Johnson v. Prosperity L. & B. Ass'n

MA Justice Sears delivered the opinion of the court. Counsel for appellant contend, first, that the appellant is entitled to a redemption of the property under the terms of the contract, irrespective of the nature of the transaction, because the contract, having been actually executed and delivered upon January 27, 1897, the period of two and one-half years, within which appellant might redeem or purchase back, is to be calculated from that date, and not from the date of the deed and contract, viz., January 20, 1897; and second, that the deed and contract, taken together, constitute but one transaction, and that transaction, by the terms of the writings, constitutes a mortgage. We are of opinion that the first contention of appellant’s counsel can not be sustained; for while January 27th is shown by the evidence to have been the actual date of execution and delivery of the deed and contract, yet the period limited by the terms of the contract, viz., two and one-half years, within which appellant might buy back, is to be reckoned from the date written in the instrument. 2 Parsons on Contracts (6th Ed.), p. 664; Abrams v. Pomeroy, 13 Ill. 133; Peoria Co. v. Elder, 165 Ill. 55; Bement v. Trenton Co., 32 N. J. L. 513; Goldsmith v. Guild, 10 Allen, 239; Luce v. Shoff, 70 Ind. 152. This bill having been filed after the expiration of the two and one-half years limited by the terms of the contract, we are of opinion that the right to repurchase had expired, if tlje appellee had become absolute owner by the conveyance, with contract for repurchase, and was not a mere mortgagee. We are brought, then, to a consideration of the second contention of appellant, viz., that the entire transaction constituted appellee a mere mortgagee and not an absolute owner of the fee, and that appellant had not merely a right to repurchase under the terms of the written contract, but the right of redemption which the law of this State accords to a mortgagor who has not been foreclosed by judicial proceeding. We are of the opinion that this contention is sound and must be sustained. There is no dispute but that the deed and the written contract were parts of one transaction and must be read together in determining the nature of the conveyance. Freer v. Lake, 115 Ill. 662. A deed otherwise absolute in its terms as a conveyance in fee simple becomes, through a defeasance provision, a mere mortgage, and it does not matter whether the defeasance provision is incorporated in the same instrument or in a separate instrument contemporaneously executed. Preschbalter v. Feaman, 32 Ill. 175; Woodward v. Pickett, 8 Gray, 617. Here the written contract, executed by the parties under seal, is admitted to be part of the same transaction. Hence we have to determine from its terms if it makes the deed a mortgage. We think that it does. The tenth clause, while not a formal condition of defeasance, is nevertheless a limitation upon the effect of the deed as an absolute conveyance, in that it provides that it is upon the refusal or failure of appellant to make payments specified, that the title “ shall vest and become absolute ” in appellee. An agreement to reconvey upon stipulated terms may not suffice of itself to make a deed absolute in terms in effect a mortgage; but a limitation which permits the absolute title to vest only upon the happening of the contingency of a failure to pay, could hardly be construed to be other than a mortgage. The defeasance condition of a mortgage need not be in the ordinary form of a defeasance proviso in order to be operative. 1 Jones on Mortgages (2d Ed.), Sec. 60; Lanfair v. Lanfair, 18 Pick. 299; Steele v. Steele, 4 Allen, 417; Skinner v. Cox, 4 Dev. (N. C.) 59. In Jones on Mortgages the author says: “ The usual words of the proviso are, that upon the payment of the debt or performance of the duty named, 6 then this deed shall be void.’ But any equivalent expression may be used; and in fact if it appears from the whole instrument that it was intended as a security, although there be no express provision that upon the fulfillment of the condition the deed shall be void, it is a mortgage. The substance and not the form of expression is chiefly to be regarded,’’etc. Here the proviso in effect limits the vesting of absolute title to the happening of a future failure of appellant to make payments specified. Aside from the other clauses and provisions of the contract, consistent with a conveyance by mortgage, and not as consistent with a conveyance absolute, we regard this one provision contained in the tenth clause as making the two sealed instruments, taken together, a mortgage. The fifth clause of the contract, providing that the grantee in the warranty deed shall be permitted to have “ sole and exclusive possession,” is inconsistent with the theory that he had already acquired that right by absolute conveyance. But if the contract be treated merely as evidence extrinsic of the deed (though we are of opinion that it is not extrinsic, but is a part of the deed), yet it affords evidence conclusive in this case of the nature of the transaction. The statute of this State provides: “ Every deed