Irwin v. Coleman

SIMPSON, J. The bill originally filed by the appellees, sought the cancellation of a deed on account of misrepresentations — the allegations being that complainants, whq are ignorant negroes, applied to dedefendant S:. W. Irwin to borrow $175; that he agreed to lend that amount if complainants would pay him $125 in addition as interest, the whole amount to be paid in 30 months at $10 per month, with interest; that thereupon complainants entered into the written ¡instrument, which is made Exhibit A to the bill (the substance of which will be set out in the statement of the case), and complainants executed notes in accordance therewith, and have since paid three of the notes; that said Irwin presented to complainants another paper, which complainants thought was a mere copy of Exhibit A, said Irwin so stating to them, and they signed the same, but that it was really a deed conveying the property to said Irwin, as shown by the copy attached to the bill, marked “Exhibit B”; that about September 9, 1909, said Irwin conveyed the property to Bennett J. Brown, who had notice of the contract between complainants and said Irwin, and of complainants’ interest and equities in the land; that shortly after said date one Dix came to complainants’ house, professing to be the agent of said Brown, and informed the compláinant Mattie Coleman that the property belonged to said Brown, and demanded that she agree to pay rent for the same; that at said time said Daniel Coleman (her husband, the other complainant) was very sick, [179] and said Mattie Coleman, without the knowledge of said Daniel, being in distress about the illness of her husband, and being ignorant, agreed to pay rent, and did afterwards pay $3 rent; and that an attachment has been levied for rent. Complainants offer to pay whatever is due to Irwin, submit themselves to the order of the court, and pray for an injunction of the attachment proceedings, and that the deed (Exhibit B) and also the deed from Irwin to Brown (Exhibit C) be cancelled. A demurrer was sustained to the original bill, on the grounds that the paper, “Exhibit A,” is a complete refutation of complainants’ contention, and an admission of title in Irwin, and that a tenant cannot assail the title of his landlord, while holding possession. The complainants then amended the bill so as to allege that the contract (Exhibit A) as well as the deed (Exhibit B) was obtained by misrepresentation and fraud, and that it was intended only as a mortgage, and prayed that upon the payment of the amount due the contract and deed (Exhibits A and B) be declared to be null and void. A demurrer to the bill as thus amended was overruled, and the answer filed, the testimony taken, and another amendment to the bill filed to meet the evidence, setting out the transactions more in detail, reasserting that the papers were intended as a mortgage, and praying that they be declared a mortgage, that a reference be ordered to ascertain the amount due, excluding usury, and that complainants be allowed to redeem, that the title be divested out of Brown, etc. The demurrer to the bill as amended was overruled, and ■the decree rendered in accordance with the prayer of the bill. The original bill and amendments all relate to the same subject-matter, the same contract or transaction, [180] and to the same property, between the same parties. •Consequently, under our statute, the objection that the amendment constitutes a departure is not well taken. Code 1907, § 3095. This court has said that: “Although it is difficult to establish fixed rules by which to determine whether a particular transaction is a mortgage or a conditional sale, there are some facts which are regarded as of controlling importance in determining the question. Did the relation of debtor and creditor exist, before and at the time of the transaction? Or, if not, did the transaction commence in a negotiation for a. loan of money? Was there great disparity between the value of the property and the consideration passing for it? Is there a debt continuing, for the payment of which the vendor is liable? If any one of these facts is found to exist, in a. doubtful case it will go far to show a mortgage was intended. If all of them are found concurring, the transaction will be regarded as a mortgage rather than a conditional sale, unless the purchaser, by clear and convincing evidence, removes the presumption arising from them.” — Turner v. Wilkinson, 72 Ala. 366; Winn et al. v. Fitzwater et al., 151 Ala. 171, 178, 44 South. 97. See, also, 3 Pomeroy, Eq. Jur. (3d Ed.) 1195. The appellants do not contend that the deed and contract created an unconditional fee in the respondents, but that the effect was to vest the title in respondents, and then to vest in the complainants only a conditional title, dependent upon the performance of the conditions by paying the installments of purchase money. It has been universally held that, as between a conditional fee and a mortgage, in cases of doubt the court will always lean towards the mortgage, as that secures the interests of all parties and works a hardship W none. — McNeill v. Norsworthy, 39 Ala. 156, 160; Glass [181] v. Hieronymus Bros., 125 Ala. 147, 148, 28 South. 71, 82 Am. St. Rep. 225; Rose v. Gandy, 137 Ala. 329, 34 South. 239. This court has always emphasized the principle that, Avlien a man of superior intelligence has a transaction with one Avho is ignorant, the utmost good faith must be observed. — Abercrombie v. Carpenter et al., 150 Ala. 294, 43 South. 746. What Avas the situation of these parties at the time of this transaction? The complainants OAved, on a mortgage to the Building & Loan Association, $177.83. The transaction Avith the respondents created a debt of $300, Avith interest, payable in installments of $10 per month. If the mortgage had been foreclosed Avith the statutory right of redemption of tAVO years, $10 per month would have fully paid the redemption money Avithin the tivo years. It- does not seem reasonable that the complainants Avould have conveyed aivay their rights by making a. conditional deed, under which they would forfeit their property on failure to pay promptly the $10 per month until the amount of $300, with interest, Avas paid. The transaction originated in a proposition to borroAv the money to pay off the mortgage, and the evidence shows that the respondent Irwin still holds the notes against the complainants, and he explains this by saying that he holds them because he had to make the title good to Brown. While there is some conflict in the evidence, yet on the whole evidence Ave hold that the chancellor correctly held “that the method adopted in this transaction was for the purpose of securing a loan of money and to evade the law against usury.” The assumption of the debt to the Building & Loan Association created the relation of debtor and creditor between complainants and Irwin. — Shreve v. McGowin, 143 Ala. 668, 42 South. 94. [182] Brown bought with notice, and the fact that the wife agreed to pay rent, under the circumstances, does not constitute an estoppel. — McNeill v. Norsworthy, supra, 39 Ala. 159. The decree of the court is affirmed. Affirmed. McClellan, Mayfield, and Sommerville, JJ., concur.