Rogers v. Burt

• Decision Date: 18 June 1908
• Citation: 157 Ala. 91,47 So. 226
• Parties: ROGERS v. BURT.
• Court: Alabama Supreme Court

47 So. 226

157 Ala. 91

ROGERS v. BURT.

Supreme Court of Alabama

June 18, 1908

Appeal from Chancery Court, Bibb County; Thomas H. Smith Chancellor.

Bill by L. A. Burt against J. M. Rogers to have a conveyance absolute on its face declared a mortgage. Decree for complainant, and respondent appeals. Reversed and rendered.

John T Ellison, for appellant.

Logan &amp Fuller, for appellee.

DENSON J.

The bill in this case is filed by the grantor in a conveyance of lands absolute on its face, against the grantee, to have the conveyance declared in reality a mortgage, and praying that the grantee be let in to redeem the lands therein conveyed. The principle underlying the doctrine invoked by the bill is "that it would be a virtual fraud for the grantee to insist upon the deed as an absolute conveyance of the title which had been intentionally given to him, and which he had knowingly accepted, merely as a security, and therefore in reality as a mortgage." 3 Pom. Eq. Jur. § 1196. The doctrine prevails in this state that in equity parol evidence is admissible to show that a deed absolute on its face was only intended to be the security for the payment of a debt, and thus to be a mortgage. Peagler v. Stabler, 91 Ala. 308, 9 So. 157; Adams v. Pilcher, 92 Ala. 474, 8 So. 757; Reeves v. Abercrombie, 108 Ala. 537, 19 So. 41. While this is true, the courts have established the rule that, to overcome the presumption which arises that the instrument is what it purports on its face to be, an absolute conveyance of the land, and to establish its character as a mortgage, the evidence must be clear, unequivocal, and convincing. Brantly v. West, 27 Ala. 542, 552; Reeves v. Abercrombie, supra, and cases cited in the opinion in the latter case. The chancellor has held that the evidence comes up to the requirements of the rule, and has decreed the relief prayed by the bill. After due consideration we are unable to concur with the chancellor in his conclusions, and will state our reasons for reaching the opposite decision.

The complainant was indebted to Cruise & Splawn, which debt was secured by a mortgage on 74 acres of land and some cattle. The mortgage was past due, and the land was advertised for sale under its terms. The respondent paid Cruise & Splawn the amount of their debt, and had the note and mortgage assigned to himself. The contention or theory of the complainant, as averred in the bill, is that respondent paid the debt and took the assignment in pursuance of an agreement, made with complainant, that he would pay Cruise & Splawn, have the assignment made to himself, and "give complainant a chance to pay off the debt"; that afterwards respondent went to the house of complainant and "demanded security from complainant in a deed to the land, and complainant and respondent then and there agreed that a deed should be executed conveying the land to him (respondent), with the understanding that complainant would have the right to redeem the land at any time within two years from the date of the said deed, by simply paying the sum that was actually due with the interest thereon"; that on the 5th day of January, 1906, complainant and his wife executed the deed to the land in pursuance of that agreement. The answer admits the payment of complainant's indebtedness to Cruise & Splawn by the respondent and the assignment of the debt and the mortgage to him; but it specifically denies that the payment was made and the assignment taken under the agreement alleged, denies that any such agreement was made, and affirmatively alleges that the payment was made and that the assignment was taken under an agreement, made between complainant and respondent, that if respondent would "stop the sale, pay off the mortgage, and have the same transferred to respondent, then complainant would make respondent an absolute deed to the land, provided respondent would release certain personal property of complainant that was conveyed by the mortgage." It is then averred in the answer that respondent did release the personal property, as he had agreed to do, and that the deed was then executed, in compliance with the agreement. The conveyance offered as evidence is in fee, with a covenant of warranty, and there is no defeasance, either in the conveyance or in a collateral paper; nor is there any admission of a parol agreement that would qualify the terms of the conveyance. So that the sole issue involved is whether the conveyance was intended as a mortgage or an unconditional sale. Peagler v. Stabler, supra; Rose v. Gandy, 137 Ala. 329, 34 So. 239.

