Gaines v. Brockerhoff

Opinion, Mb. Justice McCollum: The numerous specifications of error filed in this case raise but few questions. It was alleged in the plaintiff’s bill that the agreement under which he claimed was in writing, and lost; and he gave some evidence tending to prove this allegation, but not enough, in the opinion of the learned master, to sustain it. There was, however, a full hearing of the cause before the master, and evidence was taken by him to show an agreement in parol like that which was set out in the bill as written, the occupation, use and improvement of the property by the plaintiff after the sheriff’s sale, and all matters germane to the issues formed by the pleadings. After the litigants had exhausted their proofs on these subjects, the master refused to pass upon the questions of fact raised by them, on the ground that the plaintiff, having failed to establish a written agreement, was not entitled to the relief sought. Upon exceptions filed to the master’s report, the learned judge of the court below thoroughly examined and carefully considered the testimony, and from it found the facts on which the decree before us was entered. It is contended, first, that the court erred in not recommitting the case to the master to find the facts. We are not aware that the power of a court of equity to find the facts in a case before it, upon the testimony reported by an examiner or a master, has ever been denied. It is a power, however, which is seldom exercised; and this court has often said, in substance, that where an equity case depends on oral testimony, it should be referred to a master to report the facts. But the province of a master is merely ancillary, and his work is simply in aid of the court in the. performance of its own functions: Phillips’s App., 68 Pa. 130. The present cause came on to be heard, on exceptions to the master’s report, more — 196 — than two years after the testimony was closed before him. If it had been recommitted to him, he could have derived but slight, if any, assistance from his recollection of the appearance and manner of the witnesses under examination, and would have been compelled, like the court, to depend on the testimony as reported by him. We are not willing to say, under the circumstances of this case, that the court should have sent it to the master again, but if the omission to do so be regarded as a mistake in practice, it was cured “ by the full statement of facts and findings by the learned judge in his opinion preceding the decree now appealed from: ” Herdic’s App., 58 Pa. 212. It is not our purpose to incorporate in this opinion any portion of the testimony on which the facts were found by the court below. We have read and considered it with care, and we think it abundantly sustains the findings. Indeed, we cannot see how, upon the substantive questions in the cause, different conclusions of fact could have been reached from it. A clear and full statement of the testimony relating to the agreement will be found in the opinion of the learned judge, in connection with the finding upon that question. It discloses an agreement made before and existing at the time of the sheriff’s sale, followed by a course of dealing between the parties consistent with it and impossible to reconcile with an absolute transfer of title. A direct conveyance of the property by the plaintiff, under such an agreement, would have constituted a mortgage. A deed absolute on its face may be converted into a mortgage by its attendant circumstances, and in the absence of express proof of a defeasance: Rhines v. Baird, 41 Pa. 256. In the case cited, Mr. Justice Strong said: “ Facts and circumstances inconsistent with its being an absolute conveyance may be proved, and from them a court of equity may, and often does, infer that security for a debt..... was intended, and hence will decree that that which was in form a deed is in reality a mortgage.” May an arrangement which, if consummated directly by the parties, would have constituted a mortgage, retain that character, between the parties to it, if a sheriff’s sale is invoked by them to carry it out ? For myself, I see no substantial ground for a distinction. In either case, the defeasance can affect only — 197 — the parties to it and those who have notice of it. The deed in either case, apparently, and as respects innocent parties, conveys an absolute title. Why should we hold the grantor to his agreement in one case, and absolve him from it in the other ? The circumstance that the parties resorted to legal process in furtherance of their arrangement, should not be allowed to defeat it, or used to enable one party to perpetrate a fraud upon the other. It was held by this court in Harrison v. Soles, 6 Pa. 393, that a parol agreement between a judgment creditor and defendant that the creditor should become the purchaser at sheriff’s sale of the land of the debtor, and hold the same as collateral security for his debt, giving the debtor the right to redeem, was valid, and could be enforced. In that case the land was purchased by the creditor, who took possession of it, and afterwards attempted to collect the portion of his judgment which was not paid by the sheriff’s sale; and he was required to account for the rents and profits according to the terms of the parol agreement. It was decided that he was a mortgagee in possession, and bound to apply the rents of the property to the debt for which it was pledged. It is worthy of note that the opinion of the court in Harrison v. Soles was delivered by Mr. Justice Rogers, from whose opinion in Jackman v. Ringland, 4 W. & S. 149, the appellants quote in support of their contention in this case. In Sweetzer’s App., 71 Pa. 264, a sheriff’s deed was converted into a mortgage by a parol agreement which allowed the debtor to redeem the property. The authority of this case has not been impaired by subsequent decisions. It was recognized in Heath’s App., 100 Pa. 1, in which the present Chief Justice, in delivering the opinion of the court, said: “We think the facts as set forth in the bill bring the case within the principle of Sweetzer’s Appeal,..... where a sheriff’s deed was held to be a mortgage, and the grantee named therein a trustee for the man whose land he had bought at sheriff’s sale.’1 In Sweetzer’s Appeal full effect was given to the agreement of the parties in pursuance of which the property was sold by the sheriff, and it was determined that the sheriff’s deed was subject to the defeasance agreed upon. In Logue’s App., 104 Pa. 136, a sheriff’s deed was converted into