Barton v. Lynch

On or about the 9th of May, 18J9, the'plaintiff, then being the owner of certain real estate in the city of Syracuse, executed and delivered to

The premises in question were situated on Genesee street, with a frontage of about 132 feet, and in or before 1868 Joseph Barton became the owner thereof at the cost of about $29,000. In 1868 or 1»69, at an expense of about $80,000, he built thereon a block, having six stores upon the first floor, and in the upper part there being rooms and offices and a large opera house. In order to obtain in part the means for the erection of this block, Barton and his wife executed the two mortgages above referred to, one being dated February 12, 1868, and the other July 28, 1868, and together they covered the whole block, each being upon a distinct portion. Bonds executed by Joseph Barton accompanied the mortgages. In 1878, and for some years before, insurance was carried on the building of $90,000, and then, and for some time previous, the premises had been assessed at $53,000. On the 7th of June, 1874, Joseph Barton executed and delivered to his wife, the plaintiff, his bond for the payment of the sum of $26,000 in one year, and as security therefor a mortgage upon the said premises for the same amount. This sum was the amount agreed upon as due the wife upon a settlement between her and her husband of certain business transactions. This mortgage was afterwards foreclosed by Mrs. Barton by action. Upon the sale under the judgment, Mrs. Barton became the purchaser at the price of $1,000, and a deed was given to her on July 31, 1875. The plaintiff’s title upon this sale was subject to the lien of the two savings bank mortgages. For the deficiency upon plain

About the time of the foreclosure action Joseph Barton failed in business. On the 19th of November, 1875, a petition in bankruptcy was filed against him upon which he was adjudged a bankrupt and thereafter, on the 5th day of March, 1878, he received in that proceeding a discharge from his debts. Meanwhile, the business of manufacturing and selling cigars and tobacco, which before his failure he had carried on in one of the stores of the block, was carried on at the same place by the firm of J. Barton, Jr., & Co., which was composed of the plaintiff and her oldest son, Joseph Barton, Jr. "When Joseph Barton was discharged in bankruptcy in March, 1878, the plaintiff withdrew from the firm and her husband took her place, the name of the firm then becoming J. Barton & Son, and the business was continued at the same place. The business of J. Barton & Son was not successful, and in March, 1879, the firm was in failing circumstances with debts amounting to about $25,000 and with assets of the value of from $12,000. to $15,000, about one-half of which was the stock and property in the store and the other half was in accounts. The principal creditor was one Crawford whose debt was about $16,000, and who was pressing for payment. At this time and for some years prior thereto the defendant Lynch was and had been a banker in the city of Syracuse, and connected with various banking institutions, at which Joseph Barton and the firms succeeding him had been accustomed to do business and procure discounts irpon the credit to a considerable extent of Lynch. The latter had also assisted Barton on previous occasions in procuring settlements with his creditors, for which assistance he had been paid by Barton. In the spring of 1879 Lynch held or was liable upon a note of J. Barton & Son for $5,000, which was the only indebtedness to him of Joseph Barton or of any member of his family, and it had existed for some time, and was amply secured by a mortgage of $8,000, dated March 4,1874, executed by the plaintiff and her husband to Lynch upon a house and lot in Syracuse, the title of which was in the plaintiff and the value of which exceeded

The facts, thus far stated, are substantially as found at Special Term, and are not disputed. It is also found that the purchase by Lynch from Crawford and the subsequent proceedings thereon were in pursuance of an arrangement between Joseph Barton and Lynch by which Barton, in order to obtain a transfer of the stock and property of J. Barton & Son to the plaintiff, and a continuance of the business in her name, requested Lynch to purchase the Crawford claim as cheaply as possible, put it into judgment, sell upon execution the leviable property of which plaintiff should be the purchaser, and collect the accounts, and that when reimbursed for his disbursements, the balance of the judgment and its avails should belong to Joseph Barton or some member of his family, and that Lynch assented to this proposition. There is abundant evidence to

From the time the plaintiff acquired title to the block in 1875, to the spring of 1879, the rents of the premises were not collected by the plaintiff, but by her husband or her son, Joseph Barton, Jr., and were turned into and used in the business carried on by them, and from the business the plaintiff and her 'family received their support. In the spring of 1879 the interest upon the savings banks mortgages that fell due January 1, 1879, and the taxes for the year 1878 were unpaid, and the opera house needed, considerable and extensive alterations. The plaintiff claims that it was then verbally agreed between Lynch and the plaintiff and her husband, that Lynch should advance the sums necessary to buy up and compromise the debts of Joseph Barton & Son, advance money to pay interest on the mortgages, indorse for the plaintiff when she succeeded to the business of Joseph Barton & Son, as then contemplated, advance what moneys were needed to put the opera house in better shape and make it pay better, and as security for such advances take a deed of the block, and that when his advances were repaid out of the block or by plaintiff, with compensation for his services, he would reconvey the block to the plaintiff, and that in pursuance of this arrangement the Crawford claim was bought and the deed to defendants given.

