Hinkley v. Wheelwright

*Miller, J., delivered the opinion of the court. The conclusion at which we have arrived, upon the main point in controversy in this case, renders unnecessary a determination of other questions of importance discussed at bar. Upon the best consideration we have been able to give to the subject, the court is of opinion that the absolute deed of the “ Assabet Estate,” from Nathaniel J. Wyeth to Leonard Jarvis, of the 17th of August, 1852, cannot, at the instance of the appellants, be treated in equity as a mortgage, by reason of any of the papers executed at the same time, nor can we discover that it was the intention of the parties that such should be its effect and operation from any circumstances disclosed by the record, preceding and accompanying its execution. There is no doubt but that in equity a conveyance, whatevér form it may assume, will be treated as a mortgage, whenever ³⁴⁹ it appears to have been taken as a security for an existing debt or a contemporaneous loan, and that the inclination of the courts is, in doubtful cases, so to treat it and allow the grantor to redeem.

But on the other hand there is no principle of law or equity which forbids parties capable of acting for themselves, from making conditional contracts for the sale of their property, real or personal, or which forbids a vendor to make an absolute conveyance of the property sold subject to an agreement, that he shall be entitled to a re-conveyance upon the re-payment of the purchase money, or any other sum certain, on or before a fixed day, or to make any other stipulations by which the conveyance shall become void or remain absolute. Such contracts are not prohibited either by the letter or the policy of the law, and to deny the right to make them would, as was said by Chief Justice Marshall, in Conway v. Alexander, 7 Cranch, 237 , be “ to transfer to the Court of Chancery, in a considerable degree, the guardianship of adults as well as minors.” Nor does the fact that parties stand in the relation of mortgagor and mortgagee, prevent their dealing with each *other as vendor and purchaser of the' equity of redemption. Such transactions will not be set aside unless for manifest unfairness, or inadequacy of consideration. “A mortgagee may become the purchaser of the equity of redemption, if he does not make use of his incumbrance to influence the mortgagor to part with his property at less than its value.” Hicks v. Hicks, 5 G. & J. 85 . The intention of the parties is, in such cases, what the courts seek to discover and enforce, and to establish this, evidence dehors the instrument, of the circumstances under which it was given, or the object it was designed to fulfill, is admitted. “ In cases of this kind,” as was well said by Chancellor Bland, in Hicks v. Hicks, 5 G. & J. 82 , “ every thing depends upon what shall be deemed the intention of the parties.

Where there are several distinct instruments of writing they must all be taken together, and the contract deduced from a fair construction of the whole; and evidence dehors the writings may be let in, not as a means of explaining or construing them, but to show what was the real and true character of the whole contract; and if it appears to have been intended only as a mortgage security, the right of redemption will not be allowed to be fettered by ³⁵⁰ any conditions disadvantageous to the mortgagor. If, on the other hand, it is shown to be an absolute sale, it will not be converted into a mortgage, merely because of a stipulation to re-convey on the re-payment of the purchase money within a certain time.” In this case both parties tó the deed are dead, and we have only the written instruments themselves and part of a correspondence preceding the execution of the deed from which to gather their intentions. Before examining these, it is proper to observe, that this is not a case in which the grantor is seeking to redeem, and therefore insisting that the deed is a mortgage, but the executor and some of the residuary devisees and legatees of the grantee are here asking the court to treat it as a mortgage in order to fix upon the grantor a personal liability for the debt secured by the mortgage; and they seek to *do this for the purpose of having this debt set off against the share of the grantor in the estate of the grantee, he being himself one of the residuary legatees and devisees under the will of the latter. As between grantor and grantee, where it appears that a conditional sale was a mere cloak to an irredeemable mortgage, equity will let in the grantor to redeem; but it is matter of grave doubt whether, under such circumstances, it will afford the grantee a remedy for the debt against the grantor, because no inconvenience can result to a creditor unless the security is inadequate to the payment of the debt, for he may call on the debtor to make payment at once or submit to a sale or foreclosure of the mortgaged premises; and even in those cases where he eventually proves a loser, he has no right to complain of a difficulty growing out of his own wrongful act in making the form of the transaction different from the reality.

