Cullen v. Butterfield

178 Iowa 621

• Court: Supreme Court of Iowa
• Decided: November 24, 1916
• Status: Published

Opinion

Deemer, J.

1. Mortgages : absolute deed: mortgage or conditional sale. I. The preceding statement sets forth the issues and the decree rendered by the trial court, and it will be observed that the questions on plaintiff’s appeal are :

1. Was Thos. Wilson, now deceased, insane at the time he conveyed the land 1.o defendant, C. A. Butterfield, on September 27th, 1912?

2. Was this conveyance obtained from Wilson by undue influence exercised by defendant or his father, T. F. Butter- • field?

If plaintiffs have established these two propositions, they will be entitled to a decree against the defendant C. A. Butterfield. But, in view of the claims of intervener that the original conveyances from D. G. Butterfield and his wife to Thos. Wilson of the lands in controversy, in September of the year 1895, were not intended as absolute conveyances, but as security merely for the loan of money, they have to face that issue; for, if intervener established his claim by sufficient testimony, plaintiffs took nothing by inheritance from their- ancestor, Thos. Wilson. This latter issue is, then, the principal one in the ease, and the issues of insanity and undue influence are subordinate to the main question presented by the petition of intervention and the pleadings filed thereto. Unfortunately, both T. F. Butterfield and Thos. Wilson are dead, and, but for written memoranda left by each of them, the case would be troublesome.

On the face of the record, defendant C. A. Butterfield has title to the lands, which consist of 11 forty-acre tracts in Clinton County, through conveyances made by D. G. and T. F. Butterfield to Thos. Wilson, made in September of the year 1895, which deeds were recorded November 27th of the same year, and by a deed from Thos. Wilson to defendant, covering all of the lands, of date September 27th, 1912, recorded the same date. D. G. Butterfield originally held title to all of these lands; but, on the same day that he joined in a conveyance with his father for all the lands to Wilson, he conveyed one 40 to his father, T. F. Butterfield.

We may say at the outset that, under this record, defendant C. A. Butterfield can claim nothing as an innocent purchaser from Thos. Wilson, and no point is made in argument on this proposition. So that the first inquiry in the case is the nature of the transaction between D. G. Butterfield and his father, T. F., in September of the year 1895. Intervener -claims that, at that time, Thos. A. Wilson, knowing that both T. F. and D. G. Butterfield were hard pressed for money, and their lands were encumbered by mortgages and liens which they could not meet, agreed to make them advancements, and to take up some of these liens and encumbrances,' and to hold the title as security for the repayment of these advancements; that the deeds were made pursuant to this agreement, which was oral, and that the deed was, in fact, intended as a mortgage by all the parties, and stood as security to Wilson for these advances. Certain memoranda made by T. F. Butterfield and by Thos. Wilson, during the lifetime of each, were offered in evidence, and from these we extract the following:

This memorandum was made by T. F. Butterfield:

“Wednesday, Nov. 27th, 1895. Turned over deeds to 440 acres of land in Secs. 18 and 19, Berlin Township, to Thos. Wilson, 40 acres deeded by T. F. Butterfield, and 400 acres deeded by D. G. Butterfield; deeds were drawn up about the 25th day of Sept. — consideration stated Thirty-five Dollars per acre. Today, Nov. 27th, the deeds were turned over to Wilson, and he made a mortgage on the land to Rand for $2,000, due in two years, $5,000 due in five years; said notes and mortgages were turned over to Holmes. Wilson also turned over $2,000 in cash, a certificate, $100 cash, paid Holmes, $400 note to First Nat. Bank of Lyons. T. F. Butterfield paid Holmes $800 a deposit in bank. $300 check on 1st Nat. Bank, De Witt. $500 note to said Lyons Bank, due in four months, this with mortgage now $7,000, making in all $11,000, being the amount agreed upon to settle the suit and mortgage of P. C. Rand, against Dennis G. Butterfield and others. It was agreed that the said Wilson was to have a lien upon the 440 acres of land for the amount of money he furnished, or paid on the mortgage aforesaid, with seven per cent per annum on all of the money furnished or paid by said Wilson. The said Butterfield to pay the am&unt of interest on the mortgage at the rate of 7 per cent per annum, and is to pay all taxes on said lands, and the lands aforesaid are to be deeded back to said Butterfield at the expiration of five years from the 27th day of November, 1895, provided they shall have paid the amount then due on' the mortgage and the amount due. said "Wilson which he may have paid out, with 7 per cent interest on his money which he may have paid.”

