Corey v. Roberts

• Decision Date: 10 October 1933
• Docket Number: 5057
• Citation: 25 P.2d 940,82 Utah 445
• Court: Utah Supreme Court
• Parties: COREY v. ROBERTS

25 P.2d 940

82 Utah 445

COREY
v.
ROBERTS

No. 5057

Supreme Court of Utah

October 10, 1933

Appeal from District Court, Second District, Weber County; Geo. S. Barker, Judge.

Suit by Eva F. Corey against Ralph D. Roberts. From an adverse judgment, plaintiff appeals.

JUDGMENT SET ASIDE AND CAUSE REMANDED, with directions.

Valentine Gideon and Woolley & Holther, all of Ogden, for appellant.

Thatcher & Young and DeVine, Howell & Stine, all of Ogden, for respondent.

MOFFAT, Justice. STRAUP, C. J., and ELIAS HANSEN, FOLLAND, and EPHRAIM HANSON, JJ., concur.

OPINION [25 P.2d 941]

[82 Utah 448] MOFFAT; Justice.

The plaintiff is the appellant and the defendant is the respondent. In briefs and arguments the parties have been so designated and for convenience will herein be so referred to. For a long time prior to the 14th day of January, 1918, the plaintiff was the owner and in possession of certain property located on the east side of Washington avenue between Twenty-Fifth and Twenty-Sixth streets, in Ogden City, Utah. At that time the plaintiff was indebted to the New York Life Insurance Company in the principal sum of $ 28,000 and certain accrued interest. This indebtedness was secured by a first mortgage on the property, generally referred to as the "Corey Block" or "Corey Property."

The plaintiff was also indebted to the Utah National Bank of Ogden in the sum of $ 17,100 upon two promissory notes secured by a second mortgage upon the same property. Some taxes were unpaid. The plaintiff was also indebted to the bank in an additional sum which was not secured. The record discloses that after the 14th day of January, 1918, and before the time of bringing this action, a consolidation of the Utah National Bank of Ogden and the First National Bank under the latter name was effected.

The plaintiff is the mother of the defendant's wife. Warren L. Wattis, a nephew of plaintiff's husband, was vice president and active executive officer of the Utah National Bank. Before the bringing of this action, both Warren L. Wattis and A. B. Corey, plaintiff's husband, had died. It appears that Warren L. Wattis had advised the bank officials that the Coreys were working upon a proposition to better handle the indebtedness. Mr. Wattis was instructed by the bank to take such action as he deemed necessary to protect the bank's interests. On January 14, 1918, the plaintiff gave a quitclaim deed to the property in question, naming therein Warren L. Wattis as grantee. This deed was recorded on the 16th day of January, 1918. There [82 Utah 449] were thereupon opened at the bank two accounts, one entitled "Corey Block," and the other entitled "Corey Real Estate." The plaintiff remained in possession of the property, collected the rents, and deposited them in the "Corey Block" account. The bank officers drew all checks on the "Corey Block" account and paid all the bills. When there was insufficient in the "Corey Block" account, a few items were paid directly out of the bank funds. The "Corey Block" account was permitted to "Pyramid" until the 12th day of November, 1919, when the account showed a balance in the sum of $ 7,357.04. During this period the plaintiff had received a payment of $ 100 or $ 125 each month, paid out of this account. There appears also during this period to have been a sort of joint management, the plaintiff occupying and supervising the property, collecting the rents, depositing the funds, and reporting expenses to the bank, while the bank checked the bills and accounts, paid them out of the "Corey Block" account when there were sufficient funds available. [25 P.2d 942]

On the 1st day of November, 1919, the plaintiff signed and acknowledged a warranty deed to Warren L. Wattis to the same property. This deed contained a clause to the effect that the deed was "given subject to that certain mortgage for $ 28,000.00 executed by A. B. Corey and wife under date of June 13th, 1916, and recorded in Book 2-Y of Mortgages at page 582, records of Weber County, Utah, which said mortgage, or the balance due thereon, the grantee hereby assumes. Said mortgage was given in favor of the New York Life Insurance Company." On the 15th day of November, 1919, Warren L. Wattis, his wife, Veda L. Wattis, joining in the conveyance, executed a warranty deed to Ralph D. Roberts, the defendant, whereby the same property with the same mortgage assumption clause was conveyed.

