Pearson v. Sharp

Mr. Justice Gordon delivered the opinion of the court March 14th, 1887. On the 7th of April 1870, the plaintiff, George Pearson, owned and occupied a lot of ground, situated at the north west corner of Vine and Sixtieth streets, in the city of Philadelphia. On this lot Pearson had previously erected two ■houses, in one of which he resided with his family, and at the time above mentioned he had commenced the erection on the same lot, of several other houses. At the date stated, he, the said'Pearson, executed and delivered to Joseph F. Heatheote, whose executors are the principal defendants in this case, a deed in fee for the premises above described,-which, on the trial of this case in the court below, was interposed as a complete defence to the plaintiff’s action. To rebut this defence the plaintiff offered evidence to prove that this deed though absolute on its face was in fact but a sechrity for money ad [259] vanced by Heathcote to Pearson, and that he had been reimbursed by rents received from the property; but the court below.being of the opinion that, in this particular, the plaintiff had failed to establish what he proposed, directed a verdict for the defendant: We are not satisfied with the rectitude of the conclusion thus adopted by the learned judge who tried this case. Whilst we admit all that has been said in Plumer v. Guthrie, 76 Pa. 441; Burger v. Dankel, 100 Id., 113 and other similar cases, concerning the character of the evidence that must be. adduced in order to establish a parol defeasance, yet we are not to ignore the well established doctrine, supported not only by the cases cited, but many others, that though a deed may on its face appear to be indefeasable, an oral 'defeasance may by proper proof be established. That is to say; the conveyance may be shown to be a mere security for money advanced, or for the performance of some definite obligation. We do not, indeed, understand the doctrine here stated to be denied; on the other hand, the rule being admitted, it is denied that the evidence produced by the plaintiff is sufficient to bring his case within the rule. We are, however, of a different opinion. A very careful examination of the proofs and offers convince us that the deed of the 7th of April 1870 was executed by Pearson to Heathcote for the purpose of security only. On this point two witnesses are especially clear; they are Christian Kneass, the scrivener under whose supervision the deed was prepared, and Annie E. Walls, a niece of the plaintiff. The first of these speaks positively of the deed as intended by the parties as security for money advanced, by Heathcote to Pearson. He says, when speaking of what occurred at the time of the preparation of the conveyance, “from what I can recollect of the intervieAV, Mr. Heathcote said he Avanted a deed draAvn for the property at Sixtieth and Oregon (Vine) streets. He stated that Mr. Pearson was a drinking man, and he did this because, he wanted to protect Mr. Pearson. No money passed betAveen them in my office at the time the deed was executed. Mr. Heathcote had advanced Mr. Pearson some money. He, Mr. Pearson, was indebted to Mr. Heathcote. This deed was made for the purpose of protecting Mr. Pearson; it Avas also made because Mr. Heathcote had advanced Mr. Pearson some money. The principal reason was to secure himself, because Mr. Pearson’s habits were bad.” It will be observed from this testimony that the parties did not intend a purchase and sale of the property, and that the deed, according to the express declarations of Heathcote, was intended as security for the money Avhich he had advanced, [260] and it is further to be noted that no money was paid, no obligation given, no price fixed upon the property, nor was there anything else done which would have given the matter the appearance of a sale. So far, then, as this testimony goes it is express and positive and leaves no room for doubt or hesitation, and had it gone one step farther, and revealed the fact that Heathcote was to reconvey on receipt of his advancements, no one could hesitate to pronounce the transaction a mortgage. But Annie E. Walls, the other witness whom we have mentioned, sup.plies what is wanting for the perfection of the plaintiff’s case. She details with particularity the transactions which led to the making of the deed, and says, “it was finally agreed between Heathcote and Pearson that Pearson should deed this lot to Joseph F. Heathcote, as security for the money advanced and to be thereafter advanced for the purpose of erecting buildings on this lot, and when the amount loaned by Heathcote to Pearson was paid, with interest, Heathcote agreed to re-convey and re-deed this lot back to the plaintiff, Pearson ; arid if Pearson did not or could not pay Heathcote his money, with interest, at a favorable time the lot and buildings were to be sold, and the proceeds taken first to pay Heathcote the amount due him, and balance to go to and be paid to Pearson.” She further testifies, that subsequently she frequently heard the parties say, in her presence, and in the presence of each other, that the property had been conveyed solely for the security of the grantee, and was to be re-conveyed to Pearson as soon as Heathcote was paid. If this witness is to be believed a parol .defeasance is established, and were we to adopt the judgment of the court below we must in effect anticipate the operation of the Act of June 8th, 1881, which, when the deed in controversy was executed, was not yet enacted. But besides the evidence to which we •have adverted, there were offers of testimony ruled out which, as corroborative of the preceding evidence, were relevant and important. These offers embraced the letter signed “Sister Mary ”; the evidence of John W. Neilds, William Supplee, Christopher Grimes, Thomas Carr, Patrick McDonald, Mrs. Appleton, Robert Pearson, Alfred Pearson, Kate R. Wilson, James Sharkey, and Thomas Clegg. All these proposed to show the continued possession of Pearson, and the position of Heathcote as a mere mortgagee; all were designed to exhibit such circumstances, conditions and declarations.as were inconsistent with the idea of absolute title in Heathcote. It is urged, however, that from the testimony of-Mrs. Walls it is obvious that Heathcote had, even by the oral arrangement, the power to sell; and hence, under the rule as stated in [261] the easés of Todd and Campbell, 8 Ca., 255, and Lance’s Appeal 112 Pa. 456, the transaction can not be regarded as a mortgage, but rather as an oral trust, which the Act of 1856 avoids. But we cannot see the applicability of the cases cited to the facts developed in the present contention. In Todd & Campbell the facts were not sufficient to raise a trust of any kind, whilst in Lance’s Appeal the evidence as well as all', the circumstances showed clearly that it was not otherwise intended from the beginning, than that Bonnell, Lance’s vendee, was to have the power to sell, not only for the purpose of paying^ the indebtedness of Lance to himself, but also in order to relieve the property from its liens. Here, on the other ha.nd, there is nothing of the kind, for it is obvious that the parties being ignorant of the legal effect of their own arrangement, assumed that Heathcote possessed that power, though both were aware that when his advancements were paid his right in the property ceased. Moreover, it does not follow, that even had he possessed that power, it was not to be exercised only by way of foreclosure, and if so the parol defeasance would not bb thereby affected. What we had said sustains all the exceptions of the plaintiff in error, and, as a consequence, we Reverse the judgment of the court 'below and order a new venire.