Opinion
14230
February 13, 1936.
Before OXNER, J., Dillon, April, 1935. Reversed and remanded with directions.
Action by Wade Stackhouse against H.C. Stanton. Decree for plaintiff, and defendant appeals.
Decree of Judge Oxner directed to be reported follows:
The above-entitled suit, commenced in the Court of Common Pleas for Dillon County on the 23d day of November, 1934, sought the recovery of the tract of land mentioned and described in the complaint, which was regular in form, containing 155 acres, more or less, located in the said county, and bounded on the north by lands of H.M. Rogers; on the east by lands of J.E. Cottingham; on the south by lands of J.E. Cottingham and R.M. Jackson, and on the west by lands of R.M. Jackson and lands formerly of Mrs. Effie Evans.
In due time the defendant answered admitting the execution of a deed to the plaintiff on or about the 14th day of January, 1929, but alleging that at the time of the conveyance defendant was indebted to plaintiff in the sum of approximately $600.00, and to other parties in varying amounts, all of which were secured by mortgages on the property, and that the plaintiff agreed at the time of the execution of the deed to cancel his mortgage and to assume the other mortgages and carry them for the defendant, with the right on his part to pay the said indebtedness, upon which being done the premises should be reconveyed to the defendant; in other words, that the deed was intended as security for debt, and hence a mortgage.
The cause came on to be heard before me in open Court during the April term of the Court of Common Pleas for Dillon County. The testimony was taken, and it was agreed among counsel that it should be argued before me at Chesterfield, S.C. Arguments were duly had, and briefs were filed with me by counsel for both plaintiff and defendant.
As appears from the testimony, the facts are as follows:
That at the date of the execution of the deed on the 14th day of January, 1929, the defendant, H.C. Stanton, was indebted to the Federal Land Bank of Columbia in the sum of $3,992.40, two of the payments on the mortgage being delinquent; to the Bank of Dillon in the sum of $1,111.36 as of March 16, 1928; to Edgar Stanton in the sum of $200.00 as of February 20, 1928, and to the plaintiff, Wade Stackhouse, in the sum of $600.00 as of the 16th day of March, 1927, and to the said Stackhouse in an additional sum of $90.00. He was also due on his land taxes for two years, 1927 and 1928, amounting to $312.70, making a total of $6,306.46, liens against the property at that date, without interest. The Bank of Dillon had gone into the hands of a receiver and was pressing for its indebtedness and the Federal Land Bank was insisting upon the payment of its past due installments. The Bank of Dillon, the only banking institution in the community, which was a consolidation of three banks existing in that Town of Dillon, had closed its doors on November 6, 1928, just about sixty days before the transaction herein questioned. The South Carolina State Bank had opened up a branch in the town, and, perhaps the People State Bank, and a few days before the execution of the deed the defendant had gone to Dillon and had learned that the banks probably would not make advances during the subsequent year to any considerable extent. He therefore went to the plaintiff, and, according to the testimony, sought to make arrangements for advances during the following year. The plaintiff, however, refused to consider making such advances. Financial conditions in the community were at a low ebb, and it appears that the plaintiff, instead of having money to lend, or to make advances with, had himself just a short time previously borrowed on school bonds from the South Carolina State Bank the sum of $7,500.00, to run with during the year, and in the year 1929 bought all of his fertilizer on credit. He was not a money lender and at no time made investments in the way of loans. The indebtedness from the defendant to the plaintiff was a result of advancing him supplies during the year 1927, the defendant failing to that extent to pay the indebtedness due plaintiff.
It is not clear from the testimony who made the proposition, but it does appear that the parties finally agreed that the defendant would convey to the plaintiff the tract of land mentioned and described in the complaint by warranty deed, and that the plaintiff would allow the defendant to remain on the premises as a share cropper. The plaintiff thereupon went to attorneys and conferred with them about making the deed and subsequently the defendant went to the offices of Gibson and Muller, attorneys, and executed it.
It was admitted in open Court that neither party made the slightest suggestion to the attorneys that the deed was intended as anything else than what it purported to be, namely, an absolute conveyance, upon the consideration of Dr. Stackhouse canceling the debt that was due by the defendant to him and assuming the other outstanding obligations against the property.
Immediately upon the execution and delivery of the deed, on January 14, 1929, the plaintiff canceled the note and mortgage of the defendant. On September 17, 1929, he took over from the Bank of Dillon its mortgage and had it canceled on the records as of that day, and on the same day paid and had canceled the mortgage to Edgar Stanton. He also paid up the delinquent installments on the mortgage of the Federal Land Bank, and has since that time regularly made the payments thereon. On September 31, 1929, he paid the 1927 and 1928 taxes, and has since kept the taxes paid on the premises.
