[22] Motion for additional security on the This action was commenced in the Supreme Court of the State of New York, in February, 1884, by the defendant in error against the plaintiff in error, to recover a sum of money. On or about the 6th day of February, 1884, the defendant in error obtained a warrant of attachment against the property of the plaintiff in error; and the sum of $30,000, then on deposit in the American Exchange National Bank to the credit of the plaintiff in error, was levied on by the sheriff to secure said claim, interest and costs. that in Rochester White Lead Co. v. Rochester, | York. On or about the 20th day of February, 1884, the plaintiff in error served an undertaking, for the purpose of discharging said attachment, pursuant to sections 687 and 688 of the Code of Civil Procedure of the State of New York. The undertaking given by the plaintiff in error in this case was not an undertaking with two sureties as provided in section 688 of the New York Code, but was one executed by the Fidelity and Casualty Company of New York, pursuant to the Act of the Legislature of the State of New York, passed June 13, 1881, being chapter 486 of the Laws of 1881, entitled "An Act to Facilitate the Giving of Bonds Required by Law.” In the present case, the only evidence offered It was allowed by one of the justices of the Supreme Court of the State of New York, against the protest and objection of the plaintiff in error on or about the 23d day of Feb The Fidelity and Casualty Company of New York, that gave this undertaking, did so under a special rule of the Supreme Court of the State of New York, adopted by said court after the passage of the above Act of 1881. The evidence excluded was clearly inadmis- James H. McKenney, Clerk, Sup. Court, U.S. [49] MEXICAN NATIONAL CONSTRUCTION COMPANY, Piff. in Err., V. GUILLAME REUSENS. (See 8. C. Reporter's ed. 49-54.) Practice-security on supersedeas. A motion to require plaintiff in error to furnish additional security, not because plaintiff's condibecause another surety ought to have been required tion has changed since the security was taken, but before the attachment was discharged, will not be granted, as this was one of the facts existing at the time the security was accepted, and not open to consideration on review. [No. 980.] Submitted Apr. 12, 1886. Decided Apr. 23, 1886. ERROR to Circuit of the Thereafter a general demurrer to the com. plaiut of the plaintiff in error was interposed by the defendant in error; and when the issues of law raised thereby, were upon the day calender of said supreme court for trial, the case was removed into the Circuit Court of the Unit York upon the petition of the plaintiff in error. On or about the first day of December, 1884, an argument was had upon the demurrer before the circuit judge, and he rendered a decision in favor of the defendant in error upon said demurrer, but granted leave to the plaintiff in Reusens error to answer the said complaint. v. Mexican N. Const. Co. 22 Fed. Rep. 522. Thereafter the plaintiff in error answered the Subsequently a writ of error was allowed, The bond which was given by the plaintiff in Mr. Michael H. Cardozo, for defendant in error in support of motion. IN Fates for the Southern District of New Meyer, for plaintiff in error, contra. Messrs. Joseph H. Choate and T. F. H. [50] [54] [73] Mr. Chief Justice Waite delivered the opin- | 45 Mich. 533; Hurst v. Beaver, 50 Mich. 612; This motion is denied on the authority of Jerome v. M'Carter, 21 Wall, 17 [88 U. S. bk. 22, L. ed. 515]. Neither the circumstances of the case, nor of the parties, nor of the sureties on the bond have changed since the security was taken. All these things are now as they were then. We do not understand the case of Nichols v. MacLean, 98 N. Y. 458, to decide that the guaranty by the Fidelity and Casualty Company of New York, of the undertaking of the Mexican National Construction Company for a discharge of the attachment, is void because signed by one surety and not by two, but only that it need not have been accepted by the judge as sufficient security. It was accepted, however, and the attachment was discharged. It stands, therefore, as security for the payment of the judgment, and the judge, when he took the supersedeas bond, acted with reference to a judgment which was "otherwise secured" within the meaning of Rule 29, and could be governed accordingly. The present motion is not made because the condition of the Fidelity Company has changed since the security was taken, but because