Turner v. Kerr

• Decision Date: 31 August 1869
• Citation: 44 Mo. 429
• Parties: WILLIAM H. TURNER and WIFE, Appellants, v. ANDREW L. KERR and JAMES C. OGDEN, Respondents.
• Court: Missouri Supreme Court

44 Mo. 429

WILLIAM H. TURNER and WIFE, Appellants,

v.ANDREW L. KERR and JAMES C. OGDEN, Respondents.

Supreme Court of Missouri.

August Term, 1869.

Appeal from Fifth District Court.

Hall & Oliver, and Bassett & Van Waters, for appellants.

I. The conveyance and agreement admitted in the pleadings constitute a mortgage. (1 Washb. on Real Prop. 502.)

II. It is not necessary to insert the terms upon which the conveyance may be defeated in the deed by which it is made. It is sufficient if it be done in a separate instrument. (1 Washb. on Real Prop. 503; 3 Blackf. 51; 1 Hill. on Mort. 23, § 36.)

III. The deed in this case is absolute in its terms. But the agreement executed at the same time, and which is therefore to be considered a part of the same transaction, qualifies the terms and introduces conditions.

IV. A written agreement to reconvey upon the repayment of the consideration named in a deed, is a mortgage. (1 Hill. on Mort. 38, § 7; id. 105, § 9; 1 Washb. on Real Prop. 504; 3 Watts, 196; 6 Watts, 406, 409; 1 Metc. 199; 1 Allen, 108; 7 Wend. 249; 19 Wend. 520; 1 Sandf. Ch. 57; 12 How., U. S., 152; 1 Washb. on Real Prop. 516; 1 Hill. on Mort. 39, 40; 2 Blackf. 51; 17 Ohio, 356; 20 Ohio, 666; 4 Pick. 352; 1 Metc. 117; 1 Hill. on Mort. 115, § 14.) And the agreement to recovery may be made to a third person. (1 Hill. on Mort. 25; 2 Sumn. 540.)

V. Where there is a doubt whether the transaction be a mortgage or not, the court resolves the doubt in favor of the mortgagor. (1 Washb. on Real Prop. 516; 7 Mo. 327; 16 Mo. 145.)

VI. The transaction in proof created at least a trust in Kerr, and an equity in Turner, which chancery will enforce. (3 Hill. 95.)

VII. “Where the sale was for full value, but with an agreement on the part of the grantor that if he could, within a certain time, sell for more than the purchase money, with interest, the surplus should be paid over to the grantor, the transaction was held a mortgage.” (1 Washb. on Real Prop. 516; 1 Hill. on Mort. 40; Palmer v. Gurnsey, 7 Wend. 249.)

Vories & Vories, for respondents.

I. The transaction had no ingredient of a mortgage. No instrument is construed to be a mortgage where the relation of debtor and creditor does not exist. (1 Hill. on Mort., 3d ed., 95-107, notes and authorities there cited; 4 Kent, 144, 145; Slowey v. McMurray, 27 Mo. 113; Holmes v. Grant et al., 8 Paige, 243; Conway v. Alexander, 7 Cranch, 238; Brewster v. Baker, 20 Barb., S. C., 364; Lee v. Kilburn, 3 Gray, Mass., 594; Baker v. Thrasher, 4 Den. 493; Flagg v. Mann, 14 Pick. 467; 2 Sumn. 534.)

II. The debt of respondent Kerr against Turner was extinguished by the sale of lots, and the note given up to Turner in accordance with said written agreement.

III. The agreement in suit was in the nature of a conditional sale, and the party seeking relief under it must show a strict compliance on his part. (27 Mo. 113.)

CURRIER, Judge, delivered the opinion of the court.

A mortgage and a conditional sale are said to be nearly allied to each other, the difference between them being defined to consist in this: that the former is a “security for a debt,” while the latter is a purchase accompanied by an agreement to re-sell on particular terms. Whether the instrument forming the foundation of this suit, in combination with the conveyance therein referred to, construed in the light of surrounding facts and circumstances, constitutes a mortgage or conditional sale, is the prominent question in the case at bar. It has been elaborately and ably discussed by counsel, and is perhaps the only question requiring the particular attention of the court. In considering the subject, it is at once to be admitted that a conveyance to secure a subsisting debt is a mortgage, whatever may be the form of the deed, or however absolute it may appear upon its face. It is also true that, where the facts of the transaction leave it questionable whether a mort gage or a conditional sale was intended, the doubt is to be resolved in favor of the theory of a mortgage.

But it is not true, as a result of the adjudged cases, that a deed absolute in its terms, delivered in payment of a debt, is converted into a mortgage merely because the grantee therein (the creditor) gives a cotemporaneous stipulation binding him to reconvey on being reimbursed, within an agreed period, an amount equal to his debt and the interest thereon.

In passing on transactions of this class, the understanding and purposes of the parties thereto are to be considered and respected as in other cases. If they intended an extinguishment of the debt, and the vesting of an absolute title, subject only to an agreement to reconvey upon specific terms--as a payment of an amount equal to the canceled debt and interest--the objects of the arrangement are not to be defeated by turning the transaction into a mortgage, when the parties intended no such result. That the amount of money to be paid as a condition to the right to demand a reconveyance is measured by the amount of the debt and interest, is a circumstance of no controlling importance. It settles nothing. It may often happen that a creditor would consent to take an absolute title stipulating for a reconveyance, when he would reject a mortgage because of the delay and expense to which he might be subjected upon a foreclosure. Such arrangements operate beneficially to the debtor, securing to him additional time and renewed opportunities to extricate himself from embarrassment. Where the parties intend a conditional sale, and not a mortgage, and make their contracts in accordance with their intentions, it is not the province of the courts to circumvent and frustrate their intentions. It is nevertheless true that neither the intention of the parties nor their express contracts can change the essential nature of things. A conveyance to secure a debt is a mortgage, and the stipulations of the parties can not make it otherwise. But a conveyance to pay a debt is a totally different affair. If the conveyance extinguishes the debt, and the parties so intend, so that a plea of payment would bar an action thereon, a subsequent or cotemporaneous stipulation in the interest of the debtor, securing to him an opportunity to re-acquire the title, ought not to be construed to the creditor's prejudice. Such a transaction is no mortgage, but a conditional sale.

The whole subject of conditional sales, as distinguished from mortgages, is fully and ably discussed in 1 Hill. on Mort. 95, ch. 5. The rule is there laid down that a “sale with an agreement to re-purchase, though narrowly watched, is construed like any independent agreement between strangers, and the right of redemption restricted to the appointed time. So, also, the title passes to the vendee, and he has the intermediate rents and profits.” Numerous authorities are cited in support of this doctrine. In Conway v. Alexander (7 Cranch, 237), Chief Justice Marshall says: “To deny the power of two individuals capable of acting for themselves to make a contract for the purchase and sale of lands defeasible by the payment of money at a further day--or, in other words, to make a sale with a reservation to the vendor of a right to re-purchase the same lands at a fixed price and at a specified time--would be to transfer to the court of chancery, in a considerable degree, the guardianship of adults as well as...