Investors' Mortg. Sec. Co., Ltd. v. Hamilton, 5707

• Decision Date: 06 October 1931
• Docket Number: 5707
• Citation: 51 Idaho 113,4 P.2d 347
• Court: Idaho Supreme Court
• Parties: THE INVESTORS' MORTGAGE SECURITY COMPANY, LTD., a Corporation, Plaintiff, v. JAMES HAMILTON et al., Defendants. C. R. CROWLEY, Assignee, Cross-Complainant and Respondent, v. J. C. JONES and ISABELLA JONES, Cross-Defendants and Appellants

4 P.2d 347

51 Idaho 113

THE INVESTORS' MORTGAGE SECURITY COMPANY, LTD., a Corporation, Plaintiff, v. JAMES HAMILTON et al., Defendants.

C. R. CROWLEY, Assignee, Cross-Complainant and Respondent, v. J. C. JONES and ISABELLA JONES, Cross-Defendants and Appellants

No. 5707

Supreme Court of Idaho

October 6, 1931

APPEAL from the District Court of the Sixth Judicial District, for Bingham County. Hon. Ralph W. Adair, Judge.

Cross-action to foreclose a mortgage and a deed as a mortgage. Judgment for plaintiff. Affirmed.

Judgment affirmed, with costs to the respondent.

E. M Holden, for Appellants.

Parol testimony is incompetent to vary the terms of a written contract. (Green v. Consolidated Wagon & Machine Co., 30 Idaho 359, 164 P. 1016; Milner v. Earl Fruit Co., 40 Idaho 339, 232 P. 581.)

Parol evidence is not admissible to alter or vary the legal effect of a deed or conveyance. (10 R. C. L., sec. 214, p. 1021.)

C. E Crowley and Ariel L. Crowley, for Respondent.

Where a mortgage is given to secure certain notes and the notes are not canceled nor the mortgage released, the mortgagee retains the notes and mortgage, and the deed is placed in escrow until a given date, prior to which the indebtedness is to be paid, and upon default the deed is delivered to the mortgagee, the deed is a mortgage. (Messner v Carroll, 60 Okla. 90, 159 P. 362.)

Retention of the written evidence of the debt raises a strong presumption that the debt was not extinguished by the deed. (41 C. J. 337, par. 99, and notes.)

An instrument once a mortgage is always a mortgage. The rule is inflexible. The character of the instrument is determined at its inception. (2 Wiltsie on Mortgage Foreclosure, p. 1420; Beverly v. Davis, 79 Wash. 537, 140 P. 696.)

MCNAUGHTON, J. Lee, C. J., and Budge, Givens and Varian, JJ., concur.

OPINION

MCNAUGHTON, J.

The issues have narrowed to a contest between the cross-complainant and the cross-defendants to determine whether a warranty deed with an option to purchase back four and one-half months later operated under the circumstances of this case as a transfer of the property described in satisfaction of the debt, or as additional security for the payment of the debt later.

The defendants were indebted to the cross-complainant on a promissory note in the sum of $ 855.30, with interest, secured by a real estate mortgage. To avoid immediate foreclosure after the note fell due and also to give the appellants an opportunity to sell the mortgaged land and pay the amount of the note and $ 75 attorney's fees, the deed in question was executed by appellants and delivered to the attorney of the respondent and the option to purchase the property was executed by the respondent and delivered to appellants. The deed was not to be recorded until after the expiration of the option. The appellants did not find a purchaser for the property. No payment was made on account of the option or the indebtedness. After the expiration of the option the deed was filed for record and later this cross-action to foreclose the mortgage and the deed as a mortgage was instituted.

The trial court found that the deed was not a conveyance but that the time of payment of the mortgage debt was extended and that the mortgage, deed and option in question all constituted a mortgage to secure the payment of the note, and entered a decree foreclosing the same.

Appellants under assignments of error claim: (1) The evidence is insufficient to sustain the judgment; (2) error in receiving oral testimony to modify the terms of a written instrument; (3) error in overruling the demurrer on the special ground of uncertainty in the complaint.

We shall examine and discuss these assignments in reverse order.

The complaint is not a model. It contains allegations of fraudulent misrepresentation in procuring the deed which were disregarded by the trial court and which on motion might have been stricken. The complaint, however, stated definite facts constituting a cause of action for the relief granted, and we do not find that the trial court committed reversible error in overruling the special demurrer. In reviewing an intermediate order on appeal from the judgment, the judgment will not be reversed unless the intermediate order complained of involves the merits or necessarily affects the judgment. (C. S., sec. 7170.)

The parol testimony discloses the facts and circumstances attending the transactions culminating in the deed and option and was admissible.

C. S., sec. 6358, provides as follows:

"Every transfer of an interest in property other than in trust, made only as security for the performance of another act, is to be deemed a mortgage, except when in the case of personal property it is accompanied by an actual change of possession, in which case it is to be deemed a pledge."

C. S., sec. 6359, provides as follows:

"The fact that a transfer was made subject to defeasance on a condition, may, for the purpose of showing such transfer to be a mortgage, be proved (except as against a subsequent purchaser or incumbrancer for value and without notice), though the fact does not appear by the terms of the instrument."

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