[MR. CHIEF JUSTICE TANEY AND MR. JUSTICE DANIEL DID NOT SIT IN THIS CAUSE.]
THIS was an appeal from the Circuit Court of the United States for the district of Massachusetts, sitting in equity.
The bill was filed by Edward Wyman, a citizen of Missouri, and an assignee of Nehemiah Wyman, by a deed of conveyance made in 1853. The facts of the case are particularly stated in the opinion of the court, and need not be repeated.
The decree of the Circuit Court was as follows, viz:
This case having been heard on the bill of complaint filed therein, and upon the answer of the defendants thereto, and upon the proof exhibited by the respective parties, and the parties having been heard by their counsel, this court both declare the conveyance of Nehemiah Wyman to said defendant, bearing date the twentieth day of November, in the year one thousand eight hundred and twenty-eight, to have been a mortgage to secure the debts, the amount whereof is named in said deed, as the consideration of the same; and that, at the times of the sales of the lands in said conveyance set forth by the defendant, the assignor of the complainant had the right to redeem the same; and doth declare that the absolute sales and conveyances by defendant of said land to bona fide purchasers for valuable consideration, without notice, was a constructive fraud upon the rights of the assignor of complainant; and that therefore he became entitled, as against the defendant personally, to an account of the value of the land and of the rents and profits thereof, and, after deducting the amount of principal and interest due said defendant, to the payment of the balance; and doth declare that the complainant, as assignee, has succeeded to those rights.
And said cause having been referred to a master, to take the necessary accounts, in pursuance of the foregoing declaration of this court, and said master having made his report in the premises, and the same being duly considered and the respective parties heard therein, this court doth order and decree that there be paid by said defendant to said complainant the sum of twelve thousand and sixty-seven dollars and nine cents, together with costs taxed at four hundred and sixty-nine dollars and seventy-four cents.
Babcock appealed to this court.
The case was argued by Mr. Loring and Mr. Merwin for the appellant, and by Mr. Bartlett for the appellee.
The reporter can notice only that part of the arguments of counsel which related to the admissibility of parol evidence in this case, to establish that the deed, absolute in its terms, was intended to operate only as a mortgage.
The counsel for the appellant treated this point in the following manner:
I. The first question is, whether, under the circumstances of this case, it is competent to show, by parol evidence, that a deed absolute in terms was intended to operate only as a mortgage. The respondent contends that it is not competent, but is in direct violation of the statute of frauds.
The well-settled rule in equity is, that it is not competent to show by parol evidence that an absolute deed was intended only as a mortgage, except upon the ground that the written defeasance was omitted by fraud, accident, or mistake. (1 Story Eq. Jur., secs. 153, 154, 155, 156; 4 Kent's Com., 142.)
It is clear, upon the facts, that a written defeasance was not omitted through any accident, mistake, ignorance, or fraud.
On the contrary, the parties executed all the papers they intended to, and the form of the conveyance was precisely what they intended it should be. (Hunt v. Rousmanier's Ex'rs, 1 Peters, 1.)
According to the testimony of both Nehemiah and William Wyman, the present conveyance was in exchange for the mortgages which the said Nehemiah had previously given to the respondent and Francis Wyman, the parties well knowing the distinction between the two forms of conveyance, and their different legal effect.
It is also certain, upon their evidence, that no defeasance was contemplated, and that it was not omitted through any fraud of the respondent, or through any misapprehension, by Nehemiah Wyman, of the nature or effect of his deed.
The proposition, therefore, which the complainant must maintain in this case is, that it is competent, by parol evidence of the admissions of the grantee at the time the conveyance was made, to convert an absolute deed into a mortgage, although the grantor, well knowing their different legal effect, deliberately, and in defiance of the statute, gave an absolute conveyance.
Such a proposition is not warranted by the decisions, and is entirely subversive of the statute of frauds.
The fraud against which equity relieves, is not the refusal of one of the parties to acknowledge or perform a void parol contract, the parties having voluntarily assumed the risk of the statute–but it relieves where the parties did intend to put their contract into writing, conformably to the statute, and have failed to do so, through the fraud of one, or by mutual mistake.
'Where there is no fraud, and the party relies upon the honor, word, or promise, of the defendant, the statute making that promise void, equity will not interfere.' (Lord Hardwicke, in Montacute v. Maxwell, 1 P. Wms., 618.)
To extend the doctrine beyond this, and to allow a party to offer parol evidence of an agreement, on the ground that the mere refusal to acknowledge or perform that agreement (which the statute itself declares is void) is such a fraud as will avoid the statute, and render the parol evidence competent, amounts to a judicial repeal of the statute.
Upon this ground, there can be no case to which the statute of frauds can possibly apply.
The fallacy of this theory is, that it admits the evidence prohibited by the statute, for the purpose of first proving a fraud by proving a refusal to perform a parol agreement, and then uses that fraud as the reason for admitting the parol evidence to prove the agreement.
To allow, then, the complainant, under the circumstances of the case, to control the legal effect of the conveyance of Nehemiah Wyman to the respondent, by parol evidence of his declarations or admissions made at the time the deed was executed, would violate the statute of frauds, and would also be contrary to the decided weight of authority.
In England, it has been uniformly held that parol evidence was inadmissible, except to show that the defeasance was omitted through fraud, accident, or mistake. (Walker v. Walker, 2 Atk., 99; Young v. Peachy, 2 Atk., 257; Jones v. Statham, 3 Atk., 389.)
And the great preponderance of authority in this country is to the same same effect. (4 Kent's Com., 142; 2 Story Eq., sec. 1,018; Marks v. Pell, 1 John. Ch. R., 594; Stevens v. Cooper, 1 John. Ch. R., 429. Strong v. Mitchell 4 Johns. Ch. R., 167, and James v. Johnson, 6 Johns. Ch. R., 417, are not to the contrary. Rathbun v. Rathbun, 6 Barb., 98; Webb v. Rice, 6 Hill, 219; Lyod v. Ex'rs Inglis, 1 Des., 337; Fitzpatrick v. Smith, 1 Des., 340; Bond v. Susquehannah Co., 6 Har. and J., 128; Watkins v. Stocket's Adm'r, 6 Har. and J., 435; Merrills v. Washburn, 1 Day, 139; Brainerd v. Brainerd, 15 Conn., 586.)
In Massachusetts, the decisions are very pointed. (Walker v. Locke et al., 5 Cush., 90; Peabody v. Tarbell, 2 Cush., 226, 232.)
The decision of Judge Story, in Taylor v. Luther, 2 Sumn., 228, is inconsistent with the doctrine stated by him in 2 Story Eq., sec. 1,018.
And in 3 Story, 203, he said, 'In Taylor v. Luther, I had occasion to carry the doctrine one step further.'
No decision of this court authorizes the doctrine which the complainant must maintain in this case.
Conway's Ex'rs v. Alexander (7 Cranch, 238) simply decided that the court, in construing an instrument, may read it in the light of the extrinsic circumstances.
Morris v. Nixon et al. (1 How., 118, 133) was decided on the ground that the letter of Nixon to the complainant, either showed that the transaction was intended as a mortgage, or that Nixon had a ...