
    Senter v. Senter, Executor.
    
      Mortgagee purchaser of real estate — May not merge legal and equitable estates, when — Mortgagor discharged in bankruptcy— Bought back property from mortgagee — Release of mortgage by mortgagee — And conveyance of fee — Legal and equitable estates merged — Surety of mortgagor released, when — Interpretation of words "other considerations” — Unilateral instrument construed a bilateral contract, when.
    
    1. A mortgagee of real estate whose mortgagor had become bankrupt and who bought the mortgaged property at bankrupt sale and took a deed from the trustee in bankruptcy, “subject to the mortgage,” and entered into possession and received rents and profits, did not by these facts alone merge the legal and equitable estates.
    2. Later the mortgagor, having been discharged in bankruptcy from the debt secured by the mortgage, bought back the property from the mortgagee, then the owner of the legal estate, taking a deed in fee simple absolute, with covenants of warranty and seizin. Simultaneously with the delivery of the deed the mortgagee entered satisfaction and discharge of the mortgage upon the record. The mortgagee, having been advised by a counsellor at law that this would constitute a merger, did, by the release of the mortgage and the absolute conveyance of the fee, merge the equitable and legal estates.
    3. By thus merging the two estates, the mortgagee was disarmed of the right of foreclosure to subject the property to the payment of the debt, and thereby released a known surety for the debt, who had signed the mortgage notes jointly with the debtor as an accommodation maker.
    4. In the negotiation for buying back the property, the mortgagor stipulated for the surrender of the notes and the cancellation of the mortgage, and the mortgagee assented. The deed reads: “for the consideration of one and other valuable considerations dollars received to my full satisfaction.” The words “other valuable considerations” are to be interpreted as referring to the surrender of the notes and the cancellation of the mortgage, although they are inserted in the space left in the deed for naming the money consideration moving from the grantee to the grantor.
    
      5. An instrument unilateral in form, containing dubious or incongruous language, may nevertheless be construed to import a bilateral contract, where the relations of the parties, the nature of the transaction, and their conduct before and after the instrument is written, show that such a construction makes the confused verbiage intelligible and effects a just result.
    (No. 12893
    Decided February 25, 1913.)
    Error to the Circuit Court of Cuyahoga county.
    The defendant in error began this action April 1, 1908, by petition in the short form, upon three promissory notes of date June 3, 1899, for $500, each, payable at 12, 18 and 24 months, respectively, to the order of Sarah J. Hibbard, and signed by The Moline Refining Company, F. B. Senter and Kate Senter. Payments amounting to $356.53 were endorsed upon the first note in 1899, leaving a balance on the whole account of $1,153.55.
    The defendants, The Moline Refining Company and F. B. Senter, pleaded their discharge in bankruptcy on May 12, 1900, and they were let out of the case.
    Kate Senter answered that she signed the notes by way of accommodation only, as Sarah J. Plibbard well knew. Simultaneously with the notes a mortgage on certain real estate of The Moline Company was executed as security for the notes. Subsequently, in the bankruptcy proceedings against the company, Sarah proved the notes as a preferred claim by virtue of the mortgage, which was duly allowed; upon a sale of the mortgaged property under a decree of the court of bankruptcy, she bought the property for one dollar, subject to her mortgage, and the deed of the trustee in bankruptcy was made and confirmed in that form, August 24, 1900; she went into possession of the property and received the rents and profits till June 8, 1903, when she sold it to F. B. Senter by a deed in fee simple absolute, with covenants .of warranty and seizin, and received from F. B. Senter $775; the fair value was $2,500, and a part of the consideration of the conveyance was the surrender and the cancellation of the mortgage, and she entered satisfaction and discharge of the mortgage upon the record of mortgages, July 1, 1903. The defendant, Kate, claimed that the mortgage was security against her liability as an accommodation signer of the notes, that Sarah became a trustee of the mortgage under duty to apply the security to the payment of the notes for Kate’s benefit; when Sarah purchased the property from the mortgagor’s trustee in bankruptcy, subject to her mortgage, she took the property itself in the same trust, and when she conveyed it away and cancelled ■ the mortgage, she thereby deprived Kate of the right to have the security applied to the extinguishment of the debt, and Sarah is, therefore, estopped from asserting any claim upon the note against Kate.
    Replying, Sarah’s executor denied that Kate signed the notes as an acommodation maker and that she knew it, and that she assumed to pay the mortgage or any lien on the property when she accepted the deed from the trustee in bankruptcy “subject to the mortgage;” she admitted that she received rents amounting to $180, and averred that she paid off a tax lien of $255, for care of the property, $50, and for insurance, $30; that the property was worth only $775; the cancellation of the notes and mortgage was no part of the consideration of the sale to F. B. Senter, and that she did not agree to deliver up and cancel the same, but that she did cancel the mortgage without any consideration, but only to clear the title.
    The court of common pleas found the facts substantially as alleged in the answer, except the value of the property; also that Sarah was advised by her attorney, when she was about to convey the property to F. B. Senter, that the cancellation of the mortgage would “constitute a merger;” and that she intended to merge the legal and equitable estates. Whereupon the court found as matter of law that Sarah and her executor were estopped to deny payment of the notes and to assert any claim against Kate, who was, by the facts found, discharged- from liability on the notes; and judgment was rendered against the executor for costs.
    Error was prosecuted in the circuit court, which found that the common pleas had erred in three particulars: 1. In finding that “the other valuable considerations” mentioned in the deed from Sarah J. Elibbard to F. B. Senter were the surrender of the notes and the cancellation of the mortgage. 2. In finding that she intended to deliver up the notes. 3. In finding that when Sarah took the deed of the trustee in bankruptcy subject to incumbrances, she became estopped from collecting the debt. The circuit court reversed the judgment as contrary to law and the weight of the evidence, and remanded the cause; and then follows this clause in the entry: “Upon the new trial, unless the facts show that a part of the contract between Sarah J. Hibbard and F. B. Senter was that the money paid by him to her was paid and accepted as a full payment for the land and the notes which she still held, then the plaintiff will be entitled to recover * * * such amount as shall remain due upon the notes, after deducting the value of the land, at the time it was deeded to her by the trustee, less the amount she paid on the tax lien, deducting from such recovery, however, all dividends she received from both bankruptcy proceedings, if she received any.”
    The error assigned here is the failure to affirm the finding and judgment of the common pleas court.
    
