Spence v. Steadman
| Citation | 49 Ga. 134 |
| Parties | D. W. SPENCE et al., plaintiffs in err0r. v. ENOCH STEADMAN, defendant in error. |
| Decision Date | 31 January 1873 |
| Court | Supreme Court of Georgia |
Mortgage. Sale. Conditional deed. Debtor and creditor. Injunction. Before Judge Greene. Newton county. At Chambers. January 18th, 1873.
*Enoch Steadman filed his bill against D. W. Spence and O. S. Porter, alleging, in substance, that in June, 1871, he was the owner of a large property in Newton county worth $100,000 00, consisting of land on which was a cotton factory; that he was considerably in debt; that his debts were pressing and he was desirous to raise money; that with this view he made a written proposal to defendants to sell them his property at $50,000 00, $40,000 00 to be used for paying his debts, and $10,000 00 to remain in defendants' hands to be invested in new machinery under his order. This written proposal stipulated that cotemporaneous with the sale, defendants were to give a bond to resell him the property at the end of 1872 for $50,000 00 cash, and to lease it to him for 1872 for $10,000 00 rent, payable quarterly, with the further stipulation that if he paid the rent promptly, hewas to have the right to keep the property, under lease, on the same terms, for 1873, and that the right to rebuy, in that event, was to be extended. It was further stipulated that complainant was to keep the property insured for $30,000 00 during the lease. The bill stated that the defendants accepted the proposition, and that on the 19th day of September a deed, lease and bond were executed as proposed, the deed expressing $40,000 00 as consideration; that the $40,000 00 was not paid over to the complainant, but was left with defendants to be paid to certain judgments, etc., and other claims pressing complainant.
The bill further charged that the whole scheme was a mutual device to loan and borrow money at illegal interest and avoid the usury laws; that such was the intention of complainant, and that defendants participated in this purpose and intent.
The bill further charged that defendants had not paid the money to his debts, as they agreed; that they had bought up some at a discount; had other judgments transferred to themselves, and were about to levy them on his other property.
The bill further charged that the rent was fixed at $10,000, because that was the amount of the interest agreed upon for $50,00000, to-wit: twenty percent. 1 he bill further charged *that having determined not to increase the machinery as contemplated, he had never ordered it, and that the $10,000 00 had never been advanced by defendants, as contemplated. The bill also showed that he had paid $8,000 00 rent for 1872, to-wit: twenty per cent on $40,000 00, but that defendants claimed the whole $10,000 00, and were threatening to eject him as a tenant holding over, unless he paid the same, as well as insisting that his right to rebuy, or lease for another year and then rebuy, was dependent on his payment of the whole of the said $10,000 00 rent each year promptly. The bill then prayed that an account be had between them of the debt contracted, the usury and the payment, and offered to pay what might be found really due. The bill also prayed that the defendants might be enjoined from ejecting him and from levying any fi. fas. defendants might control on any of the complainant's property, and application was made to the Chancellor for an injunction until the final hearing. The Chancellor called on defendants to show cause, and they answered.
They admitted the written offer of complainant to sell, lease and rebuy, but positively denied that there was any agreement or understanding in any way that it was a loan of money; that it was a positive sale, just as stated in the deed, lease and bond, and no more or no less; denied that there was any intent expressed or understood that it was a loan or a device to evade the usury laws; denied that the money was not paid, but set up that either on the day of the transaction, or soon afterward, they had fully paid the $4o, ooo 00, dollar for dollar, to the complainant's debts, under his direction, and according to the agreement at the time; that they had paid the debts, dollar for dollar, and paid only such debts as complainant had directed, and that such debts and judgments had been settled (not transferred to them,) and turned over as settled by them to the complainant, and they set forth these payments, receipts, etc., in detail. They admitted that they had now in their control certain judgments againstcomplainant, but state that they had bought them with their own funds, *and to protect their property thus purchased, and insisted that they had a right to collect them from complainant\'s other property. They admitted that they had never advanced the $10,000 00 for the new machinery, but said they had been ready to do it, but the complainant had never asked for it by ordering the machinery. They denied that the property was worth $100,000 00, but insisted that it was worth little, if any, more than $40,000 00, They offered several affidavits, especially that of the scrivener who wrote the papers sustaining the answers, as to the fact that a sale, and not a mortgage or security, was intended. The complainant also filed affidavits in aid of his charge as to the value of his property, as well as to some sayings of the defendants, to the fact that they did not want the property, but only to get good returns for their money and be safe.
The Chancellor granted the injunction as prayed, and the defendants excepted.
J. J. Floyd, for plaintiffs in error.
B. H. Hill & Son; Clark & Pace; Speer & Stewart, for defendant.
A sale with an agreement to repurchase, or as is usually termed a conditional sale, though nearly allied to a mortgage, is yet very distinct in its effect, if the terms of the condition be not complied with. By the strict rules of the common law even in the case of a mortgage, if payment was not made according to the agreement, the estate was forfeited, and the title remained absolutely in the mortgagee. But Courts of equity, taking into consideration the important fact that it was not the intent of the parties to sell, but only to secure the payment of a debt, came to the relief of the mortgagor and gave him the right of redemption even after condition broken. The fundamental idea of the doctrine of the equity of redemption in a mortgagor, was that it was not the intentof the parties to sell and buy—that the transaction was, in truth an arrangement *to secure the payment of money, and that on the payment of the money due, with lawful interest, the whole intention of the parties was complied with. But when cases arose in which it appeared that the loan or security of money was not the intent, butthat there was a real intent to sell and fix a condition of repurchase, which might or might not be afterwards performed by the mortgagor, all the foundation for the interference of equity was gone, and the parties were necessarily left to their contract as they made it. In reference to a conditional sale, Chief...
To continue reading
Request your trial