conveying real estate, which shall appear to have been intended only as a security in the nature of a mortgage, though it be an absolute conveyance in terms, shall be considered as a mortgage.” Sec. 12, Chap. 95, R. S. And the decisions of our Supreme Court hold uniformly that where it is clearly established that the parties to a deed absolute in form have intended that it shall operate only as a mortgage to secure advances or a debt, then the courts should treat ib as a mortgage. Rubo v. Bennett, 85 Ill. App. 473, and cases therein cited. And although it be apparently the intent of the parties to thus make a mortgage which will cut off the right of the mortgagor to redeem, yet the courts hold that if it appear to have been intended .as a mortgage, the right of redemption can not be thus relinquished. In Bearss v. Ford, 108 Ill. 16, the Supreme Court said: “ The parties may have intended, and doubtless did intend, that if the premises were not redeemed before the 1st of July, 1897, it should then become so (absolute) in order to avoid the expenses of a foreclosure. But it is evident that parties can not by mere agreement change the law of the land. (Dicey on Parties, 37, 38, side page.) Every deed or other instrument takes effect from its delivery, and its character thereby becomes at once fixed. It can not, after such delivery, be one thing to-day and another to-morrow. If a mortgage when delivered, it continues to be such until the right of redemption is barred by some of the modes recognized by law. Hence, nothing is more firmly established in the law of mortgages than that it is not competent for the parties, even by express stipulation, to cut off the right of redemption; and to permit them to make such an instrument an absolute deed upon some future contingency would simply be cutting off the right of redemption, which, as we have just seen, can not be done. 2 Jones on Mortgages, Sec. 1039, et seq.n Much of the argument of counsel is directed to the question of whether the debt due from appellant to C. E. Brinkerhoff was in fact extinguished by the act of the parties in making the deed and contract. We do not view this question as controlling. It is true that where a deed is made upon the consideration of a pre-existing debt of grantor to grantee, and it is afterward claimed that the deed, though absolute in terms, is in effect a mortgage, the fact that the pre-existing debt is extinguished is taken as conclusive of the absolute nature of the conveyance; it being said in such cases that without a subsisting debt there can be nothing for the deed to operate upon as a mortgage. Freer v. Lake, supra. But here it was John Brinkerhoff, the appellee, not O. E. Brinkerhoff, the creditor, with whom appellant was dealing. It is true that in fact appellee was acting for C. E. Brinkerhoff. But appellant was not aware of this fact, and her action must be measured by the facts as they existed between her and appellee and by the terms of their contract. It was a part of the very advances which appellee was to make for appellant that he should pay O. E. Brinkerhoff the amount of bis claim. The second clause of the contract so provides. Therefore, the extinguishment of the O. E. Brinkerhoff liability was a part of the new liability which was created by the advances made by appellee, and to secure which the deed and contract were given. However, it appears from the evidence that the promissory note by appellant and the trust deed securing the same, which evidenced the debt of appellant to C. E. Brinkerhoff, were not delivered to appellant, but were retained by the Brinkerhoffs and were not canceled until some time after the execution and delivery of the deed in question. A release of this trust deed was executed some time after the 27th of January, 1897, and was not recorded at all nor delivered to' appellant, but was retained by the Brinkerhoffs. The very fact of this retention of the evidences of indebtedness and failure to at once cancel and deliver them up to appellant, would afford strong proof that the instruments in question constituted a mortgage, if such extrinsic evidence need be looked to for the purpose of determining their character. Taking all the evidence into consideration, we are of opinion that the parties to the deed in question intended it to operate as a mortgage only. But if the two sealed instruments, the, deed and accompanying contract together, stamp the deed as a mortgage, as we think they do, then extrinsic evidence would hardly be looked to for the purpose of determining its character. While it is allowable to resort to extrinsic evidence to determine that a deed absolute on its face is in reality intended by the parties to be merely a mortgage, the converse does not obtain, viz., that resort may be had to extrinsic evidence to establish that a deed which is by its terms a mortgage is intended to operate as an absolute conveyance. The decree is reversed and the cause remanded, with directions to the Circuit Court to enter a decree according to the prayer of the bill, allowing appellant to redeem, and to that end to take an accounting of the amount due to appellee. Reversed and remanded, with directions.