*794OPINION.
Marquette :The taxpayer herein bases his claim for relief upon the ground that the deed to the Luzerne County National Bank, although in form an absolute conveyance, was intended to be and was a mortgage, and that the title to the premises conveyed did not pass until the delivery of possession to the bank in the years 1918 and 1919. To support this conclusion he rests his case upon the terms and conditions of the contract with the bank for the sale of the property; that as the bank could not, under the provisions of section 5137 of the lie vised Statutes of the United States, purchase, hold, or convey real estate, except such as shall be necessary for its immediate accommodation in the transaction of-its business, the presumption that the intention was to obey the law should prevail and upon his own testimony presented at the hearing.
It is well settled that before a conveyance absolute in form may be regarded as a mortgage the evidence that it was so intended must be clear and convincing, the presumption being that the conveyance is what it purports to be. 3 Tiffany Real Property, 2d ed., 2386; 27 Cyc. 1025. The rule is stated in 19 R. C. L. 263, as follows:
Tlie authorities are unanimously agreed that the burden of proving that an absolute conveyance, unaccompanied by any written stipulation for reconveyance, was intended to operate as a mortgage rests on the party alleging that intention. Furthermore, evidence is not sufficient to establish such a conveyance to be a mere mortgage unless it is clear and unambiguous. It must be, according to the various statements, clear and convincing; clear and satisfactory ; plain and convincing; clear, satisfactory, and conclusive; or clear, unequivocal, and convincing. It will not suffice if composed of loose and random statements, or of facts and circumstances of doubtful import; but it must be of such a character as not to leave the nature of the transaction in reasonable doubt, though there is apparently dissent as to the proposition last stated. The reason for the exaction of this high degree of proof is not far to seek. If a less rigorous rule obtains, no man would be safe in taking a deed of property. When it has doubled or trebled in value it would be only necessary for the grantor to bring witnesses to testify to an agreement that the deed was regarded as an equitable mortgage, to enable him, on payment of the purchase price and interest, to redeem.
We think the same high degree of proof should be required in matters of taxation, and that the evidence presented herein, aided by the presumption claimed to exist, is totally inadequate to establish the taxpayer’s claim that the deed was intended to operate as a mortgage.
In the first place, in order that an absolute deed may operate as a mortgage, it is essential that an indebtedness on the part of the grantors to the grantee shall exist as a result of the transaction. In 3 Tiifany Real Property, 2d ed., 2387, it is said:
In determining whether an absolute conveyance is a mortgage, the fact that an indebtedness on the part of the grantor to the grantee is created by the transaction, or that former indebtedness is thereby continued in force, is usually conclusive that it is a mortgage. And conversely, the fact that no indebtedness exists which the conveyance can be regarded as intended to secure, is conclusive that it is not a mortgage.
*795In Arizona Copper Estate v. Watts, 237 Fed. 585, the court said:
A debt, either pre-existing or created at the time, is an essential requisite to a mortgage; and a deed cannot be construed as a mortgage where there was no indebtedness to be secured.
See also to the same effect, 27 Cyc. 1008, and the long list of cases cited in 3 Tiffany Real Property, 2d ed., 2387.
IVe are unable to find anything in the record which convinces us that any indebtedness existed which the deed was intended to secure. It is true, the contract provided that the grantors should pay interest at the rate of 414 Per cent per annum on the amount paid by the bank at the time the deed was delivered; that the grantors were required to pay the taxes, and that the rentals belonged to the grantors until delivery of possession, all of which, without other evidence, might indicate a mortgage rather than an absolute conveyance. The bank was in a position where it desired to give the transaction the appearance of a loan and the payment of interest by the grantors on the initial payment for the purchase price gave it that color. There is nothing in the evidence which indicates any indebtedness to the bank for the amount of the initial payment, and the contract between the parties specifically provides, for a payment of $25,000 on the purchase price at the time of delivery of the deed.
The only testimony produced other than the inferences to be drawn from the contract, that an indebtedness existed, was the statement of the taxpayer that the bank wanted something to show that it had paid the money — for security for the money. Nowhere does he state that it constituted a loan, but, on the contrary, testified that it constituted the initial payment for the purchase price.
Wo are of opinion the contract clearly sets forth the exact intention of the parties as to the nature of the transaction. The agreement was to sell for $88,750; the amount of $25,000 was to be paid at the time the deed was delivered, and the balance of $63,750, secured by a mortgage, payable when possession was delivered. For their own purposes, the grantors and the bank agreed that the rents should belong to the grantors until delivery of possession, and that they should pay the taxes and interest upon the advance payment until that time, and that the bank should pay no interest upon the mortgage to secure part of the purchase price. The transaction was carried out in exact conformity with the contract and, as we construe it, passed the absolute title to the property at the time the deed was delivered.
The taxpayer strenuously urges that the presumption that the parties do not intend to violate the law should control the determination as to what the intention of the parties was with respect to the passing of the title herein, upon the ground that it would be a violation of section 5137 Revised Statutes if the deed were held to be an absolute conveyance. While admitting the existence of the presumption of an intention to obey the law, such a presumption can not control positive evidence of intention as found in formal documents solemnly executed, and performed in accordance with their terms. A person’s acts are the best evidence of his intentions and, in the face of the clear terms of the contract and the acts of the parties subsequent thereto in carrying out its terms, a finding that they intended something different would be opposed to the facts as they existed.
*796The provisions of section 5137 of the Revised Statutes have no controlling effect upon the decision herein. The prohibition therein that a bank may purchase and hold only such real estate as shall be necessary for its immediate accommodation in the transaction of its business does not serve to make a transaction in violation thereof void. In Baker v. Schofield, 221 Fed. 322, it was held:
That a purchase of real estate by a national bank was in violation of the national banking law and ultra vires does not render the transaction void, but voidable only, and its validity cannot be questioned by private parties, but only by the United States.
We hold it was the intention of the parties by their contract that the absolute title to the premises therein described should pass upon the delivery of the deed, and that the title thereto did pass at the time the deed was delivered in the year 1916. The determination of the Commissioner must therefore be approved.