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CAMPBELL v. DEARBORN.
Dig. (Greenl. ed.) tit. xv. c. 1, § 21; 2 Washb. Real Prop. (3d ed.) 42; Williams on Real Prop. 353 ; Story Eq. § 1019; Adams Eq. 112; 3 Lead. Cas. in Eq. (3d Am. ed.), White & Tudor's notes to Thornbrough v. Baker, pp. 605 [*874] f seq. ; Hare & Wallace's notes to S. C. pp. 624 [*894] & seq.
The rule has been frequently recognized in Massachusetts, where, until 1855, the courts have held their jurisdiction of foreclosure and redemption of mortgages to be limited to cases of a defeasance contained in the deed or some other instrument under seal. Erskine v. Townsend, 2 Mass. 493 ; Killeran v. Brown, 4 Mass. 443 ; Taylor v. Weld, 5 Mass. 109; Carey v. Rawson, 8 Mass. 159; Parks v. Hall, 2 Pick. 206, 211; Rice v. Rice, 4 Pick. 349; Flagg v. Mann, 14 Pick. 467, 478; Eaton v. Green, 22 Pick. 526. The case of Flagg v. Mann is explicit, not only upon the authority of the court thus to deal with the written instruments of the parties, but also upon the point of the competency of parol testimony to establish the facts by which to control their operation ; although, upon consideration of the parol testimony in that case, the court came to the conclusion that there was a sale in fact, and not a mere security for a loan.
By the St. of 1855, c. 194, § 1, jurisdiction was given to this court in equity“ in all cases of fraud, and of conveyances or transfers of real estate in the nature of mortgages." Gen. Sts. c. 113, § 2. The authority of the courts, under this clause, is ample. It is limited only by those considerations which guide courts of full chancery powers in the exercise.of all
If then the advantage taken of the borrower by the lender, in requiring of him an agreement that he will forego all right of redemption in case of non-payment at the stipulated time, or an absolute deed with a bond or certificate back, which falsely recites the character of the transaction, representing it to be a sale of the land with a privilege of repurchase, be a sufficient ground for interference in equity by restricting the operation of the deed, and converting the writings into a mortgage, contrary to the expressed agreement, it is difficult to see why the court may not and ought not so interpose to defeat the same wrong, when it attempts to reach its object by the simpler process of an absolute deed alone. In each case the relief is contrary to the terms of the written agreement. In one case it is against the express words of the instrument or clause relied on as a defeasance, on the ground that those words are falsely written as a cover for the wrong practised, or an evasion of the right of redemption. In the other it is without an instrument or clause of defeasance, on the ground that it was oppressive and wrongful to withhold or omit the formal defeasance. In strictness, there is no defeasance in either case. on the part of the lender or grantor, which gives the court its power over his deed, is the same in both. “For they who take a conveyance as a mortgage without any defeasance are guilty of a fraud.” Cotterell v. Purchase, Cas. temp. Talbot, 61. See also Barnhart v. Greenshields, 9 Moore P. C. 18; Baker v. Wind, 1 Ves. Sen. 160; Mellor v. Lees, 2 Atk. 494; Williams v. Owen, 5 Myl. & Cr. 303 ; Lincoln v. Wright, 4 De Gex & Jones, 16.
As a question of evidence, the principle is the same. In either case the
CAMPBELL v. DEARBORN.
arol evidence is admitted, not to vary, add to, or contradict the writings, but to establish the fact of an inherent fault in the transaction or its consideration, which affords ground for avoiding the effect of the writings, by restricting their operation, or defeating them altogether. This is a general principle of evidence, well established and recognized both at law and in equity. Stackpole v. Arnold, 11 Mass. 27 ; Fletcher v. Willard, 14 Pick. 464; 1 Greenl. Ev. $ 284; Perry on Trusts, $ 226.
The reasons for extending the doctrine, in equity, to absolute deeds, where there is no provision for reconveyance, are ably presented by Hare & Wallace in their notes to Woollam v. Hearn, 2 Lead. Cas. in Eq. (3d Am. ed.) 676, and to Thornbrough v. Baker, 3 lb. 624. See also Adams Eq. 111; 1 Sugd. Vend. (8th Am. ed.) Perkins's notes, pp. 267, 268, 302, 303. The doctrine thus extended is declared, in numerous decisions, to prevail in New York ; also in Vermont and several other states. Mr. Washburn, in his chapter on Mortgages, § 1, has exhibited the law as held in the different states, in this particular; and the numerous references there made, as well as by the annotators in the other treatises which we have cited, render it superfluous to repeat them here. 2 Washb. Real Prop. (3d ed.) 35 f. seq.
