TOWER . DETROIT AND MILWAUKEE RAILROAD Co.

this court will not review questions of fact passed upon by the circuit court in such a case. On the second point, he claimed that error, both in fact and law, being assigned on the certiorari, this court can not presume that the reversal was upon the error of law, instead of the error of fact.

THE CHIEF JUSTICE:

We have repeatedly decided that we will not reverse the judgment of the circuit court, on a question of fact in such a case; but whether that principle is applicable to this case, should be discussed at the hearing, and not on such a motion.

Mr. Gould also offered affidavits, to prove the fact upon which his first position was based.

CHRISTIANCY, J.:

Have you any authorities that hold you may show such a fact by affidavit, where the record does not disclose it?

Gould:

The affidavits are offered in aid of the record, which does not show that there was an argument.

H. McCurdy, contra.

THE CHIEF JUSTICE:

We can not consider a question of this nature on affidavits. The motion must be denied.

EMERSON v. ATWATER.

Curtis Emerson v. Samuel T. Atwater and Others.

Where an erroneous principle has been established by the judicial decisions of the state, and individuals acting upon it as settled law have acquired rights under it, this court, after the lapse of many years, will hesitate long before overruling it, believing it to be better and safer to leave it to the Legislature to correct the error, as in that case all intervening rights would be saved, and injustice done to no one.

A deed, absolute on its face, given by a debtor to his creditor, may, in equity, be shown by parol to have been given to secure the payment of the debt; and when that fact appears, it will be held to be only a mortgage.

Where a debtor, owning lands encumbered by mortgages, gave his creditor a deed of the lands, on a parol understanding that the creditor was to dispose of them for the payment of the mortgages, and his debt, and account to the debtor for the balance, and the creditor, instead of paying off the mortgages, bought them, as agent for and in the name of a third person who claimed not to be aware of this understanding: - Held, That the latter could not claim to be a bona fide purchaser without notice of the debtor's equities, but must be held in law chargeable with knowledge of the facts of which his agent was cognizant.

Such purchaser of the mortgages, holding them subject to the debtor's equities, can not cut off those equities by selling the land mortgaged, under the power of sale, and bidding it in himself.

A plea that defendant is bona fide purchaser and owner of the absolute title to lands, is not sustained by proof showing that he is owner of a mortgage interest only.

Where one defendant answers, and the other interposes a plea which is put in issue, and the defendant answering is examined as a witness for his co-defendant, his testimony must be restricted to matters, in proof of the plea, in which he is not himself interested.

It is the interest of the party in the subject matter to which he is examined, and not the effect his evidence may have in the final determination of the issue, that renders him incompetent.

Heard May 4th, 5th, 6th, 10th, 11th, and 12th. Decided July 12th.

Appeal in chancery from Saginaw Circuit, where decree was given for complainant.

The pleadings and testimony in the case are so fully stated in the opinion, that it is deemed unnecessary to give any further abstract of them.

M. Wisner, and C. I. Walker, for complainant:

1. The plea of defendant Green is not sustained by his evidence. His plea is of a bona fide purchase at the

EMERSON V. ATWATER.

mortgage sales, for money paid down; and the proof is of the premises being struck off to him on the foreclosure of mortgages standing in his name, and without any payment whatever by him at the time. This defence must therefore fail. He can not change his position, and set up any other purchase, at any other time, or this purchase for any other consideration, or that these deeds were made to him as security. 14 Johns. 501; 1 Cow. 711; 10 Wheat. 181; 9 Pet. 405; 3 Sandf. Ch. 305; 10 Pet. 177.

2. The defendant Green was not a purchaser without notice.

Emerson is shown by the evidence to have been in possession of the premises at the time; and such possession is implied notice of the rights, whether equitable or legal, of the occupant, although no actual notice is proved -16 Ves. 249; 2 My. & K. 629; 5 Johns. 29; 2 Paige, 300; 4 Blackf. 383; 8 Greenl. 94; 13 Ohio, 408; 2 J. J Marsh. 435; 1 Litt. 351; 7 Watts, 384; 2 Hill Ch. 428.

But if there was any doubt upon this point, we prove, beyond all question, that, when Green received the deeds upon which he plants himself in his plea, he received them through the agency of Atwater, who was fully cognizant of all the facts.

When acting, therefore, as the agent of Green, he had full notice of our equities; and notice to the agent is no tice to the principal.-2 Vern. 574; 3 Atk. 646; 1 Keen, 154; 3 Russ. 493, note 1; 1 Hoff. Ch. 153; 9 Paige, 319; 4 McLean, 93; 27 Ala. 345.

