
    Reeves v. Abercrombie.
    
      Bill in Equity to Declare a Deed Absolute on its Face to be a Mortgage.
    1. Declaring absolute deed to be a mortgage — Evidence.—To authorize*19 the court to declare a deed absolute on its face to be a mortgage, ity is not sufficient] to raise merely a doubt whether the instrument speaks the intention of the parties. The court must be satisfied by at least a clear preponderance of the evidence that a mortgage, and not an absolute sale was intended and clearly understood by the .grantee as well as by the grantor.
    2. Same. — This severe rule does not apply in cases where the writings express a conditional sale, or where it is admitted that there was a contemporaneous agreement different from that expressed in the instrument.
    3. Same. — It is impossible to lay down any fixed rule by which it can be ascertained with mathematical accuracy whether, in a given case, clear and convincing proof has been adduced. But it is] absolutely certain that if there is no continuing debt, there can be no mortgage.
    4. Same — Inference from silence. — 'Where one party has begun proceedings against the other, his failure to reply to a letter from the latter making demands in reference to the property in controversy, cannot be fairly construed as an admission of the truthfulness of the assertions of facts contained in the letter.
    5. Measure of proof — Difference in cases to declare conditional sale to be a mortgage, and absolute sale a mortgage. — Less stringent rules, as to the measure of proof, prevail in cases to declare conditional sales to be mortgages than in cases to declare absolute deeds to be mortgages.
    Appeal from Montgomery City Court.
    Heard before Hon. T. M. Arrington.
    Tlie facts are stated in the opinion.
    Jiro. G. EiNLey and Ti-ios. H. Watts, for appellant.
    The failure on part of Abecrombie to deny the assertions of fact contained in 'the letter received by her from Reeves, amounts to an admission of the truth thereof.— Watson v. Byers, Q Ala. 393 ; Perry v. Johnston, 59 Ala. 651, The evidence showed a mortgage, and appellant had a right to redeem. — Hodges v. Thompson, 13 So. Rep. 679; Hughes v. McKenzie, 101 Ala. 415 Illgesv. Ingram, 98 Ala. 511; Aslmrst v. Pecio, 101 Ala. -506; Bates v. Kelly, 80 Ala. 142; McMillan v. Jewett, 85 Ala. 476; Moseley v. Moseley, 86 Ala. 289; Parmer v. Parmer, 88 Ala. 545.
    Lomax & LigoN contra.
    
    Before a deed absolute on its face will be declared a mortgage, the proof that such was the clear intention of the parties must be clear, consistent, strong, stringent and convincing. — -Douglas v. Moody, 
      80 Ala. 66 ; Parks v. Parks, 66 Ala. 326 ; Bishop v. Bishop, 13 Ala® 487; Brantley v. West, 27'Ala. 542; West v. Hendrix, 28 Ala. 234; 97 U. S. 624.
   HEAD, J.