Upon the whole, we are convinced that the doctrine may be adopted without violation of the statute of frauds, or of any principle of law or evidence; and, if properly guarded in administration, may prove a sound and salutary principle of equity jurisprudence. It is a power to be exercised with the utmost caution, and only when the grounds of interference are fully made out, so as to be clear from doubt.
It is not enough that the relation of borrower and lender, or debtor and creditor, existed at the time the transaction was entered upon. Negotiations, begun with a view to a loan or security for a debt, may fairly terminate in a sale of the property originally proposed for security. And if, without fraud, oppression, or unfair advantage taken, a sale is the real result, and not a form adopted as a cover or pretext, it should be sustained by the court. It is to the determination of this question that the parol evidence is mainly directed.
The chief inquiry is, in most cases, whether a debt was created by the transaction, or an existing debt, which formed or entered into the consideration, continued and kept alive afterwards. “ If the purchaser, instead of taking the risk of the subject of the contract on himself, take a security for repayment of the principal, that will vitiate the transaction, and render it a mortgage security. 1 Sugd. Vend. (8th Am. ed.) 302, in support of which the citations by Mr. Perkins are numerous. But any recognition of the debt as still subsisting, if clearly established, is equally efficacious ; as the receipt or demand of interest or part payment. Eaton v. Green, 22 Pick. 526, 530.
Although proof of the existence and continuance of the debt, for which the conveyance was made, if not decisive of the character of the transaction as a mortgage, is most influential to that effect; yet the absence of such proof is far from being conclusive to the contrary. Rice v. Rice, 4 Pick. 349; Flagg v. Mann, 14 Pick. 467, 478 ; Russell v. Southard, 12 How. 139; Brown v. Dewey, 1 Sandf. Ch. 56. When it is considered that the inquiry itself is supposed to be made necessary by the adoption of
forms and outward appearance differing from the reality, it is hardly reasonable that the absence of an actual debt, manifested by a written acknowledgment or an express promise to pay, should be regarded as of more significance than the absence of a formal defeasance. It of course compels the party attempting to impeach the deed to make out his proofs by other and less decisive means. But as an affirmative proposition it cannot have much force.
A mortgage may exist without any debt or other personal liability of the mortgagor. If there is a large margin between the debt or sumoadvanced and the value of the land conveyed, that of itself is an assurance of payment stronger than any promise or bond of a necessitous borrower or debtor. Hence inadequacy of price, in such case, becomes an important element in establishing the character of the transaction. Inadequacy of price, though not of itself alone sufficient ground to set in motion chancery powers of the court, may nevertheless properly be effective to quicken their exercise, where other sufficient ground exists; Story Eq. S$ 239, 245, 246; and in connection with other evidence may afford strong ground of inference that the transaction purporting to be a sale was not fairly and in reality so. Kerr on Fraud and Mistake, 186 and note ; Wharf v. Howell, 5 Binn. 499.
Another circumstance, that may and ought to have much weight, is the continuance of the grantor in the use and occupation of the land as owner, after the apparent sale and conveyance. Cotterell v. Purchase, Cas. temp. Talbot, 61; Lincoln v. Wright, 4 De Gex & Jones, 16.
These several considerations have more or less weight, according to the circumstances of each case. Conway v. Alexander, 7 Cranch, 218; Bentley v. Phelps, 2 Woodb. & Min. 428. It is not necessary that all should concur to the same result in any case. Each case must be determined upon its own special facts; but those should be of clear and decisive import.
In the present case, we are able to arrive at the clear and satisfactory conclusion that there was no real purchase of the land by the defendant, either from Tirrill or from the plaintiff ; that his advance of the purchase money at the request of the plaintiff created a debt upon an implied assumpsit, if there was no express promise; and that it was the expectation of both parties that the money would be repaid soon and the land reconveyed. Whatever may have been the intention of the defendant, he must have known that this was the expectation of the plaintiff ; and it is most favorable to him to suppose that it was his own expectation also. These conclusions are not in the least modified in his favor by an examination of his answer.
We must declare therefore that in equity he holds the title subject to redemption by the plaintiff in such manner and upon such terms as shall be determined upon a hearing therefor before a single justice.
When a judgment obtained in one state is sought to be enforced in another, it is
competent for the courts of the latter, under a plea of nul tiel record, to determine whether such service was made upon the defendant in the original action as to give the court jurisdiction of his person.