3. Parol evidence is admissible to show that a deed absolute upon its face was intended as a mortgage, not only where the defeasance was omitted by fraud, accident, or mistake, but where it was omitted by design, on mutual confidence; and where the fact is established by such proof, it will be held as a mortgage.-4 Kent Com. (143) 146; 4 Johns. Ch. 167; 6 Ibid. 417; 1 Paige, 77; 5 lbid. 10; 6 Ibid. 480; 8 Ibid. 238; 36 Me. 123; 6 Humph. 99;

4

EMERSON v. ATWATER.

2 Sum. 233; 3 Story, 290; 1 Hoff. Ch. 31; 1 How. 125; 12 Ibid. 147; 19 Ibid. 300; Harr. Ch. 113; 2 Lead. Cases in Eq. Part 1, 533; 2 Lead. Cases in Eq. Part 2, 436; 16 N. Y. 341; 5 McLean, 282; 26 Ala. 312; 29 Ibid. 261; 21 Mo. 325; 1 Wis. 527; 2 Curt. 386; 6 Watts, 130.

The fact that the grantee was to have the power to sell, to pay off indebtedness, does not affect the question, or alter the nature of the transaction. - Ibid.; 3 Pick. 490.

There is a striking similarity between the case cited from 19 Howard, and the case at bar, as well in the facts as in the legal principles involved.

The case of Fuller v. Parish, 3 Mich. 211, goes much further than we contend for, and may not be law since the case of Adair v. Adair, 5 Mich. 204; but the latter case does not conflict with our position.

We are also clearly entitled to a decree for a specific performance of the contract of Atwater, set up in the bill, and fully proved, on the ground of part performance. Lead. Cas. in Eq. (507) 557, 567.

G. C. Bates, and J. Moore, on same side.

S. T. Douglass, for defendant Green:

,,

1. Upon the bill, the conveyance from Emerson to Atwater was a conveyance upon express trusts· - that is, trusts created by express declaration or agreement, and not a conveyance upon implied trusts which arise by construction of law, or by act or operation of law upon the acts or situation of the parties. Willard Eq. 416; Hill on Trust. 91, 114; 1 Spence Eq. 508; Browne on Stat. Fr. Ch. VI. As the bill makes a simple case of a conveyance upon express trusts, without alleging any facts out of which implied trusts could arise, evidence is inadmissible under it to make a case of implied trusts. 1 Bro. Ch. Cas. 93; 5 Ga. 589, 598, 623; 3 R. I. 237; 6 Barb. 107; 2 Wis. 593.

EMERSON . ATWATER.

2. Under our statute of frauds such an express trust could only be created "by deed or conveyance in writing, subscribed by the party creating or declaring the same."1 Bro. Ch. Cas. 92; 1 Ves. 241; 1 H. Bl. 659; 4 Russ. 423; 3 P. Wms. 618; 3 Bro. Ch. Cas. 577: 1 Eden, 515; 6 Ves. 332; 1 Johns. Ch. 339; 5 Ibid. 1; 6 Barb. 99; 13 Mass. 443; 5 Cush. 90; 2 Ibid. 232; 7 Ind. 308; 8 Ibid. 209; 2 Green Ch. 362; 2 Wis. 583; 3 Ibid. 576; 2 Bibb. 311; 9 Dana, 108; 5 Ga. 341; 6 Ibid. 591; 4 W. & Serg. 149; 5 Ibid. 427; 9 Watts, 32; 1 Des. 333; 32 Me. 34; 1 Jones Eq. 193; 2 Ibid. 259; Ibid. 184; Busbee Eq. 259. It is conceded that there are authorities which can not be reconciled with this position, and which treat cases like that now under consideration as cases of constructive trust arising out of fraud. But these cases seem to us to be a manifest deParture from sound principle. To lay the foundation for such a trust, the fraud must be not simply that which is involved in every breach of contract, but there must have been an original misrepresentation, by means of which the legal title was obtained; an original intent to circumvent and get the better bargain by the confidence reposed. And when such a trust is sought to be enforced, the fraud should be distinctly alleged and clearly proved.—1 Sugd. on Vend. 187; Browne on Stat. Fr. §§ 94 to 96, and p. 109, n. 3; 2 Lead. Cas. in Eq. Pt. 1 pp. 585 to 588; Hill on Trust. 166; 6 Harr. & J. 255; Ibid. 422; 1 Rich. Eq. 91; 2 Ibid. 162; 1 Watts & S. 372; 10 Watts, 313.

3. The conveyance to Atwater was not by way of mortgage merely. Upon the averments in the bill, it was a conveyance upon trust, and not a mortgage, in so far that it was a conveyance upon the terms that Atwater should take charge of the lands, and manage the same, and sell portions thereof, and out of the proceeds pay what was due upon the Blackmar and Eaton contract, take a title from them, and pay off the encumbrances upon the property.-5 Cush. 90; 18 How. 143; 11 Ohio, 204; 17 Ohio,