EMERSON 0. ATWATER. That this was done for the convenience of Atwater: that Green had full knowledge of the rights of complainant; and that he holds the lands in trust, subject to the order and disposal of Atwater, and the rights of complainant. The bill also states, that Atwater and Durfee took possession of the "Steam-mill Reserve," with the mill and buildings thereon, and that they have taken other portions of the land at prices agreed on between them and complainant, &c.: that other parcels have been sold by Atwater, and that complainant has made payments to Atwater in notes and demands, &c.,: that the greater part of the land has been laid out and platted, and is now known as a part of the City of East Saginaw charges that the claims and demands for which the lands are held by Atwater as security, are paid, and prays an account, and a re-conveyance of the lands unsold. The bill waives an answer under oath, and is taken as confessed against Durfee. Atwater put in an answer, stating that complainant was owing him $30,000, for advances that had been made by him to complainant; that he was insolvent, and that he proposed to, and did, execute and deliver to him, Atwater, the said deed of conveyance in fee simple, in consideration of the said debt, subject to the incumbrances mentioned in the bill of complaint; and that said deed of conveyance was executed and delivered absolutely, without any condition, trust or agreement whatever, either express or implied; and that at the time of said conveyance, his said debt, together with said incumbrances, far exceeded the value of said lands: that, at the time of the execution and delivery of the deed, he held a mortgage on the premises for the first accruing part of his demand, amounting to $8,200, executed to him by complainant, November 1st, 1850; that said mortgage moneys were wholly unpaid; as well as the balance of the $30,000; and that the deed of EMERSON v. ATWATER. conveyance was executed and delivered to him by complainant in lieu of, and as a substitute for, the foreclosure of said mortgage, and to release complainants' equity of redemption in the land. And each and every other material allegation in the bill of complaint is denied. Green filed a plea, stating that he purchased the premises on the statutory foreclosures of the Little and Rockwell mortgages, for a valuable consideration paid by him, and without notice of complainant's equities. The cause was put at issue, and proofs were taken, and on a hearing in the circuit court a decree was made in favor of complainant, and the case is now before us for review on appeal. It is objected to the relief given complainant in the court below, that the case made by the bill is one of express trust; and that by statute (Comp. L. p. 942 §3177), an express trust can be created by a deed or conveyance in writing only. It is also objected that, if the case shows an absolute conveyance, but intended by the parties as a security or mortgage only, the deed, being absolute on its face, can not be turned into a mortgage by parol proof, or by proof of a cotemporaneous parol agreement. The bill makes a case of conveyance in the nature of a mortgage, with power to Atwater to sell a part or the whole of the premises, to pay the incumbrances, and what Emerson was owing him; reserving the surplus, if any, to Emerson. This view does not wholly extricate the case from the first objection, if there be any force in that ob. jection; for the statute that requires express trusts to be created by deed or conveyance in writing, includes pow"over or concerning lands," as well as express trusts. In Wadsworth v. Loranger (Har. Ch. 113), Chancellor Farnsworth says: "That a deed absolute in its terms may be proved by parol to have been intended by the parties to operate only as a mortgage, can not admit of a ers EMERSON v. ATWATER. doubt;" referring to Strong v. Stewart, 4 Johns. Ch. 167; James v. Johnson, 6 Johns. Ch. 417, and Van Buren v. Olmstead, 5 Paige 9. In that case there was a parol cotemporary agreement; as in the case before us. In Fuller v. Parish (3 Mich. 211) parol evidence was admitted to show a bill of sale, absolute on its face, was intended by the parties to be a mortgage. That was a case at law, and it was admitted by the plaintiff in error that such evidence would be competent in a court of equity. Green P. J., in giving the opinion of the court, says: "It is conceded on the part of the plaintiff in error, that in a court of equity, it would be entirely competent to show, by parol proof, that a deed absolute on its face was intended as a mortgage, and that then effect would be given to it according to the true intent of the parties. This has been too long and too well settled, and too distinctly recognized by our own courts, to admit of any question" (p. 213). And in Swetland v. Swetland (3 Mich. 482), it seems to be taken for granted as the law, both by counsel and court. Wing J. says: "if it appeared the debt due from Eli to William was not extinguished by the delivery of the deed to William, or that the deed was made for the purpose of securing the payment of a debt, it would be our duty to declare it to be a mortgage" (p. 487). show the general underon this subject, and the We refer to these cases to standing of the bench and bar injustice that would be done by overruling, at this late day, the case of Wadsworth v. Loranger, to those who may have looked to that case for the law, and have aoquired rights under the law as there laid down. This con sideration, of itself, if we believe that case to be erroneous in principle, which we do not, would cause us to hesitate long before overruling it, believing it would be both better and safer to leave it to the legislature to correct the error, than to undertake it ourselves, as all intervening EMERSON 0. ATWATER. rights would, in that case, be saved, and injustice be done to no one. The principle on which courts of equity proceed in this class of cases, is not that it is in contemplation of law a fraud for A, who has made a parol agreement to sell B a piece of land, to refuse to deed the land, or to live up to his parol agreement. It would be as clear a violation of the statute of frauds in a court of equity to decree a specific performance of such contract, as it would in a court of law to sustain an action on it for damages, It is upon no supposed fraud of this kind that equity bases its action. It proceeds on a different principle, viz; the relation between the parties of debtor and creditor, or borrower and lender, and the abuse of that relation. The statute of frauds was intended for persons dealing with each other at arm's length, and on an equal footing; and even then, when the contract has subsequently been in part performed by one party, with the assent of the other, equity will compel the latter to perform on his part, as it would be a fraud on the statute for a party to invoke its protection under such circumstances. set aside deeds and other cestui que trust, attorney Courts of equity frequently contracts between trustee and and client, guardian and ward, and parent and child, and other like cases, when it has reason for believing the relation between the parties has been abused, when such deed or contract, had it been between parties not so related, would have been held good. The principle the court goes on in cases of debtor and creditor, is the same as in the cases we have just mentioned. The difference is in its application only. In these last cases it is to prevent the abuse of a confidence which the relation implies. In the case of debtor and creditor, the abuse of the power of coercion which a creditor sometimes, by the force of circumstances, has over the debtor. So sensible are courts of the existence of this power, and of its abuse, and that debtor and creditor do not EMERSON v. ATWATER. at all times stand on an equal footing, that the borrower, says Judge Story, "has been significantly called the slave of the lender."-(1 Story's Eq. Juris. §302.) And Judge Green, in Fuller v. Parish, says: "Mortgages, and conveyances intended to operate as mortgages, are generally given by the necessitous to the more opulent, the debtor to the creditor, the borrower to the lender, the suppliant for power to him who has power to make the terms upon which it shall be granted. The man whose property is about to be sacrificed by a creditor, will not hesitate in regard to the amount of security to be given, nor the manner of giving it, if he can loan the money to satisfy the debt, or otherwise gain time for its payment. He will not hesitate to execute a deed, or bill of sale, absolute upon the face of it, but intended to operate as a mortgage, to four times the value of the loan, without insisting upon a written deed of defeasance."(3 Mich. 217). Courts of equity have, from an early day, interfered between creditor and debtor to prevent oppression. What is now a mortgage, was at common law, and until courts of equity interfered, a conditional conveyance of land, that became absolute on the non-performance of the condition by the grantor on or before the day mentioned in the deed. The penalty of a bond was collectable at law, until equity restrained its collection, on the payment of what was due on the condition. When the relation is mortgagor and mortgagee, once a mortgage always a mortgage, is the maxim in equity. See Leading Cas. in Eq. Vol. 2, pt. 2, p. 432, where may be found a large collection of cases in which deeds have been declared to be mortgages. Honesty and fair dealing, and the good of society, require that the cupidity of man should be kept within certain limits, and not be allowed to roam at large. To define and fix these limits, and give relief when they are transcended, has ever been the province of courts of equity, and their chief excellence consists in a wise and judicious exer 7 MICH.-C. |