Hudson v. Isbell

TAYLOR, J. The first position taken by the plaintiff in error, to reverse the decree of the Circuit Court, is, that parol evidence should not have been received, to vary the contract between the parties, from the one specified in the deed. The deed purports to be a bill of sale for four slaves, from Isbell to Hudson. By the bill filed in this case, Isbell alleges that no sale of the slaves was actually made ; but that they were mortgaged to secure the payment of a sum of money. The answer of Hudson admits that there was not an absolute sale at the time the deed was executed, but insists there was a conditional one, and that it was intended between the parties, that it should be absolute, if he, (Hudson,) should have to advance the money, for which, he alleges, a judgment had been recovered on a note executed by Isbell, as principal, and himself, as security.. To sustain himself in the doctrine for which he contends, that is, that parol evidence can not be admitted, to prove a mortgage, when the deed expresses an absolute conveyance, the counsel for the plaintiff in error, has cited the case of Thompson vs Patton.a The case certainly is Ml to the point, to support which it was cited. It is admitted, however, in the opinion, that the previous decisions in that State, had been different; and upon the examination of the books, I think it will be found, that that decision is not sustained by authority. In Ross vs Norvell,b decided by the Court of Ap — 76 — peals of Virginia, it appeared that certain slaves had been conveyed by an absolute bill of sale, with a warranty, and a receipt for the consideration stated in the deed was indorsed on the back of it. A bill in Chancery was filed, to foreclose, alleging that, though the conveyance was absolute in form, it was intended as a security; and that it was verbally agreed at the time, that the plaintiff might redeem at any time, upon payment of the principal and inte-fest. It was determined by the Court, that parol evidence was admissible, to prove that a mortgage was intended, although it was not pretended, that there was either fraud or mistake in the transaction; and a decree of foreclosure was the consequence. In James vs Johnson,a Chancellor Kent says, “a deed, absolute upon its face, though taken as a mortgage, is certainly a lawful instrument, and the party is only subjected to the hazard of having it defeated, by a subsequent mortgage, duly registered.” It would appear from this extract, that the statutes of New York make some peculiar requisition, with respect to the registration of mortgages; for it is plainly intimated, that to register a bill of sale, as an absolute conveyance, when in truth it was intended as a mortgage, although expressed upon the face of -the deed, as an absolute sale, might endanger the lien of the.mortgagee, should there be a subsequent mortgage of the property: and the Chancellor says, that is the only hazard to which the party would be subject; thereby substantially declaring that the . contract between the parties, would be enforced as a mortgage. The same principle is sustained by the Supreme — 77 — Court of the United States, in the case of Hughes vs Edwards.a Justice Washington, in the opinion, delivered in that case, said: “ The principles here laid down, are not less applicable to the case of an absolute deed, which is intended by the parties, to operate as a security for a debt, than they are to that of a common mortgage. A Court of Equity looks at the real object and intention of the conveyances; and when the grantor applies to redeem, upon an allegation, that the deed was intended as a security for a debt, the Court treats it precisely as it would an ordinary mortgage, provided the truth of the allegation is made out by the evidence.-” These authorities, it is believed fully show, that parol proof is admissible, to convert an instrument, which appears to be an absolute conveyance, upon its face, into a mortgage, by proving that the parties intended it to operate only as a security. There was, therefore, no error, in the admission of the parol evidence by the Circuit Court. The plaintiff in error next contends, that the contract between the parties, as proved by the evidence, was a conditional sale, not a mortgage. The bill alleges that the contract was a mortgage, and that it was agreed, that the mortgagor might redeem, at any time during his life; but, if he did not do so, the mortgagee was to hold the property, discharged from the equity of redemption, on account of his wife being related to the mortgagor. The answer alleges, that an execution had issued against Isbell which was levied upon the slaves in question; and another, that Hudson was sheriff of the county at the time ; and that it was agreed be — 78 — tween the parties that Hudson should release the slaves upon Isbell’s executing to him a bill of sale for the four in controversy, for the purpose of “ saving respondent harmless in the event he should have to pay off the execution.” It further alleges that “ this was done to save respondent, and to vest in him the slaves absolutely, and not as a mortgagee, in the event he had to pay off the fi. fa.; which was obliged to be paid by the 5th November of the same year; and that it was expressly agreed and undertaken by complainant, that he would pay off the fi. fa. by' the 5th November, but if he failed, then respondent was to pay it, and hold the property absolutely.” The answer further alleges, that the judgment was recovered, and the execution issued as well against the respondent, who was security in the note sued on, as the complainant. It is' not proved, that the respondent was a party to the judgment, and the bill alleges that it had been rendered against the complainant and one Thompson: this however, is not material, further than its tendency to explain the conduct of the sheriff, in agreeing to deliver up property to a defendant, which had been taken by execution. In the depositions, taken in the cause, there is some contrariety. The subscribing witness to the bill of sale testifies, that he understood it to be a conditional sale ; and that, if the execution were not discharged by Isbell, by the commencement of the next term of the Court, to which it was returnable, Hudson was to pay It off, and hold the slaves as his own.