86 N.Y.S. 544 | N.Y. App. Div. | 1904
Lead Opinion
The plaintiff in this action seeks to recover, the consideration ..named in a deed of real property which purported to convey a -farm upon Long Island to the defendants’ testatrix. The complaint alleged that “ on or about the 28th day of March, 1895
The answer in effect denied the sale of the property and alleged that there was no contract entered into by the testatrix relating to a sale or conveyance of this property; that the contract alleged was void under the Statute of Frauds, and that the claim or demand sought to be recovered was barred by the Statute of Limitations.
The plaintiff testified that she was the owner of a farm at Brent-wood, L. I., and that she continued in the possession of this farm until the month of March, 1895 ; that she made a conveyance of the property on the 31st day of October, 1894; that this conveyance was in pursuance of negotiations in which her husband, Mrs. La Bau and herself took part; that in pursuance of these negotiations she executed a deed which she gave to Mrs. La Bau ; that the plaintiff remained in possession of the farm until February, 1895. This deed was dated and acknowledged on the 31st of October, 1894, and recorded on the 10th of Hovémber, 1894. She also testified that on the 28th day of March, 1895, she delivered possession of the farm to one Moyer, and that on October 30, 1894, she received a loan of $3,133 from Mrs. La Bau. The plaintiff’s husband testified that the deed of the property was delivered to Mrs. La Bau in the
“Please sign the accompanying lease as agent for me and oblige ***'
“(Mrs.) A. Y. LA BAH.”
Thereupon the witness signed this lease, “ Lorenz Reich, agt.,” and it was executed by the tenant who went into possession of the premises. This lease is in form between “ Lorenz Reich of the ■'City, County and State of Mew York, lessor, as agent of Alicia Y. La Bau, owner of the lands and buildings thereon hereinafter described,” and purports to lease the premises in question for the term of five years, commencing on the 1st day of April, 1895, at the yearly rental of $1,200, and with a covenant that the lessee should have the option of purchasing this property for the price of $45,000; The witness then testified that he remembered the plaintiff receiving a letter delivered by Mr. Bell in the handwriting of Mrs. La Bau •either the evening after the lease with Moyer was signed or the next day, that is, either the 29th or 30th of March, 1895; that he was present when this letter was received by the plaintiff; that the plaintiff read it aloud to the witness and afterwards handed the witness the letter, and that he was familiar with Mrs.' La Ban’s
“Ma/rch 30th, 1895.
“ My dear Mbs. La Bau :
“ As per your request yesterday I write this letter to say that I hereby release my farm at Brentwood, L. I., described in the deed which you recorded in Suffolk Co. with the understanding that you are to pay me the $39,639.00 the balance of the purchase price on or before March 1st, 1897.
“ Enclosed please find duplicate list of all horses, cows, poultry, carriages, wagons, furniture, bedding and all the chattels, &c., &c., according to your request.
“ Very respectfully yours,
“ELIZABETH REICH, [seal]”
Inclosed in this letter was a writing which commenced: “ Bought of Elizabeth Reich, by Mrs. Alicia Y. La Bau, Mch. 29th, 1895.” This was followed by a list of furniture and other articles, and the statement: “ This amount is deducted from the $3,133.00 ■ you
Mr. Bell, the attorney who had figured in the transaction, was then examined. He testified that the lease was prepared by him and executed before him as a notary public; that the lease was prepared under the directions of the defendants’ testatrix, and after the lease was executed by the plaintiff's husband, one copy was delivered to the tenant and one retained by the witness, and the next day he delivered the one that he retained to Mrs. La Bau; that at that time she had a letter which she had prepared, or that she wrote while the witness was present, addressed to the plaintiff, and asked the witness to deliver it to her; that at the same time
The defendant then moved to dismiss the complaint upon the ground that the plaintiff having alleged that the plaintiff sold and conveyed the property on March 28, 1895, that was absolutely unproved, no such evidence having been produced; and also that the writings constituting the contract as evidenced by.the lost letters are insufficient, and that the contract being regarded as oral, is void by the Statute of Frauds, and also that the cause of action accrued more than six years prior to the death of Mrs. La Bau on August 16,1902. In denying that motion the learned trial judge: stated that “ the argument overlooks the fact that it was not a mortgage ; it was an absolute deed in fee. It is made a mortgage by parol evidence, and all that the plaintiff does here is to show, also by parol evidence, that the mortgage, which was intended when the absolute deed was given by Mrs. Reich, and that the tenor of the deed as originally drawn, delivered and recorded, continued in full force as a deed in fee, as it always had read. Parol evidence was given to show that originally it was in the nature of a mortgage
