Luesenhop v. Einsfeld

Stover, J. :

The complaint alleges that on the 25th day of November,, 1873, ^ plaintiff: made and delivered to the defendant Einsf eld’s testator, J ohn P. Einsfeld, a conveyance of certain real estate in the city of Buffalo, said conveyance being absolute upon its face; that such conveyance was made for the. purpose > of securing the payment of the sum of $1,000 due from plaintiff to Einsfeld; that said Einsfeld thereafter entered into possession of said property, and continued in possession until the time of his death; and it demanded an accounting of the rents and profits of the property, and an adjudication that the plaintiff be' entitled to a reconveyance of the property upon the payment of the sum found due. The conveyance was eiecuted on the date above stated,- and on the same date an agreement was entered into between John P. Einsfeld, Barbara, his wife, and the plaintiff herein, which agreement recited the indebtedness and the conveyance, and contained a stipulation on the part of John and Barbara Einsfeld that they would reconvey the property one year from the date of the agreement, or sooner, provided the plaintiff paid and discharged the debt; and further providing that the plaintiff herein should have the occupancy of the premises during the term, she agreeing ■ to pay the taxes and insurance premiums, and make all necessary repairs, etc., to the buildings.

Einsfeld entered into possession of the property in November, 1874. The plaintiff testified that she received the rents from the property for four months after the execution of the conveyance to Einsfeld. Einsfeld continued in possession of the property, claiming to own it, paid off the incumbrances which were liens against the property at the time of the taking of the conveyance, which amounted to upwards of $3,000, paid all the expense of repairs and *71maintenance, and generally exercised all the rights and discharged all the obligations of an owner.

The evidence does not. show any special agreement made between the parties at the time Einsfeld entered into possession of the property, Einsfeld at the time of the trial being dead, and the plaintiff being disqualified as a witness in regard to the personal transactions. The testimony for the plaintiff rests, so far as oral proof is concerned, almost entirely upon the evidence of the plaintiff’s daughter, who details conversations and transactions had with Einsfeld, but there is no explanation of the possession by Einsfeld upon the expiration of the year after the conveyance of 1873. It does not appear that any further transactions took place between the parties until the year 1886. It is alleged that at that time the plaintiff, with her daughter, called upon Einsfeld and requested a settlement of the claims.'

The evidence fairly shows, we think, that at the time of .this meeting Einsfeld claimed to be the absolute owner of the property, and that some discussion was had with reference to the claims; giving the discussion the most favorable view for the plaintiff, it must, be fairly said that Einsfeld claimed to be the owner of the property, and that the settlement, which is hereafter referred to, was made with that understanding.

The result of the negotiations was a release, executed by the plaintiff, by which she released and discharged the said Einsfeld from all claims “ in law or in equity,” and from all manner of *" * , * ■claims * * * upon or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the day of the date of these presents.”

It is undisputed that at the time of the execution of this release this real property and the claims growing out of the conveyance thereof were the only matters in dispute between the parties. At the time of the settlement the plaintiff was acting under the direction of an attorney who appeared for her, and was present at the interview between her and Einsfeld, and who drew the release referred to. His testimony is to the effect that the interview was arranged for the purpose of adjusting the differences growing out of the conveyance. At the time of the execution of the release the consideration of $1,500 was paid by Einsfeld to the plaintiff.

*72■ The trial judge has found that the release was e'xebnted with the intention that Einsfeld should thereby acquire all the right, title and interest of the plaintiff in the. premises-in question. He further found that after said accounting and settlement Einsfeld and his successors in interest made valuable improvements upon the premises, and paid taxes and insurance for said premises. He also found that the rental value of the premises in 1873 was forty-five dollars and eighty-three cents per month.

The plaintiff’s case rests upon the proposition that the conveyance by the plaintiff, and the execution of the agreement to réconvey, constituted a mortgage, and that Einsfeld acquired no legal title to the property by reason of the. subsequent transactions. This view ignores other, and, we think, controlling features of the transaction. In the adjudging of these transactions, as.in others of like character,

■ the pritnal and controlling consideration is the intention of the parties. If it can be gathered from the agreement that the parties intended to transfer a title, intended that the title should vest in Einsfeld, and treated the property after the transaction as though the title had vested in Einsfeld, no valid reason is given why this' intention should be defeated. The claim that the written papers did not sufficiently convey a legal record title is not of itself sufficient to defeat the intention, for the contract having been performed, a fair consideration paid, with the intention that the title should vest in Einsfeld, the court would, under well-known principles, either of estoppel or enforcement, of executed agreements, adjudicate the legal title to be where it properly belonged. The plaintiff, for nearly twelve years after Einsfeld entered into possession of the property as owner, made no claim whatever, so far as the record shows, for a reconveyance of the property. Then, for some reason, a claim is made, and upon negotiations entered into, and full legal advice, the release was executed, with the intention above stated. No further steps were taken by the plaintiff to enforce any actual or supposed right in the premises until after the death of. Einsfeld, and then, after a silence of seven years, and two years after the death of Einsfeld, this action is commenced. Still retaining the consideration, she asks to repudiate the contaact already entered into by her.

It would seem to be enough to say that there was an entire lack *73of equity in the plaintiff’s case; but reliance is had upon the case of Odell v. Montross (68 N. Y. 499), and it is sought to place this case within the principle there announced. We take it that the governing principle applied in that case is stated at page 504 of the report, to be this : A mortgagor and mortgagee may, at any time after the creation of the mortgage and before foreclosure, make any agreement concerning the estate they please, and the mortgagee may become the purchaser of the right of redemption. A transaction of that kind is, however, regarded with jealousy by courts of equity, and will be avoided for fraud, actual or constructive, or for any unconscionable advantage taken by the mortgagee in obtaining it. It will be sustained only when dona fide • that is, when in all respects fair, and for an adequate consideration.”

