Case ID: ohio-app_4/html/0406-01.html
Source: Caselaw Access Project
Author: {"author": "Sayre, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Fleming et al. v. Minx et al.
    
      Equity — Deed declared a mortgage, when — Partition does not lie, when — Pleirs and devisees of lessor — Ninety-nine year lease.
    
    1. A court of equity will adjudge a deed absolute to be a mortgage at the instance of either grantor or grantee, or their representatives.
    2. But such adjudication will not be made, at the instance of the personal representative, for the sole purpose of making' it possible for himi to collect the proceeds of such mortgage and distribute the same. A court of equity will declare a deed absolute to be. a mortgage only when it is necessary to prevent or relieve from imposition or injustice.
    3. The heirs at law and devisees of the lessor in a lease for ninety-nine years, renewable forever, with an option in the lessee to purchase the premises leased at a stated time each year during the continuance of the lease, can not compel partition of the same.
    (Decided December 30, 1914.)
    
      Appeal: Court of Appeals for Athens county.
    On the 6th day of November, 1908, Elizabeth Nelson, one of the defendants, made application to Daniel Fleming for a loan of $15,000. Fleming was unwilling to take a mortgage in the usual way, and it was agreed that Elizabeth Nelson should convey to him certain premises in the city of Athens by deed, which she did, and that' Fleming should execute and deliver to Elizabeth Nelson a lease for ninety-nine years, renewable forever.
    The lease provides for an annual rental of $900 per year; that lessee shall pay all taxes and assessments that may be levied during the demise upon the property; that for the -payment of the rents, taxes and assessments the lessor shall have a first lien upon the term thereby created; that upon failure to perform any covenant of the lease by the lessee the lease is to cease and determine at the election of the lessor by giving the lessee thirty days’ notice of such election “before such election; and upon such forfeiture and election the said lessor is to have the right to repossess, occupy and enter said premises;” that “lessor hereby covenants and agrees * * * that all rents, taxes and assessments herein specified being paid, and all the other covenants * * * being performed by the said lessee, he, the lessor, will at the expiration of any year after the first day of December, 1908, convey said premises to the said lessee by a good and sufficient deed of general warranty * * * upon the payment to the lessor by the lessee of the sum of fifteen thousand dollars.”
    The final stipulation of the lease is as follows:
    
      “It is agreed by the parties that the payment of Five Hundred Dollars, or any multiple thereof, may be made on said purchase money at the end of any year after December 1, 1908, together with six per cent interest on said payments from the date of the last payment of rents; and such payments when made, shall be applied on the purchase price of $15,000.00 in the event that said Elizabeth Nelson shall elect to purchase the same, and from the time of such payments, if made, the rental on said premises shall be at the rate of six per cent on the balance of the purchase price that may be due from time to time after such payments shall have been made.”
    Subsequently Daniel Fleming died, and in December, 1913, the plaintiffs, “as devisees and heirs at law of Daniel Fleming, deceased,” filed their petition for partition, seeking to partition the premises' described in the deed and lease.
    By leave of court W.. K. Scott, as administrator with the will annexed of the estate of Daniel Fleming, deceased, filed an answer, in which he avers that Elizabeth Nelson is the owner in fee simple of the premises and that the deed made by her to Fleming is a mortgage, and asks for a dismissal of the petition and for all further relief to which he may be entitled.
    Elizabeth Nelson answered and averred “that she is not advised, and does not know, what the legal effect of said instrument is as between her and said Daniel Fleming, as to whether the same constitutes a mortgage, a sale, or creates other rights, and that she is not interested in said question except to have her rights as created by said transaction fully protected in- any order, judgment or decree that may be rendered in said action * *
    The defendant, Marcia E. Linscott, in her answer, denied that anyone of the parties was entitled to the possession of the premises.
    
      Messrs. Grosvenor, Jones & Worst ell, for plaintiffs.
    
      Messrs. I^czvis & Keenan, for W. K. Scott, administrator.
    
      Mr. A. A. Koons, for Elizabeth Nelson.
   Sayre, J.

The administrator with the will annexed of the estate of Daniel Fleming contends that the deed constitutes an equitable mortgage and desires an adjudication to that effect so he can foreclose the same and distribute the proceeds, while the plaintiffs claim that the transaction between Daniel Fleming and Elizabeth Nelson is a conditional sale and seek partition.

