Kunert v. Strong

WiNslow, J. In this case the court adjudged, upon the allegations of the complaint and answer, that the relations of the parties were those of mortgagor and mortgagee; hence the question is whether that conclusion necessarily follows from the admissions and .allegations of the answer. That such relation existed prior to August 10, 1896, is admitted ; but it is alleged in the answer that the plaintiff then owed, in principal and interest and unpaid taxes, $861.79, and that the mortgaged land was not worth to exceed $500 or $600, and that the parties then agreed that the land should. be • conveyed to the defendant, that the debt should be thereby satisfied and discharged, and that the plaintiff should have an agreement or option to repurchase the land within one year by payment of the said sum of $861.79, and that the necessary papers were made and delivered to carry this agreement into effect. Upon these allegations it cannot be said as matter of law that the relation of mortgagor and mortgagee continued to exist. It is true that a deed absolute in form may be shown to have been executed as a mere security for a debt, and will then be construed as a mortgage; and it is also true that, where the relation of mortgagor and mortgagee is shown to have once existed, the courts will scrutinize closely any transaction between the parties by which the absolute title has been transferred to the mortgagee, and the equity of redemption extinguished, to see that advantage has not been [74] taken of the necessities of the debtor, and that the transaction was' based upon a- sufficient consideration. But this does not mean that the parties may not, by fair agreement, thus extinguish the mortgage, and substitute therefor a simple option to purchase. The intention of the parties is the real criterion as to the true nature of the transaction. If no unconscionable advantage is taken, and the debt is released in consideration of the conveyance of the property, the fact that there is a contract to reconvey upon certain conditions, there being no obligation on the part of the former mortgagor to perform the conditions, does not constitute the transaction a mortgage. 1 Pingree, Mortgages, §§ 92, 96. In such case, the question whether the mortgage relation still continues will be determined from a consideration of all the evidence in the case which throws light on the intention of the parties, and the fact that the debt is extinguished upon a fair and adequate consideration will be a very strong, though not always a conclusive, circumstance against the theorj^ of a still existing mortgage. 1 Pingree, Mortgages, § 96; Smith v. Crosby, 47 Wis. 160; Rockwell v. Humphrey, 57 Wis. 410, and cases cited in opinion; Horn v. Keteltas, 46 N. Y. 605. The case is one which, upon the pleadings, calls for a trial of the question whether the intent of the parties was to continue the mortgage relation or simply to give the plaintiff an opinion to repurchase within a year. By the Court.— Judgment reversed, and action remanded for a trial of the issues involved.