Lodge v. Turman

| Cal. | Jul 1, 1864

By the Court, Cürrey, J.

This is an action of assumpsit, brought by the plaintiff against the defendants on a promissory note by them made and delivered to the plaintiff) bearing date the 25th day of July, 1860, by which they jointly and severally promise to pay to the plaintiff or order, five hundred dollars, three months after the date of the note, with interest thereon at the rate off three percent per month. Each of the defendants was duly served with process, and two of them, viz: Jackson and Waggle, appeared and answered, but the defendant Turman, having failed to appear of answer, was duly defaulted. The defendants Jackson and Waggle answered jointly, admitting the making and delivery of the note, a copy of which was contained in the complaint, and then, as a defense, pleaded that the note was paid and satisfied by Turman on the sixth day of August, 1860 ; and they further answered that they signed the note, without consideration to themselves, as an accommodation to said Turman, who shortly afterwards, in order to relieve them from liability and to pay and discharge the note, conveyed to plaintiff certain real estate in the Town of Petaluma, in Sonoma County, for the consideration of one thousand dollars, and that the plaintiff paid to Turman five hundred dollars as a part of such consideration, and that it was agreed between them that the remaining five hundred dollars should be applied in satisfaction and discharge of the note. The plaintiff replied, controverting the material averments of the answer.

The issue joined was tried by a jury, who rendered a verdict in favor of the defendants, on which judgment was entered in favor of the three defendants by name, against the plaintiff. A motion for a new trial was afterwards made and denied, and the appeal in the case is from the order denying the motion for a new trial and from the judgment.

On the trial the defendants gave in evidence the deed of conveyance referred to in the answer of Jackson and Waggle. This deed bears even date with the note, and the consideration expressed therein is one thousand dollars ; but Turman testified that it was executed in fact on the sixth day of August, and was in payment of the note in question and another sum of five hundred dollars which he owed plaintiff. He also testified that by agreement with the plaintiff he had the privilege of redeeming the premises described in the deed upon paying to the plaintiff one thousand dollars, the consideration expressed in the deed, within twelve months after its execution. He further testified that he leased of the plaintiff the same premises for the term of one year, at the rate of thirty dollars a month; and in connection with this testimony a lease executed by the plaintiff and said Turman was introduced in evidence, which corresponded in date with the note and deed. Among other things, the lease contained this clause : “ And the said lessee promises to pay the rent as follows, to wit: thirty dollars per month, payable at the end of each month; but if five hundred dollars, the amount of a note of Turman to Lodge, should be paid at the end of any month, then thereafter but fifteen dollars per month is to be paid, until the entire sum of money as above is fully paid.”

A witness testified that at the time the deed was executed, the defendant Turman promised the plaintiff that he would pay the whole punctually at its maturity. The testimony being closed, the plaintiff requested the Court to instruct the jury, among other things, that if, at the time the deed was executed, there was an understanding between Lodge and Turman that there should be a re-conveyance of the land upon the payment of the note, then the document which purports to be a deed was a mortgage, and not a deed, although absolute on its face.

This instruction the Court refused to give to the jury, and to such refusal the plaintiff duly excepted, and on the motion for a new trial assigned this decision of the Court as error; and on appeal he again assigns this ruling of the Court as erroneous, and as demanding a reversal of the j udgment.

From the evidence in the case, it is apparent that the question was directly presented as to the real character of the deed produced in evidence on the part of the defendants, and whether or not the parties intended it as an absolute conveyance, or as a mortgage to secure the payment of the note on which the action was brought. Turman, himself, testified that this note, and another sum of five hundred dollars, which he owed the plaintiff, was the consideration for the conveyance, and that he Fad the privilege of redeeming the premises by paying..plaintiff one thousand dollars—the consideration expressed in the deed. From what was Turman to redeem the premises, if not -from the incumbrance of the debts, to secure which he conveyed the same to the plaintiff? The language employed.wqtild seem to indicate the real character of the transaction, and.that the conveyance was intended asa mortgage rather than as an absolute conveyance; and this intent is still more manifest from the clause in the lease to which reference has been made. Be this as it may, there was evidence before the Court from which to determine whether the deed given in evidence was executed and delivered in satisfaction and payment of the note, or whether the same was intended as a security for its payment. If this deed was intended by the parties as a mortgage, its character as such could not be defeated, because the deed is absolute on its face. The right of a mortgagor in such a case to redeem the property, by due performance of the condition on his part to be performed for the purpose, is an incident, as between the parties to the transaction, inseparably connected with the mortgage.

In Pierce v. Robinson, 13 Cal. 125, Mr. Justice Field says : “ I consider parol evidence admissible in equity to show that a deed absolute on its face was intended as a mortgage, and that the restriction, of the evidence to cases of fraud, accident, or mistake, in the creation of the instrument, is unsound in principle and unsupported by authority.” And again he says : “ As the equity upon which the Courts act arises from the real character of the transaction, it is of no consequence in what manner this character is established, whether by deed or other writing, or by parol. Whether the instrument—it not being apparent on its face—is to be regarded as a mortgage, depends upon .the circumstances under which it was made and the relations subsisting between the parties. Evidence of these circumstances and relations is submitted, not for the purpose of contradicting or varying the deed, but to establish an equity superior to its terms.”

Judge Willard, in his Treatise on Eqjjgjjp'Jurisprudence, 429, says : “It is well settled that ja^l Ifcrissible in a Court of equity to show thatl.a ';'conveyance ‘ áblolute in its terms was intended as a security ^oj’ d^hfc^'t;A|id he refers to many cases to sustain this doctrine. The Is ame learned author also says: “As betwe&jftg,jtalQBg Jhemselves, or purchasers with notice, or withput conri^pution, the true character* of the transaction may bearown, notwithstanding the Statute of Frauds.”

If it be objected that the plaintiff’s action was in a Court of law, and that therefore parol evidence was not admissible to show that the deed produced was intended as a mortgage, the answer to the objection is that the defense set up by the defendants who answered was that by the conveyance the note was paid and satisfied, and in their attempt to make good their averment they proved enough to determine the true character of the conveyance, and that it was intended as a mortgage. The deed being a mortgage in fact, it could not operate as a payment of the amount of the note and the interest thereon, and hence the defendants’ liability to pay the debt remained subsisting at the commencement of the action and at the trial.

The instruction requested should have been given, and the refusal of the Court to so instruct was erroneous.

The judgment is therefore reversed and the cause remanded for a new trial.