Summary
In Malins v. Brown (4 N.Y. 403), GARDNER, J., said: "It is said that the payment of money may not take the contract out of the statute.
Summary of this case from Russell v. BriggsOpinion
December Term, 1850
Geo. F. Comstock, for appellants.
Wm. Porter, Jr. for respondent.
According to the bill, and the proofs in the cause, it appears that Malins and Ward were negotiating for the purchase and sale of a lot of land, owned by the latter, upon which, together with other lands, a mortgage held by N. Munroe, the defendants' testator, was a lien; that Malins insisted that the premises should be discharged from that incumbrance before he would complete the purchase. It was then arranged between the mortgagee, Malins, and Ward, that the purchase money should be paid, that Munroe should receive $700 out of it, and release his lien upon the premises, which were to be conveyed to the vendee. The parties met accordingly, at the office of Munroe, the purchase money was paid, and $700 received by the mortgagee, and a deed executed by Ward; when Munroe, after obtaining the money, assigned business with others as an excuse for not then executing his release. No release was ever executed, although repeatedly demanded of Munroe in his life time, and of his executors since his death; and this bill was filed to compel its execution.
The defendants insist upon the statute of frauds. To permit them to avoid the agreement upon this ground, would be to make the statute an instrument of fraud, instead of a shield against it. The money was paid by Malins and accepted by Munroe, as a complete performance of the agreement upon the part of the former. It was paid, relying upon the release of Munroe, which was then to he executed, and not upon his contract, that it should be given at a future period.
It is said that the payment of money will not take the contract out of the statute. This may be considered as an unsettled question, where the contract is for the sale of lands. It has been decided both ways in England. (13 Ves. 461, n. 1, Sumn. ed.; 3 Atk. 1; Carman v. Cooke, 1 Sch. Lef. 40.) In Wetmore v. White, (2 Cai. Cas. in Err. 109,) it was assumed, that payment of the consideration entitled the party to a specific performance. The reason assigned by those who deny that payment of the consideration is, in equity, a part performance, is that the money may be recovered back, and the party reinstated in his former condition. This reason, which has been deemed unsatisfactory, has no application to this case. The whole purchase money was paid, and the sale consummated, upon the assurance that the release would be given. The recovery of the $700 and interest would not indemnify the vendee. He has been drawn into a purchase, which he would not have made, independent of the agreement of Munroe. That will always be considered a part performance, "which puts a party in a situation which is a fraud upon him, unless the agreement is executed." (2 Story's Eq. § 761.) Such was the condition of the vendee in this case, and he is entitled to relief notwithstanding the statute.
2d. The liability of Malins, upon his covenant of warranty, was an interest sufficient to enable him to maintain the suit. If he had paid the purchase money to Ward, of the forty acres, without insisting upon the release, the premises would only have been liable, upon the contingency that the other lands of the vendor, embraced in the mortgage, were insufficient for its payment. The whole object of the arrangement with Munroe was to avoid this contingent liability. It exists now, in another form; and the executors of Munroe have no right to insist that it is so remote, that the performance of the agreement of their testator will be of no importance to the other party. The complainant, Malins, had the right to stipulate for an exemption from a danger to himself or his estate, merely possible; much more, for the discharge of a subsisting legal incumbrance upon the lands purchased by him. The testator received the consideration and made the agreement; and if the executors believe what they alledge, they have no excuse for resisting its performance, as the estate they represent can not be injured. The decree must be affirmed.
I think all the requisites to sustain a bill for a specific performance, exist in this case, namely: there is a valuable consideration both in the way of benefit bestowed and of disadvantage sustained by the complainant, who seeks to enforce the contract. Its enforcement is practicable and necessary; or in other words, it is really important to the complainant, and is not oppressive to the defendant. ( See Adams's Doct. of Eq. p. 78, 85.) Malins made it a condition precedent to his perfecting the purchase of Ward, that the land should be relieved from the lien of Munroe's mortgage. And upon the promise of Munroe so to relieve it, on the payment of seven hundred dollars, to apply upon that mortgage, he did perfect the contract with Ward — took his title and went into possession. The payment of this money was a direct advantage to Munroe. And after the complainant had consummated his contract with Ward, on the faith of Munroe's promise, it was impossible for him to be placed in the same condition he was before the agreement, had he been so disposed, on Munroe's refusal to perform on his part.
It is not within the province of the court to inquire whether he is as safe without the release as with it. It is impossible for us to know all the motives which governed him, at the time It is sufficient for us, that Malins made it a condition of his purchase, that this property should be transferred to him clear of all incumbrance; and that the mortgagee had agreed to release his lien upon terms which were fully complied with by the complainant. The equity therefore is clearly with him.
