Court Opinion

ID: 6547144
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:20:30.623533+00
Date Added: 2024-06-11T15:55:59.968603
License: Public Domain

Hiul, C. J. (after stating the facts). Metz made deeds to Kahn for two pieces of property, one city lots of Argenta, and the other a farm in Pulaski County. Over six years afterwards Kahn sold the city lots for $6200, paid the indebtedness of Metz to his (Kahn’s) business corporation, and repaid himself amounts which he had advanced to Metz on this property and upon a farm, together with interest thereon, taxes paid and improvements placed on the property, and charged Metz $1,000, as he claimed, pursuant to an agreement, for his undertakings and gave Metz the residue, $733.18, and deeded him the farm. Metz has brought suit for an accounting, on the theory that the conveyances were mortgages, Kahn claiming that they were absolute sales. The chancellor found that there were mortgages, and decreed accordingly, from which decree Kahn has appealed. The pleadings and material facts are summarized in the statement by the court. Two questions arise: First, were the deeds mortgages; and second, was there a settlement between the parties. 1. In the case of Rushton v. McIllvene, ante p. 299, the court considered the quantum of evidence necessary to establish a deed, absolute on its face, to be a mortgage in effect, and approved this rule, which has oftentimes been applied by this court: “The evidence must be clear, unequivocal and convincing, for otherwise the natural presumption will prevail.” If the evidence upon this point rested on the testimony of Metz, it would utterly fail to meet the requirement; but it did not rest there, and the testimony of Kahn and his actions convince the court that the conveyances under consideration were in fact .mortgages, though absolute in terms. This conclusion is reached from the action of Kahn under the deeds. He paid money to Metz and assumed other sums due his (Kahn’s) business corporation; and finally, because Metz was insisting upon paying this particular debt, he sold the property, and from the proceeds repaid all of his indebtedness, which would have been secured by these deeds if in the form of mortgages, and exacted of Metz a receipt reciting that the payment then made was “in full of all demands for any equity or claim of any kind I may have in lots 4, 5 and 6, in -block 6, Argenta, Arkansas.” Lord Chancellor Sudgen said, “Tell me what you have done under a deed, and I will tell you what that deed means.” This statement was quoted with approval in Gauss v. Orr, 46 Ark. 129. No explanation is made by Kahn of his accounting to Metz for the residue after paying the sums secured by the deeds and the additional sum of $1,000, which he and Lyons said were to be paid him for assuming these undertakings, and the deeding over to Metz the farm. If it had been done as gratuity, made to him on account of friendly relations or long dealings with him as a customer, or any other explainable cause, it might have rebutted the force of his conduct under the deeds. But no explanation was offered, and the court is met with this conduct under the deeds, which is the conduct required if they were mortgages. It is more potent than testimony of witnesses in fixing their character as mortgages. 2. Treating the conveyances as mortgages, there remains to 'be decided whether there was a settlement of the accounts growing out of these transactions. Metz, at one .place in his testimony, refers to a statement that Kahn made him showing the residue due him from the French sale after paying various sums; but when he was directly asked whether Kahn furnished him a statement, 'he denied that he ever had any statement of these transactions, and declared that the only statement furnished him was the statement of his account with the liquor company of his dealings with it. Kahn testifies that he gave him a detailed statement, showing in full the transactions between them, and turned over to-him tax receipts and receipts for money paid out on improvements on the. property, and other memoranda relating to die property. ' In view of this conflict on the point of an account being rendered and the decision in favor of Metz, it cannot be said that the doctrine invoked of the stated' account is applicable. There were transactions running over six years to be settled in an accounting between Kahn and Metz. Kahn says that the original agreement was that he was to have one thousand dollars for undertaking the various matters that he did undertake in the event of repurchase by Metz; and in this he is supported by a witness. On the other hand, Metz says that Kahn was to allow him to redeem at any time upon the repayment of the sums advanced to him. Had the settlement been made within the two years during which Kahn admits Metz had the right to repurchase the property, there would have existed between them a dispute as to this