Dulaney v. Jensen
| Decision Date | 10 June 1947 |
| Docket Number | 2357 |
| Parties | ERNEST M. DULANEY and EFFIE DULANEY, Plaintiffs and Respondents, v. HENRY JENSEN, Defendant and Appellant |
| Court | Wyoming Supreme Court |
APPEAL from District Court, Laramie County; V. J. TIDBALL, Judge.
Action by Ernest M. Dulaney and wife against Henry Jensen for a judgment declaring a deed to be a mortgage and for money judgment, wherein the defendant filed a cross-petition. From a judgment for plaintiffs, defendant appeals.
Affirmed.
For the plaintiffs and respondents there was a brief by Ellery McClintock & Gray of Cheyenne, Wyoming and oral argument by Mr. A. G. McClintock.
POINTS OF COUNSEL FOR APPELLANT
On the question of the intention of the parties, the courts in this class of cases have frequently commented on the unreasonableness of the claim that a mortgagee, taking a deed from the mortgagor, intended a useless formality.
Ditto et ux v. Bank of Gillette, 38 Wyo. 120, 264 P. 1013 1016; Bailey v. Trust Co., 188 Mo. 483, 492, 87 S.W. 1003 1005.
There is no rule of law preventing a mortgagor and mortgagee from making a fair contract that will avoid the necessity of a foreclosure.
Ditto, et ux v. Bank of Gillett (1928), 38 Wyo. 120, 264 P. 1013, 1016; Stoutz v. Rouse (1888) 84 Ala. 309, 4 So. 170; Swarm v. Boggs, 12, Wash. 246, 40 P. 941, 942.
In determining whether a contract is a mortgage or a sale with right of repurchase, a test generally accepted as decisive is the mutuality and reciprocity of the remedies of the parties; that is to say, if the grantee enjoys a right, reciprocal to that of the grantor to demand a reconveyance, to compel the latter to pay the consideration named in the stipulation for reconveyance, the transaction is a mortgage, while if he has no such right to compel payment, the transaction is a conditional sale. Guilford-Chester Water Co., v. Town of Guilford, 107 Conn. 519, 141 A. 880, 883.
The result of a transaction will not be held a mortgage unless there is proof of the continuance of the debt as a personal obligation of the grantor. Bolln v. LaPrele Live Stock Co., 27 Wyo. 335, 196 P. 748, 749.
Definitive test to determine whether absolute deed in consideration of precedent debt, with agreement to reconvey to grantor on payment of consideration, is mortgage or conditional sale, is whether debt was discharged by deed or subsisted afterward; if conveyance by absolute deed in consideration of precedent debt with attendant agreement to reconvey on payment of consideration extinguishes debt, it was not mortgage but conditional sale.
Holmberg, et al. v. Hardee, Governor, et al., 90 Fla. 787, 108 So. 211; Thomas v. Livingston, 155 Ala. 546, 46 So. 851, 852; Shaner v. Rathdrum State Bank, 29 Idaho 576, 161 P. 90, 92; Charles v. Tracker (1916) 167 Ky. 835, 181 S.W. 611, 612; Kimmel v. Bundy, 302 Ill. 514, 135 N.E. 56.
Where it is claimed that a deed, absolute on its face, is a mortgage, the claimant ought not to recover without tendering the amount of the debt. Shaner v. Rathdrum State Bank (1916) 29 Idaho 576, 161 P. 90, 93; Hicks v. Hicks (Tex. Civ. App. 1894) 26 S.W. 227, 230; Jones on Mortgages (7th Ed.) Section 1095; Duke v. Ayers (1927) 163 Ga. 444, 136 S.E. 410, 415; Sims v. Sims, et al. (1928) 166 Ga. 462, 143 S.E. 381.
It is a well-settled rule of law that where one asserts that a deed shall be given a different construction from that clearly appearing on its face, claiming that it is a mortgage, he must show by clear and convincing evidence that a mortgage, and not a sale with the right of repurchase, was intended. Shaner v. Rathdrum State Bank, supra.
For the defendant and appellant there was a brief by Loomis & Lazear and Sam M. Thompson, Jr. of Cheyenne, Wyoming and oral argument by Mr. Edward T. Lazear.
POINTS OF COUNSEL FOR RESPONDENTS
The doctrine has been firmly established from an early day that when the character of a mortgage has attached at the commencement of the transaction, so that the instrument, whatever be its form, is regarded in equity as a mortgage, that character of mortgage must and will always continue. If the instrument is in its essence a mortgage, the parties cannot by any stipulations, however express and positive, render it anything but a mortgage- or deprive it of the essential attributes belonging to a mortgage in equity. Gould v. McKillip, 55 Wyo. 251 (1939).
