Fridley v. Somerville

Cox, Judge. E. J. Somerville complains of a final decree entered by the circuit court of Mason county, in a chancery cause in which he is defendant and Charles L. Fridley is plaintiff. By the decree complained of, a deed absolute on its face, made by Fridley to Somerville, purporting to convejf 66 1-4 .acres of land in said county, was declared to be a mortgage securing to Somerville the sum of $150.00 with interest from the 13th day of December, 1904, and the further, sum of $13.12, the amount of taxes paid on the land by Somerville. The sole object of the suit on the part of Fridley was to have the deed declared to be a mortgage instead of an absolute conveyance. The question for determination is, whether or not, upon the whole evidence, the action of the court in declaring the deed in controversy to be a mortgage was erroneous. The deed, absolute on its face, was executed, acknowledged, delivered and recorded on the 13th of December, 1904. It acknowledged the receipt of $225.00, the consideration named therein. The plaintiff by his bill in substance alleges that, at the time he executed and delivered the deed, and for some time thereafter, he supposed that it was a deed of trust securing a loan of $150.00; that the deed was not read to or by him before signing and delivery; that, from the declarations and representations of the defend — 274 — ant, he believed it to lie a deed of trust; that defendant fraudulently represented the deed to be a deed of trust; that plaintiff is a man of no education; while the defendant is an educated man and an attorney at law by profession; that no sale of said land was ever in fact made by plaintiff to defendant; that, as soon as plaintiff learned that said deed was not a deed of trust securing' a loan, he offered to repay to defendant the $150.00 received from him at the time the deed was made; that plaintiff demanded a reconveyance of the land in fee, and by his bill offers to repay the $150.00 and interest. The defendant by answer denies all the material allegations of the bill against him, including the allegation that the deed was intended to be a mortgage or was misrepresented. The value of the tract of land in fee and unencumbered, at the time the deed was made, Is variously estimated by the witnesses. We think from the evidence that $10.00 per acre may be said to have then been the fair value'of the land. The plaintiff’s wife, whose age does not appear from the record, did not join in the deed. At the time the deed was executed, and as a part of the transaction, the defendant executed and delivered to the plaintiff a writing as follows: “Whereas, The undersigned E. J. Somerville has this the 18th day of December, 1904, purchased froniC. L. Fridley a tract of land in Cooper District, Mason county, West Virginia, containing 66 acres, and, “Whereas, The saidE. J. Somerville is willing that in the event Lillie Gardner shoul pay to said E. J. Somerville the sum of $225.00 within four months from this date, that then he, the said E. J. Somerville, will deed said tract of 66 acres to said Lillie Gardner. “Now, therefore, this agreement witnesseth: That said E. J. Somefville does hereby agree that if the said Lillie Gardner within four months from this date, pays to said E. J. Somerville, the sum ,of $225.00, that then the said E. J. Somerville will make said deed to her, the said Lillie Gardner, with covenants of special warranty. But if the said sum of $225.00 is not paid within said four months then the right of said Lillie Gardner .to buy said land shall cease and determine, and this contract is to be null and void. “Witness the following signature and seal. E. J. Somerville, (Seal.)” — 275 — Lillie Gardner, therein mentioned, was the married daughter of the plaintiff, and this writing was afterwards delivered to her. At the time the deed was made, the plaintiff executed a bill of sale of his personal property on said land, including live stock and farm implements, to Lillie Gardner, who afterwards sold said personal property at public auction. Some time after the execution of the writing to Lillie Gardner above mentioned, which writing will hereafter be called an “option,” the defendant procured from her a release as follows: “In consideration of E. J. Somerville assisting me in the purchase of a lot from H. L. Eobey in North Point Pleasant, I hereby release all the right, title and interest I have in and to the 66 acre tract of land he purchased from Charles L. Fridley in Cooper District, an option to re-purchase the same being given bjr said E. J. Somerville in a written contract signed by said E. J. Somerville; and in consideration of One Dollar, cash in hand paid, the receipt of which is hereby acknowledged, I hereby deliver up possession of said contract, together with any and all rights I have in and to the same, or to the land by virtue of said contract. “Witness my hand and seal this 25th day of January, 1905. “Lillie B. GaedNer (Seal).” After considering all the evidence, facts and circumstances shown by this record, we are clearly of the opinion that the deed in question, and the option to Lillie Gardner, state trufy the transaction between the plaintiff and the defendant, except as to the money consideration for the deed. The money consideration, according to the evidence, was $150.00 paid to plaintiff, and $18.12 to be paid on taxes then accrued against the land, and $10.00 attorney’s fees to be paid to Duffy, plaintiff’s attorney in this transaction. It seems to us that the evidence overwhelmingly sustains the theory that the intent was to make an absolute conveyance of the land, subject alone to the right of Lillie Gardner to purchase at the price of $225.00 within four months under the option. The. evidence is voluminous. To detail it m extenso would require much space and would answer no useful purpose. Parol evidence, to prove a conveyance absolute on its face to be a mortgage, must be clear and unquestionable. Way v. — 276 — Mayhugh, 57 W. Va. 175. A decree determining a question of fact will be reversed, upon appeal, where it clearly appears that such decree is against the weight and