Coates v. Marsden

WiNSLOw, C. J.. We do not deem it necessary to discuss in detail the errors assigned; it is enough to say that the exceptions taken on the trial were sufficient to challenge not only the correctness of the various rulings and instructions, but to sharply raise the general question as to whether the case was tried and submitted to the jury upon the proper basis, and it is this general question which will be treated. When mortgagor and mortgagee make any arrangement by which the equity of redemption is apparently extinguished, the courts will scrutinize the transaction closely; but this does not mean that the arrangement will not be sustained if fairly made. Kunert v. Strong, 103 Wis. 70, 79 N. W. 32. It is evident that there might have been three different situations in which Goaies might, notwithstanding the absolute deed, be entitled to recover from Marsden the surplus which Marsden received on sale of the land in question over and above the amount credited on the mortgage debt, viz.: (1) by virtue of an-express contract to account for such surplus made by Marsden as a part of the consideration for the absolute deed; (2) by virtue of an agreement, either oral or written, made at the same time, to the effect that the mortgage relation was to continue notwithstanding the deed; or (3) by virtue of the fact that the mortgagee secured his deed by fraud or' taking advantage of his debtor’s necessities, and hence the mortgage relation must be held to continue in defiance of the absolute deed and the intention of the parties. In the first [111] ■case supposed the recovery would be by virtue of a contract pure and simple; in the second and third cases it would be by virtue of the fact that the defendant had wrongfully disposed of the mortgaged property and must account for the proceeds over and above his mortgage interest, as for money 'had and received. Barchent v. Snyder, 128 Wis. 423, 107 N. W. 329. In either of these cases the plaintiff, being the actor, .has the burden of proof. In the first supposed case he must prove the express contract on which he bases -his alleged right, and in the second and third cases he must prove the continued, existence of the mortgage relation. This is necessarily so because, the defendant having sold property of which he has absolute record title, the consideration received is prima facie his money, and any one else who claims any part of it must show some facts which overcome this prima facie right before he can recover. Herein lies the fundamental difficulty with the manner in which the case was tried and submitted to the jury. Though the complaint charges that .an express contract was made by Marsden to pay over any excess he might receive on sale of the premises, and industriously claims recovery of the amount so contracted to be paid, the charge of the court is to the effect that the controlling question in the case was the question whether the parties intended to cancel the mortgage debt and upon this question the burden of proof was on the defendant. This must certainly he considered as confusing and erroneous. If there was such a contract made and the plaintiff was relying on it, he had the burden of proof, and the question whether the parties intended to cancel the mortgage debt cut no figure. On the other hand, if plaintiff relied on the fact that the mortgage relation still continued by agreement of the parties or because advantage was taken of the debtor’s necessities, and thus that he was entitled to recover because he was still the real owner of the equity of redemp-. tion, he had the burden of proving ,these facts, because on [112] tbe face of the papers tbe defendant bad absolute title, and tbe man wbo comes into court seeking a recovery on the-ground that tbe apparent absolute title is only a lien must produce tbe facts wbicb show it This principle in no way interferes witb tbe well-understood principles tbat sucb transactions will be closely scrutinized by tbe court, tba.t it must appear tbat tbe consideration of the transfer was adequate and tbat no advantage was taken of tbe debtor’s necessities to drive a bard bargain, and tbat in doubtful cases tbe courts incline to bold that tbe mortgage-relation still exists. Lynch v. Ryan, 132 Wis. 271, 111 N. W. 707, 112 N. W. 427. These are rules governing tbe quantum or weight of evidence rather than tbe burden of proof. He wbo charges fraud as tbe basis of a recovery must prove fraud. It will take little evidence, perhaps, to make a prima facie showing of fraud in sucb a ease. Tbe fact tbat tbe relation of debtor and creditor existed, and tbe fact tbat no part of tbe debt was discharged, or tbat the consideration was not fairly adequate, will call for complete and satisfactory explanation and proof on tbe part of tbe mortgagee; but this does not change tbe rule tbat tbe burden of proof is witb the plaintiff, and that be should put in all bis evidence tending to show fraud, either direct or circumstantial, while-making bis case. Winn v. Itzel, 125 Wis. 19, 103 N. W. 220. It may be remarked here tbat this action does not seem to-be based on tbe fact tbat defendant took advantage of plaintiff’s necessities to drive a bard bargain wbicb a court should set aside, but rather tbat a bargain or perhaps two bargains-were made wbicb tbe defendant has failed to carry out. ■While tbe complaint alleges tbat foreclosure was threatened, and tbat tbe plaintiff was bard up and agreed to tbe transfer to save himself from financial ruin, be nowhere alleges tbat tbe agreements wbicb be finally mad© and wbicb be is endeavoring to enforce in this action were unfair or unsatis [113] factory or that he did not voluntarily agree to them, and the evidence of anything like fraud, undue advantage, or coercion seems very weak. The evidence as to values both of the Juneau county land and the Rock county land is also very unsatisfactory. Upon the whole case we cannot say that it appears that substantial justice has been done. The plaintiff based -his case upon contract and seems to have, recovered upon tort, because the court charged the jury that the vital point in the case was the question of the intention of the parties, and upon this question the “adequacy or inadequacy of the consideration, and whether or not improper advantage was taken by one over the other, are all matters proper to be considered.” If upon another trial the plaintiff proposes to rely upon fraud, coercion, or undue advantage, it would seem safer to allege such facts by amended complaint. In the event that such allegation be made, it would be better to determine the issues by special verdict, and thus the questions whether any contract was in fact made to return the excess, whether it was agreed that the mortgage relation should continue, and whether undue advantage was taken of the plaintiff so that the mortgage relation never in fact terminated, could be submitted without confusion and each with its proper instruction. By the Court. — Judgment reversed, and action remanded for a new trial.