another surety ought to have been required before the attachment was discharged. This was one of the facts existing at the time the security was accepted, and, therefore, under the rule in Jerome v. M'Carter, not open to consideration here for the purposes of a review of the action of the judge who fixed the amount. (See S. C. Reporter's ed. 73-80.) Conveyance absolute in terms-sufficiency of parol evidence to show that it was intended as security for a debt. 1. If a conveyance is made in fee, with a covenant of warranty, and there is no defeasance, either in the conveyance or in a collateral paper, parol evidence to show that it was intended to secure a debt and to operate only as a mortgage must be clear, unequivocal and convincing, or the presumption that the instrument is what it purports to be must prevail. 2. The evidence in the present case examined, and held insufficient to entitle the complainant to relief under the rule. [No. 224.] Argued Apr. 13, 14, 1886. Decided Apr. 26, 1886. The burden of proof is upon the party seeking to show a deed absolute to be a mortgage, and the testimony must be clear. Howland v. Blake, 97 U.S. 624 (Bk. 24, L. ed. 1027); Tilden v. Streeter, 45 Mich. 533; 1 Jones, Mort. § 335. If the evidence shows that in fact the deed was given as security for a pre-existing debt, or for advances made or to be made, or for both, it is to be treated as a mortgage, irrespective of its form. Whether it was given as security, to use the language of Judge Swayne, "is the very hinge of the controversy.' " Russell v. Southard, Villa (Alexander) v. Roariguez and Peugh v. Davis, supra; 2 Jones, Mort. 1039. In determining the question whether deed is to be construed as a mortgage, the adequacy of the consideration is an important element. Russell v. Southard, 12 How. 148 53 U.S. bk. 13, L. ed. 931), and cases cited; Peugh v. Davis, supra. So also are the confidential relations between grantor and grantee. Babcock v. Wyman, 19 How. 296 (60 U. S. bk. 15, L. ed. 647). So also are the necessities of the borrower. Russell v. Southard, 12 How. 158 (53 U. S. bk. 13, L. ed. 935). A promise to repay is not essential to constitute a deed a mortgage. Russell v. Southard, supra, and cases above cited. The fact that the grantee is to have the entire management of the property does not prevent the deed becoming a mortgage. Babcock v. Wyman, supra; Emerson v. Atwater, 7 Mich. 12. The cases cited by the district judge to sustain the decree are cases where it was held that the deed was not intended as a security, and they are therefore not applicable. Baker v. Thrasher, 4 Denio, 493; McCauley v. Porter, 71 N. Y. 177. If the deed was intended as a security, the right to redeem attaches thereto, even if the grantor at the time agrees to release this right of redemption. 1 Jones, Mort. § 251; 2 Jones, Mort. § 1039. Messrs. Harrison Geer and Ashley Pond, for appellee: A deed absolute in form will not be decreed to be a mortgage, unless the testimony is en APPEAL from the Circuit Court of the United tirely plain and convincing beyond reasonable States for the Western District of Michigan. Affirmed. The history and facts of the case appear in the opinion of the court. controversy. The complainant must show that the effect prima facie due to the deed is not the effect equitably due to it; and unless the proof is entirely clear and convincing, the writing will be Parol testimony is admissible to prove that a held to express correctly the intention of the deed absolute on its face was intended as a mort-parties. Mr. C. I. Walker, for appellant: gage. Howland v. Blake, 97 U. S. 626 (Bk. 24, L. eȧ Wadsworth v. Loranger, Harr. Ch. 113; Emer-1027); Case v. Peters, 20 Mich. 803; Tilden ▾. on v. Atwater, 7 Mich. 12; Tilden v. Streeter, Streeter, 45 Mich. 540. [74] All parol testimony to establish a trust or to make a conveyance absolute upon its face a mortgage should be clear, and even then should be received with great caution. Corbitt v. Smith, 7 Iowa, 60; Kent v. Lasley, 24 Wis. 654; Smith v. Creever, 71 Ill. 185; Hyatt v. Cochran, 37 Iowa, 309; Gardner v. Weston, 18 Iowa, 533; Noel v. Noel, 1 Iowa, 423. Under the Statutes of Michigan, and the decisions of its supreme court, trusts in lands cannot be created by parol. Howell, Ann. Stat. §§ 5569, 5573, 6179; Newton v. Sly, 15 Mich. 395; Jackson v. Cleveland, 15 Mich. 94; Palmer v. Sterling, 41 Mich. 218: Sanderson v. Graves, 18 Eng. Rep. 364; L. R. 10 C. P. 234. The allegations of the bill would not, if true, make this deed an equitable