McNamara v. Culver

The opinion of the court was delivered by

Brewer, J.:

This was an action of forcible detainer, tried by the court without a jury. Special findings of fact were made, and judgment entered in favor of the plaintiff. As ■only a portion of the testimony is preserved, we must look to the findings to see whether they support £he judgment. And upon 'them the question is, whether the deed and an agreement to reconvey, which were executed by the parties, •constituted simply a mortgage. It appears that Culver held a mortgage past due, and commenced suit in foreclosure. While this action was pending, the parties agreed to a settlement, and-McNamara and wife agreed to give Culver an -absolute deed to the premises in payment and satisfaction of all indebtedness and costs, and Culver agreed that McNamara might occupy the premises rent free for six months. Upon this, McNamara and wife executed a general warranty deed, and at the same time, and as part of the same transaction, Culver executed to McNamara an agreement to convey-the premises on payment of $203, that being the consideration of the deed, within six months. Whereupon the action was •dismissed, and the costs were paid by Culver.

*668 i Twocontracts gag“condi-’ tionai sale. *667 The conclusion of the district court was that the transac *668 tions between the parties did not create a mortgage. In support of the claim that these instruments make simply a mortgage, is the fact that they were executed at the same time and as parts of the same transaction, and also the finding that the value of the premises was between four and five hundred dollars. Against it, the finding that the conveyance was in payment and satisfaction of all indebtedness, is the fact that the agreement to convey did not recite any sale, or attempt to cast any obligation upon McNamara, but was simply an agreement to convey upon the payment, within six months, of $203, and the further fact that when the six months in which McNamara, by the agreement, was to have the occupancy rent free expired, he at first made no claim of any right to remain longer, talked about moving out, but said he could not just then get a house, and made no objection or assertion of adverse right while Culver was expending some $270 in repairs of the premises. Now'that a deed and an agreement to reconvey, though separate instruments, may °Perate as simply a mortgage, is clear, and that they do not necessarily create one is. equally ciear> The test is the existence or non-existence of a debt. And equity looks behind the form to the fact. If the transaction was intended as a loan, if there remains a debt for which the conveyance is only a security, and the collection of which may be enforced independent of the security, equity will hold it a mortgage, no matter whether the transaction is evidenced by one or two instruments. But if there be no debt, there can be no security — no mortgage. In 1 Jones on Mortgages, § 265, it is said that “a debt, either preexisting or created at the time, is an essential requisite of a mortgage.” In Glover v. Payn, 19 Wend. 518, Bronson, J., says: “Where there is no debt and no loan, it is impossible to say that an agreement to resell will change an absolute deed into a mortgage.”

The fule is clearly laid down in 4 Kent’s Commentaries, at page 144, note:

“The test of distinction is this:. If the relation of debtor *669 and creditor remains, and a debt still subsists, it is a mortgage; but if the debt is extinguished by the agreement of the parties, . . . and the grantor has the privilege of refunding, if he pleases, in a given time, and thereby entitle him to a reconveyance, it is a conditional sale.”

In Saxton v. Hitchcock,, 47 Barb. 227, the court, says:

“The conveyance does not appear to have been made to secure a debt, but in payment of it. It was a sale of the premises, with an agreement to resell upon certain terms and conditions. The liability of the defendant, the grantor, was discharged, and the relation of debtor and creditor did not exist, as by this sale the debt was extinguished, within the rule cited.”

And again, in 1 Jones on Mortgages, § 264, the author declares that “the rights of the parties to the conveyance must be reciprocal. If the transaction be in the nature of a mortgage, so that the grantor may insist upon a reconveyance, the grantee at the same time may insist on repayment; but if it be a conditional sale, so that the grantor need not repurchase except at his option, the grantee cannot insist upon repayment.” See further, Robinson v. Cropsey, 2 Edw. Ch. 138;. 6 Paige 480; McKinstry v. Conly, 12 Ala. 678; Conway’s Ex’r v. Alexander, 7 Cranch, 218; Flagg v. Mann, 14 Pick. 467; O’Niell v. Capelle, 62 Mo. 202; Turner v. Kerr, 44 Mo. 429; Farmer v. Grose, 42 Cal. 169; Slutz v. Desenberg, 28 Ohio St. 371; Plato v. Roe, 14 Wis. 457; Hughes v. Davis, 40 Cal. 117.

Now in the case at bar, the finding of the court is that the deed was given in payment and satisfaction of the prior indebtedness. It was not therefore security, but payment. There ceased to be any debt. And nowhere in the findings ■ is there anything to show the creation of any new debt. The agreement to resell does not recite a sale or show a debt. Upon the facts as found, Culver could never have collected a cent from McNamara. There was therefore no mortgage, and the conclusion of the district court was correct.

*670 2.competent evidence. *669 Again, it is objected that the court permitted evidence of matters outside the written agreements to explain the intent and understanding of the parties thereto. Now whatever *670 criticism may be made upon the form of the question, we-think the testimony which was admitted was proper testimony. Evidence of the situation of the parties, the circumstances surrounding the transaction, and of independent. parol agreements not conflicting with the terms. 0f ^g wr¡^eE1 instruments, was competent, and we do not see that any other material testimony was received. (Babcock v. Deford, 14 Kas. 408; Weeks v. Medler, 20 Kas. 57; Pilts v. Cable, 44 Ill. 103; Slutz v. Desenberg, 28 Ohio St. 371; Parish v. Gates, 29 Ala. 254; Plato v. Roe, 14 Wis. 457; Rich v. Doane, 35 Vt. 125; 1 Jones on Mortgages, § 261; Baugher v. Merryman, 32 Md. 185; Conway’s Ex’r v. Alexander, 7 Cranch, 218.)

8‘detainer; practice. A final objection is, that the defendant was refused a second trial, as is authorized in actions for the recovery of real property. The action was one of forcible detainer, commenced1 before a justice of the peace. In this action a sworn answer setting up title was filed, and thereupon the justice certified the case to the district court, where it was tried. The argument of counsel is in substance, that as the article in the-general statutes providing for proceedings in forcible entry and detainer applies only to the justices’, and not to district courts, and as the provision for certifying cases to the district court declares that the case so docketed shall be proceeded with in the district court as if originally commenced therein,, it must proceed as an action for the recovery of real property,, in which action two trials are a matter of right. We cannot agree with counsel. The action of forcible detainer is different from the action of ejectment, or for the recovery of real property, as it is styled in the code. Evidence sustaining the latter will not necessarily sustain the former. More facts are required in the one than in the other. Now the district court is one of general original jurisdiction. A provision for certifying the case from the justice to the district court, changes the forum, but does not change the action. The same proof must be made in the latter as would have been required in the former *671 court, and the same relief may be obtained. If it were not so, an unscrupulous tenant might hold possession in defiance of his landlord, and without giving any security, for many months. We do not so understand the statute.

Upon the whole record we see no error, and the judgment will be affirmed.

All the Justices concurring.