Citizens Bank of Morris v. Meyer
| Citation | 182 N.W. 913,149 Minn. 94 |
| Decision Date | 13 May 1921 |
| Docket Number | 22,215 |
| Parties | CITIZENS BANK OF MORRIS v. DAN MEYER AND OTHERS |
| Court | Supreme Court of Minnesota (US) |
Action in the district court for Stevens county to determine adverse claims to certain vacant and unoccupied real property. The case was tried before Flaherty, J., who made findings and ordered judgment in favor of plaintiff. From the judgment entered pursuant to the order for judgment, defendants appealed. Affirmed.
Warranty deed -- defeasance.
1. A warranty deed, containing a provision that the grantor may defeat it by paying a specified sum within a specified time is to be given the effect intended by the parties at the time it was executed.
Intent of parties.
2. This intention is to be ascertained from the written instrument or instruments and the attendant facts and circumstances.
Conditional sale -- mortgage.
3. A deed and an agreement to reconvey on payment of a specified sum is prima facie a conditional sale, but if the purpose be to secure a debt the transaction results in a mortgage.
Evidence of intent.
4. If no debt existed and the grantor assumed no obligation to make the specified payment, this is strong evidence that the parties intended the deed to take effect as a conveyance subject to an option in the grantor to reacquire the property.
Evidence of intent.
5. The fact that after the execution of the deed the grantor paid no taxes or encumbrances against the land, exercised no act of ownership over it, and made no claim to it, and that the grantee took possession of it, paid the taxes and encumbrances on it, and sold and conveyed it as owner, is evidence that they intended the deed to operate as a conveyance.
Decision supported by evidence.
6. The evidence justified the trial court in finding that the instrument in controversy was a deed, not a mortgage, and vested title in the grantee subject to a right to repurchase.
Roberts & Strong and S. H. Cranmer, for appellants.
James B. Ormond and Murphy & Anderson, for respondent.
On October 18, 1905, Thomas W. McClean purchased the quarter section of land, containing 153.71 acres, described in the instrument hereinafter set forth, subject to a mortgage of $2,500. At the time of purchasing the land he executed a second mortgage thereon in the sum of $725 for part of the purchase price, and on November 25, 1905, executed a third mortgage thereon in the sum of $702.70 to a bank at Cartersville, Iowa. There were no buildings or fences on the land, but a portion of it was under cultivation and McClean farmed this portion during the season of 1906. On December 18, 1906, McClean, his wife joining therein, executed to Mathius Johnson, of Cartersville, Iowa, the following instrument:
This instrument was duly witnessed, acknowledged and recorded. It is the statutory form for a warranty deed with an additional clause providing that the deed may be defeated by the payment of a specified sum within one year.
McClean never occupied the land or made any claim to it after executing this deed, and never, at any time, paid any taxes on it, or any principal or interest on the encumbrances against it. He wholly abandoned it. Johnson took possession of the land under the deed, at what time does not appear, and rented it to tenants, and he and those who took under his title have been in possession of it ever since. On December 30, 1908, Johnson executed two mortgages on the land -- one for $2,000 and one for $850 -- and with the proceeds of these mortgages and other funds, provided by himself, paid and satisfied the three prior mortgages. On November 16, 1912, Johnson executed a warranty deed of the land to A. E. Goffe. Goffe executed two mortgages on the land -- one for $2,750 to plaintiff and one for $1,250 to the Iowa bank -- and the two mortgages given by Johnson were paid and satisfied. On February 28, 1913, Goffe executed a warranty deed of the land to John Walsh, and on March 1, 1913, Walsh executed a mortgage thereon for the sum of $2,450 to E. P. Keenan and J. W. Clarey. On July 15, 1915, Walsh executed a special warranty deed of the land to defendant Hensch who took and still retains possession of it. The mortgage given by Walsh and the mortgage of $1,250 given by Goffe have been foreclosed, and the title acquired thereunder has passed to and vested in the plaintiff.
Plaintiff invested its money in the land without any actual knowledge of the condition in the deed executed by McClean, and on learning thereof brought this action to determine adverse claims, making the widow and children of McClean defendants therein. The trial court found that the instrument executed by McClean to Johnson hereinbefore set forth "was an absolute warranty deed of the premises therein described, and that the said Mathius Johnson acquired an estate in fee simple thereunder; that the reservation contained in said instrument was a mere option giving the grantor, Thomas W. McClean, the right to repurchase the said premises within one year from the date thereof upon complying with the terms of said option; that the said Thomas W. McClean never exercised his rights thereunder, permitted the same to lapse and expire, and wholly abandoned the same."
Judgment was entered decreeing plaintiff to be the owner in fee of the land and defendants appealed.
Defendants rest their case on the contention that the instrument executed by McClean to Johnson was a mortgage, not a deed, and did not convey title to Johnson. They concede that, if this instrument conveyed title to Johnson, the title has vested in plaintiff under the mortgage foreclosures, and that plaintiff was entitled to judgment. No question arose concerning the character or effect of this instrument until after the death of both the parties to it. McClean died in 1911; Johnson some years later. The instrument is a warranty deed from McClean to Johnson, with a provision added that the deed is subject to be defeated by the payment by the grantor within one year of the amount of the consideration stated in the deed, together with interest thereon at the rate of eight per cent per annum, and the taxes, if any, paid by the grantee during such year.
The cardinal rule in construing such instruments is to give them the force and effect intended by the parties at the time they were executed. King v. McCarthy, 50 Minn. 222, 52 N.W. 648; Baird v. Baird, 48 Colo. 506, 111 P. 79; Bradford v. Helsell, 150 Iowa 732, 130 N.W. 908; Rich v. Doane, 35 Vt. 125.
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