It was further contended, that although the equities were sufficient to sustain the bill, Malins was not the proper party, inasmuch as he had parted with his interest in the land; and the remaining property covered by the mortgage being sufficient amply to secure it, he had no interest to justify him in filing the bill. But Malins had conveyed the property by a deed with the covenant of warranty, and although at this time the residue of the land may be of sufficient value to satisfy the mortgage, he and his heirs or representatives have no security against the fluctuations in value which are daily occurring; or even against the failure of title to the residue of the land covered by the mortgage. These are all sufficient causes for apprehension in his or their minds. But I conceive that it does not belong to the defendants to interpose such an objection to the fulfilment of Munroe's promise; for if the remaining security be ample, their withholding the release would seem to be a mere act of wanton injustice.
The only other ground upon which the suit was defended was that the agreement was void by the statute of frauds. It may well be doubted whether a parol agreement to discharge or release land from the imperfect lien of a mortgage, before forfeiture or foreclosure, affects such an "estate or interest in, or trust or power over or concerning lands, or relating thereto," as is required by the statute to be in writing; for it has often been decided in this state, and such seems to be the established law, that "a mortgage is not a conveyance of land within the statute of frauds, so as to require the assignment thereof to be in writing." ( Runyan v. Mercereau, 11 John. 534.) So too, the assignment of the bond or debt secured by mortgage, passes the interest of the mortgage, the debt being the principal, and the mortgage an accessary which can not exist as an independent debt; and until proceedings are had for the purpose of enforcing a mortgage of real estate, the interest of the mortgagee may be assigned without deed, by a parol transfer of the debt and mortgage. ( Rigney v. Lovejoy, 13 New Hamp. 247; Jackson v. Willard, 4 John. 43; Jackson v. Blodget, 5 Cowen, 202.) A mortgagee has no estate, property or interest in the land until he takes possession. (1 Rawle, 325.) The release of a mortgage is therefore no more than a discharge of a chose in action or other chattel security.
But without insisting upon this view of the case, it is a well settled principle that, in equity, part performance takes a parol agreement out of the operation of the statute of frauds. ( Foxcroft v. Lyster, 1 Colles, 108; Morphet v. Jones, 1 Swans. 181; Bowers v. Cator, 4 Ves. 95; Parkhurst v. Van Cortlandt, 14 John. 15, 31; Annan v. Merritt, 13 Conn. 479, 491.) The mere payment of money is not a sufficient ground upon which courts of equity consider part performance of a parol agreement as creating an equity to have the agreement specifically executed, notwithstanding the statute, for the money may be recovered back by an action at law. But it is universally agreed that the ground upon which courts of chancery consider part performance of such an agreement as creating such an equity, is that it would be a fraud upon the party if the transaction were not completed. ( Hamilton v. Jones, 3 Gill John. 127; 1 Bailey's Eq. 118, 124; Story's Eq. Jur. 759.) Nothing therefore will be deemed part performance which does not put the party into a situation which is a fraud, hardship or deceit upon him unless the contract be performed. ( Tilton v. Tilton, 9 New Hamp. 386, 390; Story's Eq. Jur. 761.) Payment of the purchase money and being let into possession are sufficient. (3 Gill, 140, 157.)
The case before us differs essentially from that of a simple agreement to sell upon a suit by the purchaser against the seller; but the differences all go to strengthen the equity of the complainant. It was a contract tripartite. The mortgagor agrees to sell; the mortgagee agrees to release, and upon these conditions the purchaser agrees to buy. He performs his part of the contract by paying the full purchase money; and in addition to this he is let into the possession of the premises. The mortgagee, in part, performs his part of the contract, by accepting the money, the immediate payment of which was the consideration for his releasing the land from the charge of his mortgagee.
The ground of relief in equity, said Chancellor Kent, in Parkhurst v. Van Cortland, (1 John. Ch. 274,) is the fraud in permitting a parol agreement to be partly executed, and in leading on a party to expend money in the melioration of the estate, and then to withdraw from the performance of the contract.
I have examined the cases with reference to the statute of frauds, because this point was strenuously insisted upon by the counsel on the argument. But in my view, it is not a case for the application of the statute of frauds at all. That statute was intended to operate upon and to affect contracts relating to land, exclusively executory. The payment of the money and the delivery of the release, in this case were to be contemporaneous acts; and the withholding the release after receiving the money, as the consideration therefor, must be treated by a court of equity as a fraud; and the relief sought is not so much for the purpose of a specific performance of a contract, as that the party may be protected against the possible consequences of the fraudulent withholding of a paper security which belongs of right to the complainant. The decree of the court below should be affirmed, with costs.
Decree affirmed.