Case Name: Ephraim Wilson v. Calvin Giddings
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1876-12
Citations: 28 Ohio St. 554
Docket Number: 
Parties: Ephraim Wilson v. Calvin Giddings.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 28
Pages: 554–568

Head Matter:
Ephraim Wilson v. Calvin Giddings.
1. Where the record of a district court shows a bill of exceptions was taken to the overruling of a motion for a new trial, on the ground that the findings and decree were against the weight of the evidence at the trial term, but a number of days later in the term, which bill of exceptions was allowed by two judges of the same judicial district, who do not appear by the record to have participated in the trial, it will be presumed, in support of the record, that the judges who signed and sealed the bill of exceptions heard the motion and made the order overruling the motion for a new trial, and allowed the bill of exceptions in the discharge of their official duty.
2. Where, between the vendor and vendee, the relation of debtor and creditor exists at the time a conveyance, absolute in form as a deed, is made for real estate, and the parties, as part of the transaction, enter into a written agreement, by which, among other things, it is agreed that the vendee will reconvey the real estate to the vendor, on the repayment of a stipulated sum of money in a stated time, and the circumstances attending the transaction and general course of dealing between them furnish strong presumptive evidence that the deed was intended as a mortgage security, a court of equity will hold such a deed to be a mortgage.
3. Gross inadequacy of price, the grantor’s continued possession, regular payment of taxes and assessments on the property by him, receiving the rents and profits as his own, controlling, using, and improving the property as his own, by the grantor, in connection with the grantee's avowed purpose to make ten per cent, on his investments, and continued expectation that the vendor would take back the property, afford strong presumptions that the vendor still holds the equity of redemption in the real estate.
4. Where a deed absolute in form is accompanied, as part of the transaction, by a matter or condition of defeasance, expressed in the conveyance, or contained in a separate instrument, or exists in parol, whether the consideration be a pre-existing debt or present advance of money, if the relation of borrower and lender, debtor and creditor, exists between the parties, the conveyance will be regarded as a security, and treated in equity as a mortgage, and not as a sale, either absolute or conditional.
6. When mortgages) in fact and in form, are converted by the parties into deeds absolute on their face for the original indebtedness and accrued interest, and to secure another indebtedness or advance of money, and the relation of debtor and creditor continues to subsist, the form of the conveyance will not change its nature in equity, and such deed will he treated in a court of equity as a mortgage.
6. W., holding a mortgage on H., assigned it to G. as security for a loan of money. Afterward, G. wanted his money from W., when it was agreed that G. should foreclose the mortgage on H.; that W. should pay all the costs and attorneys’ fees of and for the foreclosure; that G. should hid in the property at sheriff’s sale, and take a deed in his own name. This was done. G. entered into an agreement in writing with W., as part of the transaction, that W., on a day named, should pay G. a sum of money (made up of another amount secured hy mortgage and the consideration named in the deed of the sheriff), and then G. would convey to W. the real estate covered hy the deed from the sheriff hy a quitclaim deed. W. failed to pay the money to G. at the time named. Held, that G. received the sheriff’s deed in trust, and held it as a mortgage security, with a continuing right of redemption in W.
Errob to the District Court of Cuyahoga county.
In April, 1867, Ephraim Wilson instituted his action against Calvin Giddings to redeem certain parcels of real estate mentioned in his petition, in which he claimed to have the equity of redemption. The record discloses that their dealings commenced about 1848, and extended over a period of about nineteen years. So much only of their respective claims and transactions will be alluded to as seems necessary to an intelligent understanding of their respective claims and rights.
The pleadings in the ease, consisting of a petition, answer, and reply, are each quite lengthy, and issue is taken upon each material allegation. We deem it not necessary to make any special statement of the particular claims and denials of the parties, as set out in the pleadings. The nature of the contest will sufficiently appear in the statement of the facts. The real estate in contest is all located in the city of Cleveland; a large portion in what was Ohio City, now Cleveland.
In 1844, Wilson conveyed to Giddings lot “ 0,” by deed absolute. Wilson remained in possession of lot “ C ” until some time in 1858, when he sold one-half of this lot to one John E. Puls, who built upon the portion purchased by him a brick building. Giddings saw this building when it was being built, and made no question or objection to the transaction. Puls paid Wilson mostly for the lot.
