Swain v. Cato

Walker, J. This suit was brought in the district court by Cato against Swain, on a promissory note for $461 43. This note was due one day after date, and recites that it is given for real estate, and that a vendor’s Men is retained. It appears, however, from the pleadings and the evidence, that the note recites a falsehood on its face, and.that it was only in part given for real estate, and in part for goods and money. [398] The vendor’s lien is a secret lien and one which stands solely upon the grounds of equity and good conscience. It need not be recorded, to give it the force and efficacy of a mortgage.. Now, is it to be allowed that parties may evade the registration laws, and attach this secret equitable lien to all manner of uses never intended by the expounders of the law of equity, and calculated to mislead third parties, and enabling the contracting parties to practice fraud upon innocent purchasers ? We think not. We are clearly of opinion that such a rule as would allow parties to make and enforce such contracts would be against public policy. If liens could be created in this way, by simply writing (and that falsely) that a note was given for real estate, when indeed -it was given for money or dry goods, all law upon the subject of mortgages might be set at nought, and all the benefit the public derive from requiring them to be recorded would be lost. It is true that as between the parties themselves it might seem right and just that such contracts should be enforced; but the parties who engage in this sort of contract (which is against public policy) are in pari delicto, and equity should not step in to relieve them. But in this case we will only follow the doctrine of Wasson v. Davis, decided at the present term, and refer again to the case of Growning v. Behn, 10 B. Monroe, 383. If the party setting up the vendor’s lien can show precisely what amount of the consideration of the note was for the purchase of the land, he can have a decree pro tanto and no more. The judgment of the district court is. reversed and the cause remanded. Beversed and remanded.