Murphy v. Booker

• Decision Date: 14 July 1919
• Docket Number: 87
• Citation: 214 S.W. 63,139 Ark. 469
• Parties: MURPHY v. BOOKER
• Court: Arkansas Supreme Court

214 S.W. 63

139 Ark. 469

MURPHY v. BOOKER

No. 87

Supreme Court of Arkansas

July 14, 1919

Appeal from Lafayette Chancery Court; James M. Barker, Chancellor reversed.

Decree reversed, and cause remanded.

Searcy & Parks, for appellant.

1. The transaction was a deed. Plaintiff had no title to the land either legal or equitable, which must exist to constitute a mortgage. 86 Ala. 289; 5 So. 722; 55 Ala. 607; 96 Ill. 456; 16 Fla. 466; 13 Ill. 186; 60 Id. 516; 20 Am. Dec 145; 77 Pa. 134; 73 Ill. 156; 172 Id. 82; L. R. A 1916 B, p. 154, § 98.

2. The evidence fails to show that the deed was a mortgage. 153 S.W. 797. To show that a deed, absolute on its face, is a mortgage to secure a debt, the evidence must be clear, unequivocal and convincing. 88 Ark. 299; 75 Id. 551; 165 S.W. 273; 113 N.Y. 991; 92 N.E. 1077; 53 So. 814; 113 P. 34; 61 So. 881; 46 Id. 851. It must have been the intention of both parties, when the deed was executed, to execute a mortgage. 45 So. 168; 22 Kan. 661; 55 Id. 82; 39 P. 1024; 79 Id. 929; 19 R. C. L., § 35, title, Mortgages; 114 Ark. 121; 200 S.W. 1023.

All the circumstances tend to show that the transaction was not a mortgage. Plaintiff, under the agreement, had no right to tender the amount and demand a deed. The tender was not in good faith and plaintiff is estopped to claim the deed was a mortgage. 89 Va. 628; 16 S.E. 749; 206 S.W. 749; 96 U.S. 544.

3. The exceptions to the master's report should have been sustained.

J. M. Carter, for appellees.

1. The instrument was a mortgage and under the facts Murphy did not establish his debt and was not entitled to foreclose against Booker and the lands.

2. Booker had equities in the land--the right to redeem from the two sales to Paschal. Kirby & Cas-Digest, sections 5814 and 8748; 54 Ark. 457; 38 Ark. 364, 270; 13 Id. 112. In doubtful cases the court should construe the contract to be a mortgage rather than an absolute sale. 27 Cyc. 1799, 1801; 165 S.W. 278; 106 Id. 489; 134 Ark. 196; 71 N.Y. 176.

3. Mrs. Booker had the right to redeem. The great preponderance of the evidence shows that the land was worth more than $ 50,000. 6 Ark. 274; 52 N.Y. 551; 42 Cal. 169; 8 Kan. 380; 21 N.Y.Eq. 414; 4 W.Va. 4; 65 N.C. 520.

The evidence shows that the contract was intended to be a mortgage, and the rights of the parties are measured by the rules of law applicable to mortgagors and mortgagees and the instrument remains a mortgage until the equity of redemption is foreclosed and the mortgagee can not have ejectment until after foreclosure. 1 Rice on Ev. 269; 31 N.Y. 399; 19 N.J.Eq. 166; 25 Ia. 19.

4. The rents charged were supported by the weight of the testimony. The mortgage to the American Investment Company was assumed by Murphy in the deed from Paschal and had never been foreclosed and Mrs. Booker had the right to redeem. Kirby & Castle's Digest, §§ 2901, 4311, 7437, 4750, 7443; 57 Ark. 248; 94 Id. 107; 55 Id. 235; 85 U.S. 141. She was not barred by the foreclosure, as her right to dower was not directly in issue. 86 Ark. 540; 67 Id. 15; 61 Id. 547; 27 Cyc. 1807; 3 L. R. A. (N. S.) 1068; 53 N.Y. 298; 13 Am. Rep. 523; 2 Jones on Mortg. (6 ed.), § 1067; Thomas on Mortg. (2 ed.), § 622; 73 Va. 413.

OPINION

MCCULLOCH, C. J.

This is an action instituted by appellees in the chancery court of Lafayette County against appellant in which the court was asked to declare a certain deed of conveyance in absolute form to be a mortgage and to allow redemption therefrom.

