Medley v. Mask, 39 N.C. 339, 4 Ired. Eq. 339 (1846)

June 1846 · Supreme Court of North Carolina
39 N.C. 339, 4 Ired. Eq. 339

JOSEPH MEDLEY vs. JOHN H MASK & AL.

In a suit brought against a mortgagor and mortgagee by one claiming to be an assignee of the mortgagor, for the purpose of setting up the assignment and redeeming, it is necessary to prove that the assignment was for a valuable consideration.

If the suit had been against the mortgagor alone, it would have been sufficient to prove the assignment without proving any consideration.

Although equity does not interfere with the legal operation of instruments, merely upon the want of consideration, where there is no fraud nor imposition, but leaves the parties to the law ; it will, yet, not afford relief upon a voluntary executory contract, which passed nothing and created no right at law. Equity in such a case does not act for a mere volunteer, but only for a real purchaser at a fair price.

The mere general, formal words in a deed of assignment, declaring that the assignor had been fully paid and satisfied, are not conclusive evidenca that any consideration has been paid, much less an adequate consideration.

The case of Thorpe v. Ricks, 1 D. & B. Eq. 613, cited and approved.

Cause removed to this Court from the Court of Equity of Anson County, at the Spring Term, 1846.

The pleadings and proofs presented the following cas'e.

On the 1st of December, 1834, the defendant, Hough, borrowed from the other defendant, Mask, the sum of $400, and as a security therefor he conveyed to Mask 100 acres of land on Pedee river in fee, by a deed absolute on its face. At the same time, however, Mask gave Hough an obligation under a penalty, and, thereby, (after reciting that lie, Mask, had purchased the land and paid the consideration of $400 and received a deed from Hough,) he bound himself to re-convey the land to Hough upon the payment of the said sum of $400 with lawful interest thereon within two years thereafter, or during the life of Hough. On the 7th October 1840, Hough assigned Mask’s obligation to the plaintiff by an endorsement thereon under his hand and seal, but not attested. After an assignment of the land in terms, it adds, “ I now give and grant to the said Joseph Medley the right of redeeming the said land within-mentioned, as he has *340fully paid and satisfied me for my interest in the said land.” The bill states, “ that the said William Hough, having in the course of dealings between them running through several years, fallen in debt to your orator, in a sum between two and three hundred dollars, the exact amount of which your orator does not recollect, in consideration thereof executed the assignment to him.” The bill was brought in September 1841, to set up the eon-tract between the plaintiff and Hough as an assignment of the equity of redemption, and to redeem and obtain a conveyance from Mask to the plaintiff upon -payment of the debt and interest, which the plaintiff had before offered to make.

The answer of Hough states, that he has no recollection of having executed the assignment on the bond; and,it denies that it was executed upon the consideration stated in the bill, or was intended as a sale of the land to the plaintiff, or an assignment of his equity of redemption. It denies that he then owed the plaintiff any debts, but such as had been amply secured by a mortgage of other land to the plaintiff. The answer then states the occasion on which Mask’s bond was transferred to the plaintiff to have been as follows: That Mask had need of the sum of $80, and applied to him, Hough, •for it, and requested him, if he had it not of his own, to endeavor to borrow it for him ; and that, for that purpose, he, Hough, applied to the plaintiff to advance that sum to Mask by way of loan, and the plaintiff agreed to do so, provided this defendant would deposit the bond in question as a security therefor; and that to that Hough assented, and thereupon he delivered the bond to the plaintiff, and, it seems, executed a written assignment on it. The answer avers positively, that this was the only purpose for which the bond was placed in the plaintiff’s hands, and that nothing whatever was said respecting any debts or other transactions between the plaintiff and Hough. The answer further states, that this defendant *341informed Mask, that the plaintiff had agreed to advance him the sum he needed, and told him to apply to the plaintiff for it; and that he was afterwards informed by Mask that he applied accordingly, but that the plaintiff refused to lend him the money, unless, upon his doing so and paying the original advance by Mask of $400 and the interest thereon, Mask would convey the land to the plaintiff in fee ; which Mask refused to do, and, consequent^', that the plaintiff gave nothing for the assignment to either of the defendants.