The defendant, Stanton, testifies that on the day of the execution of the deed, or immediately prior thereto, he and the plaintiff had an oral agreement that he might repay the plaintiff within a short time, or that if he could not do this that the plaintiff would permit him to stay upon the premises, work the same, and apply the net proceeds of crops made to the indebtedness until it was paid in full, when he would reconvey. This the plaintiff denies and testified equally as positively that there was nothing said at the time as to any reconveyance. The deed was duly recorded on the 21st day of January, 1929, and the defendant remained upon the premises and since that time has been working a share crop thereon. During the years 1931, 1932, and 1933, Dr. Stackhouse has had another share cropper on the place working a part of it, which share cropper was employed by Dr. Stackhouse and accounted to him.
On March 6, 1929, in response to a letter written by defendant to plaintiff, plaintiff wrote defendant agreeing to let him "buy back" the place if he would pay back the money he had advanced. On April 30, 1929, he gave him a letter in the nature of an option giving him the right, on or before December 1, 1929, to buy back the place upon the payment of all indebtedness and the further sum of $1,000.00. In this letter it is stated, "If you fail to buy back the farm on this basis it is agreed and understood that the one-half share contract — verbally made — is to stand. If on the share contract, I agree to furnish land, fertilizer, and you do all the labor, and we to divide the crop half and half, including cotton seed." This agreement was extended to December 1, 1930, and on November 20, 1930, was again extended to December 1, 1931.
Defendant testified that some time in the early part of 1929 he carried to the plaintiff a check of H.M. Rogers, signed in blank, with authority from Mr. Rogers for the plaintiff to fill it in for the amount due him, and Mr. Rogers testified that he did give the defendant such check; that he was a neighbor and that he stated that he had "deeded the lands" to Dr. Stackhouse and was worried about the transaction; that he made arrangements to advance the money as a neighborly act. The plaintiff testified that he had no recollection of the tender of the check and that he does not believe it was ever presented to him, but that in any event there was no request to deed the land back to Mr. Stanton, but in a conversation with Mr. Rogers, Mr. Rogers wanted the land deeded to him. This, however, is denied by Mr. Rogers. The defendant remained on the land, received advances from Dr. Stackhouse each year and divided the crop with him each year up to the time of the institution of this action.
It appears that during the year 1934, Dr. Stackhouse again made the defendant the proposition to sell the land back to him if he could get a government loan sufficient to pay him a certain amount. The parties disagreed as to what this amount was, the defendant contending that it was $4,100.00, for which amount the Land Bank approved the loan, the plaintiff that it was this amount in addition to the book account which Stanton owed him amounting to approximately $2,000.00. However this may be, the plaintiff testified on the stand that he was willing now to sell back and had offered for some time past to sell back to the plaintiff for a consideration of $8,000.00, which amount would include the sum now due on the Federal Land Bank mortgage, which is approximately $2,000.00.
After due consideration of the testimony and the law applicable to such transaction, I have reached the conclusion that at the time of the execution of the deed it was intended by both parties to be merely a fee-simple title to the premises. There are numerous decisions in the reports in such cases, but in the last analysis certain legal principles must be applied to the facts of each case, and each case has to be determined largely upon its own facts. I think the following may be stated as the chief legal principles upon which such cases must be determined:
1. The intention of the parties on the date of the execution of the instrument must determine whether it is a deed or a mortgage.
2. That in order to convert an absolute conveyance into a mortgage, the Court must be satisfied from the evidence that at the time of its execution the parties intended that it should be a mortgage instead of a deed. In other words, that it must be intended as security for indebtedness. 3 Pomeroy Eq. Jur. § 1196; Brownlee v. Martin, 28 S.C. 364, 6 S.E., 148; Reid v. Gambill, 125 S.C. 187, 118 S.E., 308; Miller v. Price, 66 S.C. 85, 44 S.E., 584; Leland v. Morrison, 92 S.C. 501, 75 S.E., 889, Ann. Cas., 1914-B, 349; Brockington v. Lynch, 119 S.C. 273, 309, 112 S.E., 94.
3. A test generally accepted as decisive is the mutuality and reciprocity of the remedies of the parties; that is to say, if the grantee enjoys a right, reciprocal to that of the grantor to demand reconveyance, personally to compel the latter to pay the consideration named in the stipulation for reconveyance, the transaction is a mortgage. Brockington v. Lynch, 119 S.C. 273, 309, 112 S.E., 94; Hodge v. Weeks, 31 S.C. 276, 9 S.E., 953; Creswell v. Smith, 61 S.C. 575, 39 S.E., 757.
4. A Court of equity will not allow a grantee fraudulently to take advantage of the necessities of a grantor and use fraud as a means of taking away from a grantor his property under a mortgage which is in the form of a deed. Mason v. Finley, 129 S.C. 367, 382, 124 S.E., 780.
Relying upon the principle last announced, the defendant contends that he went to Dr. Stackhouse in the early part of 1929 to obtain advances for the year 1929, and that he took advantage of his necessities to require him to execute the deed. I do not think the testimony sustains this position. It is admitted by all parties and witnesses that real estate was largely without market value in the County of Dillon in the early part of 1929 and for some time thereafter. The plaintiff was under no obligation to furnish the defendant. In fact, instead of being a lender he was a borrower himself. The testimony demonstrates throughout that Dr. Stackhouse was entirely friendly to the defendant, Stanton, and was desirous of helping him in any way he could. I do not think, however, the testimony justifies the position taken by the defendant that such confidential relations existed between the plaintiff and defendant as would cause the defendant to implicitly place himself in the hands of the plaintiff without considering the consequences. In fact, I am convinced that the defendant at the time of the execution of the deed realized he had no equity in the property, and with conditions as they were he was desirous of making some arrangements so that he could stay upon the premises at least for a while longer.