preponderance of the evidence; Wallace v. Douglas, 58 W. Va. 102, (51 S. E. 869). Three of the four persons present when this transaction took place, namely: Duffy, plaintiff’s attorney, the defendant and the defendant’s brother, testify in unmistakable language that the deed was read to the plaintiff before he signed and acknowleded it; that it was not misrepresented to him; that he thoroughly understood it, in all of its x>arts and terms; that it was prepared by his attorney; and that, as executed, it embodied the intention and agreement of both the x>arties to it. The xilaintiff alone, whose evidence is in many respects unsatisfactory and self-contradictory, testifies that the deed was not according to the agreement of the parties, and that he. did not understand that the deed conveyed the land absolutely when he signed it, but that he supposed it was a deed of trust to secure the money received by him, and that it was so represented to him before he signed it. The theory that the deed and o£>tion show truly the intent of the parties is further sustained by the admissions and declarations of the plaintiff made when not a witness and previous to testifying, indicating clearly that he understood the nature and effect of the deed and option, and also by evidence tending to show that the plaintiff before the deed was made offered to sell the land to another party for $150.00. It is contended that the vn&icia of a mortgage are present in the circumstances attending this transaction between plaintiff and defendant, and should control. in reaching the conclusion that the deed is a mortgage. This Court has at different times recognized certain circumstances as mdicia of a mortgage, or, in other words, as having great weight in leading to the conclusion that a deed absolute on its face is a mortgage. These vndicia are collated by Mr. Hogg in his work on Eq. Prin. p. 715. They are; First: The admission of the parties that the grantor, after the execution of the deed, owes the consideration thereof to the grantee as a debt. Second: The gross inadequacy of the consideration. Third: The retention of the possession of the land by the grantor for many years after making the deed, without the payment — 277 — of any rent. Fourth: That there had been negotiations pending between the parties for a loan. Fifth: That the grantor was hard pressed for money, and that the grantee was a known money-lender. Sixth: That the parties did not apparently consider or contemplate the quantity or value of the land when the deed was made. We shall consider these circumstances or indicia, in view of the evidence in this case. First, the admission of the parties that the grantor, after the execution of the deed, owes the consideration thereof to the grantee as a debt. In this case, there is no evidence showing that the grantee admitted, after the execution of the deed and the completion of the transaction, that the grantor still owed to the grantee the consideration for the deed, or any part of it. It is said in the opinion of this Court in the case of Sadler v. Taylor, 49 W. Va. 104, delivered by Judge Poffenbarger, upon an exhaustive review of the authorities, that where proof offered to show that a deed absolute on its face is a mortgage consists of parol declarations, it must be clear and strong. “So strict is this requirement indeed that I have been unable to find any case in which the proof did not go to the extent at least of an admission on the part of the grantee that the money represented in the transaction was a loan, coupled in each case with one or more of the circumstances' which have been judicially determined to be mdicia of the real contract having been a loan, or fraudulent conduct on the part of the grantee.” Second, the gross inadequacy of the consideration. It is claimed that the consideration was grossly inadequate. This is earnestly relied on, not only as a circumstance tending to show a mortgage, but as an independent ground for setting aside the deed. As we have said, the fair value of the land in fee, unencumbered, as shown by the evidence, was $10 per acre, or $662.50 for the whole tract. The consideration named in the deed was $225.00; but the fact is that the defendant paid $150.00 to plaintiff, $13.12 taxes, and was to pay $10.00 to plaintiff’s attorney. It is explained by the evidence that the consideration was named in the deed at $225.00 to correspond with the price at which Lillie Gardner was given the option to purchase. Under this deed, if ab — 278 — solute, the defendant took the land subject to the contingent right of dower of the plaintiff’s wife. In the opinion of some of the witnesses, this fact would greatly depreciate the value of the land. It was also subject to the option to Lillie Gardner. While neither the deed nor the option gave the right to the plaintiff to re-purchase the land, or to have it reconveyed to him upon the performance of any condition, yet these papers, when taken together, did impose on the defendant the condition that, upon the payment of $225.00 by Lillie Gardner within four months, he should convey the land to her absolutely. These facts are vital upon the question of inadequacy of consideration. A natural motive existed for the plaintiff to provide for his daughter. It appears that he intended in the future to make his home with her. At the time he made the deed, he made the bill of sale to her of his personal property. It is fair to presume that the plaintiff intended to benefit his daughter, in providing that she should have time in which to purchase the land at $225.00,. and that he expected her to do so. Owing to the facts mentioned, it is not apparent that the plaintiff was conveying the land for a grossly inadequate consideration. Inadequacy of consideration cannot, under these circumstances, be said to be so gross as in itself to amount to proof of fraud. Deepwater Council v. Renick, decided by this Court at this term. The fact that the defendant afterwards procured a release of the option, and of all the rights of Lillie Gardner under it, is immaterial. That was a matter of subsequent contract between them, and could in nowise