Kelly v. Thompson

The opinion of the Court was delivered by

Sergeant, J.

This case presents the consideration of the question that has so repeatedly been a theme of litigation in our courts, *404whether the transaction between these parties is to be considered as a mortgage or as an absolute sale in the first instance, with a subsequent distinct and independent agreement by the vendee, that on repaying him within a limited time the amount of the purchase money and interest he would reconvey the property. If it is the latter, the deed being executed and delivered on the 16th of October 1834 prior to the judgment, gives a better title than that under the sheriff’s sale upon the judgment. Whereas if the transaction was a mortgage, then the defeasance not being recorded with the deed nor prior to the judgment (nor indeed till long after), the conveyance to Bailey was an unrecorded mortgage, and will be postponed to the title under the judgment, agreeably to the decision in Freedly v. Hamilton, 17 Serg. & Rawle 70.

I do not perceive in this evidence on what grounds this transaction can be treated as a mortgage. It is true a deed with a defeasance on payment of money is put on the same footing by a court of equity as a deed of mortgage in which the condition is contained in the same instrument. If it is in reality a security for the loan of money, it is the same whether it be contained in one or more instruments. But there is no evidence here that this transaction was in reality a loan of money, or that these instruments constituted one transaction, and that the conveyance was intended only as a security for the loan. On the contrary, all the evidence given in the case goes to show that the sale and conveyance were, in the first instance, absolute; and that the agreement to reconvey was a separate and independent bargain. The deed to Bailey purports to have been executed and delivered on the 16th of October 1834: the evidence of Mr Stewart goes to show that it was executed, acknowledged and delivered on that day, and there is no parol evidence to the contrary. Of course the title vested absolutely in Bailey on that day, if there were nothing further. The defeasance is not dated till five days after, viz. the 21sL of October; and there is no parol evidence that it was executed sooner. So far, then, from appearing t.o be one transaction on the face and dates of the papers, they appear to be distinct and unconnected ; and unless we go to the extent of saying that when a person has obtained an absolute deed he shall not, at any distance of time, be permitted to agree to reconvey on recovering back his purchase money and interest, without being placed in the predicament of a mortgagee, and subjected to the loss of both land and debt by the liens of intervening creditors, it would be impossible to treat this as a mortgage. It is true dates and papers of this kind may be affected, if it can be shown that the whole was merely a scheme or contrivance; that in reality it was a loan merely; and that the defeasance was understood and agreed on in the original arrangement, and the discrepancy of dates was merely accidental or with a sinister design. But that must be shown in a case like the present aliunde.

It is contended that this is proved by the clause in the paper of *405the 21st, “the land he, Sampson, sells me this day,” and that Bailey was estopped by this averment from alleging that in fact the deed was executed and delivered previously. I do not think so. On the general issue before a jury the plaintiff is not estopped from showing that these words were mistakenly introduced, nor is the jury estopped from finding the truth. Estoppels to shut out the truth and deprive a party of his property, contrary to the real merit of his title, are odious; nor are they available unless strictly pleaded. We permit parol evidence to show mistakes in the execution of instruments; and a court of equity examines into the real merits of a transaction of this nature, where the papers are inconsistent, to ascertain what was the transaction between the parties. The whole evidence in this case tended to show that in fact the deed was executed and delivered on the 16th, and that the agreement of the 21st was a distinct and unconnected matter. . At least I am not aware that there is any to the- contrary; though I would not wish to be understood as intimating an opinion that may operate should any new facts on the subject be disclosed on another trial of the cause.

As to the authorities which have been relied on, the cases in which the decisions occurred were very different from the present. In Kerr v. Gilmore, 6 Watts 405, the conveyance and the defeasance were dated and executed on the same day, and Mr. Justice Huston, in delivering the opinion of the court, draws the distinction between the case of a deed and agreement of separate and distinct dates and arising out of contracts really separate, and where they are of the same date and executed at the same meeting of the parties before the same witnesses and therefore in point of law one transaction; holding that the latter must be a mortgage, whereas the former may be a sale, if there are not circumstances showing it to be a security for a loan of money. And in Colwell v. Woods, 3 Watts 138, the deed of conveyance and covenant were executed contemporaneously,- and constituted in law one instrument, and were considered as if inserted in one conveyance; and the ground of the decision was, that the evidence showed that the transaction was founded on a loan of money, and the deed of conveyance was given as a security for its repayment. See 6 Watts 420, 421. None of these features occur in the present case on the evidence given.

In relation to the bills of exception, I am of opinion that the first proposition, as a whole, was properly rejected, because it contained some matters which were certainly not evidence, such as the inferences from the acts and declarations of the parties, and the assurances of Thompson’s agent or attorney as to Bailey’s having his money refunded ; but that the residue ought to have been received, to enable the court and jury to judge better of the real nature of the transaction, and -to explain any ambiguities arising on the face of the papers.

■ The second bill of exceptions is not sustained. The bill of Thompson relates to the judgment, and notice to him is immaterial; *406it would not put him in the situation of a purchaser with notice; it could not do so without affecting the right and interest of the judgment creditor in the value of the property to the full. The same remark applies to the residue of the offer.

Judgment reversed, and a venire facias de novo awarded.