Case Title: Sargent v. Hamblin

Citation: 260 P.2d 919, 57 N.M. 559

Docket Number: 

State: new-mexico

Court: New Mexico Supreme Court

Date: 1953-09-04T00:00:00Z

Document:
260 P.2d 919 (1953) 57 N.M. 559 SARGENT et al. v. HAMBLIN et al. No. 5620. Supreme Court of New Mexico. September 4, 1953. *920 Harry L. Bigbee and Donnan Stephenson, Santa Fe, Quincy D. Adams, Albuquerque, for appellants. Seth & Montgomery and William R. Federici, Santa Fe, for appellees. LUJAN, Justice. The parties in this opinion will be referred to as plaintiffs and defendants as they appeared in the lower court. On May 8, 1951, plaintiffs filed suit against the defendants, Ursula Looney Hamblin and Frank L. Hamblin, her husband, to remove a cloud on their title, and to quiet their title, to a certain tract of land, containing 20,537 acres, located in Rio Arriba County. They alleged that they owned and were in possession of the land described in their complaint, and that they had obtained title through a warranty deed from the defendants, and one John Looney, dated February 9, 1926. That on December 30, 1926, the defendant, Ursula Looney Hamblin, solely, prepared a statement which was acknowledged in the State of Texas, and was on January 20, 1927, recorded in the records of the County Clerk's office of Rio Arriba County. That said statement recites that the conveyance of the property in question was as security for money loaned to the grantors by the grantees. That the matters and things set out in said "agreement" of the defendant, Ursula Looney Hamblin, are false and untrue, and constitute a cloud upon their title. That since the recording of said statement, the defendants had made no claim of title or of interest in or to the lands described in their complaint until the month of April, 1951, and that they are credibly informed and believe that the defendants do now make some claim adverse to their title. The defendants, by their answer denied the allegations that plaintiffs made relating to their title; denied that the matters set out in the statement made by the defendant, Ursula Looney Hamblin, were false and untrue; and denied the allegations which alleged that from 1926 to April, 1951, they had made no claim to the title, and then by affirmative defenses alleged that the warranty deed given by them to the plaintiff, Edward Sargent, was intended to serve as security for a loan. Plaintiffs filed reply denying all the material allegations of the amended answer and affirmative defenses. On June 15, 1951, the defendants made a demand for a jury trial. On July 23, 1951, the plaintiffs moved the court to strike the demand for jury trial. On September 17, 1951, the court made and entered an order overruling the motion made by plaintiffs, and ordered the issues to be tried by jury. On June 30, 1952, at the beginning of the *921 trial the court made the following observation: Mr. Adams, attorney for defendants, in his opening statement to the jury, stated: The court, among other instructions, instructed the jury that: The defendants did not object to this or any other instruction given by the court. The jury returned a verdict finding the issues in favor of the plaintiffs and against the defendants. Thereafter, following the receipt of the verdict plaintiffs and defendants submitted findings of fact and conclusions of law which were denied in so far as they were in conflict with those made by the Court. The Court found: Based upon the above findings of fact the Court concluded as a matter of law: The record discloses that a Special Master's Report in the case of Samuel S. Thorpe v. John Looney, Frank L. Hamblin, Ursula Looney Hamblin, et al., was filed in the United States District Court For The District Of New Mexico on October 8, 1925. That an order approving the Special Master's Report of sale and granting a deficiency judgment against Frank L. Hamblin, Ursula L. Hamblin and John Looney was filed October 8, 1925, and Decree of Foreclosure was filed June 20, 1925, in said court. On April 16, 1923, John Looney executed a deed to the defendant Ursula L. Hamblin to the premises involved, but this deed was never recorded. Thereafter, and on December 31, 1925, just six months and eleven days after the Foreclosure Decree had been recorded, John Looney executed two deeds to Ursula L. Hamblin, which were recorded with the Clerk of Rio Arriba County, on January 26, 1926. These deeds conveyed title to the real estate involved herein, subject to existing liens, which included the Thorpe Mortgage in the sum of $17,595.86 and taxes due Rio Arriba County in the sum of $8305.50. The record further discloses that John Looney, father of Ursula Looney Hamblin, was in serious trouble in the State of Illinois and needed money very badly to pay for the transcript on appeal to the Supreme Court of that state, which amounted to $4904.19, and which sum was paid to O.O. Askren, as attorney for John Looney by the plaintiff, Edward Sargent. *923 On February 6, 1926, the following agreement was entered into by and between Edward Sargent and Ursula Looney Hamblin: On February 9, 1926, a warranty deed was executed and delivered to Edward Sargent by Ursula Looney Hamblin, Frank L. Hamblin, her husband, and John Looney, which recites as follows. (Herein description) On January 20, 1927, the following instrument was filed with the Clerk of Rio Arriba County. The same was prepared in the State of Texas without the knowledge or consent of the plaintiffs. (Herein description) On July 16, 1951, two months and eight days after the complaint had been filed, and twenty-five years, five months and seven *926 days after the issuance of the warranty deed by the defendants, the following instrument was filed with the Clerk of Rio Arriba County, without the knowledge or consent of the plaintiffs: While there are many assignments of error, we believe there is but one question for determination by this