Donovan v. Boeck

Decision Date25 February 1909
PartiesJOSEPH T. DONOVAN, Appellant, v. ADAM BOECK
CourtMissouri Supreme Court

Appeal from St. Louis City Circuit Court. -- Hon. Warwick Hough Judge.

Affirmed.

R. M Nichols for appellant.

(1) When a grantor in an absolute deed at the same time takes from the grantee a written contract giving the former a certain length of time in which to redeem the premises by paying the amount of the debt or consideration of the deed and binding the latter to reconvey on such redemption, the two papers together constitute a mortgage. Book v. Beasly, 138 Mo. 455; Bobb v. Wolff, 148 Mo. 335; Chance v. Jennings, 159 Mo. 554; Reily v. Cullen, 159 Mo. 330; Shields v. Russell, 142 N.Y. 290; Turner v. Wilkinson, 72 Ala. 361; Rodgers v. Jones, 92 Cal. 80; Booth v. Hoskins, 75 Cal. 271; Kelly v. Leachman, 2 Idaho 1112; Hawes v. Williams, 92 Me. 483; Snow v. Pressey, 82 Me. 552; Security Sav., Etc., Co. v. Lowenberg, 38 Ore. 159. (a) One of the indications that the transaction was intended as a mortgage is the provision in the contract that "said Joseph T. Donovan pays said amount within eighteen months from August 5, 1901, viz., or before February 5, 1903, otherwise this agreement is void." Scott v. Hughes, 124 Ga. 1000; Pearson v. Seay, 38 Ala. 643; Ferguson v. Miller, 4 Cal. 97; Bacon v. Brown, 19 Conn. 29; Bank v. Tenn. Coal, Etc., Co., 62 Oh. St. 564; Thacher v. Morris, 52 W.Va. 220; Knowlton v. Walker, 13 Wis. 264. (b) Where an absolute deed is given as security for a debt, no personal covenant or promise on the part of the grantor to pay the debt is necessary to make it a mortgage. Locke v. Moulton, 96 Cal. 21; Dougherty v. McColgan, 6 Gill & J. 275; Rempt v. Geyer, 32 A. 266; Horn v. Keteltas, 46 N.Y. 605; Tuggle v. Berkeley, 101 Va. 83; Schreiber v. Leclair, 66 Wis. 579; Russell v. Southard, 12 How. 139. (c) A definite test to determine whether or not an absolute deed, executed in consideration of a precedent debt, with an attendant agreement to reconvey the premises to the grantor on payment of the consideration, constitutes a mortgage or a conditional sale, is found in the question whether the debt was discharged by the deed, or subsisted afterwards. The language of the contract is unmistakable in that it leaves the debt still due and owing, the grantor being bound to pay it at some future time before he would be entitled to recover back his property. Hall v. Arnott, 80 Cal. 348; Keithley v. Wood, 151 Ill. 566; Helm v. Boyd, 142 Ill. 370; Hughes v. Sheaff, 19 Iowa 335; Riley v. Starr, 48 Neb. 243; Budd v. Van Orden, 33 N. J. E. 143; Todd v. Campbell, 32 Pa. St. 250; Ruffler v. Womack, 30 Tex. 332. (d) The fact that the grantee retained possession of the notes and deed of trust, without cancellation, and a surrender of the same, from the date of the agreement, August 5, 1901, until he sold the property, September 18, 1903, raises the presumption that the debt was not extinguished by the conveyance and that a mortgage was intended. Ennor v. Thompson, 46 Ill. 214; Wright v. Mahaffey, 76 Iowa 96; McMillin v. Bissell, 63 Mich. 66. (e) The fact that the property, as admitted by the demurrer, was worth $ 27,000 when the conveyance was made for $ 7,780, is a strong circumstance showing that the parties intended the conveyance as a mortgage. Todd v. Day, 106 Mo. 278; Glass v. Heironymus, 125 Ala. 140; Husheon v. Husheon, 71 Cal. 407; Chapman v. Ayer, 95 Ga. 581; Helm v. Boyd, 124 Ill. 370; Conlee v. Heying, 94 Iowa 734; Burch v. Nicholas, 26 Ky. Law Rep. 264; Kemp v. Earp, 42 N.C. 167; Bank v. Warner, 92 Tex. 226; Rich v. Doane, 35 Vt. 125; Thacher v. Morris, 52 W.Va. 220; Russell v. Southard, 12 How. 139; Simpson v. Bank, 93 F. 309. (f) The transaction in itself and the averments of the petition show that Donovan was in embarrassed circumstances and unable to pay the debt, and that it was the intention to create a mortgage. Reed v. Reed, 75 Me. 275; Montgomery v. Beeches, 31 A. 451; Steele v. Black, 59 N.C. 427; Gilchrist v. Beswick, 33 W.Va. 168; Butler v. Butler, 46 Wis. 430. (g) The possession by the grantee under a contract for an accounting of rents and profits is evidence of an intention to create a mortgage. Murdock v. Clark, 24 P. 272; Clark v. Landon, 90 Mich. 83. (h) The circumstance that the defeasance contract provides that "this instrument shall not be construed to be a mortgage" is not any more conclusive than if it had provided that it was a "conditional sale," because after all the entire transaction must be construed together. Wilcox v. Tennant, 13 Tex. Civ. App. 220. (2) Where there is doubt as to the meaning of the parties to a contract, as to whether a conditional sale or right to redeem is intended, the transaction must be construed in favor of a mortgage. Turner v. Shaw, 44 Mo. 229; Morley v. Dryden, 57 Mo. 226; O'Neil v. Chappell, 62 Mo. 207. (3) No agreement of the parties at any time can take away or limit the right of redemption. Once a mortgage always a mortgage. Turner v. Shaw, 44 Mo. 429; Cobb v. Day, 106 Mo. 295.

