Gassert v. Bogk

Bacii, J.

This action was commenced on the twenty-eighth day of May, 1886, in the justice’s court, Silver Bow County, under the law generally known as the summary proceeding by a landlord against his tenant holding over contrary to the terms of his lease. The defendant filed an answer setting forth a claim of title; whereupon the cause was certified to the district court of Silver Bow County, in which court the cause was tried, and trial resulted in a verdict and judgment for the plaintiff. The appeal is from the judgment. The judgment roll is comprised of the pleadings, and a statement on appeal, which contains exceptions.

The first exception which we will consider is that which was taken by the defendant to the refusal of the court to grant a nonsuit at the close of plaintiff’s case.

It must be remembered that we are not considering a motion for a new trial, and that as to the question of nonsuit, we must confine ourselves to the testimony then before the court. At the trial of the cause, the plaintiff introduced in evidence a deed dated May 19, 1885, by which deed the defendant, for and in consideration of the sum of seven thousand five hundred dollars, herein granted to the plaintiff Steele, his heirs and assigns forever, an undivided one-half interest in and to the premises *593 mentioned in the complaint; also a deed of the same date from the said defendant, granting the plaintiffs Reding and Gassert, their heirs and assigns forever, an undivided one-half interest in and to the same property for a similar consideration; also an agreement, bearing same date, by terms of which Steele, Reding, and Gassert agreed as follows: —

“agreement.

“Memorandum of agreement entered into at Butte City, Montana Territory, on the nineteenth day of May, 1885, between Harry Gassert and Jacob Reding, parties of the first part, James H. Steele, party of the second part, and Gustavus Bogk, party of the third part, all of Silver Bow County, Montana Territory, witnesseth: Whereas, the said Gustavus Bogk and Margaretha Bogk, his wife, have this day sold and by deed conveyed to said first and second parties, in consideration of seven thousand five hundred dollars respectively paid by said first and second parties, an undivided one-half interest each in and to the north twenty-one feet three inches of lot number five (5), in block No. 29, in the city of Butte, according to the official plat and survey of said city, and a like undivided one-half interest each in and to the following mining lode claims, situated and lying in Summit Valley district, Silver Bow County, Montana Territory, to wit: The Berlin, Margaretha, Gustavus, Eva, and Leaf lode claims, reference being made to the deed mentioned for a fuller description of said property; and whereas, the said Gustavus Bogk is desirous of having the right to repurchase said property within one year from the date of this agreement, —

“ Now, in consideration of the premises, and of one dollar by him paid to said first and second parties, the receipt of which said last-named parlies do severally hereby acknowledge, said first and second parties do hereby covenant and agree to resell and reconvey to said third party the undivided one-half interest in and to the above- *594 described property severally sold and conveyed to said parties by the said Gustavus Bogk and wife, provided said third' party shall on or before the nineteenth day of May, 1886, pay or cause to be paid to said first party the sum of $8,967.50, and shall pay or cause to be paid to the said second parties a like sum of $8,967.50 on or before the said last-named date.

“ In witness whereof, said first parties by their attorney in fact, Henry Jacobs, and said second party in person, do hereunto set their hands and seals on the day and year herein first above written.

(Signed) “Harry Gassert. [Seal]

“ By Henry Jacobs, his attorney in fact.

(Signed) “ Jacob Reding. [Seal]

“ By Henry Jacobs, his attorney in fact.

(Signed) “ James H. Steele.” [Seal]

Duly verified and recorded in Silver Bow County, Montana.

It will be observed that no loan is referred to in either of said deeds, or in said contract to reconvey; that said contract contains no promise on the part of Bogk to pay the sum mentioned, and is not executed by him, and that said contract' refers directly to a sale. Plaintiff then introduced in evidence a lease of said premises, dated May 21, 1885, executed by plaintiffs herein to said defendant, for the term of one year, at the annual rent of $450; the lease is signed by Bogk, and he therein covenants to surrender the premises upon the expiration of the term. In addition to this, plaintiff introduced evidence to show reasonable value of the rents and profits, and to show also that the defendant was holding over against the consent of his landlords. That is all the testimony introduced prior to the motion for a nonsuit. The absence of testimony sometimes is a material fact. Many of the cases cited by counsel for appellant are determined upon the facts not before the court below at *595 the time of the motion for a nonsuit, hut as those facts are material in drawing the distinction to be made between the different eases cited upon the argument, we will note them at this time. It will be observed, then, that, up to this point in the case, no evidence was given tending to show a previous loan, or any application for a loan; that there is no evidence tending to show what was the value of the premises in question; that there is no evidence to contradict the presumption that the lease was executed two days after the deed’s conveyance, as its date imports. The motion for a nonsuit was made upon the following grounds: — ■

“motion for nonsuit.