In 1844, Wilson owned and held a real estate contract on John Winbon for the east half of lot 5, and transferred the contract to Giddings as security for borrowed money as stated by Wilson. On September 2,1844, Wilson caused Winbon to convey the lot direct to Giddings. Wilson says to save the cost of two deeds.
In 1847, Wilson held and owned a real estate contract on west half of lot No. 22 on J. H. Sargent, and November 20, 1847, Wilson caused Sargent to make the deed directly to Giddings. By some arrangement between Wilson and Giddings, this piece of property was afterward reconveyed by Giddings to Wilson.
In 1844, Wilson held and owned two real estate contracts on Josiah Barber, Asa Foote, and Richard Lord, each contract was for part of lot No. 4, in Ohio City, the two comprising the whole of lot 4. On the 8th of June, 1844, Wilson made an absolute transfer in form of both contracts to Giddings.
In 1857, Wilson owned two notes on T. S. Harbeck, dated May 14,1857, each for one thousand dollars, with interest from date, and due in one and two years from date. On September 29, 1857, Wilson transferred these notes to Giddings, and, in writing, guaranteed the payment of them. These notes were secured by Harbeck’s mortgage on lots Nos. 224, 231, 274, 276, 295, 306, 219, 230, 268, 275, 260, 297, and 307 “ of Folsom’s allotment of the old Taylor farm, in late Ohio City, now Cleveland.” This mortgage passed to Giddings as security for the notes. These notes not being paid, by an arrangement between Wilson and Giddings, the mortgage was foreclosed, and Giddings became the purchaser at two-thirds the appraised value, at the sheriff’s sale, and had the deed made in his own name, Wilson paying the costs and attorney fee for the foreclosure of the mortgage. May 8, 1860, Giddings executed a writing to Wilson to reconvey these lots to Wilson on the payment by Wilson to Giddings of $3,857.36, which the writing recited is secured to Giddings by a mortgage from Wilson to him, executed 5th day of December, 1857. This sum Wilson is to pay him by January 1,1861, and which is in part secured by the decree against Harbeek. This mortgage of December 5, 1857, is on lots 83, 84, and 85, on Terret street, in Cleveland.
January 1,1857, the parties had a settlement, at which Wilson says he owed Giddings $4,500, and by adding in a year’s interest at the rate of ten per cent, payable semiannually, the parties agreed that the amount of indebtedness to be paid in one year thereafter, would be $5,000. Giddings claims on that settlement Wilson owed him $5,000. On the 1st of January, 1857, Giddings leased to Wilson the whole of lots 4 and 5, 13 feet front off east side of lot 6, also lot “ C,” whole of lots 24 and 26, except 25 feet off the full length of east side of lot- 24, for a term of five years, and Wilson to pay Giddings $500 rent annually, payble semi-annually, and the taxes, and assessments on all the property and all the improvements that might be put thereon; and in case of failure to do so, then Giddings is, without demand of payment or notice, to take possession, and the lease to revert to him. Time is made the essence of the contract of lease and forfeiture absolute, any decision of any court to the contrary notwithstanding. If Wilson complies at the end of the term, Giddings is to make him a quitclaim deed for all these lots.
February 2,1857, Wilson conveyed to Giddings by deed absolute in form, lot 4, west half of lot 5, and 13 feet front off east side of lot 6.
January 7,1861, Wilson executed a mortgage to Giddings on part of lot 22 in Barber & Lord’s subdivision, in Ohio City, and the west half of lot No. 22 in Barber & Lord’s subdivision of original lots 51, 52, 69, and 70; also 25 feet off east side of village lot No. 9, of the village of Brooklin, now in Cleveland ; also sub lots A and B in Barber & Lord’s subdivision, etc. This mortgage is indorsed on the back: “ May 2,1862, the within mortgage is canceled by conveyance of the premises in satisfaction. Calvin Giddings.”
December 28,1861, the parties entered into an agreement in substance that Giddings would extend the time of the payment of all sums due him and to become due him from Wilson on January 1, 1862, to April 30, 1862. If Wilson fails to pay, then he agrees to convey all mortgages and release all leases to Giddings, and all rights therein. If Wilson complies fully, then Giddings agrees to give Wilson three years from January 1, 1862, to pay up the debts, interest, rents, etc.