There is no testimony that Dr. Stackhouse was pushing for his indebtedness, but the testimony shows other creditors were, and I am convinced that his only interest in the matter was to protect his mortgage indebtedness and try to work out some plan that would enable the defendant, for the time being, to remain upon the property. He already had security for his indebtedness and it would be a vain and foolish thing for him, with conditions as distressed as they were, to assume an indebtedness of approximately $5,500.00 to $6,000.00, when he could have easily held his security in the condition that it was without becoming personally responsible for this large additional indebtedness. The Court will take judicial notice that financial conditions were extremely bad at the time of the conveyance, and no one could prophesy what the outcome would be.
I am further forced to this conclusion by the indefinite testimony of the defendant as to his alleged oral agreement. While as to other transactions he could give the conversations as to them in detail, yet in connection with the transactions leading up to his alleged agreement he could state nothing, except the bald fact that there was such an agreement. He also testified that since the execution of the deed, although he had been upon the lands and had been turning over to Dr. Stackhouse from year to year the crops, or their proceeds, yet he had made no attempt to find out what progress was being made in the settlement of the indebtedness, nor in the correspondence introduced in evidence is there any reference whatsoever to any oral agreement made at the time of the execution of the deed. It is reasonable to conclude from the letter of March 6th that he had written Dr. Stackhouse about the necessity of taking up the Land Bank mortgage, and perhaps that he wanted Dr. Stackhouse to convey the lands to some other person, for in the reply (defendant's letter not having been introduced in evidence), Dr. Stackhouse expressed unwillingness to convey to any one else, but agrees that Stanton himself may buy the land back, and, according to defendant's own testimony, it was he that went to the plaintiff and got the letter of April 30th, which contains an option of repurchasing at the indebtedness, plus $1,000.00, on or before December 1, 1929, and it was he that likewise obtained the extensions for 1930 and 1931.
Defendant relies strongly on these letters as an interpretation of the deed by the plaintiff as a mortgage. I do not think under the facts and circumstances of the case they can be so construed. Defendant alleges and testifies that prior to the letter of April 30th he had tendered a check for the full amount of the indebtedness. Notwithstanding his claimed oral agreement that the deed was intended as a mortgage, he went to the plaintiff and got the option to repurchase. It seems inconceivable that if at that time the defendant was of the view that his deed was a mortgage that he would not have consulted counsel for the protection of his interest when the plaintiff so clearly gave him notice that the paper that he held was not a mortgage, but a deed. This fact in itself is strong proof that defendant realized that plaintiff was the actual owner of the property, and this realization is further emphasized by the fact of his obtaining an option to repurchase shortly thereafter, and by the further fact that at no time, according to the testimony, up to the time of the bringing of the suit, was there any contention that the deed was other than what it purported to be.
Testing it by the other principles mentioned, the conclusion is the same. At the time the deed was executed the plaintiff satisfied his evidence of indebtedness and took no new note evidencing it. Many months later, when he paid the Bank of Dillon and the Edgar Stanton indebtedness, the notes and mortgages were marked paid by the holders and the plaintiff had them taken off of the record. There was no transfer of the indebtedness to him so that he could hold the same as a claim against the defendant. It is plain, therefore, that certainly so far as the plaintiff was concerned, he not even contemplated that the defendant was indebted to him, and, as above suggested, the defendant not having made any effort to ascertain what his indebtedness might be to the plaintiff, certainly gives rise to the implication that he had no idea that he was indebted to plaintiff. If there was no indebtedness which Dr. Stackhouse could enforce against the defendant, then unquestionably there was no mutuality of obligation existing, and hence the transaction was closed.
Defendant, however, contends that the satisfaction of the obligations was merely a part of a scheme on the part of the plaintiff to deprive defendant of his property. I do not think the testimony sustains such a position. As above suggested, I do not think, under the testimony, that defendant had any substantial equity in the property at the time the deed was executed. It is true that testimony was offered of the sale of the premises several years before for a consideration of $10,000.00, and some ten or fifteen years before for a consideration of approximately $15,000.00, but the Court will take judicial notice of the fact that in the last few years the market value of farm lands has decreased considerably in value, and especially in view of conditions existing at the time the deed was made, the testimony convinces the Court that if the property had been sold at a forced sale at that time it would not have brought more than the mortgage indebtedness. In addition to this the plaintiff, according to his testimony, is ready and willing at the present time to sell the premises to anybody for the sum of $8,000.00. Defendant questions the good faith of the offer, but I am convinced that the proposition was made in good faith.
