Atlantic Trust Co. v. Holdsworth

months * * * on the payment of six hundred pounds and * * on payment of an additional sum of onp hundred pounds over and above the said sum of six hundred pounds for every period of six months which shall have elapsed before such repurchase shall be effected. And * * * in case that such sum of nine hundred pounds shall not be repurchased on the terms aforesaid before the expiration of three years * * * then the said Frederick Stuart shall, in addition to the said sum of nine hundred pounds, be entitled to a further sum, * * * that is to say, the aggregate amount of interest on the sum of nine hundred pounds calculated from the expiration of three years from the date of these presents at the rate of five pounds per cent per annum, with half yearly rests by way of compound interest. * * *” Similarly the instrument given the defendants Hartland on January 9, 1893, sold to them the sum of £400, to be payable out of the one-fourth share in consideration of the sum of £100; and that to lago, dated February 24, 1893, sold him the sum of £350 similarly payable in consideration of £100. These deeds, it will be seen, were all given prior to the death of the annuitant upon whose death they were to become payable out of one-fourth of the sum set aside to provide the annuity On the trial, David. P. Faekler, an actuary, testified that the present worth of the sum of £900 payable on the failure of a life aged seventy-two, such sum of £900, after the expiration of three years, to he increased at the rate of five per cent per annum until the failure of the life, computed at five per cent, would be £755.28; and on the assumption of four per cent. £814.88; that the value of a reversion of £350 under such circumstances at five per •cent would be £263.06, and one of £400 at five per cent would be £281.91, and at four per cent £300.64. The claim of Holdsworth, leaving out of consideration prior instruments, is formally embodied in an instrument dated June 4, 1896, which recited that Lilian E. F. Braddon had agreed for an absolute sale to him of the said one-fourth share of the residuary real and personal estate, subject to the annuity and subject to the several charges and incumbrances affecting the same specified, and such of them as are valid and subsisting, and in consideration of £2,000 did grant and .assign, as did Herbert C. Braddon, according to his estate and interest, “ the one-fourth or other the part or share to which she, the said Lilian Elizabeth Florence Braddon, is entitled;” that should the share or interest be vested within twelve months, then she should receive one-half the profits thereof, hut if the possession was delayed longer than that date, £500 was to be deducted for each six months’ delay; that subject to the right of prior mortgages or judgments, all surplus income received after March 26, 1896, during the life of the annuitant, should be equally divided between the parties, Lilian Braddon and Frederick Holdsworth. The schedule mentioned includes the liens of Stuart, Hart-land and lago, stated at the full figures. The claim of Charles and Leonie Bon is set forth in a written agreement dated December 18, 1891, entitled an Acknowledgment of Debt.” It states that in consideration of dresses and cloaks supplied to Lilian Tilden’s account, valued at 13,750 francs, she agreed to give a mortgage upon a vested estate in remainder •(namely, the . one-fourth share) for the amount due, with interest at six per cent ■from date. The Bons -had never filed any notice of this agreement, nor was it known prior to this action. The questions urged upon this appeal relate to the nature of the instruments given to lago, Stuart, Hartland and Holdsworth, the nature of the Bon claim and their priority, respectively, to payment out of the real and personal property owned by Mrs. Braddon. With respect to those of lago. Stuart and Hartland. the referee decided, that they were'conveyances, but this conclusion was modified by the judge at Special Term, who held that they constituted only liens or mortgages, and, as against other creditors, were good only for the amount actually advanced, with interest thereon. In this view we concur, because it is difficult to formulate any legal theory upon which these instruments can be sustained as deeds. It must be recalled that the interests which they affected consisted of one-fourth of the real and personal property which, with the the' other three-fourths of the estate, was in the hands of the executors of William Tilden, deceased, subject to the right of such executors upon the death of his widow, the annuitant, to turn the real estate into cash and thereafter to divide the total sum equally among the four sons. By the instruments referred to no specific property was conveyed, the parties talcing only an interest which was measured by a certain number of pounds in each instance, and such documents were ineffectual to convey title to any particular property or grant any interest which could be taken in possession or which could confer on the owners of the instruments the right to maintain any partition of any particular real estate. Furthermore, as the instruments covered both real and personal property, it is evident that they were not, strictly sneaking, deeds. Against the theory of their being mortgages, our attention is called to the fact appearing that the amounts were not expressly advanced as loans and that there was no covenant for repayment, and the only recourse which the parties had to obtain repayment was against the interest which Mrs. Braddon had in the Tilden estate. The fact that they were not in form mortgages, is not necessarily conclusive as to their character nor is the further fact that there was no covenant to repay. Under section 139 of the Revised Statutes (1 R. S. [Edmonds’ ed.] 689) which has been embodied in the Real Property Law (Laws of 1896, chap. 547, § 214), it is provided that “ A mortgage of real property does not imply a covenant for the payment of the sum intended to be secured; and where such covenant is not expressed in the mortgage, or a bond or other separate instrument to secure such payment, has not been given, the remedies of the mortgagee are confined to "the property mentioned in the mortgage.” Having reached the conclusion that the instruments were not deeds, it is unnecessary to decide whether, strictly speaking, they were mortgages; for whether we consider them such or only as transfers or assignments of an interest to the extent indicated therein, the determination to be reached as to the rights of the parties under them in the case at bar would seem the same. In regard to the Bon claim, we agree also with the learned judge at Special Term that u As between the debtor and the creditor the agreement was perfectly enforceable and created a situation in which equity recognizes that as done which ought tobe done. It becomes, therefore, an equitable mortgage.” (Payne v. Wilson, 74 N. Y. 348 ; McCaffrey v. Woodin, 65 id. 459 .) This equitable mortgage did not need to be filed as a chattel mortgage, for the statute requiring such filing includes only a mortgage upon personalty which is capable of delivery. (National Hudson