— He says, however, that he was induced to believe there was some other arrangement between the par — 79 — ties, from some casual observations which dropped from them; but did not know what those arrangements were. Daniel Williams deposes, that he was called upon by Hudson, to witness the contract; and that his understanding was, that Isbell was to be permitted to redeem at any time after the contract was made. The witnesses, exclusive of those who speak of the subsequent declarations of Hudson, appear to be > nearly equalised in number, as to the question of mortgage or conditional sale. J. M. Lewis deposes, that Hudson expressly admitted to him, after he had paid the money and after the Court, to .which the execution was returnable, that Isbell had a right to redeem; and others prove declarations of a similar kind. The position taken by Hudson’s counsel, that the testimony of the subscribing witness to the bill of sale, as to what transpired at the time of its execution, is to outweigh that of all other persons who were present at the time, cannot be maintained.— He is the best witness, as respects the execution of the instrument, which he has attested; for, to that fact, his attention must have been more immediately directed, than that of any other person; but the conversation, which passed at the time, might have been noticed by others, as much, or more than by him ; and must have been attended to as particularly by Williams, who was called upon for the purpose : and this is especially the case here, when the subscribing 'witness declares there was some understanding between the parties, of which he was ignorant. When, to other evidence is added the proof, made — 80 — by the witnesses on. both sides, that the property was worth, and could then have been sold for more than double the sum it was conveyed to secure, a clear conviction is forced upon the mind, that a mortgage was intended by Isbell, even if it were understood differently by Hudson. The delivery of the slaves into the possession of Hudson can not weigh much in the case, as it took place neither at the time the contract was made, nor at the time the money was paid. The answer states, that the contract was intended to save the respondent “ harmless,” and the possession of the property was the most effectual mode of effecting this object. In the case of Conway's ex’r vs Alexander,a the land had, for many years been in the possession of the vendee, but the mere circumstance, that possession passed at the execution of the deed, was not considered by the Court-as material, in construing the contract. The length of time that had elapsed after the execution of the deed — the circumstance that possession^ all that time, had been held, under the conveyance made by the trustees, and the valuable improvements whiélihad been erected by the creditor, after he- ’obtained possession — without any claim having been asserted by the debtor, during all that time, who lived in the immediate neighborhood, are dwelt upon, in the opinion, as going Strongly to prove that a’ sale, and not a mortgage, was intended, especially when connected with the fact, that the money advanced, was not far from the full value of the land. That it is competent for parties to make a conditional sale, can not be doubted, but from all the cir81 cumstanees presented in the case, my opinion is, that a sale was not intended; and the very great inadequacy of the price, operates strongly, in bringing me to this conclusion. As the complainant admits, in his bill, that Hudson was to have the use of the slaves, in lieu of interest on the money, and does not allege, that such contract was usurious, or otherwise illegal^ the complainant should not be allowed hire, nor the respondent, interest, until the offer of the complainant, to redeem, by tendering the amount of the debt, as proved by the witness to the sale. From that time, say first of December, 1830, until the final decree, interest should be paid by Isbell, and a moderate hire by Hudson. This hire, under all the circumstances, should not exceed one hundred and twenty dollars per annum. It does not appear upon what data the decree of the Circuit Court was rendered; but, from calculation, it would seem, that hire had been allowed to Isbell, from the time of the tender, without a deduction of the interest, which had accrued on the debt. The decree is, therefore, reversed ; and, in order that a final decree may be made, by the Circuit Court, conformable to this opinion, and finally settling the matters in controversy between the parties; and, that the plaintiff in error, (Hudson,) may be compelled to deliver up the slaves, the cause is remanded. And, it is ordered and decreed, that the plaintiff — 82 — in error recover the costs of this Court; and that the defendant in error recover the costs of the Circuit Court. LIPSCOMB, C. J., not sitting. Footnotes [a] 5 Lit. 74. [b] 1 Wash, R 19. [a] 6 Johns.C. R. 432. [a] 9 Wheat. 489 [a] 7 Cranch. 218