Sears v. Dixon , 33 Cal. 326 ( 1867 )

By the Court, Currey, 0. J.:

It seems to he conceded hy hoth parties that, if the transaction between Dixon and Woodham amounted to a mortgage, it was void for any purpose whatever, according to the provisions of the second section of the Homestead Act of 1860. (Stats. 1860, p. 311.) The inquiry then is whether it constituted a mortgage or a conditional sale. Ho question can arise here as to the admissibility or the effect of parol evidence to convert a deed, absolute on its face, into a mortgage, for the evidence is not returned, and it must he presumed that the facts in issue were found upon competent as well as sufficient evidence.

It is urged that the Court did not find that the one thousand dollars passing from Woodham to Dixon, at the time Dixon and wife executed to the former a deed, was a loan. The fact is not expressly found. The money was either loaned, or it was paid as the purchase price for the premises. If the latter was the case, then the deed was absolute, and the eotemporaneous or subsequent agreements did not, because they could not, convert the deed into a mortgage. If the money was not borrowed by Dixon, the transaction could not amount to a mortgage, for confessedly there was nothing to be secured, unless it was the repayment of that money and interest. The defendant in his answer alleged that the money was received as a loan, and that the deed was intended as a mortgage to secure its repayment; and the Court treated it as a mortgage, and on that ground ordered judgment for the defendant. It must therefore be held that the Court found as a fact, though it is not expressly stated in the findings, that the sum received was a loan. That fact would be consistent with the findings as filed, as well as the issues; while a finding that it was a payment for the purchase money upon a sale of the premises would be inconsistent with the decision, if not with the. facts recited in the finding.

It is also urged the Court did not find that the transaction constituted a mortgage. In this the counsel is in error— being led into it, probably, by the form of the findings. The Court, after stating certain facts as proved, proceeds as follows: “ My conclusion from the foregoing facts is that the plaintiff is not entitled to recover possession of the said premises in controversy, because, First—At the date of the deed they constituted the homestead of the defendant, etc. Secondly—The said deed of July 27, 1861, was made and intended as a mortgage to secure the payment of one thousand dollars, which the defendant covenanted by his agreement to pay to said Woodham, two years from date, with the rent therein specified, in lieu of interest thereon.” Each of these are ultimate facts in the case, and it would have been more orderly to have stated the conclusion of law after stating such facts. The Court, it is true, says that he draws his conclusion from the “ foregoing facts,” hut he also says he does so because of the facts that he then proceeds to state. The question whether a deed given under circumstances like those in this case was intended as a conditional sale or a mortgage is a question of fact. The conclusions of law which it was designed by the Practice Act should be stated in connection with the findings of fact, were not to be drawn from other conclusions of law, for that would be illogical as well as unnecessary, but from the facts of the case. In other words, the conclusions are what in the opinion of the Judge constitute the law of the case, arising from and applicable to the facts that are proved or admitted in the case. And besides this, were we wrong in considering that the. Court had expressly stated this as a fact, the rule announced in respect to the loan would he applicable' here. The decision could not be maintained without finding that the transaction amounted to a mortgage, and that fact being in issue, it will he presumed to have been found.

Under the provision of section one hundred and eighty of the Practice Act, as amended in 1866, if the losing party appeals, without having moved for a new trial, or without having excepted to the findings as defective, the written findings are of no value for any purpose to the prevailing party; nor are they of benefit to the losing party, unless they contain facts that are repugnant to or inconsistent with the judgment. The prevailing party needs no written finding. If he is not entitled to recover upon proof of the facts he alleges, a finding will not aid him, and if he is so entitled, and the decision is for him, he needs no written finding, for it is presumed that the facts essential for the support of the judgment were proved. And on the other hand, the losing party is neither benefited nor injured by the finding or the absence of a finding of the facts, which, if proved, entitle the opposite party to a judgment. He is interested only in having the finding state facts repugnant to or inconsistent with those upon which the opposite party relies, whether recited in the finding or not. In other words, he is interested in having error affirmatively appear. Previous to the Act of 1861, findings were required to support the judgment; but under that Act and section one hundred and eighty above mentioned, where there is no exception on the ground that the finding is defective or wanting, it is only requisite that the finding shall not be repugnant to or inconsistent with the judgment.

