Henry v. Davis & Clark

The Chancellor. It is clearly established, by the answer and the proofs, that the bond and mortgage were assigned by the plaintiff to the defendant C., by way of mortgage, to secure the payment of225 dollars by a given day; and any agreement that the assignment was to be an absolute sale, without redemption, upon default of payment on the day, was nnconscientious, oppressive, illegal, and void. The equity of redemption still existed in the plaintiff, notwithstanding any such agreement. 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, is void. If the conveyance, or assignment, was a mortgage in the beginning, the right of redemption is an [43] inseparable incident, and cannot be restrained or clogged by agreement. Though the conveyance be absolute in terms, yet if the intention appears to make it a redeemable estate, it will continue so until foreclosure; for the maxim of equity is, that an 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 upon the mortgagor. The original design of the assignment in this case, being admitted to be by way of pledge, or mortgage, for a debt, and this design being contained in a collateral instrument, executed concurrently by the defendant, C., it seems to put an end to all question as to the right of redemption. And upon a tender of the 225 dollars, with interest, in February, 1821, the plaintiff was entitled to a re-assignment of the bond and mortgage; and any payment and discharge of the mortgage afterwards, by negotiation between the two defendants, was fraudulent and void, as respected the plaintiff. It is satisfactorily shown, that the defendant, D., had notice of the plaintiff’s claim upon the bond and mortgage, prior to that negotiation and settlement, between him and the defendant, C., and the same were made at his peril, and in his own wrong. It was, according to my judgment upon the facts, a fraudulent combination between the two defendants, to deprive the plaintiff of his rights. The plaintiff has been treated by the defendant with great injustice ; and it is incredible that he should have agreed to sell, absolutely, a bond and mortgage well secured, (for nothing appears to gainsay this presumption,) for upwards of 1000 dollars, for the grossly inadequate sum of 225 dollars. The right of redemption rests, in this case, upon the most obvious principles of equity. It is just and proper, that C. should pay the balance due to the plaintiff, since he has appropriated the bond and mortgage to his own use, and discharged the same, after receiving payment of [44] the plaintiff, and taking new security on new terms for the residue. I shall, accordingly, decree, that the defendants, or one of them, pay to the plaintiff the balance of the bond and mortgage, (after deducting the 225 dollars, and interest thereon, from the 1st of October, 1820, to the 20th of February, 1821,) and the costs of this suit, within thirty days after the balance shall have been ascertained by a Master, and notice thereof, and of this decree; or that the plaintiff have execution against the goods and chattels, lands and tenements of the defendant, C.; and that the mortgaged premises be held chargeable for the same debt and costs, and be sold by a Master, on the usual terms, to pay what part of the said balance (if any) shall remain uncollected from C. Decree accordingly.