Heaton v. Gaines

Mr. Chief Justice Magruder delivered the opinion of the court: In order to sustain the allegations of the bill in this case, it must be shown that the deed of December 21,1883, executed to appellee, though absolute in form, was in fact a mortgage to secure an indebtedness from Edward Smith Heaton to appellee. The deed was not executed by Edward Smith Heaton, under whom appellants claim their right to redeem, but it was executed by M. M. Ford to the appellee. There is no satisfactory evidence to show that M. M. Ford, when he conveyed the property to appellee on December 21, 1883, held the title as mortgagee, holding an indebtedness against Edward Smith Heaton, and subject to the right of the latter to redeem the property upon the payment of a mortgage indebtedness. If the deed from Ford to appellee was merely the transfer of a mortgage indebtedness by Ford, mortgagee, so as to make appellee a mortgagee as the assignee of Ford, then it must appear that Ford held the title as security for an indebtedness to himself. The relation of debtor and creditor between Edward Smith Heaton and Ford at the time of the execution of the deed by the latter to appellee is not established by the proofs in the case. Mortgages had been executed by Edward Smith Heaton and his brother and father to Fuqua and Sheppard. These mortgages had been duly and legally foreclosed, and the title had passed by masters’ deeds to Martin Spencer and Charles C. Sheppard, as purchasers at the masters’ sales, or as assignees of the certificates of sale executed to the purchasers. There is no proof that, when Spencer and Sheppard obtained their deeds from the master, they held such deeds as security for an indebtedness existing to them from Edward Smith Heaton. On the contrary, by the foreclosure sales all the title of Edward Smith Heaton in the premises was foreclosed and barred, and passed to Spencer and Sheppard. Edward Smith Heaton nolonger had any interest in the property after the foreclosure sales and the execution of the masters’ deeds. When, in the spring and fall of 1883, the widow and heir of Martin Spencer, and Charles C. Sheppard and wife, deeded these premises to M. M. Ford, Ford took the title free from any right of redemption in Edward Smith Heaton, so far as the record-shows. The equity of redemption of Edward Smith Heaton had been cut off by the masters’ sales and deeds. Certainly, on December 21,1883, when Ford, holding the legal title, deeded the premises to the appellee, Homer Gaines, appellee became the owner of the property upon the face of the record. It is true that a deed, absolute upon its face, may be shown by parol to be a mortgage. But the proof showing this fact must be clear, satisfactory and convincing. The law presumes, in the absence of proof to the contrary, that a deed is what it purports to be, that is to say, an absolute conveyance. The burden of proof is upon the party, claiming such an absolute deed to be a mortgage, to sustain his claim by evidence sufficient to overcome this presumption of the law. (Keithley v. Wood, 151 Ill. 566; Helm v. Boyd, 124 id. 370; Burgett v. Osborne, 172 id. 227). The deed from Ford to appellee could not be a mortgage to secure an indebtedness from Edward Smith Heaton, unless it appeared in some way that Edward Smith Heaton had an interest as owner in the lands thereby conveyed. Without an ownership in lands there can be no mortgage of them. (Payne’s Admr. v. Patterson’s Admrs. 77 Pa. St. 136; Carpenter v. Plagge, 192 Ill. 82; Burgett v. Osborne, supra). Edward Smith Heaton cannot be said to have owned any equity of redemption, which was kept alive by any agreement between Ford and the appellee. Heaton had no interest in the property, which could sustain a parol agreement by appellee to buy the property for his benefit, and to convey it to him when required. Inasmuch as such an agreement, even if it existed, created an interest in land by parol, it could not be sustained under the Statute of Frauds. A naked promise by appellee to buy lands in his own name, pay for them with his own money, and hold them for the benefit of Edward Smith Heaton, could not be enforced in equity. (Howland v. Blake, 97 U. S. 624; Stephenson v. Thompson, 13 Ill. 186; Perry v. McHenry, id. 227; Magnusson v. Johnson, 73 id. 156; Caprez v. Trover, 96 id. 456; Wilson v. McDowell, 78 id. 514). In Magnusson v. Johnson, supra, it was held that, where land is sold under a deed of trust and the title vested in the purchaser, and a third party, at the request of the original owner buys from the purchaser, giving his note for the purchase money, and takes a contract in writing for the conveyance of the land to him upon payment of his note, and then agrees verbally with the original owner that, if he will pay the note when due, he may have the land, and the original owner makes no promise to pay and does not in fact pay, and the deed is executed to the purchaser, his title is absolute and