Artz v. Grove

Bowie, C. J., delivered the opinion of this Court: The appellee, the complainant below, filed bis bill on tbe 3rd of April 1854, against Isaac Long, the father and testator of the appellants, for the specific performance of a verbal contract, to reconvey certain lands then in the possession of the appellee, hut which had been previously conveyed to Long, as security or pledge for certain advances, made by him, for an account, and for an injunction against certain proceedings at law, by which the aappellant’s testator sought to evict the appellee from said lands. The hill prayed an answer on oath. The original defendant, Long, appeared and answered under oath, without pleading or relying on tbe Statute of Frauds, and making admissions, which will bo more particularly referred to hereafter. Afterwards Mr. Long made his will, devising the property in dispute to the appellants, and died; the appellants were made parties, a general replication entered and testimony — 470 — taken under a commission. The case coming on to be heard at final hearing, exceptions were filed by the appellants to the complainant’s bill, and to certain testimony of the complainant. The points raised by the briefs of the solicitors of the respective parties, are directed to the sufficiency of the allegations of the bill, the competency.of certain witnesses excepted to, and the correspondence of the proof, with the allegations of the bill, if the latter are sufficient. Among these, the appellants insist, that the bill does not charge that the contract was reduced-to writing, and does not set out with sufficient certainty, such acts of part performance as will take the case out of the Statute of Frauds; that the contract admitted by the answer is not the same as that described in the bill; and that the allegations as to payments and services'rendered, &c., are defective and insufficient, for want of certainty as to the amount, when paid and how paid. These objections require us to ascertain, in limine, whether there is a material variance between .the agreement set forth in the bill, and that admitted in the answer. If the agreement is substantially the same, the absence of a written memorandum and the sufficiency of the evidence to sustain the allegations, are immaterial, •admissions supersede the necessity of proof. The Statute of Frauds does not forbid the specific performance of parol contracts as to real estate, where the defendant admits the agreement, and does not rely on the statute as a bar. “Quisque renuntiare potest juri pro se introducto.” 2 Story’s Eq. Jur., 755. Winn & Ross, vs. Albert & Wife, 2 Md. Ch. Dec., 169. 1 H. & J., 209. It then only remains to determine whether the contract alleged and admitted, is so certain, reasonable and equitable, as to entitle the appellees to the aid of a Court of Equity, in' enforcing its specific performance. In Smoot & others vs. Rea & Andrews, 19 Md. Rep., 405, it was held to be “well settled, that the specific execution of a contract in equity, is a matter not of absolute right but of — 471 — sound discretion in the Court.” 2 Story’s Eq., secs. 742, 769. “ Yet, where a contract respecting real property is in its nature and circumstances unobjectionable, it is a matter of course for Courts of Equity to decree a specific performance of it, as it is for Courts of law to give damages for a breach of it. And, in general, if may be stated that Courts of Equity will decree a specific performance where the contract is in writing, and is certain and is fair in all its parts, and is for an adequate consideration, and is capable of being performed.” The bill in this case, after setting forth the agreement, charges also specific acts of part performance. These are, mainly, the execution of the deed on the part of the trustees, and the complainant and wife, to the appellant’s testator, and the payment of specific sums of money by the complainant in pursuance of the agreement. It must be observed here, that the complainant, Grove and wife, had an equitable interest in the land, the former had paid a part of the purchase money, and the trustees would not have been authorized without his consent, to convey the lands to the defendant Long’. The sums of money paid by the complainant, were not like part payments of purchase money, which the Courts have decided, as between vendor and vendee, do not constitute part performance, because they may be recovered back at law, if the contract be vacated or annulled. These payments, if received in part of the money advanced, or as rent of the land, to be credited as interest, were successive admissions of the original agreement; they could not be recovered back by the complainant Grove, and could not be received by Long, if tho agreement subsisted and was not specifically performed, without perpetrating a fraud. A comparison of the contract, set out in the bill, with that admitted in the answer, will