122 N.Y. 467 | NY | 1890
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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *470
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *471 The plaintiff contends that the title obtained by the purchaser at the foreclosure sale was defective because the heirs of Andrew Henderson were not made parties to the action. She insists that the deed from Wm. S. Carr to Andrew Henderson was not a mortgage but an absolute deed. That upon his death the title became vested in his heirs at law and still remains in them, for, not having been made parties to the foreclosure, they are not affected by the judgment.
The plaintiff's first proposition is that the deed, being absolute upon its face, imposed upon the defendant the burden of showing that at the time of its making and delivery there was an agreement that it should not be treated as an absolute sale, but merely as security for the sum of $30,000, and was in legal effect a mortgage. And this the plaintiff insists was not proven, because no attempt was made to show that there was an oral agreement cotemporaneous with the execution of the deed, which constituted it a mortgage. While the writing upon which the defendants base their reliance, she urges, cannot have that effect, because it does not bear the same date as the deed and, therefore, they cannot be read together. We think that, notwithstanding the difference in dates, the facts proven require them to be so read. The deed bears date March 21, 1871, and was recorded on the day following, while the defeasance is dated April first, of the same year. Now, while *474
it is true that if an instrument offered to establish a defeasance be entered into subsequently to a deed and not in pursuance of the original agreement made at or before the execution and delivery, it cannot be read with the deed, still it is not essential that they should have been reduced to writing at the same time, or bear even date. (Harrison v. Trustees,etc.,
The plaintiff's second position is that if the deed and agreement be read together they do not constitute a mortgage; that in legal effect the transaction was not a conveyance of lands as security for the loan or forbearance of money, but in payment of a debt. We think otherwise. It will be observed from a reading of the agreement, (1) that an indebtedness by the firm to Henderson of $60,000 existed; (2) that payment was to be assured by Henderson's receiving the notes of Wm. S. Carr Co. (then solvent), for $30,000 and the conveyance of land as security for the remaining $30,000. The provision as to the condition upon which Henderson accepted the conveyance being stated as follows: "Henderson receives and takes from Wm. S. Carr, trustee for the firm, the deeds * * * as security for the sum of $30,000." (3) Neither the notes nor the deeds were to *475 be accepted in payment because (a) the firm were to continue to pay Henderson interest on the full sum of $60,000 after the execution and delivery of the notes and the deeds until some portion of the notes were paid or a sale of a part of the land should reduce the amount secured by the conveyance, and then upon the remainder unpaid. (b) The firm were to retain possession of the premises, collect and receive the rents, pay all taxes and interest on firm mortgages, and pay over the net proceeds to Henderson, to be applied in payment of the principal and interest of the indebtedness secured by the conveyance. (c) The land was not to be exchanged for other property or retained for the benefit of the grantee and his heirs at his option, but was to be sold within two years. (d) Henderson was not to sell for a less sum than that mentioned in the several deeds without getting the consent of Wm. S. Carr Co. If he should, it was provided that he should be charged with the consideration expressed. (e) It was provided that when the lands should all be sold, that the moneys remaining after the payment of the $30,000 and interest should be paid over to Wm. S. Carr Co. (f) And that if the sales of some of the different parcels should be made at a less sum than the consideration expressed, but with the consent of Wm. S. Carr Co., then the firm should pay to Henderson whatever sum was required to make good to him the $30,000 and interest.
We think we need not further analyze the agreement, for it is apparent from the portions so far considered, that it was not the intent of the parties that Henderson should become the purchaser of these lands for the sum of $30,000, and that to such extent the firm indebtedness to him should be paid, but that it was the purpose of the conveyance, as manifested by the agreement, to secure Henderson to the extent of $30,000. The indebtedness remaining after the transaction as before, and continuing in the full sum of $60,000 until, by the application of rents and sale of parcels of land or the payment of moneys by the firm, it should be reduced.
Whether a conveyance be absolute or as a security must generally be determined by the intention of the parties as disclosed *476
by the contract. (James v. Morey, 2 Cow. 246.) And a deed absolute in terms, but given simply as security for the payment of money, is a mortgage with all the incidents of that instrument. (Odell v. Montross,
In determining whether a contract is to be treated as a mortgage, or a conditional sale, or a conveyance in fee, courts have commented upon the presence or absence of various particulars which commonly accompany mortgages, but the essential feature necessary to create a mortgage is that it should be a conveyance intended as a security. Such evidently was the purpose of the contract before us, but the plaintiff calls attention to the absence of a covenant to pay the amount of the indebtedness. It was agreed that interest should be paid on the full amount; that after sales should be made, the proceeds should be applied in reduction of the amount of the then existing obligation, and that the firm would pay the difference if any should remain. So that, while there was not an agreement in terms to pay the entire indebtedness, such may be said to have been the purpose and effect of the agreement; but in any event the absence of such a covenant is not conclusive, but is a circumstance to be considered in construing the contract. (Horn v. Keteltas,
The fact that the deed contained a covenant assuming the payment of a prior mortgage is also a circumstance entitled to consideration in determining what was the purpose of the parties in making the contract, but it is not controlling.
Having given that, as well as all other provisions of the contract, due consideration, we agree with the finding of the referee "that it was the intention of the two instruments * * * that the instrument and conveyance * * * should be a security to said Henderson for the payment of the indebtedness of said Carr and Susemihl to said Henderson." Macaulay v. Porter (
Randall's case was an action of trespass. A deed had been delivered for a present cash consideration duly paid, and the grantee gave to the grantor an agreement to repurchase within three years. The action was an attempt to resume possession of the property without complying with the terms of the agreement. RAPALLO, J., in delivering the opinion of the court, said: "After a careful consideration of these instruments, we are of the opinion that the relations of debtor and creditor, formerly existing between the parties, were terminated by the conveyance of December 5. That the conveyance was given and received in satisfaction of the prior indebtedness, and was not intended as security merely, but as an absolute conveyance, and the agreement of December 6th was not intended as a defeasance, but a contract to resell."
As we have reached the conclusion that the deed and agreement together constitute a mortgage, it follows that it was a personal asset which passed to the executor for the purposes of administration and upon a foreclosure thereof by the executor or his assignee, the heirs of Henderson were not necessary parties.
The plaintiff's objections to the title were not, therefore, well taken, and the trial court rightly dismissed the complaint.
The order should be reversed, and the judgment entered on the report of the referee affirmed, with costs.
All concur.
Order reversed and judgment affirmed. *478