is not held as a security for the payment of the money paid by him. In Wilson v. McDowell, supra, it was held that, where a deed of trust has been foreclosed.by a sale under its provisions, and the fee vested in the cestui que trust, a party, purchasing from him afterwards, cannot be considered as having purchased the deed of trust to be held as security for the money expended in such purchase, although he may have made a verbal promise to the grantor, that he would purchase the land, and convey it to him upon re-payment to him of all money expended. Where the equity of redemption has been completely barred, and the life of the ownership has expired, there is nothing left in the property which can be the subject of mortgage. In our view of the evidence, it is not only shown here, that Heaton had no ownership in the lands at the time of the conveyance by Ford to appellee in 1883, but it is further shown, that the lands were purchased by appellee for himself of Ford without auy previous conversation with Heaton, or previous negotiations with Heaton for such purchase. The appellants, who were the complainants below, put the appellee on the stand, and made him their own witness. Therefore, no question arises as to the competency of the evidence of appellee. Appellee swears, that he purchased the lands from Ford for the amount, which Ford claimed to have invested in the lands. He says that his object in purchasing Ford’s interest in the land was to save the amount, which was due to him from Thomas C. Heaton, and for which indebtedness from Thomas C. Heaton to himself he had held a mortgage, subject to the Fuqua and Sheppard mortgages, upon the 65 acres, deeded to Thomas O. Heaton by Edward Smith Heaton. The amount, invested by Ford in the property, was figured up between himself and appellee, and ascertained to be $8890.45. Appellee swears that he executed to Ford his two notes, one for $5500.00, and the other for $1000.00, making $6500.00 in all. The record shows a mortgage, executed by appellee upon the property for the amount of $6500.00. He also swears that he turned over to Ford three notes, secured upon other property owned by him, one for $1000.00, one for $510.00, and one for $853.30, and that he paid Ford $27.15 in cash, thus making up, with the $6500.00 so raised by mortgage, the sum of $8890.45. All the facts and circumstances go to sustain the correctness and truthfulness of the testimony thus given by appellee. The only evidence, introduced by appellants to the contrary, consists of conversations, claimed to have been heard by appellants, or some of them, between appellee and Edward Smith Heaton, in which appellee is alleged to have admitted, that Heaton was his debtor, and that he held a mortgage upon the land, and did not claim the ownership of it. Certain entries, also, made in the books of Ford, who had died before the trial, are referred to as indicating that the relation of debtor and creditor existed between Heaton and Ford, and between Heaton and appellee. This téstimony is vague and unsatisfactory, besides-being of questionable competency. While the declarations of a grantor with reference to his title may possibly be admissible against the grantee where such declarations are shown to have been made prior to his deed, yet the statements of the grantor after he has conveyed the land cannot be bindin g in any sense upon his grantee. (Bentley v. O'Bryan, 111 Ill. 53). Even, however, if these book entries were competent testimony, a careful examination of them, in connection with the rest of the evidence in the record, goes to show that Heaton’s interest in the land had been foreclosed, and that the lands were sold by Ford, as owner, to the appellee, and that the appellee purchased them for himself. In order to establish the fact, that a deed absolute upon its face is a mortgage, it must appear that a debt existed, due from the person, claimed to be mortgagor, to the person, claimed to be mortgagee. “It is an essential element of a mortgage that some obligation should exist to be secured.” (Rue v. Dole, 107 Ill. 275; Freer v. Lake, 115 id. 662; McNamara v. Culver, 22 Kan. 661). The evidence in the present case does not show, that there was any indebtedness existing from Heaton to appellee, which it was the intention of the parties to secure by the deed of December 21, 1883. Appellee swears that he made an arrangement with Heaton after his purchase of the land, by the terms of which Heaton was to remain upon the land as his tenant, and was to pay him, as rent for the farm, an amount equal to seven per cent upon the money he had invested in the land, and also the taxes. Appellee had been a merchant in the neighborhood where Heaton lived, and had sold him goods from time to time. He was a friend of Heaton and of his family. He sold out his store and retired from business, and went to Iowa to live in 1881, and lived there ever after that time. His books show payments made from time to