Opinion
No. 7,543.
Submitted June 16, 1936.
Decided July 3, 1936. Rehearing denied October 9, 1936.
Mortgages — Equity — Suit to have Deed Absolute Declared Mortgage — Evidence — Intent of Grantor — Self-serving Declarations — Burden of Proof — Appeal and Error — Preponderance and Sufficiency of Evidence — When Judgment not to be Disturbed in Equity Case — Variance. Mortgages — Suit to have Deed Absolute Declared Mortgage — Evidence — Intent of Plaintiff in Executing Deed — Parol Testimony Admissible. 1. Under the generally accepted rule that a party may, where material and relevant to the issue, testify directly as to motive, intent or belief, plaintiff, in an action to have a deed absolute declared a mortgage, could properly testify that the deed was intended by her merely as security for the payment of a debt, i.e., a mortgage. Same — Evidence — Self-serving Declarations — Inadmissibility — When Rule Applicable, When not. 2. The rule making self-serving declarations of a party inadmissible in evidence applies only to statements made out of court (with certain exceptions to the hearsay rule inapplicable here), not to statements made by such party on the witness-stand, such as, in the instant case, the statement made by plaintiff that when she executed the deed in question she intended it to be a mortgage. Same — Burden of Proof. 3. The burden of proving that a deed absolute was intended as a mortgage is upon the plaintiff so claiming. Same — Evidence — Sufficiency — Preponderance of Evidence Rule Applicable. 4. The rule that civil cases must be decided according to the greater weight of the evidence, a bare preponderance thereof in favor of the party holding the affirmative of the issue being sufficient to warrant a decision in his favor, applies in a suit to have a deed absolute declared a mortgage, as against the contention of defendant that plaintiff's proof must be clear and convincing. Appeal — Equity Cases — Sufficiency of Evidence — When Judgment not to be Disturbed on Appeal. 5. The supreme court on appeal in an equity case will not disturb the judgment of the lower court unless the evidence strongly preponderates against its decision, nor where the evidence, conflicting in character, furnishes reasonable ground for differing conclusions. Same — Sufficiency of Evidence — Presumption of Correctness of Judgment — Testimony Viewed in Light Most Favorable to Respondent. 6. Where, in an equity case, the assertion is made on appeal that the evidence preponderates against the findings of the trial court, the supreme court in reviewing the evidence will indulge the presumption that the judgment is correct, drawing every legitimate inference from the evidence in support of such presumption, and will view the testimony in the light most favorable to the prevailing party and as establishing every material fact it tends to prove. Mortgages — When Deed Absolute a Mortgage — Sufficiency of Evidence to Support Judgment in Favor of Plaintiff. 7. Evidence of plaintiff in a suit to have a deed absolute, executed by a woman past ninety years of age in favor of her foster son soon after the death of her husband at a time when she was in need of funds to pay funeral and other expenses, held sufficient to support a judgment in her favor. Same — Alleged Inherently Improbable Evidence — Failure to Remember Events — Trial Judge in Better Situation to Judge of Credibility of Witnesses Than Supreme Court on Review of Record. 8. Contention that plaintiff's failure to remember many events while on the witness-stand and that her testimony was inherently improbable in the light of admitted facts, prevented a finding that the evidence preponderated in her favor, held not sustainable in view of the rule that the trial court had the superior advantage of observing the witnesses while testifying and was in a better position to determine their credibility than is the reviewing court. Same — What Does not Amount to Variance Between Pleading and Proof. 9. Claim that there was a fatal variance between pleadings and proof [in that, while the complaint charged that plaintiff understood that the deed executed was to be a mortgage, the proof had to do with the matter of providing for her support and maintenance the remainder of her life], held not maintainable.
Appeal from District Court, Silver Bow County, Second District; T.E. Downey, Judge.
Mr. John K. Claxton, for Appellants, submitted a brief and argued the cause orally.
Mr. T.J. Davis and Mr. James T. Fitzgerald, for Respondents, submitted a brief; Mr. Davis argued the cause orally.
