and 120 New York State Reporter

full force as a deed in fee, as it always had read. Parol evidence was given to show that originally it was in the nature of a mortgage. Parol evidence was properly given to show that subsequently the deceased took advantage of the option which she had a right to exercise of treating the transaction no longer as a mortgage, but now as a deed in fee, as it read."

I think this overlooks the essential distinction between a mortgage and an absolute conveyance. A mortgage is in fact, on its face, an absolute conveyance of the property, there being incorporated in the conveyance a defeasance; but it is none the less a mortgage because the defeasance is either a separate instrument or rests in a parol agreement made at the time of the execution and delivery of the conveyance. In either case the conveyance is nothing but a mortgage by which the title to the property is not conveyed, but the grantor or the mortgagor remains the legal owner of the property subject to the lien of the mortgage; and, once the fact is established that the convevance is a mortgage, then the rights of the parties are governed by the rules that exist in relation to mortgagors and mortgagees, and not as to grantor and grantee; and a subsequent parol agreement can no more change that relation than it could if the instrument was upon its face what in reality it was a simple mortgage. The cases all hold that, once that relation is established, no verbal agreement between the parties is sufficient to turn the instrument which, when executed and delivered, was a mortgage, into an absolute grant. Certainly, if it could not be turned into an absolute grant, so as to vest Mrs. La Bau with the title to the property, by which she could maintain ejectment as against the mortgagor, it cannot be turned into an absolute grant, so as to entitle the mortgagor to recover the amount of the consideration which Mrs. La Bau was to pay upon acquiring an absolute title to the property. The plaintiff being the owner of the property subject to Mrs. La Bau's interest as a mortgagee, that property could be divested in one of two ways-either by a conveyance sufficient to transfer the legal title to the property, or by a foreclosure by Mrs. La Bau of her mortgage, and a sale under that foreclosure. Section 137 of the Revised Statutes (1 Rev. St. p. 738, pt. 2, c. 1, tit. 2) provides that "every grant in fee or of a freehold estate, shall be subscribed and sealed by the person from whom the estate or interest conveyed is intended to pass, or his lawful agent." The letter from Mrs. La Bau was in form a notice that she elected to exercise an option which it was claimed she had to take a conveyance of the property, or to treat the conveyance as absolute, and in which it is claimed she stated that she would pay the consideration named in the original instrument not later than March, 1897; and, based upon that, she requested a conveyance or release of the property from the plaintiff; and in answer to that the plaintiff is alleged to have written as follows: "As per your request yesterday I write this letter to say that I hereby release my farm at Brentwood, L. I., described in the deed which you recorded in Suffolk county with the understanding that you are to pay me the $38,639.00 the balance of the purchase price on or before March 1st, 1897." When this instrument was offered in evidence, it was objected to as not sufficient to convey an interest in the real property under the Revised Statutes, when it was expressly stated that it was not offered as such a conveyance, but was received merely as a communication between the parties. It is quite evident that this was not a compliance with the statute. It contained no words of grant, did not purport to convey any property, and certainly vested in Mrs. La Bau no title to the property which had up to that time remained in the plaintiff.

I think, therefore, the evidence failed to show that the relation in connection with this property as between the plaintiff and Mrs. La Bau ever changed after the execution and delivery of the instrument in October, 1894, which was nothing but a mortgage, and that there was no obligation of Mrs. La Bau which could be enforced for the $40,000, the consideration expressed in the conveyance.

There are exceptions by the defendants to the admission and rejection of evidence which would require serious attention but for the view that we take of the question discussed, from which it follows that no cause of action was proved, and it is not therefore necessary that they should be considered.

It follows that the judgment and order appealed from must be reversed, and a new trial ordered, with costs to the appellant to abide the event.

VAN BRUNT, P. J., and McLAUGHLIN and HATCH, JJ., con

cur.

LAUGHLIN, J. (dissenting). This action is brought to recover the balance of the purchase price of premises alleged to have been conveyed by the plaintiff to the testatrix of the appellants. The plaintiff alleges that on or about the 28th day of March, 1895, she sold and conveyed the premises to the decedent for the agreed consideration of $40,000, payable by crediting thereon the sum of $361, which plaintiff owed to her, and the balance of $39,639 to be paid on or before the Ist day of March, 1897; that no part of this balance has been paid, and judgment is demanded therefor, together with interest from the date when it became due and payable. The material allegations of the complaint were put in issue by the answer, which also sets the validity of the contract on the ground of the statute of frauds, and pleads payment and the statute of limitations.

