Adams v. Pilcher

COLEMAN, J. A conveyance absolute in terms may be shown by parol evidence to have been intended as a security íbr a debt. A.sale absolute, with a right to repurchase for a given sum, within a specified time, may also be shown by parol to have been intended by the parties as a mortgage. It matters not what form the transaction may have taken, if, in fact, it was intended as a security for a debt, in a court of equity it must be so considered. — Robinson v. Farrelly, 16 Ala. 476. In either case, to have such an instrument declared a mortgage, the proof must be clear and convincing, that at the time [476] of the execution of the instrument such was the understanding-of the contracting parties. If the parties intended a sale,, whether in payment of an antecedent debt, or a present consideration paid, with the right to repurchase within a specified time, and for an agreed price, the .purchaser becomes the owner of the property, and the vendor, of the right to repurchase if he sees proper to do so. No obligation rest upon the grantor to exercise the right; it is optional whether he will or not. If he declines to do so, the vendee has no cause of action against him — either bj reason of money paid, or for the debt satisfied by the conveyance. If there remains in the vendee a cause of action for the money paid, or in the other case, for the antecedent debt, this-will determine the transaction to have been intended as a mortgage, and not an absolute conveyance. It is not left optional with the grantor to determine whether he owes a. debt to the grantee or not, and by his election to owe the debt, to the grantee, convert a sale with the right of repurchase into-a mortgage. His power to elect to repurchase or redeem exists only where there is a sale with the right to repurchase. If a mortgage was intended by the parties the debt exists,, whether he consents or not-, and the' mortgagee has the same legal authority to enforce the instrument as a mortgage, as the grantor to have the instrument declared a mortgage. There is no conflict in the case of Turner v. Wilkinson, 72 Ala. 364, and the case of Tisdale v. Maxwell, 58 Ala. 42, as supposed by the learned chancellor. The authorities are uniform on these questions. — Perdue v. Bell, 83 Ala. 398; 81 Ala. 579 ; 65 Ala. 382; 72 Ala. and 58 Ala., supra; Robinson v. Farrally, 16 Ala. 475. Whether parol evidence is admissible to show that an absolute conveyance was intended as a conditional sale only, or that there was a parol contemporaneous agreement giving to complainants the right to repurchase, does not arise. The only real question, raised by the facts in this case is, whether the two notes — one for six hundred dollars and one for five hundred — were paid by the conveyance of the Pilcher Hotel property; or whether the debt was simply extended for sixty days, and the deed executed was intended as a security for its payment. These two notes, with a third, were-secured by a mortgage on the Pilcher Hotel property, and some other ju-operty. It has been held that the omission to-take a covenant as the evidence of a debt, is a strong circumstance to show that the conveyance was intended as a sale and nota mortgage. — 83 Ala. 400, supra; 16 Ala. 478, supra. How much stronger then must the circumstances be, if the notes, the evidence of the existing debt, are given up to the477 debtor at the time, and no other evidences of debt taken in their place, and the mortgage is credited with their aggregate amount, as was done in this case. If only a mortgage was intended by the deed, what purpose did the parties have in vieAV to be accomplished ? The grantee already held a valid mortgage from the grantors on this property to secure these notes, and the giving of an absolute deed, if intended as a mortgage, was entirely superfluous. The agreement, as detailed by the witness R. Pilcher, very nearly corresponds with that given by Adams, and tends strongly to show that the transaction was a sale with the right to repurchase. The testimony of Adams and Brooks, corroborated by other facts, has not been clearly and satisfactorily overcome by complainant’s proof. Some eight or ten witnesses place the value of the property at from $1300 to $1600,. and about as many at $1000 to $1200; and perhaps the number on b.otli sides could have been indefinitely increased. Adams did not sell the property, estimated on a cash basis, for more than it was valued in the sale to him. There is not sufficient disparity in the value of the property and what was paid for it, to raise any presumption that the instrument was intended as a mortgage, and not as a deed. ■ The testimony in .some respects is conflicting, but after due consideration of it all, we hold, it is not of that clear and convincing character required by the rules and principles of law applicable in such cases, to sustain the decree of the court below, granting relief to the complainants. A decree will be here rendered reversing and dismissing complainant’s bill. Reversed and rendered.