Spataro v. Domenico

• Decision Date: 10 March 1950
• Citation: 96 Cal.App.2d 411,216 P.2d 32
• Court: California Court of Appeals Court of Appeals
• Parties: SPATARO et al. v. DOMENICO et al. Civ. 17073.

Page 32

216 P.2d 32

96 Cal.App.2d 411

SPATARO et al. v. DOMENICO et al.

Civ. 17073.

District Court of Appeal, Second District, Division 3, California.

March 10, 1950.

Elbert E. Hensley, Los Angeles, for appellants.

Daniel W. Gage, Los Angeles, for respondents.

VALLEE, Justice.

Appeal by plaintiffs from a judgment for defendants in an action to have a grant deed, absolute in form, declared a mortgage, for an accounting, for a reconveyance of the properties to plaintiffs, and to quiet their title thereto.

The complaint, filed May 15, 1947, alleged that on March 15, 1938, plaintiffs, as security for a loan of $500, executed a grant deed to Domenico Domenico and Madalena Domenico, husband and wife, as joint tenants, covering two parcels of real property in Los Angeles County; that the deed, though absolute in form, was intended and agreed by the parties to be a mortgage on the property as security for the payment of the $500 loan; that the reasonable market value of the property at the time the deed was executed was $19,000; and that the loan had been fully paid. Defendants denied these allegations except the execution of the deed, and pleaded laches, estoppel, statute of frauds, and that the deed had been executed for a valuable consideration and not given as security for any debt or obligation.

The court found that on March 15, 1938, plaintiffs executed the grant deed for a valuable consideration; a good and sufficient consideration was paid by the grantees; the deed was intended as an absolute conveyance and not as a mortgage; plaintiffs were guilty of laches. Judgment was for defendants, from which plaintiffs appeal.

In determining whether a deed, absolute on its face, is a mortgage, the intention of the parties is controlling, and in the absence of any writing this intention is manifested by, and inferred from, all of the facts and circumstances of the transaction under which the deed was executed, taken in connection with the conduct of the parties after its execution. Morris v. Rickmeyer, 28 Cal.App.2d 253, 257, 82 P.2d 472; 17 Cal.Jur. 744, sec. 45. Whether a deed absolute is in fact a mortgage is a mixed question of law and fact. Gronenschild v. Ritzenthaler, 81 Cal.App.2d 138, 144, 183 P.2d 720. The test by which to determine whether the instrument is a mortgage is--was there a subsisting, continuing debt and a continuation of the relation of debtor and creditor? The fact is not only a circumstance tending to show that the conveyance is a mortgage, but is indispensable to the existence of a mortgage; if there is no indebtedness for which the conveyance is security, there can be no mortgage. 17 Cal.Jur. 783, sec. 83. Ordinarily, there must be an agreement, express or implied, on the part of a mortgagor to pay the mortgagee a sum of money. Where there is no promise to pay, the deed will not be construed to be a mortgage. Goodfellow v. Goodfellow, 219 Cal. 548, 554, 27 P.2d 898; Davis v. Stewart, 31 Cal.App.2d 574, 577, 88 P.2d 734; 17 Cal.Jur. 784, sec. 84.

The presumption is that a deed is what it purports to be and one who seeks to overcome such presumption has the burden of producing clear and convincing proof. Beeler v. American Trust Co., 24 Cal.2d 1, 7, 147 P.2d 583. Such evidence must be "clear, convincing, and conclusive--something more than that modicum of evidence which appellate courts sometimes hold sufficient to warrant a finding where the matter is not so serious as the overthrow of a clearly express deed, solemnly executed and delivered." Stevens v. Fetterman, 76 Cal.App. 741, 753, 246 P. 102, 107. Whether the evidence offered to change the ostensible character of an instrument is clear and convincing is a question for the trial court and its determination in favor of either party upon conflicting or contradictory evidence is not open to review on appeal. Beeler v. American Trust Co., 24 Cal.2d 1, 7, 147 P.2d 583; Baines v. Zuieback, 84 Cal.App.2d 483, 488, 191 P.2d 67.

The facts stated in the light most favorable to resondents are these:

The real property involved was, prior to March 15, 1938, owned by plaintiffs for about forty years and consists of two parcels, non-contiguous, but located within close proximity to each other. In 1936 and up to March 15, 1938, plaintiffs were in serious financial straits. One June 29, 1935, the properties had been sold for delinquent taxes. They were encumbered with a mortgage and plaintiffs were delinquent in their payments thereon. In the early part of 1936, plaintiff, Vito Spataro, approached his nephew, Peter Principi, about renting a grocery store on one of the parcels of property, informing Peter he was afraid he might lose the properties, and needed the rental to meet payments due the bank. The grocery store which Vito sought to rent was in an extremely run-down condition and Peter was hesitant about renting it. Thereafter, defendant, Mrs. Domenico, Peter's mother-in-law, was approached by both Vito and Peter respecting the advancement of money for the necessary repair work and, subsequently, she advanced approximately $1000 therefor with the understanding that it was to be repaid by plaintiffs each month at the rate of $17.50, being one-half of the $35 a month plaintiffs were to collect from Peter. In addition, Mrs. Domenico advanced $300 to plaintiffs to cover certain delinquent mortgage payments and taxes.

Mrs. Domenico testified that she spoke to Vito regarding the money he owed her and 'all the time he said, 'Can't pay.' * * * I say, 'What I going to do? Am I going to lose this money?' He say, 'When I work I pay you.'' She testified that she was never repaid any part of the $1000 or $300, although she asked Vito for it many times. 'Sometime' in 1937, Vito again approached Peter about borrowing money to meet part of the mortgage so the bank would renew the loan. Peter was unable to loan plaintiffs any money. Vito then told Peter, "I am going to burn up that place down on Marengo so the bank won't get it.' He said, 'The only way they are going to get it is burned down at ashes. That is the only way they are going to get it." The day following this conversation, Mrs. Spataro came to the home of Peter and his wife and told them her husband had burned the Marengo Street property and was in jail. Subsequently, the loss was...