The lands in controversy aggregate 1,242 acres, of which a large portion is in cultivation and they were originally owned and occupied by appellee, Paul M. Booker. His wife, Martha E Booker, joined with him in this suit. On December 11, 1913, appellees conveyed the lands to appellant by deed absolute in form reciting a consideration of "the sum of one dollar and other valuable considerations." It is alleged that this deed, though absolute in form, was intended by the parties as a mortgage. Appellees had previously mortgaged the land to the American Investment Company to secure indebtedness to that concern, and also to the Windsor Trust Company to secure a large debt. The first mentioned mortgage had been foreclosed by decree of the chancery court and the statutory period of redemption had expired and a deed had been executed by the court's commissioner to W. B. Paschal, the purchaser, about two months before the execution of the deed by appellees to appellant. Paschal held title under his deed at the time of the conveyance to appellant and had also purchased the land under a foreclosure decree rendered by the chancery court of Lafayette County to enforce levee taxes due the improvement district known as the Long Prairie Levee District. The time for redemption under that sale had, too, expired and Paschal had received his deed from the court's commissioner. Appellant, after receiving the deed from appellees, also secured a conveyance from Paschal, the same being executed for the consideration of $ 37,400, which included the assumption by appellant of the payment of the unforeclosed mortgage to the Windsor Trust Company.

Appellees alleged in their complaint that, at the time of the execution of their deed to appellant, Paul M. Booker was still the owner of the land and had the right of redemption from the judicial sales to Paschal, but that he was financially embarrassed and unable to redeem from the sales of the land and pay off the other indebtedness, and that appellant at that time entered into an oral agreement with him to the effect that appellant should redeem the land from Paschal and allow him (Booker) to redeem by repayment of the sums paid out by appellant with eight per cent. interest, and that it was also agreed that Booker should remain in possession of said lands and cultivate the same from year to year and that if the lands could be sold, the profits over and above the expenses of redemption would be divided between the parties. Appellant denied in his answer that appellee Booker owned the lands or had the right of redemption from the sales to Paschal or that there was any agreement, oral or otherwise, entered into by him with Booker whereby the latter was to be permitted to redeem the lands. He alleged in his answer that the only agreement entered into at that time was to the effect that, if Booker could find a purchaser for the lands at a price acceptable to appellant, Booker should receive a certain portion of the sale price over and above the sums paid by appellant for the purchase of the lands. Appellant also alleged in his answer that there subsequently arose a controversy between him and appellee Booker as to the terms of their agreement and that on January 6, 1915, they entered into a written contract which settled the rights of the parties. The contract is exhibited with appellant's answer. It recites the controversy between the parties and that the contract was to be in "compromise and settlement of their differences," and, after reciting a statement of the amount necessary to reimburse appellant for the sums so paid in the purchase of said lands, provides in substance that if Booker should find a purchaser for the lands at any time within three years from that date at a price not less than $ 50 per acre, and the sale be consummated, out of the proceeds of sale appellant should be reimbursed in the sum of $ 40,480.10 theretofore expended by him in the purchase and all sums expended by him between that date and the date of sale for improvements, including clearing and repairs, with interest at eight per cent. and that the excess price obtained for the land over and above the total of the above mentioned sums should be equally divided between the parties. The contract concludes with the following paragraph:

"In the event that a purchaser who is ready, able and willing, as above defined, to purchase said lands at the price herein set out, to-wit: Not less than $ 50 an acre, is not produced by party of the second part within three years from this date, then in that event any and all interest or claims of party of the second part in and to any profits arising from the sale of said lands, and any and all claims or interest in or upon said lands by virtue of the contract mentioned as a part of the consideration in his deed to the party of the first part dated December 11, 1913, shall terminate and be forever barred, and all indebtedness herein mentioned as being due from party of the second part to party of the first part shall by said event stand satisfied and canceled."

The cause was heard by the chancellor on conflicting testimony as to the substance of the oral agreement between the parties at the time of the execution of the deed by appellees to appellant. The chancellor found in favor of appellees and declared the deed to be a mortgage, and after reference to a master ascertained the balance due, and allowed a redemption.

We deem it unnecessary to discuss the testimony in detail or to determine whether or not it was sufficient to justify the finding that the deed was intended as a mortgage. We will rest our decision on another phase of the case. Suffice it to say that there was a conflict in the testimony and that at the time of the execution of the contract of January 6, 1915 a controversy had been pending between the parties as to the substance of their oral agreement. Nor do we deem it necessary to determine whether or not appellees had such an interest in the lands at the time they conveyed to appellant as to legally justify the claim that the deed should be treated as a mortgage. The time for redemption from the sales of the lands to Paschal had in fact expired, and the title of Booker had been extinguished, but he testified that Paschal, or the mortgage...