70 S.E. 942 | N.C. | 1911
This action was brought by the plaintiffs on the theory that their intestate and ancestor, C. H. Sandlin, at the request of the defendant B. S. Kearney, who wished to own the same, but was unable to raise the money, had purchased a tract of land on 1 March, 1880, at public auction from W. A. Davis, administrator, and commissioner of the court, for the sum of $712, and received a deed therefor to himself, upon the agreement and trust that he would "reconvey" the land to Kearney when he paid the amount of Sandlin's bid at the sale, and, in the complaint, it is added, in the way of what seems to be a conclusion of fact or law, "the said B. S. Kearney agreeing to purchase the land from said Sandlin and to pay the amount of the bid, with interest." It is then alleged that Kearney took possession of the land and has been allowed to occupy it ever since the deed was made to Sandlin. There are other allegations to the effect that Kearney was related to Sandlin, and for this reason he was permitted to remain in possession of the land, but that he paid interest on the debt to Sandlin up to 1 January, 1885. Plaintiffs demand judgment for the possession (598) of the land; that it be declared that the defendant is indebted to them in the sum of $712, with interest from 1 January, 1885; that, on default of the payment of the same, the plaintiffs be adjudged to have a lien upon the land for their claim, and that it be sold to pay the same. The defendant admits the allegations of the complaint, subject to the following explanation, namely, that the land was bought at the sale by Sandlin at the request of the defendant and for him, Sandlin agreeing to hold the title for the defendant until he should pay the amount advanced by Sandlin or the price paid by him to Davis, with 8 per cent interest from 1 March, 1880, and that defendant paid the interest to *472 January, 1885, but has paid nothing on the debt since that time. This separate averment of the answer is admitted in plaintiffs' reply. The defendant then sets up a counterclaim, in which he alleges that in 1880 he contracted to buy from E. G. Brown, whose tenant he then was, a lot in the town of Franklinton for $1,000, to be paid in cash, but that, having only $300, he paid that amount on the purchase money and applied to C. H. Sandlin for the loan of the balance, $700, which was advanced to him by Sandlin upon the agreement that the land should be conveyed to Sandlin by E. G. Brown, the vendor, as security for the said loan by Sandlin to him, which was to bear 8 per cent interest until paid. That interest was paid to 1 January, 1885, when Sandlin took possession of the land and retained it until the time of his death, and plaintiffs have since had possession of it.
The plaintiffs, in their reply, admit these allegations of the counterclaim, but deny that C. H. Sandlin took possession of the lot in 1885 under any agreement with the defendant other than this, that Kearney, being unable, on 1 January, 1885, to pay the loan of $700 made to him, which with accumulated interest amounted to $938, surrendered possession of the lot to Sandlin, and formally abandoned his equity therein.
The jury, upon a single issue submitted to them, found that Kearney had not "formally" abandoned his equity. Both parties pleaded (599) the statute of limitations, in every conceivable form, and the case was heard by the court upon the pleadings and admissions of the parties, as herein set forth, and the deposition of B. F. Bullock, a witness for the defendant, whose testimony tended to sustain the plaintiffs' version of the facts, so far as they relate to the lot transaction. There was no request for the submission of any issue to the jury, except the one already mentioned, and no prayer for instructions. The court adjudged that as to the Davis tract, containing 13 acres, the relation of vendor and vendee had been established, and the possession of Kearney from 1 January, 1885, without any payment to Sandlin, did not bar the right of the plaintiffs, under the statute, to have the land sold to pay the purchase money, and a sale was thereupon ordered. As to the town lot, the court held that the transaction between the parties created the relation of mortgagor and mortgagee, and that the possession of Sandlin since 1 January, 1885, without any payment on the debt or any accounting for rents and profits, barred the defendant's recovery, under the statute, upon his counterclaim. Judgment was entered according to these rulings and for costs in the action, against the defendant, who has appealed therefrom to this Court. There is a suggestion in the defendant's assignments of error that he was entitled to have the two transactions in regard to the Davis tract and the town lot considered together, and that, when so coupled, the court should have decided that the debt secured by the deed to Sandlin for the Davis tract had been fully satisfied and discharged by the receipt of rents and profits by the plaintiff while in possession under the other deed. No connection between the two matters is shown by proof, though it is alleged in the answer that by a sale of a part of the town lot and the collection of rents, Sandlin had received enough to pay both debts. But as our decision will practically achieve the same result for the defendant, we need take no further notice of this contention, if it is in such (600) tangible form as to permit us to do so.
