It was pointed out in Pallett v. Pallett, 123 Cal.App. 701 [ 11 P.2d 898], that courts of equity are loath to hold that a deed which is absolute in its terms is a mere mortgage unless satisfactory and convincing evidence to that effect is produced. [2] The mere fact that an option to repurchase is given at the same time is not sufficient, of itself, to establish the fact that a mortgage was intended by the parties. ( Garwood v. Wheaton, 128 Cal. 399 [ 60 P. 961]; Thompson v. Mansfield, 84 Cal.App. 560 [ 258 P. 702]; Davis v. Stewart, 31 Cal.App.2d 574 [ 88 P.2d 734].) [3a] There is ample evidence to support the findings that the respondents did not know that the appellants claimed any interest in this property, and that the appellants had knowledge of the manner in which Andrews was conveying the property to the respondents and taking back an option.
Whatever may be said with reference to the information given by the bank to the insurance company, the record shows that Dalmo through Moseley requested of the insurance company "that the moneys payable under the above policy be paid to the Pacific National Bank without prejudice." [14] In Thompson v. Mansfield, 84 Cal.App. 560, 565 [ 258 P. 702], the court said: "There is nothing to prohibit a mortgagor from transferring the title to his mortgagee by a conveyance made subsequent to the mortgage, and a discharge of the debt where the transaction is fair and honest and without fraud and where no unconscionable advantage has been taken of his position by the mortgagee is a sufficient consideration for the transfer ( Watson v. Edwards, 105 Cal. 70 [38 P. 527]; Bradbury v. Davenport, 120 Cal. 153 [52 P. 301]; Garwood v. Wheaton, 128 Cal. 399 [ 60 P. 961])." ( Graves v. Arizona Central Bank, 205 Cal. 715 [ 272 P. 1063].)
( Montgomery v. Spect, supra). [4] There is nothing to prohibit a mortgagor from transferring the title to his mortgagee by a conveyance made subsequent to the mortgage, and a discharge of the debt where the transaction is fair and honest and without fraud and where no unconscionable advantage has been taken of his position by the mortgagee is a sufficient consideration for the transfer ( Watson v. Edwards, 105 Cal. 70 [38 P. 527]; Bradbury v. Davenport, 120 Cal. 153 [52 P. 301]; Garwood v. Wheaton, 128 Cal. 399 [ 60 P. 961]). The plaintiff testified that the conveyance to Thompson was intended as a discharge of the debt and the testimony of the defendant Soyer, who testified in effect that the debt was paid when the conveyance was made, supports the conclusion that such was her understanding.
Section 2889 of the Civil Code has no application to such a case, for it only purports to apply to original transactions. This is clear from the language of the section itself and our supreme court in Watson v. Edwards, 105 Cal. 70, [38 P. 527], and Garwood v. Wheaton, 128 Cal. 399, [ 60 P. 961], so held. Appellant cites Henlay v. Hotaling, 41 Cal. 22, and other authorities as holding that "the test of whether or not the transaction is a continuing mortgage is, is there a subsisting continuing debt from the grantor to the grantee."
This was clearly not the proper measure of damages, as it wholly failed to establish the value of the land before the injury, and such evidence alone, we think, has universally been held insufficient to support a verdict for substantial damages. Avery v. Wallace, 98 Okla. 155, 224 P. 515; Garwood v. Wheaton (Cal.) 60 P. 961; Cleveland, etc., Ry. Co. v. Vettel (Ind.) 133 N.E. 605; McDougald v. So. Pac. Ry. Co. (Col. App.) 98 P. 685; and McDougald v. So. Pac. Ry. Co. (Cal.) 120 P. 766. In the latter case, as here, the proof was as to the value of the land at the time of the trial as it would be without the structures and as it really was at the time of the trial with the structures.
n the case at bar, the significance of the fact that the price was adequate becomes particularly impressive in view of other circumstances, like the return to the grantor of the evidences of indebtedness, the surrender of possession to the grantee, and failure of the grantors to assert any claim of right or interest in the premises for over six years thereafter, although they saw the grantee almost daily most of that time and knew that he was endeavoring to, and did in fact, sell the land to other parties. Carr v. Rising, 62 Ill. 14; Barton v. Lynch, 69 Hun, 1, 23 N.Y. Supp. 217; Rathbone v. Maltz, 155 Mich. 306, 118 N.W. 991. Where the grantee takes possession, leases the same to a third party, and, with the knowledge of the grantor, but without protest from him, in all respects deals with the property as his own, for years thereafter, the presumption that the deed was for security, raised by other circumstances, is rebutted. See Fletcher v. Northcross, 3 Cal. Unrep. 799, 32 P. 328; Garwood v. Wheaton, 128 Cal. 399, 60 P. 961; McCaughey v. Schuette, 117 Cal. 223, 59 Am. St. Rep. 176, 46 P. 666, 48 P. 1088. It appears that the value of land has increased since January, 1916.