Peugh v. Davis (96 U.S. 332)

APPEAL from the Supreme Court of the District of Columbia.

This was a suit in equity, brought June 28, 1869, to redeem certain real property in Washington City. The defence consisted in an alleged release of the equity of redemption, to establish which, in addition to the testimony of the parties, the defendant relied principally upon the following papers:--

'Whereas the undersigned, Samuel A. Peugh, of the city of Washington, in the District of Columbia, having heretofore sold and conveyed to Henry S. Davis, of the said city, two certain squares of ground in said city, the same being squares numbered nine hundred and ten (910) and nine hundred and eleven (911) in the said city, the said sale and conveyance having been by the said Peugh made with full assurance and promise of a good and indefeasible title in fee-simple, though the said conveyance contains only a special warranty, the said conveyance to said Davis bearing date on the fourth day of March, A.D. 1857, and being recorded on the seventh day of September, A.D. 1857.

'And whereas the title to the said squares so conveyed as aforesaid to said Davis having been now questioned and disputed, the said Peugh doth now, for himself, his heirs, executors, and administrators, promise, covenant, and agree to and with the said Henry S. Davis, his heirs and assigns, in the manner following; that is, that he, the said Samuel A. Peugh, and his heirs shall and will warrant and for ever defend the said squares of ground and appurtenances as conveyed, as aforesaid, unto the said Henry S. Davis, his heirs and assigns, from and against the claims of all persons whomsoever.

'And, further, that the said Peugh, and his heirs, executors, and administrators, shall and will pay and refund to said Davis, his heirs or assigns, all and singular the loss, costs, damage, and expenses, including the consideration in said deed or conveyance, which or to which the said Davis, his heirs or assigns, shall lose, incur, pay, or be subject to, by reason of any claim or litigation against or on account of said squares of ground, or either of them.

'And for the full and faithful observance and performance of all the covenants and agreements aforesaid, and for the payment of all the sum or sums of money as therein provided, in the manner prescribed as aforesaid, the said Samuel A. Peugh doth hereby bind himself, his heirs, executors, and administrators, and each and every of them, firmly by these presents.

'In testimony whereof, the said Samuel A. Peugh doth hereto so set his hand and seal on this ninth day of February, in the year of our Lord 1858.

'S. A. PEUGH. [SEAL.]

'Signed, sealed, and delivered in the presence of

'FRANCIS MOHUN.

'WM. H. WARD.'

'WASHINGTON, D. C., Feb. 9, 1858.

'Received of Henry S. Davis $2,000, the same being in full for the purchase of squares Nos. 910 and 911 in the city of Washington.

'$2,000.

S. A. PEUGH.'

The other facts sufficiently appear in the opinion of the court.

The decree at special term dismissing the bill was at general term affirmed; and the complainant appealed to this court.

Mr. Richard T. Merrick and Mr. T. T. Crittenden for the appellant.

1. A deed which is in fact security for a loan is a mortgage, in contemplation of a court of equity, and whether a conveyance absolute on its face will take effect as a mortgage depends primarily, if not exclusively, on the nature of the consideration. Morris v. Nixon, 1 How. 118; Babcock v. Wyman, 19 id. 289; Price v. Robinson, 13 Cal. 116; Huntley v. Wheelwright, 29 Md. 341.

2. A court of equity will not allow the right of redemption to be defeated by any agreement making that which is really a mortgage a conditional sale, but, where the transaction is doubtful, will incline to give effect to the instrument as a mortgage. Russell v. Southard, 12 How. 139; Dougherty v. Colgan, 6 Gill & J. (Md.) 275; Artz v. Glover, 21 Md. 456; Baugh v. Merryman, 32 id. 185.

3. The burden of proof is on the mortgagee, who claims a release of the equity of redemption, to show that it was made fairly, deliberately, and for an adequate consideration. Unless the transaction be fair and unmixed with any advantage taken by him of the use of his incumbrance, or of the necessitous circumstances of the mortgagor, equity will hold the parties to their original relation of debtor and creditor. Dougherty v. Colgan, 6 Gill & J. (Md.) 275; Mills v. Mills, 26 Conn. 213; Hyndman v. Hyndman, 19 Vt. 9; Villa v. Rodriguez, 12 Wall. 323; Williams v. Owen, 5 Myl. & Cr. 303; Russell v. Southard, supra; 2 White & Tudor, Lead. Cas. in Eq. (4th Am. ed.), pp. 1983, 1984, 1995.

Mr. Walter D. Davidge for the appellee.

The mortgagee was under no disability to purchase the equity of redemption; and the validity of the purchase does not, to use the language of this court, 'depend upon his ability afterwards to show that he paid for the property all that any one would have been willing to give.' Russell v. Southard, 12 How. 139. See also Villa v. Rodriguez, 12 Wall. 323; 3 Sugden, V. & P. (10th ed.) 227, 228; Knight v. Majoribanks, 2 Mac. & G. 10; Webb v. York, 2 Sch. & Lef. 661; Conway's Ex. v. Alexander, 7 Cranch, 218; Hicks v. Hicks, 5 Gill & J. (Md.) 85; Trall v. Skinner, 17 Pick. (Mass.) 213; Wynkoop v. Cavring et al., 21 Ill 570. Such a transaction will not be set aside, except for manifest unfairness, or gross inadequacy of price; and neither of those grounds for relief is averred. The complainant testified in his own behalf, but was silent upon the subject of the value of the property.

More than eleven years elapsed between the date of the transaction now sought to be impeached and the filing of this bill, and no explanation of the delay is furnished. The laches of the complainant, and his long acquiescence in the assertion of adverse rights by the defendant, are a bar to this suit. Badger v. Badger, 2 Wall. 87; Marsh v. Whitmore, 21 id. 178.

MR. JUSTICE FIELD delivered the opinion of the court.