Stephens v. Allen

• Decision Date: 14 January 1884
• Parties: STEPHENS v. ALLEN and others.
• Court: Oregon Supreme Court

3 P. 168

11 Or. 188

STEPHENS v. ALLEN and others.

Supreme Court of Oregon

January 14, 1884

Appeal from Multnomah county.

Geo. H. Williams and B. Killin, for appellants.

Thayer & Williams and H.T. Bingham, for respondent.

LORD J.

The object of this suit is to have certain conveyances of land made by the plaintiff to the defendants by deeds absolute upon their face, declared to be mortgages, to secure an accounting for so much of said lands as have been sold by the defendants, and to compel them to reconvey the residue of said lands to the plaintiff. The principal question involved and to which the argument is almost wholly directed, is whether the transaction between the parties was an absolute sale of the lands in dispute, or a pledge of them to secure the payment of the debt and expenses which the defendants paid and assumed on behalf of the plaintiff. As such a transaction receives its character from what the parties intended to make it at its inception, the ascertainment of that intention always becomes the important inquiry. This necessarily requires evidence of the situation of the parties, of the price fixed in connection with the value of the property, the conduct of the parties before and after and all the surrounding facts and circumstances so far as they are adapted to explain the real character of the transaction. "As the equity upon which courts act," says FIELD, J., "arises from the real character of the transaction, it is of no consequence in what manner this character is established, whether by deed or other writing, or by parol. Whether the instrument--it not being apparent upon its face--is to be regarded as a mortgage, depends upon the circumstances under which it was made and the relations subsisting between the parties. Evidence of these circumstances and relations is admitted, not for the purpose of contradicting or varying the deed, but to establish an equity superior to its terms." Pierce v. Robinson, 13 Cal. 116; Peugh v. Davis, 96 U.S. 336; Cornell v. Hall, 22 Mich. 377; Campbell v. Dearborn, 109 Mass. 130; Brant v. Robertson, 16 Mo. 143; Horn v. Keteltas, 46 N.Y. 608; Jones, Mortg. § 258. As a consequence of this doctrine, each case must be scrutinized and judged by its own surrounding facts and circumstances; and when the result of the evidence is to produce doubt, the courts incline to construe the instrument to be a mortgage. Conway's Ex'rs v. Alexander, 7 Cranch, 218; Edrington v. Harper, 3 J.J.Marsh. 354; Jones, Mortg. § 279.

It appears by the evidence that at the time the transaction in question took place "the times were unusually dull," and the sales of real estate, in that vicinity, slow and low in price. By a series of untoward circumstances the plaintiff had become financially embarrassed, and his property, much of it consisting of city lots, mortgaged and about to be subjected to a forced sale. In this emergency, and to prevent what the plaintiff conceived would result in the sacrifice of his property, he sought the counsel and assistance of the defendants, who were his friends of many years, and whom he had accommodated and assisted with his means when the circumstances of their lives were reversed, and which they acknowledged had materially aided them in securing the competency they then enjoyed. Indeed, it is to the credit of the defendants that the evidence is replete with so many acts and declarations which indicate the deep sense of their gratitude and obligation to him, their genuine sympathy at his embarrassment, and disposition to afford him whatever assistance or relief they could. The result was that they determined to help him out of his financial troubles and difficulties in which he was involved. They agreed to raise the money and to pay off the indebtedness of the plaintiff, and that he should deed to them, as security for the same and the interest that might accrue thereon, all his property; that the defendants should have the right to sell such property in parcels, as purchasers could be obtained, and that the money realized from such sales should be applied to the indebtedness assumed by him on his behalf, and also accruing interest and expenses attending the sales of the same; that the defendant Allen should give his personal attention in conjunction with the plaintiff in making sales of the property, and that he should be allowed a reasonable compensation therefor, and that after the payment of the amount so due the defendants, including interest and expenses of management, the plaintiff was to have back the entire residue of property so deeded. In compliance with this agreement the plaintiff, by deeds absolute upon their face, conveyed to the defendants all his property, and they paid off his indebtedness, and the defendant Allen entered upon the business of negotiating sales, and did thereafter affect sales of a considerable portion of the same, which he applied to the payment of the principal and interest so due by him to them, and the expenses attending the management of the property. Let it be noted here that the indebtedness of the plaintiff, which the defendants paid, was only about half the value of the property, and that he remained in possession of the most valuable portion of the property, the sales referred to being principally city lots.

It is objected, conceding the facts to be true, that there was no debt created by the transaction between the plaintiff and defendants. But it is said in Campbell v. Dearborn, 109 Mass. 130, that "a mortgage may exist without any debt, or other personal liability of the mortgage. If there is a large margin between the debt or sum advanced and the value of the land conveyed, that, of itself, is an assurance of the payment stronger than any promise or bond of necessitous borrower or debtor." And in the case of Russell v. Southard, 12 How. (U.S.) 139, where the question raised was that there was no promise to repay the money, the court say:

"The memorandum does not contain any promise by Russell to repay the money, and no personal security was taken, but it is settled that this circumstance does not make the conveyance less a mortgage."

The fact that no note or other personal obligation was given is not conclusive of the nature of the transaction. A debt may well exist without these, and when the whole evidence of it rests in the memory of witnesses. Brant v. Robertson, 16 Mo. 143. But the fact is a debt was created by the transaction. When the defendants paid to Ladd and Tilton the amount of the indebtedness the plaintiff owed them, the plaintiff became the debtor of the defendant for that amount, because it was paid at his request and on his account. The want of an express promise to repay in such case is not fatal to the transaction, for the law will imply a promise to do so, and, as was said in Southard v. Russell, supra, an action of assumpsit would lie. Note the language of Judge STORY in Flagg v. Mann, 2 Sumn. 534:

"Now, it seems to me clear, upon admitted principles of the law, that, on the payment

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