2 Barb. 28 | N.Y. Sup. Ct. | 1847
The real question in this case is whether the parties intended the deed of the 27th of January, 1840, as a security for money, or a sale. In form, the conveyance is absolute, with an agreement to re-convey upon certain conditions. But' if it appears either from the instrument executed by the parties, or by parol evidence, that the transaction was originally intended as a security for money, no form of words used by the parties in executing their intent will be allowed, in a court of equity, to defeat their object. Although a great number of fitnesses have been examined in this cause, there is nothing
The parties were capable of acting for themselves, and if they really intended to make a contract for the sale of the farm defeasible by the payment of money at a future day, they certainly had a right to do so. To deny to two individuals the power to make such a contract, would be, in the language of Chief Justice Marshall, “ to transfer to the court of chancery / the guardianship of adults as well as infants.” On the other hand, the policy of the law prohibits the conversion of what was really a mortgage into an absol ute sale, whatever its form. “As lenders of money,” says the same learned jurist, “are less under the pressure of circumstances which control the perfect and free exercise of the judgment than borrowers, the effort is frequently made by persons of this description to avail themselves of the advantage of this superiority, in order to obtain inequitable advantages. For this reason, the leaning of courts has been against them ; and doubtful cases have been generally decided to be mortgages.”
Although it is true that courts of equity lean strongly in favor of the right of redemption, and for this reason, in doubtful cases, contracts of this description have frequently been construed as mortgages, rather than conditional sales; yet when the aid of the court is sought, not to establish a right of redemption, but to have a conveyance declared a mortgage, for the purpose of avoiding it on the ground of usury, the reason why in doubtful cases the court should incline to hold the conveyance to be a mortgage, seems to fail. On the contrary, it seems to me, that before giving to a transaction a construction which should have the effect to create a forfeiture of the secu
What then is the nature of the transaction of the 27th of January, 1840? Chancellor Walworth has laid it down as a general rule, in determining whether a conveyance was intended by the parties as a mortgage or as a. conditional sale, that where the contract and conveyance are made upon an application for the loan of money, the court, for the purpose of preventing usury and extortion, will construe it to be a mortgage whenever the person to whom the application is made agrees to receive back the money advanced, with legal interest, or a larger sum, and to re-convey the property, within a specified time, whatever the form of the written contract, if it is apparent that the real transaction was a loan of ononey. And in such case the relative value of the property and the price actually paid, are to be taken into consideration in determining the intent of the parties. (Robinson v. Cropsey, 6 Paige, 480. Holmes v. Grant, 8 Id. 257.) If there is gross inadequacy of price, it is always a strong circumstance to show that the parties did not intend a sale. On the contrary, if the consideration paid is equal to the fair value of the property conveyed, it is an equally strong circumstance in favor of construing the contract as a