Saunders v. Stewart.

It appears from the complaint in this action that in April, 1870, the plaintiff being the owner of two wagons and ten horses with their harness, worth $1,400, for the purpose of securing M. C. Lake the payment of $598.20, caused a bill of sale of the property to be executed to him by P. Belton, to whom plaintiff had previously conveyed the same also by way of security. Afterwards plaintiff and defendent entered into a parol contract, by which defendant agreed to pay the debt to Lake, take the property into his possession, engage in the freighting business, pay the expenses of the business out of the proceeds, and at the end of three months settle with plaintiff, and after receiving his wages and the money advanced with interest, deliver back the property or its value or equivalent, if he should sell or exchange any part thereof. pursuance of the agreement, plaintiff procured Lake to make a bill of sale to defendant; the property was delivered; and defendant then engaged in the freighting business; but after the expiration of the three months refused to account to plaintiff, or settle with him or deliver up the property. On the contrary, he claimed, as shown by his answer, that he had purchased the property absolutely and paid for it full value; that plaintiff had nothing to do with his purchase from Lake; that Lake was represented to him as the full owner thereof; and that Lake executed to him a bill of sale, in which he undertook to warrant and defend the title of the property against the lawful claims of all persons whatsoever.

In

The referee, to whom the cause was submitted, found as a matter of fact that the bill of sale to defendant was an absolute one;

but in his report says: "In arriving at this result I have ruled out as incompetent under the pleadings, all the testimony tending to show that the conveyance from plaintiff to Belton was intended as a mortgage or pledge, and that Lake took the property as a mortgage with notice of a right of redemption in plaintiff, the said testimony having been objected to by defendant on the hearing as incompetent and irrelevant."

The final judgment of the court below was that the property should be delivered over to the plaintiff; that the debt of plaintiff to defendant had been paid by the earnings of the property; and that defendant should pay all the costs.

Saunders v. Stewart.

William Webster, for Appellant.

I. Parol evidence alone is not sufficient to authorize a court to enter a decree declaring a deed or bill of sale a mortgage or security; fraud or mistake should be made to appear, or some matter akin thereto, to authorize such decree. It is not claimed that defendant received the property in question as a security for the money paid to Lake. A trust, it may be, is relied on by plaintiff; the question will then arise, is there a trust declared? A trust of personal property may be created by parol and so proved, but whenever there appears a writing in relation to the property claimed to be trust property, this writing must and will govern both in law and in equity, and parol evidence cannot be introduced to vary or contradict its terms. Adams' Equity, 146; Hill on Trustees, 92. If plaintiff procured a bill of sale to be executed, is he not therefore estopped from showing a trust to have existed when such showing is only by parol?

II. Defendant had the right to sell or trade the property. How did he obtain such right unless he received it by reason of the bill of sale? That invested him with the title to the property. Thus plaintiff admits the title in defendant. Having thus admitted it, wherein consists the right of action of plaintiff against defendant? The pleader has stated that defendant had disregarded his trust, but no trust is charged in terms, neither will the facts warrant the conclusion that there was a trust.

Thomas E. Haydon, for Respondent.

I. The bills of sale from plaintiff to Belton, from him to Lake, and from Lake to defendant, no matter what their terms or covenants, were in law only surplusage; for the same transaction could legally have taken place by mere delivery from hand to hand as security; and such bills of sale by all authority could have been shown to be mere security for debts operating as chattel mortgages. A deed absolute on its face may be shown by the circumstances to have been intended as a mortgage. Runkle & Lichtenstein v. Graylord, 1 Nev. 125; Feusier v. Sneath, 3 Nev. 131; Bingham v. Thompson, 4 Nev. 232. Parol testimony is admissible to show

Saunders v. Stewart.

that a bill of sale was intended as a mortgage. Carlyon v. Lannan, 4 Nev. 159; White v. Sheldon, 4 Nev. 293.

II. The judgment in this case is based on findings. There is no statement on appeal, and consequently the court cannot review any proceedings after the argument on motion for new trial. Caldwell v. Greely, 5 Nev. 262; The Imperial Mining Co. ads. Barstow, 5 Nev. 253. The court had power, this being a case of equity jurisdiction, to set aside the report of the referee on motion for new trial, and take up the testimony reported, find the facts and render a decree. McHenry v. Moore & Murray, 5 Cal. 92; Cappe v. Bizzolara, 19 Cal. 607; Headley v. Ruel, 2 Cal. 322; Branger & Druar v. Chevalier, 9 Cal. 353.

By the Court, WHITMAN, J.:

This action was brought to have a bill of sale of personal property absolute on its face declared a mortgage, and for an accounting. The referee to whom the case was sent found for appellant. The district court granted a rehearing, and upon the facts reported entered a decree for respondent. It is urged that the court erred both upon the facts and in the law.

