Keithley v. Wood

• Decision Date: 19 June 1894
• Citation: 38 N.E. 149,151 Ill. 566
• Parties: KEITHLEY v. WOOD et ux.
• Court: Illinois Supreme Court

151 Ill. 566

38 N.E. 149

KEITHLEY

v.WOOD et ux.¹

Supreme Court of Illinois.

June 19, 1894.²

Appeal from appellate court, second district.

Bill by Chauncey C. Wood and Kate Wood, his wife, against Arthur Keithley, to redeem from an alleged mortgage. Complainants obtained a decree, which was affirmed by the appellate court. 47 Ill. App. 102. Defendant appeals. Affirmed.

A. Keithley, in pro. per.

Jack & Tichenor, for appellees.

CRAIG, J.

This was a bill in equity brought by Chauncey C. Wood and Kate Wood, his wife, against Arthur Keithley, to redeem from an alleged mortgage executed on the 1st day of November, 1889. It appears that Chauncey C. Wood was the owner of an undivided one-seventh of the S. W. 1/4 of section 27 in Richards township, Peoria county, except the N. W. 1/4 thereof, subject to the right of dower of his mother in the entire 160 acres. The complainant had inherited this land from his father. On July 13, 1889, Chauncey C. Wood borrowed of appellant $430, and gave his note therefor, securing the same by a mortgage, signed by him and his wife, upon the property in controversy. In August of the same year, he borrowed another $100 of appellant, giving his note therefor. These were both judgment notes, each drawing 8 per cent. interest, and providing for an attorney's fee, one of $30, and the other of $15. On the 17th day of September, 1889, Keithley caused a judgment to be entered on the notes for $566.50. No steps were, however, taken to collect the amount due until November 1, 1889, when Wood applied to Keithley for a further loan of money. What occurred between the parties which led to the execution of the deed and contract of November 1, 1889, is a matter upon which the parties do not agree, Wood claiming that Keithley made him an additional loan, and took a deed to secure the same, while Keithley claims that he purchased Wood's interest in the premises, and gave him a contract for a repurchase, upon the payment of a certain sum of money at a specific time. But, waiving for the present what the said transaction was which led to the execution of a deed and contract, it does appear that Keithley advanced Wood in the neighborhood of $400 in addition to what Wood then owed him, and Wood and wife executed and delivered a deed, which read as follows: ‘This indenture witnesseth that the grantors, Chauncey C. Wood and Kate, his wife, of the city and in the county of Peoria, and state of Illinois, for and in consideration of the sum of two thousand dollars, in hand paid, convey and warrant to Arthur Keithley, of the village of North Peoria, county of Peoria, and state of Illinois, the following described real estate, to wit: The west half (1/2) of the south half of the east half (S. 1/2 of E. 1/2) of the southwest quarter (S. W. 1/4) of section twenty-seven (27) in Richards township, situated in the county of Peoria, in the state of Illinois; hereby releasing and waiving all rights under and by vritue of the homestead exemption laws of this state. Dated this, November 1, A. D. 1889. Chauncey C. Wood. [Seal.] Katie Wood. [Seal.]’ At the same time, Keithley executed and delivered to Wood an agreement, which was as follows: ‘I agree to convey back to Chauncey C. Wood an undivided one-seventh interest in the southwest quarter of section twenty-seven (27), except the northeast quarter thereof, in Richards township, Peoria county, Illinois, provided, however, he first pay me nine hundred and thirty-seven and 50-100 dollars; this agreement to be void after December 31, eighteen hundred and eighty-nine. [Signed] Arthur Keithley.’ After the case was at issue, the court referred it to the master in chancery, to take the evidence, and report the same, together with his conclusions of law and fact. The master, in his report, found that Wood was, on the date of the transaction, the owner of the undivided one-seventh of the premises in dispute, subject to the life estate of his mother. That on July 13, 1889, Wood borrowed of defendant the sum of $430, giving a judgment note therefor, and secured by mortgage upon said homestead property and said 30-acre tract; and afterwards, on August 15, 1889, Wood borrowed of defendant the further sum of $100, giving as security a judgment note. That on September 17, 1889, defendant took judgment upon said notes for the amount of said notes, principal, interest, and cost, including attorney's fee of $30. That on November 1, 1889, the complainant Wood, being indebted to defendant as aforesaid, and being in need of or desirous of obtaining more money, applied to defendantfor an additional loan; and that, as the result of the negotiations between complainant and defendant, on said day, complainants, on the evening of said day, went to the office of the defendant, and executed and delivered to defendant the deed conveying to defendant the homestead property. That defendant thereupon canceled and discharged said indebtedness due from Wood to himself, and paid to complainant the difference between the amount of said indebtedness and $900, or, to wit, the sum of $350, and also executed and delivered to complainant Wood the contract of reconveyance. ‘And said master finds that the execution of said deed from complainants to defendant, and the written agreement of contract for reconveyance from defendant to complainant, constituted but one and the same transaction, and were intended as security for the repayment of said indebtedness from Wood to Keithley, together with the further sum of $37.50, being the amount of defendant's commission or profits in case of redemption. Complainant Chauncey Wood was not deceived or cajoled into signing said deed by representations that the defendant had no blank mortgages, but signed the same knowing it to be a deed, with a contract to reconvey upon payment of the amount stated, and for the purpose before stated.’ The master also found that on December 31, 1889, Wood applied to Keithley for and obtained an extension of the time until January 10, 1890. These findings were sustained and approved by the court, and a decree rendered in favor of the complainant. There were, however, findings in other matters not sustained by the court; but a reference to these findings is not regarded important to a proper decision of the case. Upon rendering a decree in favor of the complainant, the defendant appealed to the appellate court, where the decree was affirmed.

