This suit was commenced in 1873, and the claim may be stated thus: In 1857, Isaac Taylor loaned to Eugene Howland, upon a mortgage, the sum of $7,000, to enable him to complete the erection of certain buildings upon premises in the city of Racine, the entire cost of which was about $24,000, and which when completed produced an annual rent of $2,200.
Soon after the buildings were completed an agreement was made between the parties, which was carried out, that the possession of the property should be surrendered to Taylor, who should enter into possession and receive the rents, until the net proceeds thereof should pay the principal and the interest of the mortgage.
In 1861, while thus in possession, Taylor commenced a suit to foreclose his mortgage, claiming the sum of about $7,000 as due to him. Judgment was rendered, a sale had, and Taylor becoming the purchaser for the sum of $9,300, a deed was executed to him by the sheriff.
It is claimed that, while this foreclosure suit was in progress, it was agreed that Howland should make no defence, but allow a sale to take place; that Taylor should still hold the premises as security for the payment of the mortgage debt, and, when the rents had been sufficient for that purpose, reconvey the premises to Howland.
It is alleged that, under this agreement, Taylor purchased and remained in possession until April, 1863; that about that time he desired the payment of his money, and requested Howland to procure some other person to advance it; that Howland thereupon informed Blake and Elliott of all the facts before stated, requesting them to advance the money and take a conveyance from Taylor; that a conveyance to them from Taylor, absolute in form, was thereupon made, but upon the agreement that they would pay Taylor's debt, retain the premises until the rents thereof should reimburse them, and then would recovey the premises to Howland; that from that time until the commencement of the present action against them they have been in possession, receiving the rents which greatly exceeded the mortgage debt, with interest, taxes, insurance, and repairs. An account and a reconveyance are demanded.
An answer on oath having been waived, Blake and Elliott, the defendants, denied all the equities of the bill, and alleged other matters in defence. Taylor died in November, 1865.
At the hearing upon the pleadings and proofs, the bill was dismissed, upon the ground that where a mortgage had been foreclosed by action, and the equity of redemption sold by a decree of the court, and an absolute title given by the proper officer to the purchaser at such sale, evidence to show that a parol agreement was made pending the litigation, by which the interest to be obtained under the sale should remain a mortgage interest only, was incompetent. Howland appealed to this court.
The appellees, in addition to this ground of defence, insist that the evidence does not establish the alleged agreement, and that the complainant had no equity of redemption in the premises after the twenty-second day of May, 1860, when his interest in the same was sold by the sheriff of Racine County to Daniel P. Rhodes for $1,000, in pursuance of a decree of the Circuit Court of that county in proceedings to foreclose the lien of Wiltsie & Hetrick for materials used in erecting the buildings on the said premises.
We do not think it necessary to pass formally upon the legal position assumed by the Circuit Court, that parol evidence is not admissible to impeach a title acquired at a judicial sale, nor upon the contention that the sale to Rhodes, upon the proceeding to foreclose the lien of a material-man, terminated any alleged interest of Howland in the property.
The case may be decided upon a principle governing a class of cases of the same nature. Among them there are the following: Where a written instrument is sought to be reformed upon the ground that by mistake it does not not correctly set forth the intention of the parties; or where the declaration of the mortgagor at the time he executed the mortgage, that the equity of redemption should pass to the mortgagee; or where it is insisted that a mortgagor, by a subsequent parol agreement, surrendered his rights. These and the case we are considering are governed by the same principle.