The defendants then introduced evidence tending to show that .the plaintiff and her husband treated the property as belonging to them subsequent to the date of this alleged transaction; that shortly after this deed was executed and in January, 1895, judgments aggregating more than $20,000 were entered against the plaintiff, transcripts of which were filed in Suffolk county, the county in which this property was located. The parties then having rested, the defendants again moved to dismiss the complaint upon substantially the same grounds, which motion was denied, whereupon the court left the question to the jury, charging that it was quite clear that the original transaction between these parties as to which there seems to be no dispute was a loan by Mrs. La Bau to Mrs. Reich of $3,133 and that this loan was secured by the deed delivered to Mrs. La Bau upon the understanding that the deed was to operate as a mortgage; that this transaction made Mrs. La Bau the mortgaged of the property ; that upon the face of the transaction she was the owner, but the substance of it was that she was a mortgagee for the security of her $3,133; that in March of the following year the property was leased to one Moyer; that the contention of the plaintiff is that Mrs. La Bau “ about this time expressed her intention to purchase the property and to exercise the option which had been previously given to her, namely, to take the property for $40,000 the consideration specified in the deed; ” that “ proof has been given to you tending to show that she did exercise that option, and that the transaction which had previously been a mortgage was, by the understanding and agreement of the parties, left to its natural operation as a. deed, that is, turned into a sale, and that the deed then already on record was to remain thereafter just as it read, as a deed transferring the property to Mrs. La Bau; she was no longer to be the mortgagee but the owner. Well, the evidence on that head is all one way. The defendants have no independent evidence with regard to it; ” and then after calling the attention of the jury to the evidence, it is summarized as follows: “You have the uncontradicted testimony
To that charge the defendants excepted, and the court was specifically asked to charge that “ the plaintiff having admitted that the original deed of October 31, 1894, was really a mortgage, he cannot rely on such a deed as a- consideration to support a promise to pay by Mrs. La Bau in March, 1895, and unless the jury are fully satisfied that a new deed in the form heretofore charged was made and delivered in March, 1895, by Mrs. Reich to Mrs. La Bau, the defendants are entitled to a verdict,” which was declined; and the defendants excepted; and this presents the main question in this case.
In determining this question it is quite necessary that we should have a clear conception of the rights and obligations of the respective parties to this transaction upon the execution and delivery in October, 1894, of the deed in question. It recited a consideration of $40,000, but there was no promise to pay that sum. In consideration of .that amount it purported to convey to Mrs. La Bati the property in question; but it is conceded that that conveyance, though absolute upon its face, was in effect a mortgage to secure the payment of the sum of $3,133 with an option to Mrs. La Bau to purchase the property within one year for the consideration expressed in the deed. Ho liability could be predicated upon the statement in the deed that the consideration for the conveyance was the payment of $40,000, as a recovery of that amount was barred bv the Statute of Limitations prior to the death of Mrs. La Bau, and the defense of the
In Newcomb v. Bonham (1 Vern. 7) an absolute conveyance was given, with a defeasance upon payment of £1,000, during the life of the grantor, and the grantor covenanted that it should never be redeemed after his death, yet redemption was decreed. In Clark v. Henry (supra) the chancellor, in deciding the question from which the appeal was taken, says : “ There is no principle in. equity better settled than that every contract for the security of a debt, by the conveyance of real estate, is a mortgage; and all agreements of the parties, tending to alter in any subsequent event, the original nature of the mortgage and prevent the equity of redemption, are void. If the conveyance or assignment was a mortgage in the beginning, the right of redemption is an inseparable incident and cannot be restrained or clogged by agreement. Though the conveyance be absolute in terms, yet if the intention appear, to make the estate redeemable, it will continue so until foreclosure; for the maxim of equity is, that the estate cannot be a mortgage at one time and an absolute purchase at another. This is an elementary rule on this subject, and the object of it is to prevent imposition and fraud on the mortgagor.”
