First National Bank of David City v. Sargeant

• Decision Date: 22 July 1902
• Docket Number: 11,912
• Citation: 91 N.W. 595,65 Neb. 594
• Parties: FIRST NATIONAL BANK OF DAVID CITY v. CHARLES H. SARGEANT
• Court: Nebraska Supreme Court

91 N.W. 595

65 Neb. 594

FIRST NATIONAL BANK OF DAVID CITY v. CHARLES H. SARGEANT

No. 11,912

Supreme Court of Nebraska

July 22, 1902

ERROR from the district court for Butler county. Tried below before SORNBORGER, J. Affirmed.

AFFIRMED.

Matt Miller and Arthur J. Evans, for plaintiff in error.

A. M Walling and W. M. Cain, contra.

OPINION

HOLCOMB, J.

An action was brought in the lower court by the plaintiff, who is now the defendant in error, against the defendant plaintiff in error, to recover a sum of money alleged to have been paid under compulsion and duress. The trial resulted in a verdict and judgment in favor of the plaintiff for the sum of $ 640. The defendant prosecutes error.

The petition in error contains 112 assignments of error. With the thermometer registering well up to the same mark, we can scarcely be expected to note and consider each assignment at length, and in detail. If we generalize in our treatment and discussion of the case it is for the sake of brevity, and not because of a lack of investigation and consideration of each and every question presented in briefs of counsel. There are as it appears to us, a few questions of a controlling character, which, when considered and disposed of properly, must determine the whole case as presented by the record. The controversy arises out of a transaction wherein the defendant by warranty deed obtained the legal title to 154 acres of land theretofore belonging to the plaintiff, and one of the controverted questions is whether by the transaction referred to the defendant obtained the absolute title and ownership of the said real estate, or whether it held the conveyance as security only by way of mortgage. The plaintiff's action is grounded on the theory that, although a deed absolute on its face, the instrument was but a mortgage, and that in the adjustment and payment of the amount due thereunder the defendant, by reason of the circumstances then surrounding the parties and the relations existing between them, by threats and duress extorted from the plaintiff a much larger sum than was actually due on such indebtedness. The defendant denied that it held the deed as a mortgage, and alleged that it had become the absolute owner of the property by such conveyance, and it also pleaded as a defense that by way of compromise and settlement the parties had adjusted their differences, and that such settlement so made was a bar to any recovery on the cause of action pleaded in plaintiff's petition. On the submission of the cause to the jury, the court assumed and by an instruction told the jury that the deed by which the defendant acquired title to the property, and under which it claimed to be the owner of the real estate, although absolute in form, was in fact a mortgage to secure an indebtedness owing by the plaintiff to the defendant. The giving of this instruction is assigned as error, it being the contention of the defendant that whether or not the deed was to be regarded as an absolute conveyance or only intended as a mortgage was, under the issues and the evidence, a question of fact to be determined by the jury, and that the court could not properly withdraw such question from the jury as triers of fact. If there was any evidence upon which a finding that the defendant acquired the absolute ownership of the property by means of the conveyance could be sustained, then we apprehend the question ought to have been submitted to the jury as contended for. It appears from the record that prior to the execution of the deed, the plaintiff was indebted to the defendant, a national bank, for some $ 600 or $ 700, and to secure such indebtedness had executed a second mortgage on the real estate over which the controversy arose. A first mortgage to secure the sum of $ 2,500 for a loan made thereon was held by a third party at the time the defendant obtained its second mortgage, and about the 1st of January, 1897, and shortly before the deed in controversy was executed, default having been made in the payment of interest due on the first mortgage, and also taxes assessed against the land, foreclosure proceedings were about to be instituted by the owner thereof. To protect its own interest as second mortgagee the bank, on learning of the prospective foreclosure proceedings on the first mortgage, was anxious that the plaintiff should take some action which would forestall any further proceedings looking toward a foreclosure of the first mortgage. The plaintiff found himself unable to pay the defaulted interest and the back taxes upon the payment of which it appears the first mortgagee was willing to allow the principal to run until some future time. This condition of affairs existed for some little time, and after considerable negotiations it