Harmon v. Grants Pass Banking & Trust Co.

• Decision Date: 17 October 1911
• Parties: HARMON et al. v. GRANTS PASS BANKING & TRUST CO. et al.
• Court: Oregon Supreme Court

118 P. 188

60 Or. 69

HARMON et al. v. GRANTS PASS BANKING & TRUST CO. et al.

Supreme Court of Oregon

October 17, 1911

Appeal from Circuit Court, Josephine County; F.M. Calkins, Judge.

Action by C.E. Harmon and others against the Grants Pass Banking &amp Trust Company and others. From a judgment of dismissal plaintiffs appeal. Affirmed.

This is a suit to have a deed of real property declared to be a mortgage, and for an accounting. The facts are that the plaintiffs C.E. Harmon, G.N. Bailey, and L.L. Jewell, and the defendant J.R. Bailey, on October 1, 1907, gave to the defendant the Grants Pass Banking & Trust Company, a corporation, hereinafter called the trust company, a promissory note for $3,000, payable in a year, with interest from that date at the rate of 8 per cent. per annum stipulating to pay such additional sum as the court might adjudge reasonable as attorneys' fees in case suit were instituted to collect the note, or any part of it. In order to secure the payment of the note, the makers thereof executed to the trust company a mortgage of four quartz mining claims in Josephine county, of which premises, subject to the paramount title of the United States, Jewell owned an undivided two-fifths, and each of the other mortgagors one-fifth. In January, 1909, no part of the note having been paid, the payee insisted upon its discharge, and threatened to foreclose the mortgage; whereupon the plaintiffs and the defendant Bailey executed to the trust company a deed of the mortgaged premises, including an appurtenant water right, a quartz mill, machinery, and tools, and received the note secured a cancellation of the mortgage, and also obtained the surrender of an unsecured note. The consideration for the latter relinquishment was the assignment to the trust company of a claim for expenses incurred in moving machinery to the mines.

A contract was entered into March 8, 1909, by the terms of which the trust company stipulated to sell and convey to the defendant the Holman-Foskett Mines Company, a corporation hereinafter called the mines company, all the property described in the deed referred to, for the consideration of $10,000, of which $500 was then received, $500 to be paid April 1st of that year, $1,000 on the 1st of the succeeding July, and $1,000 a month thereafter, on account of which $7,000 had been paid when this suit was commenced. The plaintiffs, asserting that the deed so executed was intended by the parties to the instrument as a mortgage to secure the sum of $3,000 and interest, demanded of the trust company an accounting for the money which it had received under the contract of sale in excess of the original debt and interest, but failing to secure any recognition of their claim this suit was instituted; J.R. Bailey being made a party defendant, because he would not join in the prosecution.

The complaint sets forth the facts hereinbefore detailed, and alleges that the deed was executed as further security, and pursuant to an agreement with the trust company, whereby the mortgagors were to endeavor to sell the mines, and after discharging the indebtedness referred to the remainder of the purchase price was to have been paid to the tenants in common; that the mortgagors secured as a purchaser of the premises the mines company, with whom the contract of sale was effected with their consent, and they offered to make to it a confirmatory deed, or to execute such other evidence of title to the mines as the court might decree. The answer denies the material averments of the complaint, and for a further defense sets forth new matter, which is denied by the reply. Based upon the issues thus formed, the cause was tried and the suit dismissed, from which decree the plaintiffs appeal.

A.C. Hough, for appellants.

O.S. Blanchard, for respondents.

MOORE, J. (after stating the facts as above).

It is contended that a consideration of the situation of the parties to the deed, of the price stipulated as a consideration for the mines, when compared with their value, of the conduct of the parties before and after the deed was given, and of the circumstances attending the transaction shows that in executing and accepting the deed it was intended that the sealed instrument should be security for the payment of a debt, and such being the case errors were committed in dismissing the suit and in not granting the relief sought.

The intention of the parties at the time an agreement is consummated to execute a deed determines whether or not title to property was to be irrevocably transferred, or the conveyance, though absolute, was to operate as security for the payment of a debt or the performance of an obligation. Kramer v. Wilson, 49 Or. 333, 90 P. 183; Hall v. O'Connell, 52 Or. 164, 95 P. 717, 96 P. 1070; Elliott v. Bozorth, 52 Or. 391, 97 P. 632.

Based on the maxim that a person takes ordinary care of his own concerns (L.O.L. § 799, subd. 4), a disputable presumption arises from the execution of an absolute deed that the conveyance evidences the intention of the parties, except in cases of fraud. Parrish v. Parrish, 33 Or. 486, 54 P. 352. In order to overcome the deduction which the law thus expressly directs to be made from particular facts, the burden of proving that a sealed instrument is not what it purports to be is cast upon the party who asserts a different signification. Parol evidence is sufficient for that purpose; but, in order that title to real property may be rendered secure, proof of that character ought clearly to preponderate.

Plaintiffs' counsel seems to place much reliance upon the case of Stephens v. Allen, 11 Or. 188, 190, 3 P. 168, 169, where, in referring to evidence tending to establish the subordinate elements of fact relied upon herein to disclose the intention of the parties, it is said: "As a consequence of this doctrine, each case must be scrutinized and judged by its own surrounding facts and circumstances, and when the result of the evidence is to produce doubt the courts incline to construe the instrument to be a mortgage." The authorities cited to support this declaration of a legal principle are Jones, Mort. § 279; Conway's

Ex'r v. Alexander, 7 Cranch, 218, 3 L.Ed. 321; Edrington v. Harper, 3 J.J. Marsh. (Ky.) 354, 20 Am.Dec. 145, each of which refers to a transaction where doubt exists as to whether the conveyance was intended as a mortgage or a conditional sale.

If the transfer of a title is made to depend upon the performance of a condition, and at the termination of the limit prescribed for a reconveyance the grantor is not in a situation to keep his promise, or does not desire to perform his engagement, no legal obligation rests upon him to do so. The conditional sale reserves to him a mere option, permitting him to speculate upon the possibility of an enhanced value of the property, and, if his expectations are disappointed in this particular, allowing him to escape liability, but, if his desires are realized, authorizing him to demand a reconveyance. When, however, the transaction is regarded at its inauguration as a mortgage, the opportunity for hazard respecting any fluctuation in the value of the property is eliminated, and the doctrine of once a mortgage, always a mortgage, controls. Jones, Mort. (6th Ed.) § 256. "A mortgage and a conditional sale," say the court, in Turner v. Kerr, 44 Mo. 429, 431, "are said to be nearly allied to each other; the difference between them being defined to consist in this: That the former is a security for a debt, while the latter is a purchase accompanied by an agreement to resell on particular terms." A conveyance intended as a sale upon conditions must contain, either in the body of the instrument or in another memoranda, acknowledged by the grantee, the express provisions, the performance of which authorizes...