The purpose of this suit is to impress the property included in these conveyances with a trust in favor of the plaintiff subject to the mortgage lien, notwithstanding the [82 Utah 450] absolute form of the conveyances. The suit is one in equity. The binding effect of the findings of the trial court is different in equity cases from that in cases at law, in this jurisdiction. In law cases, the findings are approved if there is sufficient competent evidence to support them. In equity cases the appeal (Const. Utah, art. 8, § 9) may be on questions of both law and fact. Such is the appeal in this case. On such review the duty of this court requires an examination of all questions of law and all facts revealed by the record, and after making such examination and due allowance for the better opportunity afforded the trial court to observe the demeanor of witnesses, and more advantageous position of determining their credibility and the weight to be given to the testimony submitted, this court, analogous to a trial de novo on the record, will determine from a fair preponderance or greater weight of the evidence whether or not the findings of the trial court are supported thereby. Lawley v. Hickenlooper, 61 Utah 298, 212 P. 526.

It is likewise the law that, where conveyances, clear, unambiguous, and unequivocal in their terms, are attacked by parol evidence seeking to establish a trust or give to the documents a mortgage construction, the party so seeking must by clear, unequivocal and satisfactory proof establish the alleged trust or mortgage relationship.

From this preliminary statement of an outline of the transactions and the principles of law to be applied to the evidence, it is necessary to proceed to an examination of the evidence to determine whether or not the findings of the trial court are supported by the evidence.

Plaintiff's theory of the case is that, notwithstanding the execution and delivery of the quitclaim deed by the plaintiff to Warren L. Wattis, and approximately twenty-two months later the execution and delivery of the warranty deed, the [82 Utah 451] relationship of mortgagor and mortgagee between the plaintiff, Eva F. Corey, and the bank continued to exist, and that the defendant had knowledge and notice of the existence of that relationship at the time the defendant took over the property by warranty deed from Warren L. Wattis, and therefore defendant is also a mortgagee, or occupies the position of trustee, and holds the legal title subject to the mortgage indebtedness for the use and benefit of the plaintiff, subject to such other liens or claims as the defendant may have.

The defendant's theory is that, upon the execution and delivery of the quitclaim deed by the plaintiff to Warren L. Wattis for the bank, the relationship changed from that of mortgagor and mortgagee, and that Warren L. Wattis for the bank became the owner of both the legal and equitable title to the property, subject only to the option for a six-month period to repurchase, or to sell the property for an amount equal to or in excess of her indebtedness to the bank, and with the understanding that, if the plaintiff did not repurchase the property or make a sale within the six months, the option would cease and determine, and that thereupon Warren L. Wattis for the bank would have the absolute right to sell the property to whomsoever he could, and to give title, both legal and equitable, to the purchaser. It is further defendant's theory that, even if after the giving of the quitclaim deed plaintiff had any interest in the property other than the right of repurchase, the warranty deed which the plaintiff gave to Warren L. Wattis on November 1, 1919, operated to convey whatever interest the plaintiff may have retained in the property.

Plaintiff concedes that, to establish any other relationship, she must show by proof meeting the standard required by the courts that the defendant was not a purchaser but a mortgagee or trustee or both, and that the deed was security for the debt owing by the plaintiff to the defendant. Plaintiff also accepts the position that the proof must show [82 Utah 452] that both grantor and grantee understood that the conveyance was made as security for a debt and not an absolute conveyance. If plaintiff fails to meet these conditions and burdens of proof, her action must fail.

In determining whether a deed, absolute in its terms, is intended as a mortgage, some of the essential elements to be considered as laid down by the authorities are: Whether or not there was a continuing obligation on the part of the grantor to pay the debt or meet the obligation which it is claimed the deed was made to secure; the question of relative values; the contemporaneous and subsequent acts; the declarations and admissions of the parties; the form of the written evidences of the transactions; the nature [25 P.2d 943] and character of the testimony relied upon; the various business, social, or other relationship of the parties; and the apparent aims and purposes to be accomplished.

With these concessions, positions, and principles as a background before which the evidence in this case may be held and tested, let us proceed to an examination of some of the findings and the testimony. Many errors have been assigned. All of them were grouped by the plaintiff into three classifications: (1) That the findings of the court are contrary to the weight of the evidence and that certain of the court's findings find no support in the evidence; (2)...