was agreed between the plaintiff and defendant that the bank should pay the back interest due on the first mortgage and taxes past due, and agree to pay the principal sum on the first of January following, cancel its own indebtedness, and the second mortgage securing the same, the total of the indebtedness and costs aggregating $ 3,830.67, and that the plaintiff would execute a warranty deed for the real estate covered by the two mortgages mentioned. At the time of the execution of the deed to the bank, it executed back to the plaintiff a formal lease of the premises for the year 1897, and also a formal contract of sale, agreeing to reconvey the premises upon the payment of the said sum of $ 3,830.67 on or before January 1, 1898, with interest thereon at ten per cent. per annum after the last-mentioned date. The plaintiff testifies, in substance, that the deed was given and accepted as a mortgage only, while the president of the bank says it was an absolute conveyance, and that the bank became the purchaser outright of the land by virtue of such conveyance. The negotiations leading up to the execution of the deed and the accompanying instruments appear to have been by correspondence, the letters of the bank relating to the matter being introduced in evidence. We look in vain for any act or words of the parties outside of the formal documents they at the time executed, evidencing an intention on the part of the plaintiff to sell the land and the bank to become the purchaser thereof by the execution and delivery of the deed of conveyance. We think the language and the conduct of the officers of the bank negative the idea that it was at the time purchasing the property or accepted the conveyance otherwise than as security for its indebtedness owing by the plaintiff and the advancements made and to be made by it on the first mortgage. No other consideration entered into the transaction, and by its own testimony we think it is firmly established that the conveyance, although an unconditional warranty deed, was in fact and in contemplation of law but a mortgage to secure the plaintiff's indebtedness secured by the two mortgages hereinbefore referred to. In urging the plaintiff to take some action regarding the matter, it is stated by the president of the bank in one of his letters to him: "It is quite important to us to have this loan [the first mortgage] reinstated now, as it will leave the interest at six per cent. instead of nine per cent. or ten per cent. and save costs. We do not wish to take up the $ 2,500 now either. The only way I can see out, is for you now to deed over your land to the bank, and then we can advance the back interest and get it reinstated. As soon as you can arrange the loan or money, we are perfectly willing to deed it back to you. It is understood that this is merely a temporary arrangement, and that you proceed with your efforts to make other arrangements to redeem the land." In another letter, after giving the items going to make up the aggregate sum due, including taxes and costs, the president of the bank writes as follows: "The transfer and sale would necessarily have to be understood to be absolute, and not in the nature of a trust or mortgage, and all rights vested in the bank or its trustee, in order to enable the bank to acquire and carry this load for a year. During the year, ending January 1, 1898, you could pay off the purchase money from time to time and buy it back." And again, in a letter of later date urging the plaintiff to execute the deed and close up the transaction, the president of the bank writes: "I can not see anything to be gained by longer delay to sign and forward the deed at once, to settle this matter. If Mr. Dodge, or some other good friend, should send you the money, to redeem or buy back, the bank is ready to deed over the land in an hour's notice on payment of the cash." Nowhere is it suggested that the bank by the transaction is becoming the purchaser unconditionally of the land, or that the plaintiff is losing his entire interest and the equity of redemption therein. It is manifest, we think, that the conveyance was executed by the plaintiff solely as security, and that the defendant so understood and accepted it on its delivery to the officers of the bank. The formal lease executed at the time as a part of the same transaction and the contract to resell the land to the plaintiff but confirms him in his contention that the deed was in reality a mortgage, and that his right of redemption was preserved to him. Evidently what the parties tried to accomplish was to execute a conveyance that would operate as security for the indebtedness owing by the plaintiff, preserving to the grantor the right to redeem at any time, upon payment of the mortgage debt, before January 1, 1898, after which, if redemption was not effectuated, the deed should become absolute; but as is said in Bank of O'Neill v. Mathews, 45 Neb. 659, 63 N.W. 930, a deed so executed and delivered must be treated as...