We have seen that a higher and more satisfactory character of proof is required to establish that an instrument or conveyance is not what it purports to be than is necessary in ordinary civil cases. Generally a mere preponderance is sufficient; but, when parties deliberately execute a written conveyance, there is a strong presumption that it expresses their intentions, and more than a bare preponderance of parol proof is required to remove this presumption and to show a contrary intention. Rose v. Gandy, 137 Ala. 329, 34 So. 239; Reeves v. Abercrombie, 108 Ala. 537, 19 So. 41; Adams v. Pilcher, 92 Ala. 477, 8 So. 757. As the bill and the answer are diametrically opposed to each other, so the evidence of complainant is in irreconcilable conflict with that of the respondent. This is usual in such cases. If the parties did not disagree, there would be no cause for an action. So the evidence of other witnesses must be looked to in determining the issue. Although the evidence shows that complainant is an illiterate, we think it abundantly shows he knew the difference between a deed and a mortgage. The bill does not aver any fraud or oppression on the part of respondent, and the proof likewise fails to disclose either. Confessedly, when the indebtedness of complainant to Cruise & Splawn, with the accompanying mortgage, was paid by and assigned to respondent, the relation of debtor and creditor arose between complainant and respondent, and it may be conceded the respondent in that respect occupied the position of mortgagee; but there is no reason why a mortgagee should not, by contract subsequent to the execution of the mortgage, purchase from the mortgagor the equity of redemption or obtain a release of the statutory right of redemption, provided he do so fairly and for an adequate consideration. "Circumstances may be such as to render such a sale mutually beneficial, and entirely optional on the part of the mortgagor, uninfluenced by the relation of the parties." Peagler v. Stabler, 91 Ala. 308, 310, 9 So. 157, and cases cited.

It is conceded that this debt formed a part of the consideration of the deed; but the point of controversy in this respect is whether or not the debt was extinguished by the giving and acceptance of the deed. "One of the tests, in cases of this sort, by which to determine whether the conveyance is a sale or a mortgage, is to be found in the question whether the debt was discharged or not by the conveyance." 1 Jones on Mort. § 267, 272; Adams v. Pilcher, 92 Ala. 476, 8 So. 757; Vincent v. Walker, 86 Ala. 333, 336, 5 So. 465; Martin v. Martin, 123 Ala. 191, 26 So. 525; West v. Hendrix, 28 Ala. 226; Perdue v. Bell, 83 Ala. 396, 398, 3 So. 698. As was tersely said in the case last cited: "A continuing liability, antecedent or contemporaneously contracted, is essential to the creation of a mortgage, though the relation of debtor and creditor may have existed before and at the time of the transaction." Peeples v. Stolla, 57 Ala. 53, 58; Knaus v. Dreher, 84 Ala. 319, 4 So. 287. What is the evidence in relation to this point? The wife of the complainant testified that the note and mortgage were turned over to him by the respondent when the deed was executed. The complainant admits that he received the note and mortgage. No note, or other evidence that complainant was to repay the money, or to show a continuing liability, was given or taken. While this fact is not conclusive, it is a strong circumstance; the value of it depending upon all the facts and circumstances with which it is connected, tending to show that the debt was extinguished and that the transaction was a sale and not a mortgage. Perdue v. Bell, 83 Ala. 396, 400, 3 So. 698; Adams v. Pilcher, 92 Ala. 474, 476, 8 So. 757; Rose v. Gandy, 137 Ala. 329, 34 So. 239; Robinson v. Farrelly, 16 Ala. 472, 478; Locke's Ex'r v. Palmer, 26 Ala. 312, 323; Conway v. Alexander, 7 Cranch (U. S.) 218, 3 L.Ed. 321.

But this is not all. The respondent testified that he turned over to the complainant the cattle covered by the mortgage, with the exception of one yearling; and complainant does not deny receiving them. He also admits that he was to give the yearling not turned over to the respondent for extra trouble to which respondent had been put. It is further shown by the testimony of the complainant that the cattle released and turned over to him were of the value of $61. This is some corroboration of the respondent's answer in respect to the terms on which, as therein averred, he agreed to pay the debt of complainant to Cruise & Splawn, and also of his testimony in that respect, and therefore tends to show that the debt was extinguished by the giving and taking of the deed. Moreover, the complainant nowhere in his evidence testifies that the liability on him was continuing after the execution of the deed. To convert the instrument into a mortgage, there must be a continuing, binding debt, in its fullest sense--"not a mere privilege reserved in the grantor to pay or not at his election, but a debt which the grantee can enforce as a debt, and for its collection may foreclose the conveyance as a mortgage. * * * If there is nothing to secure, there can be no security." Knaus...