Bergen v. Johnson

STEWART, C. J.

This is an action brought by the plaintiffs against the defendant for the purpose of having a deed declared a mortgage and to compel the release of said mortgage upon the payment of the amount found due.

The answer puts in issue the material allegations of the complaint and alleges that the deed set forth in the complaint was in fact a deed and not a mortgage, and that the grantee entered into possession of said land and has remained in possession since the execution and has improved the property.

Upon the issues made by the pleadings the cause was tried to the court and findings of fact and conclusions of law made and judgment rendered in favor of plaintiffs. A motion for a new trial was made and overruled, and this appeal is from the judgment and from the order overruling the motion for a new trial.

The only question presented upon this appeal is the sufficiency of the evidence to sustain the findings and judgment. The trial court finds that the plaintiffs, respondents here, have been since May 25, 1898, owners in fee, except as to a lease given to Erick Peterson and Anna M. Peterson, of the property described in the complaint; that on the 25th day of May, 1898, the plaintiffs borrowed of the defendant Johnson $75 at eight per cent interest per annum on an oral agreement made with the defendant to pay the sum with interest on demand, and that plaintiffs received said sum, less $3 retained'by the defendant for interest for six months, the cost of making out papers, and the making of an abstract, and that the whole sum retained from said loan of $75 was about $10; and thereafter there was paid to the defendant on said loan the sum of $10 as interest; and that to secure said loan the plaintiffs executed and delivered the deed described in the complaint, dated May 25, 1898; that it was agreed between the plaintiffs and the defendant that upon the payment of the sum borrowed the defendant would release his claim against said premises by proper writings, and turn over to the plaintiffs the title papers given in security; that such title papers were deposited with the defendant with that understanding; that since the borrowing of said money and making said indenture the defendant has never been in possession of any part of the above-described premises and has not paid any taxes thereon and has made no improvements thereon of any nature or kind whatsoever; that there have been several conversations had between the plaintiffs and defendant since said money was borrowed about the transaction, and that in such conversations the transaction was referred to as a loan of money, and 'that the indenture given was as security for the payment thereof, and that the plaintiffs were never notified of the contrary until the month of August, 1909, when the plaintiffs offered to pay and settle said indebtedness; that in the month of August, 1909, the plaintiffs offered to settle with the defendant and pay him on the contract of loan $75 with interest thereon at eight per cent from May 25, 1898, less the sum of $13 repaid, and that the defendant refused" to settle with the plaintiffs or to accept said sum and refused to release the claim against said premises; that the value of the property conveyed by said security at the time the mortgage was given was about $2,500. From these facts, and other facts upon which there is no controversy in this case, the court concluded as a matter of law that the plaintiffs were entitled to recover and therefore rendered judgment accordingly.

The evidence is somewhat voluminous and upon the essential questions is very much in conflict. Herman Bergen, one of the appellants, testifies that he borrowed from the defendant' Johnson $75 on May 25, 1898, and out of the money thus borrowed Johnson retained $3 for interest on the amount borrowed for six months at eight per cent, and paid for the preparation of the papers and for the abstract of title, and paid to the plaintiff herein the sum of $63 in cash, and that the deed for the property was executed as security for said sum, and that the principal borrowed was to be paid to Johnson at such time as he was'able to pay the same; that the reason the deed was given instead of a mortgage was on account of the request of Johnson, who claimed that it would be more convenient for him and would not have to be closed in case the money was not repaid, and that there was something about the laws of Idaho that made it better than a mortgage, and that money could be better secured on a deed than on a mortgage; that after this money was borrowed he paid Johnson interest at one time of $10, and that he had conversations with Johnson thereafter in which the transaction was referred to as a loan, and that the deed had been given as security. This .evidence of Bergen is corroborated in the main by the evidence of his wife as to the conversations that took place between the plaintiffs and the defendant Johnson at the time the loan was negotiated from Johnson, and that the agreement to make the loan was made at the time the deed was executed, and that it was not only agreed to at Johnson’s office, but also afterward when the papers were executed in the office of the attorney who drafted the instrument in Mr. Porterfield’s office in Spokane. This evidence, however, is contradicted by Johnson who denies such agreement and claims that he purchased the interests of Bergen and his wife in said property and paid therefor the sum of $75, and that the deed was given by the plaintiffs as a deed of conveyance of title for the purchase price paid, to wit, $75. Johnson, however, in his testimony admits that when Bergen and his wife went to him to procure the loan they made application for a loan of about $200, and that he declined to make a loan and refused to make a loan, but finally agreed to purchase their interests. This admission on Johnson’s part clearly shows that the question of loaning money was first discussed as a loan between the plaintiffs and the defendant, and in this respect corroborates the plaintiffs in the case, but as to the finality of the agreement reached he contradicts the evidence of the plaintiffs.

There is other evidence in the record which in our judgment tends to support the contention of plaintiffs that there was no intention on the part of plaintiffs at the time the deed involved in this case was executed to make a conveyance of their title to the property described in the deed, or that the conveyance was made with the intention of conveying a fee simple title. Johnson at no time after the execution of said deed up to the time this action was commenced attempted in any way to take possession of the property; neither did he make any expenditure in the way of improvements upon said property; neither did he pay any taxes upon said property, nor did he in any way assert his ownership therein from the time of the execution of the instrument in controversy up to the date this action was commenced. After such instrument had been executed the taxes upon the said property were paid by Peterson and the plaintiffs, and the defendant at no time expended any money in or about said premises.

