tate of inheritance, a doctrine which was afterwards affirmed by Lord Mansfield, while 15 in Massey v. Johnson, 16 it was expressly declared that no agreement to convey "an equity of redemption would be binding unless in writing, because a court of equity treats the equity of redemption as the land itself, at all events an interest in land."

(b) Mortgage by Deed Absolute in Form, Defeasance by Parol or Separate Writing.The validity of a parol release is called in question most frequently where the mortgage is in form an absolute conveyance, the defeasance resting in parol, or in a separate writing. Where this is the case one unacquainted with the technical rules of law is not likely to see the necessity for a written release, and it may seem unjust to allow the mortgagor to repudiate a parol release not vitiated by unfairness on the part of the mortgagee.17 We find consequently, not a few cases upholding a parol release obtained under such circumstances, and, as generally happens when established rules of law are overridden in the apparent interests of justice these cases are surrounded with much erroneous reasoning.

Deed Absolute as Passing Legal Title.Thus, in order to support the conclusion that the mortgagor's interest under a deed absolute in form is not within the statute of frauds, some of the courts have assumed that if the legal title passed to the mortgageels the inter

16 Martur v. Mowling, 2 Burrows, 978. 16 1 Exchq. 253.

17 It would seem, however, that the evils from which the statute of frands was designed to protect might all be present in such a case. The land may have doubled or quadrupled in value since the time of the alleged parol release, while the temptation to perjury would be aggravated by facts not present in ordinary cases, and which would greatly aid the perjurer in accomplishing his object. The record evidence would indicate a perfect title in the mortgagee, while the fact that at the time of the alleged release the mortgage debt was fully equal to, or in excess of, the value of the land, would give plausibility to the story of the perjurer.

18 The very questionable rule that the legal title passes to the mortgagee where the conveyance is ab. solute in form has been adopted in some of the States where a mortgage in ordinary form creates a mere lien. Galleghar v. Giddings, 33 Neb. 222, 49 N. W. Rep. 1126; Harrington v. Birdsale, 38 Neb. 176, 56 N. W. Rep. 961; Brophy Mining Co. v. Brophy & Dale Gold and Silver Mining Co., 15 Nev. 101; Thaxton v. Roberts, 66 Ga. 704; Jay v. Welchel (Ga.), 3 S. E. Rep. 906; Richards v. Crawford, 50 Iowa, 494; Burdick v. Wentworth, 42 Iowa, 440; Farley v. Goocher, 11 Iowa,

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est left in the mortgagor would not be an interest in lands within the meaning of the statute of frauds. In the case of Stall v. Jones19 the mortgagor under deed absolute in form had accepted twenty dollars from the mortgagee knowing that the latter tendered it in full satisfaction of such claim as the latter might have in the premises. The court said: "In the case of an ordinary mortgage which under our law creates a lien and passes no title, it is reasonably clear that a right to redeem could not be barred by a transaction of this character, lying entirely in parol. But in this State a deed absolute in form although intended as a security, and in general treated as a mortgage, passes the legal title to the mortgagee * where the legal title has passed, where the mortgagee is in possession and where an arrangement is entered into which defeats the mortgagor's right to an accounting we see no reason why it should not bar a redemption." In Haggerty v. Brower,20 the separate defeasance had been surrendered by the mortgagor. The court intimates that such surrender would bar the right of redemption standing alone, but as the land mortgaged was a homestead, and the homestead right was also involved, it was held that that right could not be cut off by parol release and surrender of the defeasance. Odell v. Montrose," although the court held the parol release void as within the statute of frauds, yet this was on the theory that the legal title remained in the mortgagor, notwithstanding that his conveyance was absolute in form with a mere oral defeasance. Brinkman v. Jones22 also went upon the same

In

570; Hagerty v. Brown, 75 N. W. Rep. 321. But see Harrington v. Foley (Iowa), 79 N. W. Rep. 64.