      Mr. George W. Shaw and Messrs. Westenhaver, Boyd, Rudolph & Brooks, for plaintiff in error.
    We claim that the undisputed facts and circumstances disclosed by the record that Sarah J. Hibbard in her lifetime intended to merge and did merge both her legal and equitable title in and to the mortgaged premises, and thereby not only intended to extinguish but did extinguish the mortgage debt. Dickason v. Williams, 129 Mass., 182, 37 Am. Rep., 316.
    Whether or not a merger and an extinguishment of the mortgage debt takes place, depends to a very large extent upon the intention of the holder of a mortgage upon acquiring the legal title. 27 Cyc., 1379; Bell v. Tenny, 29 Ohio St., 240; Second Nat. Bank v. Ausperger, 5 O. C. D., 542, 12 C. C., 283; Lessee of Jennings v. Wood, 20 Ohio, 260; 20 Am. & Eng. Ency. Law (2 ed.), 1066, 1067.
    By the act of cancelling the mortgage, Sarah J. Hibbard solemnly declared that the promissory notes described in the mortgage had been “well and truly paid according to the tenor thereof.” This was the final act on her part in connection with the mortgaged premises, and we contend that it evidences conclusively an intention on her part to consider the mortgage debt as paid. In re Davis, 174 Fed. Rep., 556; Trimmier v. Vise, 17 S. Car., 499, 43 Am. Rep., 624; Pingrey on Mortgages, Sec. 1007; Lily v. Palmer, 51 Ill., 331; Shirk v. Whitten, 131 Ind., 455; Bassett v. Mason, 18 Conn., 131.
    
      Mr. Dorr E. Warner and Messrs. Musser, Kimber & Huffman, for defendant in error.
    We contend that whatever amount Sarah J. Hibbard realized from the sale of the mortgaged property which was given to secure the payment of the several notes in question, less the amount of the tax liens on said property, should be credited on the payment of said notes and whatever balance remained unpaid, the plaintiff in error, Kate Senter, is obliged to pay. We believe this to be just and in accord with the principles of law and equity governing such transactions. Post v. Tradesman’s Bank, 28 Conn., 420; Myers v. O’Neal, 130 Ind., 370, 30 N. E. Rep., 510; 27 Cyc., 1381, 1383; McClain v. Weise, 22 Ill. App., 272; Stearns on Suretyship, Sec. 98; Tetters v. Lamborn, 43 Ohio St., 144; Day v. Ramey & Co., 40 Ohio St., 446; Spencer v. Hartford’s Exrs., 4 Wend., 381; Thurston & Hays v. Ludzvig, 6 Ohio St., 1.
    The plaintiff in error has wholly failed to produce any evidence as a ground for estoppel in this case, although the law requires the evidence to be clear and unequivocal. Kroll v. Close, 82 Ohio St., 190.
   Wilkin, J.

The record shows that Kate Senter is the wife of F. B. Senter. The common pleas court found that she was only an accommodation maker of the notes; that Sarah J. Hibbard proved the notes against the bankrupts, The Moline Company and F. B. Senter, the principal makers, claiming a preference by virtue of the mortgage and filing a cross-petition for marshaling liens; that the property was appraised, subject to the mortgage and tax lien, as of no value, and that she bought it from the trustee in bankruptcy at one dollar, taking the title subject to the mortgage and tax lien; that she held the property from August 24, 1900, till July 1, 1903, and received income from it of $210, but paid $285 for tax lien and insurance; that she conveyed a perfect title in fee simple to F. B. Senter July 1, 1903, covenanting to warrant and defend it as indefeasible, and entered a discharge of the mortgage on the record, reciting that its conditions were satisfied; that “there was some talk of the delivery up of the notes” at the time of this transfer and cancellation, and the delivery of the notes and the cancellation of the mortgage constituted the other valuable consideration mentioned in the deed; that she was advised by her attorney, at the time of this transaction, that the sale of the property and the cancellation of the mortgage would constitute a merger, and that she intended to merge the legal and equitable estates, and is estopped to deny payment of the notes.

