McFadden v. French

• Decision Date: 02 April 1923
• Docket Number: 1038
• Parties: McFADDEN v. FRENCH, ET AL
• Court: Wyoming Supreme Court

213 P. 760

29 Wyo. 401

McFADDEN v. FRENCH, ET AL

No. 1038

Supreme Court of Wyoming

April 2, 1923

ERROR to the District Court, Carbon County; HON. V. J. TIDBALL Judge.

Action by Raymond A. McFadden against A. W. French and others praying that a deed of conveyance be decreed as having been intended by the parties to operate as a mortgage, and for other equitable relief. Judgment for defendants and plaintiff brings error. The material facts are stated in the opinion.

Affirmed.

Thomas Hunter, John R. Smith, Hartley B. Woods and George J. Lemmon for plaintiff in error.

It is conceded that the deed is absolute on its face, but a court of equity will look beyond the external form to ascertain the intention of the parties. (Sweet v. Parker, 22 N.J. Eq. 453; Campbell v. Dearbourn, 109 Mass. 130; Holton v. Meighen, 15 Minn. 50; Pierce v. Robinson, 13 Cal. 116.) The case calls for the application of the equitable doctrine "once a mortgage always a mortgage." The intention of the parties must govern. (Pomeroy Eq. Jr. Secs. 1192-1196; Russell v. Southard, 12 How. (U.S.) 139.) Where the evidence creates a doubt, the court will declare the instrument a mortgage. (Stinchfield v. Miller, 71 Me. 576; Campbell v. Dearbourn, 109 Mass. 130; Bud v. Van Orden, 33 N.J. Eq. 143; Houser v. Lamont, 55 Pa. St. 311; Holton v. Meighen, 15 Minn. 50; Fort v. Colby, 165 Iowa 95, 144 N.W. 393; Pierce v. Robinson, 13 Cal. 116; Clark v. Henry, 2 Cowen, 324; Rakin v. Martimer, 71 Pa. St. 372.) The amount advanced was exactly equal to the amount of a prior loan upon the property, a circumstance indicating that defendants really took up the loan. (Fort v. Colby, 165 Ia. 95, 144 N.W. 393; Ewart v. Walling, 42 Ill. 453.) The negotiations between the parties were for a loan, --also an important circumstance. (Cherry Co. v. Bowen, 4 Sneed (Tenn.) 415; Jones Mtg. 6th Ed. 203; Harper's Appeal, 64 Pa. St. 315.) Possession was retained by grantor, another circumstance indicating the real intention of the parties. (Reigard v. McNeil, 38 Ill. 400; Stover v. Bounds, 1 Ohio St. 107.) Defendant was a lender of money. The relative stations in life of the parties should be considered. (Richardson v. Barrick, 16 Ia. 407; 3 Watts & Serg. (Pa.) 384; Villa v. Rodriquez, 12 Wall. 323; Stinchfield v. Miller, 71 Me. 567; Wagg v. Herbert, 215 U.S. 546.) The value of the land should also be considered. The trial court erred in its findings and decree that the conveyance was intended to operate as an absolute sale since all of the evidence and the circumstances of the transaction indicate that it was intended as a mortgage to secure a loan.

N.E. Corthell, for defendants in error.

A finding and judgment of a trial court based upon conflicting evidence, will not be disturbed. (Slothower v. Hunter, 15 Wyo. 189; Riordan v. Riordan, 16 Wyo. 363; Hount v. Strickland, 17 Wyo. 526; Hunt v. Laramie, 26 Wyo. 160.) The action is in the nature of one for the reformation of a written contract, and must be governed by principles relating thereto, that is, the proof of intention, or of fraud, must be clear and convincing. (Kahn v. Ins. Co., 4 Wyo. 476; Wallace v. Skinner, 15 Wyo. 253; Stoll v. Nagle, 15 Wyo. 86; Travelers Ins. Co. v. Henderson, 69 F. 762; 3 Pomeroy Eq. 1376; 34 Cyc. 905; 27 Cyc. 1017; Coyle v. Davis, 116 U.S. 108; Pope v. Hoopes, 90 F. 451.) The reformation of a deed, absolute on its face, into a mortgage or a simple security stands on the same footing with that of the reformation of any other instrument. (34 Cyc. 923; Cadman v. Peter, 118 U.S. 73; Zuver v. Lyons, 40 Ia. 510; Sloan v. Becker, 34 Minn. 491; Howland v. Blake, 97 U.S. 624; McFadden v. Heison, 175 P. 814; Anderson v. Stewart, 117 N.E. 743; Gassert v. Bogk, 19 P. 281; 3 Pomeroy Eq. Jr. 1196.) Declarations or admissions of the parties made after the transaction are not entitled to great weight, unless explicit and positive, and indicating the intention. (27 Cyc. 1017-1028; Laudauer v. Cummings, 57 Ill. 195.) The settled rule is that evidence to establish a deed, absolute on its face, intended to be a mortgage, must be clear, satisfactory and conclusive and not made up of loose and random statements. (Ensminger v. Ensminger, 39 N.W. 208.) In the case of Russell v. Southard, 12 How. 139 cited by plaintiff in error, there was a contract for redemption and the same may be said of nearly all of the other cases cited by plaintiff in error, and for that reason, they are not in point in the present case. The contention that all doubts should be resolved in favor of the mortgage and against the deed is limited to the narrow issue between a conditional sale and a mortgage where it is established that it is either one or the other. The presumption prevails in cases of this class, that a written instrument is what it purports to be. The lapse of nine years from and after plaintiff's ejection from the premises before commencing this action is incongruous, if he supposed himself to be an equitable owner of the property. The sudden change in the estimated value of the property due to the discovery of oil in the neighborhood shortly before this suit was brought, is the sufficient and compelling explanation of the numerous inconsistencies in plaintiff's attitude in the case. For example, his claim that the deed was forged and that he had not executed the deed at all.