The appellants contend that the evidence before the trial court was wholly insufficient and in no manner or way measured up to the requirement of the rules of evidence in cases of this character. The rule is well laid down and expressed in 17 California Jurisprudence, page 756: "The evidence must be clear, satisfactory and convincing; explicit, unequivocal and indisputable; that is, it must be so clear as to leave no doubt or no substantial doubt in the mind of the trial court; it must appear to the court beyond reasonable controversy that it was the intention of the parties that the deed should be a mortgage. The rule seems to be particularly applicable as to parol proof." The rule in Montana is identical. ( Gassert v. Bogk, 7 Mont. 585, 19 P. 281, 1 L.R.A. 240; Robitaille v. Boulet, 53 Mont. 66, 161 P. 163; Johnson v. Opheim, 67 Mont. 126, 214 P. 951; Henley v. Hotaling, 41 Cal. 22; see, also, Wehle v. Price, 202 Cal. 394, 260 P. 878; Wright v. Rosebaugh, 46 Idaho, 526, 269 P. 98; Pittwood v. Spokane Savings Loan Soc., 141 Wn. 229, 251 P. 283; Johnson v. National Bank, 65 Wn. 261, 118 P. 21, L.R.A. 1916B, 4.)
The fact that there is no promise to pay at a definite future time is one circumstance which, with others, rebuts a presumption that either party intended the deed as security. ( Fletcher v. Northcross, 3 Cal. Unrep. 799, 32 P. 328.) The mere fact of a pre-existing debt between the parties does not prove that the conveyance was intended as a mortgage; for this fact does not exclude the hypothesis that the grantor intended to convey the land in satisfaction of the debt and without intending to reserve any right of redemption. ( Johnson v. Opheim, supra.)
Upon the question of intention: Nothing could be clearer than that the bill of sale which was made and delivered on the same date that the deed was executed shows beyond any and all reasonable doubt that it was the purpose of Mrs. Welch to transfer and deliver over to Mr. Thomas all her property. And we find these conclusive words in the instrument, to-wit: "and it is my purpose to absolutely transfer title to any and all such property to the said Ed G. Thomas without reservation or qualification." Then coupled with the agreement to support, provide for and maintain the plaintiff, the intention of the parties to a complete transfer of all property is established beyond reasonable doubt. That plaintiff may have become dissatisfied and regretful of what she may have previously done in no manner or way is sufficient either in law or otherwise to invalidate it or alter the solemn instrument in the form of a grant deed under attack in this case. ( McMillan v. Bissell, 63 Mich. 66, 29 N.W. 737; Herrick v. Teachout, 74 Vt. 196, 52 A. 432.)
It is easy for a party to take the witness-stand in a court and state as self-serving declarations that she did not intend to make a deed and it was not her intent to do so in an effort to avoid the deed and declare it to be in effect a mortgage, but without doubt the safeguards of the law do not permit any such avoidance when other solemn instruments show and indicate clearly a contrary and different intent to that given by the witness. ( Howland v. Blake, 12 Fed. Cas. No. 6792, 97 U.S. 624, 24 L.Ed. 1027.)
The rule is well settled in Montana as well as other Pacific states, that the burden is upon him who alleges that an absolute deed is a mortgage to establish that fact by clear and convincing evidence, and unless this is done, his case fails for lack of proof. Just a mere contradiction by one interested witness, one of the plaintiffs in this case, will not be sufficient when all the weight of the evidence including many silent documents is contrary to any such contention. In such a case the best that could be said is that there may be some doubt, but viewed as a whole, it preponderates against the findings of the trial court and it therefore becomes the duty of this court to set the judgment aside. ( Gibson v. Morris State Bank, 49 Mont. 60, 140 P. 76; Gassert v. Bogk, supra; Morrison v. Krouch, 141 Okla. 288, 285 P. 10; Beall v. Beall, 67 Or. 33, 135 P. 185.)