Defendant relies strongly on the case of Mason v. Finley, supra. As I view the facts, I am of the opinion that the legal principles set forth in that case are not applicable to this. There, there was no outstanding indebtedness, and the plaintiff went to the defendant for the purpose of obtaining a loan. The loan was made and a deed was taken. In the case at bar the consideration was not new. Plaintiff already had a mortgage for his indebtedness and was under no obligation to assume the indebtedness to the other parties. I therefore think that the case falls rather under the principle announced in the cases of Hodge v. Weeks, 31 S.C. 276, 9 S.E., 953; Creswell v. Smith, 61 S.C. 575, 39 S.E., 757, and Brockington v. Lynch, 119 S.C. 273, 112 S.E., 94. The opinions in both the Mason-Finley cases and the Brockington-Lynch cases were written by the late Mr. Justice Cothran, and in my opinion are illustrative of the distinction between deeds intended as deeds and deeds intended as mortgages, and the principles upon which the question must be determined. While there is an existing indebtedness and the transaction is fair and to the advantage of both parties, the deed should be sustained as a deed. Where there is no existing indebtedness and money is advanced, and one party approaches the other for a loan, and a deed is taken, the presumption at least easily arises that the deed was intended as a mortgage.
Viewing the case as a whole, I am satisfied of the good faith of the plaintiff; that it was the intention of both parties at the time of the execution of the deed to execute a deed; that there was nothing unfair on the part of either party in the transaction, and that, therefore, the instrument executed by defendant to plaintiff should be construed and held to be what it purports to be, namely, a deed in fee simple to the premises. It is, therefore.
Ordered, adjudged, and decreed, that plaintiff is entitled to the immediate possession of the premises mentioned and described in the complaint, and that the defendant do forthwith surrender same to the plaintiff.
Messrs. Joe P. Lane and N.B. Hargrove, for appellant, cite: Where deed intended to be mortgage: 41 C.J., 336; 129 S.C. 367; 124 S.E., 780; 92 S.C. 501; 82 S.C. 264. Parol testimony: 21 S.C. 399; 37 S.C. 498; 16 S.E., 472; 61 S.C. 579; 39 S.C. 757; 21 S.C. 400; 11 Rich. Eq., 582; 12 Wall, 323; 12 How., 139; 96 U.S. 332; 98 U.S. 514; 77 Am. Dec., 550; 90 A.L.R., 944; 41 C.J., 337. Right to redeem where mortgagor has conveyed mortgagee equity of redemption: 12 Wall, 323; 20 L.Ed., 406; 41 C.J., 288; 90 A.L.R., 950; 85 Fed., 869; 35 Ala., 334; 125 Ala., 140; 28 So., 71; 82 A.S.R., 225; 4 So., 450; 59 Tex., 423; 251 Pac., 283; 111 N.W., 707. Messrs. Gibson Muller, for respondent, cite: As to intention that instrument was to be mortgage instead of deed: 99 S.C. 64; 110 S.C. 161; 129 S.C. 367; 125 S.C. 187; 28 S.C. 364; 66 S.C. 85; 92 S.C. 501; 119 S.C. 309; 31 S.C. 276; 61 S.C. 575; 129 S.C. 382; 52 S.C. 54; 50 S.C. 169; 97 S.C. 362; 21 S.C. 124; 55 S.C. 51; 32 S.E., 816.
February 13, 1936. The opinion of the Court was delivered by
This is an action for the possession of real estate. The plaintiff relies upon a deed to the land in question, consisting of 155 acres in Dillon County, which was made and delivered to him by the defendant the 14th day of January, 1929, and recorded on the 21st day of January, 1929.
The defendant admits the execution and delivery of the deed, but alleges that it was given as security for debt and is in effect a mortgage.
The matter was heard by Judge Oxner, without a jury. The evidence was taken by him in open Court. By his decree, subsequently filed, he held the instrument to be a deed absolute which conveyed the land in dispute to the plaintiff; that the plaintiff was entitled to the immediate possession of the land. It is from that decree this appeal comes. It is founded upon various exceptions. There is, however, but one vital issue in the case, viz.: Was the instrument of date January 14, 1929, from H.C. Stanton to Wade Stackhouse, intended as a deed absolute, conveying the fee and the defendant's equity of redemption, or was it intended as a security for a debt, and, hence, as a mortgage?
There can be little controversy over the law in such case. In this jurisdiction the law which determines whether a written instrument, in form a deed, is in equity a mortgage, is well understood. The difficulty lies in the application of the law, so that in each case the evidence in that case is decisive. The fundamental principle applicable in such cases is thus stated by Mr. Justice McIver (afterwards Chief Justice), in the case of Brownlee v. Martin, 21 S.C. 392, 400: "The law looks with jealousy and suspicion upon all dealings between the mortgagee and the mortgagor, from the supposed influence which the former has over the latter. If therefore a deed, absolute on its face, is shown (as it may be shown by parol evidence), to have been executed merely as a security for a debt, and not intended as an absolute transfer of title, the terms of such agreement or understanding entered into at the time of the execution of the deed are not merged in any subsequent written agreement entered into by the parties. If it is once shown that the deed, though absolute on its face, was, at the time it was executed, only intended as a security for a debt, it will operate only as a mortgage, and it cannot be converted by any subsequent written agreement into an absolute conveyance, unless such subsequent agreement is based upon a sufficient consideration, and is shown to have been fairly made, without undue influence by the creditor; and the burden of showing this is upon the mortgagee. In other words, it must amount to a sale of the equity of redemption, fairly made, upon sufficient consideration. These views are fully supported by authority." (Citing several.) (Italics added.)
