SAWEA BROWN, Appellant, v. D. T. SETTRO, Appellee.

APPEAL FROM DENIAL OF PETITION FOR EQUITY OF REDEMPTION.

Argued April 20, 1944. Decided May 4, 1944.

1. Wherever a conveyance, assignment, or other instrument transferring an estate is originally intended between the parties as a security for money, or for any other incumbrance, whether this intention appears on the same instrument or on any other, it is always held in equity as a mortgage and therefore is redeemable upon the performance of the conditions thereof.

2. There is a difference between a mortage and a sale with a right of repurchase.

On appeal from ruling of court in equity denying equity of redemption, judgment reversed.

H. Lafayette Harmon for appellant. C. Abayomi Cassell for appellee.

MR. CHIEF JUSTICE GRIMES delivered the opinion of the Court.

Many years ago, Counsellor F. E. R. Johnson, prior to his elevation to the Bench of this Court, arguing a cause before this tribunal, began with the astounding observation that, “One could easily bow down and worship this case without violating the second commandment; for it resembles nothing in the heavens above, on the earth beneath, nor in the waters under the earth.” One can hardly have reviewed the records certified to this Court in this case without a strong temptation to reiterate the above-quoted expression.

In the first place the parties, having exhausted every pleading known in the law of pleadings and after having reached the sur-rebutter which is the very last pleading we have even seen or heard of in any book on that science, filed one which, having no legal name, was christened “No Name Pleading No. 1.”

It may be remarked in passing that hardly ever in equity pleadings does one find a series of pleadings going beyond the reply. And it is undoubtedly true that in equity, as in law, when one ventures beyond the rejoinder up to even the sur-rejoinder a pleader often finds himself in quicksand, as he is very apt to commit a demurrable error such as duplicity, a plea in confession and avoidance which does not give color or, worse still, the incurable blunder of a departure which, both in law and in equity, is so grave an error as to be punished by awarding forthwith an imperfect judgment against the party who has thus wrongly and unscientifically drawn the plea, no matter how meritorious in other respects said plea might be.

The second anomaly is that the trial judge gave a final decree upon the complaint and upon the answer dismissing the case, to which decree appellant excepted and prayed an appeal to this Court. But appellant, instead of prosecuting said appeal, withdrew it and filed a reply, and both parties then recommenced pleading from the reply onwards through the entire series up to the surrebutter, and then to the unheard of pleading entitled, as aforesaid, “No Name Pleading No. 1.”

There are other anomalies in the procedure in this cause, but we have not been able to divine how, with all the trump cards in the hands of appellee, appellant so outmaneuvered appellee in the subsequent handling of the cause that appellant succeeded in having all the demurrers ignored and the case submitted to the trial judge on three points only. Appellant could not but have realized that had demurrers been heard and disposed of first, as the law requires, his position would have been precarious but, outgeneraling his adversary and arranging, as it were, to have the demurrers brushed aside, he seems to have felt his position more secure. He next allowed appellee to obtain a judgment which was apparently adverse to appellant, but this again was another smart piece of generalship, as it enabled him, the said appellant, as the losing party to file a bill of exceptions and to bring up to this Court for review the only two, out of many, issues raised which appellant felt were advantageous to himself, and which, according to law, confines this Court to the review of those two issues only.

The issues thus before us, as disclosed by the bill of exceptions, are as follows :

“1. Because on the said 15th day of June, A. D., 1942, His Honour the trial Judge aforesaid, amended or made a Ruling dismissing the proceedings in said case, and to which ruling the Petitionerappellant then and there duly excepted.

“2. And also because the trial Judge in said Ruling deprives the Petitioner-appellant of his legal and equitable right to Equity of Redemption, contrary to the law governing Mortgages of Property for security of the payment of a Debt; and to which ruling the Petitioner-appellant then and there duly excepted.”

Coming then to the facts, the first thing that grips our attention is a most striking analogy between the case at bar and that of Saunders v. Gant, [1930] LRSC 2; 3 L.L.R. 152, heard and decided at our November term, 1930.

