Cake v. Shull, 45 N.J. Eq. 208

Cake v. Shull

45 N.J. Eq. 208 | N.J. | 1888

*212The opinion of the court was delivered by

Dixon, J.

The complainant seeks to have a certain bill of sale, dated May 5th, 1886, made by himself to the defendant, for one-sixth interest in “The Mann Mining Property of North Carolina,” adjudged to be a mortgage for the loan of $320, and to obtain a. decree against the defendant for the difference between that sum and $1,692, the price for which the defendant sold the same in October, 1887.

The right of a court of equity to declare a deed or bill of sale,, which is absolute on its face, to be a mortgage, is clear, as is also-the competency of parol evidence to prove the fact. The question turns upon the actual intention of the parties at the time of the transaction. Crane v. Decamp, 6 C. E. Gr. 144. If that intention was that the instrument should constitute security for the payment of money or the performance or non-performance of any other act, then it is deemed a mortgage; but if a real sale was intended, then it takes effect according to its terms, even though a contemporaneous right or privilege to purchase-back the property sold was contracted for by the vendor. Gassert v. Bogle, 7 Mont. 585; Conway v. Alexander, 7 Cranch 218; Notes to Thornborough v. Baker, 2 Lead. Cas. Eq. 1030. An obligation to repurchase^ or any other duty resting on the vendor, by the performance of which the property was to revert to him, -would ordinarily be conclusive evidence of a mortgage, while the absence of such obligation or duty, either-expressed or implied, would be indicative of a sale. Murray v. Riley, 140 Mass. 490; Horn v. Keteltas, 46 N. Y. 605. In-searching for evidence of intent, the strong probability that parties, who have reduced at least some portion of their bargain-to writing, have fully and intelligently expressed their whole-bargain in that writing, must not be lost sight of; and therefore-it has been rightly said, that, ’where the writing is in form an absolute conveyance, the parol evidence that it was designed to-operate as a mortgage only must be clear, unequivocal and con*213vincing, or the presumption that the instrument is what it purports to be must prevail. Coyle v. Davis, 116 U. S. 108.

It is necessary, therefore, to ascertain what intention the testimony in this case discloses.

And, first, there is the fact that the contemporaneous writing •shows an absolute sale, and nothing suggestive of a mortgage.

Secondly. The bill of complaint requires the defendant to answer, under oath, whether he did not advance to the complain■ant the consideration of the bill of sale as a loan, and receive the bill of sale as a security for the repayment of that loan; and the •defendant answers, under oath, with a negative, and avers that, ■on the contrary, no loan was made, and the sale was absolute.

Thirdly. It appears that, at the time of this transaction, one 'Whitney held the complainant’s note for $320, and also controlled his interest in the mining-property as security for the note, and was about to sell that interest at auction, under circum- . stances which rendered the complainant apprehensive that it would not realize enough to pay the note. Thereupon the complainant obtained from the defendant the amount of money requisite to meet the note, and gave him the bill of sale. If by .this transaction the complainant and defendant intended to create ■between themselves the same relation as before had subsisted between the complainant and Whitney, the simplest form for so • doing would have been to transfer the Whitney note to the defendant; but, on the contrary, that note was canceled and delivered to the complainant, and no evidence of his indebtedness was substituted for it. Such a marked change in the external •aspect of affairs is best explained by a substantial change in the •relations of the parties, and strongly indicates that the cómplain•ant was no longer a debtor.

Fourthly. The oral testimony scarcely preponderates on either side. The complainant swears to a loan and mortgage, but tés>tifies to his inferences rather than to language used by the parties. The defendant swears that he refused to make any loan, ■but consented, after several interviews, to buy. The defendant’s partner, the only other witness who heard the negotiations, corroborates the defendant.

*214Fifthly. There are two postal-cards, written by the defendant to the complainant, one dated December 15th, 1886, the other-February 5th, 1887, which indicate a prior agreement that the complainant might redeem the property within a time then expired. But these cards are explained by the defendant, who says, that after the assignment, he agreed that the complainant might buy back the property within a limited period for $500 ;. that this offer on his part was a mere gratuity, induced by the same spirit which led him to make the purchase, a desire to befriend the complainant, who was his uncle.

Lastly. The price paid is not inconsistent with the idea of a sale. The property was of a speculative character, and cannot be said to have had an ascertainable market value. In May, 1886, the complainant feared that, at public auction, he could not' make it bring $320, and only after several efforts did he succeed' in getting the defendant, his relative, to take it at that price. For six months afterwards he was unable to find a purchaser for it at an advance over $500; and the fact that, in October, 1887, it was sold for $1,692 is attributed by the defendant to the expenditure of money and labor on the part of those interested in-the land, and to a general increase in the market price of mining-property.

Taking all these considerations together, we think they furnish a decided preponderance of evidence in favor of the proposition that the parties really intended a sale, and not a mortgage. Consequently, our opinion is, that the decree below should be reversed,.. and the bill of complaint should be dismissed.

Decree unanimously reversed..