The same eminent jurist who declared the above principle of law said in Tant v. Guess, 37 S.C. 489, 16 S.E., 472, 479: "In view of the well-settled principle that, even where the mortgagor has conveyed to the mortgagee the equity of redemption, the transaction is to be carefully scrutinized, inasmuch as the law looks with jealousy upon such dealings, in order to see whether the creditor has taken advantage of the influence which his relation to the debtor gives him." (Citing authorities.)
In the case of Leland v. Morrison, 92 S.C. 501, 75 S.E., 889, Ann. Cas., 1914-B, 349, it was held:
"2. Parol evidence is admissible to show a deed absolute on its face was intended as a mortgage. * * *
"3. When it is once shown that a deed was intended as a mortgage it is treated as a mortgage from its date until it is barred by the statute, and no act of the parties by laches or otherwise within such time will change the nature of the instrument."
In the case of Hamilton v. Hamer, 99 S.C. 31, 82 S.E., 997, 999, there is quoted, with approval, from Pomeroy's Equity Jurisprudence the following: "The general criterion by which the distinction between a deed and a mortgage is made in * * * `the existence of a debt or liability between the parties, either existing prior to the contract, or * * * arising from a loan made at the time of the contract, or for any other cause, and this debt is still left subsisting * * * so that the payment stipulated for in the agreement to reconvey is in reality the payment of this existing debt, then the whole transaction amounts to a mortgage, whatever language the parties may have used, and whatever stipulations they may have inserted in the instrument.'"
It scarcely needs the aid of authorities outside this jurisdiction to sustain principles so well settled by its own authorities, but the case of Dickens v. Heston, an Idaho case reported in 53 Idaho, 91, 21 P.2d 905, 90 A.L.R., 944, is so much in point we venture to quote from it:
"Inadequacy of consideration is a circumstance tending to show that a deed absolute in form was intended as a mortgage. * * *
"In determining whether such instruments constitute a mortgage, we may consider the following circumstances, among others:
"(a) Existence of debt to be secured. The controlling test to be applied in determining whether a given instrument is a mortgage is whether at the time of the execution of the deed the grantor sustains the relation of debtor to the grantee. * * *
"(b) Satisfaction or survival of the debt. On an issue as to whether a deed absolute in form was intended as an absolute conveyance or as a mortgage, the test is whether there was a subsisting debt after the conveyance. * * *
"(c) Previous negotiations of parties. It is said in 41 C. J., 337, § 100: `On the question whether a deed absolute in form was intended as a mortgage, it is proper to consider the previous negotiations of the parties, their agreements and conversations and the course of dealings between them prior to and leading up to the deed in question.' * * *
"(d) Inadequacy of price. The following rule is announced in 41 C.J., 337, § 101: `When the question in issue is whether a deed of land, with an agreement for reconveyance, was made as an absolute conveyance of the property, or simply as a security for a debt or loan, in the nature of a mortgage, the value of the property at the time the deed was made is pertinent and material. For if it shall be shown that the consideration passing between the parties, or the amount to be paid by the grantor on exercising his right to repurchase, would be fairly proportional to the value of the property, if considered as a debt or loan secured by a mortgage thereon, but grossly inadequate if regarded as the price of the land upon an absolute sale, this will tend strongly to show that a sale could not have been intended, but that the transaction should rather be treated as a mortgage.' * * *
"(e) Financial condition of grantor. It is said in 41 C. J., 288, § 24, that: `If the grantor was severely pressed for money at the time of the transfer, so as not to be able to exercise a perfectly free choice as to the disposition of his property, and raised the sum needed by conveying his property in fee with a right of repurchase, his necessitous condition, especially in connection with the inadequacy of price, will go far to show that a mortgage was intended.' * * *
"(f) Intention of parties. `* * * "A conveyance of the mortgaged premises by the mortgagor to the mortgagee, operates as a bar to the equity of redemption only when it clearly * * * appears that both parties so intended tended that it should; otherwise it will be regarded as a mere change in the form of the security."'" Citing authorities.
In the light of the principles and rules of law and evidence thus shown to be of force and applicable, let us analyze the circumstances attending the transaction.
The plaintiff is a man of wealth, and an acute and successful business man. The defendant is a man of limited means, the owner of a tract of land, upon which at the time of this transaction, were mortgages aggregating between $5,000.00 and $6,000.00. Defendant was a farmer. They were both residents of the County of Dillon, the plaintiff residing in the Town of Dillon.
