165 Iowa 95 | Iowa | 1913
The business transactions between the parties began in June, 1901. Prior to that time they had no personal acquaintance. Plaintiff was then the owner of 4,449 acres of land, of which 340 acres were situated in Illinois, and the remainder in the counties- of Marshall, Wright, and Dickinson, in Iowa. He had become involved in great financial difficulties. His lands were heavily incumbered by mortgage. One or more of the mortgages had been foreclosed; but the time of redemption had not yet expired. There were also judgment liens to be cared for and other outstanding indebtedness. His personal property was mortgaged, and his only apparent hope of relief was in finding some person or persons to whom he could sell or pledge the property mentioned or some of it on terms which would enable him to save the mar
This suit was begun September 9, 1907. Stated as briefly as practicable, the plaintiff claims and alleges that the Colbys undertook or agreed to lend or advance to him the money necessary to meet his obligations to the extent of $155,000, and that the deeds made by him to Mary E. Colby and the contract or lease executed by her to him were intended by both parties thereto solely as a mortgage or security for the repayment of said loan. He further alleges that at the time of said transaction he was laboring under great mental distress, rendering him unfit for the transaction of business of such magnitude, and the Colbys took advantage of his condition and necessities with the wrongful intent to obtain conveyance of the title to the lands, and eventually to deprive him thereof; that in pursuance of such purpose C. H. Colby sought him out*, and solicited the opportunity to make the loan, and finally orally agreed to lend to plaintiff $155,000 for a term of five years at an agreed rate of interest, and that at the request of said Colby plaintiff accompanied him to the office of Colby’s attorney, who prepared the papers for execution. He further says that Colby refused to accept security in the usual form, and insisted upon plaintiff’s making deeds
The Colbys deny, all allegations of wrong and fraud, and plead that the deeds were made by the plaintiff and received by the grantee in good faith as absolute conveyances, and not as security. They further aver that the deeds made on December 3, 1901, were made in pursuance of a prior written contract, by which plaintiff undertook to convey to Mary E. Colby all said lands by warranty deed at the agreed purchase price of $155,000, which has been paid in full by said grantee in manner provided for in said agreement. It is further alleged that after the making of the conveyances and contract of December 3, 1901, plaintiff, in various instruments in writing, confirmed said deeds as absolute conveyances, and that, by taking leases of said lands from said grantee, and otherwise acknowledging her as the owner of said lands, he has estopped himself from now denying the same.
Trial was had to the court, resulting in a decree for plaintiff, declaring the conveyances to have been made as security only, and requiring the Colbys to account for rents and profits received. The conveyances made by Mary E. Colby to third persons were permitted to stand; but she was required to account for the moneys so realized. In the accounting defendants were given credit for moneys expended in paying off liens on the .lands and in making permanent improvements on some of them. Taking all items into consideration, and treating the advancements made by Mrs. Colby as a loan, the court found that she had been fully repaid the amount thereof, with interest, leaving in her hands a remainder or surplus of $4,505.60 due the plaintiff, for which sum he was given judgment. It was further decreed that said Mary E. Colby reconvey the remaining unsold lands to plaintiff.
That such an issue presents one of those exceptional cases in which a party is not precluded from denying the usual force and effect of a writing executed by him, and may prove, if he can, a prior or contemporaneous agreement and understanding, by which a deed absolute in form was given and received as a mortgage only, is, of course, too well settled to require discussion. 3 Pom. Eq. (3d Ed.) See. 1196.
The primary question we have to consider is whether such agreement or understanding in this case has been established by the evidence. The burden is, of course, upon the party asserting such agreement to establish it, not necessarily beyond a reasonable doubt, but by a fair and clear preponderance of evidence, for, in the absence of showing to the contrary, the presumption is that every writing is what it purports upon its face to be. On the other hand, the intent of the parties to make an absolute conveyance serve the purpose of security for debt being once revealed, no strictness in the phrasing of the writings and no ingenuity in devising a scheme or plan by which the grantor’s right of redemption may be lost or forfeited without foreclosure will be of effect. The conveyance in such case will be held to be a mortgage, and that which is in legal or equitable effect a mortgage in its origin will remain a mortgage to the end, so far, at least, as it can be affected by any prior or contemporaneous agreement or understanding of the parties.