Stephen. Reeves, who was complainant in the lower court, and who appeals from a decree dismissing Ms bill, executed to the defendant, in April, 1886, an absolute conveyance, with covenants of warranty, of a certain lot in the city of Montgomery, upon wMch were located several bouses. The grantor resided in one of them and he continued to occupy it, under a contract of rental, and to pay rent therefor to • the grantee, for more than six years. A controversy having arisen between them as to thé real object and purpose of the conveyance, she brought an action of unlawful detainer against him in October, 1892, whereupon he filed his bill to have said deed declared a mortgage, and for an account of the rents, and redemption. The case involves no new or difficult principles of law and the whole controversy is one of fact: the pleadings squarely presenting the issue between the parties, whether the deed was what it purports to be — the evidence of an absolute sale of the property — or whether it was designed by both parties to operate as a mortgage to secure a debt. The measure of proof -re quired in such, cases is well understood. The burden is upon the complainant to establish the averments of his bill by ‘ 'clear and convincing” or, as has been otherwise expressed, by "strong and stringent evidence.” ‘ ‘It is not sufficient to raise a suspicion or doubt as to whether the instrument, which the parties have adopted as the evidence of their agreement, correctly states the contract. The court must be satisfied by at least a clear preponderance of proof that a mortgage, and not an absolute sale was intended. — Brantley v. West, 27 Ala. 542. Such must have been the clear and certain intention and understanding of the grantee as well as of the grantor. West v. Hendrix, 28 Ala. 226 ; Adams v. Pilcher, 92 Ala. 474. No more striking proof of the steady adherence by this court to these rules can be afforded than a reference to the numerous cases, in which complainants have failed to secure favorable decrees upon bills filed to have absolute conveyances declared to be mortgages. — Ingram v. Illges, 98 Ala. 511 ; Adams v. Pilcher, 92 Ala. 474 ; Downing v. Woodstock Iron Co., 93 Ala. 262 ; Vincent v. Walker, 86 Ala. 333 ; Kraus v. Dreher, 84 Ala. 319 ; Perdue v. Bell, 83 Ala. 396 ; Douglass v. Moody, 80 Ala. 61 ; Mitchell v. Wellman, 80 Ala. 16 ; Logwood v. Hussey, 60 Ala. 417 ; Haynie v. Robertson, 58 Ala. 37 ; Peeples v. Stolla, 57 Ala. 53 ; Phillips v. Croft, 42 Ala. 477 ; Swift v. Swift, 36 Ala. 147 ; Pearson v. Seay, 35 Ala. 612 ; Sewell v. Price, 32 Ala. 97 ; Harris v. Miller, 30 Ala. 221; West v. Hendrix, 28 Ala. 226; Brantley v. West, 27 Ala. 542 ; Bryan v. Cowart, 21 Ala. 92 ; Chapman v. Hughes, 14 Ala. 218 ; Freeman v. Baldwin, 13 Ala. 239 ; McKinstry v. Conly, 12 Ala. 678 ; Eiland v. Redford, 7 Ala. 724.

When the writings, in one or separate instruments, express a conditional sale, the courts incline to construe the instrument or instruments to be a mortgage, where parol evidence is introduced tending to show a mortgage was designed; or, if it be admitted there was a contemporaneous agreement different from that expressed in the writings, such admission will have an important bearing in the weighing the parol evidence, tending to show the absolute conveyance was intended as a mortgage. — Peagler v. Stabler, 91 Ala. 308; Daniels v. Lowery, 92 Ala. 519. In such cases the severe rule as to the measure of p^oof does not prevail. This principle, however, has no application in this case and we must here apply the strict rule, since there is neither writing nor admission, that a conditional sale, or sale with a right of re-purchase was the actual character of- the transaction. It was either an absolute sale of the property, in consideration of a sum of money, furnished by the defendant for the discharge of debts due by the complainant to third persons, or it was a mortgage, to secure the amount so advanced, with a shifting of the debts from the mortgage creditors to the defendant, by way of substitution. The offer to redeem and the rejection thereof, which usually form the preliminary movements, in anticipation of a legal controversy like this, betoken that the one party is prepared to affirm by his oath and the other to deny in the same manner the defeasible character of the instrument. Emphatic assertion and equally emphatic contradiction are, therefore, to be expected; and such we find to be the state of the present record. The testimony of the principals to the controversy is in hopeless and confusing conflict. Their respective versions of the transaction exactly accord with the two theories of the case, their depositions being as different and divergent as their pleadings. The one is supported by his wife, and the other corroborated by her sister, and we may assume these witnesses are alike affected with the imputation of interest and partiality.