The court declined to find this arrangement. On the contrary, it was found that in the latter part of 1878, and to Hay, 1879, the receipts from the premises for rents and for the use of the opera house, that occupied the upper stories of the block, were not equal to the expenses of the property for interest on the mortgages, taxes, insurance, water rents and repairs; that rents and the value of real estate in the city were considerably depressed and property difficult of sale at its value ; that by reason of these things and the need of alterations to the opera house and the arrears in interest and taxes, Joseph Barton, the husband of the plaintiff and her managing agent for this property, was of the opinion that it was for the interest of plaintiff to sell the premises at a price not less than the incum

Immediately upon the execution and delivery of the deed the ' defendants took possession of the premises and have ever since been in possession, claiming to hold as absolute owners, as the court finds. The plaintiff, in continuing the business after the execution sale, remained at the same store in the block as previously occupied by J. Barton & Son, but at a fixed monthly rent agreed upon between her and the defendants and paid by her to the defendants. This continued for about a year, when, by direction of defendants, she left. She, however, continued the business elsewhere until 1886, when she failed and made a general assignment. A reassignment was made to her under an order of court in March, 1888.

The defendants, about the 1st of July, 1879, wishing, as the court finds, to,improve their title to the premises and cut off any claims that the creditors of Joseph Barton might have, requested the holders of the savings banks mortgages to foreclose the same, as they were past due. This was accordingly done by actions in the Supreme Court, Joseph Barton and his wife being parties defendant with others. Judgments of foreclosure were obtained in each case, and a public sale made by the sheriff on November 1, 1879, and the property in each case was struck off to the defendants at the amount due upon the mortgage, and the costs, that being the highest sum bidden and they being the highest bidders. Heeds were given by the sheriff to the defendants in pursuance of the sales. - Prior to May 1, 1880, the defendants spent, in repairs and improvements upon the opera house and block, about $30,000, and about $45,000

The main claim of the appellant is that, upon the evidence, she was entitled to the finding that the deed was given as security. The agreement, if any to that effect, was verbal, and is sought to be shown from the negotiations between the plaintiff and her husband with Lynch, or from declarations of Lynch, and also divers surrounding circumstances are shown as bearing upon the probability of such an agreement. So far as the evidence rests in proof of negotiations or declarations, it is conflicting. Upon the one side, the plaintiff and her husband give their recollections of what was said at divers interviews between them and Lynch, and they are corroborated, more or less, by the testimony of their three sons, Joseph Barton, Jr., William E. Barton and Frank E. Barton. The defendant Lynch denies all the material portions of their testimony. The manifest interest of the plaintiff and her husband and sons was an element on the question of credibility. Besides, the reputation of Joseph Barton was specially attacked, and it appeared that the sons, William E. and Frank E., were the owners of judgments against their mother to the amount of about $30,000, and, since the commencement of this action, a receiver of the property of the mother had been appointed for their benefit. It is claimed that the plaintiff’s theory is corroborated by a witness, Heyne, who testifies that in 1881 Lynch said to Mrs. Barton that he didn’t see any reason why she shouldn't have the block back in a few years. Circumstances, however, were shown, as to this witness and his evidence, that would make it evidently proper for the trial court, who saw the witness and heard his evidence, to fix the weight to be given to his evidence, and the like may be said as to the evidence of the witness Hamilton. So that, as to all these witnesses, the trial court, having seen them and heard them testify, had better opportunity than we have to determine the weight to be given to their evidence. In view of this, it would not be appropriate for us to interfere

The evidence justifies the finding that Barton, in the spring of 1879, made efforts to sell the- block, but was unable to find a purchaser at any sum above the incumbrances. The evidence would justify a finding that the market value did not, in the then state of the market, exceed the amount paid by the defendants. Barton had been managing the property for many years, in connection with his business, but did not seem to make a success of it. He failed in

Inadequacy of price in cases of this kind is always a circumstance to be considered (1 Story Eq. §§ 245, 246 ; 1 Jone's on Mort. § 329 ; Holmes v. Grant, 8 Paige, 243), and the weight to be given to it depends upon the degree of inadequacy. If in the present case the market value of the property at the time of the deed did not substantially exceed the consideration, the element of inadequacy ceases to be of any practical importance.

