Chamberlain v. Thompson

Though the equity of redemption in mortgaged premises may be devised, granted, levied upon and set off in execution; though the wife of the mortgagor is entitled to dower, and the husband may be tenant by the cur-tesy ; though the mortgagor in possession may acquire a settlement, may maintain trespass against his mortgagee, and may take the emblements, without being liable to account; and though the mortgagee has only a chattel interest — a mere pledge for the payment of the debt; yet still it is true, that upon the execution of the mortgage deed, the legal title vests in the mortgagee, subject to be defeated only on performance of the condition; and after condition broken, the estate of the mortgagor is forfeited at law, and his only relief is in equity. A party seeking relief in chancery against one who has the legal title, must shew an equity superior to that of the defendant. In the creation of a trust, no particular form of words is necessary, but courts of equity will regard the intent, and will so construe the instrument as to carry such intent into effect. Consequently, wherever an estate in fee is required to satisfy the purposes of the trust, such an estate will pass without words of inheritance. And this doctrine is applicable to trusts created by deed, as well as by will. It is in the power and the peculiar province of a court of chancery to correct a mistake in a deed. And such correction may be made, where the deed is set up by way of defence, as well as where it is the subject of relief by bill. A mortgaged land to B, as security for a debt, and B assigned the debt and conveyed his interest in the premises to C; after which A, being indebted to C and others, in a larger amount than he could pay, for the purpose of making a just and equal distribution of his property among his creditors, agreed with C to convey to him, and, in pursuance of such agreement, cxe-cuted a deed, purporting to convey to him, his executors, administrators, and assigns, forever, all the right, title, and interest of A in certain goods and real estate, including the mortgaged premises, in trust to sell and dispose of such property, and pay over the avails to all the creditors of A, in proportion to their respective debts, under the direction of the court of probate, pursuant to the statute of 1828, c, 3. This deed containedno words of inheritance ; but the omission of the word heirs, was accidental, owing to the mistake of the drafts-man. Afterwards, D, a creditor of A, with notice of what had taken place, attached A’s interest in the premises, and having obtained judgment against A, had the execution levied on such interest. On a bill in chancery brought by Z), against C, to redeem, on payment of the mortgage debt, it was held, 1. that from the face of the deed, it was obviously the intention of the parties, that a fee should pass; as the deed contained words of perpetuity, which, in a devise, would carry a fee, and as the trusts declared were such as to require that a fee should pass, in order to their execution ; 2. that C was entitled to have the mistake corrected in his favour, unless there was something in the peculiar character in which the parties stood before the court to prevent this exercise of its ordinary jurisdiction ; 3. that the character of 0 as assignee for the benefit of creditors, did not prevent it, as C, in that character, was not a mere volunteer, but a bona fide creditor ; 4. that the character of D, as attaching creditor, did not prevent it, for as he attached with notice, h-e stood on no higher ground than a purchaser with like notice ; and consequently, the bill was dismissed.

IN ERROR. This was a bill in chancery to redeem mortgaged premises. On the 19th of November, 1831, Ira Merwin, being seised in fee of the tract of land described in the bill, mortgaged it to Isaac Townsend, as security for a promissory note for 350 dollars, made by Merwin, dated on that day, and payable to Townsend, or order, in two years, with interest; and on the 27th of November, 1832, Toivnsend assigned this note to the defendant, and conveyed to him all his interest in the gaged premises ; by virtue of which conveyance, the defendant claimed to have acquired the legal title to such premises in fee simple. On the 10th of Map, 1832, the plaintiffs attached Merwiiis interest in the premises, in an action of book debt; and on the 14th of the same month, they attached it again, in an action on a promissory note. In these suits they afterwards obtained judgments, and had their executions duly levied on the property attached. On the same 10th of May, 1832, and before the attachment of the plaintiffs on that day, Merivin, being indebted to Nathaniel F. Clarke, to the defendant, and to divers other persons, in large sums of money, which he was unable to pay, for the purpose of making a just and equal distribution of his property among his several creditors, agreed with the defendant, to convey to him in fee simple, subject only to the mortgage aforesaid, all his right, title, and interest in the premises, in trust, that the defendant should sell and dispose of the same, and pay over the avails, after deducting all reasonable expen*ses, to all his creditors, in proportion to their respective debts, under the direction of the court of probate, pursuant to the statute in such case provided, and the surplus, if any, return to him; and he, with the intention of fulfilling such agreement^ procured to be drawn, and executed, a deed, purporting to convey to the defendant all the grantor’s right, title and interest in certain goods and real estate, including the aforesaid land mortgaged to Toivnsend. The habendum of this deed was as follows : “ To have and to hold the said goods and all my interest in said real estate, to him, the said Isaac