Mr. W. J. Fort, Marshalltown, Iowa — Dear Sir: Messrs. Patch and Craven have a mortgage on a large tract of land belonging to you, and I understand that the first mortgage has been foreclosed, and that the time of redemption will soon be up, and, as it will take about $150,000.00 to swing this deal, did not know but you would rather take a small amount of cash, and have something, than to lose the whole tract, and get nothing. You can see for yourself that this amount of money is almost impossible to raise at one time. If you should care to figure on selling the whole tract, we would be pleased to hear from you, stating about what you think you will do and the least amount you would be willing to take and deed the land over. Yours truly, C. H. Colby.
The Colbys were at this time in business as bankers at Hartley, Iowa. It does not appear that this letter was answered, and within a short time C. H. Colby went to Marshalltown, and called on plaintiff. Soon thereafter he repeated the call. At both interviews the question of these lands, of plaintiff’s necessities, and of the amount of money he desired to raise was discussed; but the testimony with reference to what was said is the subject of radical dispute. Colby concedes that plaintiff did not then wish to sell the land, but was anxious to obtain a loan for a sufficient amount to meet the demands against him, which he estimated at from $155,000 to $158,000. It is the contention of Colby
Mr. W. J. Fort, Marshalltown, Iowa — Dear Sir: When I was at your city you spoke so you would like to get some one to carry your old, and give you a chance to make all there was in the land, and will say that I have talked the matter over with my mother, and believe she would carry it, if you would make it so she could get 7 per cent, on her investment. I think now we would arrange it so the most of the land would be clear and free from all liens, if we can make a deal with another party that I would like to make. If you would think favorable to any such deal, please let me know the best you would do on a deal of this kind, and oblige. If we make this deal, would want a deed, and have all crops go to pay the interest, and, as fast as you cared to sell the land, to be applied on the amount we would be holding, and we would want statements that we would deed any tract of land when you pay us an agreed price for each tract of so much per acre. This we would have to have a good attorney write, and if you didn’t want to keep the land, or wanted us to take it at any time, we would be obliged to at the amount there was coming to us; that is, if you could not keep up the interest, or say, if you ever got so far behind with interest, the land would be ours without foreclosure. We could make a very liberal offer on
If you will let me know the best you can do, I can then tell if we can swing the same.
Answering, the plaintiff wrote under date of July 1, 1901, as follows:
Marshalltown, la., July 1, 1901.
C. H. Colby & Co., Hartley, Iowa — My Dear Mr. Colby: I have your recent letter and the remembrance to your friendly visit not many days ago. I would be glad if you would aid me in the matter of which you write and was the subject of your recent visit. You will have precisely the same security to leave the title where it is. Besides, I could, without fuss, immediately give title to all sales. I would not object to whatever bonus we might agree upon; but you can see that a rate on any loan expected to go with sale above 5 per cent, would be fatal to sale. Being single and alone, it is easy for me to execute any papers in 1st Mtg. loans, etc., and you pay, which I should hope you would make reasonable' — and I know you would — could come, as I suggested, in way of bonus or commission. I do not think I ought to come to Hartley in any event now, as I do not want to ‘stir up’ things. I thank you for your favors. Yours truly, ¥m. J. Fort.
On July 2, 1901, C. H. Colby wrote the plaintiff in answer to the above as follows:
July 2, 1901.
Wm. J. Fort, Marshalltown, Iowa — Dear Sir: Your favor of the 1st at hand, and contents carefully noted, and will say that, when I made you my proposition a few days ago at the 7 per cent, rate, we were to take the claims, and carry them, and it was not the understanding that we were to put 7 per cent, loans on any of the farms, but, in other words, the money that we could not raise we were to put five per cent, loans on the farms, but at the option of paying any interest pay day, so it would not interfere in the least in selling the farm; in other words, under this proposition, if there is $33.00 incumbrance against the land, we are to receive $2.31 per acre per year for carrying this deal, and we have nothing to do with the
Following up this correspondence, plaintiff responded with the following letter:
Marshalltown, Iowa, July 4, 1901.