The presumption is, that a deed absolute in form constitutes an actual conveyance, and the burden of proving the contrary is upon the party asserting it, and he must do so by clear, unequivocal and convincing evidence. ( Wehle v. Price, supra; Stevens v. Fetterman, 76 Cal.App. 741, 246 P. 102; Borton v. Joslin, 88 Cal.App. 515, 263 P. 1033; Elling v. Fine, 53 Mont. 481, 164 P. 891, Ann. Cas. 1918C, 752.)
In this case there is not one bit of evidence, nor the least suggestion, that defendant Thomas ever at any time asserted any claim of any kind against Mrs. Welch; he never at any time after the deed was made, made any claim as to an existing indebtedness, nor was it shown that if any debt did exist, as claimed by Mrs. Welch, it was not immediately canceled and discharged. In other words, there was nothing left as a debt which the alleged mortgage could answer. Whether the debt has been discharged is one of the crucial tests by which the rights of the parties are to be determined. ( Gibson v. Morris State Bank, supra.)
Whatever form may have been given to the transaction, the design and understanding of the parties will fix the character of the instrument. But in order to convert a deed absolute in its terms into a mortgage, it is necessary that the understanding and intention of both parties, grantee as well as grantor, to that effect be concurrent and the same. ( Henley v. Hotaling, supra; Low v. Henry, 9 Cal. 538.) The mere secret intention on the part of one of the parties, not disclosed or communicated to the other, will not have the effect of changing the character of the transaction. Subsequent developments may throw light on their original intention, but the legal character of the transaction cannot be made to depend on what they would or might have intended if they had foreseen the course of events. Facts and circumstances which may be considered in determining whether a mortgage was intended instead of a deed are only those which existed at the time the instrument was executed. ( Reese v. Rhodes, 3 Ariz. 235, 73 P. 446; Beverly v. Davis, 79 Wn. 537, 140 P. 696.)
There is no stronger presumption in law than that an instrument is what it purports to be, and to overcome it, the evidence must measure up to the rule announced in cases of this nature. ( Gassert v. Bogk, supra; Wehle v. Price, supra; Stevens v. Fetterman, supra; Borton v. Joslin, supra; Ahern v. McCarthy, 107 Cal. 382, 40 P. 482; Sheehan v. Sullivan, 126 Cal. 189, 58 P. 543.) The courts go a long way in attempting to protect and hold inviolate solemn instruments such as grant deeds, and hold that testimony of a single witness is insufficient to overcome the presumption favoring the validity of a grant deed, unless supported by other competent and convincing evidence. ( Arnold v. Mattison, 3 Rich. Eq. (S.C.) 153; Barber v. Lefavour, 176 Pa. St. 331, 35 A. 202; Strong v. Strong, 126 Ill. 301, 18 N.E. 665; Howland v. Blake, 97 U.S. 624, 24 L.Ed. 1027; Blake v. Taylor, 142 Ill. 482, 32 N.E. 401; Falk v. Wittram, 120 Cal. 479, 52 P. 707, 65 Am. St. Rep. 184.)
There can be no question but that there is a fatal variance between the allegations of the complaint in this action and the proof offered in support thereof. The complaint charges that Annie M. Welch intended to and did execute what she thought and understood to be a mortgage instead of a grant deed to secure payment of an alleged sum of $500, while the evidence offered in support thereof by the plaintiffs clearly shows the transaction to be entirely foreign and contrary to a mortgage or anything that purports to be a mortgage, and a transaction relating to and providing for her support and maintenance the remainder of her life, and from such an agreement and other instruments made, executed, acknowledged and delivered at the same time it is apparent that they bear and have no relation to a mortgage. No rule is better settled in Montana than the one to the effect where one cause of action is pleaded and another is proved, although it would have been a good cause of action had it been pleaded, it amounts to a fatal variance. ( Gregory v. Chicago, M. St. P. Ry. Co., 42 Mont. 551, 113 P. 1123; Forsell v. Pittsburgh M.C. Co., 38 Mont. 403, 100 P. 218; Flaherty v. Butte Electric Ry. Co., 40 Mont. 454, 107 P. 416, 135 Am. St. Rep. 630; Bracey v. Northwestern Imp. Co., 41 Mont. 338, 109 P. 706, 137 Am. St. Rep. 738; St. George v. Boucher, 84 Mont. 158, 274 P. 489; Kakos v. Byram, 88 Mont. 309, 292 P. 909.)
