Tibbs v. Morris

By the Court, Grover, J. It is clear that the judgment in favor of the plaintiff can not be sustained upon the ground that he is entitled to a specific performance of the written contract for the sale of the land by the defendant to him. The plaintiff clearly has no equity entitling him to such performance. The ouster of the plaintiff from possession by the. ejectment suit brought by the defendant, in 1854, was [144] notice to the plaintiff that the defendant would no longer acquiesce in delay of payment hy the plaintiff; and upon receiving such notice it was the duty of the plaintiff to act promptly, hy tendering payment and asserting his claim to such performance, -or his equity would be lost. The commencement of the action would give such notice. It is not the provincé of equity to relieve parties failing to perform their contracts, from the legal consequence of such failure, unless it has resulted from mistake, fraud or accident, or the acts and dealings of the qoarties show an assent to the delay by the party insisting upon the forfeiture, and it appears that under the circumstances it would be inequitable for him to insist upon it. In this case there can be no pretense that there is any equity for the plaintiff to insist upon the specific performance of the contract as a purchaser of the land from the defendant. There is no case containing the evidence given upon the trial before the referee, nor any exceptions to rulings made upon the trial. The case is before the court upon exceptions taken by the defendant to the conclusions of law drawn by the referee from the facts found by him. Under these circumstances, it is. the duty of the court to put the most favorable construction upon such facts, in support of the judgment. The referee finds, among other facts, that in March, 1853, the plaintiff was the owner of the land, subject to a mortgage for a small portion of its value then in process of foreclosure pursuant to the statute. That previous to the day of sale upon the mortgage the parties agreed that the defendant should bid off the land, take title thereto,.pay the amount of the mortgage and costs and execute to the plaintiff an agreement to convey the premises to the plaintiff by the 1st of January then next, upon the payment by him to the defendant of the sum paid upon the purchase at the mortgage sale, a small debt due from the plaintiff to the defendant, and $100 in addition thereto; and that it was further agreed that in case the defendant should be compelled to bid more than the amount due on [145] said mortgage, to secure the land, such surplus should be released by the plaintiff. That in pursuance of such agreement the defendant bid off the land for a much larger sum than the amount due upon the mortgage and costs, which excess was released by the plaintiff, and the written contract was given by the defendant to the plaintiff, upon payment by the latter of the sum paid by the former upon his bid, the small debt owing to the defendant, and $100 in addition, with interest, by the 1st of January then next. These are the only facts found which characterize the relations entered into by the parties. From these it is to be determined what the real nature of .the contract was. If it shows merely the relation of vendor and vendee, we have already seen that the plaintiff has no rights available either at law or in equity. ' Upon mature consideration, my conclusion is, that that is not the fair inference from the facts; that although it is not expressly found by the referee, in so inanj'- words, that the real agreement between the parties was that the defendant should loan the plaintiff a sum of money sufficient to pay the mortgage and costs, and take and hold the title to the land as security therefor and for the small debt due him from the plaintiff, and the $100 agreed to be paid for the time of the defendant in attending the sale, &c. yet that such a contract is plainly inferrible from the facts, and that the referee did so intend to find the fact. That it was a loan from the defendant to the plaintiff appears from the $100 included for time and trouble, and much more forcibly from the arrangement to release any surplus bid at the sale, which was in fact one by the plaintiff. The latter fact, in my mind, is wholly inconsistent with the idea that the defendant should have the land for the sum expressed in the written contract, unless the plaintiff, who appears to have been embarrassed, should promptly pay the money by the time specified in the contract. This must have been the real finding of the referee, although not expressly stated, upon which he based his conclusions of ’ [146] law, excepted to by the defendant. The defendant's counsel insists that the parol agreement before the sale, between the parties, was void by the statute of frauds. I do not conceive it necessary to discuss this point. That agreement was so far executed by the plaintiff's releasing"the surplus bid at the sale as to take it out of the statute, in equity, if originally within it. The counsel further insists that the whole prior negotiation was merged in the written contract, and that that alone can be resorted to to determine the rights of the parties. The counsel is correct, as a general rule. But where loans are made and securities for repayment are taken, the rule is different. Such cases are, in equity, made exceptions to the general rule that when written contracts are made, the rights of parties must be determined by the writing, unaffected by parol proof. In this class of cases, whatever the form of the instrument may be, it may be shown by parol evidence that the nature of the transaction was a loan of money and that the writings, in whatever form, were intended as security for repayment. Thus it may be shown, in equity, that a deed absolute, with covenants of warranty, was given as a security upon a loan of money. (4 Kent, 143. Brown v. Dewey, 2 Barb. 29. 2 Story’s Equity, § 1018.) These authorities show that in all cases when the real transaction between the parties was a loan and the writings were executed as a security therefor, parol evidence is admissible; and when such fact satisfactorily appears, equity will give effect to the writings according to the true intent of the parties. Applying the rule to the present case, the uniting, although on its face a contract for the sale of the land by the defendant to the plaintiff, might be shown by parol to have been one of the acts done by the parties in this case to secure the repayment of the money loaned by the defendant to the plaintiff. The legal title was obtained by the defendant upon the purchase at the mortgage sale. The plaintiff had only an equity of redemption remaining. And this equity could only be barred by lapse of time—ten years—by statute, or by being foreclosed [147] by action, or released by the plaintiff. Prior to the revised statutes mortgagees, after forfeiture, frequently brought ejectment against mortgagors, and recovered possession, but the equity of redemption was entirely unaffected by this proceeding. If I am right, then, in the conclusion that the plaintiff’s interest was an equity of redemption, this right was not affected by the recovery in ejectment, unless such effect is given to it by the statute. The revised statutes, (sec. 38, vol. 2, p. 318,) provide that every judgment in ejectment, rendered by default, shall, from and after three years from the time of docketing the same, be conclusive upon the defendant, &c. but that a new trial may be granted, upon the terms prescribed by the court within five years thereafter. This provision, as also sections 36 and 37, was designed to change the rule of the common law that ejectment was a mere possessory action and determined nothing as to the title, under which ejectments without limit might be brought and the title litigated between the same parties as often as they or either of - them chose. The statute relates only to legal titles, such as were the subjects of litigation in the action of ejectment. It was not intended to affect the mere equitable rights of the parties, and such are not barred by the statute. It is true that by the provisions of the code the defendant might have interposed an equitable defense in the action and claimed affirmative relief; but this, I think, he was not bound to do. My conclusion upon the facts found by the referee is that his legal conclusions were correct, and that the judgment should be affirmed, with costs. [Eme General Term, May 2, 1865, Marvin, Gnver apd Daniels, Justices.]