White & Tudor’s Lead. Cases in Eq. 72 Law Lib. 433. Let us now examine the circumstances attending this transaction, as well as the written instruments themselves, for the purpose of ascertaining whether the deed is, in this case, to be treated as a mortgage. Jarvis gave to his nephew, Nathaniel J. Wyeth, of Cambridge, Massachusetts, a letter of credit on Peabody, of London, for £6,000, and, at the same time, took from the firm of Wyeth, Rogers & Co., of New York, who were interested in the ³⁵¹ business of N. J. Wyeth, and of which Leonard J. Wyeth was a member, an engagement to guarantee him against loss to the extent of £3,000.

He also, at the same time, took a mortgage from N. J. Wyeth on several parcels of property in Cambridge and Sudbury, Massachusetts, then valued by Wyeth at $130,-000 or $140,000, free of prior incumbrances, as security for all sums of money now due, or that may hereafter become due, and owing from Wyeth to him, and especially, and in the first place, to indemnify and save him harmless from all liability by by reason of this letter *of credit. Amongst the property conveyed by the mortgage was the Assabet estate, consisting of an ice establishment im Sudbury. Besides the liability on account of the letter of credit, Wyeth was also indebted to Jarvis to the extent of some $2,000 or $3,000. These papers, the letter of credit, the guarantee, and the mortgage, all bear date the 20th of August, 1851.

Wyeth expressed a strong desire that the mortgage should not be recorded at present, but said it might be recorded if Jarvis desired it. It was placed on record on the 4th of February, 1852, and bn the 2nd of March Wyeth writes, complaining of this, and saying it would prevent him from borrowing money on the large surplus of his estate; that by a prior letter, (which does not appear in the record,) he had offered to Leonard J. Wyeth and Jarvis, in which their interest was equal, ample security for the letter of credit, and that if Jarvis would accept this, it would release his other property. By letter of the 4th of March, Jarvis, in reply, says : “ I have no wish to take any advantage I may have in being first on record; provided you and Leonard pay up the letter of credit, or one-half it, I will pay the other half, you to give me satisfactory security for this half and for the note I hold of yours for about $2,800 or $2,900, say for about $1,800 in all, and provided such a change of security can now be made legally and securely. I don’t wish to keep you away from your resources more than is consistent with my safety.

Security,' ample and good, I must have if any change is'made. If I can accommodate you in this way, I shall be happy to do it. But I fear your six months’ law, which you have brought to our notice; will be an ¿ffectual barrier to any such change of security at this time:” The security thus offered by Wyeth was évidently the Assa ³⁵² bet property, for, on the 30th of July, Wyeth again writes to Jarvis, saying: “ You have employed someone to fix the value of the Assabet property. I do not know what the result of your inquiries have been,” and he then encloses to *Jarvis two letters from parties valuing the property, and states that it cost him over $27,000, and then adds: “ I ask your early attention to this matter, for many are implicated in it.

If you could write Leonard that you will be satisfied with this property for your security, it may relieve me at once.” One of the enclosed letters from F. Tudor, says he has seen the Assabet establishment ; that the value of such property depends on the continued prosperity of the ice trade; that it cannot be worth less than cost, and as Wyeth says it cost $25,000, he would think it worth that sum. The other letter says it would then rent for $2,500 or $3,000. No other correspondence appears, and we know nothing of the further negotiations between the parties which resulted in the contract evidenced by the instruments executed on the 17th of August, 1852. These instruments are: 1st.