Thompson, his executors, administrators and assigns, forever, in trust, however, and to the intent and purpose, with all convenient speed, to sell and dispose of all said personal and real property, either at public or private sale, as he shall deem most for the interest of my creditors; and the avails thereof, when sold, first deducting all reasonable expenses, to pay over to all my creditors, in proportion to their respective debts or claims, under the direction of the court of probate for the district of New-Haven, and according to the statute in such case made and provided.” The omission to insert words of inheritance in the habendum of this deed, was entirely accidental, and owing to mistake of the drafts-man. This deed was duly recorded ^ town-clerk’s office, and also in the office of the court of probate, of which the plaintiffs had notice, and of such omission therein, before the service of their first attachment. Af-terwards, on the same 10th of May, 1832, Merwin, with the intention of confirming to the defendant the title to the premises, in fee simple, subject only to said mortgage, executed and delivered to the defendant a release deed of the premises, in common form. This deed, also, was executed, and notice thereof given to the plaintiffs, before the service of their first attachment; but it was never lodged for record in the office of the court of probate. The defendant having received said assignment, and undertaken the performance of the trust, gave bond to the court of probate, caused the property assigned to be inventoried and appraised, and procured the appointment of commissioners, who made report to the court of probate of the claims by them allowed against Merwin, amounting to 1084 dollars, 42 cents ; which, with the necessary charges in the execution of the trust, greatly exceeded the value of the property assigned. Previous to the institution of this suit, the plaintiffs tendered to the defendant the sum of 396 dollars, in satisfaction of the principal and interest due on said assigned note, and requested him to deliver up to them possession of the premises ; but he refused to accept the money, or to comply with their request regarding the premises. The superior court, having found these facts, dismissed the plaintiffs’ bill with costs. On motion in error, by them, the case was brought before this court for revision. after premising, that the defendant, as holder of the mortgage, is entitled to all the rights Townsend had, and nothing more; that the plaintiffs, by the levy of their executions, took the equity of redemption, unless the defendant’s title to it, by virtue of the assignment, be good; and that the only question, therefore, is, whether MerwinUs deed of assignment, for the benefit of his creditors, was sufficient to convey the equity of redemption;— contended, 1. That that deed, not containing words of inheritance, would pass but a life estate to the grantee, unless there is some circumstance to exempt the present case from the operation oí the general rule, that a man cannot have a lee pie, by grant, without words of inheritance in the deed. It may be contended, that this technical rule, which governs the legal estate, does not apply to the grant of an equity of redemption, being an equitable title only. There is no such distinction in any book; and it is opposed both to principle and authority. Courts of law and courts of equity put the same construction upon the same language ; and they equally refuse to look out of the deed for its meaning. In the case of Bag-shaio v. Spencer, 2 Aik. 573. Lord Hardwicks says: “ I shall take it as a settled maxim, that estates are to be governed by the same rules in law and in equity ; and technical expressions at law are to receive the same interpretation.” See also Watts & al. v. Ball & al. I P. Wms. 108, 9. Massenburgh, v. Ash, 1 Vern. 234, 5. Doe d. Mus sell v. Morgan, 3 Term, Rep. 763. 765. In the view of a court of equity, the equity of redemption is the real title: it is the fee. The mortgagor, even after the condition is forfeited, is the owner of the land ; and the mortgagee’s interest is mere personal assets. The cases are uniform to this effect. Casborne v. Scarfe & al. 1 Atk. 605. Winn v. Littleton, 1 Vern. 3. Strode v. Lady Russell, 2 Vern. 625. Cholmondeley v. Clinton, Jac. fy Walk. 174. I jBow. Mart. 250. Runyan v. Mersereau, 11 Johns. Rep. 534. Rockwell & al. v. Bradley, 2 Conn. Rep. 1. Wakeman & al. v. Banks, 2 Conn. Rep. 445. Bark-hamsted v. Farmington, 2 Conn. Rep. 600. Leonard v. Bosworth, 4 Conn. Rep. 421. Toby v. Reed, 9 Conn. Rep. 216. 224. The case of Fisher & al. v. Fields, 10 Johns. Rep. 495. turned upon a principle not applicable to the present case ; for there, the person, in whose name the legal title stood, was held to be a trustee for another, and, as such, was required to convey the legal estate to the cestuy que trust. The principle of that class of cases merely involves the acknowledged power of a court of equity to decree the specific performance of contracts. 2. It is contended for the defendant, that the omission to insert words of inheritance in the deed being by mistake, a court of equity will correct that mistake, as against an attaching creditor, with notice, on a bill brought for that purpose; and that, in the way of defence, the equity of the plaintiffs’ bill may be rebutted, by setting up the same matter. The ques.tion, then, resolves itself into this ; whether the present defendant, on a bill brought by him for that purpose, would be entitled to correct this mistake ? And whether the defendant, as plaintiff in such supposed bill, would have more equity to take the equitable fee from the present plaintiffs, than they have to retain it ? In the case of Swift & al. v. Thompson, 9 Conn. Rep. 68. the question was raised, whether an assignee for the benefit of creditors, was to be deemed a bona fide purchaser ; and the members of the court differed upon the question. Daggett, J., who gave the opinion of the court, held, that the mortgage, in this case, not being followed by possession, was utterly void, and that it would be so, even against a volunteer: and in this view, it was clearly immaterial whether an assignee for the benefit of creditors, was to be deemed a bona fide purchaser or not. The authorities cited by Williams, J., in that case, for the contrary position, are still left in their full force. The books are all one way on this point. Garrard v. Lord Lauderdale, I Sim. 1. Walwyn v. Coutts, 3 Meriv. 