In November, 1928, the Bank of Dillon became insolvent and closed its doors. There had been previously three banks in Dillon which about two years before the named date had been merged with the Bank of Dillon. When, then, the Bank of Dillon closed its doors in November, 1928, it left no bank of general business functioning in the town. Two local chain banks were established in the town, but it was stated that they would not make loans on the security of crops. One mortgage due by defendant on his farm was to the Federal Land Bank for about $4,000.00; one to the Bank of Dillon for $1,111.36, and one to the same bank for $700.00; one to Edgar Stanton for $200.00; one to Wade Stackhouse for $600.00. There was some interest and a debt of $90.00 to plaintiff, making an aggregate indebtedness of about $6,000.00.
It was necessary for defendant to have advances to operate his farm. In this emergency he applied to plaintiff to make such advances; plaintiff had done so before. This was January 14, 1929. He learned that the affairs of the Bank of Dillon were to be closed up. The plaintiff was a member of the liquidating committee of that bank.
Defendant was asked how he came to go to see plaintiff, and replied: "Well, I didn't come to town specially for that purpose, but I came in with a friend and learned while in town that the business of the bank was to be settled up, and with my having some papers in the bank I thought I had better look at these papers to see what could be done to get my own affairs in better shape."
He was asked: "When you got to Dr. Stackhouse's, what did you and he have to say to each other? A. He wanted some arrangement made whereby he would be secured for the amount of his mortgages, and I had two or three other small mortgages." At this point he was interrupted.
"Q. Now, what agreement did you and Dr. Stackhouse have? A. I traded with him to give him, as it was, as collateral security." Again he was interrupted.
"The Court: State what he said to you and what you said to him. A. I agreed to this: That if he would give me a few weeks, or three months to raise the money, I would give him a deed to the property to secure him for a few weeks or months.
"The Court: Was there any conversation between you and him as to the purchase and sale of the land? A. No, sir.
"The Court: Did you and he agree on the price of the land? A. The price wasn't mentioned."
The counsel for the plaintiff apparently started to object here. The Court said: "I think he can ask if anything was said with reference to the sale of the land."
"The Witness: There wasn't anything mentioned as to the price of the land.
"Q. Did you have any further conversation with him? A. The agreement was that if I could not get the money within a few weeks, I could stay on the place over a period of years and have a chance to work it out and pay it that way. I had two chances to get the money within a few weeks and pay it up, or stay on the place a period of years and work it out. I had those two chances."
The plaintiff's testimony in regard to this transaction was that he had advanced to Stanton in 1928, and Stanton did not pay up. He thought he had advanced to him in 1927. His mortgage from Stanton was about the fourth mortgage.
"Q. Did he or not come to you for advances in the early part of '29? A. Yes.
"Q. Did you agree to make them? A. No, I told him I was not able to do so.
"Q. You refused to make advances in '29? A. Absolutely.
"Q. Now Doctor, tell the Court what happened in connection with the execution of that deed by Stanton to you. A. Mr. Stanton came to me early in January, I think about the 4th of January, and wanted to get money to run his crop in '29, and I told him I was not able to advance him, and he of his own accord offered to make me a deed to the land, provided I would let him stay on that year as a sharecropper, and I agreed to it.
"Q. Did he or not state that he was unable to get advances anywhere? A. I think he did.
"Q. What was the consideration of the deed, Doctor? A. I assumed all of the mortgage indebtedness, including my own, and agreed to advance him money to run his crop in '29.
"Q. Did you or not have any agreement at that time as to reconveying that property to him? A. No, none whatever.
"Q. Was that matter discussed at all? A. I don't think it was." (Emphasis added because the defendant testifies positively that it was discussed and agreed upon, and it seems strange that on so serious and vital a question this eminently intelligent witness should be in doubt. Evidently his memory is at fault.)
On cross examination plaintiff testified:
"Q. And you did not at that time or prior to the making of the deed, make any offer to him that you would reconvey? A. Not that I recall."
This, too, is emphasized because it is in such striking contrast to the statement just made by him on direct examination that he had not agreed to reconvey; and it is equally as indefinite as the other assertion of plaintiff marked with italics.
This witness was asked if he could tell anything else he and Stanton talked about. He answered: "I don't recollect anything."
At this point the Court asked: "Were you pushing him for the payment of the $1,111.00 mortgage? A. I wanted him to pay the $690.00 for the two mortgages — one for $600.00 and one for $90.00.
"The Court: Were you pushing him at that time? A. I don't know that I was going to sell him but I wanted it paid.
"The Court: Was anything said during that conversation about his indebtedness to you? A. I don't recall anything."
Again the witness' memory is at fault. On direct examination, in answer to the question: "What was the consideration of the deed?" he had said: "I assumed all the mortgage indebtedness, including my own, and agreed to advance him money to run his crop in '29." (Italics added.)
It is difficult to understand how this agreement was arrived at without something being said about defendant's indebtedness to plaintiff.
