Durden-Powers Co. v. O'Brien

142 S.E. 90, 165 Ga. 728, 1928 Ga. LEXIS 57

• Court: Supreme Court of Georgia
• Decided: February 18, 1928
• Docket: No. 6010
• Status: Published

Opinion

Russell, C. J.

This is not a case involving the admissibility of parol evidence to alter, vary, or contradict a written instrument, which is forbidden by the Civil Code (1910), § 5788. The judgment was upon a demurrer to the petition; and the facts which are relied upon in the effort to show a deed executed and delivered by the plaintiff to the defendant was not an absolute conveyance, but rather a security for debt and in effect an equitable mortgage, are contained in written contracts incorporated in the pleadings. For this reason we are of the opinion that the contention of learned counsel for the plaintiff, that the court should not have sustained the general demurrer, because issues of fact were presented which should have been submitted to the jury, can not be sustained. In this case the issiie must be determined by the construction of the deed and a contemporaneous contract as affected by a contract entered into by the parties subsequently thereto. The construction of contracts is the prerogative of the courts, which is delegated to the jury only when there are ambiguous expressions in the contract, and resort must be had to aliunde testimony in order to clarify the meaning of the language used as it was understood by the parties, and thus to make plain their real intention. There is no ambiguity in the contracts embodied in the record in this case; and it is admitted in the petition that the defendant was in possession of the property at the time the action was instituted. The deed from Durden and Powers Company (which will hereinafter be denominated as “the company”) to Joseph F. O’Brien, dated April 13, 1922, was executed on the same day as the contract by the terms of which O’Brien agreed, upon certain named conditions being fulfilled, to reconvey the same property to the company; and hence these two writings very properly should be construed as if the stipulations and covenants of each were a part of the other. However, construing these two writings together, we are of the opinion that the agreement of O’Brien to reconvey the tract of land involved in this controversy does not amount to a bond for title or a bond to reconvey upon payment of a debt which the plaintiff says was merely to be secured by the execution of the deed, and contends that for that reason the conveyance was not absolute. Properly construed, the contemporaneous contract of April 13, 1922, was nothing more than an option to buy or repurchase the land which the company had conveyed to O’Brien.

As frequently held by this court, there is a clear distinction between the retention of equitable title in property which has been pledged by mortgage as security for indebtedness and the sale of an option to repurchase the property. In the case at bar O’Brien agreed, upon compliance with certain conditions not necessary to repeat here, and within a certain limit of time, to sell the company the same land as it had conveyed to him upon the payment of the sum of $5,000 in addition to the various charges specifically stated in the writings, as well as the amount of the former indebtedness of the company (which had been assumed by O’Brien), with eight per cent, interest thereon. The mere fact that the larger portion of the consideration, upon payment of which O’Brien was to reconvey the property to the company, consisted of the amount that O’Brien had paid or was to pay in the discharge of prior debts of the company does not raise any implication that the deed, although contemporaneous, was not what it purported to be, an absolute conveyance, and not a mere security for debt. In the absence of any plea that the additional sum of $5,000 exacted by O’Brien as a condition precedent to his reconveying the premises to tbe company was a mere cover for the purpose of collecting usury (and only in the event such plea had been interposed), it may be assumed that the deed from the company evidenced a complete sale, and that O’Brien, being of the opinion that he had bought a good bargain, fixed the purchase-price at which he would sell the property, in ease the company saw fit to exercise the option, at a figure which he determined to be its value to himself as the owner. This court has several times decided that stipulations in so-called leases providing for the payment of named funds as rent may be shown by parol to be nothing more than provisions for the collection of exorbitant and unlawful rates of interest; but there is no suggestion in this case that the rental stipulated to be paid; in the writing executed contemporaneously with the deed, was intended to be paid as interest on the debt of the plaintiff which was to be paid by O’Brien. Great stress is laid on the provision of the contract of April 13, 1922, by the terms of which O’Brien was created attorney in fact for the company, and was to keep in a separate bank account any surplus remaining from the proceeds of the business conducted at this seashore resort, and that this surplus was to be deducted from the purchase-price of the property should the company desire to avail itself of the option to buy. This stipulation might afford conclusive evidence that the original deed was intended only as security for debt, but for the fact that the contract with which we are now dealing does not place any obligation whatever on the company to buy the property in question.