The facts support the decree, and the law applied is too well settled in the United States to be disputed at this day. That an absolute conveyance, whether of real or personal property, can in equity be shown to be a mortgage, or to have been given only as security, by parol proof; that it was obtained or is vitiated by fraud, mistake or undue influence; or that the consideration upon which it depends is a loan, has been held by the federal court, and by the courts of last resort in New York, California, Iowa, Texas, Illinois, Mississippi, Wisconsin, Tennessee, Michigan, Connecticut, Pennsylvania, Indiana, North Carolina, Vermont, Ohio, Virginia, and so far as the digests indicate, by those of several other states, the citations from which it is impossible to verify, owing to the fragmentary condition of the library of this state. So also it has been held directly in Carlyon v. Lannan, 4 Nev. other cases the general principle has been approved.

159, while in

The doctrine

is, that such evidence is not received to contradict an instrument of writing, but to prove an equity superior thereto.

Wheeler v. Schad.

The order and decree of the district court are correct, and they are affirmed.

CYRUS T. WHEELER et al., APPELLANTS, v. CHARLES SCHAD, RESPONDENT.

COVENANT TO BUILD DAM AND FLUME NOT RUNNING WITH MILL-SITE. Where the owners of a mill-site and water privilege conveyed a portion thereof, and six days afterwards such owners and grantees entered into a contract to erect and keep in repair at joint expense a dam and flume for conducting water to their respective mills; and subsequently the mill and mill-site of the grantees were sold out on judgment against them: Held, that the contract of the grantees to contribute to keep the dam and flume in repair was not a covenant running with the mill-site, and that the purchaser at sheriff's sale was not by his mere purchase liable for any portion of such repairs.

DISCONNECTED MATTERS DO NOT FORM ONE TRANSACTION.

Where the owners of a

mill-site and water privilege conveyed a portion thereof, and afterwards such owners and grantees entered into an agreement to erect and keep in repair a dam and flume for conducting water to their mills; and it did not appear that the agreement was a part of the conveyance or contemplated at the time: Held, that in no sense could the two papers be considered one instrument, or connected together.

COVENANT RUNNING WITH LAND HOW CREATED. A covenant to run with land must relate to and concern the land; and if it imposes a burden, it can only be created where there is a privity of estate between the covenantor and covenantee. COVENANT BINDING ON ASSIGNEE. To render a covenant binding on the assignee

or the covenantor, it must not only be meant to bind his estate as well as his person, but the relation between the parties must be such as to render the intention effectual; that is, there must be privity between the covenanting parties.

COVENANT RUNNING WITH LAND ONLY MADE IN FAVOR OF ONE INTERESTED IN THE LAND. A covenant real is and can only be incident to land; it cannot pass independent of it; it adheres to and is maintained by it; it is in fact a legal parasite; hence it follows that the person in whose favor it is made must have an interest in the land charged with it.

NO RECOVERY ON CONTRACT NOT COVERED BY PLEADINGS. In an action to recover half the cost of certain improvements made by plaintiff for the benefit of both parties, where the complaint based the assumpsit exclusively upon a written contract by the terms of which it was claimed defendant was bound as assignee: Held, that no recovery could be had upon a direct personal promise. PROBATA NOT TO GO BEYOND ALLEGATA. Proof is only admissible to establish the case made by the allegations of the pleading.

Wheeler v. Schad.

PAROL ADOPTION OF WRITTEN CONTRACT-STATUTE OF LIMITATIONS. If a party adopt by mere parol promise the written contract of another, his obligation will be barred by the limitation prescribed for parol contracts.

APPEAL from the District Court of the Third Judicial District, Lyon County.

The facts are stated in the opinion of the court.

Sunderland & Wood, for Appellants.

I. Plaintiffs are entitled, under and by virtue of the agreement, to have a lien upon the defendant's interest in the dam and flume for one-half the amount expended by them in making the repairs.

II. The deed made June 5th, 1862, and the agreement made six days thereafter, are cotemporaneous papers affecting the same property, and are to be taken and construed together.

III. The agreement constituted a covenant running with the land. 1 Parsons on Contracts, 199; Mosman v. Wells, 17 Wend. 136; Watertown v. Connen, 4 Paige Chy. 510; Taylor's L. & T. Sec. 437; 2 Sugden on Vendors, Chap. 14.

IV. The claim of plaintiffs is an obligation or liability, founded upon an instrument in writing, and therefore not barred by the statute of limitations as a parol contract. The statute does not require the instrument upon which a liability is founded to be signed by the party sought to be charged. Sherwood v. Dunbar, 6 Cal. 53; Saunickson v. Brown, 5 Cal. 57; Neighboerrs v. Simmons, 2 Blackf. 75; Raymon v. Simison, 4 Blackf. 85.

V. Defendant is personally liable. This is a proceeding in equity, and if a liability exists from defendant to plaintiffs, arising out of the indebtedness alleged in their complaint, relief should be granted. When a court of equity has acquired jurisdiction, and has the whole merits before it, it will proceed and do complete justice between the parties.

Williams & Bixler, for Respondent.

I. This action does not lie for want of privity, either of contract or of estate, between the parties. 2 Wash. Real Prop. 15, 16;