No other business transactions are disclosed until May 2, 1862. At that date, Wilson says he owed Giddings $>10,-000 on settlement, made up of principal and interest. This is not denied in Giddings’ testimony. On that day Wilson made to Giddings a deed absolute in form for lots 83, 84, and 85 on Terret street (on these lots Giddings then held a mortgage); west half of a certain lot in Ohio City, etc.; lot 22; twenty-five feet off east side of village lot No. 9, etc.; sub lots A and B; also 44 feet front on west side of Pearl street, etc.
On May 2, 1862, the following of the foregoing mortgages, agreements, leases, etc., were canceled: “ The agreement for extension, of December 23, 1861; ” “ The mortgage of December 5, 1859 ; ” “ The mortgage of January 7,1861; ” “ Lease of January 1,1857.”
May 3, 1862, the parties signed an agreement, in which Giddings promised, if Wilson would perform all his covenants faithfully, he would execute to him a lease like unto the one of 1857 (which it is recited was canceled May 2, 1862), for all the real estate described in the deed of May 2,1862. Then it recites : “ Said Wilson agrees that he will, by the 1st day of May, 1863, pay and discharge all mortgages, incumbrances, or liens, by way of taxes, tax titles, or otherwise, of every kind or nature whatsoever now outstanding against any of the afore described property, and perfect in said Giddings any imperfect titles to any of the same, at his own cost and expense, and that he will .pay or cause to to be paid to said Giddings or his assigns, on the said 1st day of May, 1868, $1,049.25, less whatever amount the said Giddings may realize out of the rents and profits of said lands and tenements, after deducting from said rents the taxes and insurance and all necessary expenses for repairs and collecting of said rents; on the 1st day of May,
1864, the sum of $1,431.82, subject to like deductions as last aforesaid; and that he will, on the 1st day of May, 1864, enter into and execute on his part said lease and contract, agreeing from that time forward to pay unto the said Giddings the sum of $1,000 per annum for the use of said lands and tenements, and all taxes assessed against the same, together with such insurance as said Giddings may require, not exceeding two-thirds the value of the buildings thereon, for the period of five years, and at the end of said time that he will pay to said Giddings the sum of $10,000 for said property.”
In May, 1863, Wilson says Giddings came to him and asked him if he was ready to pay him. He replied no, because he had not got his contract; that he was ready to pay him up what he owed him, $10,000. Giddings says, in 1863 he called on Wilson promptly to fulfill the contract of May 3, 1862; says Wilson asked for more time, but he told him he could not give it. W. E. Giddings, son of defendant, was present at that interview. He says: ■“ Eather demanded of Wilson the fulfillment of the contract of May, 1862. Wilson said he could not, and wanted more time. Eather said he could n’t give more time, and that he declared the contract void.” The parties met no more in relation to the business.
After this date, and prior to the commencement of this suit in 1867, defendant sold real estate, as follows :
December, 1864. The Harbeck lots to Thomas W. Kennard,.......$3,200 00
July, 1864. Lot 6, Taylor farm allotment, John Puls,........ 1,650 00
1865. The 44 feet front on Pearl street, Edwin Giddings,....... 3,000 00
Remainder’ of the Pearl and Church streets property, Levi Aust,.....$9,500 00
Lots 88, 84, 85, G. T. Pease, .... 1,800 00
October, 1866. Two of the stores on Detroit street, Edwin Giddings, ... . 4,800 00
$23,950 00
In the court of common pleas there was a finding in favor of plaintiff. On appeal to the district court a finding was made in favor of the defendant. On the overruling of his .motion for a new trial, a bill of exceptions, purporting, on its face, to contain all the testimony offered on the trial in the district court, was, as evidenced by the record, ordered to be made a part of the record.
In this court quite a number of alleged errors are assigned on the record. In our view of the case the only ones material are here quoted and numbered as assigned:
“ 3. Said court erred in overruling the motion for a new trial made in said ease.
“ 4. Said court erred in making said decree, as to the law of the case.
“ 5. Said court erred in holding that either said Wilson parted with his equity of redemption at all, or that he did so for an adequate consideration.”
