Wright v. Bates

The opinion of the court was delivered by Bennett J. This case comes before this court by an appeal from the court of chancery. The object of the orator is to be let in to redeem, and the first question presented for our consideration is, whether the deed from Wright to Bates is to be treated as a mortgage, between the immediate parties. It is well settled law, in this state, that a court of chancery will treat an absolute deed of real estate, given to secure the payment of a debt, as a mortgage, as between the immediate parties, especially if the grantor continues to remain in possession, though the defeasance rests wholly in parol. Campbell v. Worthington, 6 Vt. R. 448. Baxter v. Willey, 9 [349] Vt. R. 280. When there is an attempt to set up such an instrument as an absolute conveyance, there is a fraudulent application or use made of it; and this is a proper ground upon which chancery may proceed. Though Bates, in his answer, denies that the deed was given or accepted as a mortgage, or that any párol agreement was made, at the time of its execution, that it should be considered otherwise than as an absolute conveyance, yet, from the testimony of Danforth, we learn that he, in the spring of 1821, went with the orator to Bates, to assist him in getting a loan of three hundred dollars, and that Bates agreed to accommodate him with the loan, provided the orator would secure him with a deed of the lands described in the bill, and pay him an interest of twenty-five dollars a year for the use of the money, which proposition was then agreed to, though the writings were not then made. A short time after this, the witness says, he was informed by both parties, that the agreement had been carried into effect. Samuel Wright also testifies that in the spring of 1823 he was employed to draw the lease set forth in the answer of Bates; and that at that time he learned from him that, at some previous time, he had let the orator have $325, and that he took a deed of the premises in question, and promised to give him a time to redeem them in, hut that no time was fixed, and he wanted it done in the lease. When, in addition to this, we see that the value of the property, as shown by a great number of witnesses, was, in 1821, about $1,000, and that the orator had been, for a great length of time, permitted to remain in possession, we can have no reasonable doubt that this land was conveyed as a security for the money advanced, and that, in equity, the conveyance should be treated as a mortgage. The next question is, what is the character and effect of the lease of 1823 ? Does this change and affect the relation between these parties, and convert that/which was before but a mortgage into a conditional sale ? Though it is apparent that it was the intention of Bates that the lease should have the effect of a conditional sale, yet we are to remember that the connection between these parties did not commence with the lease. There had been a negotiation for a loan, which was to be secured by a mortgage; a deed had been executed which, though absolute upon its face, was only to stand as a [350] security ; and the grantor had remained in possession, paying interest for the money loaned. The lease was intended to veil a transaction differing in reality from the appearance which it assumed in the lease. Bates intended to hold a se-curjty for money which he had loaned, and yet cut off the equity of redemption, an intention which a court of chancery will defeat. In no sense- can;'we regard the léase, in connection with the facts prpved, as a .conditional sale. It is an ingenious device to disguise a loan, and to convert that which was before a mortgage into a conditional sale. The law does not permit the mortgagor to be tolled of his equity of redemption by such a shift. Niles, in his answer, admits that he was informed by the orator, a short time before Bates conveyed to him, that he (Bates) was bound to reconvey the premises to him upon the payment of a given sum of money, and that'he was still indebted to Bates, on account of the. lands conveyed .in about the sunTof'nine hundred dollars, and it appears that Wright had remained in the quiet possession from 1821 down to 1836, when Niles commenced his action of ejectment against him. Upon this state of facts it is evident that Niles can stand in no better situation than Bates. The fact that Wright remained in the open, peaceable, and exclusive possession and improvement of the land conveyed to Bates, for so great a length of time, is sufficient, of itself, to affect Niles with notice of the orator’s right of redemption. Reublee v. Mead, 2 Vt. R. 544. Griswold v. Smith, 10 Vt. R. 552. Niles, then, having purchased with notice of Wright’s equity, must come in subject to it. So far as Wright is concerned, it is a purchase mala fide. Merrills v. Washburn, et al., 1 Day’s R. 139. Barney v. Currier et al., 1 D. Chip. R. 321. Pritchard v. Brown, 4 N. H. R. 397. But it is said, in argument, aside from the question of notice, that the answer of Niles not having been traversed, there is no testimony against him to show that the deed of Wright was intended as a mortgage. The answer of Niles admits notice, and does not deny the case made by the complainant in his bill. He says, he is a stranger to all and singular the other matters and things in the bill contained, and not able to answer them, and he leaves the same to such proofs as the complainant can make. All the effect, which a [351] want of a traverse of the answer of Niles can have, is, that the whole answer shall be taken to be true. No facts are disclosed in it which could preclude the complainant from having a decree against him, provided the complainant established the facts alleged in the bill, as against Hence, there is no occasion for a traverse of this answer. Niles is the immediate grantee of Bates, and his rights are dependent upon those of his grantor. If he is affected with notice, he takes the title, subject to all the eqúiti'es that existed against Bates. The notice, having been admitted in the answer of Niles, and there being no change in the possession of the premises, the question, whether the deed to Bates is to be regarded as a mortgage, is to be tried on the traverse of his answer. Though it is true, as a general rule, that thé answer of one defendant is not evidence against his co-defendant, yet there are exceptions to this rule, and, in the case of Field v. Holland, 6 Cranch’s R. 9, it is held that the answer of one defendant is evidence against another, defendant claiming through him. ' This principle, however, should perhaps be confined to cases where the title has been acquired subsequently to the putting in of the answer. But the answer of Bates may be laid out of .the question, and, in fact, it does not make for the orator. There is no reason why Niles should not be affected with the testimony taken upon the traverse of Bates’ answer to sustain the bill. The interrogatories to the witnesses were settled by the defendants without distinction. Both were notified, and both were present at the taking of the testimony. The defendant, Niles, in his answer, denies all knowledge of the character of the transaction as between Wright and Bates, and submits himself to such proof as the orator can make. The testimony is amply sufficient, without recourse to the answer of Bates, to satisfy the court that the conveyance, in equity, should be regarded as a mortgage, and there is no reason why Niles, coming in under Bates, should not be affected with that testimony, especially as he does not set up in his own answer a denial of the facts, proved by the witnesses, and no new matter by which the effect of the testimony is avoided. The decree, then, of the court of chancery, permitting the orator to redeem the premises, as against both defendants, must be affirmed.