When this case was first submitted, we were inclined to hold that the decree of the circuit court and the judgmentof the appellate court were erroneous, and a judgment of reversal was entered; but, upon the petition of complainant, a rehearing was ordered, and, upon a further examination of the case, we have arrived at a different conclusion. At the time the deed and agreement were executed, no one was present but Wood and his wife and Keithley. They, and they alone, are the persons who know the facts under which the deed and contract were executed. Rejecting the testimony of Mrs. Wood on the ground that she, being the wife of the complainant, is disqualified as a witness, we have complainant and defendant as the only witnesses to testify to the motive and character of the transaction. Wood testified, in substance, that he borrowed of Keithley a certain amount of money in addition to the amount of the judgment Keithley held against him, and that the deed and agreement were executed as a mortgage to secure the payment of the amount agreed to be due,-$937.50; that a sale of the land was not made. On the other hand, Keithley testified that he purchased the land, paying therefor the amount named in the contract, which was made up of the judgment he had against Wood, and the balance in money which he paid at the time that the agreement was given which authorized Wood to repurchase as provided by its terms; that the transaction was not a loan. It is thus seen that the testimony of the two parties in regard to the matter in dispute,-whether the transaction was intended as a loan or a sale and resale,-is irreconcilable. When land is conveyed in fee by a deed, with covenants of warranty, and there is no condition or defeasance either in the deed or in a collateral paper, and parol evidence is resorted to for the purpose of establishing that the deed was given as a mortgage, such evidence must be clear and convincing; otherwise the presumption that the deed is what it purports upon its face to be must always prevail. This principle is well established.

In Coyle v. Davis, 116 U. S. 108, 6 Sup. Ct. 314, in discussing the question, the court said: ‘The conveyance to Davis of the undivided one-third of Coyle, being to him, his heirs, and assigns, forever, with a covenant of warranty, and without a defeasance either in the conveyance or in a collateral paper, the parol evidence that it was to operate only as a mortgage must be clear and convincing, or the presumption that the deed is what it purports to be must prevail.’ So in the case of Cadman v. Peter, 118 U. S. 73, 6 Sup. Ct. 957, the court state: ‘If the conveyance is in fee, with a covenant of warranty, and there is no defeasance either in the conveyance or in a collateral paper, parol evidence that it was given to operate as a mortgage must be clear and convincing.’ But where there is a conveyance by deed, and a defeasance in a collateral paper, or a contract for a resale, and the evidence leaves it in doubt whether the transaction was intended as a conditional sale or a mortgage, it will, as a general rule, be treated as a mortgage. In Cosby v. Buchanan, 81 Ala. 574, 1 South. 898, there was a deed and an agreement to reconvey, as in the case here. The court said: ‘The character of the deed must be determined by the intention of the parties, clearly and satisfactorily proved. When it is absolute, and only parol evidence is relied on, the party affirming that the conveyance was intended as a security for a debt must show that such was the...