707. S. C. I Sim. 14. Sug. Vend. 457., and the cases cited in Swift & al. v. Thompson, 9 Conn. Rep. 63. The defendant here is a mere naked trustee, without any sort of interest; he is accountable only for what he receives. His character of trustee excludes the idea of his being a purchaser ; and although he alleges in his answer, that he was himself a creditor of the grant- or, it is obvious that in his character of creditor, he can make no claim under the deed : he must stand or fall simply as trustee. The agreement was, to make the defendant a trustee ; and such an agreement is merely voluntary, giving the defendant neither a legal nor an equitable claim to a conveyance from the insolvent. No action could be sustained upon it; nor could a bill for a specific performance. 1 Ves. 53, 4. 2 Freem. 217. 4 Cruise's Dig. 128. So far as the agreement has been executed by the party, it will be established ; but so far as it is executory, there is no remedy. Notice of such an agreement was, therefore, wholly immaterial. 3. But conceding that a trustee for the benefit of creditors, is to be treated, in all respects, as a bona fide purchaser, the question arises, whether a court of equity will interfere to correct a mistake, in a case like the present. A court of chancery considers that as done, which a party, upon sufficient consideration, has stipulated to do; and if he refuses, it will deal with his conscience and compel him. Upon a contract to sell, the - vendor becomes a trustee for the vendee; and the man who purchases, knowing of the trust, becomes himself a trustee, and is said to be particeps criminis. 2 Fonb. Eq. 443. & seq. A second purchaser is treated, in all the books, as guilty of a fraud. 4 Kents Com. IG4. The present case does not fall within that principle. Here is a race among creditors to get security. The attaching creditor cannot be charged with acting corruptly. There is no combination ; nothing unconsci-entious. It is not a case for the interference of equity. Carter v. Champion, 8 Conn. Hep. 550. Our law of attachment is coeval with the settlement of the country ; and while the jurisdiction of a court of equity to rectify a mistake in a deed, has always been recognized, the principle has never been extended to a case like the present, although cases calling for the application of the rule, if any such existed, must have been of frequent occurrence. Pendleton v. Button, 3 Conn. Rep. 406. 411. Watson & al. v. Wells, 5 Conn. Rep. 468. 471. With respect to the second deed from Merioin to the defendant, it will not aid the defendant’s title, because it has not been lodged in the probate office for record, as the statute requires it should be. It is, by force of the statute, utterly void as against creditors. remarked, in limine, That as the plaintiffs had notice of Mer-wirts intention to convey an estate in fee, and of both the deeds mentioned in the record, previous to the service of either of their attachments ; and as they are now seeking to call the legal estate out of the defendant’s hands ; it is incumbent upon them to shew a superior equity. If they can only shew an equity equal or inferior to the defendant’s, they cannot redeem. Carter v. Champion 6c al. 8 Conn. Rep. 550. 559. Again ; the plaintiffs are attaching creditors, with notice of a previous conveyance, seeking to call the estate out of the hands of a previous bona fide purchaser; for such is the character of an as-signee for the benefit of creditors. Swift & al. v. Thompson, 9 Conn. Rep. 64. 69. The counsel for the defendant then contended, 1. That it was competent to a court of equity to correct a mistake in a written instrument. Fraud, accident and mistake are sub-jects, which, of all others, are most incontestibly within its jurisdiction. And the doctrine in question has been repeatedly recognized in Connecticut. Washburn v. Merrills, I Day, 139. Peters & al. v. Goodrich, 3 Conn. Rep. 146. 150. Avery v. Chappel, 6 Conn. Rep. 274., and the cases cited ibid. 2. That such mistake may be shown, by setting it up by way of defence, as well as by making it a ground of relief, by bill. 2 Johns. Ch. Rep. 596. per Kent, C. 6 Conn. Rep. 274. per Daggett, J. 3. That the record in this case shewing a plain intention to convey an estate in fee, and a mistake in the instrument of conveyance, the court will correct the mistake, and decree that a fee shall pass according to the intention. Fisher v. Fields, 10 Johns. Rep. 505. Higinbotham v. Burnet & al. 5 Johns. Ch. Rep. 184. 187. 4. That even if the assignment conveyed only a life estate, the plaintiffs cannot redeem. The deed was effectual to convey that estate. Stat. of 1828. c. 3. p. 182. 10 Johns. Rep. 513. 5 Johns. Ch. Rep. 187. 5. That the deed of confirmation, referring to the assignment, and taken in connexion with the actual notice which the plaintiffs had of both deeds, conveyed a fee simple. Priest v. Rice, 1 Pick. 164. 168. Carter v. Champion & al. 8 Conn. Rep. 554. 1 Sw. Dig. 129. 130. The object of the probate record is to give notice; and the conveyance is complete, so far as the party with notice is concerned, without the record.