Graham Co. v. Russell , 55 N.D. 717 ( 1927 )

Burke, J.

The plaintiff, the Graham Oompany, prior to the 23d day of February, 1923, was the owner of lot “A” outlot of Eddy and Fuller’s outlots to the city of Fargo, North Dakota. The Graham Company mortgaged the said property to the Interior Lumber Company of Fargo, which company purchased a number of judgments and liens upon the property which had been foreclosed, and one of which had ripened into a sheriff’s deed, on the 23d day of February 1923; and on that date said lumber company had $8,200 invested in said property, and held the legal title thereto. There were at said time, other mortgages, and liens, against said property, one for $2,200, one for $240, one for $1,200, and one for $131.40.

On February 24, 1923, the Interior Lumber Company by warranty deed, conveyed the said property to the defendant, Horace G. Bussell, who at said time paid as a consideration to the Interior Lumber Company the sum of $8,200, and assumed the other mortgages not then due, amounting to $3,771.40. On the same date the defendant, Bussell, agreed to sell to the plaintiff, the Graham Company, the said property by the terms of a written contract for the sum of $12,600, $500 payable quarterly, the possession of said property being retained by Bussell, and the rents and profits therefrom were to be by Bussell collected and credited on the contract as additional payments on the purchase price, and to receive 5 per cent commission from the gross rents and profits for his service in looking after, and managing the property, the whole purchase price to be paid on or before March 15th, 1926.

In October, 1923, the Graham Company also became indebted to the defendant in an additional sum of $520, for rent upon other property in the city of Fargo, and as security for the payment thereof, the said contract for a deed was assigned by the Graham Company to the defendant, Bussell.

The plaintiff, the Graham Company, claims that the warranty deed from the Interior Lumber Company to the defendant, Eussell, is a mortgage, and prays to have the same declared a mortgage, and for an accounting between tbe plaintiff and defendant, and alleges tbat it is ready to pay whatever may be justly due to tbe defendant Eussell. In reply to defendant’s answer, plaintiff alleges tbat be does not know bow much is due defendant. During tbe trial tbe plaintiff was granted leave to amend bis reply, and in whicn amended reply it is alleged, tbat tbe money advanced by tbe defendant, Eussell, included a $1,000 in excess of tbe actual money loaned by said Eussell, and prays tbat tbe said contract be held usurious, and tbat tbe defendant, Eussell, forfeit all interest due, and be required to pay to said plaintiff double tbe amount of usurious interest collected by said Eussell from tbe said Grabam Company.

Tbe trial court found as facts, tbat tbe Interior Lumber Company was tbe owner in fee of tbe property in question on tbe 24th day of February, 1923, tbat tbe instrument executed on tbat day by tbe Interior Lumber Company to tbe defendant, Eussell, which purports to be a warranty deed was in fact a warranty deed, and not a mortgage, tbat on said date, Horace G. Eussell executed and delivered a contract for a deed to tbe plaintiff, tbe Grabam Company whereby be agreed to sell tbe said property to tbe Grabam Company for $12,600, payable in quarterly installments of $500, tbe whole sum to be paid on or before March 15, 1926, tbat tbe said Horace G. Eussell, thereafter paid off all tbe incumbrances and has been at all times ready, able, and willing to conform to tbe terms of bis contract and tendered to tbe court a deed to said property, free and clear of incumbrances, tbat tbe plaintiff tbe Grabam Company has defaulted in tbe terms and conditions of tbe contract and has made no payments on tbe purchase price as specified or upon tbe collateral indebtedness of $520, except, from tbe net profits from tbe rentals collected by tbe defendant and applied on tbe purchase price, and further tbat there is due to tbe defendant, Eussell, tbe sum of $12,109.88.

As conclusions of law tbe court found tbat tbe contract for tbe deed was a bona fide sale, and not a mortgage, tbat there is a default in tbe conditions of tbe contract by tbe Grabam Company in tbat it has failed to make tbe payments thereunder, including tbe payments of interest, principal and taxes as therein provided, and that the defendant, Russell, is entitled to judgment foreclosing, the contract for a deed in which judgment it is provided that the plaintiff, the Graham Go. have a reasonable time within which to pay the amount due under said contract, which time was fixed at six months.

There is just one question in this case, and that is a question of fact, viz., was the instrument executed by the Interior Lumber Company to the defendant, Russell, a deed or a mortgage %

It is the contention of the plaintiff, that the Interior Lumber Company held the legal title to the property only as collateral security, and the deed from the lumber company to Russell is a mortgage. If Russell purchased the property from the Interior Lumber Company, and then sold it to the Graham Company there can then, be no question of usury. All that is necessary to do is to figure the amount due on the contract. The instrument purports to be a deed, a warranty deed in which the defendant Russell binds himself to pay other mortgages amounting to $3,111.40. If Russell was only making a loan it does not look reasonable that he would agree to pay the other mortgages not then due. On April 5, 1926, Graham wrote to Russell saying, “I received your letters about balance due on property.” He does not say the balance due on the mortgage but the balance due on the property, and the record shows he is referring to the property in question. On February 26, 1923, Graham wrote to Russell enclosing a statement “To whom it may concern; this will advise that Mr. H. G. Russell has purchased the above property, and will collect the rents, accruing from this date.” All of the written evidence supports the contention of the defendant that the instrument is a deed. It is also supported hy the testimony of Russell, and there is a direct conflict between Russell and Graham on the question of deed, or mortgage, purchase or loan, and whether they treated the instrument as a deed or mortgage. It is well settled that a deed absolute on its face may be shown to be a mortgage, but the evidence must he clear and satisfactory, and it is far from being either clear or satisfactory in the case at bar, and the judgment is affirmed.

Birdzell, Oh. J., and Burr, Christianson, and Nuessle, JJ., concur.