Summary
In Macauley v. Smith (supra) it was held that the surrender of possession by the grantor to the grantee, after the debt became due, did not prevent the levy of an attachment, issued in behalf of creditors of the former, upon lands conveyed to the latter as security.
Summary of this case from Mooney v. ByrneOpinion
Argued April 18, 1892
Decided May 3, 1892
John Van Voorhis for appellant. Rollin Tracy for respondents.
The agreement which antedated the deeds by one day and expressed their intent and purpose should be read in connection with them. Thus read, the deeds are shown to have been given by Lucilia Tracy to Howland, Smith and Tracy "for the purpose of securing and in consideration of said loan of $8,240" made by the grantees to the grantor and "that the said deed * * * is a security for said loan for a term not exceeding one year from the date of said deed * * * and that upon the repayment of said sum of $8,240, with interest within or at the expiration of one year by the said Lucilia * * * the said Howland, Smith and Tracy are to reconvey said premises to said Lucilia, * * * and in case said sum of $8,240 shall not be repaid during or at the expiration of one year as aforesaid, then it is understood and agreed that the said deed * * * is to become and be a deed absolute, and the said Howland, Smith and Tracy are to become and be the owners in fee simple absolute."
The deeds are thus clearly shown to have been intended as mortgages. This conclusion is also inferable from the facts. The premises at the date of the deeds were worth $30,000. The judgments against the premises were by the terms of the agreement to be paid from the money loaned, and presumably were either paid or their amount retained by the grantees from the $8,240. The amount of the outstanding mortgages against the premises was $7,000. It is not presumable that Lucilia Tracy intended to sell property worth $30,000 for $15,240. The grantor remained in possession of the premises for about two years after the delivery of the deeds. She was embarrassed and straightened for money. Stress is laid by the defendants upon the fact that the grantor did not expressly covenant to repay the money. The cases are to the effect that this is one of several circumstances to be considered ( Horn v. Keteltas, 46 N.Y. 605; Morris v. Budlong, 78 id. 552; Brown v. Dewey, 1 Sand. Ch. 57), and here it is to be considered in connection with the repeated statement that the money to be advanced by the grantees is a loan and that "said deed is a security for said loan for a term of not exceeding one year," and that upon repayment the grantees should reconvey to the grantor. It is plain that repayment of the loan was contemplated; nothing is said of the repayment of purchase money, and there is nothing in the agreement indicating that the money advanced by the grantees was purchase-money, except that in case said sum of $8,240 (previously termed a loan), should not be repaid at the expiration of one year, "then it is understood and agreed that the said deed is to become and be a deed absolute," thus clearly indicating that at the date of the transaction said sum was not purchase-money and said deed was not a deed absolute, but was to become so in case of non-payment of the loan. Clearly upon the undisputed facts the deeds were a mortgage to secure the money loaned, and the trial court erred in refusing the plaintiff's request so to find. The agreement that the non-payment of the loan within the time specified should convert the mortgage into an absolute deed did not have that effect. The agreement to turn a mortgage into an absolute deed in case of default is one that finds no favor in equity. The maxim "once a mortgage always a mortgage" governs the case. ( Horn v. Keteltas, supra; Murray v. Walker, 31 N.Y. 400; Carr v. Carr, 52 id. 251; Remsen v. Hay, 2 Edw. Ch. 535; Clark v. Henry, 2 Cow. 324; Morris v. Nixon, 1 How. [U.S.] 118; Villa v. Rodriguez, 12 Wall. 323; 4 Kent's Com. 143.) Since the deeds were a mortgage the title did not pass to the grantees but remained in Lucilia Tracy. ( Barry v. Hamburg B. Fire Ins. Co., 110 N.Y. 1; Thorn v. Sutherland, 123 id. 236; Shattuck v. Bascom, 105 id. 39.)
The levy under the plaintiff's attachment was, therefore, upon Mrs. Tracy's land to which she had the legal title. It was not merely an attempted levy upon her equitable right to obtain title. As against Howland, Smith and Tracy the levy was valid and the judgment and execution which followed the attachment became a specific lien upon the land itself, and the land could be sold upon execution.
Howland, Smith and Tracy conveyed the premises before the attachment was issued to the defendant, the N.Y. Baptist Union for Ministerial Education. This defendant by its answer admits that $3,000 of the purchase-money, with interest from January 1, 1883, remains unpaid, and that $1.550 of the principal of one of the mortgages upon the premises given by Mrs. Tracy also remains unpaid. This defendant in order to maintain the defense that it is a bona fide purchaser without notice of plaintiff's rights, must have paid all the purchase-money. ( Sargent v. Eureka S.A. Co., 46 Hun, 19; Harris v. Norton, 16 Barb. 264; Jewett v. Palmer, 7 Johns. Ch. 61; Jackson ex dem. v. Cadwell, 1 Cow. 622; Boone v. Chiles, 10 Peters, 179; Patten v. Moore, 32 N.H. 382.)
In equity it has not completed its purchase, but to the extent of its payments innocently made before notice of plaintiff's claim is entitled to protection. It may, therefore, retire from the transaction without actual loss and without further impairing the rights of the plaintiff.
The action is in aid of plaintiff's execution. Its object is not to reach any equitable assets of Mrs. Tracy, but to strip from her legal title to the premises in question the obstructions created by the deed by which such title, apparently but not in fact, passed from her to Howland, Smith and Tracy, and from them to the Baptist Union, and thus to show that the lien acquired by plaintiff's attachment of the premises and perfected by her judgment and execution was valid, and, therefore, may now be enforced free from the obstructions which seemed to defeat it. Such an action is within the equitable jurisdiction of the court. ( Beck v. Burdett, 1 Paige, 305; Heye v. Bolles, 33 How. Pr. 266; Rinchey v. Stryker, 28 N.Y. 45; Frost v. Mott, 34 id. 253.) Thurber v. Blanck ( 50 N.Y. 80) does not hold otherwise, but does hold that the attachment to be effective must operate upon legal rights; the precise position of the plaintiff here.
The judgment should be reversed and a new trial granted, costs to abide event.
All concur.
Judgment reversed.