Ringling v. Smith River Development Co.

MR. JUSTICE HOLLOWAY delivered the opinion of the court. On October, 28,1910, the Smith River Development Company, a Montana corporation, with its principal place of business at Helena, executed and delivered to John Ringling its promissory note for $16,000, due six months after date with interest at eight per .cent per annum. About the same time it procured a contract for the purchase of certain lands in Meagher county known as the Catlin lands, payment for which was to be made in installments covering a period extending to February, 1914. The defendant, having paid two installments due upon the contract, went into possession of the land, and thereafter, on December 28, 1910, by an instrument in writing it transferred, set over, and delivered to Ringling the Catlin contract, with all its right, title, and interest therein, as collateral security for the payment of the note above. About the same time it also secured an option in writing to purchase the Mayn & Heitman ranches in Meagher county, upon installments extending to May, 1915, and on February 9, 1911, it assigned, set over, transferred, and delivered this instrument, with all its right, title and interest therein, to Ringling as further collateral security for the pay [474] ment of the same note; $5,519.58 was paid upon the indebtedness in June, 1911, and, no further payments having been made, this suit was instituted in 1912 in Lewis & Clark county to secure a judgment for the balance due and a decree foreclosing the defendant’s interest in the securities mentioned. A demurrer for want of jurisdiction was interposed and overruled, and the defense of want of jurisdiction was made in the answer. The plaintiff prevailed upon the trial and secured a decree fixing the amount due, and directing the sheriff to sell the securities mentioned, upon five days’ notice,, and to execute to the purchaser a certificate of sale without the right of redemption. This appeal is from the judgment, and. the record presents only the pleadings, the decree and the notice of appeal. We have purposely omitted reference' to many matters contained in the pleadings, which, while proper for consideration in the district court, do not reflect in any manner upon the question before us. If the assignment of the contract in the one instance, and the option in the other, conveyed to Ringling an interest in land as security for the debt due, the transactions amounted to a real estate mortgage which could only be foreclosed in a suit instituted in Meagher county, and in that event the defendant would be entitled to the statutory period of redemption. If we were called upon to determine the character of the security given to Ringling, our inquiry would be limited to construing the agreement made on December 28, 1910, when the contract wac assigned, and also, the agreement of February 9, 1911, by which the option was transferred as further security; but that is not the question before us. The trial court held that those agreements resulted in Ringling receiving into his possession the contract and option as personal property, delivered in pledge as security for the payment of the $16,000. We enter upon our [1] investigation indulging the presumption that the trial court did not err, and the appellant must assume the burden of overcoming that presumption. (Toole v. Weirick, 39 Mont. 359, 133 Am. St. Rep. 576, 102 Pac. 590.) In the absence of [475] any evidence disclosing the circumstances under which the securities were given, or reflecting the intention of either the debtor or the creditor, and, indeed, in the absence of the writing assigning either the contract or the option, appellant must assume the burden of showing that the trial court’s conclusion is erroneous under any possible state of facts consistent with the declaration of the record that by an instrument in writing, duly executed by it, the defendant assigned, transferred, and delivered the contract in the one instance, and the option in the other, as collateral security for the payment of a debt. So far as this record discloses, the defendant company had not paid anything upon the Heitman option, and had not taken possession of any [2] of the lands described in that instrument at the time the option was assigned, and therefore it did not have any interest in the lands themselves (Smith v. Jones, 21 Utah, 270, 60 Pac. 1104), and could not have given a real estate mortgage upon them or upon any interest in them (Provident Life & Trust Co. v. Mills (C. C.), 91 Fed. 435). It did, however, have the right to purchase, and that right may have been valuable. (Ide v. Leiser, 10 Mont. 5, 24 Am. St. Rep. 17, 24 Pac. 695.) It was such a species of property as might be sold, transferred, or assigned (Winslow v. Dundom, 46 Mont. 71, 125 Pac. 136), and, being personal property, it could be pledged. When the record discloses that the option (the writing) was actually delivered to Ringling as security for his note, it would seem that a pledge was created, within the meaning of sections 5774 and 5775, Revised Codes. In any event, the appellant has failed to overcome the presumption in favor of the correctness of the trial court’s ruling, so far as the option is concerned. Although the subject is a debatable one, we may assume, without deciding, that by reason of making certain payments upon the Catlin contract and taking possession, the defendant had acquired an equitable interest in the land prior to the time the contract was assigned to Ringling. If so, it is very clear that such an interest could be mortgaged. We may further assume [3] that the assignment of such a contract, as security for the [476] payment of a debt, would, generally speaking, create an equitable mortgage upon real estate. Still that result does not necessarily follow. “But here, as in other cases, the question whether the transaction creates an equitable mortgage depends upon the intention of the parties in that behalf, and this is to be determined by a consideration of the circumstances attending it.” (27 Cyc. 981.) While our attention has not been directed to any case directly in point, our conclusion is fortified by the [4] logic of analogous cases. The authorities seem quite uniform in holding that a lease of, or mortgage upon, real estate may be pledged (Dewey v. Bowman, 8 Cal. 145; Jones on Pledges and Collateral Securities, sec. 143; Denis on Contracts of Pledge, 56; Colebrooke on Collateral Securities, 3), and we see no difference in principle between the pledge of a lease and the pledge of a contract to purchase land. If the parties so intended, they might have created a real estate mortgage by complying with the provisions of section 5749, Revised Codes, but whether the assignment in this instance contained the formalities required in the case of a grant to real property we have no means of knowing. The assignment is not set forth in the pleadings, but so far as we are able to determine its character from the description given, it did not pretend to transfer any interest in the land itself (Gardner v. McClure, 6 Minn. 250 [Gil. 167]), but referred only to the contract and to the defendant’s interest in it. If this be true, then we are of the opinion that the defendant’s interest in it was such that the contract might have been pledged. Since it is possible that these transactions might have constituted a pledge of each of these instruments, the appellant has failed to overcome the presumption attaching to the judgment of the district court, and for this reason that judgment is affirmed. Affirmed. Mr. Chief Justice Brantly and Mr. Justice Sanner concur.