In our opinion, the judge erred in holding that the relation of vendor and vendee was created between the parties by their arrangement with respect to the Davis tract. There is no point made as to the statute of frauds, and the case must be determined upon the admission of the parties. If the deed of Davis to Sandlin is to be considered, upon the facts relevant to that question, as a mortgage, then it must follow from the other facts that the statute of limitations, which is pleaded in the answer, is a bar to plaintiff's recovery. If the plaintiff's own statement, in his complaint, of the transaction does not make him a mortgagee and the defendant a mortgagor — and this we need not decide — the defendant's allegation, which he admits, surely impresses that character upon the relation of the parties.
There are no special words required to constitute a mortgage. The true test is to ascertain whether the conveyance is a security for the payment of money or the performance of any act or thing. If the transaction resolves itself into a security, whatever be its form, it is, in equity, a mortgage. "The rule which converts an absolute deed into a mortgage, in accordance with the intention of the parties that it should be held only as security, applies not only to conveyances, voluntarily made by the grantor, but also to deeds received by purchasers at judicial sales, when the purchase was made under an agreement or arrangement with the debtor that the title should be held only as security for a debt or loan, and should be defeasible on payment of the money due. Nor need the deed even be made by the debtor; it is sufficient if the debtor, who claims to occupy the position of a mortgagor with the right of redemption, has an interest, legal or equitable, in the premises, and the grantee of the legal title acquired it by the act and assent of the debtor and as security for his debt." 27 Cyc., 993. The law looks to the substance and not the phraseology. It goes behind the mere words of the parties to find their real meaning and intent, and when found, it administers *474
(601) their rights accordingly, and it matters not how this intent may be veiled or concealed by language. It searches for the true, and not the false, and brushes aside all impediments in the way of finding it. Chancery suffers itself to be little embarassed with the forms which any transaction may assume, and, therefore, in whatever hand the fee may remain or however disguised may be the terms, if the real object be the taking or holding of land for the security of a loan or debt, it is, in equity, a mortgage, and, if necessary, the subsequent conduct of the parties with reference to the matter may be examined to ascertain their true intent, as the giving a note for the money or receiving part payment or interest on the same. Campbell v. Worthington,
"It is well established that a deed, absolute on its face, can be shown by parol or other extrinsic evidence to have been intended as a mortgage; and that the relation of mortgagor and mortgagee being thus established, all the rights and obligations incident to that relation attach to the parties. It is not material that the conveyance should be made by the debtor or by him in whom the equity of redemption will exist. It is sufficient if the debtor and he who claims to occupy the position of mortgagor with the right of redemption has an interest, legal or equitable, in the premises, and the grantee of the legal title has and acquired such title by the act and assent of the debtor, and as a security for his debt. (Stoddard v. Whiting,
That case is not distinguishable in principle from this one. It appeared there, it is true, that the seller had recognized the borrower of the money as the purchaser of the land by receiving a part of the purchase money from him, but that fact does not differentiate the cases, and was merely mentioned by the court because it happened to be one of the facts in the case. Sandlin bought for Kearney, paying the price for him, *476
and thereby recognized him as the real purchaser. The character of the transaction must be determined, not so much by the understanding of Davis, the seller, as by the agreement between Sandlin and Kearney. Many authorities can be cited to sustain our view of the matter. 20 A. E. Enc., p. 943 et seq. and notes; Jones on Mortgages (6 Ed.), secs. 281 and 332; Klock v. Walter,
We close this part of the discussion with the words of Chief JusticeSmith in the oft-cited case of Mulholland v. York,
If this deed must be considered as a mortgage, the deed for the town lot must receive the same construction. Kearney actually bought the lot himself and paid a part of the purchase money, Sandlin advancing the balance, upon an agreement of Kearney to pay it back to him. This created a debt, and the deed was a security for its payment.
Having concluded that both deeds must be regarded as mortgages, it follows that the plaintiff's cause of action is barred by the statute, Kearney, the mortgagor, having been in possession of the Davis tract since the last payment on the debt was made in January, 1885 (Revisal, secs. 391 (3) and 399), and the defendant's cause of action, alleged in his counterclaim, is likewise barred, Sandlin, the mortgagee, having held the possession of the lot since January, 1885, when the last payment on that debt was made. Brown v. Brown,
The result is that there was error in the ruling as to the Davis tract, and no error as to the town lot, and we modify the judgment accordingly and direct it to be adjudged in the Superior Court that the defendant is the absolute owner of the Davis tract and the plaintiff of the town lot.
Modified.
(607)