Prentiss, Baldwin & Ford, for plaintiff in error.
S. Burke, for defendant in error.

Opinion:
Ashburn, J.
In the district court a motion was made to strike the bill of exceptions from the files, because :
1. The bill of exceptions was not allowed and signed by the judges who tried the case.
. 2. It is so defective as not to constitute a sufficient bill of exceptions.
The record shows the case was tried by Judges Welch, Stone, and Paine. Judge Welch was one of the supreme judges; Judges Stone and Paine were common pleas judges of the fourth judicial district. Trial took place on the 13th of September, 1869. The bill of 'exceptions, taken on overruling the motion for a new trial, was filed on the 2d day of October, 1869, that being a day in the September term of the district court for the fourth judicial circuit for 1869. The record shows this bill of exceptions was signed and sealed by "John Eitch and "W. "W. Boynton, judges." We will take official notice that they were at that time (October 2, 1869) common pleas judges of the fourth judicial district. We do not think it essential to the validity of a bill of exceptions in all cases that it be allowed and signed and sealed by the judges who presided at the trial, unless the same judges also presided at the time the motion for the new trial was heard and disposed of. We think the statute of April 12, 1858 (S. & C. 1155), is complied with when the judges who. compose the court, or a majority of them at the time the motion for a new trial is heard and disposed of, allow the bill of exceptions taken to that ruling.
The maxim omnia rita acta presumuntur may be applied to this question. We will not presume a state of case which will invalidate the record. 17 Ohio St. 571. But rather will we presume in favor of the record, that a competent district court made the order overruling the motion for a new trial; that Judges Eitch and Boynton were then present, and'as acting members of the court participated in making the order overruling the motion for a new trial, and, in the discharge of an official duty, signed and sealed the bill of exceptions attested by their signatures and seals.
The second exception to the bill of exceptions must also be overruled. The bill of exceptions manifests want of care in its preparation. It is wholly wanting in the usual formalities at the beginning and close. But we are to deal with substance and not mere form, and find the bill in other respects, where complaints are made, sufficient to require us to consider its contents.
The testimony discloses money and real estate transac tions extending over a series of years, during which time plaintiff executed and caused to be executed to the defendant a number of deeds for lots and parts of lots in the city of Cleveland. These deeds are absolute in form, but plaintiff testifies they were each intended to secure loans of money borrowed by him from defendant. In the same period plaintiff' assigned real estate contracts to defendant, as he claims, to secure loans. Also two mortgages were executed in form as such, to secure loans; a deed was made by the sheriff of Cuyahoga county for certain lots to be held for plaintiff, .for the redemption of which a written contract was given by defendant to plaintiff; also a lease and agreements purporting to be leases and conditional sales were executed.
The elements of contest are so numerous, and transactions between the parties so shaded into and mingled with each other, that a separate analysis of each on paper will not be attempted. It is perhaps not necessary to do so in order to reach a correct conclusion. Once the true nature of the transaction is ascertained, the law of the case will appear with sufficient certainty.
Wilson testifies, in substance, among other things, that 'he borrowed money many times from defendant, mostly .small sums at first, and occasionally repaying; that he never sold any real estate to Giddings ; that the deeds were intended and understood to be security for loaned money, .and interest;-that the real estate contracts were assigned for the same purpose; the two mortgages canceled at the • execution of the deed of May 2, 1862, were securities also; •that he told defendant he did not like to give a deed for ; security; that defendant replied that was his way of doingf business. " He said it made a man prompt, and he never took any advantage of it." That he (Wilson) had to give .a large amount of security to procure a very little money; •that in 1857 the parties had a settlement; that he then owed defendant $4,500; that defendant charged him ten per cent, interest, and by adding a year's interest, calcuilated at ten per cent, semi-annually, the consideration of the deed he executed to defendant February 2, 1857, was found, and that deed was executed to secure that sum made up in that way; that the property was worth $18,000; that he sold part of lot " C" to John F. Puls, who put upon his purchase a brick house, and otherwise made improvements, without objection from defendant; that he remained in quiet possession of the property not sold by him to Puls up* to May, 1862; that he paid all the taxes, assessments, etc.; received and appropriated the rents while he remained in possession; built and repaired houses upon the property. All this was done and continued up to May, 1862. That in 1862 the property he had conveyed to Giddings by deed absolute was worth from thirty-five to forty thousand dollars.
