Barry v. Coville

The facts, which have been stated, sufficiently exhibit the positions of the parties and enable us to review the two-questions which the appellants’ counsel has argued here. He says-that the patent deed, conveying an interest in the patent described, was absolute, and that the evidence did not justify a finding that it was a security only. His argument is, in effect, that as no fraud was found, or practiced, in respect to-its execution, paroi evidence could not destroy the absolute-character of the conveyance, and equity was powerless to attach to it a defeasance. If the deed of this particular patent interest stood alone, and there was no light cast upon it, in which the intentions and understanding of the parties to it could clearly be read, of course it would stand as an absolute conveyance. But where, as here, the court had before it the circumstances connected with its making, and the conceded absence of any new consideration for it, it was proper and right to consider the facts which showed it to be for a security, and to judge accordingly. It is a perfectly well settled rule in equity that a conveyance, absolute upon its face, may be shown by paroi or extrinsic evidence to be in reality merely for a security, and to that end the presence of some fraud, or mistake, in the inception of the instrument is not at all essential to be shown. That is an ancient doctrine in equity, which has come down to present times, and to which the courts of this state are fully committed in many decisions. For a fuller discussion of the doctrine, reference may be had to Judge Allen's opinion in Horn v. Keteltas, 46 N. Y., 605 .

In the present case the court had sufficient evidence before it upon which to find this deed to have been executed and delivered merely in furtherance of the agreement made in the previous October between the parties, and to be in the nature of a security.

The finding made in that respect is conclusive upon us. The contract defined the relations of the parties and their respective rights during a period of time which had not expired when this patent deed was made. Its provisions gave an absolute ownership to the defendants in the patent interests to the extent described while the contract lasted; but when, upon the default or the election of the defendants, its ceased to be operative, its provisions required the defendants to re-assign their interests; or, at, furthest, to retain them only so long as the plaintiff’s indebtedness was undischarged. The deed given during the running of the contract is unexplained, unless by the fact that it completed the assignment of the interest in the patents, which the contract had undertaken to transfer. It was delivered because of the contract, and its operation was limited by the understanding of the parties, as evidenced by the testimony and the existing agreement.

It would require proof of some other agreement, and of some new «consideration pending the running of the contract, to give to the patent deed a necessary operation independent of the terms of the contract. Its validity is not affected whether it is considered as an absolute conveyance of patent rights, or as a mortgage upon them. We will not, therefore, disturb the decree of the court adjudging as to the nature of contract and deed and that the defendants should re-assign to the plaintiff the patent interests they had acquired, upon a satisfaction of whatever obligations he might be shown to be under to them and as a security for which the contract was intended to operate.

But the appellants further insist that it was error for the •court to charge the defendants upon the accounting with the value ■of plaintiff’s labor. That labor, as it was correctly found, was performed in perfecting improvements upon the roller skate invention. It was performed, as there was evidence to show, at the «defendants’ request subsequently to the making of the contract, .and the request was only complied with upon the defendants promising to compensate plaintiff for his time spent. The terms of the contract did not require of him to do this particular work and there was no reason why he should not agree with the defendants to work especially for them, in reference to any one of the particular inventions (which seems to have been the case here), .and that he should be paid for that work as an independent transaction or arrangement. The appellants, however, find fault with the decision of the court below on the ground that the expenditures were upon the property of parties having joint interests in it and that plaintiff, as one of the parties, should not, therefore, Be allowed a credit for it. In support of this view the appellants’ counsel advances arguments based upon the rule governing the relations of tenants in common, or of mortgagor and mortgagee. But that line of argument is not applicable to the present case ; inasmuch as the court has found, upon sufficient evidence, that there was a special hiring of the plaintiff by the defendants to do the particular work in question. It was, therefore, not like a case •of work done by a joint owner, or by a mortgagee, in the improvement of the property in which there was a joint interest. This liability to pay plaintiff for his services arose upon their rendition and was, in a certain sense, as they were not called for by the contract, outside of the contract. He was entitled to be paid if the «contract continued and when it terminated such payment was a proper .charge against the defendants in stating the account between them and him to ascertain what, if any, claim they had upon the patent interests as security for the plaintiff’s indebtedness to them.

The appellants allege no other error and the judgment appealed from should be affirmed, with costs.

All concur.