Court Opinion

ID: 6504062
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:16:28.028454+00
Date Added: 2024-06-11T15:54:41.251972
License: Public Domain

DARGAN, J.
The plaintiff in error contends that the bill should have been dismissed for want of equity. The material allegations are, that the complainant executed to the defendant a bill of sale of the slaves, with a condition annexed, that he should have the privilege of redeeming them by paying one thousand dollars on or before the first day of July 1846: that the conveyance was not intended to' be absolute, but was intended to give the defendant a lien on the slaves, to secure him in the payment of the one thousand dollars, which complainant owed to him.
We think there can be no doubt but that the bill contains equity. The rule is unquestionably settled, that if the transaction was intended as a mere security for a debt, whatever may be the form of the instrument, it must in a court of equity be considered a mortgage. — Flagg v. Mann, 2 Sumn. 533; 1 Powell on Mort. 138, note 7; Hicks v. Hicks, 5 Gill & Johns. 76; Williams v. Owen, 10 Simons, 386. The demurrer admits that the complainant owed the defendant a thousand dollars, and that to secure the payment thereof, the instrument of conveyance described in the bill was executed. This admission shows, that the conveyance was a mortgage, for it admits the debt, and that the instrument was intended as a security for its payment.
*477The question whether the complainant is entitled to relief on bill, answer and proof, is one of more difficulty. The ani swer denies that the parties intended the instrument as a mortgage, and insists that it was a sale, with the privilege of repurchasing within the time limited by the instrument, but admits that the slaves were at the risk of the complainant, until the expiration of the time within which he had the right to redeem them, after which, they were to be at the risk of the defendant.
The nature of a sale, with the right to repurchase for a. given sum, and within a specified time, is a conveyance of the title to the purchaser; he is the owner of the property, but the vendor has the right to repurchase if he sees fit; no obligation rests on him to do so, it is a mere matter of volition, whether he will or not. If he declines to repurchase, he is not bound to refund the money, and the purchaser has no cause of action against him because he does not see fit to claim his privilege. If the purchaser retain the right to demand the money of the vendor, notwithstanding his purchase, a debt is then due from the vendor to him, and the existence of this debt within itself shows that the conveyance is a mere security for its payment.
It is equally true, that if the parties intended, at the. time the instrument was executed, that it should be a security for a sum of money, due by the vendor to the vendee, no words used in the instrument can cause it afterwards to operate as a sale, and not as a mortgage; for if the transaction in its inception was a mortgage, a court of equity cannot permit it to be converted into an absolute purchase by a mere default in the payment of the mortgage money at the appointed time. The rule is, once a mortgage, always a mortgage. — Willett v. Willett, 1 Vern. 488; 10 Leigh 264; Henry v. Davis, 7 Johns. Ch. Rep. 40. What then was the intention of the parties at the date of the transaction? Taking the answer for my guide, for the testimony affords little or no light on the subject, I think the parties intended a loan of money, but if not paid at the time stipulated, that then the conveyance should be absolute and unconditional. The reaáon why I think it was understood as a loan of money is, that the defendant admits, that the slaves were to remain at the risk of the com" *478plainarit until time elapsed within which he had the privilege to redeem, but afterwards, they were to be at his risk. Had the slaves died before the time expired, what would have been the rights of the defendant according to his answer? They would have died the property of the complainant, and he would have owed the defendant a thousand dollars. He did not therefore, take the risk of a contract of purchase at the date of the transaction, but his money was to be secure to him, although the slaves died before the expiration of the lime appointed for the complainant to redeem. This, to my mind, is conclusive, that a sale was not intended at the moment of the execution of the contract, but it was intended to be a sale only in the event the complainant failed to pay within the time prescribed. In a sale with a right to repurchase, as well as in an unconditional sale, the title must pass to the purchaser, and' if the chattel die, or be destroyed, the loss must fall on him, although a mere proviso, giving the right to repurchase, will not turn a bona fide purchase into a mortgage, yet if the purchaser does not take the risk of the contract upon himself, but retains the right to demand the money if the chattel die or be destroyed, the transaction in a court of equity must be considered a mortgage. — Powell on Mortgages, vol. 1,138, note 7; 2. Sch. & Lef. 393.
It is however insisted, that as the defendant received no ev-dence of debt, nor demanded any, he has no remedy against the person of the debtor for the sum mentioned in the bill of sale, and therefore no debt exists between the parties, and without a debt, there can be no mortgage. I admit that a debt is necessary to the existence of a mortgage, but a debt may exist although no bond or note be taken for its payment, and even although its existence be known only to the creditor and debtor. True, the omission to take a covenant for the payment of the debt, or some evidence of its existence, is a strong circumstance to show that the parties intended a sale, and not a mortgage, but it is not conclusive. — 7 Cranch, 218; Goodman v. Grierson, 2 Ball & Beat. 274; 3 Atkins. 278; Mellor v. Lees, 2 Atkins. 494; and if the intention from the transaction appears to have been that the conveyance was a security for a debt due, it will be so decreed, notwithstanding no obligation is reserved affording evidence of it.
*479We come then to the conclusion as stated, that at the time of the transaction, the parties considered the transfer as a mere security for the sum mentioned in it, but that they also intended that if the complainant did not redeem the slaves within the time, his right of redemption should be lost. This being the fair construction of the contract from the answer of the defendant, the complainant can now redeem, for if at the beginning the parties looked on the transaction as a security for a sum of money, no terms or words used in the instrument can be permitted to cut off the right of redemption.
Let the decree be affirmed.