a mortgage by proof of a parol agreement that it was made as security for a debt or loan; and in the case of Saunders v. Gould, 134 Pa. 445, this principle was distinctly recognized. — 198 — Fox v. Heffner, 1 W. & S. 372, and Jackman v. Ringland, supra, are cited in support of the broad proposition that a sheriff’s deed cannot, under any agreement or circumstances, be converted into a mortgage. These were actions of ejectment. In the former case, in disposing of the claim that the transaction was a mortgage, Mr. Justice Sergeant said: “There seems to be nothing in the evidence to justify this view of the case.” In the latter, the question was raised upon an offer to prove a naked parol agreement. There was no evidence or offer to show, in either case, that anything had been done on the faith of the agreement; that the purchaser had acquired, or the debtor had lost, anything in consequence of it. In Kimmel v. Smith, 117 Pa. 183, which was also an action of ejectment, our Brother Green said: “ The second assignment must be sustained, because the transaction in question Was in no point of view a mortgage, and in fact it was presented in the general charge as a sale exclusively, and not as a mortgage; and to say it was both, upon the same facts, was necessarily confusing and misleading to the jury. The plaintiff could only recover on the theory that Lawrence Kimmel was a trustee ex maleficio for the plaintiff, because of fraud in the making of the parol agreement to convey the land to the plaintiff. Upon that theory the case was tried, and there was none other upon which it could have been tried.” He said, further, that there was “ the most profound uncertainty as to the essential features of any agreement.” It was to such a case that he applied the language of Mr. Justice Sergeant in Fox v. Heffner, and of Mr. Justice Rogers in Jackman v. Ringland. In the present case, the parties to the agreement were debtor and creditor, between whom business and friendly relations had existed for a long time, and the affairs of the former were well known to the latter. The agreement involved advances by the creditor to pay the costs of sale and the Crissman & Sons judgment, and these he charged upon his ledger to the debtor. Under this agreement, he bid off at the sheriff’s sale lands of the debtor worth at least $12,000 for the nominal sum of $635. The debtor continued in the actual and exclusive possession of tracts Nos. 1 and 2 without payment or demand of rent; he made valuable improvements on them at his own expense, and the sales of land and timber covered by the sheriff’s deed were made on — 199 — consultation with, and at prices agreed to by him. Upon the faith of the parol agreement, at the request and for the benefit of the creditor, he paid $1,500 of purchase money due on one of the tracts, and conveyed land, not included in the sheriff’s deed, worth $1,800. The creditor distinctly recognized this agreement in his letter of November 21, 1871, and, by acts, declarations, and a course of dealing which would make repudiation of it now a fraud, confirmed it. It should be remembered to his credit that this recognition and acknowledgment of the agreement made with his friend and debtor continued until his death. These are a few of the facts with which this case bristles, and which, we think, bring it within the principle of Sweetzer’s Appeal, and distinguish it from the cases relied on by the defendants to defeat this action. The defendants are not bona fide purchasers for value of the lands in controversy. Their claim to be such rests on the deeds of February 20 and 21, 1878, but these lands are not described in them; and it would appear from the testimony of Andrew Broekerhoff, one of the defendants, when called by the plaintiff on cross-examination, that it was not intended to include them. He said: “I advised my father to make the deed on account of his old age, and directed the making of the deeds, descriptions and all. I directed my father to leave out the lands in Elk county, and these lands in controversy.” In view of this testimony, it is probable that the use of language in the deed of February 20th broad enough to include these lands was a mistake, and the attempt of the defendants to build a defence upon it is surprising. But, aside from this, there is nothing in the transaction represented by these deeds which secures to the defendants any better standing to contest the plaintiff’s claim than the party to whose rights they have succeeded. There is no evidence-in the case which stamps the arrangement under which the sheriff’s sale was made as a fraud upon creditors; and, certainly, we are not to presume fraud in favor of parties who allege it, that they may retain the fruits, and escape the obligations, of a contract their father made. The bill alleges that the agreement was written; the proof is that it was verbal. Is the variance fatal? We think not. A parol defeasance, sufficiently proven, is the equivalent of a written one. The vital question is, not whether the agree — 200 — ment was reduced to writing, but whether it was made. In Danzeisen-’s App., 78 Pa. 65, the bill charged that the defendant held the property in trust for the plaintiff, and it was dismissed at nisi prius on the ground that a trust was not shown ; but, on appeal to this court, it was sustained as a bill to redeem a mortgage. The case at bar was fully heard upon its merits ; the variance is technical, rather than substantial, and, if necessary to reach the justice of the case, an amendment would be allowed at any stage of the proceeding. We regard the transaction respecting the lands in question as a mortgage of them for the purpose stated in the ninth finding of facts by the court below. It was always so understood and recognized by the parties to it, and the effort of the heirs and legal representatives of the mortgagee to stamp it as a sale cannot be sanctioned. In this view of the ease, the statute of frauds has no application, and there is no limitation or laches which prevents a recovery. The learned judge of the court below stated an account between the parties which we think is fairly sustained by the evidence. All the items of claim on both sides, and the proofs to support them, were before him. He was not asked to refer the case to a master to state an account, and it is not alleged that there is other evidence affecting these claims. The parties have had a full and fair hearing upon all the questions raised, and a just conclusion has been reached. Decree affirmed and appeal dismissed, at the cost of the appellants.