Case Name: King v. Newman
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1811-03-20
Citations: 2 Munf. 41
Docket Number: 
Parties: King v. Newman.
Judges: 
Reporter: Virginia Reports
Volume: 16
Pages: 310–311

Head Matter:
King v. Newman.
Wednesday, March 20, 1811.
flortgage — Conditional Sale How Distinguished. — whether a contract is a mortgage, or a conditional sale, "depends on the whole circumstances of the contract, and not the mere written evidence of it:” the great point to he considered being, whether the parties intended to treat of a purchase, and, contemplating the value of the commodity, fixed the price; or whether the ohj.ect was a loan of money, and a security, or pledge,'for repayment.
Same — Same.—The former was the case in Chapman v. Turner, 1 Call, 280: the latter in Rose v. Nor veil, 1 Wash. 14, and Robertson v. Campbell & Wheeler, 2 Call, 421 — 433.
The question in this case was whether the contract, between Henry Newman and William King, relative to a tract of land in Wythe county, was to be considered by a court of equity as a conditional sale, or a mortgage, and it was decided to have been a mortgage, conformably to the principles' laid down by Pendleton, President, in the case of Robertson v. Campbell & Wheeler, 2 Call, 429.
The bill was filed in the county court by Newman against King, praying relief against a judgment in ejectment obtained by the latter.
The grounds of equity stated were, that about the year 1783, a certain George Perry obtained a certificate from the commissioners, appointed for settling claims to lands on the , western waters, for 135 acres of land, lying in the county of Montgomery, (now Wythe,) which certificate, and the land located thereon, was, in the year 1786, purchased by the plaintiff, (who, it seems, was then living on the land, and had contested Perry’s right before the commissioners,) for the consideration of sixty pounds payable in horses; that he, thereupon, applied to William King, the defendant, to let him have horses to pay part of 'said sum, to which King agreed, on condition *that the certificate should be lodged in his hands, as a security for payment of the price of the horses so furnished by him; that, in consequence of this agreement, the plaintiff received of the defendant two horses, amounting in value to “forty-five pounds, which sum, it was agreed, the plaintiff should pay the defendant at the end of twelve months from the date of said agreement, with interest thereafter, in case of failure of payment; that King insisted upon an assignment of the certificate; and the plaintiff, being ignorant and illiterate, and not conceiving that an assignment would in this case injure him, or give any interest to King in the land, did, by an endorsement upon the said certificate, assign it to him; though no assignment of it had ever been made to himself; that the defendant afterwards, by some means unknown to the plaintiff, obtained a grant on said certificate in his own name, instituted an action of ejectment, and obtained a judgment for the land.
The prayer of the bill was, therefore, that, by a decree of the court, the defendant be compelled to convey the said land to the plaintiff, on his paying him the sum of forty-five pounds, and interest.
The terms of the agreement were stated differently in the answer; the defendant alleging that the plaintiff came to him, and proposed a conditional sale of the land ; “that is to say, that, if the respondent would let him have 451. in horses, the respondent should have the land for that sum, (as the plaintiff was himself unable to pay for it,) unless the plaintiff should pay the respondent, in twelve months, the said 451. .in money; in which case the sale to the respondent was to be void.’’ He farther stated, that “the money not having been paid him in twelve months, he considered the land his own; but, contemplating his bargain as not very advantageous, and considering the situation of the complainant, who is poor, and, at the time of the bar gain, lived, and still lives, on the land, he repeatedly offered to take the 451. and interest, *for the same; but the complainant never complied with any of those proposals.”
A number of depositions were taken ; by which, in general, the statement in the bill was supported. It also appeared that, in the year 1796, the defendant having threatened to turn the plaintiff out of possession, the plaintiff agreed to give him the sum of one hundred and eighty pounds in the fall of the same year, and, if he failed in such payment, to quit claim to the land ; but this agreement was not mentioned in the answer.
'The county court decreed according to the •prayer of the bill; and that decree was affirmed by the superior court of chancery for the Staunton district; whereupon the appellant again appealed to this court.
Hay, for the appellant.
Call, for the appellee.
Mortgage — Conditional Sale — How Distinguished.— It is often a nice and difficult'Question to draw the line between mortgages and conditional sales. But the great desideratum which the Court of Appeals of Virginia has made the ground of their decision, is whether the purpose of the parties was to treat of a purchase, the value of the commodity contemplated, and the price fixed; or whether the object was a loan of money, and a security or pledge for the repaymenti ntended. As adopting this rule laid down by Judge Pendleton in Robertson v. Campbell. 2Cali 421, theprincipal case is cited in Earp v. Boothe, 24 Gratt. 368.
The circumstance, that there were negotiations pending for a loan, or the admission by the grantee, that he loaned the money to the grantor, is a strong circumstance to show, that the real transaction was a mortgage, and not a conditional sale. Davis v. Demming, 12 W. Va. 283, citing the principal case as authority.
See the principal.case also cited with approval on this subject in Hyde v. Ni.ck, 5 Leigh 343; Moss v. Green, 10 Leigh 272; Klinck v. Price, 4 W. Va. 9.
See further, monographic note on “Mortgages” appended to Forkner v. Stuart. 6 Gratt. 197, and footnotes to cases in this series of reports there collected.
Same — Same—Parol Evidence. — It has -been frequently decided that parol evidence may be received to prove that a deed absolute upon its face is in truth a mo.rtgage, and this is upon the principle that it is competent to prove by parol testimony the express or agreed conditions upon which the legal title is acquired. Walraven v. Lock, 2 Pat. & H. 652, citing the principal case; Ross v. Norvell, 1 Wash. 19; Robertson v. Campbell, 2 Call 421; Thompson v. Davenport, 1 Wash. 125: Dabney v. Green, 4 Hen. & M. 101. To the same effect, the principal case was cited in Snavely v. Pickle, 29 Gratt. 31.
And in Davis v. Demming, 12 W. Va. 282, it is said: “Parol evidence, the declarations and conduct of th e parties at the time of the transaction or subsequently, as well as all the circumstances attending or surrounding the same are received to show, whether the transaction was a conditional sale, or mortgage; and this is done though the deed, or bill of sale be absolute on its face. Robertson v. Campbell, 2 Call 421; Kino v. Newman, 2 Munf. 40; Lamb v. Shears, 1 Wend. 437; Horner v. Kiteltas, 40 N. Y. 605.” To this same point, the principal case is cited in Hoffman v. Ryan, 21 W. Va. 429.
The fact, that by the papers executed no right of redemption exists, will be considered a matter of no importance, if it is shown satisfactorily by proof or by the surrounding circumstances, that a security or pledge for a debt was intended; for a party is never allowed to take from his debtor by any form of con tract his right to redeem. Davis v. Demming, 12 W. Va. 282; Lawrence v. DuBois, 16 W. Va. 460,461; Hoffman v. Ryan. 21 W. Va. 429, 430.
See further, foot-note to Snavely v. Pickle, 29 Gratt. 31; monographic note on “Mortgages” appended to Porkner v. Stuart, 6 Gratt. 197; monographic note on “Evidence” appended to Lee v. Tapscott, 2 Wash. 276.

Opinion:
Monday, March 25th. The president pronounced the unanimous opinion of the court, that the contract was properly considered a mortgage, and that the decree be affirmed.