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Vol. I.)

CAMPBELL v. DEARBORN.

(No. 3.

plaintiff allowed to recover thereunder such sum as he can show to be a reasonable attorney's fee in the particular case. And this, because, First. The rule is universal to construe such fixed sum as a penalty, unless the intent to make it liquidated damages is manifested beyond a reasonable doubt - in this case such intent is not manifested, and the term “ liquidated damages ” is not even used. Second. The sum fixed is to be paid by reason of a default in the payment of a sum of money at a specified time; and in such cases courts never construe the sum fixed as liquidated damages, but always as a penalty. Kuhn v. Myers et al. (present term).

Third. The plaintiff may not lawfully have more than ten per cent. for the use of his money, and if the stipulated sum is in excess of a reasonable attorney's fee, which is all plaintiff can have to pay, he does obtain more than that rate, and under the foregoing opinion could successfully violate the law in this respect, for it would be, as held therein, liquidated damages, and not interest or usury. And, finally, Because if the stipulated sum is construed as a penalty, perfect and complete justice will thereby be meted out to both parties : for that the defendant would have to indemnify the plaintiff for the default, by paying him the reasonable attorney's fee expended in the case: and the plaintiff would be prevented from taking the money of the defendant without an equivalent. This, very briefly, is the law and the right, as I am able to see them ; but I cannot comprehend, as such in truth, either the reason, the law, or the justice of the foregoing opinion and its results. The judgment of the court below ought, therefore, to be affirmed, and not

Reversed.

SUPREME JUDICIAL COURT OF MASSACHUSETTS.

[TO APPEAR IN 109 Mass.]

BILL IN EQUITY. — PAROL EVIDENCE. — ABSOLUTE CONVEYANCE HELD

TO BE A MORTGAGE.

CAMPBELL v. DEARBORN.

A bill in equity, to declare the plaintiff entitled to redeem land, which the defendant holds by an absolute conveyance from him, may be maintained upon parol proof that he bought the land with money borrowed from the defendant, and, though he executed his absolute deed intelligently, yet both parties understood that it was intended as security for the loan.

BILL IN EQUITY, filed July 12, 1869, to compel a reconveyance of land by the defendant to the plaintiff, on the ground that the plaintiff's conveyance of it to the defendant, although in form absolute, was in substance a mortgage.

The bill alleged that the plaintiff on June 11, 1866, agreed with Artemas Tirill for the purchase by him from said Tirrill of a parcel of land in Charlestown, and at the same time Tirrill gave him a bond to convey the land at any time within three years from said June 11, upon the payment to him of $5,500, the plaintiff to pay all assessments upon the

Vol. I.]

CAMPBELL 0. DEARBORN.

[No. 3.

d by woce, and the defence

land meanwhile; that since taking the bond the plaintiff has occupied the land ; that in the early part of June, 1869, he made arrangements to borrow the sum of $5,500 from Charles J. Walker, in order to tender the same to Tirrill, and secure performance of his obligation to convey, within the time fixed in the bond ; that on June 11, 1869, being disappointed in finding Walker, he met the defendant; that the defendant expressed regret that the plaintiff should be obliged to lose fulfilment of the bond through not having in time the money required, and voluntarily offered to lend to the plaintiff the required amount, and the plaintiff accepted the offer as an act of friendship, as he supposed ; that the defendant and the plaintiff went immediately to Tirrill and tendered to him said sum of $5,500, and Tirrill thereupon delivered to the plaintiff his deed of the land in fee simple, in compliance with the bond, which deed was dated May 21, and was acknowledged before the defendant as a justice of the peace on said June 11, 1869; that upon leaving Tirrill the defendant said to the plaintiff that he ought to be secured for his loan in some way, and proposed that they should go to the defendant's attorney, to have the necessary papers prepared ; that they thereupon went to the attorney's office, where the defendant and the attorney consulted together privately, and, without consulting the plaintiff, an instrument was drawn, and handed him to sign, which upon reading he found to be drawn to convey the land in fee simple to the defendant; that the plaintiff objected to this form of conveyance, and desired to have a mortgage drawn instead, but was assured by both the attorney and the defendant that the instrument prepared would have the same effect; that, being ignorant of the legal effect of said instrument made under such circumstances, and relying on the statements of the attorney and the defendant, he on said June 11, executed and delivered said deed to the defendant; and that it was recorded in the registry of deeds at the same time with Tirrill's deed.