Another element of uncertainty and difficulty is added , by evidence offered by the complainant of a casual remark said to have been uttered by the defendant, (and which she positively denies) ; tending- to show the trust character of the conveyance, over and against which, may be set the evidence of another witness introduced by the defendant, who testifies to three alleged conversations of the complainant, (which he protests he never had), tending to show admissions at variance with the position assumed in his bill and testimony. It is when confronted with such a situation, that one feels, with full force, the wisdom of the remark of Chief Justice-Chilton in one of the cases above cited, where he deprecates the relaxation of the rule against varying the effect of a written instrument by parol testimony, in this class of cases ; and looking over the litigation such relaxation has produced, as it appears in our reports, it is seriously to be doubted whether it has not produced more of perjury than of justice. The right to establish by parol the defeasible character of an absolute written conveyance is, however, now too well fixed in our jurisprudence to be questioned, and where' the effort is made we have only to inquire, whether it has been sustained by the necessary measure of proof. Every case must of necessity be decided upon its peculiar facts and circumstances. It is impossible to lay down any decisive tests and fixed rules by which it can be ascertained, with mathematical accuracy, whether in any particular case clear and convincing proof has been adduced. The absolutely certain thing which the cases establish is, that if there is no continuing debt to be secured, there can be no mortgage ; but in practical operation, this axiomatic proposition often affords no substantial relief in solving the problem, since the ascertainment of the existence of a debt is in many instances attended with as much difficulty as the decision of the main question; indeed it may be said to be but another form of the main question itself. We have an illustration of this in the present case, where, no written evidence of indebtedness having been given or taken, the same testimony, which tends to establish that the instrument did not really state the contract, tends also to establish the continued existence of a debt; while that which tends to establish the contrary, tends also to prove the discharge of the debt complainant owed to third persons without leaving any subsisting obligation to the defendant.

The qustion at last resolves into the inquiry, whether the version of the complainant is so far sustained by other witnesses, and the facts and circumstances developed in evidence, that an impartial mind has an abiding conviction of its truth, or whether no more can be asserted than that a doubt or suspicion as to its truth has been raised up. In the former case, the complainant prevails ; in the. latter,- or if the clear preponderance of the evidence is not on his side, he must fail.

■ It is helpful to ascertain whether the transaction began in an application for the loan of money ; was there great disparity between the value of the property and the consideration of the conveyance; whether the grantor retained possession, paid taxes, made improvements a tenant would not. probably make; or otherwise, with the knowledge and.consent of the grantee, acted towards the property in a way an owner would naturally do, when his property was encumbered. The conduct-of the parties under, and with reference to, any agreement made by them, throws a strong light upon their understanding of its scope and purpose, and, upon this idea, the inquiries above suggested would naturally arise in the mind of the searcher after truth, who, in the midst of conflicting statements, would probably give more heed to the actions of the parties than to their words. These circumstances are therefore important, but not necessarily controlling, although they may be deemed sufficient to turn the scale. The absence of all or most of them would be regarded as very significant in a contested case and would strongly support the theory of no mortgage. Much, of course, would depend upon the other evidence. In this, as in other cases, attention must be paid to all trustworthy evidence, and upon that the conclusion must be based. "With this much of preface, let us proceed to an analysis of the testimony, in which we have been aided by able and elaborate arguments of counsel, who discuss the case from their respective standpoints, with great zeal.

To narrow the field of controversy as much as possible, we will state what the practically undisputed evidence establishes. At the time of the execution of the conveyance the complainant owned the property in question, but it was encumbered with three-mortgages aggregating about nineteen hundred dollars. He was an undertaker and hackman, having personal property suitable for carrying on such business, and this was likewise covered by at least one of the mortgages. His creditors were pressing for payment, threatening to sell his personal property, and he was unable to meet the obligations. He had instructed real estate agents to advertise the place for sale, and a card, with the words ‘ ‘For Sale’ ’ thereon, had been posted upon the premises. He and the defendant were friends and neighbors, but they were not relatives, nor particularly intimate, nor were they even accustomed to visit each other, although they resided on the same street. She owned a good deal of property but was not a money lender. She did not have on hand the cash necessary to pay off the mortgages, but was forced to and did borrow it on four years time by placing an incumbrance on a piece of property she already owned, as also upon that conveyed to her by the complainant. The two mortgages on the real estate, outstanding when the transaction took place, appear in the record, having been delivered to the defendant, marked paid, with the other papers. The third mortgage is not produced and the evidence is somewhat indefinite as to the amount of the three, but this is not surprising after the long lapse of time. The statement of the consideration of the deed at nineteen hundred dol-dollars was intended to cover the aggregate amount in round numbers, and no money was paid or agreed to be paid to or for the grantor, except an amount necessary to discharge his said debts, evidenced by said mortgages. When the conveyance ’ was' executed the complainant made no claim, nor statement either to the lawyer'who drafted the instrument or to the notary who took the acknowledgment, that the trade was other than an absolute sale. For five years before the filing of the bill the collection of the rents and the letting of the houses was in the hands of a real estate agent, employed by the defendant, and he never heard any claim from the complainant during that time, that he had simply given a mortgage.