In Odell v. Montross (68 N. Y. 499) the court upon the trial found that the plaintiff, being indebted to the defendant for money advanced, executed to the defendant a deed of the premises described in the complaint, which deed was absolute on its face and purported to convey the fee, but that it was executed as, and intended as a security for, the said indebtedness then existing and what might thereafter accrue, but it was agreed and intended by the parties that the plaintiff, upon payment, should have the right to redeem and should be entitled to a reconveyance; that in September, 1866, the
I do not find that this case has ever been questioned; but it has-been cited in Kraemer v. Adelsberger (122 N. Y. 476), and in. Cooley v. Lobdell (153 id. 600). This then was the relation between, the parties. They stood as mortgagor and mortgagee, with the-rights incident to that relation, and no agreement between the-, parties could change that relation, except such as would be sufficient, to divest the plaintiff of her title to the property.. It is entirely ■ clear that if this plaintiff had filed a bill to redeem at any time within ten years after the execution of this instrument, she would have been entitled to redeem, and no agreement between the parties, not sufficient.to legally divest the plaintiff of her legal title to the; property, would have been sufficient to foreclose her of that right
The plaintiff’s right to recover must depend upon a valid agreement to pay the sum of $40,000 for a legal conveyance of the property in March, 1897, and to sustain such a promise it must appear that the defendants did at that time convey or assure to Mrs. La Bau a valid title to the property. If this instrument Jhad been upon its face a mortgage when executed and delivered in October, 1894 — and, as I understand the rule, the rights of the parties are exactly the same as if the instrument had been on its face a mortgage — the question is whether there was a valid conveyance or agreement to convey by which Mrs. La Bau then agreed to pay '$40,000 so that the agreement to pay that sum can be enforced in an action at law ; for if there was no such contract or conveyance, it seems to follow that no obligation -existed on behalf of Mrs. La Bau to pay to the plaintiff the $40,000, the amount mentioned in the conveyance. Keeping in mind that the legal title to this property has never passed from the plaintiff to Mrs. La Bau ; that this instrument was a mortgage and not a conveyance, and that Mrs. La Ban’s interest in this property was that of a mortgagee and nothing more, to vest in her a legal title to the property it was necessary that the plaintiff should execute a conveyance sufficient to pass title to real estate. The learned trial judge considered that a parol agreement made after the execution of the mortgage could modify the parol agreement by which the conveyance, though absolute on its face, was a mortgage, and thereupon the mortgage was converted into an absolute deed, or, as the court said in denying the motion to dismiss the complaint, “ the argument overlooks the fact that it was not a mortgage; it was an absolute deed in fee. It is made a mortgage by parol evidence, and all that the plaintiff does here is to show, also by parol evidence, that the mortgage which was intended when the absolute deed was, given by Mrs. Reich, and that the tenor of the deed as originally drawn, delivered and recorded,
I think this overlooks the essential distinction between a mortgage and an absolute conveyance. • A mortgage is on its face an absolute conveyance of the property, there being incorporated in the conveyance a defeasance, but it is none the less a mortgage because the defeasance is either a separate instrument or rests in a parol agreement made at the time of the execution and delivery of the conveyance. In either case the conveyance is nothing but a .mortgage by whicli the title to the property is not conveyed, but the grantor or the mortgagor remains the legal owner of the property subject to the lien of the mortgage; and once the fact is established that the conveyance is a mortgage, then the rights of the parties are governed by the rules that exist in relation to mortgagors and mortgagees, and not as to grantor and grantee; and a subsequent parol agreement can nd more change that relation than it could if the instrument was upon its face what in reality it- was, a simple mortgage. The cases all hold that once that relation is established no verbal agreement between the parties is sufficient to turn the instrument which when executed and delivered was a mortgage into an absolute grant. Certainly if it could not be turned'into an absolute grant so as to vest Mrs. La Bau with the title to the property, by which she could maintain ejectment as against the mortgagor, it cannot b¿ turned into an absolute grant so as to entitle the mortgagor to recover the amount of the consideration which Mrs. La Bau was to pay upon acquiring an absolute title to the property. The plaintiff being the owner of the property subject to Mrs. La Ban’s interest as a mortgagee, that property could be divested in one of two ways, either by a conveyance sufficient to transfer the legal title to the property, or by a foreclosure by Mrs.' La Bau of her mortgage and a sale under that foreclosure. Section 137 of the Revised Statutes (1 R. S. 738) provides that “ every grant in fee, or of a freehold estate, shall be subscribed and sealed by the person from whom the estate or interest conveyed is intended
I think, therefore, that the evidence failed to show that the relation in connection with this property, as between the plaintiff and Mrs, La Bau, ever changed after the execution and delivery of the instrument in October, 1894, which was nothing but a mortgage, and that there was no obligation of Mrs. La Bau which could be enforced for the $40,000, the consideration expressed in the conveyance.
