Sweet v. Mitchell

15 Wis. 641 | Wis. | 1862

By the Court,

PAINE, J.

In the ease of Rasdall’s admr’s vs. Rasdall, 9 Wis., 879, we decided that in the absence of fraud, accident or mistake in the execution of the papers, parol evidence could not be admitted to show an express trust reserved in land conveyed by an absolute deed. At the same time the correctness of the rule admitting such evidence to show an absolute deed a mortgage, was questioned upon principle. But afterwards, in the case of Plato vs. Roe, 14 Wis., 453, we held that the latter rule had been so long and so frequently asserted that it ought not now to be changed by the courts. These two decisions will dispose of this case.

The plaintiff here seeks for an accounting, and for the redemption of divers lands, the title to which, he claims, was conveyed to the defendant Mitchell either by him or for him, and which the latter was to hold upon certain trusts, or by way of mortgage as a security for money. These lands may be divided into three classes, each class presenting a different question: first, those conveyed by the plaintiff directly to Mitchell; second, those which the latter acquired at the foreclosure sale on the Sage mortgage; and third, those which were conveyed to him by Blossom.

In respect to the first class, the plaintiff claims that the lands were conveyed by him to Mitchell by deeds absolute on their face, but really as a security for divers moneys advanced and to be advanced by Mitchell for him as loans. If this were all that was shown by the plaintiff upon this subject, it would follow from the decision in Plato vs. Roe, that the parol evidence offered by him to show the real nature of the transaction, and that the deeds were really mortgages, should have been admitted. But after making the above allegations, the plaintiff proceeds to allege that while Mitchell held the lands so conveyed, the plaintiff made to him another conveyance, including the same lands and some others and containing the following clause: “It being . expressly understood, that if I have any equity of redemption or any interest in and to said lots or parcels of land above described, tbe same, for the aforesaid consideration, is hereby relinquished,” &c. This conveyance purports to be upon a consideration of fifteen thousand dollars. The complaint expressly admits that the intention of the parties in making it was, to convey such a title to Mitchell that he could sell and convey any portion of the land and give a perfect title to the purchaser, free from any right of redemption in the plaintiff. And yet, notwithstanding this conveyance and this intention thus admitted, the plaintiff now seeks to come in and show by parol that he was still to retain his equity of redemption, and thus contradict and substantially nullify this release. This is going much beyond the rule admitting parol evidence to show that an absolute deed was given as a security, and thus convert it into a mortgage. It is in effect saying, that after such a mortgage has once been made, it is impossible for the mortgagor to convey his equity of redemption to the mortgagee by any instrument which he may not afterwards contradict and set aside by parol evidence. Believing as we do, that the rule itself was a violation of principle and sound policy, while we have regarded it as our duty to follow it so far as it may te fairly regarded as established by authorities, we are not inclined to extend it any further. The right which the plaintiff claims was reserved after the conveyance which, it is expressly admitted, was intended to convey the equity of redemption to Mitchell — for it is obvious that the latter could not convey it to purchasers from him unless it was first conveyed to him — was substantially a trust. It would fall, therefore, within the rule established in Rasdall's admr’s vs Rasdall, instead of that in Plato vs. Roe.

The same may be said in respect to the lands bid in by Mitchell at the sale on the Sage mortgage. The facts averred in the complaint show that Mitchell became a trustee and not a mortgagee. He was to take the lands as trustee, and out of the rents and profits or proceeds of sale was to pay the mortgage debt to Sage, and hold the balance, two thirds in trust for tbe plaintiff, and one third in trust for Sage. So far, this is purely a trust, and not a mortgage from to Mitchell. Yet tbe complaint proceeds to ayer tbat Mitchell was to bold tbe two thirds reserved to tbe plaintiff, by way of security, as be held tbe other lands conveyed by tbe plaintiff. But tbe difficulty of getting at this is, tbat in order to show any two thirds belonging to Sweet, tbe express trusts in tbe foreclosure sale must first be proved. It was tbe interest which Mitchell was to bold in trust for him tbat the mortgage agreement related to. Tbat trust must therefore be first shown before tbe mortgage agreement can have anything to operate upon. We think, therefore, tbat tbe parol evidence offered to prove tbe allegations of tbe complaint in respect to these two classes of lands, was properly excluded. And it may be as well here to dispose of tbe alleged error in refusing to allow tbe plaintiff to amend bis complaint so far as relates to them. Tbe first proposed amendment avers tbat tbe defendant procured tbe release of tbe equity of redemption by fraud, but does not set up any facts showing bow tbe fraud was perpetrated; for tbe alleged concealment by Mitchell of bis intention to have tbe instrument operate according to its legal effect as it was drawn, can hardly be said to be an act of fraud in procuring it. And the allegations of the original complaint would seem to show that tbe plaintiff well knew tbat tbe conveyance was so drawn as to give Mitchell a complete title, so tbat be might convey such to any purchaser. Tbe only fraud, then, which tbe proposed amendment would seem to indicate, would be tbe refusal by Mitchell to abide by bis alleged verbal promise to bold the lands for tbe benefit of Sweet, and this, as shown in Rasdall's Adm'rs vs. Rasdall, is not sufficient to take tbe case out of tbe statute. The allegation of fraud was too general to require the court to allow it as an amendment on tbe trial.