19 66 N. W. Rep. 653.

20 75 N. W. Rep. 321. 21 68 N. Y. 500.

22 44 Wis. 498. This is a well considered case, and, although the court assumes that if the legal title had passed to the mortgagee the interest remaining in the mortgagor might have passed by parol, it intimates that there is no good reason why a deed absolute in form should be held to pass the legal title in jurisdic. tions where an ordinary mortgage would not have that effect. In Massachusetts, where an ordinary mortgage passes the legal title, the court in the case of Harrison v. Trustees, etc., 12 Mass. 456, held that the surrender of the separate defeasance by the mortgagor vested title absolutely in the mortgagee, suggesting at the same time that this could only be accomplished by a formal conveyance if the mortgage were in the ordinary form, but no reason was given for such a distinction. In the later case, however, of

theory, following Odell v. Montrose. In assuming that unless the mortgagor's interest include the legal title it is not protected by the statute of frauds, these courts evidently overlooked the fact that his interest had always been regarded by the English courts as an interest in lands within the meaning of the statute of frauds, although the legal title had for centuries been recognized as passing under the mortgage. The interest of the beneficiary under a trust is protected by the statute of frauds,23 yet the legal title is in the trustee, not in the beneficiary, and it has always been understood that the statute applied as well to equitable interests as to legal. The New Jersey court has squarely recognized the application of the statute of frauds to the interest of the mortgagor under a deed absolute in form,25 and there is little doubt but that its example will be ollowed when the question arises de novo in other States.

Trull v. Skinner, 17 Pick. 213, it was pointed out that the "surrender of the defeasance did not operate by way of transfer, nor, strictly speaking, by way of release working upon the estate, but as an estoppel arising from the voluntary surrender of the legal evidence by which alone the claim could be supported." See also Fallis v. Conway Ins. Co., 7 Allen, 46.

23 McLain v. McLain, 57 Iowa, 167; Richards v. Richards, 9 Gray (Mass.), 313; Holmes v. Holmes, 86 N. Car. 203.

24 Brown, Stat. of Frauds, 229; Wood, Stat. of Frauds, 414; Holmes v. Holmes, 86 N. Car. 205; Rawdon v. Dodge, 40 Mich. 697; Wright v. DeGroff, 14 Mich. 164; Scott v. Bush, 26 Mich. 418, 29 Mich. 523; Purcell v. Miner, 4 Wall. 513; Dunlap v. Gibbs, 4 Yerg. (Tenn.) 94; Newman v. Carroll, 3 Yerg. (Tenn.) 18; Hogg v. Wilkins, 1 Grant (Pa.), 67; Whiting v. Butler, 29 Mich. 143; McEwan v. Ortman, 34 Mich. 324; Ripley v. Seligman, 88 Mich. 201; Grover v. Buck, 34 Mich. 519; Grunow v. Slater, 118 Mich. 149; Hughes v. Moore, 7 Cranch (U. S.), 176; Kelly v. Stanberry, 13 Ohio, 426; Smith v. Burnham, 3 Sumn. 435; Maxwell v. Wallace, 8 Bush. Eq. 251; Simms v. Killian, 12 Ired. 252; Rice v. Carter, 11 Ired. 298; Lilly v. Dun. bar, 62 Wis. 198; Daniels v. Barley, 43 Wis. 566; Connor v. Tippet, 57 Miss. 594.

