Morris v. Nixon

THIS was an appeal from the equity side of the Circuit Court of the United States in and for the eastern district of Pennsylvania, and arose upon the following facts.

On the 2d of January, 1812, Jonathan Williams and Thomas Morris (the complainant) purchased from the Bank of North America a parcel of land upon the Schuylkill river, near the city of Philadelphia, for the sum of $80,000; $20,000 of which was to be cash, and the remaining $60,000 was divided into three payments of $20,000 each, which were to become due on the 25th of March, 1814, 1815, and 1816, respectively. The parties gave their joint and several bonds for these sums, with a warrant of attorney to confess judgment, and a mortgage upon the property. It afterwards appeared that Morris was not exclusively the owner of his moiety.

On the 27th June, 1812, Morris gave a power of attorney to Thomas Biddle and Henry Nixon, to manage the property for him.

In 1815, Williams died intestate, leaving Henry J. Williams and Christine, the wife of Thomas Biddle, his heirs at law.

In April, 1816, Morris and the representatives of Williams executed a power of attorney to Biddle and Nixon, authorizing them to enter into and take possession of the property, sell or lease it, receive the money, execute deeds, &c.

Under this power, they accordingly took possession, and exercised all manner of ownership over it.

A great number of letters between the parties were given in evidence, running from this time to the year 1822, relating to the condition and prospects of the property. One of the bonds had been paid out of the proceeds of sales, and considerable payments made on account of another. The third was wholly unsatisfied.

In 1822, Morris, residing in New York, applied to Nixon for a loan, under the circumstances stated so particularly in the opinion of the court that it is unnecessary to mention them here. Nixon declined making a loan, but took from Morris a deed, absolute upon the face of it, conveying the whole of Morris's interest to Nixon, and reciting that Nixon had always been interested in the purchase to the extent of three-sixteenths of the whole, or three-eighths of Morris's moiety. Nixon then loaned to Morris $5000, for which he took his bond.

The deed also recited that there had been allowed to Nixon for his agency, the sum of $2000; one-half of which, or $1000, had been paid by the representatives of Williams, but paid to Morris; and five-eighths of the other $1000, (or $625,) were justly chargeable to Morris; thus bringing Morris in debt to him $1625, which was released in the deed. It also contained other recitals, which are mentioned in the opinion of the court.

In 1836, Morris filed a bill on the equity side of the Circuit Court of the United States for the eastern district of Pennsylvania, against Nixon and other parties, alleging that the deed was only a security for the money loaned; that, at the time of its execution, there was not, between himself and Nixon, any contract, agreement, understanding, or negotiation for a sale; that Nixon had furnished no account of his agency; and praying for an account and general relief. The parties all answered; and in April, 1841, the Circuit Court, after a hearing, dismissed the bill with costs. The complainant appealed to this court.

Wood, for the appellant.

Sergeant and Williams, for the appellees.

Wood made the following points:

I. The deed of the 28th May, 1822, explained by the letter of the defendant, Nixon, to the plaintiff, would constitute per se a mortgage of the premises to secure the loan for $5000.

II. The said deed was designed by the parties thereto to secure the said loan, and was designed in substance to be a mortgage, assuming the shape of an absolute conveyance, only as a more effectual security for the loan.

III. If said Nixon designed otherwise, yet the complainant was led by his conduct, and by all the circumstances, to consider it a security for the loan, and it ought to be treated as such.

IV. A deed, though absolute on its face, may be shown, by parol evidence, to be designed as a security for a loan, or a mortgage, and more especially by written evidence furnished about the time the deed was given, and conducing to show the same.

V. If it should appear that said deed was designed by the parties to be an absolute conveyance in fee, it ought to be set aside, or modified and converted into a mere security for said loan. Because:

1. The consideration therein was grossly inadequate.

2. There was no negotiation for a sale between the parties thereto, either personally or through authorized agents, and no estimate of value.

3. The plaintiff, the grantor therein, was not in a condition to deal at arm's length-being much embarrassed, in want of money, and ignorant of the condition of the property-the grantee being a capitalist, having the property under his management, and fully acquainted with its condition and value.

4. The grantee did not fulfil his duty as steward and agent in apprizing the grantor, at the time of said conveyance, of the condition and value of said property.

5. Undue influence was exercised by the grantee upon the grantor, in pressing upon him a sale to himself in the condition in which said grantor was placed, and in the relative condition in which they stood at the time to the property and to each other, as lender and borrower, steward and principal.

VI. Lapse of time is no bar to the complainant's equity under the last-mentioned point. Because:

1. Such a bar is not set up and relied upon in pleading.

2. The influence and control of the said grantee in said deed, over the grantor, and the grantor's ignorance of the condition of the property, continued until a short time before exhibiting the bill of complaint.

3. The relationship in which the parties stood to each other, as steward and principal, lender and borrower, will prevent the bar from applying in equity to the relief sought for by the bill.

VII. Lapse of time is not a bar to the complainant's equity, for a full account and relief in regard to the matters arising, as well before as subsequently to the said deed. All which he is fully entitled to.

VIII. The agreement, for a conveyance from the complainant to Maria Nixon, should be modified so as to embrace only one-eighth of the plaintiff's moiety of the premises, and she should be decreed to be entitled only to the net proceeds of said one-eighth part.

Mr. Justice WAYNE delivered the opinion of the court.