mortgage. In the case of Baker v. Thrasher, 4 Denio, 493, an agreement similar to the one under consideration, although in writing, was held not to constitute a mortgage. See also McCauley v. Porter, 71 N. Y. 173; 41 Cal. 28; 9 Pacific Rep. 547; Freer v. Lake, 2 West. Rep. 924; 107 ПI. 276. There is no claim made by Cadman that Peter was guilty of any fraud in obtaining this deed. He claims that the fraud consists in his refusal to execute the trust and that this trust may be established by parol; but this would be a clear violation of the statute. Rasdall v. Rasdall, 9 Wis. 876; Lathrop v. Hoyt, 7 Barb. 59. Mr. Justice Blatchford delivered the opinion of the court: On the 25th of October, 1875, by a warranty deed, dated and acknowledged on that day, Charles C. Cadman and his wife, of Detroit, Michigan, conveyed to William Peter, of Toledo, Ohio, in fee, land in Newaygo County, Michigan, amounting to 87 sections, or 5,400 acres, the consideration named in the deed being $20,000. On the same day, by a mortgage dated and acknowledged on that day, Peter mortgaged the same land to Cadman, to secure the payment to Cadman of $10,000 in four months, and $10,000 in six months, from that date, with interest at 8 per cent, according to four promissory notes of $5,000 each, of that date, executed by Peter to Cadman. The deed and the mortgage were both of them recorded in October, 1875. On the first of April, 1881, Cadman filed a bill in equity against Peter, in the Circuit Court of the United States for the Western District of Michigan, and an amended bill on the 23d of April, 1881. The latter contains the following allegations: About the year 1874 or 1875, Cadman became indebted to Peter in $10,000, for money borrowed, Peter making his two notes, for $5,000 each, with interest at 7 per cent per annum, payable to Cadman, to be by him indorsed, and used to obtain money for Cadman's benefit, which was done. The notes were renewed from time to time, Cadman paying up the accrued interest at each renewal, until October 25, 1875. On that day, Cadman owned the 5,400 acres of land above mentioned, covered with pine timber and valued at upwards of $40,000, and was anxious to procure money, and applied to Peter to furnish him with $20,000 more, and the negotiations with Peter culmi | nated in the following agreement: Peter agreed to loan to Cadman $20,000 more, by making two notes of $10,000 each. Cadman was to execute to Peter a deed of the land, as security for the entire $30,000. Peter was to hold the land until such time as it might be sold at a profit or for a greater sum than could be then realized, and, when such time should come, was to sell the land in the most advantageous manner possible, and out of the proceeds was to pay himself the $30,000, and interest thereon at the rate of 7 per cent per annum, and the taxes which he should have paid on the land, and should divide the surplus, if any, paying over to Cadman one half, and retaining the other half to recompense himself for his labor; trouble and expense in selling the land. Cadman received and used the notes for $20,000, and the transaction was intended to operate as a security from Cadman to Peter for the repayment of the $30,000 and interest, and was so considered by both of the parties. At the time of the agreement and conveyance, the financial affairs of the country were greatly depressed, and land valuable chiefly for its standing pine timber was not in great demand, and both parties knew that an adequate price therefor could not then. be obtained, but also knew that within a short time such land would greatly appreciate in value, and that, by continuing to hold the land until it should rise in value, they would be able to dispose of it at a price much beyond $30,000. Cadman had estimates of the timber standing on the land, and alleges that there was upwards of 40,000,000 feet at the time, worth not less than $60,000, and now worth, if none had been cut, from $80,000 to $120,000. During two years last past the property has become valuable, and it could, at any time during the past 18 months, have been readily sold for a sum sufficient to pay all of Cadman's indebtedness to Peter, and all moneys Peter may have expended for taxes. Cadman, on the of 1878, applied, by letter, from San Francisco, California, to Peter, for an accounting of his doings in the matter, and received a reply that the land had not yet been sold, and consequently no account could be rendered. On the 4th of February, 1881, he again applied to Peter to settle