C. H. Colby & Co., Investment Bankers, Hartley, Iowa — ■ Dear Sir: I have your recent letter. This proposition would take years, it would seem, to close up, and from a lawyer’s standpoint-is safe. But bankers and other business men do not do all their transactions according to rules laid dowm by Attys., and their affairs are conducted as safe as though they did. I was attracted to you because you came so far to see me, and I am yet. But I lean to the proposition to let the title remain where it is, and me account to you in commissions for pay for your favors. You will understand that people seeking to buy would not look up the party wdio recently had the title, but
With the following letter from C. H. Colby, the negotiations were interrupted for a time until his return from a trip to the West:
July 6, 1901.
Mr. Wm. J. Fort, Marshalltown, Iowa — Dear Sir: Your favor of July 4th at hand and contents carefully noted, and will say that you can readily see that in a deal that will necessitate an investment of $185,000.00 we would want to have it fixed by our attorney so that we would know that everything would be correct. We would also want it fixed so that everything would be satisfactory to you, and am certain that this could be done. We would be obliged to take a deed for the reason that we will make the investment so as to get out of paying taxes, as we do not care to pay on moneys and credits, and virtually own the land. If you think that we can make some kind of a deal, and will write me about three weeks from now, I will come down and have another talk with you as soon as I get home from the West. Yours truly.
In August following, after some effort to arrange a place of meeting, C. H. Colby wrote plaintiff, saying that, if any arrangement could be arrived at, it would be upon the basis of “the proposition we talked so much about, as I do not see any other way we could deal and be protected by law. ’ ’ Later plaintiff, in response to the request of Colby, went to Hartley, and accompanied him to the office of Colby’s attorney, Mr. Herrick, who prepared a written contract, which was signed by the parties, under date of October 2, 1901. • It is in form a contract by which plaintiff, as party of the first part, undertakes to convey the lands in question to Mary B. Colby for the expressed consideration of $155,062; the lands in Dickinson county being reckoned at $30 per acre, and all the rest at $37.50 per acre, said purchase price to be paid as follows:
(19) And in further consideration of the said covenants and agreements on the part of the second party, the first party hereby grants unto the second party an exclusive option to
(20) Said second party shall have the right to buy not to exceed 20 per cent, of said total acreage any one year, except that, in the, event of his not taking advantage of said option for any one of the five years for which said option is granted, then he shall have the right to buy an amount not exceéding the rate of 20 per cent, a year up to the time of so taking advantage of said option; second party having the right to buy said land yearly in 20 per cent, installments as to amount, or all of it at the end of five years, from said October 1, 1901, or 40 per cent, of it at the end of the second year, or 60 per cent, of it at the end of the third year, or 80 per cent, of it at the end of the fourth year, as he may elect. And in case said second party shall not have bought the full 20 per cent, in any one year, he shall have the right to take up the deficiency in any following year he may desire.
(21) But, in order to exercise said option, said second party shall give the first party sixty days’ written notice prior to the date any annual interest on any of the first mortgages on any of said land he so desires to buy under this option shall fall due, to enable said first party to take up said mortgages on such land, and as to any of the lands on which there may be a mortgage at the time of exercising said option by the second party, such option can be exercised only by such notice and on such dates. If said option is to buy any of said lands not under mortgage, then the same may be exercised by giving first party thirty days’ written notice of the election to so take advantage of such option.
(22) In taking such option, said second party shall in such written notices give a description of the lands which he so elects to take under said option, and, in order to make the full quota that he shall be entitled to at any time, he shall not select lands in such manner as to injuriously affect the values of those remaining by cutting into whole tracts, or dividing the same.
