Wehle v. Price

PRESTON, J.

Plaintiff and appellant seeks by this action to have a deed executed by him to defendant Walter F. Price declared to be a mortgage, and to quiet his title to the land described therein.

The complaint alleges plaintiff’s ownership of certain real property valued at $8,000; that about December 3, 1923, as security for an interest-bearing note of $900 he executed a deed of grant, purporting to convey said property to defendant Price, but that at said time it was understood by both parties that the deed was given as security for a $900 loan, and upon repayment of said sum said defendant should reconvey the premises to plaintiff. It further alleges that about July 11, 1924, defendant commenced an action in ejectment against plaintiff, and on August 22, 1924, secured judgment by default in his favor.

Defendants, answering, deny that said deed constituted a mortgage. By way of separate defense they plead that the judgment in the prior action in ejectment between the same parties constitutes a bar to this action, and by way of cross-complaint they ask that plaintiff be enjoined from asserting any claim to the lands in question and that their title thereto be quieted. From judgment in their favor plaintiff prosecutes this appeal, urging that the facts indicate that the conveyance in question was intended by the parties as a mortgage and that the evidence is insufficient to support the findings and judgment.

The facts and circumstances surrounding the execution of the deed appear to be substantially as follows. Plaintiff was endeavoring to raise $700 to pay a fine imposed upon him for violation of the Volstead Act. He consulted defendant Price, who, after securing for him an extensión of ten days within which to pay said fine,' advised him to secure a loan from the Bank of Italy, where he had already borrowed $2,600, or from some other bank, or from his friends. After expiration of the ten-day period plaintiff again consulted defendant, stating that his efforts to raise money had been unsuccessful, and asking if defendant would not let him have the money and take a second mort

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gage upon his property. Defendant refused to do this, but finally stated that he would take plaintiff’s property for $700, giving him the privilege of buying it back at any time within six months for $900, plaintiff to pay interest on that sum and all interest due the bank. Pursuant to this arrangement, an attorney satisfactory to plaintiff prepared a grant, bargain, and sale deed from plaintiff to defendant, which recited a consideration of $900 and was subject to the $2,600 mortgage. Defendant then executed a grant, bargain, and sale deed back to plaintiff as grantee and an escrow agreement reciting the terms and conditions of repurchase, which documents, together with escrow instructions, were delivered to the Bank of Italy. Upon verbal agreement of the parties, plaintiff remained in possession of the premises during the period within which he could repurchase the property. Upon his failure to comply with the terms of the escrow agreement, and after due notice, defendant demanded that he vacate the premises, whereupon, after his failure to so vacate, defendant instituted an action in ejectment against him, securing judgment by default. Within two or three weeks after making said deed, plaintiff was again arrested for violation of the Volstead Act and in order to raise bail placed what purported to be a third mortgage of $1,250 on the property. Both parties claim to have paid, and evidently did pay, the second installment of taxes for the year 1924.