the matter in some way, and Peter then ignored and repudiated the entire transaction, and stated to Cadman that he knew of no unsettled transaction between them, except an indebtedness of $10,000 from Cadman to Peter. Cadman thereafter offered to pay Peter $30,000 and interest, and any sums paid by Peter for taxes or other proper expenses, and requested Peter to release the security, and deed the land back to Cadman. Cadman offers to pay any sum that may be found due from him to Peter. The bill waives an answer on oath. It prays for an accounting as to what is due from Cadman to Peter; and for a decree that the deed was an equitable mortgage, intended by the parties as a security for money loaned and expenses to be incurred about the land, and that Cadman be permitted to redeem the land on paying to Peter the money which shall be found equitably due to him; and that then Peter may be directed to convey the land to Cadman. There is also a prayer for general relief. day The answer contains the following averments Peter made the two notes for $5,000 each, to [75] [76] [79] the order of Cadman, to enable him to obtain money for his individual benefit, but at an earlier date than that stated in the bill. The land conveyed was not, at the time, valued at $40,000. There were no negotiations between Cadman and Peter which culminated in the agreement | set forth in the bill, and Peter never made any such agreement. The deed was not received as security for money. At the time Peter received it the affairs of the country were greatly depressed, and the land was valuable chiefly for the pine timber standing on it and was not in great demand, and an adequate price for it was difficult to be obtained, and this fact was known to both parties, and it was expected by both of them that it would appreciate in value, but that was a matter which should not affect Cadman, as he was in no way to have any interest in the land after the sale and the deed to Peter were made. The property has become valuable since Peter purchased it from Cadman, but he does not hold it to secure any indebtedness from Cadman to him. Cadman did not, at any time in 1878, apply to Peter by letter for an accounting of his doings in the matter, and did not receive a reply that the land had not been sold and consequently no account could be rendered. On the 25th of October, 1875, Peter purchased the land from Cadman for $20,000, the price agreed on between them and which was a fair price therefor at the time, and the sum has long since been paid. After the purchase Cadman never claimed to have any interest in the land until a short time before the bill was filed. The answer also contains a demurrer to the bill, as not stating a cause of action warranting the relief prayed. Issue being joined, proofs were taken, and, on a hearing, the bill was dismissed, in June, 1882. The decision (12 Fed. Rep. 363) announced these propositions: The agreement set forth in the bill is inconsistent with a right to redeem, it being stated as an agreement under which Peter was to hold the land until he should sell it, and then share in any profit from the sale. Under that agreement, even if it was valid, the deed cannot be turned into a mortgage, although the execution of the agreement, if valid, might be compelled, when the land could be sold at a considerable profit. If the agreement is obnoxious to the statute which declares that no trust concerning or in any manner relating to land shall be created by parol, it cannot be enforced specifically nor employed to turn the deed into a mortgage. The agreement, if valid, would make Cadman a beneficiary under the deed, and create a trust in Peter concerning or relating to land, and, not being in writing and properly signed, is void under the Statute of Frauds. But the grounds of the conclusion reached were stated thus: under the evidence Cadman is not entitled to relief, conceding the bill to state a good case. 1. The conveyance was absolute on its face, for an expressed consideration of $20,000. To overcome the effect of the deed, and turn it into a mortgage, the evidence must be clear and convincing, beyond reasonable controversy. 