(23) Whenever said second party shall avail himself of said option, and shall have given the written notice provided for, then he shall on or before the date for the execution of
(24) And upon payment of said cash and the execution of said notes and mortgages as above to the first party, said first party agrees to execute to the second party, or to such third party as he shall in writing direct, a special warranty deed of the said premises so purchased under this option, warranting title only against any acts on the part of the said first party. All expenses of conveyancing, including - revenue stamps, are to be also paid by the second party.
(25) In order to facilitate the right of the second party to exercise said option, he shall have the right to sell any portion of the lands he shall elect to take under said option, not, however, exceeding the amount he shall so have the right to take under said option, and the first party will, on the written direction of the second party, execute the deed of said lands to such purchaser instead of to the second party, provided that all the terms of said option are fully complied with by such third party so purchasing from the second party. And provided, further, that the entire amount for which the second party shall so sell said lands to such third party shall be paid to the first party, and any notes and mortgages taken for any part of the said purchase price shall be payable to the first party, and conform to the same requirements as to form and
(26) And whenever, under this contract, said second party shall have purchased all or enough of said lands to pay to the first party all of the sum of one hundred and fifty-five thousand ($155,000) dollars, together with all rents for said lands, and all taxes thereon, and all advancements for repairs or improvements made by the first party under this contract as hereinafter provided for, and interest on all past due and unpaid rentals, and on such advancements, then the first party will execute a deed like that heretofore called for, for all the entire balance of said lands undisposed of either to the second party or to any third party, and from and after such conveyance all rights to rents therefrom shall at once cease. It is also understood that all rents shall cease on any of the lands taken by the second party under this option prior to the expiration of said period of five years from and after the execution of such deed or deeds by the first party, except that all rents accrued up to the date of süch conveyance shall inure to the benefit of the first party.
(27) And it is distinctly understood and agreed that this option is granted upon the express terms and conditions set out above, all of which are conditions precedent to the right to exercise such option, and, if said second party shall fail to beep all taxes fully paid, and shall allow them to become delinquent for the space of 180 days, or if he shall fail to pay all rents as provided for in the foregoing contract for the space of 30 days after the same are due and payable, or shall sublet any portion of said premises without the consent called for herein, or shall fail to turn over to the first party the rentals from any such subletting, or if he shall fail to cultivate said lands in a good, husbandlike manner, or to keep and carry out
(28) It is further understood that, in case the second party shall not secure a renter ,for any portion of said lands by January 1st of each year then the first party shall have the right to rent the same herself or by her agent to such party as she may see fit and on such terms as she may see fit.
In witness whereof said parties have hereunto set their hands on the date first above written. Mary E. Colby, by C. H. Colby, Her Duly Authorized Agent. Wm. J. Fort.
There is in the record considerable correspondence between the parties after the date of the deeds and lease, though it is probably not full or complete on either side. For the Colbys it was carried on exclusively by C. H. Colby. Usually in his letters he is careful to speak of the property as the “lands we bought from you,” or words to that effect; but there is in them nevertheless much tending to bear out plaintiff’s theory of the nature of the understanding between them concerning the conveyances of December 3, 1901. For ex
On the 28th of July, 1903, after having served notice of forfeiture of the original lease, Colby executed to plaintiff another lease of said lands on substantially the terms expressed in the one of December 3, 1901, for the terms of five years from October 1, 1902, except there is added to the agreed rental of $2.25 per acre a gross sum of $17,025, which we suppose represents an unpaid balance of rent accrued under the first lease. The new lease repeats the provisions contained in the several paragraphs which we have quoted at large from the lease first made. At the time of executing this last-mentioned instrument plaintiff signed an indorsement upon the original lease canceling the same. In November,
I have been thinking of the Nebraska trade, and believe I understand it correctly. If so, you can make the deal under the $50,000.00 basis. Our understanding is that there is $10,-000.00 against this, which would leave an equity of $40,000.00, and putting in your land at $100,000.00 would leave! $60,000.00 coming to us, which would leave the property with simply the $10,000.00 incumbrance or your Nebraska property, provided these folks pay us cash down to where the second mortgage should go. If not, we would have to take a second mortgage back on the Nebraska property as collateral to the Dickinson county land, as you see there would be as much against the Dickinson county land as we really call it worth, and, if the party swung the deal, and paid off, then of course we would release the Nebraska property without consideration, as the Nebraska property would only be collateral mortgage to help secure the Dickinson county land. We believe, if you can get interest and everything to start at the present time, this will be a good deal for you to make; but if I were you I would write as I stated when there, and tell them to try to look over the property, and see what would be the best offer they would make, and it might be they would make a better proposition than this, and, if they did not, I think if I were you I would accept their offer.
