McNeill v. Norsworthy

R. W. WALKER, J. Where a conveyance is absolute on its face, and. the question is, whether the transaction was an absolute sale or a mortgage, the party who claims that it was a mortgage must prove, either by the admission of the answer, or by clear and convincing evidence, that the original transaction was at the time intended and understood by both parties as a mere security for the re-payment of money. — Seawell v. Price’s Adm’r, 32 Ala. 97. But, where it is shown that the Iiansaction was not an absolute, unconditional sale, but was either a conditional sale or a mortgage, and it is doubtful which of the two it in fact was, equity will construe it to be a mortgage. — Crews v. Threadgill, 35 Ala. 334; Locke v. Palmer, 26 Ala. 312; Parish v. Gates, 29 Ala. 254; Turnipseed v. Cunningham, 16 Ala. 501; Secrest v. Turner, 2 J. J. Marsh. 471; Russell v. Southard, 12 Howard, 139; Davis v. Stonestreet, 4 Ind. 101. Itis not pretended that this was an unconditional sale; but the controversy is, whether it was a mortgage, or a sale with a right to re-purchase. McNeill’s land had been sold at sheriff’s sale, and purchased by Townsend. The two years having nearly expired since the execution sale, and the land being worth more than the amount required for' its redemption, McNeill applied to Norsworthy for the money necessary to redeem ^ it. Thus it will be seen the transaction had its origin in a proposition for a loan. In addition to this, the amount advanced or paid was about two-thirds of the value of th$* property, and the vendor remained in possession. ,/All these are regarded by the courts as circumstances tending to show that a mortgage rather than a conditional sale was intended. If it be admitted that the declarations of the complainant, as testified to by a single witness, are sufficient to show that he remained in possession (after 1st January, 1856) under a contract of renting with the defendant, it is perhaps a complete answer to this to say, that the complainant must have entered into such a contract under a mistake as to his legal rights, and that he ought not to be prejudiced thereby in a court of equity. The complainant charges that the land was conveyed as security for the payment of $365, with usurious interest. The evidence in [160] the case is very meagre, but there are some circumstances which tend to support this allegation. It is clearly proved that the amount advanced by the defendant was but $865, whereas the deed' to Norsworthy states the consideration paid as $425. If the transaction was in fact a sale of the land for $365, with the right to re-purchase by the 1st January for $425, it is difficult to understand why the matter was not truly set forth in the writings. Why was not the real consideration expressed in the deed ? — and why was the larger consideration recited, unless for the purpose of evading the law against usury ? The witness Scarborough, who testifies to the conversation between the parties on the 1st January, 1856, states that, “from the talk between the parties there had been a trade, and the money was then due.” Again, “ Nothing was said about paying for the land, except that the time had arrived when McNeill was to pay the money bade to Norsworthy and redeem the land.” The witness Turner, who received the money ($365) from Norsworthy and paid it to McNeill, says, “ the money was paid to McNeill to redeem the land from Townsend.” And in another part of his deposition, he says, “ the amount that McNeill got from Norsworthy was $365. McNeill was to pay bach for it $425.” This evidence certainly tends to show that the object was a loan, and that the conveyance was given to secure its re-payment. The circumstances attending the transaction at least make it doubtful whether it should be deemed a mortgage or a conditional sale; and that being so, a court of equity will construe it to be a mortgage. — Authorities supra. See, further, 3d Lead. Cases Eq. (edit. 1859,) pp. 627-8, 630, 638-9, 642; Babcock v. Wyman, 19 How. 289; Miller v. Thomas, 14 Ill. 428 ; Steele v. Black, 3 Jones’ Eq. 427; Brant v. Robertson, 16 Mo. 129. Decree reversed, and cause remanded.