73 Pa. 65 | Pa. | 1873
The opinion of the court was delivered, January 27 1873, by
The transaction between Danzeisen and the elder Miller in this case, was a mortgage. The former conveyed his property to the latter expressly as a security for money to be obtained to pay his debts. Miller agreed to take the property, raise the money through a certain building association, apply the rents to a repayment of the loan, and to reconvey when the building association expired. In Harper’s Appeal, 14 P. F. Smith 320,
In such a case, where the purpose of the parties is not to sell, but to make the deed a mere security, it cannot be material that Miller was to procure the money from an association whose business it was to lend money on real estate security. The fact that the parties, who were Hermans, called it a trust, cannot overcome the distinct terms of their agreement, that it was to be a security only. Indeed, their use of the term trust, giving to it an ordinary signification, only confirms the intent not to make an absolute conveyance. It is very evident that the deed was a mortgage, or a trust ex.maleficio would arise; for when the deed was delivered no consideration passed. Miller procured the estate without payment of any purchase-money, and therefore stood in no better situation in point of fact than one in whose name a deed is taken by another who pays the purchase-money.
In equity the estate should remain in Danzeisen, who had received nothing but a promise to raise money for his use, unless the promise to raise be the equivalent of the money when raised. If the promise was not intended to be performed by Miller, the deed was obtained by a deceit, and it was a fraud at the time it was delivered.
Rut if the promise be performed, the true intention of the parties is executed, and the deed should stand as a security for the money. It would be different had the deed been intended to enable Miller to raise money by a sale, for then Danzeisen would intend to pass an absolute estate, and to trust the promise of Miller to apply the proceeds to his use; a breach of such a promise would not convert Miller into a trustee, and the case in principle would resemble that of Barnet v. Dougherty, 8 Casey 371. But W'here no sale is intended, and the conveyance is only to be a security for a loan to be obtained on it, the parting with the title must be by way of mortgage, or the deed is procured by false pretence. The law, however, rather treats the deed as a mortgage, than to impute a fraud to Miller. In equity, where the estate is conveyed without consideration, and for the special purpose of security for a loan, what difference can it make that the money was not paid on the delivery of the deed ? The grantor’s intent in its delivery is the same in either event, while every breach of faith in the grantee partakes of a fraud.' To say, therefore, that the relation of debtor
Miller’s intent to raise the money, which was the effective means of procuring the title, must be viewed as the equivalent of the money, when it is raised and applied to Danzeisen’s use. Then the purpose of the deed is executed, and then it should stand as a security to reimburse the money borrowed on the faith of it. It is plainly a mortgage, therefore, and equity will so regard it, and compel a reconveyance when the money shall have been refunded. As was said in Haines v. Thomson decided in February 1872, 20 P. F. Smith 434, in all the cases 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 mere security for money. But without further discussion, the case of Sweetzer’s Appeal, decided last year, is an authority in point, that even a sheriff’s sale will be converted into a mortgage when it is made an instrument to carry out the agreement of the parties to raise money by way of loan, and when the loan is subsequent to the deed: 21 P. F. Smith 264.
At Nisi Prius this case was treated as a question of trust. The draftsman of the bill evidently looked at it in that light, and( in that light the bill was dismissed. But a careful examination of the bill discloses all the essential facts to support it as a bill to redeem a mortgage, and it prays for an account and a reconveyance. With these substantial averments and appropriate prayers, and with the ample power of amendment possessed by the court to do equity and reach the justice of the case, we cannot turn the plaintiff out of court by reason of inappropriate terms used in the bill, indicating a trust instead of a mortgage.
Treating the bill as substantially one to redeem a mortgage, we are of opinion the evidence clearly proves the conveyance by Danzeisen to Miller to be a mere security for money to be borrowed for the use of Danzeisen, and therefore it was a mortgage in law, and that Henry E. Miller was not a bond, fide purchaser for a valuable consideration without notice of the nature of the deed. The decree of the Court of Nisi Prius is therefore reversed, the plaintiff’s bill restored, a decree for an account to be taken between the plaintiff and the defendants is ordered, and G-eorge M. Dallas, Esq., is appointed a master to take the account and report the same to the court, together with the proper form of a final decree, in accordance with the rules and practice in equity.
