Durden-Powers Co. v. O'Brien

• Decision Date: 18 February 1928
• Docket Number: 6010.
• Citation: 142 S.E. 90,165 Ga. 728
• Parties: DURDEN-POWERS CO. v. O'BRIEN et al.
• Court: Georgia Supreme Court

142 S.E. 90

165 Ga. 728

DURDEN-POWERS CO. v. O'BRIEN et al.

No. 6010.

Supreme Court of Georgia

February 18, 1928

Syllabus by the Court.

A deed absolute in form may be shown to have been made to secure a debt, where the maker remains in possession of the land; but where the grantee in a deed or bill of sale absolute on its face is in possession of the property, such muniment of title shall not be proved (at the instance of the parties) by parol evidence to be only a mortgage, unless fraud in its procurement is the issue to be tried. In this case the maker of the deed absolute in form had surrendered possession to the grantee, and the latter was in possession at the time of the filing of the petition.

While the issue as to what was the true intent of the parties in the execution of a written instrument is frequently for the determination of a jury, who, upon consideration of all the facts and circumstances, are to determine whether a certain writing evidences an absolute conveyance or a mere security for the payment of a loan, nevertheless, the construction of unambiguous contracts in writing is for the court, and in the state of the pleadings in this case the contracts attached as a part of the petition were so plain and unambiguous as not to require the intervention of a jury.

Error from Superior Court, Chatham County; Peter W. Meldrim, Judge.

Petition by the Durden-Powers Company against Joseph F. O'Brien and others. Petition was dismissed on demurrer, and plaintiff brings error. Affirmed.

In petition to declare deed an equitable mortgage, construction of deed which was plain and unambiguous, and under which grantee was in possession, held not to require intervention of jury. Civ.Code 1910, § 3258.

The petition for the Durden-Powers Company, after amendment, made substantially the following allegations: Joseph F O'Brien and Max L. Wolff are in possession of real estate in the town of Tybee, Chatham county, Ga., known as beach lots Nos. 91, 92, and 93, which are definitely described, to which lots petitioner claims title by reason of the following state of facts: It obtained said property by warranty deed on March 1, 1913. On July 15, 1919, it conveyed said property by deed to secure debt, to the Mercantile Bank & Trust Company of Savannah, to secure an indebtedness of $28,000. There were renewals and transfers of this indebtedness and of the security deed, so that on March 20, 1921, the indebtedness amounted to $31,200, to secure which another deed was executed to said bank. In April, 1922, Joseph F O'Brien agreed to advance to petitioner sufficient funds with which to pay off all of its indebtedness, including that above stated, aggregating approximately $35,000, "provided that your petitioner would execute a deed to him conveying said property. Your petitioner executed said deed on April 13, 1922, said deed reciting a consideration of $10. The said Joseph F. O'Brien on said date executed an agreement with your petitioner, which agreement showed that the said deed was in truth and in fact an equitable mortgage." Under the terms of the agreement O'Brien was to hold the deed in trust pending the repayment of the indebtedness due by petitioner, and was not to record deed; but on November 19, 1924, he had it recorded, in violation of the trust imposed in him. On December 12, 1924, O'Brien executed to Wolff a deed conveying said property to secure an indebtedness of $21,000 due by O'Brien to Wolff, and a subsequent deed to the same grantee was executed on January 1, 1926, in renewal of the prior indebtedness. In April, 1922, petitioner entered into an agreement with O'Brien, under the terms of which petitioner was to operate the bathhouses, restaurant, etc., located on the described property, and all profits derived from said operations should be applied to the extinguishment of the indebtedness due O'Brien by petitioner. Under said agreement O'Brien had a representative present on the premises to receive all moneys, pay all bills, and apply all net earnings as a credit on said indebtedness; and thereafter under said agreement O'Brien received from petitioner various sums of money to be so applied, the exact amount of which petitioner cannot state, because O'Brien refuses to render an accounting.

