Emery v. Lowe

McFARLAND, J.

This is an appeal by defendants from a judgment in favor of plaintiff and. from an order denying their motion for a new trial.

The action is upon a promissory note made by defendants to plaintiff of the date of March 19, 1898, for $1,542.75, due ninety days after date. The first formal defense set up in the answer is want of consideration; but subsequent averments in the answer and the course of the trial show that the real defense is, that the note was merely another form of part of a large present indebtedness secured by an instrument in writing which, on its face, is an absolute conveyance of certain real property, but is alleged by defendants to have been intended as a mortgage; and appellants’ contention is, that respondent’s only remedy is an action to foreclose the mortgage as provided by section 726 of the Code of Civil Procedure. The court, however, found that the instrument was an absolute conveyance of the property, and was not, and was not intended to be, a mortgage; and unless this finding can be disturbed, the judgment and order must be affirmed.

The main features of the case are these: The appellants had been the owners of certain real property situated in the city of Pasadena, California, which they had mortgaged to the State Loan and Trust Company of Los Angeles, a corporation, to secure about thirty thousand dollars. The mortgage had been foreclosed, and at a commissioner’s sale under the foreclosure the said loan and trust company had purchased the property and received a certificate of purchase; and the time for redemption would expire on the twenty-second day of July, 1897. A few days before that time—about July 16, 1897—the appellant T. S. C. Lowe went to E. H. Lockwood, who was a real estate agent residing at Pasadena, and told him of the situation of the property, and asked his assistance in raising the money to save his right of redemption. Appellant first wanted to borrow the money and give a mortgage. There is some conflict in the testimony of

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Lockwood and appellant as to what next occurred. Lockwood testified that he told appellant that it would be impossible to negotiate a loan for the .necessary amount of money, and asked him “if there was any other arrangement that could be made,” and-appellant said that “he would be glad to sell the property provided he were given an opportunity to repurchase the property within a reasonable time at a good advance.” It was found that it would take thirty-four thousand dollars to satisfy the said loan and trust, company and to meet certain other incidental expenses; and Lockwood testified that it was agreed that if he could make the necessary arrangements for the sale of the property, appellant would have the privilege of repurchasing it within a year at thirty-nine thousand dollars, and would also lease it for a year and pay two hundred dollars per month cash rental, and also certain taxes and insurance. Appellant’s testimony as to these conditions was practically the same as that of Lockwood, except that, according to the former’s testimony, the deed to the purchaser was to be considered a mortgage. At that time the respondent, Emery, was in the state of New York, where he resided; but for several years he had been in Pasadena a few months each year, and was acquainted there. He knew Lockwood, who, as agent for others, had sold respondent some pieces of land there, and who had also done some business there "for respondent. So far as respondent is concerned, the negotiations which resulted in his buying the land here in question were conducted entirely by telegrams, which all appear in the record, and they amount substantially to this: On July 16, 1897, Lockwood telegraphed to respondent, speaking of the property here in question, “Can sell now entire property and convey perfect title for amount of claim thereon, which is thirty-four thousand dollars, provided Lowe is given option to purchase back at five thousand dollars advance within one year.” In reply to this respondent wired back that he did not like to make important deals in such hasty manner, and made inquiries as to the acreage and what rental Lowe would pay in addition to the five thousand dollars, and other details, and saying that he did not think it a very salable property. Lockwood replied, giving the details asked for, and saying that “Lowe offers, in addition to five thousand