The answer of Mask contains the like statement of his request to Hough to borrow the money for him, and that Hough informed him, that the plaintiff had agreed to lend him $80 upon the security of the bond, which Hough said he had placed in the plaintiff’s hands. This defendant then states, that, in consequence of the information thus received from Hough, he applied to the plaintiff for the said sum, but the plaintiff refused it, except upon the terms of receiving an absolute convej'ance of the land, as stated in Hough’s answer; and the defendant Mask avers, that he received nothing from the plaintiff upon the transaction

The plaintiff has filed several exhibits besides Mask’s bond and Hough’s assignment of it to him. One is a deed of trust for another tract of land containing three or four hundred acres on Pedee river" made by Hough to the plaintiff on the 17 th of November 1838, reciting that “ said Hough is indebted to the said Medley in the sum of $700, for moneys had 'and received of him to pay and discharge said Hough’s just debts,” and conveying the said land in fee as a surety therefor, and in trust to sell it at anytime after the 1st of February 1810. On the deed is an entry by the plaintiff, that the debt was satisfied by a sale of the land by the sheriff of Anson on the 15th of September 1810 on execution, subject to that deed of trust.

The other exhibits by the plaintiff are of evidences of *342debts from Hough to himself of the following dates and sums:

1820 — April 20,. Bond payable to plaintiff one day after date, , $8 8S

1840 — March 28. Bond to plaintiff, payable 1st January, 1841, s 404 87

Oct. 13. Bond of Hough to Horn, and paid by plaintiff on this day $130 83 473 73

Degernette’s judgment paid this day by

plaintiff 8 08

Habbinds’ judgment paid this day by plaintiff 6 50

Myers’judgment paid this day by pi’tiff, 0 '02

Threadgill’s judgment paid this day by

plaintiff, 45 66 203 65

$677 37

1841 — April 5. Bond of Hough to plaintiff for

this sum borrowed, $40 00

1842 — Feb. 5. Paid balance of Horn’s judgm’t. 13 88

“24. Liles’ judgment paid by pl’ntiff. 24 52

“ “ Bond to Bogan paid by plaintiff 23 90

. $779 67

The plaintiff likewise proved by the sheriff of Anson, that, on the 14th of March 1839, the plaintiff paid him on an execution against Plough the fui'ther sum of $65 : and that, under another execution against Plough, the plaintiff on the 15th of September 1840 purchased the land mortgaged to the plaintiff and subject to that mortgage, at the price of $1200; of which he paid the sheriff the sum of $66 only, in discharge of the said execution. The plaintiff further proved, that the debts paid by him, as aforesaid, on the 13th of October 1840, and in February 1842, were paid at the request of Hough, or were debts for which the plaintiff’ was his surety. It is also *343proved that the land mortgaged to the plaintiff is worth from $1,500 to $2,000, and the tract conveyed by Hough to Mask is as valuable as any land in the county, and is worth $1,500.

Strange, for the plaintiff.

Iredell. for the defendants.

Ruffin, C. J.

