Ahern v. McCarthy

Belcher, C. On the 6th of October, 1886, the plaintiffs, who were husband and wife, executed to the defendant a deed, absolute in form, of a lot of land in the city of San Francisco, and in September, 1890, they commenced this action to obtain a decree adjudging that the said deed was in fact a mortgage, given to secure the payment of money due and to become due from plaintiffs to defendant, and that they he allowed to redeem the property on payment of the amount found due the defendant, and also that defendant be required to account for the rents and profits of the property while in her possession.

The answer denied that the deed was given to secure the payment of any money, or that it was, or was intended to be, a mortgage, and alleged that it was given and received as an absolute conveyance.

The court below found, upon all the issues raised by [383]the pleadings, against the plaintiffs, and gave judgment in favor of the defendant, from which, and from an order denying their motion for a new trial, the plaintiffs appeal.

The appellants contend that the findings were not justified by the evidence, and that is the only ground urged for a reversal.

It is a general and well-settled rule of law that a deed absolute in form, if given to secure the payment of a debt, will be treated in equity as a mortgage, and the facts and circumstances attending its execution may be shown by parol evidence. The law upon this subject is stated in Pomeroy’s Equity Jurisprudence, second edition, section 1196, as follows:

“ The general doctrine is fully established, and certainly prevails in a great majority of the states, that the grantor and his representatives are always allowed, in equity, to show by parol evidence that a deed absolute on its face was only intended to be a security for the payment of a debt, and thus to be a mortgage, although the parties deliberately and knowingly executed the instrument in its existing form, and without any allegations of fraud, mistake, or accident in its mode of execution. As in the last preceding case, the sure test and the essential requisite are the continued existence of a debt. If there is no indebtedness the conveyance cannot be a mortgage; if there is a debt existing, and the conveyance was intended to secure its payment, equity will regard and treat the absolute deed as a mortgage. The presumption, of course, arises that the instrument is what it purports on its face to be—an absolute conveyance of the land; to overcome this presumption, and to establish its character as a mortgage, the cases all agree that the evidence must be clear, unequivocal, and convincing, for otherwise the natural presumption will prevail. Whenever a deed absolute on its face is thus treated as a mortgage the parties are clothed with all the rights, are subject to all the liabilities, and are entitled to all the remedies of ordinary mortgagors and