matter, and the dispute was not eliminated by the prolongation of the time of repurchase, or redemption. The conveyances were in the forms of absolute deeds, and, as contended on the side of Kahn, they were such, with a mere right to repurchase on the conditions named by him. On the other side, it was contended by Metz that they were in effect mortgages, although in form they were absolute deeds. There was also a contention on the part of Kahn that he was entitled to eight per cent, interest on the sums ádvanced by him, and this was denied by Metz. These various differences were matters of adjustment between men of full age and sound mind, and the law favors amicable settlement of differences. “The law' favors settlements,, and courts will not open or disturb them but for cogent reasons. When parties have mutually agreed upon a settlement of their dealings with each other, and have adjusted balances on the basis of such settlement, nothing short of clear and satisfactory evidence of fraud or mistake will justify the falsifying or surcharging of such settlement.” Fletcher v. Whitlow, 72 Ark. 234. In Burton v. Merrick, 21 Ark. 357, the court said: “A receipt expressed to be in full of all demands is only prima facie evidence of what it purports to be, and, upon satisfactory proof being made that it was obtained by fraud or given under a mistake, it may be inquired into and corrected in a court of law as well as in equity. But where the receipt is introduced by the party relying on it, and there is no attempt from the other side to prove that it was obtained by fraud or given by mistake, it must necessarily operate in the particular case as conclusive evidence of what it purports to be upon its face.” The application of these principles to the receipt in evidence forces the conclusion that it must be given effect as written. There is no evidence of imposition, fraud or mistake. There is no evidence of weak-mindedness, overreaching or inability to care, for himself on the part of Metz. The amount paid for which the receipt was given represented the amount which Kahn contended was due to Metz upon the settlement of their accounts. Metz admits that this was stated to him by Kahn; and whether he received a detailed statement at that time is immaterial. It was his right to have it; and, if he omitted to demand it, that was his misfortune. He knew what the sum then paid him purported to be; and he was required to sign a receipt in full of all demands growing out of his equity in the property which had been sold. He then received a deed for the other property in addition to the cash paid him evidenced by the receipt; and the only outstanding matter that could have been between them wa§ over proceeds of the Argenta property and the amount due him from the sale of it to Dr. French. Instead of demanding a detailed statement at that time and questioning it then, he accepted the money and land tendered him and waited a year before bringing suit, and never, until this suit was brought, questioned the correctness of the sum paid him in full settlement of these transactions. As heretofore shown, there were matters of fair controversy between them, and when he accepted from Kahn the conveyance of the land and the payment of the $733.18 in full settlement of them, and executed a receipt evidencing the same, it was binding upon him unless he showed that his acceptance of the deed and the money and execution of the receipt were made under mistake of fact or induced by fraud. There is neither evidence nor allegation of fraud or mistake in the settlement. There-is evidence of Kahn’s contentions and of Metz’s contentions, which radically differ; but these were subjects for mutual adjustment, and if adjusted according to Kahn’s contention,' and the consideration paid and accepted, it is too late to reopen the matter merely to establish that Metz’s contentions as the juster basis of settlement. It is objected that the settlement was not pleaded in the answer. But the evidence of the settlement and the written receipt evidentiary of it were received without objection. It is an undisputed fact of the case, only its effect being a matter of controversy. It is permissible under the Code to amend pleadings to conform to the proof; and on appeal, where the pleadings have not been so amended, they .are considered amended to conform to the testimony which has been adduced without objection. Railway Co. v. Triplett, 54 Ark. 289; Davis v. Goodman, 62 Ark. 262; Waterman v. Irby, 76 Ark. 551; Young v. Stevenson, 75 Ark. 181. This principle has been applied to answers as well as complaints. Shattuck v. Byford, 62 Ark. 431; Trippe v. DuVal, 33 Ark. 811. This is an equity case, where the trial here is de novo on the record as made in the chancery court, and the pleadings will be considered amended here to conform to defenses made out by evidence introduced without objection. Decree reversed and complaint dismissed.