WAGG V. HERBERT, 215 U. S. 546 (1910)

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U.S. Supreme Court

Wagg v. Herbert, 215 U.S. 546 (1910)

Wagg v. Herbert

No. 29

Argued November 11, 1909

Decided January 24, 1910

215 U.S. 546


In a suit in equity to have a deed declared a mortgage and in which fraud, oppression, and undue influence are charged, the court is not concluded by what appears on the face of the papers, but may inquire into the real facts of the transactions. Russell v. Southard, 12 How. 139.

A court of equity may decree that a deed given in settlement of a mortgage debt, no new consideration moving, was, by reason of fraud, oppression and undue influence, merely a new mortgage, and by such decree no new contract is created by the court, and the relation of mortgagor and mortgagee originally existing is not disturbed. Though laches may be the equitable equivalent of the legal statute of limitations, there is no fixed time that makes it a bar, and in this case, a delay of a little over two years in bringing an action to have a deed declared to be an equitable mortgage did not amount to laches.

19 Okl. 525 affirmed.

This was a suit commenced on June 13, 1903, in the District Court of Pawnee County, Oklahoma, by William H. Herbert and Mary B. Herbert, his wife, against a number of defendants, the principal one being Solomon R. Wagg, the appellant. The suit was one to have a certain conveyance, in form conveying the legal title to a tract of land from Mrs. Herbert to Wagg, adjudged void as having been fraudulently obtained, and to redeem the property from a prior mortgage lien. An outline of the transaction between the Herberts and Wagg is as follows: on October 26, 1898, they borrowed from him $1,000, and gave their promissory note, payable in one year, with interest after maturity at ten percent per annum, and as security therefor a mortgage on eighty acres belonging to her, and adjoining the Town of Cleveland, in the County of Pawnee.

Page 215 U. S. 547

Wagg retained $100 as interest for the first year, and sent the mortgagors $900. At the same time, as required by him, the plaintiffs executed to him a warranty deed for the same real estate, which was left in the Bank of Cleveland in escrow as security for the note and mortgage. In closing this transaction, he wrote to one of the plaintiffs a letter, in which he said:

"This pays first year's interest, second year's interest is not due until the end of the second year, and six months' grace on end of this makes a full two and a half years before you allow, or I can ask for, the deed in case of default of contract."

On December 26, 1899, he withdrew the deed in escrow from the bank, and caused it be filed and recorded in the office of the Register of Deeds of Pawnee County. His excuse for this was that not merely was $100 due as interest, but also that there was a default in the payment of taxes for the year 1898, and that, to protect the property, he had been obliged to pay them, amounting to $24.94, with accrued penalty and costs. Notwithstanding he had taken and recorded this deed, which apparently transferred to him the legal title, he advised Mrs. Herbert that she might still redeem the land according to the terms of the original loan. In May, 1901, the parties, who had been talking of a settlement for some time, executed two deeds, one for Mrs. Herbert, her husband having left for parts unknown, to the defendant, of the entire eighty acres, and one from him to her of twenty-five acres. Thereafter this defendant platted the fifty-five acres as an addition to the Town of Cleveland, and sold and conveyed lots to the other parties named as defendants.

In the second amended petition, the one upon which the case was tried, plaintiffs alleged that the defendant Wagg was guilty of fraud and oppression, and, taking advantage of his position and the relationship of the parties, obtained for a grossly inadequate consideration the title to the fifty-five acres; that, after platting, he conveyed some lots

"to innocent purchasers, the exact lots and amounts received for which are

Page 215 U. S. 548

not known to the plaintiff, but which amount to a large sum of money;"

that he had not accounted for the moneys so wrongfully received, and that an accounting was necessary.

The case was tried by the judge without a jury. Several hundred pages of testimony were taken, and on May 19, 1905, a decree was entered finding generally the issues in favor of the plaintiff, Mrs. Herbert, the death of whose husband had been suggested pending the suit, adjudging that the deed of May, 1901, from her to the defendant, was a mortgage, that an accounting be had, and that she be allowed to redeem. The case was reserved for further consideration and determination of the claims of, and an accounting with, the other defendants. This decree was, on October 12, 1907, affirmed by the supreme court of the territory, Wagg v. Herbert, 19 Okl. 525, all the defendants joining in the appeal to that court. Thereafter the case was brought here on appeal by the defendant Wagg, the other defendants not joining in the appeal, but named as parties appellees.

Page 215 U. S. 550

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