The facts in the latter case are briefly as follows : Irene A. Gant, appellee, desired to make a trip to the United States of America and, with that object in view, borrowed from Jane Saunders, appellant, £140.0.0 or $672.00 to be repaid within one calendar year. Appellee gave as collateral security for said loan a warranty deed, conveying to the appellant the appellee’s fee simple title to lot Number 150 situated in Monrovia. The parties simultaneously executed an indenture by the terms of which the said Jane Saunders covenanted, upon repayment of the loan plus interest within the period agreed to, viz.: one year, to reconvey in fee said premises to the grantor, the said Irene A. Gant.

In the case at bar, according to the sworn pleadings in the records certified to us, Sawea Brown, appellant, was urgently in need of eighty pounds sterling which D. T. Settro, appellee, agreed to lend him on condition that: (1) The loan be repaid within four calendar months, viz.: on or before May 4, 1941, with a flat rate, albeit usurious, of interest of twelve pounds, making a total of ninety-two pounds; and that (2) In consideration thereof appellant execute a deed poll conveying in fee to appellee appellant’s farm land on Bushrod Island, which is five acres, with a house thereon, which land and house appellant himself valued at $ioo8.00 and which valuation appellee contested ; and as further security a half lot in Monrovia, the value of which is not given in the record. Simultaneously, as in the case of Saunders v. Gant, supra, the two parties executed an indenture by which Settro, the appellee, covenanted to reconvey the premises in fee to appellant in the event that within the said period of four months, the life of the loan, appellant should have repaid to appellee the loan of eighty pounds plus the interest of twelve pounds totalling ninety-two pounds sterling. Up to this point the analogy in the two cases seems to be complete.

In the case of Saunders v. Gant, supra, Irene A. Gant, during the life of the agreement between her and Jane Saunders, never repaid one cent; but long before her default, through sundry friends in Liberia, begged for an extension of time because of her absence in America, offering an increased amount of interest and other considerations if Jane Saunders would consent to a reformation of the terms of the indenture. But Jane Saunders refused every approach made by sundry persons as aforesaid in behalf of her debtor to modify and reform the contract, preferring to ignore the terms of the indenture and to confine herself to holding tenaciously to the terms of the deed poll which, as she believed, created in her an indefeasible estate in fee in said premises. The negotiations for the reformation of the indenture were drawn out until the date for the repayment of the loan had passed, when Jane Saunders, appellant, without bringing a suit to bar the appellee’s equity of redemption, immediately took over the premises by virtue of her deed poll and performed acts of dominion over said premises as though the right of equity of redemption inhering in the borrower by virtue of the indenture executed concurrently with the deed poll had been barred in a suit of foreclosure by the decree of a court of competent jurisdiction.

The appellee, Irene Gant, immediately after her return from the United States after a stay of four years, tendered to Jane Saunders, the appellant, a sum of money in acquittance of her debt and demanded a reconveyance of her premises. Appellant refused to accept the money and refused to execute the reconveyance. Hence arose the suit by Irene Gant to enforce her equity of redemption.

The case at bar is not altogether parallel with the case just mentioned. Sawea Brown, the present appellant, paid over to Settro, the present appellee, during the life of the loan, and the appellee received and acknowledged receipt of the following installments on his debt, viz.: (1) On March 25, eight pounds; (2) On May 3, five pounds; and (3) On May 20, sixty pounds. We note the last enumerated item was paid after the expiration of the four months, but appellee appears to have accepted this amount also. However, afterwards, when on May 31 appellant tendered to appellee his balance of nineteen pounds, appellee refused to accept same, claiming that the time for reconveyance of the property had passed. Like Jane Saunders in the former case appellee took over the premises and exercised such dominion over them as though he were the absolute owner, without having first taken the precaution of having appellee’s right to equity of redemption barred by a decree of foreclosure in a court of equity.

We have given the history of these two cases in, as it were, parallel columns, showing the similarities and dissimilarities in the facts of the two cases as we proceeded, because in the final analysis, as the actual citations of law, infra, will show, the principle of equity jurisprudence involved in the two cases is the same.

His Honor Chief Justice Johnson, delivering, as aforesaid, the opinion of the Court in the case of Saunders v. Gant in 193o cited as an authority for the Court’s decision the following from Justice Story’s admirable treatise on equity :

” ‘As to what constitutes a mortgage, there is no difficulty whatever in courts of equity, although there may be technical embarrassments in courts of law. The particular form or words of the conveyance are unimportant; and it may be laid down as a general rule, subject to few exceptions, that wherever a conveyance, assignment, or other instrument, transferring an estate, is originally intended between the parties as a security for money, or for any other incumbrance, whether this intention appear from the same instrument or from any other, it is always considered in equity as a mortgage, and consequently is redeemable upon the performance of the conditions or stipulations thereof.’ ” Id. [1930] LRSC 2; 3 L.L.R. 152, 156-57 (1930), quoting 2 Story, Equity Jurisprudence § 1018, at 197 (8th ed. 1861).