time, in the form of drafts sent to Iowa, by Heaton, but there is nothing to show that these amounts so paid were not for rents. ' The entries in these books do not show upon their face, as is claimed by appellants, that they were paid'as interest upon an alleged indebtedness from Heaton to appellee, nor does the other proof show that they were paid as interest. Appellee was a friend of Heaton, and the latter often admitted that appellee was kind to him in permitting him to remain upon the land. He did remain upon the land until the time of his death in June, 1899. The evidence tends strongly to show, that the relation, which existed between Heaton and appellee after the execution of the deed on December 21,1883, was that of tenant and landlord, and not debtor and creditor. On the 15th day of September, 1894, Heaton took out a policy of insurance upon the dwelling house, barn, sheds and other buildings upon these premises. In his application to the agent of the insurance company, Heaton stated that appellee was the owner of the farm, and that he was tenant. Heaton signed the application, or caused his wife to sign it for him, in the name of “Homer Gaines, applicant, by E. S. Heaton, agent.” In the application thus signed, the following question is asked: “Are you the sole and undisputed owner of the property to be insured?” and is answered, “Yes.” Therein also the following question is asked: “Are the buildings to be insured, or containing property to be insured, occupied by the applicant or tenant?” and was answered as follows, “Tenant.” At another time, Heaton was sued before a justice of the peace by a man, who had done some work for him upon the farm, and he defeated the suit by swearing that the farm was owned by appellee, and that he was acting merely as agent for appellee in his possession and operation of the farm. The evidence also shows, that appellee tried to sell the farm to different parties, and put it into the hands of a real estate agent to sell for him, and advertised it for sale in the newspapers, all of which efforts to sell must, under the circumstances, have been known to Heaton, and he entered no protest against them, nor made any objection thereto. There is testimony, showing that Heaton always recognized appellee as the owner of the land in his conversations with his neighbors upon the subject. It is true that, during the years while Heaton was in possession of the land from December, 1883, to the time of his death, he made certain improvements upon the premises, but, after a careful examination of the evidence, we are satisfied that these improvements were only such as a tenant in occupancy of premises would naturally make, in order to keep the premises in repair. (Clark v. Clark, 122 Ill. 388.) Appellee swears that one of the terms of the occupancy by Heaton was that he was to keep the premises in repair. The decree of the circuit court seems to have been based upon the proposition of settlement made by appellee in his answer, and not upon a consideration of the merits of the case. The proposition, which was made by appellee in his answer, was that he would allow the widow of Heaton to have the premises, provided a sale of them could be made for enough to reimburse him what he had expended upon them and interest upon such amount. This offer of settlement, however, was based upon the condition that the transaction was to be closed on or before March 1,1900; but it was not closed within the time limited. We concur with the following statement upon this subject, made by the Appellate Court in its opinion (p. 28): “The proposition made by Gaines was practically an offer to settle the suit and save the costs. He had a right to prescribe his own terms in making such an offer. The proposition was explicit that the transaction should be closed by March 1, 1900, but it was not until fifteen months after the expiration of the limitation made that the offer was accepted by defendants in error, if indeed there was any acceptance. In the meantime the proofs had been taken, expenses had been incurred for solicitor’s fees, and the cause had been determined by the master in favor of Gaines. The offer had expired by its own terms, and defendants in error had no right after that length of time to accept it. The court had no authority, at the time when the offer is claimed to have been accepted, to extend the time of compliance with it to November 1, 1901, neither did it have authority to allow interest at the rate of five per cent per annum as provided for in the decree, when the offer provided for the payment of interest at the rate of seven per cent per annum. In no event could Gaines have been properly held by the decree to be bound by terms other than those named in his offer. — Carpenter v. Plagge, 192 Ill. 82.” After a careful examination of the whole record we are satisfied that the judgment of the Appellate Court was correct. Accordingly, that judgment is affirmed. Judgment affirmed.