Defendant testifies substantially, among other things, that he never loaned any money to plaintiff; that the deeds absolute in form were intended to be deeds and not mortgages ; that the two mortgages were to secure the Harbeck notes; that-he paid plaintiff $1,750 for them ; that he purchased the real estate from plaintiff at rates that would enable him to make ten per cent.; and plaintiff always had the privilege to repurchase. Then he testifies specifically:
" When I made my first purchase of Wilson, he agreed to buy the property back, and that was the understanding afterward in regard to each piece of property I bought of him, or through him, so that the money I paid would net me ten per cent. That was my general understanding in all our transactions until Wilson said he was not obliged to buy it back. I rented to him the property I purchased of him before 1857, and the amount of the rent was with reference to its amounting to ten per cent, over taxes. The amount of rent was not with reference to the value of the propei'ty, but what it had cost me, and so that I could make ten per cent, besides taxes. I had reference in the rent to what he had agreed that he would pay me for money. . . . Wilson was to pay so much rent, and pay the taxes ; nothing was stated as to the time of repurchase. After the first transaction he promised to buy back at the money I paid. Sargent lot nearly in same style; it was all in same style as the first; he was to buy back so as to guarantee me ten per cent. I understood he was to purchase back."
Other testimony was introduced.
Giddings' testimony discloses that his purpose was to make ten per cent, on his money, whatever form the transaction assumed. Up to May 3,1862, be did not professedly want the real estate, but his ten per cent, clear.
The proofs in the case, and reasonable presumptions arising from them, appear to establish with reasonable clearness the following propositions:
1. That from about 1843 or 1844 the parties sustained toward each other the relation of debtor and creditor.
2. Up to 1862 Wilson remained in possession of the property; improved it as his own ; sold a portion to others; received the pay therefor; rented the property; received and used the rents; paid the taxes and assessments put on it; once taking from Giddings a lease and conditional sale in form, prior to 1862.
3. That the price Giddings claims to have paid for the property conveyed to him by Wilson was greatly below its actual value, so much so in some eases as to amount to gross inadequacy of consideration.
4. That the several sums paid, and agreed on the part of Wilson to be paid, under the denomination of rent, were interest payments on loans at the rate of ten per cent., payable, usually, semi-annually.
5. That the conveyances executed, and caused by plaintiff to be executed to the defendant, including the deed of May 2, 1862, were security for loans of money.
6. That the deed executed by the sheriff of Cuyahoga county, July 17,1860, to defendant, for lots 218, 219, 224, 230, 231, 268, 274, 275, 276, 260, 295, 296, 306, and 307, in that part of Cleveland, formerly Ohio City, was received by defendant in trust for plaintiff', and held as a security for the consideration named in the deed and other money loaned by him to plaintiff.
7. That the agreement of May 3,1862, was not a conditional sale, but was a condition of defeasance of the deed of May 2,1862.
8. That the declaration of defendant, made to plaintiff in May, 1863, that the agreement of May 3, 1862, was " void," had no effect upon the legal rights of the parties to that agreement.
9. That the deed executed and delivered May 2, 1862, and the agreement executed May 3, 1862, were parts of the same transaction, and will be treated as one.
As we understand the agreement of May 3, 1862, it inferentially recognizes the title to the property conveyed by the deed of May 2, 1862, to be in Wilson. Wilson, by it, is required to pay a given sum by May 1, 1863, less the rents and profits of the lands and tenements, and also a named sum by May 1, 1864, less, etc. If Giddings was, under that deed, the title holder, the rents and profits would belong to him. If the title remained in Wilson, then they would belong of right to Wilson, and, as Giddings agrees to credit Wilson with the rents and profits, he must have understood, when the agreement was executed, that Wilson was mortgagor, and that he was mortgagee. This agreement is to be read as part and parcel of the transaction of May 2, 1862, and was, we think, intended and understood to be a condition of defeasance to the deed. Giddings was endeavoring to secure ten per cent, interest, and adopted the deed form rather than the mortgage form of conveyance to secure his per cent.