There is no doubt that the transaction between Hough and Mask, though not strictly a mortgage, in point of form, was substantially so, and is to be treated but as a security in this Court. Neither of those persons raise a question upon the right of Hough to redeem. The only dispute is, whether the plaintiff has that right; and that depends upon the question, whether he has such an assignment of the equity of redemption, as is effectual and sufficient in a Court of Equity, Upon that question the opinion of the Court is against the plaintiff If this had been the case of an ordinary mortgage upon its face, and Hough had made a formal deed of assignment of the equity of redemption to the plaintiff, he might have filed a bill against Mask for redemption, without bringing Hough into the cause, or proving the consideration moving from himself to Hough, as the price of the equity of redemption. For a plaintiff need not make a person a party, who, according to the facts alleged in the bill, has no interest in the' subject, and, although it requires a consideration to raise a trust, yet, after it is well raised, it may be transferred, as against the trustee, voluntarily. To Mask it would be immaterial upon what consideration Hough might have assigned to the plaintiff; and it would therefore be sufficient, in the case supposed, for the plaintiff to prove the assignment, on the hearing. Thorpe v. Ricks, 1 Dev. & Bat. Eq. 613. We do not say, that it would be so in this case, since it is, in form, not an assignment of a clear and admitted equity of redemption, but an assignment of a covenant *344or executory agreement from Mask to Hough to convey the land to him upon the payment of a certain sum. Perhaps, therefore, it was indispensable in this case, that the plaintiff should bring in Hough, as well as the mortgagee. But, admitting that it was not, and that the plaintiff might have had a decree upon a bill against Mask alone, yet he has not thought proper to proceed in that way and claim a decree against the mortgagee upon the apparent assignment to him, leaving it to the assignor to assert his right afterwards in a bill of his own, denying the assignment or its legal efficacy. On the contrary, the plaintiff has chosen to proceed against both the mortgagee and mortgagor; and thus he puts, himself, in issue, the assignment in respect of both of those parties, and is, consequently, bound to shew one which is efficacious, and which the'Court will specifically uphold against the assignor, so as to conclude him by a declaration of the assignment in the decree in this suit. Hence it became necessary in the bill to set out not- onlj* the naked fact of the assignment from Hough to Medley, but also that it was made on a valuable consideration. For, although equity does not interfere with the legal operation of instruments, merely upon the want of consideration, where there is no fraud or imposition, but leaves the parties to the law r it will, yet, not afford relief upon a voluntary executory contract, which passed nothing and created no right at law. Equity in such a case does not act for a mere volunteer, but only for a real purchaser, at a fair price. The plaintiff has endeavored to appear to be such a purchaser. But he entirely fails in the attempt. It is urged for him, that the assignment itself states, that he had fully paid and satisfied Hough for his interest in the land; and that such an acknowledgement is not to be disregarded, but must be deemed sufficient evidence prima facie of a valuable consideration. Upon' the same technical reasoning, it might be insisted that the seal imported a consideration *345in this Court, because at law it precludes an enquiry as to the consideration. But, in equity, there must be proof of an actual consideration; and, therefore, while a receipt from a party for a certain sum of money is evidence of the payment, these general words, inserted merely as formal parts of an instrument and declaring ■ no particulars, can by no means be admitted as conclusive, that some valuable consideration was actually paid or secured, much less that an adequate consideration was paid dr secured. Those words, respecting the consideration, would, for example, be equally true, whether the assignment was upon a sale, as alleged by the plaintiff, or upon a pledge, as declared by the defendants. The assignment, therefore, cannot supply the place of all other proof of a consideration paid or secured. Indeed, tho plaintiff has not relied on it in the bill for that purpose. On the contrary, the bill professes to set forth the actual consideration, and the plaintiff has gone into evidence, apparently, with the view to the proof of it. The statement of the bill is, that in fact the consideration was a sum due from Hough to the plaintiff on dealings, running through several previous years; the amount of which the plaintiff does not recollect, further than that it was between two and three hundred dollars. -This statement is singularly loose and unsatisfactory. It sets forth no particular sum, either as the amount or the balance of the account, and gives no items; and the only excuse for the omission is, that the plaintiff’s recollection failed him, although the bill was filed in less than a year after the assignment, and although it would have been easy to refer to the settlement of accounts, which it is to be supposed must have been made, if the balance on it was to be paid by the sale of this land. But the very inadequacy of that consideration, taking it at the larger sum, makes it difficult to credit the statement. The value of the land is fixed at $1500 ; and in October 1840, the principal and interest due to Mask, supposing *346him not to have been in possession amounted to $540. The value of the equity of redemption was, then, about $960, while the price at which Hough is supposed to have agreed to sell it, was at the utmost only $300 ; which is not one-third of its