Upon the trial the plaintiff showed the execution and delivery by her to the decedent of a full covenant warranty deed of the premises on the 31st day of October, 1894, reciting a consideration of $40,000, and that possession thereof was surrendered to the decedent on the 28th day of March, 1895. The premises consisted of a tract of 100 acres of land at Brentwood, in Suffolk county, and the plaintiff at the time of executing this deed had good title thereto. The appellants showed by the testimony of the plaintiff upon cross-examination that contemporaneously with the execution and delivery of the deed she signed and delivered to decedent a receipt in the following words:

"Received, New York, October 30th, 1894, of A. V. La Bau the sum of Three thousand one hundred and thirty-three dollars as a loan repayment of the same to be secured by the making, execution and delivery by me on the 31st day of October, 1894, of a deed conveying the property owned by me and standing in

and 120 New York State Reporter

my name at Brentwood, Long Island, in the State of New York. Elizabeth. Witness A. H. Stevens."

The plaintiff then gave evidence tending to show, and sufficient to warrant the jury in finding, that at the time of the execution of the deed she did owe the decedent the sum specified in the receipt, and that there was an agreement between them to the effect that, if the decedent should elect within a year to purchase the property specified in the deed, possession would then be delivered, and the terms of payment of the balance of the purchase price over and above plaintiff's indebtedness to her would then be agreed upon; that on or about the 28th day of March, 1895, the decedent did so elect to purchase the premises, and possession thereof was accordingly delivered on that day upon the express agreement that the balance of the purchase price as stated in the complaint, which was arrived at by crediting the agreed value of personal property upon the premises which plaintiff owned and also sold to decedent upon the plaintiff's existing indebtedness to her, was to be paid on or before the Ist day of March, 1897, and this was evidenced by correspondence between the parties; that at the time the conveyance was executed the parol agreement between the parties was that the decedent was not bound to purchase, and, if she did not so elect, it was to operate as a mortgage; that decedent contemplated purchasing, and the instrument was executed as a conveyance, instead of a mortgage, by mutual agreement, and for the express purpose of avoiding the necessity of executing a deed later on should the decedent elect to treat it as a purchase, and that she did so elect, and accepted the deed as a sufficient conveyance; that on said 28th day of March, 1895, the decedent leased the premises as her own, giving the lessee the privilege of purchasing the same for $45,000; that on the 1st of April thereafter she procured insurance in her own name upon the personal property, and after a fire preferred a claim against the insurance company for the loss, and executed an agreement to arbitrate the loss; and that the balance of the purchase price has not been paid. This action was commenced on the 19th day of January, 1903 -within six years after the balance of the purchase price became payable. Consequently the plea of the statute of limitations is not well taken. Nor has the statute of frauds any application. Possession has been delivered to the purchaser, and the plaintiff has fully performed on her part all of the conditions, as the contract was construed by the parties, upon which her right to recover the balance of the purchase price depend; the promise to pay contained in a sufficient memorandum signed by the decedent.

The principal contention on the part of the appellants is that the instrument of October 31, 1894, although a deed in form, was in fact a mortgage, and that, therefore, it was ineffectual for the purpose of conveying the premises to the decedent. Even though this contention should be sustained, it does not follow, I think, that plaintiff was not entitled to recover. It is to be borne in mind that she sues for the balance of the purchase price, and she shows compliance with every condition precedent agreed upon by the parties to entitle her thereto. Even though the parties were mistaken in the legal effect of the instrument they agreed upon, it is sufficient for the purpose of conveying title and of entitling plaintiff to payment. If, through mistake of law or otherwise, it is insufficient to convey the title, then the defendants should have alleged the facts, and demanded by way of counterclaim a further conveyance, which the court could, if necessary, decree as a condition of compelling payment.