This brings up the only remaining point which we think it necessary to notice. It is found that when Dixon applied to Woodham for the loan of the one thousand dollars upon the homestead property, Woodham “ referred the matter to his lawyer, who advised him that a mortgage on the homestead of the defendant would be ineffectual to secure the payment of the money.” Woodham thereupon refused to lend upon the security. This, it is insisted, shows that the parties did not intend that the property should be mortgaged to secure the repayment of the money. It is apparent that they did not intend that a mortgage eo nomine should be executed. Woodham was unwilling to accept, as his security, a lien in that form. But does not the transaction show that he was willing to accept, and did take a conveyance of the legal title as his security ?

The findings show that “ it was finally understood and agreed ” between them that Woodham would let Dixon have the one thousand dollars, and that Dixon would convey the property to Woodham by deed; that Woodham would lease the property to Dixon at a rent that would be equivalent to the interest on the one thousand dollars at one and a half per cent per month, and would reconvey the property upon Dixon’s paying the one thousand dollars and the rent; that in pursuance of that understanding and agreement the deed was executed and the money paid, and nine days subsequently the parties executed an instrument which constituted the lease, the covenant to reconvey, and a covenant on the part of Dixon to pay the rent and the sum of one thousand dollars on or before the expiration of the lease. All these facts unmistakably indicate a loan, and a security for its repayment. The fact that the agreement last referred to was executed' after the delivery of the deed does not impair its character as a defeasance, for it was executed in accordance with the understanding and agreement under which the deed was executed and the money paid. The very object of the admission of parol evidence, which we have held in Pierce v. Robinson, 13 Cal. 116 ; Johnson v. Sherman, 15 Cal. 291; Lodge v. Turman, 24 Cal. 385; Cunningham v. Hawkins, 27 Cal. 603; and Hopper v. Jones, 29 Cal. 19, was admissible, was to show the real nature of the transaction without regard to the mode or form in which the instruments in writing were executed. If the defeasance forms a part of the original transaction, it is not material that it be executed at the same time as the deed. (See Harrison v. Trustees, etc., 12 Mass. 463; Scott v. McFarland, 13 Mass. 309; Lovering v. Fogg, 18 Pick. 540 ; Bodwell v. Webster, 13 Pick. 411; Marden v. Babcock, 2 Met. 99; 4 Kent, 141.)

There are other facts in the finding that forcibly indicate a loan and security. After two parcels of the premises were sold by Dixon and conveyed by Woodham, the purchase money of the two parcels amounting to eight hundred dollars, Woodham lent to Dixon a further sum, so that the one thousand dollars was increased to one thousand five hundred dollars, and the rent was raised to twenty-five dollars per month.

We are of the opinion that the Court was justified in finding that the transaction constituted a mortgage, and that the parties intended thereby to secure the repayment of the sum loaned and the interest.

It is not doubted by any one that an absolute deed, accompanied, by a covenant to reconvey upon the repayment of the purchase money, or even a larger sum, may amount to a conditional sale, and the cases cited by counsel show that such transactions are frequent. To deny the power of two individuals,” says Mr. Chief Justice Marshall in Conway v. Alexander, 7 Cranch, 237, “ capable of acting for themselves, to make a contract for the purchase and sale of lands defeasible by the payment of money at a future day; or in other words, to make a sale with a reservation to the vendor of the right to repurchase the same land at a fixed price and at a specified time, would be to transfer to the Court of Chancery in a considerable degree the guardianship of adults as well as of infants.” On the other hand, there is as little question that such contracts may be made upon a negotiation of a loan ; and when it appears that such was the object and intention of the parties, the Court will construe it a mortgage. (Page v. Rogers, 31 Cal. 305; Robinson v. Cropsy, 6 Paige, 480; Holmes v. Grant, 8 Paige, 243; Clark v. Henry, 2 Cowen, 324; Taylor v. Weld, 5 Mass. 109 ; Hughes v. Edwards, 9 Wheat. 489; 4 Kent, 141.)

Judgment affirmed.

Mr. Justice Sanderson did not express an opinion.