Frady v. Ivester

December 19, 1921. The opinion of the Court was delivered by The record shows that the issue of title was raised by the pleadings, as to which either the plaintiffs or the defendant had the right to demand a trial by a jury; but that it was waived.

The appellant's first exception assigns error on the part of his Honor, the Circuit Judge, in refusing to allow the plaintiffs' attorney to amend the complaint. He has failed to satisfy this Court that there was prejudicial error. The exception is therefore overruled.

The argument of the appellants' attorney contains this statement:

"The other exceptions raise two practical questions: (1) Are the plaintiffs whose ancestor, Mrs. E.E. Tate, executed the mortgage in question, barred by the lapse of 20 years? (2) Is the plaintiff, D.E. Frady (now Marlin), having signed the mortgage during her minority, barred by the lapse of more than 10 years?"

The question will be considered next whether the plaintiffs are barred by the lapse of 20 years.

The issue of title is legal in its nature. Therefore the findings of fact by the Circuit Court which we have italicized are not reviewable by this Court.

The Circuit Court's conclusions of law from those facts have already been set out. It will be observed that the Circuit Court ruled, in effect, that the defendant did not become a trustee when she entered into possession of the lands by reason of the fact that she did not enter with the intention of holding the mortgaged premises as security for the mortgage debt, or for the collection of the rents and profits for the application to the payment of the mortgage debt. That the Circuit Court also ruled, in effect, that the defendant was not a trustee, by reason of the fact that her entry into possession without such intention was a claim of exclusive ownership, and a repudiation of any trust relationship, which started the running of the statute of limitations against the mortgagors and the plaintiffs. Section 3460, Code of Laws 1912 is as follows:

"No mortgagee shall be entitled to maintain any possessory action for the real estate mortgaged, even after the time allotted for the payment of the money secured by mortgage is elapsed; but the mortgagor shall be deemed owner of the land, and the mortgagee as owner of the money lent or due, and shall be entitled to recover satisfaction for the same out of the land by foreclosure and sale according to law: Provided, That notwithstanding the foregoing provision all releases of the equity of redemption shall be binding and effectual in law."

As the mortgagees had not released their equity of redemption at the time the defendant entered into possession of the lands, the legal title remained in them. NavassaGuano Co. v. Richardson, 26 S.C. 401; 2 S.E., 307.

The rights of the mortgagor and the mortgagee are thus stated in Walling v. Aiken, McMul. Eq., 1:

"It is the well known rule of the Court that that which was originally intended as a security shall never be turned into an absolute conveyance. Even if it be expressly stipulated that, if the money be not paid at a given day, the title shall be absolute, and the estate irredeemable, this stipulation operates nothing. And it is equally incompetent to stipulate from what source the funds to redeem may be derived. The mortgagee is considered in this Court, only as a creditor, and all that he is entitled to is his money, coming at what time (within the known limits) or from what source it may."

To the same effect, is the following language of the Court, in Brownlee v. Martin, 21 S.C. 392:

"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, * * * it will operate only as a mortgage, and it cannot be converted by any subsequent 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 numerous decisions.

The only consideration stated in the findings of fact by the Circuit Court is that, the mortgagors "being unable to make payments, the land was surrendered to the defendant in payment of the mortgage debts." It will thus be seen that there was no new consideration, and that, after the defendant entered into possession, the relation of mortgagor and mortgagee continued to exist between her and the mortgagor. Under these facts the law imposed upon the mortgagee the duties of a trustee. Sims v. Steadman,62 S.C. 300; 40 S.E., 677.

The defendant's entry into possession was permissive, and, as she had a duty to perform, she could not hold adversely to the rights of the mortgagors until she either surrendered the possession or gave notice of an adverse possession. Wilson v. Weathersby, 1 N. McC., 374;McCutchen v. McCutchen, 77 S.C. 129; 57 S.E., 678; 12 L.R.A. (N.S.) 1140; Pinckney v. Knowles, 112 S.C. 7;99 S.E., 354; Milhouse v. Patrick, 6 Rich., 350.

The possession which authorizes the presumption of a conveyance must be adverse, and not permissive.Trustees of Wadsworthville v. Meetze, 4 Rich., 51.

It will thus be seen that the Circuit Judge's conclusions from the facts found by him were erroneous.

We proceed to the consideration of the question whether the plaintiff, D.E. Frady, having signed the mortgage during her minority, is barred by the lapse of more than 20 years. The respondent's attorney says:

"The statute of limitations commenced to run against Elizabeth E. Tate, the owner of the lands, the 1st day of November, 1897. Elizabeth E. Tate died in September, 1905, and the running of the statute was not arrested by the infancy of E.D. Frady, appellant."

He has failed to take into consideration that E.D. Frady was one of the mortgagors. As she was laboring under this disability of infancy when the defendant entered into possession, neither the statute of limitations, claim of title by adverse possession, nor the presumption of a grant then commenced to run against her. Her disability was also a protection to the adult mortgagors against the statute of limitations and claim of title by adverse possession, but not from the presumption of a grant. McGee v. Hall, 26 S.C. 179;1 S.E., 711. Ihley v. Padgett, 27 S.C. 300;3 S.E., 468. Garrett v. Weinberg, 48 S.C. 28; 26 S.E., 3.

Reversed and remanded for a new trial.

MR. JUSTICE WATTS and MR. JUSTICE FRASER concur.