Plaintiffs brought this action seeking to have a deed absolute on its face declared to be a mortgage. Issue was joined upon the allegations of the complaint by the answer. The property conveyed by the plaintiffs was a house and lot in the city of Butte and the Bismark lode mining claim. The deed was an ordinary grant deed containing mineral reservations. Defendants affirmatively sought to have this deed reformed upon the ground of mistake, to include the minerals reserved so far as the lode mining claim was concerned. Issue was joined on these affirmative allegations by reply. The cause was tried before the court sitting without a jury. Findings of fact and conclusions of law, both special and general, were made in favor of the plaintiffs and against the defendants. Judgment was entered in conformity therewith. Motion for new trial was made, heard and denied. The appeal is from the judgment. No question is raised on this appeal as to the sufficiency of the pleadings.
Mrs. Welch, one of the plaintiffs, was at the time of the trial past ninety years of age. The defendant Ed. C. Thomas was approximately fifty-one years of age. He was a nephew of Mrs. Welch and the youngest child of her sister. When he was approximately two and a half years of age, Mrs. Welch brought him from Wales and reared him in her home until he was approximately fifteen years of age. She at that time was married to a man by the name of Westlake, and Thomas was known by that name although he was never adopted by Mr. and Mrs. Westlake as their child. When he arrived at that age some difficulty arose, and he thereafter ceased to reside with Mrs. Welch, then Mrs. Westlake.
During the month of March, 1934, Mr. Welch, the then husband of Mrs. Welch, one of the plaintiffs in this action, was ill and died as a result of this illness on March 18 of that year. Some two years prior to that date Mrs. Welch had a broken femur, which confined her in the hospital for some five months, and which, together with old age, left her in a feeble condition. Following the year 1900, and until the week immediately prior to the death of Mr. Welch, Mr. Thomas, according to his own testimony, had only visited his foster mother on a very few occasions, once along in 1910 or 1911 when he sought to secure written authority to dispose of the lode mining claim for her, and again during the time she was in the hospital with the broken leg. Mrs. Welch at the time of the illness of her husband was, according to the testimony, without funds and was being supported by some relief agency. A practical nurse was in this manner provided to care for Mr. Welch during his illness. During the last week of his illness, Mr. Thomas called at the home of Mrs. Welch. The evidence is in conflict as to the number and the time of his various visits. We might well pause at this point to observe that the testimony, other than the facts which we have summarized above, at to what occurred on the various visits of Thomas and his wife, and also after the death of Mr. Welch, is in sharp conflict; in fact, this court is seldom called upon to consider on appeal a record wherein the testimony as presented on behalf of the respective parties is in such direct and sharp conflict as to the most minute details.
Mrs. Welch was without funds to take care of the necessary funeral expenses of her deceased husband, and was in such a feeble condition that she was unable to attend his funeral. According to her version, Thomas took charge of the funeral arrangements and either paid the expenses of the funeral or arranged for them upon his sole credit. He and his witnesses assert that all of this was done upon the express request of Mrs. Welch; this she denies. He claims that the funeral expenses and other bills which he paid for her within the next few months amounted to the sum of $500. The plaintiffs in their complaint offered to pay this sum, and prior to the filing of the complaint made a tender of that amount to Mr. Thomas, which was refused by him.
