Wight v. Prescott

By the Court, Harris, P. J. The facts of this base, as they are admitted by the defendant, unexplained as they are, establish, beyond all reasonable doubt, a fraudulent design on the part of Charles B. Prescott, after having obtained the loan, to displace the lien of the mortgage. That he "should Have permitted the mortgage executed by him to the loan commissioners, to be foreclosed for the non-payment of interest, and then, upon the sale, should have paid up the interest and costs, and renewed the mortgage in the name of his brother, and having done this, that he should have allowed Mrs. Dudley to re-enter for the non-payment of a small amount of rent, can only be accounted for, I apprehend, upon the presumption that his object was to obtain, under the recovery of Mrs. Dudley, a title to the premises tininciimbered by the mortgage. If these circumstances, tending, as they d8, to establish a fraudulent intent, and rebutting, as they do, the express denial of fraud in the 199 answer, were capable of explanation, the defendant was, I think, called upon to furnish such explanation. Where, as in this case, a fraudulent intent is alleged in the bill and denied in the answer, such denial repels the presumption of fraud arising from the facts stated in the bill, and admitted in the answer, unless the plaintiff chooses to put the question of fraud in issue by a replication to the answer. It is true, indeed, that in some cases, a denial of fraud, charged in the bill, will not be sufficient to overcome, even upon bill and answer, the evidence of fraud derived from the facts stated in the bill and admitted .in the answer. But this is only in cases where the facts thus alleged and admitted amount to conclusive evidence of fraud. (Cunningham v. Freeborn, 11 Wend. 240.) Where, however, the facts alleged and admitted only furnish presumptive evidence of fraud, the denial of such fraudulent intent is equivalent to an averment by the defendant that he is able so to explain the facts as to rebut the presumption of fraud. He is entitled to an opportunity to do this; and if it is withheld, and the plaintiff chooses to bring the cause to a hearing upon bill and answer, the general denial of fraud in the answer will be available as a defence. But when the plaintiff chooses to put the question of fraud at issue by a replication, the defendant, if he would avoid the inference of fraud, to be derived from the circumstances alleged and admitted, must furnish such explanatory evidence as shall satisfactorily repel the presumption of fraud. In this case, although the opportunity was given, no such evidence was produced. Indeed, it is not easy to see how it were possible, so to explain the acts of Charles B. Prescott, as they are stated in the bill and admitted in the answer, as to divest the transaction of a fraudulent intent. The only natural explanation to be given to the circumstances, seems to be, that Prescott allowed the mortgage to be foreclosed and the title to become vested in his brother, and then procured, or at any rate, suffered, Mrs. Dudley to re-enter for the non-payment of rent, for the sole purpose of effecting a preconceived design of displacing the lien of the mortgage executed to the loan commissioners. 200 It may well be doubted whether, under the circumstances of this case, Charles B. Prescott, and those holding under him, should not be held to be estopped from denying the validity of the lien of the mortgage under which the plaintiff claims title. But as the facts in the case are sufficient to warrant the conclusion that the whole transaction is characterized by fraud on the part of Prescott, and as those facts are wholly unexplained by the defendant, it is unnecessary to inquire whether the defendant would be at liberty, under any circumstances, to insist upon the title acquired under the re-entry of Mrs, Dudley, to defeat the lien of the mortgage. There must be a decree, declaring that the mortgage executed by Ebenezer Prescott to the loan commissioners was a lien upon the mortgaged premises, notwithstanding the re-entry of Mrs. Dudley for the non-payment of rent, and directing the defendant to release to the plaintiff any interest ip the premises acquired by Charles B. Prescott by virtue of the lease executed to him by Mrs. Dudley, and, if in possession, to surrender the possession of the premises to the plaintiff. Neither party to have costs as against the other.