Thos. Wilson made the following memorandum:

“Agreement: I will deed to them on the 27th day of November, 1900, providing they pay me for the same,— in addition to other debts that I may hold against them,— the sum of ten thousand dollars, and a failure on their part io pay the sum of ten thousand dollars, together with other debts that T may bold against them at said above date, shall forfeit this agreement, and the same to become cancelled.

“Dated November 27, 1895.

‘ ‘ Thomas Wilson. ’ ’

And from other memoranda, we extract these statements, reduced to writing by Thos. Wilson:

“The D. G. and T. F. Butterfield land deal in Berlin Township and described as follows and containing 440 acres more or less, being the S.W. *4 and the W.% of the S.E.1/^ of Sec. 18, and the W.% of the N. E,1/^, and the E.i/2 of the N.W.%, and the N. W.% of the N. W.% of Sec. 19, all in Township 82, Range 2 East of the 5th P. M., to which they make me a warranty deed. The conditions of this purchase is that I am to make them a lease of the land for 5 years for a rent of $700 per year, payable annually to me by the said Butterfields. ’ They ‘ are to make and keep in repair all the necessary repairs and improvements that may be required on the place; also to pay all taxes levied on said lands, including the road tax, said repairs, improvements and taxes not to be considered as any part or counted in the rent, nor a loan on the land for the same, but shall be made, kept and performed by them in addition to and independent of the rent. And they are to furnish all material for said improvement and repairs, and a failure of them to pay said taxes or rent shall at my option cancel the lease, and they to vacate the place at once, and surrender to me possession ht once. Bach note for each year’s rent made payable November 20th of each year for $700, with 7 per cent per annum after due. Providing I am able to and will pay off the mortgage made to Mrs. Rand on Nov. 27th, 1895. I agree to and will, on the 1st day of December, 1900, deed to the said Butterfields, or to who they will direct me to make said deed to, of the above described lands. Providing that they will pay or cause to be paid to me the sum of $.10,000, in' addition to all other claims, or moneys they may or will owe me on December 1st, 1900, and a failure to make the said payment as above stated shall and will forfeit all or any of this agreement made in this transaction, and the same to be cancelled. The above is a true statement as we agreed to.

"Thomas Wilson.”

"November 26th, 1900, I'paid up in full to the Lyons First National Bank, the Hannah J. Rand mortgage and took the mortgage and notes up. I find the land advertised for the taxes of 1899. Rent notes past due and unpaid, and agreement made by Thos. F. Butterfield a failure, and I consider all or any understanding I had with him in the matter contained as to that land cancelled.

"Dated December 4th, 1900.

"Thomas Wilson.”

"November 27th, 1900. Thomas' F. Butterfield called on me, asked what I would do regarding it, replied that if he would pay in full what the land cost me I would deed it to him, said he could not do -it, then in that case I would have to take control of the land and do the best I could with it. If he wished I would lease it to him for the term of three years, rent $750 per year, which he accepted. I accordingly mádé him the lease.

"Thomas Wilson.”

These last statements were signed by Thos. Wilson alone, and were objected to by intervener as incompetent, and as statements made by Wilson alone, and not agreed to by either intervener or his father, T. F. Butterfield.