The learned Chief Justice added that :

“In England and in most of the states of America some time is allowed after foreclosure to allow a party to exercise the right of equity of redemption. While the maxim ‘once a mortgage always a mortgage’ has been modified in modern practice, still the mortgagor is allowed from three months to a year to exercise the right of equity of redemption. We are of the opinion that when the mortgage deed contains a power to the mortgagee to sell on default, the mortgagor must be allowed six months to exercise the right of redemption; otherwise the time should be extended to one year.” Id. at 158-59.

We have very carefully examined the opinion of the late Chief Justice, as aforesaid, and have studied the law he cited from Story’s Equity Jurisprudence and from other authorities. We have been compelled as a result of said examination to find ourselves almost wholly in accord with the conclusions reached by the late Chief Justice at that time, which conclusions he so ably expounded.

We have, therefore, decided that in endorsing his opinion we should implement same by a few authorities of more recent date culled from Ruling Case Law, a digest of cases adjudicated by the Supreme Court of the United States of America as well as by the supreme courts of sundry states of the Union.

“Since it is only on principles of equity that a deed absolute on its face may be declared to be a mortgage, it is held by the weight of authority that the equitable rules as to laches and stale demands are applicable to a suit to secure such relief, this doctrine being based on the maxim that equity aids the vigilant, not the slothful, and on the consideration that evidence produced a considerable lapse of time after the execution of a deed cannot generally be complete and reliable enough to justify the court in acting. There is, of course, no fixed rule by which to determine when laches will constitute a defense, but each case, when it arises, must be determined according to its own particular circumstances. In a few jurisdictions it is ruled that no lapse of time short of that prescribed by the statute of limitations to cut off the right of redemption will bar the right of the grantor in a deed, absolute in form but given as a mortgage, to have the true nature of the instrument declared and to redeem therefrom, the equitable doctrine of laches having no application in the eyes of these authorities. However, the statute limiting the time to redeem from mortgages generally is, of course, applicable to the right to have an absolute deed declared a mortgage and redeem therefrom. It has been held that a grantor in possession may defend his possession as against the grantee on the ground that the deed was given for security, though the debt was barred, but only on condition that he acknowledged the debt.

“Since an instrument, irrespective of its form, is a mortgage if intended as security, it follows that a deed with a provision for a reconveyance or a defeasance of the estate on the performance of certain conditions, whether the provision is made in the deed itself or in an accompanying instrument, is a mortgage if intended to secure the performance of the conditions stipulated, even though it is in form a conditional sale or conveyance of some other character. In this connection it is important to note that the deed and the provision for reconveyance do not of themselves constitute a mortgage although the rule is sometimes loosely so stated. On the contrary, it is absolutely essential that at the inception of the transaction the deed be intended to operate by way of security. Since the whole doctrine of treating a conditional sale as a mortgage is the creature of equity, it will not be applied when the parties have unreasonably slept on their rights, and its application would lead to injustice, not equity.

“As regards their legal incidents, there is all the difference in the world between a mortgage and a sale with a right of repurchase. If the contract is one of the former description, the right of redemption subsists until it has been cut off by a foreclosure sale. If of the latter description, there is no right of redemption in the transferor after the expiration of the time fixed for the payment of the stipulated price. But in practice the line of demarcation between the two is shadowy, and it is frequently a matter of great difficulty to determine to which category a given transaction belongs. However, there is a test generally accepted as decisive, and this is the mutuality and reciprocity of the remedies of the parties—that is to say, if the grantee enjoys a right, reciprocal to that of the grantor to demand reconveyance, personally to compel the latter to pay the consideration named in the stipulation for reconveyance, the transaction is a mortgage; while if he has no such right to compel payment, the transaction is a conditional sale.

