140 Tenn. 602 | Tenn. | 1918
delivered the opinion of 'the Court.
We find the following facts clearly and satisfactorily established by the record:
In 1907 John W. Taylor, of Corinth, Miss., being then the owner of a house and lot situated on Shelby street, in Memphis, Tenn., conveyed this property to his wife, complainant Della Taylor. When the property was purchased by Mr. Taylor, it was subject to a mortgage of $5,000 in favor of Williamson
The amount bid at the sale was much less than the value of the property. Defendant states in his deposition that he investigated the matter before the sale, and learned from persons competent to give an opinion that it was worth $8,000. C. W. Young testifies that it was worth $16,000. In any view it was worth at least $2,000 more than the amount at which the defendant and his brother purchased it at the sale.
Defendant and W. F. Elgin knew that the property belonged to Mrs. Taylor, and that Taylor was acting for his wife in the negotiations referred to between Taylor and the defendant. In making these negotiations defendant was acting for his brother W. F. Elgin as well as for himself, the two having agreed to buy the property and defendant acting. for both, although, as stated, the bid was actually made in the name of W. F. Elgin. The trustee’s deed, delivered immediately thereafter, however, was made to W. F. Elgin and defendant Frank S. Elgin.
Frank S. Elgin alone was sued, he being the only resident of the State, and having collected and disbursed the funds as stated. The complainant sought an accounting with the defendant as a trustee.
The defendant’s view seems to have been, and seems now to be, that the arrangement stated above amounted to a mere contract to permit a repurchase of the property at farthest within the period of one year from the date of the sale which took place on September 5, 1908; that, inasmuch as there had been no repurchase or resale within that time, complainants had no further claim on the property or on him.
There is another defense advanced to the effect that at the expiration of the twelve months no resale or redemption having been effected, defendant and his associates paid to Taylor for his wife $1,000 in full satisfaction of any further claims they might have. The weight of the evidence on this matter is that Taylor was making continual complaints to Wal
The chancellor held that the transaction amounted to a mortgage, and held defendant liable as a mortgagee, but allowed him credit for all expenses, also ten per cent, per annum as profit on the amount invested, and $750 attorney’s fee. He also gave him credit for the $1,000 paid the real estate agent for effecting the sale to Mrs. Sledge. The defendant prayed a broad appeal. The complainant prayed no appeal, but assigned errors upon the credits just mentioned as having been allowed to the defendant; that is, the ten per cent., the attorney’s fee, and the $1,000 paid to the real estate agent.
The fundamental question on which the whole controversy turns is whether the facts stated make out a case of sale with liberty of repurchase, or that of a mortgage.
It is often very difficult to distinguish when a state of facts falls within the one or the other category. The matter has been considerably discussed in this State, and we have several cases, some of which discuss the principles involved quite fully and all of which are valuable for purposes of illustration. We shall not review these cases in detail, but only cite them. They are: Bennet v. Holt, 2 Yerg. (10 Tenn.), 6, 24 Am. Dec., 455; Scott v. Britton, 2 Yerg. (10 Tenn.), 215, 224, 225; Lowry v. McGhee, 8 Yerg. (16 Tenn.), 242, 248; Hickman v. Cantrell, 9 Yerg. (17 Tenn.), 183, 184, 32 Am. Dec.,
The leading cases are Bennet v. Holt, Hickman v. Cantrell, and Ehert v. Chapman. The latter case contains a full summary of the points which distinguish between a sale with.liberty of repurchase and a mortgage. It is said that if there he a striking disparity in value between the property conveyed and the money advanced the probability is that the conveyance was intended as a security or mortgage. In that case it was held that where the amount advanced was $1,000 and the value of the property was $1,500, the disparity was too great to justify a conclusion that the transaction made a sale with liberty of repurchase'. Another indication stated is that, if there was no price fixed on the property, the transaction should he characterized simply as a provision for security. Another matter for consideration is whether there was a contract for repaying the money advanced; if so, this is indicative of a mortgage. It is stated that another point for consideration is whether possession remained with the vendor, or passed to the vendee. The opinion continues:
“After enumerating these several symptoms, Judge Haywood says: ‘But if the price he settled, and there be not any great disparity between the money advanced and the thing sold, if the receiver of the money be not hound to repay it, and there is no*612 covenant to that effect, and if possession is delivered to the vendee, then it is a sale, and, being liable to be defeated by paying a certain sum on a certain day, it is a conditional sale.’ All these things must concur, otherwise the conveyance is a mortgage.”