We think this determines the character of the writing, and plainly shows it to be nothing more than a mere option or a right to elect to buy on the part of the company; whereas had the instrument partaken of the nature of a bond for title in any sense, there would have been not only an agreement on the part of O’Brien to sell but an express obligation on the part of the company to pay the stipulated purchase-price. The option to repurchase shows that the actual consideration of the deed was $5,974.86 cash and the assumption of mortgages aggregating $27,461.44, to which was added $5,000 as a profit to O’Brien should the company elect to purchase the property. In paragraph (f) of the first agreement appears the only reference to the deed, as follows:- “It is further understood and agreed that in the event the said F. Ii. Haar and Eose Eicholz shall not prevail in the said litigation now pending, then and in that event the title to said property which has vested in the said party of the first part under and by virtue of the deed from the said party of the second part to the said party of the first part, made contemporaneously herewith, shall be ’subject only to the right of the said party of the second part herein to repurchase said property as herein stated.” The words “the title to said property . . shall be subject only to the right of the said party . . io repurchase said properly [italics ours] as herein stated,” it is insisted, supports the contention of the plaintiff that the deed was merely given as security for debt, and •not as an absolute conveyance; but in a second agreement of May, 1924, it is recited that the Haar and Eicholz litigation was not terminated until April, 1924, and that the parties desire to enter into certain additional covenants and agreements, and do covenant that “the lease and option agreement contained in the agreement of April, 1922, is hereby extended as to time until October 1, 1924.” Under this agreement the option to repurchase expired on October 1, 1924.

From the execution of the deed on April 13, 1922, until October 1, 1924, the plaintiff was in possession of the property, and, indeed, remained in possession until April, 1926, by reason of which the plaintiff for that period stood in a much stronger position as related to its contention that the deed was in effect an equitable mortgage.or security for indebtedness than at the time of the filing of the petition in this case. However, in May, 1925, the company, without any reservation whatever, except one clause which will be referred to hereafter, acknowledged the title of O’Brien by leasing the premises conveyed by its deed for the taxes and water rent for the year 1924 until October, 1925, due to the Town of Tybee, the taxes due the State and county for the year 1924 until October, 1925, interest on $43,000 at eight per cent. j>er annum for the year 1924, carrying charges on the insurance in force on the property, the expenditures for the maintenance and repairs of said property, the expense of the person placed in charge of the money by the lessor (these amounts to be paid out of the cash received by said lessor through his said representative), and all other carrying charges necessary for the expenditures on the property until October 15, 1925. The only provision in this contract of rental which might by any construction seem to indicate any interest in the premises on the part of the plaintiff is that in which it is said: “It is understood and agreed that the said representative of the said lessor shall handle the money in bank, as agreed between the parties hereto, and that the said lessor shall have the privilege of distributing said money as in his judgment is necessary.” But bearing in mind that by -its terms the contract of May, 1924, terminated the option as of October 1, 1924, and the further fact that the words in this stipulation that “the said representative of said lessor shall handle the money in bank, as agreed between the parties hereto” are not explained by any statement or provision in the later contract, the clause of the contract which we have quoted in full above can not be construed so as to imply the existence of any right in the plaintiff in derogation of the title of the defendant O’Brien as its landlord. So we are of the opinion that the general demurrer was properly sustained.

The Civil Code (1910), § 3258, provides that “A deed or bill of sale, absolute on its face and accompanied with possession of the property, shall not be proved (at the instance of the parties) by parol evidence to be a mortgage only, unless fraud in its procurement is the issue to be tried.” Learned counsel for the plaintiff insists that “the agreement of April 13, 1922, and the supplemental agreements of May, 1924, and May, 1925, show conclusively that the plaintiff remained in physical possession of the property from April 13, 1922, through the season of 1925. Plaintiff alleged that its physical possession of said property was surrendered in April, 1926, in order that an advantageous lease of said property might be effected by O’Brien; and “Therefore the possession of said property was not surrendered at the time of the execution of said deed, neither was it intended that possession of the property should be surrendered by the plaintiff.” Conceding that possession of the property was not surrendered at the time of the execution of the deed (for this would seem to be immaterial), and that at that time the plaintiff did not intend to surrender possession of the property, it nevertheless appears from the petition that it had surrendered possession several months prior to the filing of the action in this case. Nothing is better settled than that “A deed absolute in form may be shown to have been made to secure a debt, where the maker remains in possession of the land conveyed.” Mercer v. Morgan, 136 Ga. 632 (71 S. E. 1075) ; Berry v. Williams, 141 Ga. 642 (81 S. E. 881); Waller v. Dunn, 151 Ga. 181 (106 S. E. 96); Southern Ry. Co. v. Williams, 160 Ga. 541 (128 S. E. 681). It is also well settled that where the maker remains in possession of the land, so that parol evidence is admissible, then the issue as to the purpose and intent of the parties, that is, whether the parties intended the transaction to bespeak security for a loan or an absolute sale, is a question for the jury. As said by Mr. Justice McCay in delivering the opinion of the court in Monroe v. Foster, 49 Ga. 514, 519: “It is perfectly settled, that it is a question of fact for the chancellor, or, in this State, for a jury to determine what was the true intent of the parties, and that no mere words, whether. in parol or in writing, are conclusive. The whole transaction is to be looked to; and if, upon the whole, it appear that the loan of money and security for its repayment was in truth the purpose and intent of the parties, it will be treated as such, notwithstanding very strong language may be used at the time to give it a different appearance.” However, as we have already shown, the plaintiff did not remain in possession and was not in possession at the time of beginning the suit; and in addition, as pointed out by the learned trial judge in his order dismissing the petition, there is no allegation that there was any fraud in the procurement of the deed in this case, or that any of the contracts were tainted with fraud; and the language of section 3258, supra, is to the effect that a deed apparently absolute shall not be'proved to be a mortgage “unless fraud in its procurement is the issue to be tried,” and in this case, at the time of the institution of the suit, O’Brien held a warranty deed absolute on its face, and was in possession of the property. The petition therefore was fatally defective in two respects: (1) Because, under the decisions cited above, it is only where the maker of the deed absolute in form remains in possession of the land that he can prove such deed absolute to have been made as security for a debt. (2) O’Brien, having been permitted to go into possession and holding-under a deed absolute on its face, his muniment of title can not be proved by parol evidence to be a mortgage, in the absence of any allegation that there was fraud in the procurement of the writing.

