Slowey v. McMurray

• Decision Date: 31 March 1858
• Citation: 27 Mo. 113
• Parties: SLOWEY, Plaintiff in Error, v. MCMURRAY et al., Defendants in Error.
• Court: Missouri Supreme Court

27 Mo. 113

SLOWEY, Plaintiff in Error,

v.MCMURRAY et al., Defendants in Error.

Supreme Court of Missouri.

March Term, 1858.

1. The test by which to determine whether a transaction is a mortgage or a conditional sale is this: if the relation of debtor and creditor remains, and a debt still subsists between the parties, it is a mortgage; if, however, there is no debt still subsisting, and the grantor has the privilege of refunding if he pleases by a given time, and thereby entitling himself to a re-conveyance, it is a conditional sale.

2. If the transaction is a conditional sale, the party seeking a re-conveyance to himself must strictly comply with the conditions imposed upon him.

Error to St. Louis Land Court.

The petition in substance sets forth that on the 14th day of August, 1855, plaintiff was the owner of a certain lot in the city of St. Louis; that he held the same subject to an encumbrance by deed of trust to secure two notes--one for $616, payable in twelve months--the other for $682, payable in twenty-four months from date; that when said note for $616 became due he was unable to pay the same; that McMurray loaned plaintiff $300, plaintiff agreeing to pay interest thereon at the rate of two and a half per cent. per month, for the period of six months; that he gave his several promissory notes to said McMurray for the sum thus loaned; that he delivered to said McMurray $316, with which, together with the money loaned as above stated, he, McMurray, paid the said note of $616 when it became due, and took and kept possession thereof; that, at or about the time the notes executed by him in favor of McMurray fell due, he paid to him $200, and took up two of the notes given by him; that, when the note for $682 became due, he, plaintiff, failed to pay the same, and the trustee advertised the lot in controversy for sale and proceeded to sell the same; that at and before this sale it was agreed between plaintiff and McMurray that plaintiff should remain in possession of the premises, and that McMurray should bid in the same in his own name for the benefit of plaintiff Slowey, and pay said note of $682, and that, if plaintiff would pay back to said McMurray said sum of $682, and also pay him the sum of $150, the balance remaining due and unpaid of said notes made and delivered as above stated by plaintiff to McMurray, within one year from the date of said sale, said McMurray would re-convey said premises to plaintiff; that said McMurray bid for said premises at the trustee's sale on the 14th of August, 1855, the sum of $1,005, and received the trustee's deed therefor; that in pursuance of said agreement the plaintiff remained in possession of the premises, intending in good faith to fulfill and perform said agreement; that on the 11th day of October, 1855, he paid McMurray forty dollars in part discharge of the sum of money which he had agreed to pay to said McMurray; that on the 17th day of November, 1855, McMurray sold the premises to one Ackerman for $1,100; that Ackerman took with notice; that at the date of the trustee's sale the whole indebtedness of plaintiff amounted to $840.36; that plaintiff, on the 14th of August, 1856, said McMurray being absent from his place of business and out of the state, offered to pay to the wife of McMurray $1,000, being more than the sum due McMurray; that he went to McMurray's place of business for the purpose of paying what was due and of demanding a deed; that said lot was worth $2,000; that at the trustee's sale the plaintiff had procured the attendance of other persons, and had made arrangements with them to purchase in the property for him, but he had been induced by McMurray to enter into the agreement above set forth.

The plaintiff prayed the court to annul the deed to Ackerman; that defendants be required to convey to plaintiffs, upon the payment of the debt due to said McMurray; that if the court should not order the deed to be cancelled, judgment be given against McMurray for the sum of $323, the overplus (with interest) of said McMurray's bid, after paying the sum of $682, also for $995, what the land and improvements were really worth over and above the sum of $1,005, bid by McMurray, etc.

Evidence was introduced tending to support the allegations of the petition. The case was tried by the court without a jury. At the close of the testimony the court gave the following instruction or declaration of the law: “On the evidence in this cause the plaintiff cannot recover.”

S. T. & A. D. Glover and Wingate, for plaintiff in error.

I. McMurray was a mortgagee. (12 Mo. 30; 1 Hoff. Ch. 31; 8 Paige, 243; 1 How. 118; 17 Mo. 61.) The transaction did not cease to be a mortgage simply because Slowey did not pay the debt as by agreement. (6 Gill & Jo. 275; 12 How. 151; 8 Paige, 243.) McMurray had no right to sell the land without foreclosure. (3 Dev. Eq. 234; 6 Ired. Eq. 39; 1 Paige, 618.) Having done so, he must account for the value of the plaintiff's interest in it. (1 Litt. 84.) The usurious interest paid by Slowey was a lawful credit on his debt. (3 Dana, 595.)

I. Z. Smith, for respondent McMurray.

SCOTT, Judge, delivered the opinion of the court.

As the light in which this, and contracts similar to that involved in this suit should be regarded, is a matter of some importance, and as cases of this kind are not of unusual occurrence, it may be as well to look a little into this matter.

We do not well see how the transaction between these parties can be regarded as a mortgage or a quasi-mortgage, or how the law of mortgages is applicable to it. It may be premised that contracts of this kind are narrowly watched, and courts lean strongly in favor of the right of redemption. Chancellor Kent says, that the distinction between a mortgage and a bill of sale is, that, if the relation of debtor and creditor remains, and a debt still subsists, it is a mortgage; but if the debt is extinguished by the agreement of the parties, or the money advanced was not by way of loan, and the grantor has the privilege of refunding if he pleases by a given time, and thereby entitling himself to a re-conveyance, it is a conditional sale. (4 Kent Comm. 145.) In the case before us we conceive that the relation of debtor and creditor had ceased to exist between the parties. The debt between them was extinguished. After the execution of the deed by the trustee to McMurray there was no evidence of any debt due by Slowey to McMurray. The witness Vogel proves that he delivered all evidences of indebtedness, on the part of Slowey to McMurray, to Slowey. McMurray then no longer had any remedy against Slowey. No remedy existed, nor was it reserved in terms. If the property had...