Johansen v. Looney

• Decision Date: 29 November 1918
• Parties: THORAL JOHANSEN, Appellant, v. EUGENE LOONEY and JAMES H. OAKES, Respondents
• Court: Idaho Supreme Court

176 P. 778

31 Idaho 754

THORAL JOHANSEN, Appellant, v. EUGENE LOONEY and JAMES H. OAKES, Respondents

Supreme Court of Idaho

November 29, 1918

DEED AS MORTGAGE-INADEQUACY OF CONSIDERATION-EQUITY OF REDEMPTION-BURDEN OF PROOF-MOTION FOR NONSUIT-DEFENSES-LACHES-ESTOPPEL-BONA FIDE PURCHASER.

1. Where a mortgagor parts with his equity of redemption in favor of the mortgagee and the transaction is thereafter called in question, it must be shown, in order to uphold it that the agreement was fairly entered into between the parties thereto, for a consideration not grossly inadequate in view of all the circumstances.

2. In this case three facts must be considered as admitted by the motion for nonsuit: First, the relation of mortgagor and mortgagee between appellant and respondent Looney; second that a deed, absolute in form, was taken by the mortgagee conveying to him the property encumbered by the mortgage third, that such property was conveyed for an inadequate consideration.

3. Where the legal effect of an absolute conveyance from mortgagor to mortgagee is called in question in an action by the mortgagor, and the latter shows the existence of that relation, the subsequent execution of an instrument purporting to be an absolute conveyance, and the inadequacy of the consideration therefor, he has made a prima facie case and a motion for nonsuit should be denied.

4. In an action at law the defense of laches is not available, where questions arise as to loss of legal rights through lapse of time. In such cases only statutes of limitations of actions apply.

5. The defense of estoppel is not available to a holder of title as against one contesting his right, where such title holder was at all times in possession of full knowledge of the nature of his title and the facts relating to the manner of its acquisition.

6. The defense of bona fide purchaser is not available to a holder of title who relies upon a motion for nonsuit, as such defense would become proper only when he is put upon his proof.

[As to effect of lapse of time upon right to have a deed declared a mortgage, see note in Ann.Cas. 1914B, 354]

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Carl A. Davis, Judge.

Action to set aside a deed purporting to convey equity of redemption to mortgagee and to recover value of certain real property after satisfaction of mortgage debt and interest. From judgment of nonsuit and dismissal, plaintiff appeals. Reversed.

Reversed and remanded. Costs awarded to appellant.

Alfred A. Fraser and S. L. Tipton, for Appellant.

From the record it was for the jury to pass upon the question as to whether or not the defendant paid for the property what it was worth and took no advantage of the plaintiff by reason of defendant's superior position. To give validity to such a sale by a mortgagor, it must be shown that the conduct of the mortgagee was in all things fair and frank. He must take no advantage of the fears or the poverty of the other party. Any indirection or obliquity of conduct is fatal to his title. Every doubt will be resolved against him. (Alexander v. Rodriguez (Villa v. Rodriguez), 12 Wall. (U. S.) 323; 20 L.Ed. 406; Bigelow on Fraud, pp. 259-261; Gassert v. Strong, 38 Mont. 18, 98 P. 497, 503; Lewis v. Wells, 85 F. 896; Peugh v. Davis, 96 U.S. 332, 24 L.Ed. 775; Bradbury v. Davenport, 114 Cal. 593, 55 Am. St. 92, 46 P. 1062.)

The burden is upon the creditor to show that the right of redemption was given up deliberately and for an adequate consideration. (Jones on Mortgages, sec. 251; Keeline v. Clark, 132 Iowa 360, 106 N.W. 257.)

Whenever the relation of mortgagor and mortgagee is once shown to exist the court views with distrust and disfavor any arrangement between them by which it is proposed to transfer the equity of redemption to the mortgagee, and the parties will be held to their original relations, unless the transaction appears to be perfectly fair and no advantage is taken by the mortgagee of the mortgagor by reason of his encumbrance. (Russell v. Southard, 12 How. (U. S.) 139, 13 L.Ed. 927; Stoutz v. Rouse, 84 Ala. 309, 4 So. 170; West v. Reed, 55 Ill. 242; Bradbury v. Davenport, 114 Cal. 593, 55 Am. St. 92, 100, 46 P. 1062; Shillaber v. Robinson, 97 U.S. 68, 24 L.Ed. 967; Coates v. Marsden, 142 Wis. 106, 124 N.W. 1057; Miller v. Smith, 20 N.D. 96, 126 N.W. 499; Moeller v. Moore, 80 Wis. 434, 50 N.W. 396; Fort v. Colby, 165 Iowa 95, 144 N.W. 393; 3 Pomeroy's Eq., 3d ed., sec. 1193, note 1.)

"The grantee in an absolute deed, which is in fact a mortgage, may have a judgment for a redemption in money against the grantee in case the latter has conveyed the land to a bona fide purchaser so that it cannot be reached, and although an action against the grantee to recover for money had and received would be barred by the statute of limitations." (Jones on Equity, sec. 1060A; May v. LeClaire, 78 U.S. 217, 20 L.Ed. 50.)

A plea of laches is only available in an equitable action; actions at law being governed solely by the statute of limitations. (Wilson v. Nichols, 72 Conn. 173, 43 A. 1052; Ormsby v. Vermont Copper Min. Co., 56 N.Y. 623.)