The bill also alleged that the plaintiff believed, and from the manner and declarations of the defendant at the time, had every reason to believe, that the loan was prompted by the kindness of a friend, and was a gratuitous loan, and one which he was to immediately repay, and he accepted it accordingly; that on the same day he asked the defendant how soon the money must be repaid, and the defendant replied, “In a few days;” that the plaintiff at the same time said to the defendant that he had arranged for a permanent loan on the land and thought the matter could be settled on the next day, June 12; that on said June 12 Charles J. Walker, who had agreed to lend the plaintiff $5,000 upon a mortgage on the land, was not ready to do so, as his attorney desired more time to examine the title, and the plaintiff went to the defendant and stated the occasion of delay, and asked him to be ready to receive the money advanced and execute a deed conveying the land back to the plaintiff the next Monday ; that the defendant replied that he was going to Philadelphia on that day, but would settle the matter upon his return, which would be about June 17; and that at this interview, the plaintiff, feeling very grateful to the defendant for what he had done, suggested that he was disposed to pay him for his trouble in the premises, but the defendant replied, “ Never mind now, we will make that all right,” from which the plaintiff inferred that the defendant would make no charge for the loan.

Vol. I.)

CAMPBELL v. DEARBORN.

(No. 3.

The bill further alleged that on the 17th, 18th, and 19th of June the plaintiff endeavored to find the defendant and repay his loan and obtain his deed, but was unable to find him ; that on the 21st of June the plaintiff saw the said attorney of the defendant, who had told him that the attorney was authorized to settle the matter, and said attorney informed the plaintiff that the defendant would not reconvey the land unless he was paid the sum advanced and $500 besides for the use of the money, whereat the plaintiff was greatly astonished and so stated to the attorney; that the plaintiff afterwards saw the defendant, and objected to the charge, and gave him to understand that he supposed the loan to be gratuitous, but rather than have any ill feeling he would pay $250 ; that the defendant refused to accept that sum ; and that the plaintiff has been desirous of obtaining a reconveyance of the land, and has tendered the defendant the said sum of $5,500 with legal interest from the time of the loan, and has also tendered a deed reconveying the land to the plaintiff, to be executed by the defendant; but that the defendant refused to accept the tender and to execute the deed.

The prayer was “ that the plaintiff may have proper relief in the premises ; that an account may be taken of what, if anything, is due to the defendant for principal and interest on said loan ; that the plaintiff may be permitted to redeem the land, he being ready and willing, and hereby offering, to pay what, if anything, shall appear to be due in respect to said loan and interest accrued ; and that the defendant may be decreed to convey the land to the plaintiff in fee, free from all incumbrances made by him or any person claiming under him, and may be restrained from making any sale or conveyance thereof to any person or persons pending this bill.”

The defendant, in his answer, denied that he ever made or offered to make any loan to the plaintiff ; alleged that, on the contrary, he refused a request of the plaintiff for a loan; and further alleged that “the defendant agreed to pay Tirrill the said sum of $5,500 for the premises described in the bill, provided the title to said premises should stand in the defendant's name," and the plaintiff agreed that immediately on payment of the sum to Tirrill the land should be conveyed in fee simple to the defendant, “ and the plaintiff should not have any interest or title thereto ;” that thereupon the defendant paid the $5,500 to Tirrill, and Tirrill executed and delivered to the plaintiff a deed of the land ; that the plaintiff did not have any title or interest in the purchase money or any part thereof, but the whole of it was property of the defendant ; that the land was not purchased of Tirrill for the benefit of the plaintiff, “ neither did the defendant agree to purchase it for the benefit of the plaintiff, but for the use and benefit of the defendant ;” that by said purchase the equitable title to the land was vested in the defendant; and that the plaintiff, in pursuance of his said agreement, did convey the land to the defendant in fee simple, " for the purpose of vesting both the legal and equitable title in the defendant;” that the agreement between the plaintiff and the defendant, that the plaintiff should make such an absolute conveyance, and no other, was fair and distinct; that “ before and at the time of said payment to said Tirrill ” the defendant refused “ to lend the plaintiff said money, and to allow the plaintiff to have any interest in said money or

Vol. I.)

CAMPBELL v. DEARBORN.

(No. 3.

the premises purchased therewith ;” and that the plaintiff's deed was read in his presence and hearing before he executed it, and he was then and there informed that it was an absolute conveyance and that he thereby ceased to have any interest whatever in the land.

The answer also alleged that afterwards, and as an independent transaction, the defendant at the plaintiff's request orally agreed to reconvey the land to him for the consideration of $6,000 to be paid on June 18, 1869, together with such charges as the defendant should make for his expenses incident to the several conveyances ; that although the defendant then well knew, and still insists, that this agreement had no legal force or effect, for the reason that it was not in writing, yet on the day named he was ready and willing to perform his part of it, but the plaintiff neglected and refused to perform his own part or pay any sum whatever, and thereupon the defendant considered himself released from all obligations to the plaintiff ; that on June 19, 1869, he made another oral agreement with the plaintiff to reconvey the land to him for the sum of $6,000, together with such expenses as the defendant had incurred by reason of said conveyances, provided the agreement should be carried into effect forthwith, and the plaintiff then and there agreed to pay said sum ; that the defendant on the same day executed a quitclaim deed, with the usual covenants, conveying the land to the plaintiff in pursuance of this agreement, and has repeatedly tendered this deed to the plaintiff ; but that the plaintiff refused to comply with the agreement, and to pay the expenses incurred by the defendant in the premises; and that the defendant “ now and always has denied that the plaintiff had any right to or interest in said premises, except such as he may have acquired under said parol agreements made subsequently to and independently of the conveyance" from the plaintiff to the defendant.