Petitioner cannot attach an itemized statement of the indebtedness due by it and the credits which should be allowed, because the books of account and other papers showing the status of the account between the parties were all turned over to O'Brien in September, 1925, for the purpose of having the same audited; but O'Brien will not render any accounting. O'Brien has contracted to dispose of said property to Wolff for $40,000. The property is worth "The approximate sum of $75,000; and if the same should be handled judiciously for the interests of all parties concerned," it could be sold for said sum, so that any and all amounts, if any, which may be due defendant by petitioner could be paid in full and the equity of petitioner in said property be preserved. The prayers of the petition are: (1) That an accounting be had between petitioner and O'Brien; (2) that the deed of April 13, 1922, be declared an equitable mortgage, and that O'Brien be required to render to petitioner a statement of the amount due, if any, under said mortgage; (3) that O'Brien be enjoined from disposing of said property, and Wolff be enjoined from purchasing it; (4) that Wolff be required to produce for cancellation all deeds O'Brien may have made to him, conveying said property; (5) for general relief, etc. In response to special demurrer on the ground that the deed and agreements referred to in the petition were not attached thereto, the petitioner by amendment attached as exhibits the instruments referred to. The defendants demurred generally on the ground that the petition set out no cause of action.

In the amendment, it is alleged that, since the petitioner remained in possession of the premises during the entire time from April 13, 1922, until April 1, 1926, and operated the pavilion and premises and applied all of the rents, incomes, etc., from said premises towards the payment of said indebtedness, saving and excepting a salary of $25 per week to W. D. Durden, president of the Durden-Powers Company, the conduct of the parties has shown that the writings set forth constituted an equitable mortgage in favor of O'Brien. The petitioner alleges two instances in which it had during said period given notes which had been indorsed by O'Brien, and paid, in part, out of the proceeds of the profits of the business. It is alleged that the real purpose of the petition in surrendering possession to O'Brien on April 1, 1926, was to enable O'Brien to rent said property for the year 1926 for $7,500, which was $1,000 more than petitioner could secure as rental for said property, which $7,500 so received by O'Brien should be credited on the indebtedness due by petitioner.

The deed from Durden-Powers Company to O'Brien, dated April 13, 1922, heretofore mentioned, is in form a warranty deed, reciting a consideration of $10 and other good and valuable considerations, conveying to O'Brien beach lots 91, 92, and 93 in the town of Tybee, Chatham county, Ga., together with all outhouses, edifices, buildings, liberties, privileges, etc., thereunto belonging, and also all personal property of every kind situated in said buildings, and also the equity of redemption which the grantor has or may hereafter have by virtue of the several deeds to secure debts thereinafter specified. The conveyance is made subject to the indebtedness due by the grantor to the Mercantile National Bank (referred to in the original petition), and which indebtedness is assumed by O'Brien as a part of the consideration of the deed. The agreement executed contemporaneously with this deed recites the indebtedness of the company to the Mercantile National Bank, the appointment by said bank of a trustee to sell said property upon default, in accordance with the provisions of its deeds, the sale of said property for the sum of $47,025, failure of the purchasers to pay the purchase price on the day of sale, ensuing litigation, and suit by the purchasers for specific performance, and:

"Whereas, the said [O'Brien] has agreed to pay the sum of $5,974.86 and to assume the indebtedness due to the Mercantile National Bank of Savannah amounting to $27,461.44, in consideration of the transfer to him of the said property by [Durden-Powers Company], and [the company] has contemporaneously herewith as a part of the same transaction conveyed said property in accordance with said agreement; and whereas, it is further agreed that the said [O'Brien] will lease the said property to [Durden-Powers Company] for the period of one year and will give [that company] an option to repurchase the said property at or before the expiration of the said period of one year from the date hereof, at and for the sum of $5,000 over and above all amounts paid out or assumed by [O'Brien] in accordance with the terms of this agreement and upon certain other conditions and terms hereinafter stated; it being understood and agreed, however, that if the said litigation has not terminated three months before the expiration of said period of one year, then said option to purchase herein given *** shall continue until the expiration of three months after the final conclusion of said litigation."

It is therefore mutually covenanted and agreed: (a) That O'Brien leases the premises and the personal property to Durden-Powers Company for the term of one year from date "or if said litigation does not end three months before the expiration of one year, then *** this lease shall continue in force until the expiration of three months after the final...