Hughes v. Sheaff
Hughes and Dial v. Sheaff
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Opinion of the Court
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Wright, Ch. J.
We do not find, from the testimony, that Claussen had any fraudulent purpose in giving the trust deed in the place of the mortgage, pending the negotiation for the sale of the property to plaintiffs. The deed which they accepted expressly refers to the incumbrance as a “ deed of trust,” and they thus had the fnost reliable evidence and notice of its nature and import. Not only *342 so, but Sheaff was no party to this negotiation, nor had he any knowledge of the alleged fraud, and would not, therefore, of course, be affected by it.
The charge of fraud in procuring the conveyance of August 12, 1858, is not sustained by the evidence, and indeed it does not seem to be urged with much apparent confidence by counsel. The important inquiry is to ascertain the true and actual nature of the transaction. Plaintiffs claim that the intention (of defendants, at least, in which they were compelled to acquiesce) was to create a security which should, become irredeemable by mere lapse of time, and which equity will not permit. Or if not this, then they claim that the deed was but a conveyance of the equity of redemption by themselves as mortgagors to defendant as mortgagee; that while equity does not pronounce such a conveyance necessarily void, it looks upon it with great suspicion, and if found to have been obtained without valuable consideration, or by taking advantage of the necessities of the mortgagor’s situation, should be set aside. Defendant, on the other hand, claims that there was a conditional sale to him, with the privilege in plaintiffs to repurchase. And plaintiff's concede (admitting the validity or fairness of the transaction) that as they did not exercise the right to repurchase'within the time limited, they have no claim for relief. But if their view of the transaction is sustained, then they insist that nothing but foreclosure or release by plaintiffs could deprive them of their equitable right to redeem, and that as defendant put the property beyond their reach, by the sale to Carpenter, he must account to them for its value.
i mobtconditional sale. *343 _ fn favor of mortgage.
*342 The most casual reading of the many decisions upon the questions,involved in the claims above stated, will satisfy any one of the truth of the remark Qj? j Robertson in JEdgington v. Harper, 8 J. J. Marsh, 354, that every case must be determined by a *343 consideration of its own peculiar circumstances; that the- intention of the parties is the only true and infallible test,. such intention to be collected from the condition or con-, duct of the parties, as well as from the face of the written contract. There is much of good reason in the proposition. that in all doubtful cases the law will conthe contract to be a mortgage rather than a consa]e) for this construction is most apt to attain the ends of justice and prevent fraud and. oppression., Skinner v. Miller, 5 Litt., 86 ; Poindexter v. McCannon, 1 Dev. Eq., 373 ; Connoy’s Ex’r. v. Alexander, 7 Cranch, 218 . And yet a conditional sale or an agreement for a repurchase, if clearly and satisfactorily proved, although narrowly watched, will be held valid. 1 Powell Mortg., 138.; Goodman v. Grieson, 2 Ball & Beatt., 278; Pennington v. Hanby, 4 Murf., 140; Bloodford v. Zigly, 2 Caines’ Cas., 124; 4 Kent, 144; Davis v. Thomas, 1 Russ. & M., 506. So that finally we have in all these cases to come back to the inquiry, whether the transaction is really a security for the repayment of money or an actual sale. For, though, in the language of the court in Ross v. Minshell, 1 Wash., 19 , a deed, however absolute upon its face, and though the defeasance be by parol, will be deemed a mortgage if really intended to secure a debt. Yet the line of distinction between mortgages and defeasable sales cannot well be. marked out by any general rule, and every case must, in a ■great measure, be determined on its own circumstances, looking at the true nature of the transaction and the intention of the parties. Chapman, Admr., v. Turner, 1 Call, 280 ; Davis v. Stonestreet, 4 Ind., 101 .
3. — Whea debt con«núes, *344 *. — when guíaheá.
