Hoopes v. Bailey

Mr. Justice HANDY delivered the opinion of the court. This was a bill filed in the superior court of chancery by the appellant against the executor and heirs at law of Henry T. Irish, deceased, alleging in substance that in the year 1845, the appellant, being indebted to Irish, in order to. secure the- debt, caused certain lands belonging to the appellant in this State, the legal title to which was in other persons, to be conveyed, by deeds absolute on their face, to Irish, under an agreement by Irish that he would hold the lands only as a security for the payment of the debt, and upon the payment of it, that he would convey the lands to the appellant; that the lands are worth largely more than the amount of the debt, but that the appellant has been entirely unable to raise the money to redeem them; that Irish died in the year 1846, he, in his lifetime, and his executor since his death, having had possession of the lands. The bill prays an account of the debt due, and a sale of the lands, and that the proceeds be applied to the payment of the-debt and costs of the suit, sufficient to pay the same, and that the surplus be decreed to the appellant. The answer of the executor denies all knowledge of the amount of indebtedness of the appellant to Irish, and of the-consideration of the conveyances- to him, or of the alleged agreement to reconvey to the appellant; and claims the benefit of a demurrer to the bill, because it is not a bill for a specific performance of any agreement, nor does it offer to redeem the-lands by paying the debt, and that the complainant has lost all claim to relief by his own negligence. It was proved in behalf of the complainant, that Irish admitted that the complainant had secured the debt to him by the conveyance of the lands, and that the complainant had the privilege of redeeming them. He subsequently, in letters to the complainant, expressed his willingness that the complainant should redeem them, stating that they were valuable, and that he did not wish to speculate on the complainant in the matter. It appeared also that Irish and his executors had paid the [338] taxes on the property, and that the' complainant was willing that the same should be charged upon it. On the final hearing, the bill was dismissed; from which decree this appeal was taken. It is insisted in behalf of the appellant, that the conveyance to Irish must be regarded, in equity, as a mortgage and a mere security for the debt. Taking the transaction in that view, it is clear that the relief sought in the bill could not be granted, upon well established rules. It is undoubtedly true, that a mortgagor cannot file a bill to redeem without tendering the payment of the debt. And, although in the case of a formal mortgage the mortgagor would have to file his bill to foreclose, yet there is no such necessity in case of an absolute conveyance, which is agreed to be held as a security for the debt. In such case, the deed upon its face conveys a perfect title. Considering the conveyance in this case as having the force of a mortgage, what must be regarded as the substantial agreement between the parties ? It certainly is, that the lands are conveyed to Irish, with the right to the appellant to redeem them by paying the debt for which they are taken; and until that shall be done, that they shall be the property of Irish. If this were not so, the means of payment of the debt which the creditor had agreed to take, might be rendered greatly deficient. If the grantee in the conveyance were compelled to submit to a sale of the property for the payment of the debt, it might turn out upon a sale that it would not bring enough to pay the debt. His situation in such an event would be that he would be deprived of the property which he had agreed to take in satisfaction of the debt and would lose a part of his debt. It will not do to say, that the bill alleges that the property is worth more than the debt, for that can only be properly ascertained by a sale; and if the proceeds of the sale should be less than the debt and costs, it would then be too late to object that the grantee was entitled to hold the lands until he should be actually paid the amount due him. The lands would be lost to him, and all of his debt which remained unpaid by the proceeds of the sale. [339] He has, therefore, the right to object when he is required to sell, and to stand upon the terms of his agreement, which were in effect that the lands should be absolutely his property until the money for which they were taken should be actually paid to him. He is not compelled to take the hazard of a sale to realize his money. This would be the condition of the parties if the case be regarded in the light of an equitable mortgage. But we consider the transaction rather as a conditional sale than a mortgage. The distinction between a mortgage and a conditional sale has been held to be, that when the relation of debtor and creditor remains, and a debt still subsists, it is a mortgage; but if the debt be extinguished by the agreement of the parties, by the execution of the conveyance, and the grantor has the privilege of refunding, and to entitle himself to a recon-veyance thereby, it is a conditional sale. Slee v. Manhattan Co. 1 Paige, Ch. R. 56; Conway v. Alexander, 7 Cranch, 237. Here the debt to Irish was paid and discharged. Hoopes had simply the privilege of refunding the money, and thereby to obtain a reconveyance. Unless he should see proper to refund the money, it is manifest that the indebtedness was extinguished, and the transaction finally settled between the parties. In conditional sales, the rule is, that the vendor must comply with the condition upon which his right to a reconveyance depénds, strictly and precisely, or his right to reclaim the property will be lost. 4 Kent’s Comm. 144. If a day be fixed for the performance of the condition, it must be precisely observed; and if no time be fixed, the terms must be complied with in a reasonable time. This serves to show that the appellant can claim nothing except what is within the strict terms or purview of the agreement ; and regarding his right merely as one of redemption, we think it manifest that in no point of view could he claim more than that. We think that the decree is correct, and it is affirmed.