There is evidence to sustain the judgment and it should not be disturbed.

KIMBALL, Justice. POTTER, Ch. J., and BLUME, J., concur.

OPINION

KIMBALL, Justice.

On April 30, 1910, the plaintiff, Raymond A. McFadden, by warranty deed absolute in form conveyed certain land in Carbon County, Wyoming to the defendants A. W. French and Nellie F. Wilson. In March, 1919, claiming that the deed was intended as a mortgage to secure a debt, the plaintiff commenced this action asking to have an accounting of rents and profits and to be allowed to redeem the land. The defendant grantees, who were brother and sister, denied that the deed was given as a mortgage or as security and asserted that it was intended as an absolute conveyance. The contentions of other defendants, who claimed interests as lessees of French and Wilson need not be noticed. The findings and judgment were for the defendants and the plaintiff has the case here by proceeding in error.

In March, 1908, the plaintiff owned the land in question subject to a mortgage for $ 500 with accrued interest, and to satisfy that mortgage, he then gave another to John H. Lewis for $ 1000. In 1909 Lewis foreclosed, purchased the property at the mortgage sale, and after the expiration of the redemption period received the sheriff's deed. Afterwards, by a suit the exact nature of which is immaterial, McFadden questioned the regularity of the foreclosure, and in February, 1910, in settlement of this suit, it was agreed that McFadden have until April 30, 1910 to redeem the property by paying Lewis the amount due him, which was then about $ 1475. A quit-claim deed from Lewis to McFadden was placed in the hands of McMicken & Blydenburgh, attorneys for Lewis, who were to deliver it to McFadden on payment of the money. The right to redeem in this way was the only right which McFadden had or claimed at that time. He testified to his many efforts to borrow the money with which to make this payment, but as he was without any property to offer as security except the land which was thus subject to redemption, he was unsuccessful. On April 28, while still seeking some one who would lend him the money, he was introduced to defendant French who told him he had no money to invest, but suggested that his sister, Mrs. Wilson, might have, and that they see her. They then called on Mrs. Wilson, a widow, who supported herself and three children with her earnings as a school teacher and the income from a few thousand dollars which she usually kept invested in well secured loans. She, like her brother, had had no previous acquaintance with plaintiff, and neither of them was familiar with his land. On being introduced to Mrs. Wilson by her brother the plaintiff made application to her to borrow the money he desired, and the testimony as to what followed at this meeting is conflicting.

Mrs. Wilson and French testify that immediately on learning that the plaintiff needed the money to pay off a mortgage that was being or had been foreclosed, she said there was no use for them to go any further, as she would not make a loan under those circumstances; that plaintiff then explained how his land was partly included in the site of a proposed reservoir to be built within a year, and had a special speculative value because it would be necessary for the reservoir company to pay a good price in order to get the land which it needed, and that he said he would rather give the land away than have Lewis get it. The defendants claim that then it was suggested by one or the other of them that they investigate further with a view to buying the land; that it was arranged that the plaintiff and French would look over the land the next day, and if, after this investigation, French approved of the purchase he and Mrs. Wilson jointly were to buy the property.

The plaintiff's testimony as to the same conversation is to the effect that Mrs. Wilson agreed to let him have the money on his promise to repay it with $ 1000 as bonus and interest. As to the time of re-payment, his testimony was not clear. He first testified that the money was to be repaid when the land was sold, and afterwards testified that it was to be repaid when the reservoir was built, which he was then sure would be within a year. He finally said he was to make repayment within a year, as he figured the reservoir would surely be built in that time, and it might fairly be inferred from his whole testimony...