
    Elizabeth Blazy, Resp’t, v. Hector McLean, App’lt.
    
    
      (Court of Appeals,
    
    
      Filed December 1, 1891.)
    
    1. Deed—Collateral security.
    Plaintiff’s husband and another had contracted with defendant for the purchase of a farm, and upon the contract was endorsed a memorandum by which the former agreed to pay §2,000 additional, to be “secured in part ” by plaintiff’s deed of certain property belonging to her, said sum to be paid prior to the execution of the deed of the farm. Reid, that plaintiff’s deed was, in substance and effect, a mortgage, and as defendant conveyed the farm to a third party for a new consideration he was not entitled to hold plaintiff’s property as collateral security.
    2. Evidence—Written contract varied by oral testimony.
    The court refused to allow defendant to show that when the deed was executed the three parties and Mrs. Blazy were together, and that the deed was explained to her and she agreed to deliver it absolutely as a payment of §2,000, which defendant then agreed to accept and indorse. Reid, error; as Mrs. Blazy was not a party to the contract, but a stranger, and the rule as to varying a written contract by paroi testimony did not apply.
    Appeal from judgment of the supreme court, general term, fifth department, affirming judgment for plaintiff entered upon an interlocutory judgment previously rendered and upon the report of a referee to whom had been referred the matter of the rents and profits of certain real estate while in the possession of the defendant.
    
      E. W. Gardner, for resp’t; Cassius C. Davy, for app’lt
    
      
       Reversing 35 St. Rep., 409.
    
   Finch, J.

The deed of the plaintiff and her husband to the defendant McLean was declared by the judgment below to have been in truth a collateral security. The property which it covered belonged to the plaintiff in her own right, and the deed was delivered by her husband apparently in accordance with the terms of a written contract. John Blazy, the husband, and Augustus 0. White had contracted with McLean for the purchase of a farm. That contract recited a consideration of $5,092.52 “ with other stipulations and payments heretofore made and to be performed,” and was signed by the vendor and vendees. What those other stipulations and payments were the contract does not recite. But endorsed upon it appears the following memorandum signed by all the parties: “ In addition to the within payments of $5,092.52 we the parties of the second part agree to pay to the party of the first part $2,000 with semi-annual interest on the same from and after the 1st day of January, 1878, said $2,000 and interest being secured in part by a deed executed by Elizabeth Blazy and John Blazy on lots Nos. 29 and 30 on the north side of Wager street in the city of Eochester, and said $2,000 to be paid to the party of the first part prior to the execution of a deed to the parties of the second part; and on the sale of said lots by said McLean the avails of said sale after paying all expenses are to be applied on the $2,000 aforesaid, this being a part of the original agreement”

By the terms of this memorandum $2,000 was added to the purchase price, and that sum was declared to be “ secured in part ” by Mrs. Blazy’s deed. The two lots were not to be taken in payment of the $2,000, but to become security for that payment “ in part.” If the transfer was absolute there was no need of the additional memorandum, or if made, the price of the lots should have been credited at once.

This contract was dated January 23, 1878, and the deed was delivered by the husband the next day. There is no ambiguity in this writting. Blazy and White agreed to pay McLean $2,000 before the delivery of his deed, and Mrs. Blazy gave her deed as collateral security for their debt. It was therefore, in substance and effect, a mortgage. The evidence further shows that the debt which it was intended to secure no longer exists. McLean has ■conveyed the farm to Mrs. White for a new consideration agreed upon between them, and without the knowledge dr consent of Blazy or his wife. Of course he cannot now claim that the debt of two thousand dollars remains, and that he is entitled to hold the Eochester lots as collateral security.

But he takes a different position. He claims in his answer that he took the deed of Mrs. Blazy as payment in full for the $2,000 ; that Blazy as vendee abandoned the contract and forfeited the payment, and the vendor accepting that abandonment delivered up the contract as cancelled and annulled and re-sold the premises to Mrs. White. It is evident that this theory cannot stand upon the face of the written contract. That shows that McLean did not take the lots at $2,000 and agree to credit that sum on the •contract; and that he took them as security only in part, and if he sold them was to credit merely what he received. There was thus no error in the finding of fact that the deed was given as collateral security upon the facts permitted to be proven. The debt having been extinguished a re-conveyance was a natural and necessary consequence.

But the defendant offered to show a very different state of facts. Three times he sought permission to prove that the deed was delivered by Mrs. Blazy and accepted by him as a complete and absolute transfer of the lots and for which he agreed to allow two thousand dollars as a payment upon her husband’s contract. By the evidence of Blazy, the husband, it appears that there were two -occasions on which the subject of the deed was more or less discussed with the wife. One of these was on the day of the execution of the contract, and the other on the next day when the deed was signed and acknowledged. The defendant offered to prove that on each of these occasions it was explained to Mrs. Blazy that the deed was to be absolute and the value of the lots be at once applied upon the contract. This evidence was steadily excluded.

Just that agreement with the wife was pleaded in the answer, and no ground of objection was stated on the trial, and no allusion to the point is made in the opinion of the general term. The rulings are briefly defended by the respondent upon the, ground that the written contract was conclusive. That is true where the contest is between the parties to the instrument, but not true as against a stranger to it. Sprague v. Hosmer, 82 N. Y., 466 ; Lowell Mfg. Co. v. Safeguard Ins. Co., 88 id., 591. Mrs. Blazy was no party to this contract, and not bound by it. Notwithstanding the agreement of the parties to take the lots as collateral, she was at liberty to apply them absolutely or not at all on her husband’s contract, and the parties to that were at liberty, to induce her, if they could fairly, to take that action. When the deed was executed, the three parties and Mrs. Blazy were together, and one of defendant’s offers was to show that on that occasion the effect of the deed was explained to her, and she agreed to deliver it absolutely as a payment of $2,000 on the contract which the defendant agreed to accept and endorse. I cannot discover any lawful objection to that evidence. It does not even contradict or vary the writing. It only shows performance. By the contract Blazy and White were to pay $2,000 at any time before the vendor should convey, and Mrs. Blazy’s deed was to be given as security. But if she paid the $2,000 at once, no security was needed, and the proof offered showed simply an immediate payment in accord with the terms of the contract, and which merely made the provision for security needless and superfluous. The rejected evidence shut out the defense, and I am compelled to say that its rejection seems to me to have been a material error.

For this reason the judgment should be reversed, and a new trial granted, costs to abide the event.

All concur, except Huger, Oh. J., not voting.  