O'Briant v. . Lee

CoNNOR, J.

It does not appear on the face of the pleadings in this action that the relation of creditor and debtors existed between the defendant and the plaintiffs at the date of the delivery of the deed executed by the plaintiffs, conveying the land described in the complaint to the defendant, and of the contract executed by the defendant by which she agreed, at the option of the plaintiffs, to reconvey to them the said land, upon their payment to her of certain sums of money, in accordance with the terms and provisions of said contract, nor does it so appear on the face of the deed and contract, which are by reference made a part of the pleadings, and which for the purposes of this action must be construed as if they were one instrument. The allegation to that effect in the complaint-is denied in the answer. An issue of fact is thus raised on the pleadings for the jury.

For this reason there was no error in the refusal of the court to allow the motion of the plaintiffs for judgment on the pleadings in accordance with the prayer of their complaint. Such refusal is in accord with the law as stated in 41 C. J., section 81 (3), at page 321, as follows:

“When the grantor in an absolute deed at the same time takes back from the grantee a written contract giving the former a certain length of time in which to redeem the premises by paying the amount of the debt, or the consideration for the deed, and binding the latter to reconvey on such redemption, the two papers together constitute a mortgage. And the effect of the transaction is not altered by the fact that the contract specifically limits the time for redemption, and makes the time an essential element in the right to redeem. But if the contract'leaves it entirely optional with the grantor to redeem or not, and does not bind him to effect a redemption according to the agreement, it is rather to be held a conditional sale than a mortgage.”

Tbis statement of the law applicable to plaintiffs’ assignment of error with respect to the refusal of the court to allow their motion for judgment on the pleadings is supported by numerous cases cited in the notes, among others Porter v. White, 128 N. C., 42, 58 S. E., 24. See, also, Robinson v. Willoughby, 65 N. C., 520, where it was held that when a debtor conveys land to a creditor by deed absolute in form, and at the same time gives his note for the amount of his debt, and takes from his grantee a bond for title upon his payment of the note, such transaction is a mortgage. Where, however, there is no relation of creditor and debtor between a grantor and a grantee in a deed absolute in form, and the grantee contemporaneously with the delivery of the deed, agrees in writing to reconvey to the grantor the land conveyed to him by the deed, upon the payment to him of a certain sum of money by his grantor, such transaction will not be held a mortgage as a matter of law or equity. “The mere execution of a deed absolute on its face and of a bond for a reconveyance of the premises upon certain conditions, does not of itself stamp the transaction as a mortgage. That character attaches to it only when it was intended as a form of security for a debt or a loan, and if it is shown that the parties intended an absolute sale of the property, with a mere right to repurchase, that intention must govern. Such intention may be manifested on the face of the papers or inferred from circumstances. If the agreement for reconveyance expressly recites that the transaction is not intended as a mortgage, this is conclusive. In the absence of such a declaration, the test must he found in the character of the consideration. If it is a debt which the grantor is bound to pay, which the grantee might collect by proper proceedings, and for which the deed for the land is to stand as security, the transaction is a mortgage; but if it is entirely optional with the grantor to pay the money and receive a reconveyance, he has not the rights of a mortgagor, hut only the privilege of repurchasing the property.” 41 C. J., section 87, page 325.

The contention of the plaintiffs on their appeal to this Court from the judgment of the Superior Court in this action that there was error in the instructions of the trial court to the jury with respect to the character of the evidence and the degree of proof which the law requires to justify an affirmative answer by the jury to the issue submitted by the court, must he sustained.

In Williams v. Building & Loan Association, 207 N. C., 362, 177 S. E., 176, it is said by Schench, J.:

“In this jurisdiction there are three degrees of proof required of the party upon whom the onus probandi rests. First, in ordinary civil actions, the burden is to satisfy the jury by the greater weight of the evidence; and, second, in certain cases of an equitable nature, such as where it is sought to reform a written instrument, or prove the terms of a lost will, or to impeach the probate of a married woman’s deed, the burden is to establish the contention by clear, strong and cogent proof; third, in criminal actions the burden is to show the guilt of the accused beyond a reasonable doubt. Ellett v. Ellett, 157 N. C., 161, 72 S. E., 861; Montgomery v. Lewis, 187 N. C., 577, 122 S. E., 374. The first phrase, ‘greater weight of the evidence,’ has been universally explained by ‘the preponderance of the evidence,’ Supply Co. v. Conoly, 204 N. C., 677, 169 S. E., 415; the second phrase, ‘clear, strong and cogent proof,’ by evidence which ‘should fully convince,’ Lumber Co. v. Leonard, 145 N. C., 339, 59 S. E., 134; and the third phrase, ‘beyond a reasonable doubt,’ by ‘to a moral certainty,’ S. v. Schoolfield, 184 N. C., 721, 114 S. E., 466.”

In Ricks v. Brooks, 179 N. C., 204, 102 S. E., 207, it is said by Walker, J.:

“We may as well state in the beginning that this is not an action for the correction of a deed, or for its reformation, and the doctrine as to the quantity of proof required in such a case does not apply, and the contention of the defendant in .this respect cannot be sustained.

“In an action for reformation it must be alleged and shown, by evidence clear, strong and convincing, that the instrument sought to be corrected failed to express the true agreement of the parties, because of a mistake common to both parties, or because of the mistake of one party induced by the fraud or inequitable conduct of the other party, and that by reason of ignorance, mistake, fraud or undue advantage something material has been inserted, or omitted, contrary to such agreement, and the intention of the parties. Ray v. Patterson, 170 N. C., 226, 87 S. E., 212; Newton v. Clark, 174 N. C., 393, 93 S. E., 951. But this rule does not apply when the purpose is not to reform, but to set aside the instrument for fraud, undue influence or upon other equitable ground. Poe v. Smith, 172 N. C., 67, 89 S. E., 1003, and Boone v. Lee, 175 N. C., 383, 95 S. E., 659, citing Harding v. Long, 103 N. C., 1, 9 S. E., 445.”

The instant action is not of an equitable nature, it is not to reform or correct a written instrument, upon the ground that by reason of mistake of the draftsman, or of one of the parties induced by the fraud of the other, the instrument fails to express the true intention of the. parties. There is no allegation in the complaint nor was there any contention at the trial to that effect. It is alleged'in the complaint and was contended by the plaintiffs at the trial that the true intention of the parties to the deed and to the contract was that both should constitute a mortgage securing a loan made contemporaneously with the execution of both instruments by the defendant to the plaintiffs. This allegation was denied in the answer.

The issue raised by this allegation and denial was submitted to the jury. It involves only a question of fact, to wit, the true intention of the parties. The burden of the issue was on the plaintiffs to satisfy the jury of the truth of their allegation, by the greater weight or preponderance of the evidence. No greater degree of proof was required of them. There was error in the instructions to the contrary.

For this error the plaintiffs are entitled to a new trial. It is so ordered.

New trial.