On November 12th of the same year concerning a proposed exchange of lands by plaintiff for Minneapolis property Colby writes criticising the wisdom of the transaction, but adds: “Of course it is nothing to us just so we get our cash out of the deal.” Other letters covering the period from the date of the second lease, July 28, 1903, and April 15, 1904, contain more or less of similar import.
On the date last named Colby served upon plaintiff a notice of forfeiture as follows:
To William J. Fort: You are hereby notified that the un
• Thereupon a meeting was had between plaintiff and C. H. Colby, at which plaintiff signed an indorsement upon the lease of July 28, 1903, as follows: “Not being able to complete the contract set out on the opposite page here, I hereby agree to its complete and full cancellation in consideration of being released from its terms on my part, and from this date said contract shall be and is absolutely null and void, and the title to said lands absolutely confirmed in the said Mary E. Colby free from any claim on my part under this contract or otherwise. Dated this 16th day of May, 1904. Vm. J. Fort.”
Concerning the circumstances of this transaction, there is some dispute. Plaintiff says in substance that Colby represented or claimed that plaintiff’s rights in the land and under the lease had been lost, and that, believing such to be the case, and being unable then to do more, he signed the release. At the same time Colby, in the name of his mother, made and delivered to plaintiff a writing authorizing him as agent to sell the land at scheduled prices and on certain terms of payment, he to receive as commissions whatever might be realized from such sales over and above the prices named. These scheduled prices aggregate about $227,000. The instrument is signed by both Colby and plaintiff. The agency is not made exclusive, and is limited to one year.
For the defense C. H. Colby as a witness denies ever
Concerning the nature of the transaction culminating in the conveyances and contracts made in October 2 and December 3, 1901, we think the evidence quite conclusively establishes the truth of plaintiff’s claim that it was in substance and effect a loan' or advancement of money for the use óf plaintiff, repayment of which was secured by a conveyance of the lands; that plaintiff was asking a loan, and that he then believed and understood the effect of the deed to be an actual loan of the money to relieve his necessities, and the conveyance to be in the nature of mortgage security for its repayment there is scarcely room for doubt; that such was also the understanding of C. H. Colby, and the basis upon which the negotiations were opened and carried on is but little less certain.
On no other theory is there any reasonable explanation of the language in his letter of June 26, 1901:
When I was at your city you spoke so you would like to get some one to carry your old, and give you a chance to make all there was in the land, and will say that I have talked the matter over with mother, and believe she would carry it, if you would make it so she could get 7 per cent, on her investment. . . . If we make this deal, would want a deed, and
So, also, of his language in his letter of July 2, 1901:
Your favor of the 1st at hand and contents. carefully noted, and will say that, when I made you my proposition a few days ago at the 7 per cent, rate, we were to take the claims and carry them. . . . Under this proposition, if there is $33.00 incumbrance against the land, we are to receive $2.31 per acre per year for carrying the deal, and we have nothing to do with the profits that you will make off the land, as these will go to you. I was talking with my attorney, E. C. Herrick, of Cherokee, about this and other matters, and he said the best and most satisfactory way to make a deal of this kind would be for us to take a warranty deed, and buy each and every farm, and for us to give you a written agreement that will give you the exclusive right to sell each and every farm at an agreed price, . . . and us to charge rent of about 6 per cent, interest, or about $2.00 per acre. . . . Mr. Herrick said it would take him several days to get this agreement written, as it would be very particular to have it so it would give you all the privileges, and still fix it so we would not have to foreclose in case we would not rent the farms for enough to keep up the interest.