There are some other circumstances that may be briefly adverted to. It will be observed that the transfer by Crawford to Lynch was on 20th of April, 1879, while the deed was not given till May 9, 1879. No other debt of tire firm was purchased by Lynch or compromised by him, The deed was drawn by Lynch and sent to Barton on May 6, 1879. On May 8, 1879, Lynch wrote to Mr. Barton to return the deed and that he didn’t want it executed. Instead of doing this Barton and his wife executed the deed and sent it to Lynch. Barton in his evidence testifies that before the date of the deed propositions as to the block had been exchanged between him or his wife and Lynch, but that nothing definite had been concluded upon. If that be so, it may be argued with some force that the giving of the deed was entirely separate from any agreement for the compromise of debts.

A part of the agreement between plaintiff and Lynch, as claimed by plaintiff, was that Lynch should indorse for 'her, upon her continuing the business. Still, very soon after she commences business, and on the 13th of June, 1879, she gives to Lynch a mortgage of $10,000 upon her house and lot upon which the $8,000 mortgage

At the time of the deed there was no debt in existence from plaintiff to Lynch, nor was she liable upon the bonds given with the savings banks mortagages. She did not become liable to pay to Lynch any of the moneys which he might expend upon the buildings. If there was a loss, she was not liable. But, as she claims, she had an option, for an indefinite period in the future, to call for an accounting and redemption. The defendants immediately took full possession, plaintiff becoming for a time a tenant, and after she left friendly relations seemed to have continued between the parties until 1885. In the meantime, the defendants expended largely for improvements, far more, it is claimed, than a mortgagee in possession would be likely to do, and after the fire in 1888 they rebuilt at an expense of $100,000 and upwards.

The circumstance that the defendants, after receiving the deed, procured the foreclosure of the mortgages is not necessarily inconsistent with their claim of absolute ownership. The atmosphere about the mortgage under which plaintiff claimed title was not entirely clear. The plaintiff when she took it knew, as she herself testifies, that her husband had got to fail. The manner in which the block had been managed might give opportunity for a question as to who was the real owner. The withdrawal of the wife from the firm was only about a year previous. It was certainly discreet to perfect title before making costly permanent improvements.

The plaintiff claims-that as upon the giving of the deed she obtained nothing over and above the incumbrances and taxes, she would not

The evidence required to show that a deed absolute in form was. intended to be a mortgage, must be clear, unequivocal and convincing. (C adman v. Peter, 118 U. S. 73 ; Erwin v. Curtis, 43 Hun, 292 ; 112 N. Y. 660 .) In Ensign v. Ensign ( 120 N. Y. 655 ), it is said that the existence of an oral defeasance must be established beyond a reasonable doubt. In Lance's Appeal ( 112 Penn. St. 467 ), it is said that “ to convert a deed, absolute on its face, into a mortgage by parol testimony, such testimony must be clear and specific, of a character such as will leave in the mind of a chancellor no hesitation or doubt, and, failing this, the effort to impeach the legal character of the deed must be regarded -as abortive.” The testimony must be entirely plain and convincing beyond reasonable controversy. Huut, J., in Howland v. Blake ( 97 U. S. 626 ). The fact that the grantor may have understood the transaction to be a mortgage is not alone sufficient to prove it to be so, in the absence of fraud or mistake. (1 Jones on IVIort. § 335.)

In view of the strict rule of evidence applicable to such cases, and of the fact that in some features of the case the credibility of witnesses was at issue, which v-as a matter that could be dealt with by the trial court better than by this court, we fail to find any sufficient reason for interfering with the finding that the deed in question was executed and delivered with intent to convey to the defendants an absolute estate in fee. There are no circumstances in the case so decisive in favor of plaintiff’s theory as to require us to overturn the decision of the trial court.

If the deed at its execution was not intended as a mortgage, then, within the authority of Sturtevant v. Sturtevant ( 20 N. Y. 39 ), it

Our attention is called to some exceptions to rulings upon evidence. Error is claimed in the admission of certain declarations of Joseph Barton. There was evidence that the management and control of the block while the plaintiff held the title was left by her entirely with her husband, and that he had full charge and management of her business then and, afterward until she failed, and that he was in fact her general agent. Evidence was received of his declarations as to the block in the negotiations that led up to the deed, and cf the interviews between him and Lynch with reference to indorsements for plaintiff in the business after the deed, and in fixing the rent of. the store to be used in plaintiff’s business, and as to leasing some portion of the block before the deed. The declarations of Barton, in transactions within the scope of his authority, would bind the plaintiff. (Story on Agency, § 134.) Within this principle, no material error is apparent.

There are no other questions that call for special consideration. It follows that the judgment should be affirmed.

Hardin, P. J. and Martin, J., concurred.

Judgment affirmed, with costs.