Bazemore v. Mullins

Cockrill, C. J. The conveyances which Mullins caused to be made to the appellants by way of security for his indebtedness were absolute in form. There is a conflict in the testimony as to what indebtedness they were intended to secure. Mullins’ statement that they were intended to secure only the sum of $250, which the appellants lent him in January, 1883, is not very probable, because the deed to the Baker tract was not executed until long after that indebtedness had been paid according to his theory; and he took from the appellants a bond to convey to him the other tract upon the payment of $900 in January, 1885, when it was estimated that that was the sum that would be due by him on settlement at the close of that yeai. But in the view we take of the cause that question ceases to be material. 1. Mortgages: Redemption: Condition of. Mullins had also executed chattel mortgages to secure all his indebtedness to the appellants. At the close of 1885. a settlement was reached by mutual agreement. The lands in dispute were valued at $400; Mullins orally released to the appellants, all further claim to them and received a credit upon his account for that amount. He discharged the balance due upon his account by delivery of corn, and payment of cash to the appellants, and received from them a receipt showing the full payment of all his indebtedness, and demanded and obtained satisfaction upon the record of his chattel mortgages. He took the chattels which had been released from the mortgages into Louisiana and there disposed of them, retook the corn and converted it to his own use, and now actively invokes the aid of a court of chancery to invest him' with the title to the land. He alleges in his complaint that he had discharged his entire indebtedness to the appellants. It appears from his own testimony, however, as it does from all the other evidence in the cause, that the claim of payment alleged in his complaint, is based solely upon the release of his equitable interest in the lands, the delivery of the corn, and the cash payment made in the settlement above referred to. But if the lands are taken from the appellants, and their value and that of the corn withdrawn from the terms of the settlement, Mullins’ debt will be in a great part unpaid; but the security which the appellants held for its payment is gone, and Mullins cannot or will not restore it. . It is manifest that it would be inequitable under such circumstances to cancel the deeds to the appellants without first requiring Mullins to pay to them his entire debt. That would only be requiring him to do equity. Anthony v. Anhony, 23 Ark., 439; Morgan v. State, ante. 2. Same: Equity of redemtion Statute of frauds: Estoppel. But there is another consideration which puts a final quietus upon Mullins’ claim for relief. His own testimony shows that upon a fair settlement with the appellants, he released his terest in the lands to them for an adequate consideration, a part of which was the cancellation of securities which they held for payment of his debt, which was greater than the value the parties placed upon the lands. The law does not inhibit the mortgagee from purchasing the equity of redemption from his debtor, but demands the utmost fair dealing of him in the transaction. There is not a suggestion of unfairness or oppression in this case on the part of the appellants in making the settlement or taking the release. There is .nothing to show that the lands were not taken at their fair market value. The price was fixed by arbitrators, one of whom was selected by Mullins, and the other by the appellants, and the proof shows that Mullins would not agree to any settlement whatever until the appellants consented to take the lands in part payment at the price fixed by the arbritators. He does not undertake to controvert these facts, but relies upon the statute of frauds to consummate his scheme. He argues that he has sold an interest in the land by parol, and that the payment of the purchase money does not alone constitute a part performance of the contract sufficient to take it out of the operation of the statute. But it is a settled doctrine of equity never to lend its aid to one who invokes it for the purpose of perpetrating a fraud. Mullins is in that attitude. He induced the appellants to surrender to him the securities they held for his debt, and now when the court cannot place them in statu quo, seeks to annul his compact and leave them without land or security. In such a case the courts withhold their aid, and leave the deed, which is absolute in form, to carry the estate in fee as it purports to do. Pugh v. Davis, 96 U. S., 332; Trull v. Skinner, 17 Pick, 213; 2 Wash. Real Prop., *496, sec. 24. As was explained by Chief Justice Shaw, in Trull v. Skinner, supra, the equitable interest of the party at fault is in such (case divested, not by way of transfer, nor strictly speaking by way of release working upon the estate, but rather by an estoppel arising from the voluntary act of the party having the equitable interest, just as it is accomplished when one withholds his conveyance from record and permits his grantor to convey to a bona fide purchaser without notice. The doctrine allowing a conveyance to absorb an interest in land which the conveyance alone did not convey, in order to prevent injury being done to one without fault, is of frequent application, and is illustrated by the cases of Bramble v, Kingsbury, 39 Ark., 131, and Gill v. Harden, 48 ib., 409. In the latter case one who had executed an absolute deed to have effect only as a mortgage, and who remained in possession of the land which he conveyed, was denied the aid of equity to assert his title against an innocent purchaser, from, the holder of the legal title because the proof showed that he was not in position to ask equity. We make application of the same principle to the facts of this case. The decree will be reversed and the cause remanded with instructions to dismiss Mullins’ cross-complaint, to cause the receiver to pass his accounts and pay what he has collected to Bazemore & Harper, and to award them possession of the lands.