Scarcely less significant is his letter of July 6,1901, when responding to the plaintiff’s suggestion that the title- “remain where it is,” and permit him to account in commissions for favors extended, and that he desired aid until he could let go of some of the land. Had Colby understood that the- transaction was simply one of purchase and sale, the natural thing at this juncture would have been to say so explicitly; but, after saying that in a deal of that magnitude he wants it fixed by his attorney so that “everything would be correct,” he adds: “We would also want it fixed so that everything would be satisfactory to you, and am certain that this could be done.
If he was negotiating for a mere purchase of the land, why enter upon any argument or explanation for requiring a deed from the seller? That the negotiations when resumed at a later date were taken up at the point where they had been suspended and carried on without a material change of intention or purpose is shown by Colby’s letter written in August, 1901, in which he says, in effect that he is willing to proceed in the matter on the basis of “the proposition we talked so much about.” Again, if an absolute purchase and sale were in contemplation, then, aside from an investigation of the question of title, it is difficult to understand the extraordinary solicitude of Colby to submit each step to counsel in order, as he says, “to be protected.” If he never contemplated making a loan, and did not regard the land as security only, why should he assure the plaintiff that he would employ a good attorney to write the contract, “and, if you didn’t want to keep the lemd, or wcmted us to take it at any time, we would be obliged to at the amount there was coming to us; that is, if you could not keep up the interest, or say, if you ever got so far behind with the interest, the land would be ours without foreclosure”? How was plaintiff to “keep the land” after he had made an absolute conveyance of it? What is meant by his possible failure to “keep up the interest” or “getting behind with the interest” upon a debt which did not exist, and thereby risking the loss of land in which he had no shred of title? That Colby believed the plan which he proposed would be effectual to eliminate all claims of plaintiff to the land in case of his failure to “keep up the interest,” and that in such case a mere notice of forfeiture would make the deeds efficient “without foreclosure,” is doubtless true. But the fact that he so understood the legal effect of the transaction, or even that plaintiff also so understood, would not affect
Rent due Oct. 1,1903..........................$ 17,025.00
Interest on same to April 15,1904............... 553.15
Interest to April 15, 1904 on $155,000.00........ 5,037.50
Taxes....................................... 1,313.68'
Total....................................$ 23,929.33
Received rent................................ 4,332.16
Balance due April 15,1904.................$ 19,607.17
Original price ............................... 155,000.00
Total due................................$174,607.17
If he then believed that no loan had been made, and that the $155,000 had been paid as purchase money for the land, why is interest thereon included in the account of plaintiff’s indebtedness? Testifying as a witness, he is wholly unable to explain this item, saying he does not know what it does mean, and that it is not in' fact interest. The statement does not bear date; but it will be noticed that the items are computed up to April 15, 1904, the time when the final notice of forfeiture was given to plaintiff, and is very clearly a summary of what Colby then claimed the situation to be. Beginning with October, 1903, the close of the preceding two years under the lease, he charges up the accumulated “rents” with interest thereon and taxes paid, and to this he adds in express terms “interest on $155,000, $5,037.50”; then the sum of these items is increased by the “original price” $155,-
In Conlee v. Heying, 94 Iowa, 734, there was as in this case a deed absolute in form, with a lease in return, with a provision giving the lessee a right to repurchase the land in one year. Later another lease was made, with right to the lessee to repurchase before a certain date at which the option should expire. The testimony showing that the transaction was in fact a loan and the deed to have been given as a mortgage was much less persuasive than we find in the present record, and a decree permitting redemption was affirmed. The case of Keeline v. Clark, 132 Iowa, 360, has many points in common
Many more cases could be quoted directly to the point upon the real nature of the transaction; but the limits of this discussion already too greatly extended will not permit. But, as fully sustaining the view we have above expressed, see Russell v. Southard, 12 How. (53 U. S.) 139 (13 L. Ed. 927); Haggerty v. Brower, 105 Iowa, 395; Morris v. Nixon, 1 How. (42 U. S.) 118 (11 L. Ed. 69); Schierl v. Newburg, 102 Wis. 552 (78 N. W. 761); Carveth v. Winegar, 133 Mich. 34 (94 N. W. 381); Malone v. Danforth, 137 Mich. 227 (100 N. W. 445); Wells v. Geyer, 12 N. D. 316 (96 N. W. 289); Rempt v. Geyer (N. J. Ch.) 32 Atl. 266; Thompson v. Investment Co., 114 Iowa, 481; Richardson v. Barrick, 16 Iowa, 407; Barley v. Bailey, 5 Gray (71 Mass.) 505; Grand United Order of Odd Fellows v. Merklin, 65 Md. 579 (5 Atl. 544); Batty v. Snook, 5 Mich. 231; Kintner v. Blair, 8 N. J. Eq. 485; Hickox v. Lowe, 10 Cal. 197; Woodward v. Pickett, 8 Gray (74 Mass.) 617; Jackson v. Lynch, 129 Ill. 72 (21 N. E. 580, 22 N. E. 246).
