Davis v. Stewart

NOURSE, P. J.

The defendant appeals from an adverse judgment holding that a deed absolute in form was in fact an equitable mortgage. The grounds of the appeal are that the evidence does not support this finding, and that as the defendant extinguished the debt which the documents are claimed to have secured when, under the same agreement, he dismissed with prejudice a pending suit to foreclose a lien

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upon the property for that debt, there is no mortgage securing the indebtedness which plaintiff concedes is unpaid. Objection is also made to the order of the trial court charging the defendant with negligence in the operation of the property and his failure to procure adequate rental and income while in possession, as a result of which the obligation, which the trial court held was secured by the transfer, was reduced something over $2,000. The real property was owned jointly by the plaintiff and her husband both of whom executed the documents herein involved. Thereafter the husband conveyed all his interest to the wife, and she alone sues as plaintiff.

The first point raised by the appellant is the one which presents the real difficulty. The undisputed facts are that the plaintiff and her husband, while in possession of the property which is located on the San Eafael highway at its junction with the San Quentin highway and occupied by a filling station and auto rental camp, were deeply in debt upon obligations, some of which were secured by liens upon the property. They were also obligated to the defendant in the sum of $6,788 for work and labor performed on the premises, which sum was the subject of a mechanic’s lien filed upon the property, suit to foreclose which was pending at the time of the agreement hereinafter referred to. The owners had endeavored to secure a loan from local banks to finance their property, but this assistance was denied them, and on September 27, 1932, an agreement prepared by their respective counsel was executed by these owners with the defendant, reciting these various obligations and encumbrances upon the land. In this contract the defendant agreed to dismiss with prejudice his action to enforce his mechanic’s lien and to pay off and cause to be released all existing liens and encumbrances upon the property, and in consideration therefor the owners agreed to sell, assign and transfer by good and sufficient deed all their rights and interest in the property. The defendant agreed to give to them an option to repurchase the property for the total sum of “$13,479.29, plus all recording charges, title insurance charges, taxes and other assessments, insurance of all classes on said property, including public liability insurance, attorney’s fees, court costs and other charges reasonably convenient and/or neces