Court Opinion

ID: 6511515
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:47.708112+00
Date Added: 2024-06-11T15:54:53.645662
License: Public Domain

BRICKELL, C. J.
The purpose of the original bill, filed by the appellant, is the redemption of certain lands, which it is averred she conveyed by way of mortgage to the appellee, Wilkinson, as a security for the repayment of money borrowed. The conveyance to Wilkinson is, in form and terms, absolute and unconditional.
In a court of equity, the character of the conveyance must *365be determined by the clear and certain intention of the.parties;, and if there be an agreement between them, that it shall operate as a security for a debt, it can and will operate only as a mortgage. The agreement may be expressed in the deed, or in a separate writing, or it may rest in parol; for it is now well settled, that, in equity, parol evidence is admissible to convert into a mortgage an instrument appearing on its face to be an absolute conveyance.—2 Brick. Dig. 271, § 316; M. B. & L. Asso. v. Robertson, 65 Ala. 472. When the conveyance is absolute, and the controversy is, whether the parties contemplated an unconditional sale or a mortgage, the party claiming that it was intended as a mortgage, if the fact is denied, must show by clear and convincing evidence that, at the time of the original transaction, it was intended and understood by both parties the conveyancé should operate only as a security for a debt. 2 Brick. Digest, 271, §§ 318-22. But, when it is an admitted fact, that the transaction was not an absolute, unconditional sale, as the conveyance imports, and the controversy is, whether a mere mortgage or a conditional sale was intended, a court of equity is inclined to consider the transaction as a mortgage. For, by this construction, complete justice can be done to both parties; the mortgagee is secured in the payment of the money he may have loaned or advanced, with its accruing interest, and the mortgagor is protected in his equity of redemption; while, if the other construction was adopted, the time limited for the re-purchase must be precisely observed, or the right to reclaim the property is irretrievably lost; oppression could be exercised over the needy, and undue advantage taken of their distressed or embarrassed circumstances.—Turnipseed v. Cunningham, 16 Ala. 501; Locke v. Palmer, 26 Ala. 312; Parish v. Gates, 29 Ala. 254; Crews v. Threadgill, 35 Ala. 334; McNeill v. Norsworthy, 39 Ala. 156.
It is not pretended, in the present case, that the transaction between the parties was, as tlie-conveyance on its face expresses,, an absolute, unconditional sale. It is an admitted fact, that there was a eotemporaneous agreement, subjecting the conveyance to conditions or trusts not expressed upon its face. The point of contention is, whether a mortgage or a conditional sale was intended. The lands had been sold under a mortgage-executed by the appellant, and purchased by Dunklin. The statutory period of redemption had expired, but Dunklin gave to the appellant the privilege of redeeming notwithstanding-that fact, upon the same terms and conditions on which she could have been let in to redeem, if within due time she had asserted her rights. The .amount of money necessary to effect the redemption was agreed upon and settled between the appellant and Dunklin. There had been negotiations between *366the appellant and Wilkinson, resulting in his furnishing the money to pay Dunklin; and it was paid to him- by Harris, Wilkinson’s clerk and agent. Dunklin executed to the appellant a quit-claim conveyance, and she executed to Wilkinson the conveyance now in question, and he gave to her a writing showing the agreement between them. The writing is not produced, and the only account of its absence is that given by the appellant (which is not denied); that at the request of Harris, the agent and clerk of Wilkinson, who seems to have taken an active part in all the transactions, she sent it to him, that Wilkinson might indorse upon it an enlargement of the time for redemption, but it was never returned to her. Parol evidence of its contents was introduced by both parties, without objection. The appellant states that she was to-have two years to redeem the lands, paying the money advanced to Dunkliri, in two equal installments. Harris states that she was to have until the fall of 1878 (a few months less than two years), to redeem; and that he has no recollection that she was to be forever barred, if within that period she did not redeem. Wilkinson does not ■state any thing in reference to this writing, further than a general denial that the conveyance to .him was to be regarded as a mortgage. This is all the evidence in reference to the transaction, and it will be seen that it is very meagre, and not very satisfactory. There is, however, no material conflict between the appellant and Harris; they concur in the fact, that the appellant had a right to redeem upon the re-payment of the money advanced by Wilkinson. Whether by redemption the parties intended repurchase, is matter of inference to be drawn from all the facts and circumstances.