The principle governing the courts in dealing with these cases is aptly stated by Mr. Pomeroy as follows: “A court of equity will look beyond the external form at the real relations between the parties, and will protect the debtor’s equity of redemption, if necessary, in opposition to the literal terms of the instrument. This principle lies at the base of the entire equitable doctrine, and is applied to mortgages in the ordinary
The evidence tends strongly to show that the lands were worth much more than $155,000. At that price, the lands
Finally upon this feature of the case attention is due to certain terms of the written contract or lease of December 3, 1901. As we have already noted, the amount of money which appellants undertook to advance or pay for the release of the liens was limited to $155,000, and they furnished plaintiff no more than this amount, except the loan of about $8,000, which did not figure in the consideration for the conveyances. In other words, if the real essence of the transaction was a loan, then the principal sum for which the plaintiff
It is to be admitted, as we have before noted, that during the course of these dealings, and in a more marked degree after the forfeiture so called, C. H. Colby often spoke to plaintiff of “the lands we bought of you,” and in his mother’s name exercised much authority consistent with that claim; but it has often been held that complete surrender by the debtor, the control of the premises by the creditor, the acceptance by the debtor of leases, and the payment of rent, while proper evidence in the case, are not necessarily conclusive of the real character of the transaction, and the deed, though unconditional, may still be a mortgage. In this connection the straitened and helpless condition of the borrower, his ignorance or misconception of his rights, the power which the creditor acquires with the title to the debtor’s entire estate are not to be overlooked. Plaintiff was earnestly seeking a loan. He believed, and it seems he was justified in believing, that he had a valuable equity in the property, which could be saved if help could be secured to prevent the sacrifice of the
We have given attention to the cases of Cold v. Beh, 152 Iowa, 368, Bradford v. Helsell, 150 Iowa, 732; Hanford v. Blessing, 80 Ill. 188, and others of their class which have been cited and relied upon by the appellants, but find nothing in them necessitating any modification of the views herein expressed. As upon every rule of law and equity, there are border line decided cases on either hand which have many apparent resemblances, yet when carefully considered are easily distinguishable.
In the Bradford case it was conclusively shown that the property was charged to the bank at its full value, and the great preponderance of the evidence was to the effect that the deed was made with the express intent and understanding that it witnessed an absolute purchase and sale and not a mere matter of security. The Gold ease presented the usual disputed question of fact as to the agreement between the parties at the time the conveyance was made, and the court held that the plaintiff’s claim in that respect had not been sustained by a sufficient showing of evidence. The opinion in the Illinois case as summed up in the syllabus is that ‘ ‘ contracts for repurchase, made contemporaneously with conveyances of real estate, absolute in form, are sometimes strong evidence tending to show the conveyances are intended to be
II. Having found that the deeds were given as a mortgage, the other vital question arises whether plaintiff is to be held to have relinquished or otherwise divested himself of the right to redeem therefrom.