River Bank v. Chaskin, 28 App. Div. 311 ; Booth v. Kehoe, 71 N. Y. 341 ; State Trust Co. v. Casino Co , 19 App. Div. 344 .) The Special Term having thus reached the conclusion that the Bons were equitable mortgagees, and that the instruments to lago, Stuart and Hartland so far as they were unconscionable, would not be enforced against them, properly held that after the payment of the amount actually advanced by these three creditors with interest, the Bon claim was next in order of priority. As between lago, Stuart, Hartland and the Bons on one side and Holdsworth on the other, the former were properly held to be prior for the reason. that what Holdsworth contracted and paid for was what was left of Mrs. Braddon’s interest after the payment of the claims and charges against it, and, as the Special Term said, “The legal theory of those agreements, whether Holdsworth acts under a virtual power of attorney, coupled with an interest, or as an assignee subject to the burdens imposed, is that the prior transfers or liens should be fully paid before any division between himself and Mrs. Braddon. and in no other manner could it be ascertained what the net profits were. Independently, therefore, of other considerations the Bon claim is superior to that of Holdsworth, and, necessarily so, to any which Mrs. Brad-don may urge.” With this conclusion, we do not think that Holdsworth has any just cause of complaint, because what he will receive after the payment of the claims against Mrs. Braddon’s interest is exactly what he bargained for, and the effect of cutting down the amounts of the claims of lago, Stuart and Hartland, or excluding the claim of the Bons, would be to enable him to get at a less price than he agreed to pay the property or interest contracted for. In his instrument certain specified outstanding claims and charges were recited, and among them those named — other than the Bon claim — at their full amounts; and as Mrs. Braddon and Holds-worth are not here contesting such claims and have recognized them at their full •amount, we do not see, except upon the theory that Holdsworth shall be allowed to obtain whát he purchased for an inadequate price,that he should be paid without previous payment of such claims in full. And as to the Bon claim, the same reasoning applies. Holdsworth agreed to purchase Mrs. Brad-don's interest subject to specific claims and charges, but his real bargain was to purchase from her “the part or share” to which she was entitled of and in the one-fourth interest; and this was necessarily subject to diminution by all just, legal or equitable claims. Holdsworth’s instrument, moreover, contained a provision whereby any surplus was agreed to be applied to the payment of outstanding claims which were not specified. Although there was a statement of specified claims and charges which did not include the Bon claim, this enumeration was not in its nature exclusive of other claims; for what Holdsworth bought was to be determined from the language of the in.strument of transfer which expressly provided, not that he shall take Mrs. Braddon’s interest subject only to the payment of such claims as are specified, but that he shall receive “the part or share to which she * * * is entitled,” which was necessarily what would be left after the payment of all just claims and charges against her interest. Upon the other questions presented, in view of the opinion of the referee and that of the -Special Term in modifying the report, it is unnecessary to prolong this discussion, concluding as we have thatthe disposition made

by the learned judge at Special Term fairly and equitably determined the rights of the parties. The interlocutory judgment accordingly should be affirmed, with costs to the respondents Bon as against the appellants. Van Brunt, P. J., Barrett, Rumsey and In-graham, JJ., concurred.