value. Thus, any presumption of a fair price, to be inferred from the general expressions of the assignment, is confined by the bill to a sum, as the actual price, so totally inadequate as to render it almost incredible, that a contract of sale was made or intended, notwithstanding the form into which the transaction was moulded. It is, indeed possible, that a man may agree to take less than one-third of the value of his land; and, if he did. the Court would not be at liberty, merely for that reason, to set aside his conveyance. But equity would not lean to enforcing, by specific performance, a contract for the sale upon such a consideration, but, rather, leave the case' to its fate at law. At all events, without good proof of the fact of sale at that price, the Court would not incline to the conclusion, that one was intended, especially when there is a fair ground for thinking, that the contract might have been in the nature of a security or for some other purpose. Now, the defendant here, in answer to those allegations in the bill and its interrogations, denies most positively that he contracted to sell the land or his equity of redemption at any price ; and he avers that the bond was not even deposited with the plaintiff as a surety for any debt of his own, but exclusively as a security for the small sum of $S0, which the plaintiff agreed to lend to Mask, but which, as the answers state, after getting the bond, he refused to advance. If this account of the trans - action were less probable in itself than that given in the bill, though it would seem quite the contrary, yet, upon a law of evidence in this Court, it is to be received as true, as far as it is responsive to the bill, unless shaken by other credible evidence. There is no other evidence here, which can have that effect. If a sale had been in*347tended, and the mortgagor had, as -is usual, continued in possession, he would have let the plaintiff into the possession, as the owner after his purchase. But nothing of the sort appears. It is not shown that there was any treaty lor a sale and purchase ; that there was any acknowledgement by Hough, even in an unguarded moment, that he had made a sale upon any. terms, or that he ever represented the transaction differently from what it appears in his answer.' The answer is in no way brought into doubt. On the contrary, it is sustained by the evidence which the plaintiff adduces in order to shew Ho'ugh’s indebtedness. The deed of trust recites a debt of $700, which is said to be for advances of money at different times to pay [lough’s debts. It is not stated to be due on bond, nor when it was or would be payable. And it looks, therefore, very much as if that sum were , not an ascertained debt, but was inserted in the deed to cover all advances. That, however, need not be insisted on. The plaintiff also produces bonds and judgments against Hough to the amount of $779 67, and proves that he paid for him another sum of $G5 — in all, $844. Of that sum, $538 73 appears to have been due before and at the 15th of September 1840. As there is no evidence of the consideration of the bond for $464 87, which Hough gave the plaintiff March 28th, 1840, it might, if necessary, be proper to enquire, whether that bond was not given on a settlement for the advances ser cured by the deed of trust. But, for purposes now in view, it may be assumed, that both of the debts of $700 and $464 87 were subsisting. Still, Hough would not have been indebted to the plaintiff in $300, or any other sum on the 7th of October, 1840. For, on. the 15th of September 1840, the land that had been mortgaged for the debt of $700, was sold under a fieri facias at the instance of another creditor, subject to that mortgage: in other words, the equity of redemption was sold, and was purchased by the plaintiff at the price of $1,200. That, *348of course, extinguished the mortgage debt — the land being worth, probably, $2,000, and the plaintiff taking it, liable to his own debt. Of the price bid by him, the plaintiff paid the sheriff only $66; and he was to account with Hough for the residue, namely, $1,134. At that time, besides tho mortgage debt of $700, the plaintiff’s demands against Hough amounted only to $53S 73 and some interest, and thus left a balance of about $595 27 due to Hough. No doubt, it was on account of that balance due from him, that the plaintiff made the subsequent payments and advances for and to Hough on the 13th of October. 1840, and in the years 1841 and 1842, namely, the sums of $203 64 and $102 30 — making together $305 94. But, after deducting that sum from the before-mentioned balance of $595 '27, there Avould remain due to Hough from the plaintiff the sum of $289 33. It appears, therefore, that, at the time tho plaintiff jjro-., cured the assignment of this bond from Hough, instead of the latter owing the former two or three hundred dollars, the balance was on the other side ; and that the plaintiff then owed a balance of $595 27, and, after deducting intermediate payments, he still owes Hough $289 33. It is then impossible, that the plaintiff could become the purchaser of the land in the manner and upon the consideration alleged by him. On the contrary, the statement of the bill as to ^he price, singular and suspicious as it is, is not sustained, but is disproved by the evidence, which, as far as it goes, leads one to credit the answer.

Consequently, it must be declared, that the plaintiff has failed to establish that be purchased the equity of redemption in the premises from Hough at the price of $200, or $300, or at any other price paid or secured, or that Hough assigned to him the bond of Mask, which is mentioned in the pleadings, for any valuable consideration ; and therefore, that the plaintiff has not entitled himself to a decree in this cause for the redemp*349tion of the premises; and the bill must be dismissed with costs.

Per Curiam.

Bill dismissed with costs.