There are exceptions by the defendants to the admission and rejection of evidence which would require serious attention but for the view that we take of the question discussed, from which it follows that no cause of action was proved, and it is not, therefore,, necessary that they should be considered.
It follows that the judgment and order appealed from must be reversed and a new trial ordered, with costs to the appellant to abide the event.
Van Brunt, P. J., McLaughlin and Hatch, JJ\, concurred; Laughlin, J., dissented.
See 9th ed.—(Rep.
Dissenting Opinion
This action is brought to recover the balance of the purchase price of premises alleged to have been conveyed by the plaintiff to the testatrix of the appellants. The plaintiff alleges that on or about the 28th day of March, 1895, she sold and conveyed the premises to the decedent for the agreed consideration of $40,000, payable by crediting thereon the sum of $361, which plaintiff owed to her, and the balance of $39,639 to be paid on or before the 1st day ■of March, 1897; that no part of this balance has been paid and judgment is demanded therefor together with interest from the date when it became due and payable. The material allegations of the 1 complaint were put in issue by the answer which also alleges the invalidity of the contract on the ground of the Statute of Frauds •and pleads payment and the Statute of Limitations.
Upon the trial the plaintiff showed the execution and delivery by her to the decedent of a full covenant warranty deed of the premises on the 31st day of October, 1894, reciting a consideration of $40,000, and that possession thereof was surrendered to the decedent on the 28th day of March, 1895. The premises consisted of a tract of 100 acres of land at Brentwood in Suffolk county, and the plaintiff at the time of executing this deed had good title thereto. The appellants showed by the testimony of the plaintiff upon cross-examination that contemporaneously with the execution and delivery of the deed she signed and delivered to decedent a receipt in the following words :
“ Received, Hew York, Oct. 30,-1894, of Alicia V. La Bau, the sum of $3133. as a loan, the repayment of the same to be secured by the making, execution and delivery by me on .the 31st day of Oct., 1894, of a deed conveying the property owned by me and standing in my name at'Brentwood, Long Island, State of Hew York. Elizabeth Reich. Witness, A. H. Stevens.”
The plaintiff then gave evidence tending to show, and sufficient to warrant the jury in finding, that at the- time of the execution of the deed she did owe the decedent the sum specified in the' receipt and that there was an agreement between them to the effect that, if the decedent should elect within a year to purchase the property specified in the deed, possession would then be delivered and the terms of payment of the balance of the purchase price over and
This action was commenced on the 19.tli day of January, 1903, within six years after the balance of the purchase price became payable. Consequently the plea of the. Statute of Limitations is. not well taken. Mor has the Statute of Frauds any application. Possession has .been delivered to the purchaser and the plaintiff has fully performed on her part all of the conditions, as. the contract was construed by the parties, upon which her right to recover the balance of the purchase price depends. The promise to pay was contained in a sufficient memorandum signed by the decedent..
The principal contention on the. part of the appellants is that the instrument of October 31,1894, although a deed in form, was in fact a mortgage, and that, therefore, it was ineffectual for the. purpose of
I fail to see any merit in the position taken by appellants. Their . testatrix had a good record title and they seek to defeat it by evidence dehors the record, from which they claim, in effect that she? was a mortgagee in possession. They do hot show that they obtained possession in that right, and the plaintiff shows quite clearly that" the possession was given pursuant to the agreement to-purchase. But even With the evidence that the deed was to be considered as a mortgage only in case the decedent did not wish to' Complete the purchase, still the contention of the appellant should not be sustained. The plaintiff by electing to give the decedent possession pursuant to her parol election to purchase and to demand the- balance of the purchase price and by bringing this action therefor, which is an irrevocable election, would be forever estopped from asserting any right of redemption in the premises.
The appellants insist that the plaintiff has an equity of redemption In the premises. This she never asserted and does not now claim and is estopped from claiming. It, therefore, becomes unnecessary to decide whether the doctrine of the cases of Mooney v. Byrne (163 N. Y. 86) or Hughes v. Harlam (166 id. 427) and kindred cases is applicable to the case at bar, or whether the defeasance or equity of redemption which was created by parol could be released by parol so that the decedent in any event obtained a complete title on or about the "28th day of March, 1895, when she made her election to purchase, dr Whether the fact that the express purpose of having-the instrument in the form of h deed was to, have it serve and stand as a conveyance of the title, without the execution of any further
I am of opinion, therefore, that the judgment and order should be. affirmed.
Judgment and order reversed, new trial ordered, costs to appellants to abide event.