[Title of court and cause.]

“Now comes the defendant in the above-entitled action, and moves the court that the plaintiffs be nonsuited in this action, for the reason that the evidence introduced by them in this action fails to prove their cause of action, in this: they failed to prove that they were ever at any time in possession of or entitled to the possession of the premises described in the complaint, and that defendant ever entered into possession under and by virtue of said lease, or referable thereto, and that the defendant totally failed to prove a demand to have been made for the possession of said premises by them or any one upon the defendant, and that the plaintiffs ever or at any time served or gave notice to quit and deliver possession of same to the defendant, or cause it to be done at any time, or at all.

(Signed) “John T. Baldwin,

“Attorney for defendant.”

The complaint alleges that more than three days prior to the commencement of the action, a demand in writing was made upon the defendant to deliver up the possession of the property; and further alleges the re *596 fusal of the defendant so to do; the answer contains no denial of these allegations; it was therefore unnecessary for plaintiff to prove a demand. The remaining ground upon which the motion for nonsuit was based is the main point in this case. Do the deeds, contract to reconvey, and the lease, when considered together, constitute a mortgage? If they do, then plaintiffs have failed to show a tenancy; if they do. not, then the tenancy was proven.. In considering this question, particular attention must be given not only to the facts proved, but also to the absence o'f any evidence as to certain other facts to which reference has already been made. We will consider the case, first in regard to the authorities cited, and then upon the principles which we think should control cases of this character.

The cases cited by appellant may be divided into three classes, and it-will be seen that the third class alone is authority for his view of this case. The first1 class includes those cases in which the papers (deed and bond) upon their face recite that the transaction is one for the security of a loan. This class includes the following cases cited by appellant: Erskine v. Townsend, 2 Mass. 493 ; Beatty v. Snooks, 5 Mich. 231 ; Eurs v. Sutherland, 11 Mich. 539 ; Perkins v. Dibble, 10 Ohio, 433; Dey v. Dunham, 2 Johns. Ch. 182 ; Bank v. Upmann, 12 Wis. 555 . The second class includes those cases where evidence aliunde shows that a mortgage, and not a sale, was intended, including cases where the evidence shows such facts as a previous loan, an application for a loan, great difference in value, application on the part of grantee to have the debt or portion thereof repaid. Under this class may be placed the following cases cited by 'appellant: Walker v. Mining Co., 2 Col. 94, in which there was a note; Trucks v. Lindsey, 18 Iowa, 505 , in which the court say that sale of land with contract to reconvey will be upheld, where a sale, and not a *597 mortgage, is intended; Scott v. Menherter, 49 Iowa, 487 ; Presbaker v. Feaman, 32 Ill. 475 ; Ewart v. Walling, 42 Ill. 453 ; Clark v. Finlon, 90 Ill. 246 ; Crassen v. Surreland, 22 Ind. 427 ; Sharkey v. Sharkey, 47 Mo. 543 ; Ferris v. Wilcox, 51 Mich. 105 ; Marshal v. Stewart, 17 Ohio, 356; Stephens v. Sherod, 6 Tex. 294 ; Ruffier v. Womach, 30 Tex. 341 ; Plato v. Roe, 14 Wis. 490 ; Brinkman v. Jones, 44 Wis. 514 ; Robinson v. Willoughby, 65 N. C. 520 ; Overton v. Bigelow, 3 Yerg. 513 .

It will appear hereinafter cited that the courts of last resort in Texas and Michigan, Illinois, Wisconsin, Indiana, and Tennessee, have held that a deed with a contemporaneous contract to reconvey are not per se mortgages.

The third class of cases is that in which the courts hold that a deed with contract to reconvey are per se mortgages. This class includes the cases from Vermont, Maine, Massachusetts, and Pennsylvania. Looting at this case upon well-established principles, and confining ourselves strictly to the evidence before the court when the motion for a nonsuit was denied, we are forced to the conclusion that the ruling of the court was correct.

At the present time, a mortgage is a security, and it is quite impossible to conceive of a conveyance wthich would or could be a mortgage unless such conveyance was given to secure the performance of some act or obligation.

