Talley v. Eastland

• Citation: 82 S.W.2d 368,259 Ky. 241
• Parties: TALLEY et al. v. EASTLAND et al.
• Decision Date: 10 May 1935
• Court: Court of Appeals of Kentucky

82 S.W.2d 368

259 Ky. 241

TALLEY et al. v. EASTLAND et al.

Court of Appeals of Kentucky

May 10, 1935

Appeal from Circuit Court, Caldwell County.

Suit by Mrs. Tylene Talley and others against A. A. Eastland and another. From a decree for defendants, plaintiffs appeal.

Reversed for consistent proceedings.

R. W Lisanby and Alvin Lisanby, both of Princeton, for appellants.

Marshall P. Eldred and George O. Eldred, both of Princeton, for appellees.

DRURY Commissioner.

From a judgment holding a certain instrument to be a deed and not a mortgage, Mrs. Tylene Talley et al. have appealed.

The Facts.

Some years ago R. E. Butler died intestate and without issue leaving his mother, Nancy Hill, as his sole heir. The First National Bank of Princeton, Ky. became his administrator.

Among the assets that came into its hands were some notes signed by J. Fred Talley and secured by mortgages upon a farm in Caldwell county, Ky. Subject to these liens this farm then belonged to J. Fred Talley in fee simple.

On October 3, 1930, Mr. and Mrs. Talley executed an instrument which was that day acknowledged and recorded, the essential parts of which are:

The Instrument in Question.

"This deed made and entered into by and between J. Fred Talley and Tylene Talley, his wife, of Princeton, Caldwell County Kentucky, as parties of the first part and the First National Bank, of Princeton, Kentucky, Trustee, party of the second part. Witnesseth, That for and in consideration of the sum of ($2,000.00) two thousand dollars and the cancellation of all indebtedness held by the estate of R. E. Butler, deceased, against the land hereafter described and hereby conveyed receipt of which is hereby acknowledged and of the covenants and agreements hereinafter contained, the said parties of the first part have this day bargained and sold and do by these presents grant, bargain, sell and convey unto the said party of the second part, as Trustee aforesaid the following described real estate, viz: (We omit the description.) But it is understood and agreed and this deed is made on the express condition that the said J. Fred Talley and Tylene Talley, his wife, parties of the first part are hereby given one year from date of this deed to redeem said land by paying said sum of $2000.00 without interest but otherwise this deed shall become absolute."

Mr. and Mrs. Talley continued to live upon the farm, to cultivate and improve the same. Mr. Talley listed it for taxes in his name, paid the taxes thereon, and insured it in his own name with a clause in the policy making the loss payable to the First National Bank, mortgagee.

On October 22, 1931, the bank conveyed this property to the above-named Mrs. Hill. Mrs. Hill thereafter died leaving a will by which she devised this property to her other children, M. F. Hill et al. The insurance was now made payable to M. F. Hill, mortgagee, as his interest may appear.

In 1931 the bank made this deed:

"This Deed of Conveyance, made and entered into this 22 day of October, 1931, by and between the First National Bank, of Princeton, Kentucky, Trustee and Administrator of the estate of R. E. Butler, deceased, intestate as party of the first part, and Nannie Lowery Hill, of Piggott, Arkansas, sole heir of R. E. Butler, deceased, intestate, as party of the second part.

"Witnesseth: That whereas, the real estate hereinafter described and hereby conveyed was, on the 3rd day of October, 1930, conveyed by J. Fred Talley and wife to the aforesaid Trustee, to be held in trust by said Trustee for a period of one year, subject to the right of said grantors to redeem same upon payment to said Trustee of the sum of $2000.00 without interest, same being for a debt owed to the estate of said decedent, R. E. Butler and his heirs, said grantors, J. Fred Talley, and wife, have failed to pay to said Trustee said amount, or any part thereof, and said trust period has expired. "Now therefore, in consideration of the premises, and in order to vest the legal title to the land hereinafter described in the said party of the second part, who is the sole heir and beneficiary of the estate of the said R. E. Butler, deceased, etc."

On May 4, 1934, M. F. Hill et al. conveyed this property to the appellees, A. A. Eastland and wife. J. Fred Talley was killed in a railroad accident a few days thereafter. He died intestate, and whatever rights he had in this property passed to his widow Tylene Talley and his six children of whom five were infants. Mrs. Talley qualified as guardian of these infants, and in her own right and as guardian of these infants she joined with her adult son in this suit against Mr. and Mrs. Eastland to recover this land, seeking to have the first deed copied above construed to be a mortgage, and that they be permitted to pay their debt, etc.

What Is this Instrument?

It will be observed the grantee named is "the First National Bank, of Princeton, Ky. Trustee"; but there is not another word indicating for whom or for what it is trustee, and the question is: What is the effect of the use of this word?

