Ing v. Brown

The Chancellor : It being admitted in the answer of Brannan, that his purpose in taking the bill of sale of the 13th of December, 1847, was to obtain a security for money loaned and to be loaned the grantor, I am of opinion that though the instrument is absolute on its face, it must be considered as a mortgage. Dougherty vs. McColgan, 6 G. & J., 275. Being a mortgage in contemplation of equity, it has been insisted that no effect can be given to it, and the grantee must lose the benefit of the security, by reason of the provision contained in the 2d section of the Act of 1825, ch. 203. But an examination of that statute will show it to be entirely inapplicable to such a conveyance as this. This is not a conveyance “ which, by any other instrument or writing, appears to have [523] been intended only as a mortgage-security in the nature of a mortgage, though it be an absolute conveyance in terms,” and of which, according to the enactment, the person for whose benefit such deed shall be made, shall not have the benefit or advantage of the recording thereof, unless the defeasance or qualifying instrument be also recorded therewith. In this case no such defeasance or other instrument of wriing has been executed, and, consequently, none such could be recorded. The bill of sale here stands unaffected by anything in writing between the parties, and we get at the fact that it was designed simply as a security for money loaned and to be loaned, from the answer of the grantee. This case, therefore, must bo decided without reference to the Act referred to. It appears that the bill of sale of December, 1847, which was duly acknowledged and recorded, was supposed to be defective, in consequence of the affidavit required by the Act of 1846, ch. 271, with reference to the bona fide character of the consideration, having been made by the grantor instead of the grantee, and that to cure this defect and confirm the conveyance, a second instrument of the same description was executed, acknowledged, and recorded on the 11th of April, 1848. Those conveyances are assailed by the complainant, as the permanent trustee in insolvency of Brown, the grantor, upon the ground of fraud under the statute of Elizabeth, and as having been made in derogation of our insolvent system. The allegations of the bill, both with regard to the alleged fraudulent and covinous character of the transaction, and the insolvency and contemplated application for relief, when the first bill of sale was executed a,re explicitly denied by the answers of both defendants, that is to say, the fraud is denied absolutely and altogether, and the charge that the conveyances were made in view of the insolvent laws, and in violation of their provisions, is positively denied when the first was executed, both defendants insisting, and Brown especially, who of all men could speak most confidently of his condition and purposes, that he was not, at the date of the first conveyance, [524] insolvent in fact, and that he did not then contemplate availing himself of the benefit of the provisions of the insolvent laws. Now, this answer being responsive to the averments of the bill, cannot be overruled, unless contradicted by the testimony of two witnesses, or by one sustained by pregnant circumstances. There is no pretence that he is contradicted by a witness, and circumstances standing alone, the Court of Appeals have said, will not destroy the answer. Roberts et al. vs. Salisbury, 3 G. & J., 426. It has been urged that there is a contradiction or manifest inconsistency between the affidavit made by Brown to the first conveyance, and his answer to the bill. But although, strictly speaking, the whole consideration of $800 mentioned in the conveyance, had not been paid in cash at' that time, I cannot bring myself to think that under the circumstances detailed in the answers, the party intended to commit perjury in that affidavit, or that he did not believe that substantially the consideration was paid. Indeed, it appears to me a circumstance not undeserving of notice, and favorable to the fairness and frankness of the conduct of the defendants, that they have unreservedly stated the actual nature of that transaction. It can scarcely be doubted, that if they had designed a fraud, and to support that fraud by perjury, their answers to the present bill would not have exhibited any, the least difference from the affidavit. If perjury was committed in the affidavit taken before the magistrate, both the defendants were guilty, the one of perjury, and the other of subornation of perjury, and upon that supposition there is, I think, very little doubt the answers to this bill would have been formed in full accordance with the affidavit-Fraud, it has been over and over decided, is not to be presumed but must be proved, but in this case, which involves the charge of perjury as well as fraud, no witness has been produced to sustain it. If the answers speak the truth, the consideration expressed in them was paid by the grantee in the conveyances, and as they must be presumed to speak the truth, being responsive to the bill, unless disproved by that degree of evidence which the rule requires, I do not think there is any [525] principle which will authorize me in taking from the defendant, Brannan, the benefit of his security. J. H. Ing, and T. P. Scott, for Complainant. O. Ii. Pitts, and C. S. S. Leary, for Bospondents, It is not denied that if the transaction was bona fide, that the conveyance of December, 1847, though defective by reason of the mistake in regard to the affidavit required by the Act of 1846, may be set up as a valid contract in equity, and that the confirmatory deed of April, 1848, would give it full validity. The case of Alexander vs. Ghiselin, 5 Gill, 138, establishes this proposition, and as, for the reasons stated, I am of opinion that the complainant has not succeeded in showing fraud, or that the conveyances are void under the insolvent laws, it follows that the complainant must be denied the relief prayed by his bill. But although the complainant is not entitled to a decree vacating the conveyances in question, yet inasmuch as these conveyances constitute mortgages, the case last referred to shows that the property embraced in them must be taken possession of and administered by the complainant, as the permanent trustee of the mortgagor. It is understood that the complainant, as receiver, under the appointment and authority of the Baltimore County Court, has sold the property, but I do not find among the proceedings a report of the sale, and therefore it is impossible to say whether the proceeds will or will not be sufficient, or more than sufficient, to pay the mortgagee’s claim. My opinion, then, is, that the bills of sale shall stand and have effect as mortgages, and that the proceeds of the will made by the receiver shall be applied to the payment of the mortgage debt. The receiver should make a report of his sale, and then the cause should go to the Auditor for an account. The question of costs will be reserved.