109 Ga. 320 | Ga. | 1899
This was an action by Grier against Felton, upon 51 promissory notes of $14 each, and the plaintiff liad a recovery for the full amount apparently due thereon. On the trial below, there was a “ special verdict of the facts.” It was supported by clear, positive, and direct testimony; and, as a necessary consequence of the findings of the jury, it must be assumed in this court that the actual truth of the case is as follows: Felton applied to Grier for a loan of $600, proposing to secure the payment thereof by a deed to certain land. Grier positively refused to lend Felton the money on any terms. Some days subsequently, they entered into an agreement to the effect that Felton was to sell, and convey the land absolutely to Grier at the price of $600, Felton reserving the right to repurchase, and becoming bound to do so, by paying to Grier $14 monthly for 60 consecutive months. Accordingly, Felton executed and delivered to Grier a deed to the land, and received therefor $600. He then made and delivered to Grier 60 purchase-money notes of $14 each, payable as above indicated, and took from Grier a bond conditioned to make him a title to the land upon the payment of these notes. All the foregoing stipulations were parts of one and the same transaction. Nine of the notes had been paid before the action was begun. Felton’s answer set up the defense of usury, it being therein alleged that the transaction between himself and Grier was a mere loan of money, at a usurious rate of interest, secured by deed with bond for reconveyance upon payment of the indebtedness evidenced by the notes. There was some testimony in support of the answer, but we must deal with the case upon the facts established by the special verdict. Without stating and discussing separately the several grounds of the motion for a new trial, it is enough to say that they present for decision the naked question: Is it legally possible for an owner of realty to sell it outright for cash, and at the same
Says Chancellor Kent: “The case of sale, with an agreement for a repurchase within a given time, is totally distinct and not applicable to mortgages. Such conditional sales or defeasible purchases, though narrowly watched, are valid,” etc. 4 Kent’s Com. (14th ed.) *144. The real difficulty, so frequently arising, is to determine whether, in a given instance, the parties intended a sale or a mortgage. In a note to the text-book from which we have just quoted is the following, and the same will be found copied in many judicial opinions and made the basis of the conclusions therein announced: “ The test of the distinction is this: If the relation of debtor and creditor remains, and a debt still subsists, it is a mortgage; but if the debt be extinguished by the agreement of the parties, or the money advanced is not by way of loan, and the grantor has the privilege of refunding, if he pleases, by a given time, and thereby entitle himself to a reconveyance, it is a conditional sale.” See also 3 Pom. Eq. Jur. (2d ed.) § 1195. In a note the author cites a large number of “ cases in which the transaction has amounted to a mortgage,” and also numerous others which were “casesof sale and contract to repurchase.” We have examined most of these cases of both
The second clause is as follows: “but if the debt be extinguished by the agreement of the parties, or the money advanced is not by way of loan, and the grantor has the privilege of refunding, if he pleases, by a given time, and thereby entitle himself to a reconveyance, it is a conditional sale.” The phrase “if the debt be extinguished” applies, as was said respecting the first clause of the rule, to a debt already subsisting. Certainly it can not be understood as aptly referring to a debt coming for the first time into existence as a result of the very transaction by which this same debt is immediately to be extinguished. Relative^, then, to a case like ours, the pregnant and all-important language of the rule is embraced in the phrase, “ or if the money advanced is not by wa}^ of loan.” The words just quoted and those following them manifestly relate to a case where two parties come together for an original transaction in which one advances and the other receives mone}, and the latter executes to the former a conve3ance of property with right of repurchase. If the money advanced is “by way of loan,” the .conveance is, in effect, a mortgage only. If not “by way of loan,” but as the purchase-money of the property on the resale, the conveyance evidences an actual sale to him who agrees to resell. In case -the original seller binds himself to repurchase and gives promissory notes accordingly, the relation of debtor and creditor will, of course, exist between him and the other party; but it will be a newly-created relation and not an old one which “remains” or “still subsists.” In other words, the real test, in a case like the present, is whether the consideration of the notes is money loaned or the purchase-price agreed upon in the contract of resale. If the former, the deed made by the-party receiving the loan should be treated as a mere security deed; if the latter, such deed should be treated as one of bargain and sale.
We have not in our investigation overlooked or ignored the
Mr. Pomeroy claims no more for the “criterion” he lays down than that it “furnishes a sufficient test in the great majority of cases.” Our case is not one of the great majority, but of the small minority. We have endeavored to find and examine all the cases decided by this court from which we could hope to derive any aid in properly disposing of the case in hand.. In numbers of them the cardinal rule that intention must control is stated and recognized, but none of them are strictly in point; for the precise question with which we are-now dealing has never, so far as we can ascertain, been distinctly made in and ruled upon by this court. As above indicated, that question, reduced to its last analysis, is simply this: Is it a legal impossibility for two parties to agree between themselves that one shall buy property frqm the other for cash and contemporaneously contract to resell in consideration of the original seller’s binding undertaking to repurchase on time at an advanced price? The question was certainly not passed upon in either Spence v. Steadman, 49 Ga. 133, or Monroe v. Foster, Id. 514, the two Georgia cases mainly relied upon by counsel for the plaintiff in error. In both, however, it was expressly ruled that it Avas legally possible for one to actually and truly sell to another unwilling to lend money but willing to purchase and allow the seller the privilege of repur
Judgment affirmed.