25 Van Keuren v. McClaughlin, 19 N. J. Eq. 187. 26 85 Ala. 476.

either by express terms or necessary effect reserves to the mortgagor an equity of redemption. In such case there may exist facts which may operate in equity to estop the mortgagor from asserting an interest in the property. The present deed however is absolute in form, and neither expressly nor impliedly reserves any interest in the grantor. His right of redemption was created by parol agreement when the deed was first made. A parol agreement concerning land may be discharged by parol, and such a discharge will constitute a valid defense to a bill to redeem.''27 The court here seems to have misapprehended the modus operandi of an instrument of mortgage. If the mortgagor's interest is created by parol what part does the absolute deed play in the creation of that estate? It purports on its face to convey the entire estate to the nominal grantee. And it is only on the assumption that it actually does what it purports to do that we can regard the mortgagor's interest as being created by the parol defeasance. But it has never been supposed that where the defeasance is in a separate writing it operates by itself alone to create the mortgagor's estate. Nor in the case of an ordinary mortgage has it ever been supposed that the words of grant pass the entire estate over to the mortgagee to be severed by the words of defeasance, and a moiety returned to the mortgagor. The only reasonable view is that in every mortgage regardless of its form, the words of grant and defeasance operate concurrently, that together they carve the mortgagee's estate out of that previously held by the mortgagor, leaving the residue in the latter. This partition is the final result of every mortgage, and what reason is there for regarding a deed with a parol defeasance as accomplishing this result by a process different from that of a deed containing a written defeasance? If the deed operates independently of the defeasance and conveys the entire estate in the

27 The dictum of the court that an interest in lands which can be created by parol can likewise be dis charged by parol seems to be opposed to the weight of authority (Batting v. Maatin, 1 Camp. 317; Mallett v. Brayne, 2 Camp. 103; Rowan v. Little, 11 Wend. [N. Y.] 606; Logan v. Barr, 4 Harr. [Del.] 546; Holmes v. Holmes, 85 N. Car. 205), but is supported by the opinions of several courts. Kienter v. Miller, 25 Pa. St. 481; McKinney v. Reader, 7 Watts, 123; Strong v. Crosby, 21 Conn. 398.

first instance, then at the moment of its inception it is not a mortgage but an absolute deed, and its character at the moment of inception controls. "Once a deed always a deed," is a maxim as fully established as "once a mortgage always a mortgage."'28

Estoppel Against Mortgagor.-But while the statute of frauds nullifies a parol release by the mortgagor, facts may exist which would estop him from asserting the interest which he has orally agreed to relinquish. Some courts have held that the mere surrender of the defeasance operates by way of estoppel to bar the right of redemption.29 But unless the mortgagee takes possession or makes improvements or takes some similar action in pursuance of the surrender, the better opinion seems to be that the doctrine of estoppel, strictly speaking, is not applicable,30 although when the mortgagor seeks relief in equity he may be turned out of court on the principle that he who seeks equity must do equity. If, however, relief is sought by ejectment, matters in the nature of equitable estoppel are not available as a defense unless otherwise provided by statute.32 In Michigan, even in equitable actions facts which would estop a party from asserting title to personalty will have no such effect with respect to realty. In Huyck v. Bailey, the complainant, the owner of a reversionary interest in land had acquiesced in the sale of timber by the life tenant to the defendant, and afterwards filed a bill to restrain the latter from cutting the timber. Injunction was granted. The court said: "It will be ob

28 Note to Chase's Case, 17 Am. Dec. 304; Doughty v. Miller, 5 Dick. (N. J.) 529; Frink v. Adams, 9 Stew. (N. J.) 485; McMillan v. Bissel, 63 Mich. 72.

29 Trull v. Skinner, 17 Pick. 213. See also McMillan v. Jewett, 85 Ala. 476; Stall v. Jones, 66 N. W. Rep. 653.

30 Odell v. Montrose, 68 N. Y. 500; Hays v. Livingston, 34 Mich. 394.

31 Green v. Butler, 26 Cal. 595; Watson v. Edwards, 105 Cal. 70.

32 In Michigan this rule is still adhered to very closely (Buel v. Irwin, 24 Mich. 145; Ryders v. Flanders, 30 Mich. 336; Harriet v. Kinney, 44 Mich. 457; Geiges v. Greiner, 68 Mich. 153; Whiting v. But ler, 29 Mich. 122; Mich. Land Co. v. Thoney, 89 Mich. 226, 50 N. W. Rep. 815; Paldi v. Paldi, 95 Mich. 410), but has been changed in England and in the Code States. Bliss, Code Pld. 347. The reason for the dis tinction between legal and equitable defenses is pointed out by Judge Cooley in Hays v. Livingston, 34 Mich. 394 5.