court, and that is whether the agreement of sale together with the warranty deed, constitute a mortgage or an absolute sale with an option of repurchase. One test which may be applied in determining the nature of the transaction is whether there exists mutuality and reciprocity of rights between the parties. In other words, it may be helpful to determine whether the grantee has the right to compel the grantor to pay the consideration named in the agreement for reconveyance. If he can compel such payment the transaction is generally regarded as a mortgage, while if he cannot compel such payment the transaction is generally regarded a conditional sale. 36 Am.Jur., Mortgages, § 167, page 773; 37 Am.Jur. § 1182, page 426; 41 C.J., Mortgages, § 87, page 325; 59 C.J.S., Mortgages, § 27. The testimony given by plaintiff indicates that he never made a loan and never intended the transaction to be a loan. The purchase price was paid for the lands and the defendants under the agreement had an option to repurchase same within a definite time, which option they did not exercise. There was no debt remaining which could have been enforced by plaintiffs nor was the obligation on the part of the defendants, insofar as repurchase is concerned, one which could have been enforced by the plaintiffs. The obligation under the option was unilateral enforceable only by defendants. The intention of the parties at the time an agreement is consummated to execute a deed determines whether title to the property is to be irrevocably transferred or the conveyance, though absolute in form, is to be merely as security for the payment of a debt or the performance of an obligation. In order for the defendant to have a deed, which is an absolute conveyance, as shown upon its face, declared a mortgage, it is incumbent upon such defendant to prove by clear and convincing evidence that the instrument was simply security and not an absolute deed. Parks v. Mulledy, 49 Idaho 546, 290 P. 205, 79 A.L.R. 937 and annotation therein; Harmon v. Grants Pass Banking & Trust Co., 60 Or. 69, 118 P. 188; 41 C.J. § 96, page 331, 59 C.J.S., Mortgages, § 36. The undisputed evidence shows the execution and delivery, by defendants, of an absolute warranty deed, in the usual form, to plaintiffs, dated February 9, 1926, and a written agreement of sale dated February 6, 1926, executed by the plaintiff Edward Sargent, and defendant Ursula Looney Hamblin, whereby the defendant agrees to sell and convey to plaintiffs the premises described in said deed, upon the payment of *927 $30,805.50, but, in case defendants exercise their option to repurchase, said property shall be deeded back to them. That the purchase price was fully paid by the plaintiffs as per agreement. The deed being absolute in form, the burden was upon defendants to show that it was a mortgage, the law presuming that an instrument is what it appears on its face to be, an absolute conveyance, and, in the absence of fraud or imposition, the proof to overcome this presumption and establish its character as a mortgage must be clear, unequivocal and convincing. Pomeroy's Jurisprudence, Vol. 4, § 1196, page 586; 59 C.J.S., Mortgages, § 48(a-b) pp. 82, 83; Brandt v. Manson, Mo. App., 207 S.W.2d 846; Parks v. Mulledy, supra; Gish v. Terrell, 266 Ky. 424, 427, 99 S.W.2d 168. There is no contention in the record that the plaintiffs perpetrated a fraud upon the defendants by which they were induced to execute to them the deed in question. After a very careful reading of the testimony and an examination of the exhibits, we conclude that the defendants have not shown by clear, unequivocal and convincing evidence that the deed was intended to be or is, a mortgage. The subsequent conduct of the parties is often persuasive of what they intended to accomplish by the transaction. Among the circumstances held to be evidence that they intended to convey the title instead of a mortgage are the following: That the grantor relinquished possession; that he allowed a long period of time to elapse without asserting a claim to the land or exercising any act of ownership over it; that he paid no taxes or incumbrances; that grantee took possession and exercised dominion over the land as owner; that he paid taxes; that he put valuable improvements on the land; that he contracted to sell and convey the land as owner. Hesser v. Brown, 40 Wash. 688, 82 P. 934; Rich v. Doane, 35 Vt. 125; Becker v. Howard, 75 Wis. 415, 44 N.W. 755; Hart v. Randolph, 142 Ill. 521, 32 N.E. 517; Gray v. Hayhurst, 157 Ill. App. 488; Fridley v. Somerville, 60 W. Va. 272, 54 S.E. 502; Way v. Mayhugh, 57 W. Va. 175, 50 S.E. 724; La Cotts v. La Cotts, 109 Ark. 325, 159 S.W. 1111; Bradford v. Heesell, 150 Iowa 732, 130 N.W. 908. In the instant case the defendants relinquished possession; they allowed more than twenty-five years to elapse without asserting any claim to the land or exercise any act of ownership over it; they paid no taxes since 1926; the plaintiffs took immediate possession and exercised dominion over the land as owners; they paid the taxes on the land for over twenty-five years; they put valuable improvements thereon; and they have contracted to sell and convey the land as owners. With the above well established rules of law in mind, and after a careful review of the testimony presented by the record, we conclude that the verdict of the jury and the finding of the court that the transaction entered into by the parties constituted an absolute sale and not a mortgage are sustained by the evidence. The oral testimony, when taken in connection with the written instruments, renders it reasonably certain that it was the intention of the parties that the warranty deed should be absolute in fact, as well as in form. Finding no reversible error the judgment is affirmed, and It is so ordered. McGHEE, COMPTON and SEYMOUR, JJ., concur. SADLER, C.J., absent from state and not participating.