2. Peter gave back to Cadman a mortgage, of the same date as the deed, to secure the payment of the notes for $20,000 given for the purchase price. The mortgage was accepted and speaks for both parties, as a contemporaneous writing expressing their intention, and adding to the effect of the deed, as evidence that there was an absolute sale. 3. On January 21, 1876, Cadman wrote to Peter that he had drawn on the latter, at one day's sight, for $5,000, to take up at a bank a note of $5,000 made by Peter, due that day, which Cadman was unable to get extended by renewal. That note and another like it, due that day, were continuations of the $10,000 accommodation notes mentioned in the bill, which were in fact made in 1872. This $10,000 of paper is alleged by Cadman to have been secured by the deed. Peter had sent to Cadman two new notes to retire the two then coming due, and Cadman says, in his letter, that he had lodged one of the new notes as collateral to the draft. The draft, a copy of which is in the record, directs the amount to be charged to Cadman's account. Peter, on January 22, 1876, replied to Cadman thus: "I accepted your draft this morning. What do you think of making a draft on me at one day for $5,000? I do not have the money to pay this draft. This shows for itself how my notes are peddled in Detroit. I have told you before that my credit will suffer from such transactions. You say you did this to save my good name. This is a most cruel assertion to me under the circumstances, as I derive no benefit from it. Let me know at once if I must raise the money to pay this draft. I have $5,000 to pay to your bank the same day. I want you to send me something to show that the two notes and this draft are for your benefit, and for you to pay it in case I should be taken away, which we are all liable to be. My estate should have something to show-in fact, I myself should have it." Peter would not have written thus, if the $10,000 of notes were for him to pay, and if, three months before, Cadman had given him security for the amount; nor would he have asked Cadman to give what he had no right to ask from him. To the above letter Cadman replied, on January 24, 1876: "I am sorely mortified and grieved that this should be the case, but I am entirely powerless to act. I think I can get the money on the other note in time to recall your acceptance. *** I shall try and get the money, but if I do not, you can draw on me at three days' sight, and I will get the money in meantime on the note. I hardly know what to do. I will do any thing in my power. I will send you my notes or anything I have." Cadman would not have acquiesced in Peter's demand for something to show that Cadman was to pay the paper, and that it was all for his benefit, unless Cadman so understood the fact. On January 30, 1876, Cadman having come to the end, wrote to Peter thus: "I return your note, $5,000, herein. I cannot use it, except to discredit you still more. I have resigned; am a ruined man. owe so much money outside that I cannot stand the pressure. *** My family have gone into the country to board, and I am ruined and penniless. I console myself, in your case, that the great bargain you made in the Newaygo lands will, in some great measure, compensate you for the loss you must incur, for I cannot take care of the acceptance due early in Febru ary.' This was an acceptance by Čadman of a draft on him by Peter, drawn January 28, for * * * I [79] IN ERROR to the Circuit Court of the United States for the Middle District of Tennessee. Statement by Mr. Justice Gray: January 1, 1866, on bonds made and delivered $5,000, at three days' sight, to pay the $5,000 draft of Cadman at one day's sight which Peter had accepted January 22. Peter having paid that draft, and there still being one $5,000 note out against him, he would lose $10,000 by Cadman, having the land to represent the $20,000 This action was brought July 6, 1880, in the of notes given for it, which had not matured. Circuit Court of the United States for the MidThis last letter cannot be reconciled with Cad- dle District of Tennessee, upon coupons owned [80] man's version of the transaction as to the deed. and held by the United States, for interest payAt such a crisis in his affairs, with the transac-able at different dates from July 1, 1861, to tion so recent, if he had a beneficial interest in the Newaygo lands, they being, as he now says, then worth $60,000, as against $30,000 of notes from Peter, he would not have dwelt on the great bargain Peter had made, as a matter of congratulation to Peter and consolation to himself, but would rather have taken consolation from the fact that he still had an interest in this valuable property. If the property, ample as Cadman now says it was, even at its value at that time, to secure to Peter the $30,000, was in fact merely a security to Peter for the $30,000, the idea of talking to