33 100 Mich. 226.

served that the extent to which the showing made by the answer goes is that the defendant purchased the timber of the life tenant under such circumstances as would perhaps have estopped the complainant had the property been personalty, but it does not set up any fraudulent concealment of facts by complainant as to the true title. Unfortunately for the complainant's contention the statute of frauds prevents the passing of title to realty by parol, and this cannot be done any more under the guise of an estoppel in the absence of fraud, and when the estoppel consists only of an implied assent, than by showing a direct parol contract." Charlotte, Mich.

W. A. COUTTS.

TAXATION-EXEMPTIONS.

YOUNG MEN'S CHRISTIAN ASSN. OF OMAHA v. DOUGLAS COUNTY.

Supreme Court of Nebraska.

1. An intention to use property occupied for business purposes at some uncertain time in the future, for purposes which will render it exempt from taxa. tion under the laws of the State, will not preclude its being taxed under the general revenue laws, so long as occupied for such business purposes.

2. Statutes providing for exemption of property from taxation when used for purposes therein mentioned, being an exception to the general rule of taxation, and in derogation of the equal rights of all, are to be strictly construed.

3. The Young Men's Christian Association of Omaha, being organized and incorporated for educa. tional, charitable, and religious work, owned certain real estate, upon which was erected building used by it for the purpose of carrying forward the object of its organization, except the first floor thereof, which was rented for business purposes, the rents being applied to the work of the association. Held, that the portion of the property occupied for business purposes was not used exclusively for educational, charitable, and religious work, and therefore not exempt from taxation, under the general revenue laws of the State.

HOLCOMB, J.: A petition was filed for the purpose of obtaining an order of injunction to restrain the appellees, the county of Douglas and the county treasurer thereof, from collecting certain taxes alleged to have been illegally assessed against the appellant's property situated in Omaha, Douglas county, and consisting of a city lot and a building erected thereon. In the petition it is alleged that the appellant is a duly-organized corporation, under and by virtue of the laws of the State, maintained and existing for school, religious, and charitable purposes, and that the property which is attempted to be assessed is exempt under the constitution and laws of the State. It is to be conceded at the outset, as it is admitted by the demurrer to the petition which was filed, and under which the question

was decided, that the object and purposes of the appellant corporation are such as to exempt the property used exclusively by it for the purposes of its organization from taxation under the laws of the State. The controversy as to its property being taxable, notwithstanding the exemption referred to, arises, and becomes apparent, from the following allegations in the second paragraph of the petition. After describing the lot of land owned by it, it is said "that on this lot this plaintiff constructed, about the year 1887, and has ever since been maintaining, a large four-story stone building, which building has always been used for said purposes of said Young Men's Christian Association. The first floor of said building the plaintiff is now leasing temporarily for business purposes; the rents thereof, as well as all the income from all sources, being used exclusively in maintaining the educational, religious, and charitable work of the plaintiff. It is the purpose and intention of the plaintiff to use the first floor for offices, gymnasium, baths, etc.; but, owing to its restricted income, it is compelled, for the present, to rent the same, and apply the rents to the running expenses of the institution, until its income from other sources and voluntary donations will pay the expenses of maintenance for the purposes aforesaid." Whether the assessment of taxes sought to be restrained is against the entire property, or only the portion thereof rented for business purposes, is not disclosed by the petition. It is alleged that there was levied and assessed against the plaintiff, and against the said lot of ground, the taxes for the years 1892, 1893, 1895 and 1896.