“ A definition broad enough to cover any view of the transaction and any form of it can only be that it is a conveyance of land as security.” Jones on Mortgages, sec. 16. “No conveyance can be a mortgage, unless it is made for the purpose of securing the payment of a debt or the performance of a duty, either existing at the time the conveyance is made or to be created or to arise in the future.” Morley v. Dryden, 47 Mo. 226 -271. We are not to be understood as saying that there must be *598 some promise in writing to pay the debt, where the mortgage is given to secure the payment of money; that promise may be implied from the facts. Still the absence of any writing showing an express promise to pay is said to be strong evidence that the transaction was not one of security. See Horn v. Keteltas, 46 N. Y. 605 ; Morris v. Budlong, 78 N. Y. 543 ; Conway Ex’rs v. Alexander, 7 Cranch, 218 , and other cases cited below.

This suggests the true test, which is, “What was the intent of the parties?” Was the intent to make a sale, or to give a security for a debt? If intended as a security, then the conveyance is a mortgage. Was there a loan? If there is a loan, then there is a debt; if there is a debt, then there is a duty to pay the debt, which duty may be created by the act of the parties or by act of the law. If there is anything in the writing which shows a promise to pay, or a loan and the debt resulting therefrom, then there is no difficulty in arriving at the intent of the parties; such cases come plainly within the first subdivision above referred to. If the writings themselves are silent, parol evidence may be resorted to, in order that the court may arrive at the intent of the parties; and in this connection, the value of the property, the existence of a note, the fact that a loan had been applied for, and the indicia of intent become material aid to the court. This case comes plainly under the second class above referred to. It is believed that the following authorities sustain the foregoing propositions: Farmer v. Grose, 42 Cal. 169 ; Conway’s Ex’rs v. Alexander, 7 Cranch, 218 ; Cornell v. Hall, 22 Mich. 377 ; Hubby v. Harris, 68 Tex. 91 ; Glover v. Payn, 19 Wend. 518 ; and other cases cited below.

The following authorities sustain the proposition that parol evidence may be admitted to show that the deeds and contract to reconvey were given as security, and are therefore a mortgage: Peugh v. Davis, 96 U. S. 333 ; *599 Farmer v. Grose, 42 Cal. 169 ; Hickman v. Cantrell, 9 Yerg. 171 ; 2 Devlin on Deeds, sec. 1136, and cases cited. Jones on Mortgages, sec. 248, and cases cited; and the other cases cited herein.

In the case under consideration, the deeds and contract upon their face show an absolute conveyance. No obligation appears therefrom binding Bogk to pay anything; no words appear from which the characteristic of security, so essential to a mortgage, can be deduced. Prima facie the transaction is one of sale. It is incumbent upon the defendant to produce some evidence tending to show that a mortgage in fact was intended. Perdue v. Bell, 3 South. Rep. 698 (Ala.); Jay v. Welclel, 3 S. E. Rep. 906 (Va.); Howard v. Roppere, 5 S. W. Rep. 927 ; Evans v. Euloe, 34 N. W. Rep. 919 (Wis.); Ferris v. Wilcox, 51 Mich. 105 . This last case is cited by the appellant. The court say (page 107): “The controversy thus stated is not one which necessarily must be determined upon the face of the papers; if it was, the plaintiffs would unquestionably be entitled to retain their judgment. By the contract, the defendant appears to be purchaser, not mortgagor; and the surrender or cancellation of the notes would indicate payment, and the determination of the relation of debtor or creditor.”

The court then proceeds to examine the parol evidence, and holds the transaction to be one of mortgage. Cornell v. Hall, 22 Mich. 377 ; Stevens v. Allen, 3 Pac. Rep. 168 (Or.); Winters v. Swift, 3 Pac. Rep. 15 (Idaho); Wilhelm v. Woodcock, 5 Pac. Rep. 202 (Or.); Smith v. Crosly, 47 Wis. 161 ; Hay v. Carr, 83 Ind. 275 ; Farmer v. Grose, 42 Cal. 169 ; Miller v. Yturria, 7 S.W. Rep. 206 (Tex.); Glover v. Payn, 19 Wend. 518 ; Hickman v. Cantrell, 9 Yerg. 171 ; Baker v. Thrasher, 4 Denio, 493 ; Adams v. Adams, 51 Conn. 544 ; Rue v. Dole, 107 Ill. 275 ; Hanford v. Blessing, 80 Ill. 188 ; Henley v. Hotaling, 41 Cal. 22 . And the existence of the lease does not help the de *600 fendant. The léase bears date two days later than the deed and contract. If the defendant, Bogk, considered the deed and contract to reconvey to be a mortgage, why, then, did he take a lease of the premises two days later?