*343 And hence the court must take into consideration the | price, the circumstances, all the antecedent facts, the tion of the parties, and from these determine the , _ , . mi t/V» true nature of the transaction. These diner, as we-know, as the names of the parties differ, and they so influ *344 ence the determination in each case, that it is next to impossible to deduce from them any general, safe and compre-, hensive rule. Now, if the relation of creditor and debtor in any given case continues, and the debt still subsists, we can readily see that the relation of mortgagee and mortgagor still remains. If, however, the debt is extinguished by a fair agreement, and the grantor has the privilege merely of refunding if he pleases, by a given time, and thereby entitle himself to a reconveyance, there is a conditional sale and the equity of redemption does not continue; for a mortgage without a debt, or a debtor without a debt cannot exist. The contract being fairly made, a court of equity will not relieve the grantor who neglects to perform the condition on which the privilege of repurchasing depended. For while the policy of the law prohibits the conversion of a real mortgage into a sale, it does not prohibit the making of conditional sales. If it did, then in the language of Ch. J. Marshall, a court of chancery would become in a considerable degree, the guardian of adults as of infants. 7 Cranch, supra.
Having said this much as to some of the rules governing these cases, let us turn very briefly to the facts as shown by this record.
And, first, we understand, as before stated, that the conveyance from plaintiffs was fairly obtained. The price paid was not so inadequate as to justify the conclusion that the parties intended a mortgage, or that the conveyance was made for further security. Indeed, taking the testimony all together, it may well be doubted whether, at the time, the property was worth in cash anything more than the defendant’s debt. It is true witnesses differ, as they are very apt to in such cases; but the fact that plaintiffs did not make a sale for more, after the advertisement of the property and before the conveyance, and the further fact that they were unable to raise the money by a sale, or *345 otherwise to obtain a reconveyance before the 1st of January, 1859, tend strongly to satisfy us that the price paid was reasonably adequate, and that there • is nothing thus far to lead to the conclusion that defendant obtained an unfair or unconscionable advantage.
Then, again, we understand that the debt was extinguished, and that plaintiffs were at liberty to pay, or not to pay, at the time named. At the time of the conveyance, plaintiff’s right of redemption had but little if any value. The sale by the trustee was to take place on the next day. If made, the right to redeem was entirely extinguished; and the act of defendant in giving plaintiff a right to a reconveyance at a time limited, was a favor and benefit extended, rather than a change in the form of a security. By the sale by the trustee, defendant could have secured an unquestionable title to the land, as against plaintiffs, or his money, and there was no apparent necessity on his part, for his own protection, to make the new arrangement.
In addition to this, the written instruments themselves gives the transaction this character. And though it is competent for plaintiffs to show, by parol, that a mortgage was intended, the proof should be satisfactory, and much more so than is here presented. When, as we have seen, upon the whole facts it is doubtful what the parties intended, equity is inclined to treat their transaction as a mortgage. But if the writing or agreement is not doubtful, and the party seeks to show aliunde, that there was a parol defeasance, the burden of proof is upon him, and he must satisfy the court by sufficient proof of the equity of his claim.
And finally, plaintiffs’ conduct subsequently is in conflict with their present claim. \ They surrendered the property at the time fixed for the repurchase, or the refunding of the money. One of them took a new lease, and in March, 1859, made a final surrender. Defendant *346 sold in the fall of that year, and this action was not commenced until nearly a year afterwards. These acts indicate the understanding they had at the time of their rights and' the true, nature of the transaction. They are more probably in accord with the true and actual intention of the parties than the subsequent claim made after the sale to Carpenter, and when they found that there was a possible margin for realizing something beyond the original debt with interest.
Thus we view the facts. Their statement in detail is unnecessary. There are some circumstances, we readily admit, favoring, no little, plaintiffs’ theory of the transaction. Giving them their full weight, however, we conclude that the parties intended a conditional sale, and that the bill was therefore properly dismissed.
Affirmed.
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(stating it is strong evidence a security was intended 9 when “the consideration for the conveyance was much less than the value of the property”)
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