There is no principle in equity more firmly settled on authority than that every contract for the security of debt, by the conveyance of real estate, is a mortgage, and that all agreements of parties tending to alter, in any subsequent agreement, the original nature of the mortgage, is of no effect.
There appears to be no exception to the rule that a conveyance that is once a mortgage is always a mortgage. 2 Cowen, 324; 2 Ball & Beatty, 278. If the conveyance or assignment was a mortgage in the beginning, the right of redemption is an inseparable incident, and can not be restrained or clogged by agreements. Though the conveyance be absolute in its form and terms, yet if the intention appears to make it a redeemable estate, it will continue so until foreclosed; " for," says Chancellor Kent, in Henry v. Davis & Clarke, 7 Johns. Ch. 40, "the maxim of equity is that an estate can not be a mortgage at one time and an absolute purchase at another. This is an elementary rule on this subject, and the object is to prevent imposition and fraud upon the mortgagor."
The rule is general that where a contract and conveyance are made upon a negotiation for a loan of money, a court of equity will always construe the conveyance to be a mortgage, whatever may be the form of the contract. Where the money-lender's sole purpose appears to be to make interest at a rate greater than that authorized by law, and resorts to devices for that purpose, a court of equity will sift the transaction, and give it its true meaning, and will sometimes let a person loose from an unconscionable agreement and against his agreement (Coote on Mort. 11); nay, even against his oath, as was said in one case, will allow him to come in and redeem. Whatever form the transaction assumes; whatever covenant there may be in the conveyance, or in an agreement accompanying it, if it was founded upon a loan of money, and intended by the parties to be a mortgage, courts of equity will always so construe it. Coote on Mort. 11; 17 Ohio, 356.
Gross inadequacy of price; continued possession by the grantor; payment of taxes and assessments by him; receiving and using as his own the rents and profits, without objection, for a series of years; controlling and improving the property, as he ordinarily would, if he was the owner; selling a portion of the property, and the purchaser improving his purchase at great expense, with the knowledge of the grantee, are strong circumstances in favor of the supposition that the conveyance, although absolute in form, was not a sale absolute or conditional. Holmes v. Grant, 8 Paige Ch. 243.
In Wright v. Bates & Niles, 13 Vt. 341, it was held: " Where an absolute deed is given as a security for a debt, chancery will treat it as a mortgage, though the defeasance rests in parol, especially if the grantor remains in possession."
Where a deed was so executed, and the mortgagor afterward took a lease of the premises from the mortgagee, and the mortgagee, with intent to veil the transaction and cut off the equity of redemption, covenanted to reconvey to the mortgagor, on the payment of a sum of money, by a time specified, it was held " that, although the lease and covenant gave the transaction the appearance of a conditional sale, still the relation of mortgagor and mortgagee was not destroyed." This case of Wright v. Bates et al. has many features in harmony with the one under consideration. With a slight change of phraseology, and substituting the name of Giddings for Bates, the reasoning of Judge Bennett in the case would apply with significant force. The lease of 1857 and agreement of 1862 were not conditional sales. " They were ingenious devices to disguise a loan," to collect interest at the rate of ten per cent.,' " and convert that which was before a mortgage into a conditional .sale."
I have found no better rule by which to determine the character of the transaction between Wilson and Giddings than the one so clearly stated in Robinson v. Cropsy et al., Edw. Ch.(2 ed.) 138. It is as follows : In order to determine whether a transaction amounts to a mortgage or a conditional sale, " if the deed or conveyance be aecorojianied by a condition or matter of defeasance, expressed in the deed, or contained in a separate instrument, or exists in parol (whether the consideration is a pre-existing debt or present advance of money to the grantor), the only inquiry necessary to be made is, whether the relation of debtor and creditor exists and a debt still subsists between the parties; for, if it does, then the conveyance must be regarded as a security for the payment, and must be treated in all respects as a mortgage."
As we have determined, as a question of fact, that the relation of debtor and creditor did obtain and exist at the time the several deeds were executed, and that they were intended by the parties as security for loans of money, they will be treated as mortgages.
We think the district court erred in its findings, and in refusing to award the plaintiff a new trial on his motion.
Judgment reversed and cause remanded for further proceedings.