Watson v. Edwards

Mortgage—Deed with Defeasance—Mutual Surrender of Defeasance and Note.—Where a mortgage is made by a deed and a separate defeasance, the surrender of the defeasance by the mortgagor, accompanied by the yielding up of the note and the discharge of the debt by the mortgagee, with the intent to make the deed absolute, is a valid transaction, as between the mortgagor and mortgagee, provided the transaction is fair, honest, and without fraud, and no unconscionable advantage has been taken by the mortgagee.

Id.—Change of Title—Estoppel.—Whether or not by the respective surrender of the note and debt and defeasance the technical legal title passed to the mortgagee is not material, since both parties are estopped, the one from claiming the debt and the other from claiming any interest in the land.

Id.—Change of Mortgage—Purchase of Mortgagor’s Right.—The doctrine “once a mortgage always a mortgage” does not refer to a future contract between the mortgagor and mortgagee in respect to the estate between the parties; and the mortgagee may always purchase the mortgagor’s right of redemption, and thus acquire an absolute title; and this rule is not changed by section 2889 of the Civil Code.

Id.—Consideration for Surrender of Right.—The kind or character of the consideration for the surrender of the rights of the mortgagor, or whether there is any consideration between the parties in addition to the mortgage debt, can make no difference as to the validity of the transaction between the mortgagor and mortgagee if the consideration is fair and adequate, and no advantage is taken of the mortgagor by the mortgagee.

Id.—Record Title—Action to Compel Conveyance—Intent to Vest Title.—In an action in equity to compel a conveyance of the apparent record title, equity, in determining whether it shall grant the relief sought, will not concern itself with the question whether or not the strict legal title passed by the deed which was originally intended as a mortgage, but it is sufficient to deny the relief that the title should have passed upon the surrender of the defeasance, and of the note and debt, with intent to pass the title, and that there should have been a redelivery of the deed.

Id.—Extinction of Trust — Tenancy in Common of Beneficiaries — Bona Fide Purchase by Mortgagee—Repurchase by One Beneficiary.—Where a mortgagee who holds a deed has given a separate defeasance, and the note and defeasance are surrendered by agreement with the mortgagor, with intent to pass the title to the mortgagee, who cancels the debt without notice of any trust relation between the mortgagor and other persons, the mortgagee becomes an innocent purchaser of the land, and the trust and tenancy in common of the beneficiaries is thereby extinguished; and a subsequent purchase by one of the beneficiaries of the record title held by the mortgagee does not inure to the benefit of the other original tenants, in common who were also beneficiaries under the trust.