Hays v. Emerson

• Decision Date: 27 May 1905
• Citation: 87 S.W. 1027,75 Ark. 551
• Parties: HAYS v. EMERSON
• Court: Arkansas Supreme Court

87 S.W. 1027

75 Ark. 551

HAYS v. EMERSON

Supreme Court of Arkansas

May 27, 1905

Appeal from Columbia Circuit Court in Chancery CHARLES W. SMITH Judge.

Affirmed.

STATEMENT BY THE COURT.

This was an unlawful detainer suit brought by appellee against David Hays in the circuit court of Columbia County for recovery of possession of certain lands described. Appellee alleged in the complaint that he was the owner of the lands and on February 11, 1898, executed to Hays a written contract whereby he agreed to sell the land for $ 450 to be paid by Hays, as evidenced by his two promissory notes each for $ 225, due and payable on October 1, 1898, and October 1, 1899 respectively, with 10 per cent. interest; but that, if the defendant (Hays) failed to pay either of said notes, said contract of sale should be void, and upon such failure Hays should pay plaintiff $ 80 rent for the year 1898. He further alleged that Hays had failed to pay either of the said notes or the stipulated rent, and willfully and unlawfully held said premises after demand, etc.

The defendant answered, denying that he ever purchased or leased the land in question from the plaintiff, or that he ever occupied the premises as tenant of plaintiff, or recognized plaintiff as his landlord. He alleged that on February 11 1898, he applied to plaintiff to furnish him supplies, and agreed to give him a lien on said land to secure payment of said supplies, and, at plaintiff's request, executed to plaintiff a warranty deed conveying said lands, but that the same was intended only as security for said debt for supplies, and that it was agreed between them that that should be the sole effect of said conveyance. He offered in the answer to repay all sums owing to plaintiff, and asked that the case be transferred to equity, and that his said deed to plaintiff be declared to be a mortgage, and that an account be stated between the parties. On appellant's motion the cause was transferred to equity.

David Hays died pending the litigation, and the cause was revived in the names of the appellants, his heirs, and on final hearing a decree was rendered in favor of the plaintiff, and the defendants appealed.

Appellee exhibited with the complaint his contract with David Hays containing the following clause (after setting forth the terms of the agreement of sale):

"And it is hereby further covenanted and agreed by and between the parties hereto that, immediately upon the failure to pay any of the notes above described, all previous payments shall be forfeited to the party of the first part, and the relation of landlord and tenant shall arise between the parties thereto for one year from January 1 immediately preceding the date of default, and the said party of the second part shall pay rent at the rate of $ 80 for occupying the premises from said January 1 to the time of default, such rent to be due and collectible immediately upon such default."

The undisputed facts are that appellee, who was a merchant, had been furnishing David Hays, who was an illiterate negro, money, goods and supplies in the usual course of business, and on February 11, 1898, Hays was indebted to appellee in the sum of $ 450, to secure which appellee held a mortgage on the lands in controversy, and conveyed the lands to him by warranty deed reciting a consideration of $ 450, and on the same day appellee executed to Hays the contract of sale and lease hereinbefore mentioned, and also agreed to furnish Hays supplies to enable him to make a crop that year. Hays paid nothing on the purchase money notes or the stipulated rent or debt for supplies. The value of the land was considerably in excess of said amount of consideration named in the deed and contract.

David Hays testified that he was indebted to appellee for supplies, and applied to him in February, 1898, for supplies to be furnished that year; that appellee required him to "fix up papers" for the supplies, and that he signed papers, but did not know that he signed a deed or mortgage, and did not sign any notes for the purchase price of the land. His testimony is a complete denial of the transaction as claimed by appellee, except that he was already indebted to appellee for supplies and "fixed up papers" for supplies to be furnished that year.

Appellee testified that Hays was indebted to him in the sum of $ 450.59 on February 11, 1898, to secure which he held a mortgage on the lands, and was about to foreclose the mortgage, and Hays, at his own request, sold and conveyed the land to him (appellee) for the amount of the debt, rather than to have the mortgage foreclosed, and that on the same day he agreed, as set forth in the written contract exhibited with the complaint, to sell the land back to Hays. He is corroborated by witness Peffley, his son-in-law and bookkeeper, who testified that he was present when Hays signed the deed, notes and contract, and explained the transaction fully to Hays.

This is all the testimony, except that of one other witness who testified only as to the value of the land.

Decree affirmed.

Magale & McKay, for appellants.

The deed from Hays to Emerson was given to secure a debt, and was therefore a mortgage. 27 Ark. 404; 31 Ark. 438; 40 Ark. 149. The condition in the contract that upon failure to make payments when due rent should be paid did not change the transaction from a mortgage to a sale. 2 Story, Eq. Jur. 1019; 29 Ark. 544; 16 S.W. 637.

Stevens & Stevens, for appellee.

The proof that the parties intended the instrument as a mortgage should be clear and conclusive. 3 Ark. 364; 40 Ark. 146; 54 Ark. 30; 14 Ark. 370; 19 Ark. 278; 31 Ark. 163. The presumption, is in favor of the deed. 7 S.W. 206; 23 Ark 212. The instrument was an absolute deed. 110...