Although it is difficult to establish fixed rules, by which to determine whether a particular transaction is a mortgage, or a conditional sale, there are some facts which are regarded as of controlling importance in determining the question. Did the relation of debtor and creditor exist, before and at the time of the transaction ? or, if not, did the transaction commence in a negotiation for a loan of money? Was there great disparity between the value of the property, and the consideration passing for it ? Is there a debt continuing, for the payment of which the vendor is liable ? If any one of these facts is found to exist, in a doubtful case, it will go far to show a mortgage was intended. If all of them are found concurring, the transaction will be regarded as a mortgage, rather than a conditional sale, unless the purchaser, by clear and convincing evidence, removes the presumptions arising from them.—Eiland v. Radford, 7 Ala. 724; Robinson v. Farrelly, 16 Ala. 472; Locke v. Palmer, 26 Ala. 312; Crews v. Threadgill, 35 Ala. 334; M. B. & L. Asso. v. Robertson, 65 Ala. 382. All these indicia *367of a mortgage are shown in the present cas'e. The parties were first brought into relationship by a negotiation for a loan of money — there was no proposition to buy, or to sell the lands ; for, at the time when the negotiations commenced, the appellant had in them no alienable interest. The money' advanced was but little more, if so much, as one-third of the value of the lands. There was no note or memorandum given for the payment of the money advanced to appellant, and that is always a circumstance which tends to show that a mortgage was not intended ; for, generally, when there is no debt, there is no mortgage, and when there is a debt, there can not be a conditional sale. But, that no evidence in writing of the debt is taken, is only a circumstance — it is not conclusive.—Robinson v. Farrelly, 16 Ala. 472; Turnipseed v. Cunningham, Ib. 501; M. B. & L. Asso. v. Robertson, 65 Ala. 382. The value and weight of it as a circumstance depends upon all the facts and circumstances with which it is connected The debt may exist, and may be capable of proof, though a bond, covenant, or note for its payment is not given ; and in this case, the transaction originating in a loan of money, the evidence of the loan proves the debt. It was known to Wilkinson, that the appellant was not of ability to pay the money advanced, otherwise than from the lands; and of these he had an absolute conveyance. Obviously, it would seem to the parties a rather useless ceremony, that a memorandum in writing of the debt should be given, when in his own hands, and under his own control, Wilkinson had all the property of the appellant which could be subjected to its payment. If we concede that the least which may be said, in view of all the evidence, is, that there may be a doubt whether a mortgage or a conditional sale was intended, the doubt must be resolved in favor of the appellant, rather than to suffer her creditor to gain the unjust advantage of acquiring her lands for much less than their real value; an advantage, it may be remarked, he could not have gained, if he had dealt directly with Dunklin, who, upofi the same consideration, would not have parted with the lands to any one else than the appellant.
A bona fide purchaser, upon a valuable consideration, o'f lands chargeable with an outstanding equity, of which he has no notice until after the payment of the purchase-money, a court of equity favors and protects, and will not divest him of the legal estate, or enforce the equity against him. It is in this relation, the appellee, Barganier, stands. lie purchased from Wilkinson, upon a fair and valuable consideration, paying .in full the purchase-money, and receiving a conveyance of the legal estate, without notice of the equity of the appellant. But, while protection is afforded to him, Wilkinson must account for the purchase-money received from him, and the accruing in*368terest. lie must also be charged with all. rents received by him. A mortgagee in possession, and in the perception of rents and profits, must account for them as a trustee.—Powell v. Williams, 14 Ala. 476; Morrow v. Turney, 35 Ala. 131.
The result is, the chancellor erred in decreeing the transaction was a conditional sale, and not a mortgage. The decree must be reversed, and a decree here rendered in conformity to this opinion.