We come now to the field of controversy, contradiction and inference from proven facts and circumstances. Reeves testifies he had made repairs to the extent of several hundred dollars, but he gives no information as to what the nature and character thereof were, nor upon which of the houses ; and the real estate agent mentioned, as also a carpenter who testifies he made repairs at the instance of the defendant, both say they know of no repairs made by him at his own expense.

The complainant and his wife swear that the trade was made at their house, whither the defendant volunteered to come, her attention having been attracted by the sign upon the house, indicating the property was for sale; that upon being informed of his financial embarrassment and of the importunities of his mortgage creditors, she offered to relieve him of his difficulties, by lending him the money necessary to pay the debts, which she stated she would borrow, by mortgaging her best piece of property, giving him an unlimited privilege of redemption, with simply an application of the rents to the reduction of the amount advanced, and the taxes and insurance which she agreed to pay. This shows a disinterestedness and liberality very remarkable under the circumstances, when it is considered, that with the most favorable collection of rents, it would, according to the calculation of his counsel, require over eight years to make the account balance, during which time her other property, called into service for his relief, would be jeopardized. These considerations stamp his version of the affair with a strong impress of improbability. On the other hand, the defendant and her sister testify that complainant repeatedly came to her house to sell the property, she having emphatically refused to make him a loan, or raise his mortgages for him, saying she was not engaged in taking up mortgages, and that the bargain was there made to buy the place outright.' In this statement they are corroborated by Nicrosi, a disinterested witness,- who states that the complainant told him he was willing to sell if he could find a purchaser, not wishing to have his property sold at auction, and that the witness found a purchaser, who was the defendant, and sent him to her. The defendant owned another lot on the same street, and it is not unnatural that she should have been willing to buy another lot, with improvements in the same neighborhood. Upon complainant’s theory, no profit or advantage could accrue to the defendant; on the contrary she might suffer loss. Viewed, however, as an absolute sale the complainant obtained the release of the incum-brance upon his hacks, hearses and horses, which might well furnish a sufficient inducement to a parting with his real estate. It is not unreasonable that he should have preferred to preserve his business, when the rent of a house to live in would be insignificant. No disparity between the value of the property and the consideration is satifactorily established. A real estate agent gives the opinion that the defendant paid a full price and there is no counter evidence upon this point except that of complainant and his wife. The continued occupancy of one of the houses, accompanied by a payment of rent, is not such a retention of possession as would indicate the retention of an equity of redemption.

The only payment of taxes which it is claimed the complainant made, was for two years. One receipt produced shows payment for 1885, the year previous to the conveyance, and for this he was liable. Its payments was necessary to protect his covenant of warranty.