The third contention of the plaintiff, as stated in the brief, is “That in_the event said instrument executed on April 13, 1922, was in truth and in fact a deed conveying the title to said property to the said Joseph F. O’Brien, and that in the event the agreement made on the same date and contemporaneously with said deed and as a part of the same transaction (as recited in the 7th ‘whereas’ paragraph of said agreement) was an option to repurchase (as contended by the defendants), then said option has been, and was, exercised by the plaintiff when the plaintiff permitted the defendants to operate the property and apply all funds derived from such operation toward the payment of the indebtedness, and that the defendant . . should reconvey the property to the plaintiff.” We have already held that the agreement executed contemporaneously with the deed of April 13, 1922, was an option to repurchase, as denominated by counsel for plaintiff in error in his contention; but we can not concur in the conclusion reached by counsel that the option was exercised by the plaintiff when it permitted the defendants to apply all funds towards the payment of the indebtedness. To reconvey the property for this reason would be to make a new and altogether different contract from that Set forth in the original agreement. This paper specifically provided for the payment of certain funds and an additional $5000 of profit; and before the plaintiff could seek a reconveyance of the property it must necessarily show that sufficient funds had been derived from the operation of the property to pay the amounts set forth in the option. There is no allegation upon this subject which is so definite as to amount as to enable the jury to find that such funds were sufficient to pay the purchase-price. Furthermore, as already stated, the option had been abandoned; the plaintiff had entered into a subsequent contract of rental, acknowledging itself to be a tenant; and finally, at the conclusion of its tenancy, had surrendered possession, thus making the original contract completely functus officio.

It is further insisted that in airy event the plaintiff is entitled to an accounting with O’Brien, and for this reason, if no other, the general demurrer should not have been sustained. It is not alleged that an accounting would disclose an indebtedness by O’Brien to the company. Nowhere in the petition is it alleged that any amount was received by O’Brien from the company over and above the carrying charges to be placed in a separate bank account, or that there was ever any amount earned by the company over and above the carrying charges. The facts stated did not authorize or require that an accounting be had. “In a proceeding to obtain an accounting, the complainant is not obliged to show how much is due. But the law will not do a vain thing and order an accounting, when the petitioner does not aver facts sufficient to indicate that something will be found to be -due him by the defendant.” Gould v. Barrow, 117 Ga. 458 (43 S. E. 782). It is stated in 1 C. J. 629, § 87, that “Generally, when one party calls upon another for an accounting, it must be made to appear that the accounting will be available to complainant, as that there is something in the hands of defendant due to complainant; in other words, there must be something to be accounted for before a reference will be ordered.” Following the same reason as that in Gould v. Barrow, it is said in 1 C. J. 635, § 104, that “As ordinarily a court of equity will not decree an accounting if it is apparent that nothing can be found to be due upon the accounting, the bill should allege that there is an indebtedness due from defendant to plaintiff.” The plaintiff does not aver sufficient facts to indicate that there was anything due the plaintiff by the defendant, and the court would not have been authorized to overrule the general demurrer merely for the purpose of retaining the cause in order that an accounting might be had between these parties. Judgment affirmed.

All the Justices concur. Atkinson, J., and Hill, J., concur in the result.