Opinion
December, 1903.
R.M. Martin, for the appellant.
Isidor Buxbaum, for the respondents.
The plaintiff contends that the settlement of the foreclosure suit was a mere extension of time for payment of the mortgage indebtedness and that, therefore, the deed from Eugenie J. Wolff to Von Au was in effect a mortgage, under which there is an outstanding right to redeem in the heirs of Gabriel J. Wolff. This may be so, but it does not appear from the facts disclosed by the record. Of course it is competent to show by parol evidence that a deed absolute upon its face was intended as security for a debt which renders it in effect a mortgage. But the burden of showing these facts dehors the record rests upon the plaintiff, provided the record title as tendered appears to be marketable. The plaintiff has refused to perform and he presents no facts in justification excepting those set forth in the statement of facts. Therefore, his contention must fail if it does not appear from the documents themselves that the deed was intended as a mortgage. Facts may exist dehors the record which will defeat a good record title; but this does not impose upon the vendor the burden of negativing their existence. It is suggested that Gabriel J. Wolff was the owner of the equity of redemption and that his daughter merely held the nominal title; but this is disproved by the record. It appears that she held the absolute title prior to the commencement of the foreclosure suit and there is nothing to show that her father was the equitable owner. Furthermore, the agreement running from Von Au to Wolff expressly recites that the daughter was the owner of the equity of redemption. We are of opinion that the agreement was merely intended as an option to Wolff to purchase the premises within the time specified at the consideration therein mentioned. Attention is drawn to the fact that the consideration equaled the gross amount of the items of incumbrances upon the property, together with the interest and accumulations thereon to the date of the agreement; but it will be observed that Von Au agreed to convey the premises to Wolff for this specific sum, without interest, one year three months and a half thereafter. There is nothing to indicate that there was any defense to the foreclosure suit or to Wolff's liability for the deficiency. The fair inference is that the parties anticipated that if there should be a foreclosure sale at that time there would be a judgment of deficiency against Gabriel J. Wolff which would have been of doubtful value, for otherwise it is difficult to understand how the holder of the mortgage would be willing to take title and sell the premises, more than a year and a quarter later, for the amount to which he was entitled at that time. But the motives of the parties are immaterial, excepting as they shed light on the question as to whether the deed was, as it purports to be, intended to be absolute and to discharge the indebtedness. As bearing on this question, the fact that Gabriel J. Wolff did not obligate himself to pay the amount specified in the option is significant, although not controlling. ( Morris v. Budlong, 78 N.Y. 543; Holmes v. Grant, 8 Paige, 243; Fullerton v. McCurdy, 55 N.Y. 637.) It would seem that he desired merely an opportunity of purchasing the premises, for the consideration stated, should he be able and disposed to do so prior to the expiration of the time specified. The fact that the conveyance was made to Von Au subject to the mortgage which was being foreclosed is pointed out as indicating an attempt on the part of the parties to keep the mortgage alive. The inference from this fact is rather, we think, that Eugenie J. Wolff in executing a conveyance with a covenant against incumbrances, conveyed subject to this mortgage in order to protect herself against liability on the covenant. Of course, the mortgage might have been satisfied by Von Au before the conveyance was executed to him, but it was not material which form the transaction took. This mortgage merged in the deed the moment Von Au obtained title. The fact that it was subsequently formally discharged in order to remove any possible question is of no consequence. The rule is undoubtedly firmly settled in our jurisprudence that where a deed absolute in form was in fact intended as security for an indebtedness, it is in equity a mortgage with a right of redemption remaining in the grantor which it is not competent for him to relinquish by any agreement made at the time of executing the deed. ( Pardee v. Treat, 82 N.Y. 385; Macauley v. Smith, 132 id. 524; Mooney v. Byrne, 163 id. 91, 92; Hughes v. Harlam, 166 id. 432.) But this rule has no application to the case at bar as we view the facts. It is perfectly competent for the owner of an equity of redemption, in an action for the foreclosure of a mortgage, to convey the premises to the holder of the mortgage and discontinue the action, and thus cut off any right of redemption. That is precisely what was done by the owner of the equity of redemption in this case. The mere giving of a concurrent option to purchase either to a third party as was done here, or even to the owner of the equity of redemption, does not affect the absoluteness of the deed. ( Randall v. Sanders, 87 N.Y. 578.) The material inquiry in this class of cases is whether the debt was extinguished. ( Robinson v. Cropsey, 2 Edw. Ch. 138, 148; Davis v. Thomas, 1 Russ. M. 506; Randall v. Sanders, supra.) To infer from these facts that the mortgage indebtedness was intended to remain, and that the conveyance was intended merely as security therefor — which is the only condition on which it could be said that the title is defective — is to do violence to the written instruments by which the parties have recorded their agreements and to indulge in unwarranted speculation. We are, therefore, of opinion that the title tendered by defendants was free from reasonable doubt, and that specific performance of the contract was properly decreed.
It follows that the judgment should be affirmed, with costs.
VAN BRUNT, P.J., INGRAHAM and HATCH, JJ., concurred; PATTERSON, J., dissented.
Judgment affirmed, with costs.