An agreement is produced, forgotten but not denied by the complainant, in which he contracted to pay one-third of the taxes for 1886. The payment of the taxes the second year was no doubt under this contract, which we regard as having a strong tendency in support of the defendant’s side of the controversy. When the sale was made, just one-third of the year 1886 had expired and the purpose of the agreement was. evidently to apportion the burden of the year’s taxes between them according to the time of their respective ownerships. If a mortgage, only, had been intended, no good reason pan be perceived for taking or making this written . agreement, since the complainant would then be liable ultimately-for all of the taxes. No evidence of indebtedness'against the complainant was taken or preserved, and- while it would not be necessary to do this, such omission is always regarded as significant. The only remaining evi-deuce, corroborative of the complainant’s theory, is that of three witnesses, who testify to verbal statements, in recognition of the alleged defeasible character of the deed, claimed to have been made by the defendant. Loose declarations of trust and casual conversations derogatory of the grantee’s title have not been regarded as possessing much probative force in cases like this, even when proven to have been made ; while the unsatisfactory and unreliable character of evidence of verbal state-, ments, easy to be misunderstood and difficult to be accurately reproduced, is everywhere recognized by those accustomed to deciding controverted questions of fact, particularly when given long after the event and without motive to impress the-conversations upon the memory. Enmity or unfriendliness to the party, against whom such testimony is given, or bad character of the witness giving it, infects it with additional elements of weakness and worthlessness. We, therefore, attach no weight to the testimony of the witness, Ennis, in which she states, that two years before, she heard the defendant say she had raised a mortgage for six hundred dollars on the complainant’s property, and he was to pay her ten dollars a month until he paid her back ; and no importance is to be attributed to the ambiguous statement of the witness Burchett, who testified to having heard the defendant remark, eight years before, that she bought the place “for pity’s sake and that if Reeves paid her back to-morrow he could take the place. ” Such remark is by no means inconsistent with an absolute purchase. The testimony of the witness Pinckard, who gave evidence in reference to an interview or conversation between the complainant and the defendant in his office, six years prior to his examination, is entirely too indefinite and uncertain to form any substantial basis for the belief, that she then deliberately x'ecognized and admitted that she held only a lien or mortgage upon the property in controversy. The complainant, in her absence, applied to Pinckard to borrow money, for the purpose, as he says, of redeerfiing,but, as slie testifies, of purchasing the property from her, she having offered to re-sell it to him'. It developed she held the legal title and Pinckard sent for her to come to his office. She exhibited her deed and a disagreement or dispute there arose between these litigants upon the subject of her liability to allow him for rents collected, which would rather prove she denied instead of admitted his claim. The witness states the disagreement did not make much impression on his mind, as he soon discovered it was not a loan he cared to make, and that he may have remarked his business was to loan money and not buy property. This witness does not claim to have any accurate recollection of what occurred and his deposition furnishes no substantial support to the complainant’s cause.

Much stress is laid by counsel for appellant upon the omission of the defendant to reply to a letter of October 21st, 1892, written in the name of the complainant, in which his demands were set forth, but we do not feel the force of the argument. The letter was evidently prepared by his attorney as preliminary to his litigation. The controversy between them had already culminated in an unlawful detainer suit, which sufficiently indicated, her position, and no reason appears why she should have reiterated it. Her silence simply indicated an intention to abide by her resolution of resistance to his efforts and refusal of his proposition of redemption. It cannot be fairly construed as an admission of the truthfulness of the assertions of fact contained in the letter.

From the foregoing review of the facts, we think it sufficiently appears that the evidence is neither clear and convincing nor strong and stringent in support of the complainant’s cause. His case is attended at every point with contradiction doubt, uncertainty and improbability. After a survey of the evidence in its entirety and in all its bearings, the mind is left rather in a state of bewilderment, than in a condition of calm satisfaction, which accompanies clear and abiding conviction of the truthfulness of a proposition. Upon the whole case, there is a tendency towards the belief, that the deed truly states the contract.

In most of the eases in our reports, where relief has been granted to complainants, declaring absolute con-veyarcc to have been mortgages, it is noticeable that the controversy was, whether a conditional sale or ' a mortgage was intended, in which, as we have seen, less stringent rules as to the measure of proof prevail. Hughes v. McKenzie, 101 Ala. 405 ; Daniels v. Lowery, 92 Ala. 519 ; Cosby v. Buchanan, 81 Ala. 574 ; Turner v. Wilkerson, 72 Ala. 361, Mobile Building & Loan Associa tion v. Robertson, 65 Ala. 387 ; McNeil v. Norsworthy, 39 Ala. 156 ; Crews v. Threadgill, 35 Ala. 334 ; Parish v. Gates, 29 Ala. 254 ; Locke v. Palmer, 26 Ala. 312 ; Turnipseed v. Cunningham, 16 Ala. 501. In all of these, however, the case for the complainant was much stronger than it is here ; and the like may be said of the four cases we have found, where relief was granted, in which the issue was presented in the same form as we here find it. — Parks v. Parks, 66 Ala. 327 ; Bishop v. Bishop, 13 Ala. 475 ; Sledge v. Clopton, 6 Ala. 589 ; English v. Lane, 1 Porter, 328.

We concur in the opinion of the city court that the appellant failed to establish the averments of his bill, by the measure of proof the law requires, and the decree must be affirmed.  