-ninths interest to Bennett and Longyear to secure them for the advancement to pay for his interest, would the transaction have been any more a mortgage than was accomplished by what actually did take place ? JJnder the arrangement Chesebrough acquired an interest in the purchase the instant Bennett and Longyear became the grantees, and the agreement that Bennett and Longyear hold that interest as security became at once effective. The transaction resulted in creating an equitable mortgage in favor of Chesebrough, although his interest and the mortgage relation were created at the same time by the same transaction.
In the majority opinion, reference is made to Schriber v. Le Clair, 66 Wis. 579, 29 N. W. 570, 889, and to other cases from Wisconsin, Iowa, California, and Oregon, and it is stated that no
The principle is stated in Krebs v. Lauser, 133 Iowa, 241, 110 N. W. 443, but it was held that the evidence was insufficient to meet the rule that an absolute deed cannot be established as a mortgage, except upon clear and satisfactory evidence.
The doctrine was applied later in Jones v. Gillett, 142 Iowa, 506, 118 N. W. 314, 121 N. W. 5. In that case Jones, desiring to purchase the land from one Davidson for $1,760, applied to Gillett for a loan of a part of the purchase money; it being verbally agreed between them that the defendant would advance the necessary amount at seven per cent, and take a deed for the land from Davidson as security. Subsequently the defendant agreed to advance the entire purchase price, and took a deed from the owner with that understanding, and secured himself for the payment of the interest by a nominal lease of the land at a rental which amounted to seven per cent, of the purchase price, and finally defendant repudiated the contract and attempted to hold the land. The court said that parol evidence was admissible to show that the deed was subject to an agreement that the defendant should hold the title as security only.
To the same effect is Hall v. O’Connell, 52 Ore. 164, 95 Pac. 717, 96 Pac. 1070. The facts were essentially the same as here, with the exception that in this case Ohesebrough bought only a part, instead of the entire, interest.
As I understand the case of Stitt v. Rat Portage Lumber Company, 96 Minn. 27, 104 N. W. 561, this principle was applied to the three tracts of land known as the “Loper & Rumery,” the “Mur
