Dobbs v. Kellogg

Orton, J. Without any critical examination of the record, it is sufficient for the disposition of the case that the error, if any, consists in the rendition of the judgment on the verdict of the 'jury, without first disposing of the equitable counterclaim. Both of the answers —one by Sarah 0. Kellogg, and the other by Edwvn, 0. Kellogg, her husband — are very vague, uncertain and indefinite; but, as the cause went to trial without any objection to the pleadings by demurrer or otherwise, we must, if possible, by liberal construction in their favor, arrive at and consider their substantial allegations. [451] The defendant Sarah answers that she is the owner of the fee of the premises and entitled to the possession thereof, and that the defendants are not; and that the deed under which the plaintiffs claim was made and delivered as a mortgage to secure the payment of money, and not as an absolute deed, and that it was delivered by her husband without' her authority and in fraud of her rights; and she prays that the complaint be dismissed, with costs. The defendant Edwin G. Kellogg answers for himself that the defendant Sarah was the owner of the premises, and that as her agent he caused the deed under which the plaintiffs claim, to be delivered, and that it was so delivered and intended as a mortgage to secure certain advancements of money then made and thereafter to be made to him for the purpose of building upon the premises, and that such deed was delivered as such mortgage only, and not as an absolute deed; and he prays that an accounting be had between the plaintiffs and the said Sarah, and that he be allowed to pay what is found due on such accounting, and that certain subsequent deeds and a certain mortgage be cancelled and delivered up, and for other and further relief. The defendant Edwin G. Kellogg does not pretend in his answer that he makes it as the authorized agent or on behalf of the said Sarah, and it does not appear that he was authorized by her to make it, or that she adopts it as her own, and it does not appear that he has any interest whatever in the subject matter of the action. Iiis answer, setting up an equitable counterclaim to be tried by the court without a jury, was therefore properly disregarded as an absolute nullity. It will be observed that the answer of Sarah ,G. Kellogg asks no affirmative relief, and is, therefore, strictly in defense of the action only. It is settled by the decisions of this court that, in order to make an equitable issue to be tried by the court alone, such matters must be pleaded as a counterclaim, and not in defense of the action merely. Lombard v. Cowham, 34 Wis., 486; DuPont v. Davis, 35 Wis., 631; Lawe v. [452] Hyde, 39 Wis., 345; Stowell v. Eldred, id., 630; Fuchs v. Treat, 41 Wis., 406. It may not be very material in this case to determine that the question raised by the answer oí Sarah, whether the deed under which the plaintiffs claim title was intended as a mortgage only, could be submitted to and tried by the jury upon the proper evidence; for we have seen it must be so tried if tried at all. But this important question, which may often arise, being involved in the record, it may be proper to decide it. The cases above cited seem to go upon the theory that equitable defenses in ejectment which do not invoke the interposition of the court in equity for affirmative relief, and which leave the legal and equitable title to lands outstanding and separate, ought not to be allowed in defense to the action merely; and it is therefore decided in those cases that such matters must be pleaded as a counterclaim. The reason of this holding would seem to be, that such equitable defenses must be tried by the court, and/ cannot be submitted to the jury, and that the court, sitting in equity, ought not to step aside from the jury trial of the strictly legal action of ejectment to try such an issue, for no other purpose than merely to defeat the action, leaving the whole matter open for future litigation in equity. Treating the matter of this answer as technically an equitable defense to the action, no such consequence could follow; for if established on the trial, either before the court or jury, it would be final and conclusive upon the title of the plaintiff. To show that the deed upon which the plaintiff relies for title is, in fact, a mortgage, as mortgages are treated under our laws and decisions, shows the legal title out of the plaintiff and in the defendant; or, in other words, the fee in the defendant as the mortgagor, and a mere security for money or chattel interest in the plaintiff as the mortgagee, and at the same time the right of possession, which is also at issue, in the defendant. However much it may appear to be in conflict with the statute of frauds, it is now too well estab [453] lished to be questioned, that a deed absolute on its face may be shown, even by parol, to be in fact a mortgage. This, of course, was first allowed in courts of equity, because courts of equity only had jurisdiction over the foreclosure and redemption of mortgages; and it is commonly said that such fact may be established in courts of equity. But it has now grown into an established principle of the law of evidence that such fact may be shown by parol. As a fact, then, why may it not be as well shown before a jury under the instruction of the court, and be found by them, as before the court sitting in equity, when such fact operates to defeat the title of the plaintiff in an aetion of ejectment, and shows title in the defendant? As a fact to be proved and found that a deed absolute on its face was intended by the parties to it to operate only as a mortgage to secure the payment of money, it is no more difficult or abstruse than the fact that it was obtained by fraud, or under duress, or that it is void for any other reason available in a court of law, or that it was obtained in violation of the trust and confidence reposed in one party as the agent of the other party to the suit, as in the case of McMahon v. McGraw, 2(5 Wis., 614. In ejectment the defendant may show that the deed offered by the plaintiff was fraudulent and void, and may introduce any evidence tending to estop or conclude the plaintiff from setting up his title, or that will show the defendant entitled to the possession. Adams on Ejectment, 378; Hambleton v. Wells, 4 Call, 213; Torrey v. Beardsley, 4 Wash. C. C., 242; Jackson v. Ogden, 4 Johns., 140; Mather v. Hutchinson, 25 Wis., 27. But, without carrying the argument further, this court has decided, upon the authority of numerous cases elsewhere, that the fact may be proved, as any other fact which affects the title, before the jury in an action of ejectment. In Kent v. Agard, 24 Wis., 378, the plaintiff showed title in one Cown in 1848, a mortgage from Cown to him in 1859, and a foreclosure of the* mortgage and referee’s deed to him in 1865, and then offered to show that a deed of [454] Cown to one Lasley in 1849, under which the defendants claimed," which was absolute on its face, was in fact a mortgage to secure Lasley against his indorsement of Gown’s note, and that said note was paid, which was refused. Numerous authorities are cited in the brief of the able counsel of the appellant and found in the report of the case, “ to the point that parol evidence is admissible in actions at law to show that a deed absolute on its face was in fact a mortgage.” The able and lamented Judge Pause says in his opinion: “The plaintiff should have been allowed to show by parol that the absolute deed given by Cown to Lasley was intended as a mere security, and was consequently a mortgage,” “When the facts are proved, such a deed is a mortgage only, both at law and in equity. The rights of /the mortgagor and mortgagee are precisely the same as though the defeasance were contained in the deed itself. The only difference is in the manner of proving the defeasance.” The judgment was reversed solely on the ground of the rejection of this evidence. If such evidence could be introduced by the plaintiff to show that the deed on which the defendant relies for title was a mortgage, on the trial of the action, by the same rule the defendant should be allowed to show that the deed under which the plaintiff claims is, in fact, a mortgage, and thus show the fee-simple title out of the plaintiff and in the defendant, and the defendant’s possession rightful. ■ In this case, the defendants having offered no evidence in defense of the action, the verdict of the jury for the plaintiffs, upon their proof of legal title to the premises, was therefore proper, and, there being no equitable counterclaim to be tried by the court alone, judgment upon such verdict was also proper. This decision is not intended to conflict in any respect whatever with the doctrine of the cases which hold that strictly equitable defenses must be pleaded as counterclaims or they cannot be made available. , By the Court.— The judgment of the circuit court is affirmed.