“Except in the rare instance in which the word ‘securing’ bears a meaning different from that ordinarily attached to it, where a conveyance with a stipulation for reconveyance includes a statement that the property is being conveyed for the purpose of securing a debt, the transaction must obviously be construed a mortgage. It is such even at law. In some cases, however, while it is not expressly stated that the conveyance is for the purpose of security, expressions are used which indicate that after the execution of the instrument or instruments, the relationship of debtor and creditor subsists between the grantor and grantee. Thus, words may be used which expressly state that the transaction is one of lending and borrowing; which impose on the transferor an enforceable obligation to repurchase the property; or which expressly provide that the property is to be conveyed on the transferor’s satisfying a certain debt then owed by him to the transferee or thereafter to be contracted, or on the transferor’s discharging a promissory note or other written obligation given for the payment of money to the transferee.

“Very frequently no expressions are used in either the deed proper or the stipulation for reconveyance which indicate either that the transaction was intended to operate as a mortgage or that the relationship of debtor and creditor existed between the parties after the conveyance. In cases of this character there is a conflict of authority as to what presumption should be indulged. According to one view, the transaction is presumed as a matter of law to be a mortgage. Under this doctrine it is obvious that parol evidence regarding the intention of the parties becomes wholly incompetent. If offered for the purpose of proving that the transaction was a mortgage, it is supererogatory. If offered for the purpose of proving that the transaction was a conditional sale, it is inadmissible, as tending to vary the terms of a written contract. Elsewhere, however, the transaction is presumed as a matter of fact to be a mortgage, evidence being admissible to rebut that presumption. . . .” 19 Id. Mortgages §§ 30, 34-37, at 262-63, 265-68 (1917) . And, finally, we find the following further clarification of the point, viz.: ,

“Regardless of the view that they may entertain as to the presumptive character of a deed with a stipulation for reconveyance, or as to the standard of proof necessary to establish the instrument or instruments to constitute a mortgage, the authorities are agreed that where the evidence leaves the state of the transaction in doubt, a court will hold a deed with a provision for reconveyance to be a mortgage rather than a conditional sale. This rule is based on the consideration that, generally speaking, the purposes of justice will be more effectually subserved if the transaction is declared to be a mortgage than if it is held to be a conditional sale, for as lenders of money are less under the pressure of circumstances which control the perfect and free exercise of the judgment than borrowers, the effort is frequently made by them to avail themselves of the advantage of their superiority, in order to obtain inequitable advantages.” Id. § 39, at 269.

“As has been heretofore stated, under the common law theory, a mortgage was treated as a conveyance of a conditional estate. The title passed to the mortgagee, reverting to the mortgagor in case of the due performance by him of his obligation, but on breach of condition becoming absolute in the mortgagee and indefeasible by any subsequent performance of the obligation. But courts of equity at an early day, looking beyond the terms of the instrument to the real character of the transaction, as one of security and not of purchase, interfered and gave to the mortgagor a right to redeem the property from the forfeiture following the breach, upon discharge of the obligation secured within a reasonable period. This right of redemption after forfeiture, generally known as an equity of redemption, is the real and beneficial estate in the land. It may be sold and conveyed in any of the ordinary modes of transfer, subject only to the lien of the mortgage, and, broadly speaking, is subject to all the incidents of real property. . . . The mortgagee has no estate in the land, and is simply a creditor holding a lien upon the mortgaged premises as security for his debt, which he must enforce by a foreclosure and sale. Where these views have been adopted, therefore, the term equity of redemption, when used to describe the estate of the mortgagor or his right after default to discharge the mortgage, is strictly speaking a misnomer. The mortgagor remains the legal owner of the land ; and until foreclosure, he has a legal right, corresponding to his legal right at common law to redeem before default, to discharge the mortgage.” Id. § 297, at 501—02.

We are not now in a position to express an opinion with respect to the allegation in appellant’s petition that appellee forcibly entered the premises and carried away certain property of his. We are unable to do this largely because appellee’s affidavit denies that allegation and no evidence beyond the affidavits and answering affidavits of the parties has been submitted in the record now before us.

It follows, therefore, that the judgment of the court below should be reversed, that the case should be remanded to the trial court with instructions to grant unto appellant his right of equity of redemption; that upon repayment or upon a further tender by appellant to appellee of the nineteen pounds sterling or the ascertained balance due upon the transaction up to the time of the first tender, appellee shall reconvey to appellant the premises hereinbefore mentioned ; and that appellee shall pay all costs of the suit; and it is so ordered.

Reversed.