The demurrer to the petition raises but one question, and that is whether or not, under the constitution and laws of the State, the plaintiff's property, or the portion thereof rented for business purposes, is wholly and altogether exempt from taxation. It is provided by sec. 2, art. 9, of the constitution, that "the property of the State * ** shall be exempt from taxation, and such other property as may be used exclusively * for school, religious * and charitable purposes, may be exempted from taxation, but such exemption shall be only by general law." By sec. 2, ch. 77, of the revenue laws it is provided: "The following property shall be exempt from taxation in this State: * * * Such other property as may be used exclusively

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for school, religious, cemetery and charitable purposes." While there is an allegation that the plaintiff intends to use the rooms now rented for business purposes for offices, gymnasium, and other purposes proper and necessary for carrying out the objects of its organization, we do not think such allegation can materially affect the decision of the case as to the present situation and uses to which the property is put as disclosed by the petition. An intention to use it for such purposes in the future, which would doubtless, when so used, exempt it from taxation, is not a present exclusive use, as con

templated by the constitutional and statutory provisions quoted. In the case of Academy v. Irey, 51 Neb. 755, 71 N. W. Rep. 752, it is held that, in order to be exempt from taxation, the property must be used directly, immediately and exclusively for the purposes mentioned in the provisions referred to. It cannot, we think, under the allegations of the petition, be successfully contended that, because of an intention to use the property at some time in the future directly by the association for offices, etc., such intention is a direct and immediate use for such property. As has been aptly said by Mr. Justice Brewer, in Washburn College v. Commissioners of Shawnee Co., 8 Kan. 344: "An intention to occupy is not equivalent to occupation-does not tend to prove it. The pleadings recognize the difference, for they admit the failure while they allege the intention to occupy. An occupation which is to be-though here it is only which may be is no present use. Nor is ownership evidence of use. Full possession and perfect title are consistent with total failure to use. This is too plain to need either argument or illustration. If the framers of the constitution had intended to exempt all property belonging to literary and charitable institutions from taxation, the language employed would have been very different. They would have used the simple, ordinary language for expressing such intention. The fact that they ignored 'ownership.' and made 'use' the test of exemption, shows clearly that they recognized the essential distinction between the two, and established the latter, rather than the former, as the basis of exemption." In First Christian Church of Beatrice v. City of Beatrice, 39 Neb. 432, 58 N. W. Rep. 166, it is held that the possession and ownership of a lot which is rented, the rent derived therefrom being set apart to constitute a building fund for the purpose of erecting a church edifice thereon, which the society had resolved to build, was not a use of the property such as would exempt it from tax. ation under the provisions of the law referred to. It would therefore seem that an intention to use, at some indefinite time in the future, the rented portion of the property exclusively for the purposes for which the society is organized, cannot control in the determination of the legal effect of the present uses of the property as alleged in the petition.

The controversy is thus narrowed to the one question of whether the renting of the first floor of the building for business purposes, when the income or rental is devoted to the objects of the association, is an exclusive use of the property for religious and charitable purposes, within the meaning of the law. In arriving at a conclusion with respect to the matter, we are to bear in mind that, the exemption claimed being an exception to the general rule of taxation, and in derogation of the equal rights of all, the statute is to be strictly construed. This does not mean that there should not be a liberal construction of the lan

"guage used in order to carry out the expressed intention of the fundamental lawmakers and the legislature, but, rather, that the property which is claimed to be exempt must come clearly within the provisions granting such exemption. As is said by many eminent authorities, the exemptions are granted on the hypothesis that the association or organization is of benefit to society, that it promotes the social and moral welfare, and, to some extent, is bearing burdens that would otherwise be imposed upon the public, to be met by general taxation, and that from these considerations the exemption is granted. There is, in this case, no question as to the organization which claims the exemption being one serving such beneficial purpose, and entitled to the privileges granted, in so far as its property is used exclusively for such purposes. It is not whether it is entitled to any exemption, but whether the property claimed to be exempt is exclusively used for the purposes of its organization. In determining this, we are to adhere to a strict rule of construction of the language used granting the exemption. Cincinnati College v. State, 19 Ohio, 110; Stahl v. Association, 54 Kan. 542, 38 Pac. Rep. 796; State v. Board of Assessors, 35 La. Ann. 668.