We are persuaded by the opinion in Sansom, Trustee, v. Ayer & Lord Tie Co., 144 Ky. 555, 139 S.W. 778, that this word is merely descriptive and nothing more. When the bank attempted to convey this property to Mrs. Hill (see that deed supra), it described itself as "Trustee and Administrator of the estate of R. E. Butler deceased," and further on it says this property was to be held by it as trustee for a period of one year subject to the right of the grantors to redeem it by paying the $2,000.

One thing is certain, if this was enough to make this a deed of trust to be held by the bank awaiting the payment of this $2,000 and interest, then it is only a mortgage, for such, deeds of trust are uniformly held so to be. See Jones on Mortgages (8th Ed.) § 77; 41 C.J. p. 290, § 31; 19 R.C.L. p. 269, § 40. However, the parties in their briefs have not discussed this feature at all, so we shall now take up and consider this instrument in the light of their very able discussion of it, for they were in immediate contact with the parties; they got their impressions, of what this paper is, from the parties themselves; so we shall dismiss this idea and give our attention to the question they have presented.

Mortgage or Conditional Sale.

Whether such a transaction as this is a mortgage or a conditional sale is a question that has puzzled the courts of America no little, as will be seen by the case of Dickens v. Heston, 53 Idaho 91, 21 P.2d 905, 90 A.L.R. 944 and the 14 pages of annotations following it.

By the case of Parks v. Mulledy, 49 Idaho 546, 290 P. 205, 79 A.L.R. 934 and the 21 pages of annotations following it.

By Sauer v. Fischer, 247 Mich. 283, 225 N.W. 518, 65 A.L.R. 766 and the 9 pages of annotations following it.

By Pollak v. Millsap, 219 Ala. 273, 122 So. 16, 65 A.L.R. 110 and the 4 pages of annotations following it.

By Mankin et al. v. Dickinson et al., 76 W.Va. 128, 85 S.E. 74, Ann.Cas. 1917D, 120 and 4 pages of notes following it.

Other annotated cases are: Plummer v. Ilse, 41 Wash. 5, 82 P. 1009, 2 L.R.A. (N. S.) 627, 111 Am.St.Rep. 997; Keithley v. Wood, 151 Ill. 566, 38 N.E. 149, 42 Am.St.Rep. 272; Friedley v. Hamilton, 17 Serg. & R. (Pa.) 70, 17 Am.Dec. 638; Harbison v. Lemon, 3 Blackf. (Ind.) 51, 23 Am.Dec. 376; Wallace v. Smith, 155 Pa. 78, 25 A. 807, 35 Am.St.Rep. 868; Edrington v. Harper, 3 J. J. Marsh. (Ky.) 353, 20 Am.Dec. 145; Hutzler Bros. v. Phillips, 26 S.C. 136, 1 S.E. 502, 4 Am.St.Rep. 687, and divers others too numerous to mention.

The result of an examination of these is the conclusion that if there is any doubt whether the transaction is a mortgage or a conditional sale, it will be held to be a mortgage, and that the nature of the instrument is to be determined from the intent of the parties ascertained from the circumstances of the case.

Many facts that might have helped in the solution of this problem have not been brought out. For example, we would like to know the relation other than contractual, if any, between R. E. Butler and Talley and his family. We would like to know the date of R. E. Butler's death, but that does not appear. The same is true of Talley's death and that of Mrs. Hill. However, we can approximate the date of Butler's death from the qualification of his administrator which took place on February 5, 1930.

Talley then owed R. E. Butler's estate a note for $1,500 secured by mortgage, which had been due since December 23, 1920, and a note for $1,000 secured by mortgage which had been due since December 30, 1921. What, if any, payments had been made on these notes, and when, does not appear; but certainly some had been made else these notes and interest would have amounted to about $3,800, and no one claims any such sum was due.

It is evident that Talley was overwhelmingly indebted when he made the deed of October 3, 1930. In Conway v. Alexander, 7 Cranch, 218, 237, 3 L.Ed. 321, Chief Justice Marshall wrote this: "Lenders of money are less under the pressure of circumstances which control the perfect and free exercise of the judgment than borrowers, the effort is frequently made by persons of this description to avail themselves of the advantage of this superiority, in order to obtain inequitable advantages. For this reason the leaning of Courts has been against them, and doubtful cases have generally been decided to be mortgages." Practically the same is to be found in 41 C.J. p. 288, § 24. Also see this which is copied from 41 C.J. p. 340, § 102: "If the grantor of a deed absolute in form, but alleged to have been intended as a security, was financially embarrassed at the time of its execution, being sorely pressed for money and therefore, at the mercy...