The answer then denied “ that the defendant, or any one in his behalf, or at his request, or with his knowledge, ever made any representations or intimation to the plaintiff that the conveyance of the plaintiff to the defendant was or had the effect of anything but an absolute conveyance in fee simple:” alleged “ that the plaintiff well knew the contents and the legal effect thereof, and the same was fully explained to and understood by the plaintiff before the execution thereof, and no assurances or intimations were made, at or before the execution or delivery thereof, that the land would be reconveyed ;” denied “ that the plaintiff has ever tendered to the defendant the amount paid by him and interest thereon, or, any other sum as alleged ;” set up the statute of frauds“ in answer to the several averments of contracts, agreements, promises, and trusts concerning the premises with, to, or for the benefit of the plaintiff in the bill contained, and to so much of the bill as sets forth any pretended contract, agreement, trust, or confidence between the plaintiff and the defendant, or as seeks any relief or discovery, of the defendant, of or concerning any pretended contract, agreement, trust, or confidence between the plaintiff and the defendant, touching the land or premises mentioned in the bill, or any part thereof; ” denied “that the defendant, or any person thereunto by him lawfully authorized, did ever make or sign any writing whatsoever, of or containing any such contract, promise, agreement, grant, or declaration with, to, or for the benefit of the plaintiff touching the said land, or creat

Vol. I.]

CAMPBELL v. DEARBORN.

[No. 3.

ing any estate or interest therein, or creating or declaring any trust respecting the same, in or for the benefit of the plaintiff ;” and finally denied all the plaintiff's allegations which were not above expressly admitted.

The plaintiff filed a general replication, and the case was heard by Colt, J., who made the following report thereof :

“ The plaintiff was the only witness in support of his case, and testified substantially to the facts stated in the bill. The defendant testified in substance to the facts stated in his answer, and was confirmed in the main part of his evidence by the testimony of the attorney who prepared the deed from the plaintiff to him, but who also testified more fully to what was said between the parties at his office at the time the deed was executed. The witnesses appeared to me to be equally entitled to credit.

"I find as a fact, that the deed to the defendant was executed by the plaintiff intelligently, and not by accident or mistake ; and that no fraud was practised to procure its execution, other than may be inferred, if any, from the facts testified to and here found by me. I find, from all the circumstances surrounding the transaction, and from the acts and declarations of the parties at the time, that the plaintiff believed, and had reason to believe, that the payment made to Tirrill was made to prevent a forfeiture of the plaintiff's rights under the contract, as a friendly act on the part of the defendant, with a view to give him further time to raise the money due thereon, and that the defendant would within a few days, on being repaid the purchase money and a compensation for his trouble, reconvey the same to him. It appeared that no definite time was named for the repayment, and no definite amount was fixed as compensation; and that the defendant refused to take a mortgage instead of an absolute deed, insisting upon the ownership of the property, and the right to charge what he had a mind to for his services, in case he should reconvey.

“I report the case for the consideration of the full court, such order or decree to be entered as law and justice may require."

The pleadings were made a part of the report, and the case was argued in writing for the plaintiff, and orally for the defendant, in January, 1871, and was decided in September, 1873.

G. A. Somerby, G. B. Bigelow fo S. C. Darling, for the plaintiff. W. S. Gardner, for the defendant. WELLS, J. Regarding the money paid to Tirrill for the land as the money of the plaintiff, by loan from the defendant, there is still no resulting trust in favor of the plaintiff arising from the whole transaction. A deed was taken to the plaintiff, according to his equitable interest; and he thereupon conveyed to the defendant by his own deed. The recitals and covenants of that deed preclude him from setting up any trusts by implication, against its express terms. Blodgett v. Hildrėth, 103 Mass. 484. His agreement with the defendant for a reconveyance cannot be enforced as a contract for an interest in lands; Gen. Sts. c. 105, § 1; nor will it create an express trust; Gen. Sts. c. 100, § 19. The question then is, Can the deed be converted into a mortgage, or impeached and set aside, or its operation restricted, upon any ground properly cognizable in a court of chancery?

This question was somewhat discussed, though not decided, in Newton v. Fay, 10 Allen, 505. Some suggestions were made as to the bearing

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