There were also introduced in evidence certain leases made by Thos. Wilson to T. F. Butterfield, or to T. F. and D. G-. Butterfield, of all the premises in controversy, covering the period from November 27th, 1895, the date when the deed ivas recorded, down until March 1st, 1912.

These leases provided for a yearly rental of $700. The leases also provided that the lessee should pay the taxes on the land and keep the premises in repair. Intervener and his father have been in possession of the premises since the •conveyance was made. It is admitted that defendant C. A. Butterfield borrowed the money which he paid to Thomas Wilson, amounting to $11,000, from a bank at Lyons, and gave a mortgage on the land as security therefor. Again, it is admitted that, some years ago, Wilson was talking of selling the lands to one Benton; and, when T. F. Butterfield heard of this, he caused Benton to be notified that he, Wilson, had no right to sell the land, and the matter was then dropped.

Intervener and his father, or someone representing them, had rented the land in controversy to others, down until his father’s death, which occurred in 1912; and defendant was engaged in looking after his father’s business, and, for a time, in looking after the business of intervener. Again, it is shown that, after Wilson sold or transferred the land to defendant, for a small consideration, he declared that he did not care- as to the amount of consideration; that he got all of his money out of it, and that was all he wanted. He also declared that the original transaction was a loan to Butter-field, and that he held the land as security.

Still further, it is shown that, at the time of the making of the deed by Thos. Wilson to defendant, he, Wilson, declared, in the presence of attorneys, that ho was not seeking the value of the land, but simply to get his money out of it; and, when an attorney who was present suggested that he should deed the land to Thos. F. Butterfield, he, Wilson, declared, in substance, that it was not his lookout; that they (meaning the Butterfields) should fix the title among themselves.

Thos. Wilson paid the taxes' on the land for the years 1902 to 1912 inclusive; but it is shown that intervener supposed these had been paid by defendant, who, it seems, was looking after the father’s business during almost the whole time, receiving rentals for the land, and looking after T. F. Butterfield’s business.

This is practically all the testimony in the case bearing on the issue between intervener and the plaintiff and defendant. It is strenuously insisted, on behalf of the defendant C. A. Butterfield, that, at best, it shows nothing more than a sale -with a conditional agreement to resell, which agreement of resale terminated on November 27th, 1900; and that both intervener and his father lost all interest in the land, because they failed to consummatei their agreement to repurchase on the date fixed. ,

On the other hand, it is argued with equal confidence that the entire ti'ansaetion constituted nothing more than a mortgage; that this mortgage has never been foreclosed; and that the right of redemption exists or existed in the grantor or grantors or their representatives, at the time this action was commenced. These contentions raise the only point in the case, and the questions presented are of mixed law and fact. We should also state that the land, when sold to C. A. Butterfield, was worth $75 per acre, or $34,000, whereas he, defendant, paid but $11,000 therefor. There is no showing as to the value of the land in 1895, when the- conveyance was made in September of that year.

The rules of law are pretty well settled. It is practically agreed that there was either an agreement that grantors might redeem the land within the time stated, the advancements made by Wilson being regarded as a loan, or that Wilson purchased the land absolutely, and agreed to resell the same to the grantors within a fixed time, with the understanding that their agreement would be forfeited if the grantors failed to repurchase within the time so fixed. It is not a case where a party is seeking to show that an absolute deed was intended as a mortgage; for it is practically agreed that the grantors either had an agreement whereby they might redeem, or that they had the right to repurchase upon an agreed compensation.

The question is, Was there a conditional sale, or should the transaction be held to be a mortgage? This depends largely upon the intent of the parties, as evidenced by their conduct, statements and writings, in so far as these writings are competent.

