Edrington &C. v. Harper

• Decision Date: 20 January 1830
• Citation: 26 Ky. 353
• Court: Kentucky Court of Appeals
• Parties: <I>Edrington, &c.</I> <I>vs.</I> <I>Harper.</I>

26 Ky. 353

Edrington, &c.vs.

Harper.

Court of Appeals of Kentucky.

January 20, 1830.

Error to the Franklin Circuit; HENRY DAVIDGE, Judge.

Chief Justice ROBERTSON delivered the opinion of the Court.

DOUBTING the correctness of the opinion which was delivered in this case, we directed a re-argument.

The case has been fully argued on the re-hearing; and we are still of the opinion that the contract is a mortgage, and that if it were not, it would be proper to withhold a specific execution of it.

The land had been assigned to the wife of Edrington, (before he married her) as her dower in the estate of her first husband, Jackson.

On the 21st of May, 1823, Edrington and Cook executed to Harper, a bond in the penalty of $624, with the following condition: "That whereas, the said Cook and Edrington, have this day sold to said Harper, for the sum of $312, to them paid, the life estate held by them or one of them, in and to the land laid off by commissioners to Mary, the wife of said Edrington, but formerly the widow of John Jackson deceased, as her part of the tract of land on which said Jackson resided at his death, to which she was entitled as her dower. Now, if said Cook and Edrington shall, on or before the 21st day of September next, surrender possession of said premises, and convey said land, by a good title, warranting the same against them and against said Mary Edrington, and all claiming under them, to said Harper and his heirs or assigns, then this obligation to be void, &c."

Simultaneously with the execution and delivery of this bond, Harper executed and delivered to Cook and Edrington, the following defeasance: "I have this day bought of Seth Cook and Benjamin Edrington, the dower right of Mrs. Mary Edrington, formerly Jackson, in and to part of the tract of land on which John Jackson resided at his death, for the sum of $312. I do hereby agree, that if they choose to repay me said money with six per centum interest, on or before the 21st day of September next, I will cancel the contract with them; but it is optional with them to do it or not; and if accepted and fulfilled by that day, it is well and good. Given under my hand this 21st May, 1823.

                                            ADAM HARPER."
                

It is often very difficult to discriminate between mortgages and conditional sales. Every case must be determined by a consideration of its own peculiar circumstances; and it is proper, that no specific rules should be defined for distinguishing mortgages from conditional sales: otherwise, the usurer, with the rules before him, would be able to evade the laws against usury, and oppress the necessitous with impunity.

But in all doubtful cases, the law will construe the contract to be a mortgage: because such a construction will be most apt to attain the ends of justice and prevent fraud and oppression. See Skinner vs. Miller; V Littell's Reports, 86.

The execution of a defeasance, simultaneously with the absolute conveyance, constitutes them in contemplation of law, one entire instrument, as much as if the defeasance had been incorporated in the conveyance; and will generally have the effect of making the contract a mortgage. Powell on mortgages, 67.

It is a general rule, that "where land is conveyed absolutely, and the grantee, by a separate instrument, or defeasance, covenants to re-convey to the grantor, on his paying a certain sum of money, the transaction amounts only to a mortgage." Peterson vs. Clark; XV. Johnson, 205; Dey vs. Durham; II. Johnson's Chancery Reports, 189.

Where A, gave a regular bill of sale of three horses to B, for the consideration of $200; and B, at the same time, gave to A, a writing, or defeasance, engaging, on the payment of $210 to him by A, in 14 days, to deliver the horses to A, it was held that this was a mortgage." Brown vs. Bemont and Strong, VIII. Johnson, 75.

From this general rule of construction, there are exceptions. The intention of the parties is the only true and infallible test; that intention is to be collected from the condition or conduct of the parties as well as from the face of the written contract. Parol evidence is not admissible to contradict the writing: but when the chancellor is asked to assist the vendee, in enforcing (as in this case) an alleged equity, a rebutting equity may be proved by parol testimony; and even when the vendor is the complaining party, proof of the conduct and condition of the parties may be admitted to aid in giving construction to a writing which may be of doubtful import on its face. Parol evidence is always admissible to prove fraud or usury, or the illegality of the contract, or the consideration.

The fact that the real transaction between the parties, was a borrowing and lending will, whenever, or however it shall appear, show that a deed, absolute on its face, was intended as a security for money; and whenever it can be ascertained to be a security for money, it is only a mortgage, however artfully it may be disguised.

But if a "bona fide" purchaser of property at sheriff's sale, agree, after his purchase, that the former owner may re-purchase the property within a given time, this, if there be no other fact to control the construction, will be considered a conditional sale, and not a mortgage; Hany vs. Marsh, II. Marshall, 47; Flowers vs. Sproule, &c. Ib. 54.

But the reason for this interpretation is obvious; and is perfectly consistent with the general rule of construction which has been suggested. It is manifest from the nature of the transaction, that there was no borrowing or loaning of money; and that the deed or certificate of sale given by the sheriff to the purchaser, could not be intended as a security for money. Therefore, and therefore only, in such a case, characterized by no other circumstances than those which have been mentioned, the contract could be construed to be a conditional sale.

There may be many other cases in which the nature or subject matter of the contract may authorize the inference that the contract was not a mortgage, but a conditional sale.

But the language of the contract alone, will seldom justify the construction, that it was a conditional sale. Here the general rule applies; and if there be no other fact to illustrate the intention of the parties, than the simple circumstance, that the written contracts shows an absolute sale by one to the other, and a simultaneous condition of defeasance delivered by the latter to the former, the court will incline to the construction, that the contract was a mortgage, rather than a conditional sale.

In such a case, therefore, the "onus" devolves on the party who insists that the contract was a conditional sale; and if he shall fail to exhibit any fact tending to show that it was a conditional sale, other than the written evidence of contract, he must be content to submit to it as a mortgage.

In the case of Gray vs. Prather, II. Bibb, 225, this court decided that the contract was a conditional sale. But that decision is consistent with the general rule which has been extracted from Powell and other authorities. Independently of the sale and the condition, there were other facts, which clearly showed that the contract was a conditional sale; and these facts alone, are assigned as the reasons for the opinion:

1st. Prather having an execution against Gray, bought his slave at more than his value, and was to credit the execution with the sum agreed to be given for him. This fact would indicate that the sale of the slave was not a security for money: because the amount to be secured, exceeded the value of the slave; and because, the debt being secured by replevin bond, there was no necessity for a mortgage on the slave, as an additional security.

2d. The agreement stipulated, that if the slave should die within the prescribed period for the re-purchase, Gray should sustain the loss. This provision would be prudent and precautionary in a conditional sale; but it would be superfluous in a...