Peter of loss was absurd. But if Peter owned the lands, had bought them at a bargain, and was likely to make by selling them a profit greater than $10,000, then the loss of the $10,000 by Cadman was properly called a loss to be compensated for out of a profit in selling the Newaygo lands for more than Peter bad paid for them. [120] These are the considerations which induced the circuit court to dismiss the bill. They seem to us of controlling weight. It is not necessary to enlarge on them. The rule in cases of this kind is well settled. If the conveyance is in fee, with a covenant of warranty, and there is no defeasance, either in the conveyance or in a collateral paper, parol evidence to show that it was intended to secure a debt, and to operate only as a mortgage, must be clear, unequivocal and convincing, or the presumption that the instrument is what it purports to be must prevail. Howland v. Blake, 97 Ū. S. 624 [Bk. 24, L. ed. 1027]; Coyle v. Davis, 116 U. S. 108 [Bk. 29, L. ed. 583]; Case v. Peters, 20 Mich. 298, 303; Tilden v. Streeter, 45 Mich. 533, 539, 540. Decree affirmed. True copy. Test: James H. McKenney, Clerk, Sup. Court, U. 8. UNITED STATES, Piff. in Err., The defendant filed two pleas: First. That the United States held the coupons, not in its own right as the Government of the United States, but as trustee for certain beneficiaries, namely, the Chickasaw Indians, a nation of people, and that the cause of action accrued to the United States more than six years before this suit was brought. Second. That the United States was the holder of the coupons, not in its own right, but as such trustee, from January 10, 1866, until January 20, 1878, at which last date it ceased to hold them as trustee, and became the owner thereof in its own right; and that the cause of action accr more than six years before that date. To each of these pleas the United States filed a demurrer, which was overruled by the court, and issue was joined on the pleas. By the Treaty of October 20, 1832, between the United States and the Chickasaw Nation of Indians, which provided for the removal of the Chickasaws to the west of the Mississippi, they ceded to the United States all their lands east of the Mississippi; and the United States agreed that those lands should be surveyed and sold, like other public lands, and the proceeds, deducting expenses, paid over to the Chickasaw Nation. The eleventh article of that Treaty contains the following provisions: "The Chickasaw Nation have determined to create a perpetual fund, for the use of the Nation forever, out of the proceeds of the country now ceded away. And for that purpose they propose to invest a large proportion of the money arising from the sale of the land in some safe and valuable stocks, which will bring them in an annual interest or dividend, to be used for all national purposes, leaving the principal untouched, intending to use the interest alone. It is therefore proposed by the Chickasaws, and agreed to, that the sum to be laid out in stocks as above mentioned shall be left with the Government of the United States, until it can be laid out under the direction of the President of the United States, by and with the advice and consent of the Senate, in such safe and valuable stock as he may approve of, for the use and benefit of the Chickasaw Nation. The sum thus 1. The Federal Government, asserting rights to be invested shall be equal to at least three vested in it as a sovereign, is not bound by any stat-fourths of the whole net proceeds of the sales ute of limitations unless Congress has clearly manifested its intention that it should be so bound. NASHVILLE, CHATTANOOGA AND ST. (See & C. Reporter's ed. 120-126.) 2. The right of the United States to sue on bonds and coupons, purchased before the Statute of Limitations had commenced to run against the right of any holder to sue thereon, with money received from the sale of lands ceded to the Chickasaw Nation of Indians, is not barred by the Statute of Limitations of the State of Tennessee. [No. 231.] of the lands; and as much more as the Nation may determine, if there shall be a surplus after "At the supplying all the national wants." expiration of fifty years from this date, if the Chickasaw Nation shall have improved in cducation and civilization, and become so enlightened as to be capable of managing so large a sum of money to advantage, and with safety, Argued Apr. 15, 1886. Decided Apr. 26, 1886. | for the benefit of the Nation, and the President 118 U. S. U. S. BOOK 30. 6 81 [121] |