The importance of having the exact price fixed to be repaid on the repurchase and of having the exact day fixed is fully shown in Hickman v. Cantrell, supra. Judge Turley there recalls the well-known legal principle that originally at common law all estates which were defeasible by the payment of money on a particular day became absolute, if the day fixed for payment was permitted to pass without payment of the money. This principle was applied to conveyances where the transaction was intended merely as security as well as to those where it was really intended as a sale. Prom the operation of this principle great abuses arose, resulting in the oppression of debtors. To ameliorate this hardship the distinction was established that, where the. transaction was intended as a security for debt, the debt should be considered the principal thing contracted for, and the estate collateral thereto; whereas in the case of a transaction really intended as a sale, the estate should be treated as the principal thing, and the consideration collateral. As a result of this principle it was held that, where the transaction was intended, as security, the debt being the principal /thing and the estate collateral, the right to redeem should continue, although the day of payment
Thus it appears that the party who is to make a repurchase with a view to enforcing the condition must know the exact day on which he is to pay, and
As to the disparity between the amount of money advanced in the purchase of the property and the value of the property, this was at least $2,000, and probably very much more. The disparity was too great.
So it appears that of the several points indicated in Ehert v. Chapman as necessary to exist in concurrence in order to enable one to assign a transaction to the category of a sale with liberty of repurchase, only one is found present; that is, the delivery of the possession to the purchaser at the sale. The authority referred to holds that all of these must be present. The conclusion seems to be inevitable that the trans: action was properly held by the chancellor to be a mortgage. A transaction very similar to the present
It remains to deal with the assignments filed by complainant.
The first assignment, as to the ten per cent., and the second as to the $750 attorney’s fee, must both be sustained. The defendant should be allowed only six per cent, interest per annum on the sum advanced. The ten per cent, would be usurious, and a clog on the right of redemption. The $750 attorney’s fee would likewise be a clog on the right of redemption. It does not appear that any services were performed for which such charges should be made. The third assignment as to the $1,000 paid to the real estate agent for effecting the sale must be disallowed. We think that was a proper expenditure.
A decree will be entered, taxing the defendant with all the costs of the chancery court, and with two-thirds of the costs of this court. The complainants will pay one-third of the costs of this court.
ON Petition eob Reheabing.
The complainant’s petition is overruled. The matter on which it is based was disposed of on the ground stated in the last paragraph but one of the original opinion; that is, that such matter was not contained in the assignment of errors. Complainant concedes this, but says it did appear in the latter part of the brief. This was one of the matters we referred to in the paragraph of the opinion just mentioned, and we see no reason to change what we have there written. Having excluded the question of rents from the assignment of errors, the complainant cannot regain
The petition of the defendant is also overruled. It is true that complainant, in stating in the bill the contract made between the parties when the defendant and his brother undertook to buy in the property, and hold it for Mrs. Taylor, said that two of the terms were that Mrs. Taylor, in effecting redemption, either directly or through the medium of a sale, was to allow to defendant and his associate ten per cent, per annum on the money invested, and in addition a reasonable attorney’s fee, which was later fixed at $750. The bill also charged that by these arrangements the defendant became a trustee for the complainant, and, having sold the property subsequently for $13,000, which was far more than twice the sum paid at the trust sale, and having refused to account to her, that he should be compelled to account, and that, after the allowance of proper credits, the balance found due should be paid over to her. The two credits now claimed, and which we disallowed on the original hearing, were particularly mentioned, and it was asked that they be allowed “if proper;” and there was also a prayer for general relief. We did not overlook the allegations of the bill, as surmised by the learned counsel who drew the petition. It is true the bill was much too long, and very involved, and tedious to the last degree, but we read it all, and annotated it on the margin
Defendant urges in his petition that he did not know the fee would be questioned, and therefore had no opportunity of showing the services he performed, and asked that the cause be remanded that he may file such evidence. Defendant is in no situation to make this request. He says in his answer that the contract or arrangement charged in the bill “is a pure fiction;” that in the next year after he and his associates had made the purchase, complainant’s husband said he could redeem the property for her, ^ and defendant agreed he might do so by repaying the purchase money with ten per eSnt. interest thereon, and a reasonable attorney’s fee, but that nothing ever came of it. Thus he does not claim in his pleadings that he performed any service for the complainant, and the petition substantially admits • that there is nothing in the evidence to justify the allowance of such a fee against her. So the question returns- to the status given it by the complainant’s presentation in the pleadings,
"We may add that defendant’s own evidence ■ clearly shows that'his own conception of the “fee” was of a kind of concession to him by his associates, W. F. Elgin and W. F. Wallace, in view of the fact that he was to look after the matter for them, as well as for himself. We mean by “concession,” not that he was not to do something for them, and thereby earn something special for himself in addition to his taking one-third of the profits of the venture— for such it was between the three persons just mentioned — but that none of them had any definite idea, of what such service might be worth, and defendant himself recognized, as may ,be inferred from his evidence, that they, W. F. Elgin and W. F. Wallace, were conceding him very generous compensation. But, be this as it may, he did not perform any service as attorney for Mrs. Taylor.
We may add, further, that by reason of the complainant’s failure to assign errors against the chancellor’s allowance of quite a considerable sum of rents collected by the defendant, he has been permitted to retain a very handsome bonus, in addition to the six per cent, lawful interest which we have allowed him, for all he did in the way of extending financial aid to Mrs. Taylor to extricate her from the pit into which she and her husband with her had fallen.
Petitions denied.