Wm. F. Smith for respondent.

(1) A demurrer admits only facts which are well pleaded. In Missouri, it does not admit the amount of damages to be assessed where an inquiry of damages follows upon an interlocutory judgment. Nor does a demurrer admit averments concerning the meaning of a paper, nor conclusions of law. Bliss on Code Pl., secs. 418, 420, 636; 15 Mo. 187; 1 Phil. on Ev., 786; McKenzie v. Mathews, 59 Mo. 99; 21 Wall. 430; 68 N.Y. 298. (2) The contract of August 5, 1901, is not ambiguous in law. "No matter how difficult it is to interpret an instrument, if the court does finally interpret it, there is no ambiguity about it which will warrant the introduction of parol testimony." 1 Ency. of Ev., pp. 826-841; Riggs v. Meyers, 20 Mo. 239. (3) "Mere inadequacy of price, or any other inequality in the bargain is not, however, to be understood as constituting, per se, a ground to avoid a bargain in equity. However, there may be such an unconscionableness or inadequacy in a bargain, as to demonstrate some gross imposition or undue influence, and in such case courts of equity ought to interfere upon satisfactory ground of fraud. But then such unconscionableness or inadequacy of price should be made out as would (to use an expressive phrase) shock the conscience, and amount in itself to conclusive and decisive evidence of fraud." 1 Story's Eq. Jur., secs. 244-246; Pollard v. Lyman, 2 Am. Dec. 63 and note 71; Robertson v. Smith, 11 Tex. 211; Rue v. Dole, 107 Ill. 283; Holmes v. Fresh, 9 Mo. 200; Cobb v. Day, 106 Mo. 301; Keith v. Browning, 139 Mo. 190; Hardwick v. Hamilton, 121 Mo. 465; Railroad v. Brown, 157 Mo. 326; Maloney v. Webb, 112 Mo. 575; Phillips v. Stewart, 59 Mo. 491; Harlan v. Nation, 126 Mo. 97. (4) "In passing on transactions of this class, the understandings and purposes of the parties thereto are to be considered and respected as in other cases. If they intended an extinguishment of the debt, and the vesting of an absolute title subject only to an agreement to reconvey upon specific terms -- as a payment of an amount equal to the cancelled debt and interest -- the objects of the arrangement are not to be defeated by turning the transaction into a mortgage when the parties intended no such result. When the parties intended a conditional sale, and not a mortgage, and make their contract in accordance with their intentions, it is not the province of the court to circumvent or frustrate their intentions." 44 Mo. 429; 7 Cranch 237. (5) It was not essential to the cancellation and extinguishment of the subsisting mortgage debt and the lien that the note itself evidencing the debt be cancelled and released of record, or delivered up immediately. The conveyance paid and extinguished the debt and discharged the lien, and the writing expressly records that fact, and that is all that is required. The conduct of the parties comports with that understanding also. Slowey v. McMurray, 27 Mo. 113; Turner v. Kerr, 44 Mo. 432; Wolff v. Bobb, 148 Mo. 335; Saxton v. Hitchcock, 27 Barb. (N. Y.) 220; Bailey v. Trust Co., 188 Mo. 483. (6) Since appellant Boeck owned the note and mortgage at the time the warranty deed to the mortgaged premises was delivered to him, the transaction resulted in a merger, in law, and the indebtedness became cancelled in law, even though the mortgage was not at the time released of record. Wonderly v. Giessler, 118 Mo.App. 708. (7) The facts and circumstances show that appellant was and is guilty of such laches as that a court of equity should not and will not favorably entertain his plea under the circumstances shown. And since the laches arise out of the facts of the case, the defense of laches can be invoked even though that defense was not pleaded, and can be raised by demurrer. Hatcher v. Hatcher, 139 Mo. 613; Stevenson v. Smith, 189 Mo. 447; Dexter v. McDonald, 196 Mo. 403. (8) The warranty deed from Donovan to Boeck, which is absolute in form and terms, must be construed according to its terms and purport, both at law and in equity, until it is shown by convincing proof to have been intended as a mortgage; and the burden of overthrowing its legal effect rests, as in all cases, on him who seeks to defeat its terms; and neither the terms and conditions of the contemporaneous offer or option contract, nor the incidental facts, circumstances and inferences, show that the absolute deed was intended as a mortgage. Wolff v. Bobb, 148 Mo. 344; Bailey v. Trust Co., 188 Mo. 483.

OPINION

LAMM, P. J.

Cast on demurrer to his amended bill and refusing to plead over, judgment went against him and plaintiff appeals.

On November 19, 1904, plaintiff brought his suit in equity, the object and general nature of which was to recover damages for...

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