If there is an indebtedness or liability between the parties, either a debt existing prior to the conveyance, or a debt arising from a loan made at the time of the conveyance, or from any other cause, and this debt is still left subsisting, not being discharged or satisfied by the conveyance but the grantor is regarded as still owing and bound to pay it at some future time, so that the payment stipulated for in the agreement to reconvey is in reality the payment of this existing debt, then the whole transaction amount to a mortgage, whatever language the parties may have used, and whatever stipulations they may have inserted in the instruments. Gould vs. McKillip, Supra. Baldwin vs. McDonald, 24 Wyo. 108.
It is a fundamental principle of equity that, whenever a conveyance of land is given for the purpose of securing payment of an existing debt, it is a mortgage. And whatever may be its form, if the instrument is in its essence a mortgage, the parties cannot by any stipulations, however express and positive, render it anything but a mortgage, or deprive it of the essential attributes belonging to a mortgage in equity. Conley v. Henderson, 75 P.2d 746.
Where it appears that a pre-existing debt was not extinguished upon the delivery of the deed, a strong inference arises that the conveyance was intended as security for the debts. Murray v. Wiley, 127 P.2d 112. (Ore.)
The testimony most favorable to the respondents must be accepted as true. Gould v. James, 43 Wyo. 161; Griffin v. Rosenblum, 46 Wyo. 40.
The District Court of Laramie County rendered a judgment declaring that a certain deed absolute in form executed by Effie M. Dulaney and Ernest M. Dulaney as grantors designated in the instrument as "wife and husband" to Henry Jensen, grantee, to be a mortgage and awarding a money judgment in favor of said grantors and against said grantee. The property involved embraces five acres of ground described by metes and bounds, is located about four or five miles from the City of Cheyenne and the eastern boundary thereof adjoins the westerly boundary of the Fort Francis E. Warren military reservation. The Dulaneys as plaintiffs, now the respondents, brought an action in the district court aforesaid seeking the relief thus granted against Jensen as defendant who as appellant has brought this proceeding to review that judgment here by direct appeal. The parties will usually be mentioned hereinafter as "plaintiffs" and "defendant" or by their respective names.
Briefly outlined the pleadings of the parties are as follows: Plaintiff's petition after describing the real estate owned by them and referred to above and alleging that on July 7, 1941 they owed the defendant about $ 350 for materials and supplies purchased from him by them for improvements upon said premises and that on the date last mentioned, the defendant filed in the County Clerk's office of Laramie County a "notice of intention to file a lien" for $ 410 upon said property then stated:
"That no lien was ever filed by the defendant but to secure to defendant the payment of the said indebtedness for materials and supplies the plaintiffs executed and delivered to the defendant a warranty deed bearing date of August 20, 1941 conveying to defendant in fee simple, the premises aforesaid, which deed though absolute in form, was intended by both plaintiffs and defendants to be a mortgage only, and to stand as security for the payment of said indebtedness aforesaid and to serve no other purpose; that at the time of delivery by plaintiffs of said deed to the defendant it was understood and agreed by and between the plaintiffs and said defendant that defendant would enter into the possession of said premises under said deed and that defendant, in order to realize from said premises the amount of said indebtedness, would rent or sell said premises or parts or parcels thereof and that as soon as defendant had either through rentals, sales or sale contracts obtained money equal to the amount of said indebtedness with interest thereon at the rate of 7% per annum he would reconvey said premises to plaintiffs".
Their pleading then avers that the defendant took possession of the property and still holds it, that notwithstanding the defendant had, not later than August 20, 1942, realized and received through rentals and sale contracts, a sum greatly in excess of the amount due him on said indebtedness, he has refused to reconvey the property to plaintiffs or account to them for these rents and profits so received by him. The prayer of the petition sought a judgment that the deed aforesaid be declared a mortgage to secure said indebtedness to defendant, that the deeded premises should be reconveyed to them and that they be given a money judgment against the defendant for the excess moneys over the amount of their debt to the defendant and concerning which he declined to render an accounting.
The answer of the defendant set out three alleged defenses. The first, a general denial of the averments of plaintiff's petition, the second, a general demurrer thereto and the third, a claim that under said deed, the defendant now holds and possesses the aforesaid real estate as sole owner free and clear of any rights of the plaintiffs therein. The answer also presented by way of cross petition a suit to...
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