General Casualty Co. v. Soda

DRAPER, J.

Asserting that the deed under which defendants claim title to land in Contra Costa County was in

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fact a mortgage, plaintiff brought this action to quiet title to lots still held by defendants, and for money judgment for the proceeds of lots theretofore sold by them. Defendants claimed that their deed was in fact absolute, and also relied upon a release claimed to amount to a surrender of the equity of redemption if the transaction were in fact a mortgage. They asserted further that plaintiff’s apparently absolute deed was itself but a mortgage. Their cross-complaint sought to quiet title in them. Judgment was for plaintiff. Defendants appeal from the judgment as a whole. Plaintiff appeals, asserting that a larger amount should have been allowed.

Both deeds in question are absolute in form. Both were made by Osage Development Company, one of a number of corporations wholly owned by T. R. Bechtel and Marvin Sherwin. Bechtel, Sherwin, and their several corporations had been engaged in real estate subdivision and development projects in and about Hayward, and defendants Soda, directly or through corporations owned by them, had largely financed these transactions. As to Tract 1032 in Hayward, the Sodas took title to the land as security, and as each house was sold conveyed title to a Beehtel-Sherwin corporation which in turn deeded to the buyer. Late in 1950, Bechtel and Sherwin owed the Sodas more than $100,000. They had other creditors. They proposed to pay one of these by deeding two lots in Tract 1032 to him. There is testimony that the Sodas refused to release these two lots, and that Beehtel-Sherwin then agreed to transfer the 10 Danville lots here in issue as “substitute security.” The Sodas then deeded the two Hayward lots to a Beehtel-Sherwin corporation, and Osage deeded the 10 Dan-ville lots to the Sodas by deed dated December 12, 1950 and recorded January 25, 1951. Bach of these deeds contains on its face the statement “consideration less than $100.” In fact, Soda testified that the two Hayward lots were worth $2,400 to $3,000. Beehtel-Sherwin had paid $17,500 for the 10 Danville lots.

On May 8, 1951, some five months after date of this deed, the Sodas and their several corporations, on the one hand, and Beehtel-Sherwin and their several corporations (including Osage Development Company) on the other, entered into a mutual release. The Sodas, as part of this transaction, paid Beehtel-Sherwin $33,000 and took over all remaining interest in the Hayward tracts. The four paragraphs of recitals in the mutual release, as well as one paragraph effectuating the release, refer to named tracts of land in Hayward, including