In the case of Odell v. Montross it appears that the consideration for the release was fifty dollars, practically nominal, and that the paper under which the right of redemption was claimed to be extinguished was, in its terms, ambiguous; and a discussion is there had as to the strictly legal effect of such documents; and were the facts, the same in the case under discussion and the legal effect of the paper only applied, perhaps the contention of the plaintiff might be upheld. But, as above stated, it ignores the rule laid down above, namely, that such agreements may be made and will be upheld in equity, if fair and dona fide. In the case of Odell v. Montross, in the application of the legal principle, it was held that the agreement there could not be upheld, and that the facts in that case did not bring it within the equitable principle. In the discussion of that case it was said : Had the defendant, acting upon the faith of this transaction, entered into possession of the premises and incurred expenses, and substantially changed his situation so that lie could not be placed in the same situation in which he was before, it might have estopped the plaintiff from taking shelter under the Statute of Frauds, or-alleging the insufficiency of the written instrument to carry out the agreement and intent of the parties: But there are none of the elements of an equitable estoppel in the case as presented by the record.” So that, in that case, the absence of the equitable principles led the court tcrapply the rule against the grantee, and it may be said further, while perhaps not as controlling, but as a fair consideration of the case under discussion, that not every agreement to *74reconvey upon the payment of a certain sum "within a specified time, constitutes a mortgage, but the parties may execute such. conveyance with the intention that the title shall become absolute, and the.right of redemption determine, so as to vest in the grantee the title absolute, upon default after the expiration of the time for payment, and such intention actually appearing, there is no reason why full effect should not be given to it. While it is true as. a general rule that, in the absence of such intention appearing, equity would construe the transaction as a mortgage with the right to redeem, yet such rule is. not to be applied where another intention is evident. If it had been intended to rely upon the conveyance as á mortgage, why did Einsf eld’s wife join in the agreement to reconvey? It could be fairly said that it was contemplated that a reconveyance was necessary to divest Einsfeld of the title: So, coming to the question of the release, we know of no rule which would render invalid the agreement to regard the deed as absolute upon the payment of the consideration for the release, or that would defeat an agreement to construe the release as extinguishing the right to redeem, and vesting the absolute title in the grantee. The release is broad enough to embrace a release of the equity bf redemption. Such an agreement would violate no principle of law and no rule of public policy, and, therefore, it was quite within the power of the parties to bind themselves by such an agreement, and such interpretation, we think, should be. given to the release here. It is an agreement made fairly, in good faith and upon a valid.and adequate consideration, which has been fully paid and discharged. .

- The evidence, we think, discloses that at all times after the conveyance Einsfeld insisted that he was the absolute owner of the premises. The plaintiff, at the interview in 1886, claimed the right .to redeem. Here was a disputed situation between the parties, and Einsfeld might fairly, without surrendering his position as an absolute owner, have paid the $1,500 consideration in order to avoid the dispute. Certainly the payment of the $1,500, and asking for the release from all claims, could not be deemed an acquiescence under the claim ,of the plaintiff that she was the owner of the equity of 'redemption, but it should be treated as a settlement of disputed matters, leaving Einsfeld in full control and ownership of the prem- - *75ises and the plaintiff with the consideration for the settlement and acknowledgment of Einsfeld’s rights as owner.

Another feature which we think takes this case out of the principle of Odell v. Montross is that Einsfeld and his successors have, upon the faith of the transaction, continued in the possession • of the premises, incurred expense and substantially changed their situation, so they could not be placed in the same situation they were before the agreement was made.

It is hardly necessary to discuss in detail this feature of the case. There is no dispute as to the facts. All taxes, assessments for improvements and the expense of the maintenance of the property were borne by Einsfeld during his lifetime, and by his executor after his death, up to the commencement of the action. It would seem impossible to restore Einsfeld or his successors to the position which he occupied prior to the making of the agreement in question. This feature of itself, it would seem, takes the case out of the principle of Odell v. Montross if it. were necessary to reconcile this case with the adjudication there. The case of Odell v. Montross is a case which perhaps may be considered a border case. Some discussion was there had as to the legal effect of conveyances, and the principle was applied as rigidly perhaps as in any adjudicated case, but it did not attempt to relax or ignore the basic principle that full effect is to be given to the intention of the parties to an agreement which violates no principle of law and is not against a rule of public policy, but, upon the contrary, the principle is reiterated that all agreements of that kind; when once established, will be upheld. And in that particular case it was held that the grantee showed no equitable rights which would suffer by reason of the enforcement of the legal rule, and, therefore, it was applied in that case, the statement there being that no injustice would be done to the defendant by the conclusion reached; but in the case under discussion it is impossible to see how a gross injustice would not be done to the successors of Einsfeld were the plaintiff permitted to recover in this action. It perhaps is more profitable to apply the generally accepted rules of law and equity in the consideration of this case than to endeavor to square it with a dissimilar case which is quoted as a precedent. Precedent, if without principle to sustain it, cannot be regarded as authority, and, as we have seen, the case *76cited varies in such essential particulars from the one under consideration that it is not of a nature to be controlling.

The judgment should be affirmed, with costs.

All concurred, except Hiscock, J., who dissented in an opinion.