The contest here is between the administrator with the will annexed and the devisees and heirs at law of Daniel Fleming. Elizabeth Nelson is not interested in the matter except that her rights, whatever they may be, shall be protected.

So we are called upon to decide whether a court of equity will construe a deed absolute on its face to be a mortgage, at the instance of the personal representative of the grantee of such deed, for the sole purpose of enabling such representative to collect and distribute the proceeds.

In 3 Pomeroy’s Equity Jurisprudence (3 ed.), Section 1196, is the following: -

. “The general doctrine is fully established, and certainly prevails in a great majority of the states, that the grantor and his representatives are always allowed in equity to show, by parol evidence, that a deed absolute on its face was only intended to be a security for the payment of a debt.”

The right here seems to be limited to the' grantor and his representatives, and not to extend to the grantee and his representatives. But in McMillan v. Bissell, 63 Mich., 66, 29 N. W. Rep., 737, and Kellogg v. Northrup, 115 Mich., 327, 73 N. W. Rep., 230, it was held that the grantee or his representatives may show that a deed absolute is in fact a mortgage. It would seem just that either grantor or grantee, or their representatives, should have the right, under proper circumstances, to show what the real transaction was. No reason can be assigned why one should not have the same right as the other.

The precise question to be determined then is: Under what circumstances will a court of equity look beyond a deed absolute and receive evidence outside the same to determine what the real transaction was between the parties ?

An examination of a number of cases will show that an attempt to convert.that into an absolute sale which was intended as a security for a loan is treated as a fraud. Morris v. Exr. of Nixon et al., 1 How., 118, 126; Russell v. Southard et al., 12 How., 139; Babcock v. Wyman, 19 How., 289; 3 Pomeroy’s Equity Jurisprudence (3 ed.), Section 1196.

Usually the value of the property conveyed is in excess of the money loaned, and the grantee, by insisting upon the transaction as appears from the language of the deed alone, will thus secure an unfair advantage, and at the instance of the grantor a court of equity will hear evidence, and if the deed was given to secure a loan will declare the same to be a mortgage. The occasion for this action of the court is found wholly in the injustice which will result to the grantor. Consequently, if the grantor is satisfied with the transaction and it appears that no unfairness, imposition or injustice can result to the grantee, then the court will leave the deed to stand as an absolute conveyance.

A court of equity will treat a deed absolute as a deed absolute, unless by declaring it to be a mortgage injustice can be prevented.

In the case under consideration the grantor, Elizabeth Nelson, makes no complaint in regard to the transaction. From her answer it appears that she is willing to allow the deed to stand as a deed absolute. It appears that neither the heirs, devisees nor personal representative of Daniel Fleming will suffer any imposition or injustice by allowing the deed to stand as a deed. There is, therefore, no reason to examine the facts surrounding the transaction in order to determine whether the deed was made as a security for a loan. The only possible reason which the administrator with the will annexed can have for desiring the court to treat the deed as a mortgage is that he may collect the money and distribute the same in the course of administration. This is no ground for the action of a court of equity.

The plaintiffs desire partition of the premises conveyed by Elizabeth Nelson to Daniel Fleming, and the right to partition is contested by the defendant, Marcia Linscott, one of the heirs of Daniel Fleming.

The lease to Elizabeth Nelson for ninety-nine years, renewable forever, with option to purchase, is an estate in perpetuity on condition. It may be defeated by the lessee exercising the option to purchase, as a life estate may be defeated by the death of the life tenant.

In Tabler v. Wiseman et al., 2 Ohio St., 207, it was held that the heirs at law could not make partition in case the entire premises were assigned to the widow as her dower; and the reasons assigned for such holding were that a tenant in common could not derive any benefit from the partition, that where the property is subject to a life estate exclusive possession can not follow the judgment, and because the commissioners could not make an equitable division if permitted to speculate upon the probable condition of the property at the termination of the life estate.

Now all these reasons apply with equal force to the situation in hand. The tenants in common have not the present right of possession to any part of the premises which they desire to have partitioned. Partition, therefore, will not lie.

Judgment accordingly.

'Walters and Jones, JJ., concur.