Hickox v. Lowe

Citations

• 10 Cal. 197
• 1858 Cal. LEXIS 214

Syllabus

<p>Whether a conveyance, absolute in form, executed in consideration of a precedent debt on the part of the grantor to the grantee, and an agreement executed at the same time by the grantee to re-convey the premises to the grantor upon payment of the consideration, with interest and expenses, taken together constitute a mortgage or a conditional sale, depends upon the fact whether the debt was discharged by the conveyance, or subsisted afterwards.</p> <p>If the debt continued after the execution of the conveyance, the instruments constitute a mortgage; if, on the other hand, the debt was extinguished by the conveyance, the agreement to re-convey must be regarded as an independent contract, in no respect affecting the absolute character of the original instrument.</p> <p>The only difficulty which arises, where there is an absolute conveyance with an attendant agreement to re-convey, is to ascertain the fact whether the debt subsists or has been extinguished; and where there is doubt on this point, Courts of Equity lean in favor of the right of redemption, and construe instruments as constituting a mortgage rather than a conditional sale.</p> <p>A provision in an agreement for a re-conveyance, upon the payment of the precise amount of the consideration, and a stipulated monthly interest thereon, is a circumstance favoring the conclusion that the debt subsisted.</p> <p>A provision in the agreement, for the application of the proceeds of the property, after deducting the expenses of its charge to the payment of the monthly interest, and any excess, upon the principal sum, is a very strong circumstance to show the existence of the debt, and when taken in connection with the other circumstance above stated, is conclusive that the debt was not extinguished by the conveyance, and that the transaction was intended as a mortgage.</p> <p>A conveyance, and an attendant agreement for a re-conveyance upon the payment of the amount of the consideration and interest, do not of them