show the identity or diversity of the agroementa referred to by the complainant, appellee, and the appellant’s testator. The bill alleges that Grove being the purchaser of cer — 472 — tain lands in Washington County, and having paid part of the purchase money, &e., and finding himself unable to-pay the balance, (for which his vendors had obtained judgments,) applied to Long for aid and relief, and that it was agreed behoeen them, that Long should receive the deed for the lands, pay off and satisfy the judgments, and hold the deed as his security until Grove should be able to reimburse him the amount of money he should accordingly pay for him, with all the interest thereon. The answer admits, that the appellee purchased the land from Baker and Swearingen; that being unable to pay the purchase money and the executions then in the sheriff’s hands, amounting to $1200 or $1300, he requested the respondent to pay said purchase money and executions, and take a deed for the land, with an understanding that, if the appellee should be able to repay him the full amount of principal and interest, and costs, that he would reconvey the same to him. In compliance with this arrangement and understanding, the respondent paid the said Baker and Swearingen and the said sheriff the sum of money aforesaid, and received a conveyance for the land, in which the said Grove and wife joined. The bill charges, that it was agreed Long should pay off and satisfy the judgments for the purchase money, upon the payment and satisfaction of which he should receive the deed and hold it as his security, until Grove should be able to reimburse him, &c. The answer admits that judgments and executions to the amount of $1200 or $1300 were to be paid, the deed taken for the land by Long with the understanding, that if the appellee should be able to repay him the full amount, he would reconvey the same. The appellants have excepted to so much of Baker’s testimony, as tends to contradict or vary the terms of the deed. This does not exclude the facts proved by him, that, as one of the trustees, he sold the land for $1100 or $1200, for which Grove gave his four notes, one of which he paid in full, and $100 on another; that judgments were obtained and — 473 — execution issued for the residue, which Long told Mm he was to satisfy; that tbe statement annexed showed the amount paid to be $868.91, and that the said judgments wore entered to the use of Long. This testimony accounts for and explains the discrepancy between tbe bill and answer, by showing that the original purchase money was between 81100 and $1200, more than one-fourth of which was paid by tbe appellee, Grove, and that judgments and executions existed for the balance, the aggregate of which, with two small judgments of Baker against Grove, amounted to $868.91, the sum actually advanced by Long. The gist of the agreement was not the amount to be advanced, but, that a deed should be made to Long to secure tho advancements, and he should reconvey to Grove upon being reimbursed. In this material feature the bill and answer agree. The substance of the agreement, which shows the primary object of the parties, is what Courts of Equity regard, and where that requires a specific performance, they will execute it, if the case be a proper one, whatever may be the character of the instrument. 2 Story’s Eq., sec. 715. The substance of the contract being established by the admissions of tbe answer and evidence, which is above exception, the next consideration is, whether it was fair,'mutual and just? These features are all clearly proved. Property which, cost originally $1100 or $1200, on which improvements to the value of $1000 were subsequently erected by tbe appellee, was conveyed as security for a sum less than half its value, upon a promise of reconveyance, when the sum advanced should he refunded, the lender in the mean, time receiving $100 per year in the form of rent. There is no want of mutuality. The lender had an absolute title in the estate with ample compensation for its uso, subject to be divested by the reimbursement of the money. He is in the actual enjoyment of all the benefit contemplated to accrue from the agreement, — tbe investment of the money at most profitable rates. The rights of the appellee — 474 — rested in contract, to be asserted in a reasonable time or forfeited by his laches; the contract was in part performed on his part by the conveyance of the land, and entitled him to require a reconveyance when the conditions were complied with. Edwards vs. Grand Junction R. Co., 13 Eng. Ch. Rep., 559, 1 Mylne & Craig, 650. The circumstances of this case bring it within the general rule and exceptionlaid down in the case of Bank of Westminster vs. Whyte, 1 Md. Ch. Dec., 539: “That no matter how . absolute a conveyance may be on its face, if the intention is .to .take a security for a subsisting debt or for money lent, the transaction