and, as is frequently added, that such transaction “is entirely unconnected with the original contract of mortgage.” See note 1 to section 1193, 3 Pomeroy's Equity (3d Ed.); also Hursey v. Hursey, 56 W. Va. 148 (49 S. E. 367); Sadler v. Taylor, 49 W. Va. 104 (38 S. E. 583); Lewis v. Wells (D. C.) 85 Fed. 896; Bradbury v. Davenport, 114 Cal. 593 (46 Pac. 1062, 55 Am. St. Rep. 92; Liskey v. Snyder, 56 W. Va. 610 (49 S. E. 515); Remsen v. Hay, 2 Edw. C. (N. Y.) 535; Odell v. Montross, 68 N. Y. 500; Holridge v. Gillepie, 2 Johns, Ch. (N. Y.) 30; Henry v. Davis, 7 Johns. Ch. 40; Sheckell v. Hopkins, 2 Md. Ch. 89; Wagg v. Herbert, 19 Okl. 525 (92 Pac. 252); Jones on Mortgages, section 251.
It is also held that it must appear that such relinquishment was made upon adequate 'consideration. As was said by Field, J.: “The release must be for an adequate considera
Speaking of the effect of additional conveyances or agreements following a conveyance shown to have been given as a mortgage, the Minnesota court uses this language: “Though a mortgagee may purchase the equity of redemption, yet, where the relation is once established, the courts scrutinize with great jealousy the acquisition of the equity of redemption by the mortgagee in any other way than by regular foreclosure. Any additional conveyances exacted or secured by the mortgagee for his benefit cannot be used to prevent a redemption. They proceed from the same old root, and are subject to the same equity; otherwise hardship and oppression might be practiced upon the mortgagor.” Marshall v. Thompson, 39 Minn. 142 (39 N. W. 309).
On the same point the Illinois court says: “When the mortgagor has conveyed the mortgaged premises to the mortgagee, it only operates as a bar to the equity of redemption, when it clearly and unequivocally appears that both parties so understood and intended it should. Otherwise it will only be regarded as a mere change in the form of the security.” Ennor v. Thompson, 46 Ill. 222.
Nor do we think that the surrender and cancellation of the second lease after notice of forfeiture served upon him can be held to bar the plaintiff’s right to redeem. In the first place it was without any consideration, certainly without any adequate consideration. He had an interest in the land over and above the appellants’ lien, amounting in value to the equivalent of a comfortable fortune, and, if this relinquishment is held effective, he surrendered or abandoned it without even the shadow of compensation, unless it is to be found in a twelve months’ privilege, not exclusive, of selling these same lands at scheduled prices which would net the appellants in round numbers $227,000. In other words, he was to find his compensation in the privilege of earning .commissions by the sale of said lands within one year in competition with the appellants themselves and such other agents as they might em
Says the Lord Chancellor in Vernon v. Bethell, 2 Eden, 113: Necessitous men are not, truly speaking, free men, but to answer any present emergency will submit to any terms the crafty may impose upon them. ’ ’ This language is quoted approvingly by Curtis, J., in Russell v. Southard, supra, where the grantor, in a deed absolute in form but given as a mortgage, abandoned the land to the creditor, and later surrendered the written contract, and gave him a receipt in full, yet after a period of nineteen years was permitted to assert his right to redeem upon equitable terms.
It may be well that plaintiff, knowing that he had given
We are satisfied that it would be wholly inequitable to hold that the writings in this case were made under circumstances which operate to foreclose the plaintiff’s equity in this case.
As we find the case may be affirmed on its merits, we do not enter upon any discussion of the question thus raised further than to say that, as we understand the situation, there was no record entry made of the court’s original announcement, and, if this be true, we think under precedents too numerous to mention it must be held that the time for«appeal dates from the entry of the final decree. The decree below must therefore be affirmed on both appeals. Of the costs in this court the appellee will pay for thirty pages of his own printing. All other costs will be taxed to appellants. — Affirmed.