It is also shown by the evidence, and upon which there is no conflict, that at the time the instrument of May 25, 1898, was executed by plaintiffs and delivered to the defendant the property described in the deed was of the value of not less than $1,000 and not exceeding in value $2,500. The fact that the amount paid was about one-thirteenth of the value of the property conveyed is a circumstance which strongly indicates that it was not the intention of either the plaintiffs or the defendant that the conveyance was one of fee simple title rather than a title to secure the payment of money. There is no evidence which in any way indicates circumstances which could justify the conclusion that the plaintiffs ever intended such transaction to be a sale. If the instrument was executed and delivered as security for a debt, then the instrument becomes a mortgage and is not a deed, notwithstanding the fact that the deed is absolute in its terms. (Rev. Codes, sec. 3391; Kelley v. Leachman, 3 Ida. 392, 29 Pac. 849; Brown v. Bryan, 6 Ida. 1, 51 Pac. 995; Hannah v. Vensel, 19 Ida. 796, 116 Pac. 115; McMillan v. Bissell, 63 Mich. 66, 29 N. W. 737; 27 Cyc., pp. 1006-1009.)

Cyc., in discussing this question, in vol. 27, p. 1007, announces the general rule to be: “The question whether a deed which is absolute in form is to be taken as a mortgage depends upon the intention of the parties in regard to it at the time of its execution. It is this which must be sought for, whether in the papers themselves or by the aid of extraneous evidence, and which, when clearly ascertained, will govern the decision. Whatever form they may have given to the transaction, the design and understanding of the parties will fix the character of the instrument. But in order to convert a deed absolute in its terms into a mortgage, it is necessary that the understanding and intention of both parties, grantee as well as grantor, to that effect should be concurrent and the same.”

In a case of this kind it is required on the part of the person asserting that the deed is a mortgage to prove clearly and satisfactorily the intent of the parties to make the instrument signed and delivered a security for a debt and not a conveyance of absolute title, and we believe that the evidence in this case shows clearly the intent of both plaintiffs and defendant that the instrument involved was given for the sole and only purpose of securing a debt.

The trial court heard the evidence, saw the witnesses and determined that the instrument was intended as a mortgage and was executed for the purpose of securing a debt and was in fact a mortgage. In view of this evidence and this finding we do not believe that the findings and judgment should be disturbed. The authorities heretofore referred to also hold that in cases of this kind it is not necessary that the debt be evidenced by a promise to pay in writing, and that an oral promise of the plaintiffs and the acceptance on the part of the defendant that it was a debt and was to be repaid is sufficient; neither was it necessary for the plaintiffs to show that any particular rate of interest was agreed upon as these are matters which are implied from the debt.

Counsel for appellant also contend that the plaintiffs cannot recover because of laches. The evidence shows beyond contradiction that the relation of both plaintiffs and defendant with reference to the property remained the same after the execution of the instrument of May 25, 1898, as it was before execution, and remained the same up to the time the plaintiffs returned and took possession of the property in 1909; that the defendant in no way changed his relationship to said property and in no way was led to waive any rights, not asserted or enforced by reason of the delay. It is true in this instance that a long period of time elapsed between the making of the instrument and the bringing of this action for its enforcement, yet notwithstanding that fact at no time during that period has the defendant expended any money or done any act which resulted from the fact that the 'instrument was a deed. The witnesses to the original transaction are all still living and were present during the trial, and none of the parties or the witnesses have died or have removed beyond the jurisdiction of the court, and neither party has been deprived of any evidence that could have been produced had the action been brought at an earlier period. In cases of this kind there is no indexible rule controlling the application of the defense of laches. The facts and circumstances of each case must govern courts of equity in permitting such defense to be made. Lapse of time is an important element, but it is not controlling, it is only one of the controlling and important factors, and the courts should give proper and due regard to the surrounding circumstances and the acts of the parties and their relationship to the property involved in the controversy. In this case we are clear that the evidence wholly fails to show laches. Counsel for appellant contend that the action is barred by the statute of limitations. This defense cannot be allowed. The instrument involved being a mortgage and the debt being payable upon demand, Johnson could have commenced an action to have the mortgage foreclosed at any time upon demand, and it was entirely within his power to have brought an action for that purpose at any time, and the respondents were not in law required to bring an action to compel him to do so, and they are not barred by the period of the statute of limitations because they did not so bring an action. So far as the evidence is concerned, it appears that the respondents, as soon as they were able and had the money to pay said indebtedness, made a tender of the same to the appellant and demanded that the same be accepted and the mortgage released, and this the appellant refused.

The judgment is affirmed. Costs awarded to the respondent.

Ailshie and Sullivan, JJ., concur.

Case Details

Case Name: Bergen v. Johnson

Court Name: Idaho Supreme Court

Date Published: Apr 8, 1912

Citation: 123 P. 484

Court Abbreviation: Idaho