If there be doubt on the question, courts almost universally hold that the transaction should be construed to be a mortgage, and not a conditional sale. Bradford v. Helsell, 150 Iowa 732; Hughes v. Sheaff, 19 Iowa 335; Jones on Mortgages (6th Ed.), Sees. 257, 258, and cases cited. As stated by Jones, a court of equity looks behind the transaction, and will often pronounce that to be an equitable mortgage which at law would be considered a conditional sale. Each case must be determined on its own peculiar circum-' stances; and, if it appears that it was the intention that the original deed should stand as security for a debt, the transaction will be regarded as a mortgage, although expressed in the form of a conditional sale. If, however, there was no debt and no advancement, or if there be a debt and that debt was extinguished by fair agreement between the parties at the time the conveyance was made, and the grantor had the privilege of refunding the amount paid or of repurchasing, the transaction is regarded as a conditional sale.

If the transaction was a loan in the first instance, it will be treated as such to the end, unless it be shown that the parties afterward bargained for the property independently of the loan. Richardson v. Barrick, 16 Iowa 407.

Tested by these rules, we reach the same conclusion as the district court did: that this transaction was a mortgage, and not a conditional sale; and that the grantors, or their representatives, had the right to redeem; and that the decree is right, except it be that the action is barred, or intervener is estopped by his laches from questioning the same.

2, Mortgages: re-exemption: unauthorized re-exemption: re-suiting trust: üonsation °f ac" II. It will be observed that the debt has already been paid to T'hos. Wilson. This was done by the defendant, when he undertook to purchase the same from Wilson, and took title in his own name. This so-called pur- , , , , _ chase either amounted to a redemption, or ■ ■ defendant C. A. Butterfield, m virtue of his ’ ^Miouship to the parties, or by reason of his so-called purchase with knowledge of all the facts, simply became a trustee of the property, holding title for the benefit of the parties entitled thereto. He did not get his title, or assert any interest in or to the lands in his own right, until his purchase in the year 1912. Hence the. action is not barred as to them. As the* debt to Wilson has been paid, there is no room for the application of the statute of limitations to that debt.

s trusts • limitaSsavowafof151: trust Moreover, there has been no such laches on the part of intervener as will bar him of his action. He came into this action in August of the year 1914, a little over two years a:^er defendant took title, and no showiág any prejudice resulting to defendant from the delay is shown. Thos. Wilson accepted the money due him, and defendant became trustee of that property, and he, defendant, cannot interpose the plea of the statute of limitations. Trice v. Comstock, 121 Fed. 620, 624; Gebhard v. Sattler, 40 Iowa 152; Otto v. Schlapkahl, 57 Iowa 226.

III. If plaintiffs had shown themselves entitled to have the deed from Wilson to defendant' set aside, they might, perhaps, have insisted upon the bar of the statute; but it is doubtful if they could do so without returning or offering to return the money secured by their ancestor upon the indebtedness, and as a consideration for the deed to defendant. But, however this may be, they are entitled to no standing in court unless they show that, at the time of the conveyance to the defendant C. A. Butterfield, Thos. Wilson was insane, or that ho was unduly influenced in making the conveyance to defendant.

We have gone over the testimony with reference to these issues with care, and arc satisfied that plaintiffs have failed 'to establish either the incompetency of Thos. Wilson, or that he was unduly influenced into making the conveyance. We shall not set out the testimony with respect to these issues, as it would extend an opinion already too long. Whilst Wilson was old and infirm at the time this conveyance was made, he had had no revenue from the lands, and seemed glad to get rid of them, upon a return of the amount advanced to the Butterfields. He had the advice of counsel, and, as we think, had sufficient mental capacity to understand the nature and effect of the transaction.

• The trial court saved the right to all the heirs of T. F. Butterfield, deceased, saved C. A. Butterfield, and the testimony tends to show that there are other heirs. No question was made regarding defect of parties, and we need only adl that the rights of these other heirs, if any they have, should not be prejudiced in any manner by the affirmance of the decree below.

We reach the conclusion that the decree should be, and it is — Affirmed.

Evans, C. J., Weaver and Preston, JJ., concur.