It is argued that, the appellant being in the actual possession and use of the property taxed for the legitimate purposes of its charter, and renting two rooms temporarily, applying the rents to the charitable purposes of the organization, the property is within the protection of the statute exempting it from taxation, notwithstanding the temporary renting of the rooms on the first floor for business purposes. To hold that property rented for business purposes is exempt when the rentals or income therefrom are used exclusively for religious, charitable, or educational purposes, is extending the operation of the law further than is warranted by the language used. There is a clear and well defined distinction between the use of property and the use of the income derived therefrom. As was said in First Christian Church of Beatrice v. City of Beatrice, supra: "It might be that these rents would be exempt under the provisions of the constitution and the statute to which allusion has been made; for it might be contended with much plausibility that the money derived from rents is property to be used exclusively for religous purposes." There may be an exclusive use of the income, and not of the property from which such income is derived. Webster defines "exclusive" as "possessed and enjoyed to the exclusion of others; debarred from participation or enjoyment;" and "exclusively" is defined, “in a manner to exclude; as enjoying a privilege exclusively." If the property be used by appellant exclusively for purposes of its own organization, this would exclude the idea of others using it for an entirely different or secular purpose. The fact that appellant is in the exclusive use of a portion of the property for the legitimate purposes of its organization does not preclude the

occupancy of other portions for purely secular purposes, and thus subject the property so used to the general law of taxation. This has been repeatedly held in other jurisdictions, where laws exempting from taxation property used for charitable, religious and educational purposes have been under consideration, and it occurs to us that the mere fact of proximity cannot vary the rule. Whether it be portions of the same property, or separate and distinct parcels, it is governed by the same rule of construction. Our law is broad and comprehensive, and provides that all property exclusively used for the purposes mentioned is exempt, negativing the idea that property not so used is entitled to such favor. In Stahl v. Association, supra, where the language under which the exemption was claimed is very similar to that in the present instance, it is said, at page 549, 54 Kan., and page 797, 38 Pac. Rep., by Horton, C. J.: This construction omits to give sufficient force to the following language of section 6, viz.: 'for the exclusive purposes of religion or education.' The property exempt from taxation must not only bave been received, held, or appropriated by or for the association, but it must be received, held, or appropriated for the exclusive purposes of religion or education,' except the ground for a cemetery. Therefore, giving the provisions in the statute creating the exemption a strict construction, the charter must be interpreted to mean that the real or personal property of the association must be received, held, or appropriated 'for the exclusive purposes of religion or education only,' not for lease, investment or profit. When its real estate is rented to a tenant, or its funds invested in other property for profit, or loaned at interest, the property thus rented or invested or loaned will be liable to taxation, as much as any other property that is rented or invested or loaned, no matter in whose hands it might be." In Cincinnati College v. State, supra, it is held: "The property of literary and scientific societies is only exempt from taxation when used exclusively for literary and scientific purposes. If used for other purposes it is liable to taxatlon, although the proceeds are in future to be applied for the promotion of literature and science." Says Caldwell, J.: "It would, we think, be rather a forced construction of language to say that this building, with its eight stores, its merchants' exchange, and its other rooms used for miscellaneous purposes, is used exclusively for literary and scientific purposes. But when any society,

no matter of what kind, whether scientific, literary, or religious, enters the common business of life, and uses property for the purpose of accumulating money, the government should, and we think the statute does, treat it in the same way persons are dealt with who are using property in a similar manner, and engaged in the same business. Government cannot discriminate between the uses which different societies or individuals will make of the proceeds of their business, and