DEADERICK, J. This is an action of debt instituted in the law court of Memphis, upon the record of a judgment of a circuit court of Mississippi. Defendant below (Barnett) pleaded nul tiel record and payment. After one verdict and judgment in favor of defendant, a new trial was granted, which resulted in a verdict in favor of plaintiff, and defendant has appealed in error to this court. The argument of counsel here has been mainly addressed to the question of the validity of the record of the judgment, which is the foundation of this suit. For plaintiff in error it is insisted that the record sued on shows upon its face that defendant had no notice, actual or constructive, of the existence of the suit against him, and that this court must hold the judgment void for want of jurisdiction of the person. While, on the other hand, it is insisted that the judgment, having been rendered by a court of competent jurisdiction in such cases, its jurisdiction can no more be inquired into by the courts of this State, than the correctness of the judgment upon the merits. The statutes of Mississippi require that original process shall be served personally on the defendant, if to be found, and a true copy thereof delivered to him. If the defendant cannot be found, such process may be served by leaving such copy at his usual place of abode, with his wife, or some free white person above the age of sixteen years, then and there being a member of his family, &c.
The record in question shows that on the 18th of May, 1860, a declaration of complaint was filed in the office of the clerk of the circuit court of Sunflower County, Mississippi, and thereupon a summons was issued, which was returned indorsed as follows: “ Received May 28, 1860. ecuted this writ May 30, 1860, by leaving a true copy thereof with a free white person, found at his usual place of residence in this county, defendant not being found. Eli Waites, sheriff, by G. H. Bryant, special deputy.” Then follows, at the December term, 1860, a judgment by default, for $1,050.08.
From the sheriff's return, it is manifest that the personal service of the writ was not effected, and we think it equally clear that no constructive notice was given, nor does the record anywhere recite that the defendant appeared, or that he was summoned to appear. It is not a case of defective service of process, but one of a total want of service, a distinction
BARNETT v. OPPENHEIMER.
clearly recognized in the case of Harrington v. Wofford, 46 Miss. R. 41, where it is said : “ There is a very clear and obvious distinction between a total want of service of process, and a defective service, as to their effect in judicial proceedings. In the one case the defendant has no notice at all of the suit or proceedings against him. The judgment or decree in such cases, it is conceded, is coram non judice and void, upon the principles of law and justice. In the other case the defective service of process gives the defendant actual notice of the suit or proceedings against him, and the judgment or decree in such case, although erroneous, would be valid, until reversed by a direct proceeding in an appellate jurisdiction, and its validity cannot be called in question.” The same distinction is recognized between a void and a voidable judgment, or an irregular or defective service and no service at all, in same book, page 675, and in 41 Miss. 562. In the last named case Judge Ellett, delivering the opinion of the court says:
" Where judgment in default is taken upon a return which purports to show that the process has been actually executed, such judgment is valid and binding whenever it comes collaterally in question, althongh the defendant might reverse it upon a writ of error, on the ground of the insufficiency of the return." In the case under consideration, there was no personal service of notice, nor any constructive notice, so that according to the case in 46 Miss. 41, the judgment rendered in Mississippi is void there, and this is so whether defendant was or was not a resident or inhabitant of that State at the time of the rendition of the judgment. The Constitution of the United States declares, “ full faith and eredit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved and the effect thereof." Article four, section one.
Pursuant to this authority, Congress enacted “ That the said record and judicial proceedings, authenticated as aforesaid, shall have such faith and credit given to them, in every court within the United States, as they have by law or usage in the courts of the state from whence the said records are or shall be taken." Act of May 26, 1790. If, therefore, the judgment in this case is a valid judgment, which the court in Mississippi had the jurisdiction to pronounce, it is equally valid and binding here. But it is insisted by the counsel for the defendant in error that the question of jurisdiction of the person of the defendant is just as legitimate for the determination of the court rendering the judgment sued on, as any other question arising in the cause, and when determined, as it necessarily is in the rendition of the judgment, it is conclusive, and cannot be inquired into in a collateral proceeding. Authorities have been cited which fully sustain the proposition of the counsel. In the notes of the two cases of Mills v. Duryee, and McElmoyle v. Cohen (2 Am. Lead Cases), many cases in the United States and state courts are cited, which show conflict and differences in the holdings of those courts.
While many of them fully sustain the proposition of the counsel for defendant in error, as before stated, other authorities equally as decisively announce the doctrine that, upon the plea of nul tiel record, the court should inspect the record, and determine for itself whether the court trying the cause had jurisdic