But another answer to this amendment, as well as to the one offered in respect to tbe agreement about tbe sale on the Sage mortgage, is, tbat they change entirely tbe cause of action. Tbe original complaint shows first a mortgage, then a conveyance releasing tbe equity of redemption and conveying other lands, with tbe express intention of vesting a per-feet title in Mitchell, but upon an alleged verbal agreement by Mm that be would still bold tbe lands for the benefit of tbe plaintiff. This, as already stated, was substantially a trust. In respect to tbe lands sold on tbe Sage mortgage, tbe complaint, expressly sets forth an agreement to bold tbe lands in trust. On tbe trial, tbe plaintiff offered parol evidence to prove these agreements, and be was met by tbe statute of frauds. He then offered to amend, first, by alleging that tbe conveyance of bis equity of redemption, which be bad set out in tbe complaint, was procured by fraud, and thus fall back on bis equity of redemption as though no such conveyance bad been made; and next, by alleging that tbe conveyance at tbe sale on tbe Sage mortgage was procured by fraud in promising to execute a written agreement showing tbe trusts, and afterwards refusing to do so. This is an entire change of tbe grounds of action. In tbe first instance, it changes it from tbe enforcement of a trust reserved after tbe conveyance of tbe equity of redemption to an enforcement of tbe equity of redemption itself, as though it bad not been *conveyed; and in tbe other, it changes tbe action from tbe enforcement of a trust arising out of an agreement by tbe parties creating it, to tbe enforcement of a trust for which there was no valid agreement, but which would arise out of the fraudulent acts of tbe defendant in procuring the title. Tbe policy of tbe law favors great liberality in allowing amendments to perfect a pleading in respect to tbe cause of action originally set out. But it does not allow amendments on tbe trial changing tbe cause of action from one thing to another. There was no error in refusing these.

But so far as tbe lands conveyed by Blossom to Mitchell are concerned, we are unable to see why tbe case presented does not come within the rule allowing parol evidence to show the conveyance to have been by way of mortgage. Tbe agreement for a loan, and tbe loan, are fully averred. Tbe plaintiff gave bis note to Mitchell for the money advanced by him to Blossom. There is nothing to take it out of tbe rule, unless it be tbe fact that tbe title was not conveyed directly from Sweet, but from Blossom for him; and we' do not think this should have that effect. It is frequently tbe case that parties desire to give security upon lands the title to which, is not in them, but is subject to their control. It is also frequently true that they desire to give it upon lands owned by them, but liable to be sold on judicial proceedings against them. The rule itself being once established, that parol evidence may be admitted to show an absolute deed a mortgage, when such an agreement is clearly established, we do not think it material whether a judicial- sale was adopted merely as a means of conveying the title to the mortgagee, or whether it was conveyed to him by some third party for and on account of the mortgagor. These circumstances furnish no substantial grounds for distinguishing the case from a direct conveyance from the mortgagor, and the cases which have established the rule do not make any distinction.

The fact that the agreement by Blossom to convey to Sweet may have been within the statute of frauds, is also immaterial. Blossom executed it by conveying to Mitchell for Sweet; and Mitchell can raise no question upon that point, any more than he could if Blossom had conveyed to Sweet and then Sweet to Mitchell.

We think this sufficiently disposes of the questions presented upon this appeal.

We express no opinion upon the question, whether, if it should appear that these entire transactions between the plaintiff and the defendant were entered into with a view to delay and defraud the plaintiff’s creditors, it would deprive the plaintiff of any right to the iblief he seeks here, or not. It was so claimed by the respondent’s counsel, but we shall leave that question to be disposed of after the case has been more fully tried upon the evidence, if it shall then be presented. For the reason that parol evidence should have . been admitted to show the relation of mortgagor and mortgagee between Sweet and Mitchell in respect to the lands conveyed by Blossom, the judgment is reversed, with costs, and a new trial ordered.