163 Ark. 157 | Ark. | 1924
(after stating the facts). It is well settled in this State that whenever, at the time of a sale, a vendor is indebted to the purchaser, and continues to be indebted after the sale, with the right to call for a reconveyance upon payment of the debt, a deed absolute on its face will be considered by a court of equity as a mortgage.Harman v. May, 40 Ark. 146, and Brewer v. Yancey, 159 Ark. 256.'
The effect of our decisions is that, whether any particular transaction does thus amount to a mortgage or to a sale with a contract of repurchase must, to a large extent, depend upon its own circumstances. The question ultimately turns, in ail cases, upon the real intention of the parties, as shown upon the face of the writings or as disclosed by extrinsic evidence. The rule is undisputed that, to show that a deed is not in fact an absolute conveyance but was intended as a mortgage to secure a debt, the evidence must be clear, satisfactory and convincing. Hays v. Emerson, 75 Ark. 551; Snell v. White, 132 Ark. 349; Henry v. Henry, 143 Ark. 607; and Jefferson v. Soulter, 150 Ark. 55.
It is true that the written agreement between the parties of the same date as the absolute deed recites the fact that Matthews had made to Stevens a deed, upon payment of the mortgage debt by Stevens, in consideration that Matthews may redeem the property upon any day prior to November 1,1918.
The word, “redeem,” however, has. no definite significance. It means to repurchase, or to regain, and does not necessarily imply the existence of a valid existing indebtedness. The mere use of the word “redeem” is not sufficient to make a contract for reconveyance a defeasance. If it be shown there was no debt from which redemption might be made and that the debt has, in fact, been extinguished, then the word will be construed as repurchase. Cole v. Beh (Iowa), 132 N. W. 73; Robinson v. Cropsey, 2 Edwards’ Ch. Repts. 138, affirmed in 6 Paige’s Ch. (N. Y.) 479; 3 N. Y. Ch. Repts. bot. p. 1069, and Pace v. Bartles, 47 N. J. Eq. 170, Atl. 352.
In the last-mentioned case it is said that the distinction between a contract for repurchase and a defeasance is difficult to define, and that, in fact, they cannot be distinguished without taking into consideration all the facts and circumstances surrounding the transaction. Such is the effect of our own decisions on the subject.
In the case at bar the facts are that there was no indebtedness, in the first place, from Matthews to Stevens. Matthews had mortgaged the land to his nephew for an amount which, all the witnesses agree, was the full value of the land. Indeed, one of the mortgagees said that he was afraid that, on account of the boll weevil and other ■things, land would depreciate in value so that the land in question would not pay off the mortgage indebtedness, and, for this reason, they were about to foreclose their mortgage. Matthews had applied to Bradshaw for a loan to pay off the mortgage indebtedness, but, on account of some controversy in regard to cutting timber off of the land, Bradshaw refused to make him the loan. Matthews then procured Stevens to act for him. He executed an absolute deed to Stevens to the land. Stevens, in turn, mortgaged the land to Bradshaw for $1,500, and with the money paid off the mortgage indebtedness. At the same time a written agreement was executed between Matthews and Stevens wherein it was recited that the mortgage ■debt amounted to the present value of the land. The mortgage gave Matthews until November 1, 1918, to “redeem” the land upon paying to Stevens the amount paid out by him in satisfaction of the mortgage debt and any advances made by him to Matthews. The liability of Matthews to Huestess Bros, was wholly discharged when ■Stevens paid off the mortgage indebtedness to them. Matthews was not liable thereafter to pay them anything ■or to pay anything to Stevens. He had the right to repurchase, if he saw proper to do so, upon paying a certain sum within the period designated' in the written agreement. If the land had fallen in value Stevens could not, under the language of the contract and the circumstances surrounding the transaction, have held Matthews responsible, and must himself have sustained the loss.
Therefore we are of the opinion that the transaction is a contract for repurchase, and not a mortgage. According to the testimony of Stevens, he offered to deed the land back to Matthews on the first day of November, 1918, if Matthews would pay him the amount due for such repurchase, under the terms of their written agreement. His testimony in this respect is contradicted by Matthews. Matthews says that he tendered to Stevens the amount due under the written agreement. Then, if he desired in good, faith to repurchase the land, he should have proceeded promptly to exercise the right of repurchase given him under the contract. Instead of that, he waited from the first of November, 1918, until he brought this' suit on March 18,1922. During all this time Matthews lived near to the land and must have known what Stevens was doing with it. Stevens cleared about fifty acres of land, did considerable ditching on the land, and put a new wire fence around a large portion of it. He also made some other improvements of lesser consequence. As we have already seen, Matthews lived near to the land, and knew, or he must be charged with knowledge, that these improvements were being made. He made no protest of any kind, and this fact is evidence of considerable probative force in determining his good faith in the matter of repurchasing the land. The fact that he waited so long tends to negative the idea that his contention of the amount necessary to repurchase the land under -their agreement, as testified to by him, was correct.
The result of our views is that Ihe decree must be reversed, with directions to the chancery court to dismiss the complaint of Matthews for want of equity.
