105 Neb. 127 | Neb. | 1920
James A. Snoke brought this suit in' equity against Ellsworth J. Beach to have a certain deed from the former to the latter declared to be a mortgage; that an accounting be taken of the rents and profits of the land; that he be let in to redeem; and that the defendant be required to reconvey the premises to the plaintiff. The trial court denied the plaintiff the relief prayed, and he has appealed.
The pleadings, as well as the evidence, present a clear-cut question as to whether the transaction is to be regarded as an absolute sale, with an option back to the grantor to repurchase the land, or a mortgage. A deteiu mination of this question involves an examination of the testimony in the light of well-settled legal principles applicable in such transactions.
The record shows that the plaintiff purchased the land in question in 1909. At that time there was a mortgage on it in favor of one Goedekin for $1,200. Later the plaintiff gave a mortgage on it to J. 0. McCorlde for $1,500, and still later the plaintiff executed a third mortgage to the defendant for |G00. The mortgage to Mc-Corkle had been assigned as collateral security to the
On the date of the delivery of the deed a contract was signed by Beach and Snoke, as follows: “11-9-14. I have this day received from James A. Snoke warranty deed .to the N. E. 1/4 of section 20, township 25, range 47, Box Butte county, Nebr., for which I agree to sell back to the said James A. Snoke within one year from this date for $2,719.40 and 9 per cent, interest on this amount from this date, except I reserve the right to make private sale of this land within the year at the stipulated price of $22.50 per acre, and agree to pay James A. Snoke, in case I make such sale, all over and above the sum of $2,719.40 and interest and any and all expense I may have during this time, including any taxes I may pay. E. J. Beach. J. A. Snoke.”
Pursuant to the arrangement, Beach paid off the Goedekin and McCorkle mortgages and canceled his own, and later filed of record releases for the three mortgages.
There can be no doubt that the holder of a mortgage debt has the legal right, with the consent of the mortgagor, to accept an absolute deed to the mortgaged premises in full satisfaction and discharge of the debt, where such transaction is freely and voluntarily made, and is free from the vice of fraud or coercion. It is the policy of the law to encourage rather than to discourage the settlement of controversies by the parties out of court. It is also within the right of the parties to enter into a contemporaneous contract wheréby the grantee ifi such- deed agrees to resell the premises to the grantor upon the payment of a stipulated price and within a given time, and no legal impediment arises even though the amount named in the contract to reconvey is the same amount as the debt for which the deed was given in payment. Where,- however, a dispute arises as to whether the deed and the contract speak the real transaction, and proof is offered tending to show that the deed was intended to be a mortgage, the fact that there was an- antecedent debt existing and that the repurchase price named in the contract is the same amount as the mortgage debt with interest will be regarded as strong circumstances tending-to show the transaction to be a mortgage. It is well settled that a deed and contract to resell, however positive and clear the terms may be, are subject to parol explanation, and that a court of equity in its effort to find the truth will look behind the form of the language used to determine the real transaction. Whether a deed absolute on its face,is a sale or a mortgage depends upon the intention of the parties, and such intention is to be gathered from the declarations and conduct of the parties, as well as from the papers which they subscribe. Sanders v. Ayres, 63 Neb. 271; Kemp v. Small, 32 Neb. 318. The rule is also established in this state that, where it is sought to vary the effect of a deed
The value of the land as compared with the consideration paid for it is also an important factor to be considered in determining the true nature of the transaction. This of course is based upon the well-recognized trait of mankind to secure as nearly as possible a fair value for his property. While there is a sharp dispute upon the question of value, the weight of the defendant’s testimony fixing it at $3,600 and that of the plaintiff from $4,000 to $4,500, we are inclined to the view that the value of the land as shown by the testimony was $4,000. The possession of the premises is also an important factor to be considered. In that respect the testimony shows that the possession of the premises was to be in Snoke, and in fact it is shown that an agent for Snoke rented the premises on a crop rent basis for the year 1915, taking the lease in Snoke’s name. Later, however, in Snoke’s absence, the .landlord’s share of the crop was delivered to Beach and appropriated by him. The agent of Snoke who had made the lease testified with respect to the 1915 crop as follows : “Before they got ready to thresh Mr. Beach came and asked me what I was going to do with the grain, and I told him Mr. Snoke wasn’t here at the time, he was over in Colorado, and he wrote me to look after it; there was no granary to put it in, and Mr. Beach said, ‘I will' do this with you, I will take the grain from the machine, and if Mr. Snoke redeems the land I will owe him for the grain, and if he don’t redeem the land the grain belongs to me.’ I said, ‘That is satisfactory to me,’ and so Mr. Beach took the grain.”
We cannot in the space proper to be given to an opinion quote from the testimony further, and must in the end give our conclusion as to what the testimony shows.
From a careful examination of the testimony and the circumstances surrounding the transaction, we have be
Reversed,- with directions.