affect the adequacy of the original consideration. Under the circumstances, inadequacy of consideration loses its potency in leading to the conclusion that the deed in question is a mortgage. Third, the retention of the possession of the land by the grantor for many years after the making of the deed, without payment of any rent. This circumstance is notably absent in this case. It appears that the plaintiff, at the time the deed was made, had fully determined to change his place and manner of living. He owed about $150.00, which he desired to pay. He had made previous efforts to borrow this sum, but had failed, because his wife would not join in a deed of trust. There is evidence tending to show that he expected — 279 — to get rid of his present wife and her children. He says that ■he could no longer make a living on the farm for himself and family. By the deed he obtained the $150.00 he desired, disposed of his farm, and secured to his daughter the right to buy the farm at an advance of about $50.00. After the deed was made, he went out of possession of the farm, and his personal property thereon was sold at auction by his daughter. Thus, all his connection with the farm ceased, and he stayed for a time with his daughter. It is true that before this suit was brought he and his wife moved back to the farm; but it is not shown that he did so with the consent of the defendant. It is claimed that the defendant did not go into possession after the deed was made. It is true that he, being a resident of Point Pleasant and engaged in the practice of law, did not take actual physical possession of the land; but he claimed ownership of it, and negotiated about the sale of it. Fourth, that there had been negotiations pending between the parties for a loan. This circumstance is present in this case. The plaintiff, accompanied by his attorney, applied to the defendant for a loan of $150.00, but was refused, because defendant was then told that plaintiff’s wife would not join in a deed of trust securing the loan. Afterwards, the transaction resulting in the deed and option was concluded between them. Fifth, that the grantor was hard pressed for money, and that the grantee was a known money-lender. It appears that plaintiff was in somewhat straitened circumstances; that he owed about $150.00, and desired to pay it. It does not appear that the defendant was a known money-lender. Sixth, that the parties did not apparently consider or contemplate the quantity or value of the land when the deed was made. We are unable to determine from the evidence that the parties did not contemplate the quantity or value of the land. It is shown that the defendant was not acquainted with the land, and had never met the plaintiff until the day the deed was made. The quantity of the land is named in the deed and in the option; and the defendant testifies that he relied upon the representations of plaintiff as to the land and its value. This being true, we do not think that — 280 — the quantity and value of the land was apparently without the consideration of the parties. This concludes the consideration of the indicia of a mortgage in the light of the evidence in this case. Some of the indicia most material are absent. In the opinion in the case of Sadler v. Taylor, it it said, in relation to the indicia of a mortgage, that ‘ ‘it is found in some cases that a. single dominant fact, indicating a contrai’y intention, has been held to preponderate over practically all of them combined, as in the case of Mathews v. Sanford, 26 W. Va. 386.” It is further said: “ There is one circumstance, which, if found to exist in transactions of this kind, determines the question absolutely, namely, if after the deed is executed no debt remains due from grantor to the grantee, the instrument is not a mortgage.” It seems perfectly natural that this circumstance should be conclusive against the theory of a mortgage. It involves the very substance of the issue, and, if found against the grantor, must of necessity conclude his case. The indicia of a mortgage, if present, are circumstances tending to show a fact. The probative force of these indicia is necessarily greater when they co-exist, than when one or more of them are absent. These indicia do not preclude the introduction and consideration of other evidence and circumstances; and such other evidence, both direct and circumstantial, may be of such character, and so potent and convincing, (as in this case,) as to overthrow the weight to be given to any or all of the indicia of a mortgage. It is for the court to determine, from' all the competent evidence in the case, both direct and circumstantial, including any indicia of a mortgage present, whether the deed in question was intended by the parties, at the time it was made, to be a mortgage or an absolute conveyance. It is contended that the plaintiff was of weak intellect at the time the deed wás made. It does not appear from the evidence, including his own, that he was incompetent to make the deed. It appears that he was a man of ordinary mind, not of the highest nor of the lowest order of intellect. There are no new ’ questions of law involved in this ease. In cases of this character, the law is fully settled in this State. The burden of proving that a deed absolute on its — 281 — face is a mortgage is on the party alleging it. The intention of the parties to the deed at the time it was made is controlling. If, after the deed was made and the transaction completed, there existed no indebtedness from the grantor to the grantee on account of the consideration for the deed, it is not a mortgage. See Clint v. Price. 4 W. Va. 4; Davis v. Denning, 12 W. Va. 246; Lawrence v. Duboise, 16 W. Va. 443; Hoffman v. Ryan, 21 W. Va. 415; Vangilder v. Hoffman, 22 W. Va. 1; Mathews v. Sanford, supra; Sadler v. Taylor, supra; Way y. Mayhugh, 51 W. Va. 184; Thompson v. Davenport, 1 Wash. 125; Dabney et al., Exors. etc., v. Green, 4 H. & M. 101. Tested by these principles, the plaintiff’s case fails. For the reasons stated, the decree complained of is reversed, and the plaintiff’s bill dismissed, with costs to the appellant. Reversed.