It is believed that the above authorities will sustain the following doctrines: 1. Neither equity nor the law forbids parties from making a sale of land with a contract to reconvey; and where parties enter into such a contract in good faith, the contract will be upheld. 2. Where the papers upon their face show a loan, they will be construed to" be a mortgage. 3. Parol evidence will be received to show that the transaction was in fact a mortgage; but it seems that where the papers on their face show a mortgage, parol evidence will not be admitted to show that it was in fact a sale. See 2 Devlin on Deeds, sec. 1144, and cases cited. 4. Where the papers do not show that a security was meant, it is incumbent upon the party seeking to establish a mortgage to show that a mortgage was intended. 5. Where there is a deed and a contract to reconvey, and oral evidence has been introduced tending to show that the transaction was one of security, and leaving upon the mind a well-founded doubt as to the nature of the transaction, then courts of equity incline to construe the transaction as a mortgage., See Morris v. Budlong, 78 N. Y. 543 ; —— v. Buchannan, 1 South. Rep. 898 ; Ferris v. Wilcox, 51 Mich. 105 ; Conway’s Ex’rs v. Alexander, 7 Cranch, 218 ; Hickman v. Cantrell, 9 Yerg. 171 .

But where there is a deed alone, and it is sought to show a parol defeasance, then it seems the evidence must be clear and convincing. See McMillan v. Bissell, 29 N. W. Rep. 737 (Mich.); McCormick v. Herndon, 31 N. W. Rep. 303 (Wis.); and see cases cited in note.

The nonsuit was properly denied. This view of the case disposes of the next objection, which was taken to "the ruling of the court admitting in evidence the lease *601 referred to; the ground of the objection being that it contradicted documentary evidence previously introduced.

The next error alleged is the objection taken to the giving and refusal of certain instructions.

The next error assigned is the giving of certain instructions at the request of the plaintiffs, and the refusal to give certain other instructions as requested by the defendant. The exception taken by the defendant wras, in all respects, similar in form to that which was held to be insufficient in Woods v. Berry, ante, p. 195. We thére held that there must be a separate exception to each instruction deemed objectionable.

Appellant claims that this rule no longer applies because of the recent act of the legislature declaring that instructions given and the refusal to give instructions shall be deemed to be excepted to. This action was tried upon the sixteenth day of October, 1886. The law referred to was enacted on the thirteenth day of September, 1887.

It has been held that an amendment to the laws governing procedure applies to actions pending as well as to actions commenced thereafter, so far as the amendment alters the practice in any step yet to be taken; thus changes in the procedure on motion for a new trial, and changes in the manner of taking an appeal, apply to actions pending, where these steps in such actions have not already been taken, as well as to actions commenced thereafter; but such changes do not govern the practice where the motion for a new trial has already been made, or where the appeal has already been taken. The hardship which would result from a contrary interpretation would be apparent if some succeeding legislature should amend the present law regarding exceptions to instructions, by enacting that an exception must be taken to instructions granted to which objection is sought to be taken, and *602 that the exception must state specifically the grounds of the objection. If the rule of interpretation contended for by appellant be correct, and if such a law should be passed, every litigant who has relied upon the law passed by the last legislature above referred to would be without remedy against erroneous instructions.

But the legislature has removed- from this question all doubts which may arise from a consideration of the various conflicting authorities.

Section 209, page 649, of the Compiled Statutes, provides as follows: “ No action, plea, prosecution, civil or criminal, pending at the time any statutory provision shall be repealed, shall be affected by such repeal, but the same shall proceed in all respects as if such statutory proceedings had not been repealed, except that all such proceedings had after the taking effect of any statute passed at this session shall be conducted according to the provisions of such statute, and shall be in all respects subject to the provisions thereof, so far as they are applicable.”

Of the three instructions requested by the defendant and refused by the court, two are plainly not the law, and the one remaining is so unintelligible that the court below was warranted in refusing it upon that ground alone.

It is claimed that the district court had no jurisdiction to try the cause, because the justice’s court had no jurisdiction, — 1. Because the title to real estate is involved; and 2. The amount of damages is in excess of the amount which limits the jurisdiction of justices’ courts.

This would be true if the case had been by appeal from the justice’s court to the district court. In such case, the jurisdiction of the latter court is limited by that of the former, and it could render no judgment which the former court could not render. But this *603 cause was not taken to the district court by appeal, but was, at the request of defendant, certified to that court by the justice of the peace, under section 779, division 1, Compiled Statutes.

By the terms of that statute, the district court obtains the same jurisdiction over the action as if it had been originally commenced therein. It is a distinct and separate mode, perhaps, of bringing such actions and the defendants therein into the district courts; but it is a very fair and efficacious one, tending to insure good faith on the part of defendants in such action when they plead adverse title. The defendant brings himself, by his own motion, into the district court, which obtains thus an original and not an appellate jurisdiction.

The judgment is affirmed, with costs.

Judgment affirmed.

McConnell, C. J., and Liddell, J., concur.