An absolute deed from Wyeth and wife, conveying to Jarvis in fee, the Assabet property, for the consideration of $15,000. 2nd. A lease from Jarvis to Wyeth of the same property for the term of three years, from the 15th of October following, at the rent of $900, payable semi-annually, the lessee covenanting to pay the rent, to keep the premises insured, to deliver up possession at the end of the term, to pay taxes levied during the term, and also to pay the rents and taxes for such further time as the lessee may hold the same, and not to suffer waste, etc. 3rd. An agreement or indenture, as it is called, between Wyeth and Jarvis, which recites the conveyance in fee to Jarvis of the Assabet property, one of the estates heretofore conveyed to Jarvis by the mortgage of the 20th of August, 1851, and the lease thereof to Wyeth for the term of three years, and then sets forth, “ that said conveyance and demise are made upon the following terms and conditions, to wit:” If Wyeth shall perform the covenants in the lease, 'then Jarvis “ agrees, at any time within the term of three years-above ³⁵⁴ specified, upon payment to him of the sum of *$15,000, to convey unto the said Wyeth, his heirs and assigns,” the said Assabet estate; “and the said Jarvis further agrees, that upon such payment to him of the sum of $15,000, or other satisfaction for that amount, either by a sale of said estate as hereinafter provided, or by a good and absolute title to the same being vested in the said Jarvis, he will release and discharge the said Assabet estate from all his claims upon the same retained by him under the mortgage above referred to.” Upon Wyeth’s failure to perform the covenants of the lease, or if the $15,000 shall not be paid to Jarvis for said estate by Wyeth, his heirs, executors, etc., at or within said term of three years, then Jarvis shall have the right to sell the estate at public auction, and if such sale be made within six years from the date hereof, it shall be on the premises, with notice, etc., and upon any conveyance of the estate by virtue of this agreement, the said Jarvis may make and deliver to any purchaser thereof a deed, or deeds, in confirmation, release or warranty of the same in the name of Wyeth, as his attorney for that purpose, by these presents appointed; and out of the money arising from the sale, Jarvis agrees, after retaining the sum of $15,000, with costs of sale, to render the overplus, if any, together with a true and particular account of the sale, to Wyeth, his heirs, etc. “And it is further agreed, that any sale of said estate made by said Jarvis, after said period of six years, shall be a perpetual ban against all claims by said Wyeth, his heirs or assigns, without any notice being given or account rendered to him of the same/3 4th. An assignment from Jarvis to Leonard J. Wyeth, for the consideration of $17,315, of all his interest in the mortgage of the 20th of August, 1851, and of the debt thereby secured and the estate thereby conveyed, except the Assabet property, “as to which estate my interest in the said mortgage is .to continue as security for the sum of $15,000,” and the residue of the mortgage and the estate thereby conveyed, the said Leonard is to hold as security for the sum of $17,315, *the consideration above expressed.

To this assignment is appended an agreement by Nathaniel J. Wyeth, dated the 18th of September, 1852, by which he assents to and ratifies and confirms “the above assignment and the separation and ³⁵⁵ apportionment thereby made of the estate conveyed, and the debts secured by said mortgage.” 5th. An agreement between Jarvis and Leonard J. Wyeth, which recites the deed in fee of the Assabet estate, included in the mortgage, the assignment of the residue of the mortgage and the estate thereby conveyed to Leonard, “excepting the said Assabet estate, in which the said Jarvis retains his interest under said mortgage to the extent of $15,000, for the better protection of his title to the same" and then stipulates that Leonard shall pay or discharge on or before the 1st of November, following, the whole amount due by Jarvis to Peabody, on the letter of credit, and give his note to Jarvis at three years for $2,315, to take up Nathaniel J. Wyeth’s note to him for that amount, and Jarvis on his part agrees to supply to Leonard, on or before the 15th of October, following, the sum of $15,000, “ being the amount of the consideration expressed in the deed,” to him for the Assabet estate, and made payable to said Leonard by the written authority and request of the said Nathaniel to said