Wilson v. Parshall — 41 N.Y. St. Rep. 376

Majority

p. 376

Andrew Wilson, App’lt, v. William A. Parshall, Resp’t.

(Court of Appeals,

Filed December 1, 1891.)

Headnote

1. Deed—Title.

B., owner of mortgaged premises, conveyed them by deed absolute to defendant a member of the firm of T. & Co., the mortgagee, upon an

p. 377

agreement that T. & Co. might sell the premises, returning to B. any surplus over the indebtedness. Between 1877 and 1880 B. became a bankrupt, and in his schedules included these premises, stating that they were subject to two mortgages, and that B.’s interest was nothing. In 1880 defendant conveyed the premises to plaintiff for value by a deed containing a covenant of seizin. Thereafter the conveyance by B. to his assignee in bankruptcy was discovered, and for large expenses incurred in remedying this supposed defect in the title the plaintiff brought this action. Held, that he could not recover, as it was clear from the evidence that the debt by B. was really paid by an absolute unconditional transfer of the real estate to the defendant, B’s only interest being in the proceeds to be realized on a sale thereof by the defendant, and thus there was no defect in defendant’s title.

2. Same.

A grantee suing for a breach of covenant in a deed and assailing it by paroi evidence to show that it was intended as a mortgage must show not only that the claim was made that his grantor’s deed was a mortgage, but he must establish as a fact that it was in fact intended as a mortgage.

Appeal from judgment of the supreme court, general term, first department, reversing judgment recovered on verdict of jury, and order denying motion for new trial.

A. B. Cruikshank, for app’lt; H. Aplington, for resp’t.

This action was brought to recover damages for the breach of the covenants contained in a full covenant deed of real property situate in the city of New York, which was purchased of the defendant by the plaintiff in 1880. The plaintiff’s claim is that there were breaches of the covenants of seizin, of a right to convey and against incumbrances. The court directed a verdict against him, and he claims that, at least, the evidence should have been submitted to the jury.

The real estate formerly belonged to John W. Bockhorn, and on the 3d day of December, 1877, he conveyed it to the defendant by a deed absolute in form containing full covenants, subject, however, to two mortgages, one for $6,000 and another for $5,100, the latter having been executed to secure an indebtedness from him to the firm of H. K. Thtirber & Co. The plaintiff claims that this deed was executed to the defendant, who was connected with that firm, to secure the same debt, and that therefore it was in fact and legal effect a mortgage, and that thus his title was imperfect.

These deeds in form conveyed a perfect title to the real estate, and the burden was upon the plaintiff in this action for a breach of the covenants, to show that they did not, and in this he utterly failed.

The security of titles and sound public policy require that a party alleging that a deed, absolute in form, is nevertheless a mortgage, should show it by very satisfactory evidence, and where he attempts to show it by oral evidence, his proof should amount to more than a mere guess or surmise, or even inferences which are j ust as consistent with one theory of the deed as the other.

In limine it may be observed that it is entirely improbable that Thurber & Co., already having a mortgage to secure their debt, should take another mortgage on the same property, for the same

p. 378

debt, without any apparent reason or advantage, and then record it as a deed. But the proof shows, without any doubt, that this deed was not intended as a mortgage. While Boekhorn, a witness for the plaintiff, testified in a general way that the deed was given to secure the debt to Thurber & Co., he also testified that the debt did not survive the deed and that he was not thereafter indebted to them, and that Thurber & Co. were to sell the land, and after paying the liens thereon, including the debt to them, they were to account and pay over the balance to him; and H. Eh Thurber, the only other witness upon the same subject, testified substantially to the same effect. Thus it is clear that the debt was to be secured and really paid by an absolute, unconditional transfer of the real estate to the defendant, and by vesting the absolute title in him for the benefit of Thurber & Co., and thereafter Boekhorn had no further title to or interest in the land as such, his only interest being in the proceeds to be realized on a sale thereof by the defendant. Then there was no defect in defendant’s title. He did with the land exactly what he had the right to do, under the paroi arrangement with Boekhorn, and Bockhorn’s only right was to call him to account for the proceeds. In the end they appear to have proved insufficient to pay the liens upon the land.

The mere fact that Boekhorn, or some one in his behalf, or representing him, claims that the deed was intended as a mortgage, does not render the title conveyed by the defendant defective, or make the defendant liable for breach of any of the covenants in his deed. Any absolute deed may be assailed by paroi evidence given for the purpose of showing that it was intended as a mortgage. But a grantee suing for a breach of the covenants in the deed to him in such a case must show, not only that the claim is made that his grantor’s deed was a mortgage, but he must establish that it was, in fact, intended as a mortgage. This the plaintiff failed to do.

There may be an apparent cloud upon the title to real estate conveyed by a full covenant deed, and the circumstances may be such that a court of equity would not compel a purchaser under an executory contract to take a deed. Yet if he takes the deed and then sues for a breach of the covenants, the suit is well defended by proof satisfactory to the court upon all the evidence submitted that the title was, in fact, not defective. Evidence which will defend an action for specific performance is not always sufficient to maintain an action for breach of covenants. The one action may concern apparent defects in the title, and the other must concern real defects.

The judgment should be affirmed, with costs.

All concur.

Footnotes

1 Affirming 27 St. Rep., 178 .