will be regarded as a mortgage, and will be treated as such.” Hicks vs. Hicks, 5 G. & J., 75. Dougherty vs. McColgan, 6 G. & J., 275. “And although the defeasance was by an agreement resting in parol, still, as between the parties, the deed, though absolute ow its face, will be considered a mortgage, for parol evidence is admissible to show that an absolute conveyance was intended as a mortgage, and that the defeasance was omitted or destroyed by fraud or mistake. But it is likewise undeniably true, that unless accident, fraud or mistake can be shown, or in cases of trusts, parol evidence cannot either at law or in equity be admitted to contradict, add to or vary the terms of a will, deed or other instrúment. “In this case the transfer nf the three stalls is absolute and unconditional, and if there was nothing in the answer of Mr. Fisher to whom the transfers were made and who acted as the agent of the bank in the negotiation with Suter, from which it could be fairly inferred that the object was to take’ security for money loaned or to be loaned, it would fall within the general rule, and the transfer could not be qualified by the introduction of parol evidence, neither fraud nor mistake being alleged. But looking to the pleadings in the cause, and especially to the answer of Eisher; * * * it therefore clearly appears, that the transfer was taken as a security for á ..debt, * * * and consequently the transaction must be treated — 475 — accordingly; that is, the transfer mast be regarded as a mortgage or pledge to secure the payment of a debt, and not as passing the absolute title to the creditor.” There is a striking analogy between the answer and facts referred to in the case cited, and that now under consideration. The same general rules have been reaffirmed in prior and subsequent cases. Vide Ing vs. Brown & Branan, 3 Md. Ch. Dec., 522. Dougherty vs. McColgan, 6 G. & J., 275. In Ing vs. Brown, the Chancellor says, “it being admitted in the answer of Brauner that bis purpose in taking the bill of sale, &c., 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.” 3 Md. Ch. Dec., 522. The language of the Court in Dougherty vs. McColgan, 6 G. & J., 275, is an apposite answer to the argument on the part of the appellants, “that the transaction was an absolute sale, reserving the right simply in parol to Grove, if lie should be able by paying and fully reimbursing Long, the money advanced, with interest, to have the land conveyed to him, thus making it a conditional sale between Long and Grove, though the holders of the title were not parties to it;” viz: “It is sometimes exceedingly difficult to draw the line between a mortgage and a conditional sale, to determine whether the purpose of the parties was to treat as a purchase, at a price agreed upon, or whether the object of the transaction was a security for the payment of a pre-existing debt, or the repayment of money advanced or lent, esc. * * * But a transaction, constituting a mortgage, cannot he converted into a sale, and lenders of money being less under the pressure of circumstances calculated to control the free exorcise of the judgment than borrowers, they may often be tempted to avail themselves of that advantage, in order to attain unequitable bargains.” — “The leaning of Courts of Equity, therefore, is against them, and doubtful cases have generally been decided to be mortga — 476 — ges.” * * * “Whenever the intention is like a security for a subsisting debt or for money lent, and to avoid or restrict the equity of redemption, chancery, seeking to protect the debtor against the rapacity of the creditor, and to do full and equal justice between the parties, will defeat such intention by treating the transaction as a mortgage, and extending to the debtor the benefit of the equity of redemption, and compelling the creditor to accept the principal and interest of his debt, which is all that-he is in justice entitled to, or ought to seek to attain.” 6 G. & J., 280, 281. (Decided June 1st, 1864.) The relation of mortgagor and mortgagee being thus established between the appellee and appellants, it followed as a necessary consequence, that an account should be taken between them, and the property should be reconveyed upon payment of the balance ascertained to be due. The evidence seems to us sufficient to charge the appellant’s testator with the several items carried to the credit of Grove, except the item of $68, which depends on the testimony of George W. Grove, who is excepted to as an incompetent witness. We are not satisfied of the authority of the Court to discharge a surety on an injunction or appeal bond and substitute another, so as to make the former.a competent witness. Such a power may be very convenient, but it impairs the obligation of contracts, and violates our organic law. The account must therefore be reformed, so far as to exclude that credit. Game remanded for further proceedings.