I fail to see any merit in the position taken by appellants. Their testatrix had a good record title, and they seek to defeat it by evidence dehors the record, from which they claim, in effect, that she was a mortgagee in possession. They do not show that they obtained possession in that right, and the plaintiff shows quite clearly that the possession was given pursuant to the agreement to purchase. But even with the evidence that the deed was to be considered as a mortgage only in case the decedent did not wish to complete the purchase, still the contention of the appellants should not be sustained. The plaintiff, by electing to give the decedent possession pursuant to her parol election to purchase, and to demand the balance of the purchase price, and by bringing this action therefor, which is an irrevocable election, would be forever estopped from asserting any right of redemption in the premises.

The appellants insist that the plaintiff has an equity of redemption in the premises, which she never asserted, and does not now claim, and is estopped from claiming. It therefore becomes unnecessary to decide whether the doctrine of the cases of Mooney v. Byrne, 163 Ν. Y. 86, 57 Ν. E. 163, or Hughes v. Harlam, 166 N. Y. 427, 60 Ν. Ε. 22, and kindred cases, is applicable to the case at bar, or whether the defeasance or equity of redemption which was created by parol could be released by parol, so that the decedent in any event obtained a complete title on or about the 28th day of March, 1895, when she made her election to purchase, or whether the fact that the express purpose of having the instrument in the form of a deed was to have it serve and stand as a conveyance of the title, without the execution of any further grant, in the event that the grantee so elected within the time specified, distinguishes the case from those last cited, and renders the doctrine "once a mortgage, always a mortgage," inapplicable. These would be interesting questions, but their consideration is, I think, unnecessary. The learned court conducted the trial without error prejudicial to the appellants. The letter, Exhibit H, was not shown to have been authorized by plaintiff, and was therefore properly excluded.

I am of opinion, therefore, that the judgment and order should be affirmed.

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time of the death of the insured, the amount due should be deducted from the amount of the claim. Held, that the company was entitled, where the assured died November 16, 1902, having paid premiums to August 9, 1902, to deduct from the face of the policy the payment due February 9, 1903.

Action by Evelina Bracher against the Equitable Life Assurance Society of the United States. Judgment for plaintiff.

James A. Hudson, for plaintiff.

Alexander & Green (Charles W. Pierson, of counsel), for defend

ant.

ROGERS, J. On the 10th day of August, 1898, the defendant issued its policy of insurance, whereby it insured the life of George S. Bracher for the sum of $10,000, the loss payable to Evelina Bracher, if living. The consideration was the payment, in advance, of $383.90, and the like amount on or before the 9th day of February and August in each year thereafter during the lifetime of the assured. He died November 16, 1902, having paid said premiums as they fell due down to and including the 9th day of August of that year. On the 6th of December thereafter the proofs of death required by the policy were delivered to the defendant. Defendant admits its liability to pay the said $10,000, but claims there should be deducted therefrom the premium, which, had the assured lived, would have accrued February 9, 1903. Whether this deduction can be made is the only question to be determined. The language of the policy essential to an understanding of the controversy is as follows:

* *

*

*

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The defendant "on receipt of satisfactory proofs of the death of the said assured, providing this policy is then in force, agrees to pay ten thousand dollars to Evelina Bracher. This assurance is granted in consideration of the written and printed application for this policy, which is hereby made a part of this contract; and of the payment in advance of Three Hundred and Eighty-three and 90/100 Dollars, and of the payment of Three Hundred and Eighty-three and 90/100 Dollars, on or before the Ninth day of February and August in every year thereafter during the lifetime of the assured.

"THE LOANS, SURRENDER VALUES, BONUS GUARANTEE, OPTIONS, PRIVILEGES AND CONDITIONS

stated on the second and third pages hereof form a part of this contract as fully as if recited at length over the signatures hereto affixed."

The quotations here made are from the first page or face of the policy, under which are the signatures of the president and registrar. On the third page, under the heading, "Facility in Making Payments" is the following:

"All premiums are due in the City of New York, but at the pleasure of the Society suitable persons may be authorized to receive such payments at other places on or before the due dates, but only on production of the Society's receipt therefor, signed by its Secretary and countersigned by the authorized person to whom the payment is made. Although the contract is based on the receipt of premiums annually in advance, the premium may be made payable in semi-annual or quarterly installments in advance, but in such case any future installments which, at maturity of the contract, are necessary to complete the full year's premium shall be deducted from the amount of the claim."

The words underscored are written; the remainder is printed. A contract of insurance is to be interpreted so as to give effect to the intent of the parties as indicated by the language employed, and the