Under cross examination, plaintiff testified that there was no discussion, nor bargaining about what the land was worth. Plaintiff knew the land, owned it once, sold it to defendant's father for $15,000.00 — $100.00 an acre.
Here are the direct conflicting statements of plaintiff and defendant as to the circumstances attending the execution of the deed. From this evidence, however, there can be adduced these undisputed facts:
The defendant was in debt; distressed by the necessity to provide for the payment of his mortgage indebtedness to the defunct banks, by the necessity of making provision to run his farm for the year 1929. When first approached, the plaintiff refused to make the advances for the crop. The defendant owed the plaintiff a mortgage debt of around $690.00. Plaintiff does agree to make the advance for the crop of 1929. And the deed comes into being. The authorities we have quoted show that here are some of the indicia which are held to be potent to support the claim that the deed was intended to be a mortgage.
The testimony of the defendant is supported by that of Mr. John W. McKay, a respectable citizen of the county, formerly a member of the House of Representatives from Dillon County, and once its treasurer. He testified that he went to the office of Dr. Stackhouse on business of his own. "Mr. Stanton and Dr. Stackhouse came out of the office. I spoke to Dr. Stackhouse, went back in with him, said Stanton wanted to redeem his plantation, and he told me he would be glad for him to do it if he could, and that he had agreed with him that if he could pay him his money, that was what he needed, he could."
The plaintiff went upon the stand in reply, but he did not deny this testimony of Mr. McKay.
A.L. Wallace, a witness for the defendant, was asked, in reference to a cow trade between plaintiff and defendant, "What, if anything, occurred in the conversation concerning the land? A. That was all, he just said he was backing out of the cow trade at that price, and he was backing out of the land trade."
March 6, 1929, which is within the period in which defendant testified he had the right, under his agreement with plaintiff, to get the money and redeem the land, he received the following letter from plaintiff:
"March 6, 1929.
"Mr. H.C. Stanton, Dillon, S.C.
"Dear Hugh: Your letter March 4th received. I have not paid the Land Bank anything except the interest due and all Taxes due on the land. You would not have to take up the Land Bank Mortgage.
"I am not willing to transfer a Deed to any party except yourself. In other words, I am not willing for you to make preference as to Ownership or anyone, unless you can buy back the place. It is about time also to finance your farming for this year. I do not see how you can do this with the Deed for the Farm in my name. In order to take back the place it will be necessary for you to pay me back the money I have advanced and also to finance the Place for this year. If you can do this by April 1st of this year, I shall be glad to deed the Land back to you.
"Yours very truly,
"WADE STACKHOUSE."
The defendant testifies that he had arranged with Mr. McIver Rogers to advance him the money to pay Dr. Stackhouse; that Mr. Rogers gave him a check dated and signed payable to Dr. Stackhouse, but the amount left blank, which he presented to Dr. Stackhouse before he received the above letter. That all he could get from him was the extension of the time of payment. It is true that the plaintiff testifies that the check was not presented to him, but an examination of all of his testimony satisfies one that his memory has again misled him, and that his reason for refusing the check was that he had advanced the amount of his demand by $1,000.00 and because the defendant was intending to deed the land to Mr. Rogers. Mr. Rogers was asked: "What was your intention in giving the check? A. Nothing whatever except to help Mr. Stanton get his place back."
April 30, 1929, the plaintiff wrote the defendant:
"Dillon, S.C. April 30, 1929.
"Mr. H.C. Stanton, Dillon, S.C.
"Dear Sir: This is to agree that if you pay me all you are due on your tract of land which has been deeded to me — on or before Dec. 1, 1929, and pay all interest and any other accounts which may be due me, and outstanding at that time, plus one thousand dollars, I will deed the land back to you free of all incumbrance. It is agreed that I will advance you from time to time any necessary cash to work the farm this year.
"It is understood and agreed that the proceeds of all crops as gathered is to be turned over to me as a credit on the account. If you buy back the farm on this basis I will charge you interest at the rate of 8% per annum on all moneys outstanding including the price of the place. If you fail to buy back the farm on this basis it is agreed and understood that the one-half share contract — verbally made — is to stand. If on the share contract, I agree to furnish land, fertilizer, and you do all the labor — and we divide the crop half and half — including cotton seed.
"The amount of the Federal Land Bank Mortgage is to bear interest at the same rate as charged by the Land Bank.
"Yours very truly,
"WADE STACKHOUSE."
Appearing on the back of this letter are following two separate writings:
"Mr. H.C. Stanton:
"If we settle on the crop of 1929 on the share basis, I agree to accept one-half of all crops made as interest on my investment. If you can redeem the place on or before December 1, 1930, I agree to extend this agreement so as to cover the year 1930, but if place is not redeemed before December 1, 1930, we are to work the next crop the same as for 1929.
"WADE STACKHOUSE, Dillon, S.C.
"November 15, 1929."
"I agree to extend proposition to buy back farm till December 1, 1931 — but all improvements that may be made to the farm will be added to the price of the farm.
"WADE STACKHOUSE.
"Nov. 29, 1930."