The determinative question which we have to decide is, did the circuit court err in overruling the last two findings of facts, viz.: (1) That the delivery of the notes was a part of the consideration of the sale, and (2) Sarah J. Hibbard intended to merge her equitable estate by the mortgage in the legal estate which she conveyed by the absolute terms of the deed to F. B. Senter.

On the first branch of the question, we find the reasoning of the circuit court in a copy of its opinion which is printed in the brief of counsel for the executor. “The consideration named in the deed being one dollar and other valuable considerations, the money consideration, however, being in fact $775, the court below held as a fact that the ‘other valuable considerations5 were the delivery up of these notes and the cancellation of the mortgage. This is really a contradiction of terms and should not have been so found. No part of the consideration passing to the grantor could consist of her releasing claims that she had against the grantee or anybody else. If she meant, for the $775, to convey this property, and in addition thereto to release these notes, then the releasing of the notes were considerations passing from her to the purchaser [grantee], who certainly would not be embraced in the term ‘other valuable considerations’ received by the grantor.”

We have the same transcript of the testimony and the same exhibits of documents that were submitted to the circuit court. Unfortunately the original deed is not attached to the record, but an abbreviated typewritten copy is substituted for it. The clause in which the dubious words occur is as follows: “I, Sarah J. Hibbard, the grantor, for the consideration of one and other valuable considerations -dollars, received to my full satisfaction from F. B. Senter, the grantee, do give, grant,” etc. It is conceded that this clause does not import the whole truth, and the grotesque form of the language suggests that the instrument was a printed blank form of deed and that the words in question were written in a blank space not appropriate for them; and it is apparent that those words taken in connection with the clause in which they are inserted, will not bear syntactic nor logical analysis. The learned circuit court, however, seems to have resolved the question of the meaning of the parties to the instrument by just that sort of dialectic discourse.

There is force in the learned judge’s logic, if the inquiry were confined to the writing. But the writing being equivocal, or, as the foregoing extract shows, absurd, we must inquire what was in the mind of the parties that moved them to insert in a perfect, formal clause of this deed an incongruous phrase. The province of legal interpretation is to discover, in this instance, the thought of two minds which suggested the use of this language. The mere accident that a purpose in which the minds coincided was set forth in the inducement instead of the granting clause or elsewhere, does not disprove that there was not an agreement of minds about something else than the sale of land.

The fact found by the common pleas court, about which there is now no dispute, and of which there is incontestible evidence in the record, is that “There was some talk of the cancellation of the mortgage and the delivery up. of the notes.” True, this refers to a consideration moving from the grantor to the grantee. True, also, the document before us is unilateral, and its normal form was composed to define only the consideration moving to the grantor from the grantee; but the grantor inserted “other valuable considerations,” and the finding last mentioned reveals to us the only “other considerations” that were in the minds of the parties.

If Sarah, the grantor, did not promise those “other considerations” she should not have put this useless language in her deed. The deed not having been reformed, the courts are compelled to interpret it as it stands. She did keep her promise as to one of those considerations; the conclusion is inevitable that she agreed to the other, and the evidence in the record is all that way.

This conclusion determines this case, by the very terms of the circuit court’s mandate for new trial, in the part which we have quoted at the close of our statement of the case — “unless the facts shall show that a part of the contract between Sarah J. Hibbard and F. B. Senter was that the money paid by him to her was paid and accepted as payment for the land deeded and the notes which she still held, then the plaintiff will recover against Kate Senter,” etc.

However, we will briefly pursue the second branch of the inquiry. Did the circuit court rightly overrule the common pleas court’s finding that Sarah intended to merge the legal and equitable estates? We would answer “yes,” if the common pleas had found that the merger took place at the time stated by the circuit court, viz., when she took the deed from the trustee in bankruptcy (subject to her mortgage). But the common pleas found that the merger took place when she made the deed to F. B. Senter and discharged the mortgage. That is an irrefragible proposition, and if the circuit court meant to overturn it, the latter court was in error. (The authorities are cited by counsel, supra.)

The documents in the case as well as the testimony of the witnesses show with unvarying certitude that Kate Senter was surety only for the debt, as the trial court found, and that Sarah Hibbard, who was Senter’s sister, knew that fact from the very inception of the debt of which the three notes in suit were renewals. The mortgage security belonged as much to Kate for her protection ’as to Sarah, and when Sarah released that security she also released Kate.

That the defendant in error is estopped from enforcing these notes against Kate Senter follows, as the judgment of the law, from what we have said.

Judgment of the circuit court reversed and that of the common pleas affirmed, and judgment here against the defendant in error for costs.

Judgment accordingly.

Shauck, C. J., Johnson, Donahue, Wanamakek and Newman, JJ., concur.  