Where the condition of the title is known to both parties, or both have the same means of ascertaining the truth, there is no equitable estoppel. (Brant v. Virginia Coal & I. Co., 93 U.S. 326, 23 L.Ed. 927; Steel v. St. Louis Smelting & Ref. Co., 106 U.S. 447, 1 S.Ct. 389, 27 L.Ed. 226; Lux v. Haggin, 69 Cal. 255, 4 P. 919, 10 P. 674; New York Rubber Co. v. Rothery, 107 N.Y. 310, 1 Am. St. 822, 14 N.E. 269; Fort v. Colby, 165 Iowa 95, 144 N.W. 393; Pomeroy's Eq. Jur., 2d ed., sec. 803; Atkinson v. Plum, 50 W.Va. 104, 58 L. R. A. 788, 40 S.E. 587.)

C. C. Cavanah and Wyman & Wyman, for Respondents.

Burden of proof was on plaintiff to show that the deed was other than it purports to be. (Barton v. Bank of New South Wales, 15 App. Cas. 379; Howland v. Blake, 97 U.S. 624, 628, 24 L.Ed. 1027, 1029; Miller v. Smith, 20 N.D. 96, 126 N.W. 499; Jasper v. Hazen, 4 N.D. 1, 58 N.W. 454, 23 L. R. A. 58; Turner v. Kerr, 44 Mo. 429; Helm v. Boyd, 124 Ill. 370, 16 N.E. 85; Woods v. Jensen, 130 Cal. 200, 62 P. 473; Hawkins v. Elston, 58 Colo. 400, 146 P. 254; Beverly v. Davis, 79 Wash. 537, 140 P. 696; Motley's Admr. v. Carstairs etc. Co., 114 Va. 429, 76 S.E. 948; Cadman v. Peter, 118 U.S. 73, 6 S.Ct. 957, 30 L.Ed. 78.)

In absence of fraud, inadequacy of price is not sufficient to convert deed into mortgage or entitle plaintiff to recover. (West v. Hendrix, 28 Ala. 226; Rodgers v. Burt, 157 Ala. 91, 47 So. 226; Bridges v. Linder, 60 Iowa 190, 14 N.W. 217; Forester v. Van Auken, 12 N.D. 175, 96 N.W. 301; Pierce v. Traver, 13 Nev. 526; McGuin v. Lee, 10 N.D. 160, 86 N.W. 714; Davidson v. Little, 22 Pa. 245, 60 Am. Dec. 81; Harris v. Tyson, 24 Pa. 347, 64 Am. Dec. 661; Hemingway v. Coleman, 49 Conn. 390, 44 Am. Rep. 243; Williams v. Powell, 66 Ala. 20, 41 Am. Rep. 742.)

The evidence discloses that the deed of April 3, 1907, was made voluntarily and was intended by the parties to be an absolute conveyance. (Stall v. Jones, 47 Neb. 706, 66 N.W. 653; Becker v. Howard, 75 Wis. 415, 44 N.W. 755; Neeson v. Smith, 47 Wash. 386, 92 P. 131; Woodworth v. Carman, 43 Iowa 504; Cook v. Lion Fire Ins. Co., 67 Cal. 368, 7 P. 784.)

Laches will defeat recovery. (Ryan v. Woodin, 9 Idaho 525, 75 P. 261; McCabe v. Mathews, 40 F. 338; City of Leavenworth v. Douglass, 59 Kan. 416, 53 P. 123; Wilson v. Wilson, 41 Ore. 459, 69 P. 923; Kleinclaus v. Dutard, 147 Cal. 245, 81 P. 516; Wilson v. Linder, 21 Idaho 576, 587, Ann. Cas. 1913E, 148, 123 P. 487, 42 L. R. A., N. S., 242; Coyle v. Lamb, 123 Cal. 264, 55 P. 901.)

BUDGE, C. J. Morgan and Rice, JJ., concur.

OPINION

BUDGE, C. J.

This case was here on a former appeal to determine whether appellant was entitled to a jury trial. It was held that he was. (Johansen v. Looney, 30 Idaho 123, 163 P. 303.) The cause was remanded for trial. After appellant had introduced his evidence the court granted a nonsuit and dismissed the action. This appeal is from the judgment of dismissal.

The evidence on behalf of appellant was in substance as follows: Appellant testified that he was 82 years of age and a native of Norway; that he came to this country in 1864 and to Idaho in 1872, and in 1882 he acquired title to 442 acres of land, of which approximately 300 acres were level and the balance rolling or hill land; that he cleared, irrigated and cropped about 300 acres; that he first met Looney in 1905, at which time he obtained from him a loan on his ranch, Looney refusing to take a mortgage and insisting upon a deed absolute in form and a bill of sale to certain personal property, to which appellant agreed; that a deed to the land and a bill of sale of the cattle and horses were executed and Looney thereupon gave a contract to reconvey and loaned appellant $ 6,500, of which $ 6,200 was used in redeeming appellant's ranch from foreclosure sale under a mortgage held by the Union Central Life Insurance Company; that he told Looney the ranch was worth about $ 16,000; that appellant returned to the ranch, where he has resided ever since; and that in 1907 he gave a second deed to Looney, who offered to give the stock back for a deed to the ranch, and took offense because appellant told him the bill of sale of the cattle was not valid.

Marcellus testified that he had known appellant for 16 or 17 years that in 1899 he made him a loan on the ranch, of which about 300 acres were level and under water; that he next saw the ranch in 1905, where he went in company with Looney, with the view of making a loan; that Looney preferred having a deed so that he would not have to foreclose if the debt were not paid; and that the bottom land was worth $ 55...