Thomas v. Board of Supervisors ( 1890 )

Cooper, J.,

delivered the opinion of the court.

This is a controversy between the board of supervisors of Holmes county and appellant touching the liability of appellant to be assessed and pay taxes for the years 1884, 1885, 1886, 1887 and 1888 on the sum of $46,071.05, which the board contends she owned as personal property during such years. The facts are, that prior to the year 1884 one Keirn was indebted to William S. Thomas, the husbaud of appellant (who is now dead, leaving her his sole heir-at-law and distributee), in a large sum of money, the payment of which was secured by a mortgage on a large body of lands in Holmes county. Keirn was also indebted to many other persons whose debts were secured by mortgages on other lands. On the 17th of May, 1884, an arrangement was entered into between Keirn and Thomas by which Thomas surrendered and cancelled the notes he then held against Keirn, and assumed the payment of a note of $6181.25 due by Keirn to one Jenkins. The sum of the notes surrendered and of that the payment of which Thomas assumed was $46,071.05. In consideration of this surrender of his debt by Thomas and of his assumption to pay the debt to Jenkins, Keirn on that day executed a conveyance of a large quantity of lands, being the same lands before that time mortgaged to secure the payment of the notes above mentioned. The conveyance is in usual form in its recital of the consideration paid and the description of the land conveyed, and then proceeds thus : “This deed is, however, conditional that the said W. L. Keirn shall have the right to redeem said lands at any time within five years from the date hereof, or before the title of the said Thomas has become absolute, by paying to said Thomas the sum of $46,071.05, with 6 per cent, interest thereon from date hereof. If the said Keirn shall fail to pay annually on the 17th day of May the accrued interest on said sum of $46,071.05, then the title of said second party becomes absolute and perfect, and the said Keirn shall be barred of all further right of redemption, and the said Tilomas or his heirs shall be entitled to the immediate possession and control of said lands, which it is agreed shall hereby be delivered to him and his heirs. And if said Keirn at the expiration of said five years shall fail or refuse to pay said sum of $46,071.05, with any accrued interest that may be due thereon, or any part thereof, then the title of said second party to said lands shall become absolute and perfect, and he shall be entitled to the immediate possession and control of the same as his own property, and the said Keirn shall be barred of further rights therein. The said Keirn shall have the right to the possession of said lands until the failure to pay said interest annually occurs, or of failure to pay said sum of $46,071.05, or any part thereof, as hereinbefore agreed, he, the said Keirn, keeping all the taxes and assessments against said lands paid off and so discharged.”

But little parol evidence was introduced by either party, but Mr. Hooker, a witness for appellant, stated that, “ before the execution of the deed, Dr. Keirn was indebted to William Thomas in a large sum of money, and to Jenkins and other parties. About the time of the execution of the deed a scheme was formed by which it was supposed that Dr. Keirn could be released entirely from debt, and save some part of his property. Mr. Thomas bought from Dr. Keirn the places described in the deed, and in payment thereof delivered up to him his notes, which bore 10 per cent, interest, and all evidences of debt, and released him from all obligations to him. This was a bonaficle purchase, and not a loan of money. Dr. Keirn did not owe Mr. Thomas anything, nor had Mr. Thomas any claim which he could enforce against Keirn. The scheme fell through, and Dr. Keim desired of Mr. Thomas the privilege of repurchasing the land within five years by paying the taxes on the land, and about $2700 annually. Thomas could not have sold the land on account of the agreement held by Keirn.” The fact appears, by a quit-claim deed made by Keirn to Mrs. Thomas, that, before the hearing of this cause by the board of supervisors, Keirn had surrendered his right of redemption, and taken a lease of the land for an additional term of years.

Conceding for the purposes of this examination, the power of the board of supervisors to apply equitable principles to contradict the express language of a deed, and conceding its power to re-examine the subject of the liability of Mrs. Thomas to taxation on the property or debt notwithstanding the conclusions reached by the board in preceding years that she was not, we dispose of the cause upon its merits. Looking alone to the deed, we find some of its features to be those of a mortgage, and some those of a conditional sale. The release of the debt from Keirn to Thomas, in consideration of the conveyance; the absence thereafter of any personal obligation or duty on the part of Keirn to pay anything to Thomas; the stipulation making time of the essence of the right to re-acquire the land; the fact that before the execution of the deed the relation of mortgagor and mortgagee had existed, and the evident purpose to change such relationship; the fact that by the change then made Keirn secured decided benefits, and that by such arrangement Thomas was put at serious disadvantage by surrendering notes then due and drawing interest at 10 per cent, upon which Keirn was personally responsible, and that to construe the instrument as a mere mortgage would add to the loss he has submitted to — are circumstances tending to show that the contract was for a conditional sale, and not for a mortgage. On the other hand, the agreement of Keirn to pay a stipulated sum per annum as “ interest” on the purchase price during the five years in which the conveyance reserved to him possession of the land; the fact that such right of possession was reserved; the fact that the deed reserved the right to redeem by repayment of the exact sum recited as the consideration of the conveyance; and the use of the technical word “ redeem” by the parties to describe the right reserved to Keirn — are indicia tending to show that the conveyance was intended to be a mortgage, and not a conditional sale.

An examination of the authorities discloses that, while one or the other of such circumstances has in particular cases been powerful in determining the character of the instrument, each case was decided upon its own facts, and, where doubt existed on the face of the instrument, the court sought by the aid of extraneous evidence to discover and effectuate the intent of the parties. The authorities are collected in.l Jones on Mortgages, chap. 7.

The testimony of Mr. Hooker, who is of counsel for Mrs. Thomas, and was familar with the intention and purpose of the parties, is conclusive, in our opinion, of their understanding and design, and is supported by the evidence that, before the hearing by the board of supervisors, Keirn dealt with his right as one for repurchase only, and surrendered it to Mrs. Thomas. Taxes have been paid to the county on the lands, which, in our'opinion, were the lands of Mrs. Thomas, and she,should not have been assessed with the purchase-price paid for them as so much money secured by mortgage on them.

The judgment is reversed, the action of the board directing the assessment vacated and the assessment annulled.