The defendant testifies that he was forced to accept these terms because he could get no others from the plaintiff.
There ensued a series of negotiations and letters between the parties extending over 1930-1934, in which the defendant was encouraged to believe that if he would pay up what he owed the plaintiff the land would be redeeded to him. In the fall of 1933, defendant made application to the Federal Land Bank for a loan; W.C. Moore, Esq., an attorney at the Dillon bar, represented him. Mr. Moore testified:
"We were applying for a loan of $4,000.00 — maybe $15,000.00 ($5,000.00?) was the application and it was finally approved for $3,100.00.
"Q. Net to Dr. Stackhouse? A. That amount was allocated to the payment of Dr. Stackhouse. Doctor did not agree to accept that. Finally the loan was increased to $4,000.00. That is the amount applicable to the payment to him.
"Q. $4,100.00, wasn't it? A. Maybe it was, it was approximately $4,000.00. I recall that when that finally came to my attention, I called Dr. Stackhouse on the phone and asked him if he would accept that, and he said he would not, and as far as negotiations for completing the transaction were concerned, he wouldn't go any further with them."
On cross examination he said that Dr. Stackhouse or Mr. Stanton told him that Dr. Stackhouse would take $5,000.00 subject to the Land Bank mortgage. Witness knew as a fact that the approximate total indebtedness was $8,000.00. It appears elsewhere in the testimony of the plaintiff that $2,000.00, approximately, of this indebtedness arose from the farming operations after the execution of the deed. It is a fair inference that if plaintiff had accepted the check of Mr. Rogers in 1929, this extra indebtedness would not have accumulated.
It is established by the evidence that this is a valuable tract of land, worth $50.00 to $75.00 an acre. Mr. Rogers testified that it was worth that in 1929, when the deed was made. Plaintiff himself had owned it, and had sold it to the father of defendant for $100.00 an acre; since which sale defendant had put several thousands of dollars of improvements on the place and it was in a high state of cultivation.
The close examination of this case leads us to the inevitable conclusion that this deed, when made, was intended to be, and therefore was, a mortgage. The subsequent dealings and transactions did not change its nature. "Once a mortgage, always a mortgage," unless there is additional consideration for any change made; and there is no evidence of such additional consideration.
In the quoted case of Leland v. Morrison, Judge Gage, who heard the case on circuit and whose decree was affirmed by this Court, said: "Above all things no harm can come to Morrison by granting the relief sought. He cannot lose a cent. He testified that the improvements, which cost him some $5,000.00, are on such part of the whole as may be set aside to him when partition be had. He is entitled to have that remedy to protect him from loss. He is furthermore entitled to have Leland's half interest first subjected to the payment of all sums which Morrison has paid, and which Leland ought to have paid. When that has been done, if there yet be a surplus, then Leland is entitled to it. It seems to me that this is complete equity." (Italics added.)
In imitation of the just principle of this eminent jurist — no less renowned for his knowledge of the law, than for his acute sense of justice — we think it would be "complete equity" to provide a method which will amply safeguard the rights of plaintiff and protect those of defendant.
The plaintiff testifies that he does not want this land; that he has some 6,000 acres now; he only wants his money. The defendant does want the land; he ought to pay what he owes the plaintiff; he has availed himself of the right contained in the contract for the execution of the deed, to occupy the land in the effort to redeem it. He ought, therefore, in justice to the plaintiff, pay whatever debt he has incurred to the plaintiff in connection with the advances for his farming operations made to him by plaintiff in pursuance of that agreement. It is apparent from the record that the parties do not agree on that amount.
It is the judgment of this Court that the deed executed by defendant to plaintiff on the 14th day of January, 1929, was intended to be, and is, a mortgage.
That the decree of the Circuit Judge is reversed.
That the case be remanded to the Circuit Court for Dillon County with instruction to refer it to the Master for that county to ascertain and report the amount due from the defendant to the plaintiff on the equitable mortgage so as above held; and also the amount due from defendant to plaintiff on the farming operations of defendant on the land in question, since the making of the said mortgage. Upon the coming in of the Master's report; and the confirmation thereof, the Circuit Court shall give judgment in favor of plaintiff against the defendant for the amount thus found to be due; and the Circuit Court shall fix a reasonable time in which defendant shall pay that sum to the plaintiff; and if defendant does not make such payment, the Circuit Court shall issue to the plaintiff its decree in foreclosure of the said tract of land, in the usual form of foreclosure; and barring the defendant's equity of redemption.
MR. CHIEF JUSTICE STABLER and MR. JUSTICE BAKER concur.
MESSRS. JUSTICES CARTER and FISHBURNE dissent.
This case, which was comes to this Court on appeal from the decree of his Honor, tried in the Court of Common Pleas for Dillon County, Judge G. Dewey Oxner, who heard the case on the Circuit. The facts and issues involved are sufficiently set forth in the decree of Judge Oxner, and for the reasons stated therein I think the judgment of the lower Court should be affirmed. I therefore most respectfully dissent from the leading opinion.
MR. JUSTICE FISHBURNE concurs.