Immediately following the burial of Mr. Welch, Mr. Thomas secured the services of an attorney of his own selection, who called at the home of Mrs. Welch; some conversation ensued at that time. The testimony as to what then occurred is likewise in hopeless conflict. The day following, Mr. Thomas and the attorney returned to the home of Mrs. Welch, at which time she signed the deed conveying the property mentioned above to Mr. Thomas. She testified that she was informed by the attorney that the deed was a mortgage and that he read it to her as such. Over objection she testified that it was her intention, and no other, to mortgage the property to the defendant Thomas as security for the debt. The attorney, Mr. Thomas, and others testified that she called for her glasses, read the various documents, and then signed them, which documents, in addition to the deed, included a bill of sale for all the personal property she owned, and likewise an agreement between her and the Thomases whereby they agreed to support her during the remainder of her life. Mrs. Welch denied that she had her glasses or ever read any of these documents. Prior to this time the defendant in some manner had secured the possession of a pawn ticket on a pawnbroker for certain jewelry pledged by Mr. Welch. The evidence is again in conflict as to how this was secured. He secured this jewelry, however, for his own use. Likewise he secured from a bank in Butte other jewelry which had been pledged by Mrs. Welch; this he sold and very reluctantly testified that he secured but little more than the amount which was necessary to redeem the pledge. Following the execution of the above instruments for some little time, according to Thomas and his wife, he provided Mrs. Welch with some groceries and other necessities. He also insisted that she remove to his home, which she refused to do.
In the month of August, 1934, Mrs. Welch consulted an attorney and conveyed to him a one-half interest in her real property. He has joined with her as coplaintiff in this action.
The trial court found that Mr. Welch died during the month of March, 1934, and that subsequent to his death Thomas arranged for and took charge of the burial of Welch and claimed that he had expended the sum of $500 on behalf of Mrs. Welch, and that on March 23, 1934, Mrs. Welch, one of the plaintiffs, made what she thought and intended to be a mortgage, which was in fact a deed conveying her interest in her house and lot, and an attempt to convey her interest in the lode mining claim; that the deed was executed by her and intended and understood to be a mortgage for the sum of $500, and was not intended to be a deed or an absolute conveyance of any character. The court found that the defendants were not entitled to a reformation of the deed and found the issues generally in favor of the plaintiffs. Exceptions were taken to these findings. The making of these findings and the overruling of the exceptions are assigned as error in this court. Likewise conclusions of law which followed the findings are challenged by specifications of error. Error is assigned upon the making and entering of the decree. Defendants also assign error upon the court's action in overruling their objection and permitting Mrs. Welch to testify as to what her intention was in giving the deed to the house and lot. We shall discuss this specification first.
The law is well settled in this state that a grantor may show [1] by parol evidence that a deed absolute on its face was intended merely as security for the payment of a debt and thus to be in the nature of a mortgage, and this is to be ascertained from an examination of all the facts and circumstances surrounding the transaction. It is solely a question as to what was the real intention of the parties. ( Nolan v. Benninghoff, 64 Mont. 68, 208 P. 905.) The modern rule is, where material and relevant to the issue, a party may testify directly as to motive, intent or belief. (2 Jones' Commentaries on Evidence, 2d ed., sec. 708, p. 1329; 1 Wigmore on Evidence, 2d ed., sec. 581.) This rule is recognized by the courts of every state of the Union, with the exception of Alabama. (See texts cited supra.) This court has recognized and approved the rule. ( Bordeaux v. Bordeaux, 43 Mont. 102, 115 P. 25.)
In support of this contention counsel argues that the [2] statement made by Mrs. Welch while a witness on the stand was a self-serving declaration and therefore inadmissible. He relies in his argument upon the statement of this court in the case of Spellman v. Rhode, 33 Mont. 21, 81 P. 395. In that case, however, the court said what it did with reference to a statement made by a party outside of court and not under oath. Much confusion abounds as to what are declarations, admissions and confessions. No text on the subject of evidence has ever attempted to give an accurate and concise definition of the word "declaration," as applied to the law of evidence. We make no attempt to define or limit the scope of the word as applied to the law of evidence. The rule mentioned above is only properly applied to a statement made by a party outside of court and not under oath. If a witness had been produced who sought to testify that at some time following the transaction here in issue, Mrs. Welch had made a statement as to what was her intention at the time of the execution of these instruments, such a statement would have been a self-serving declaration upon her part and inadmissible; but the rule relating to the inadmissibility of self-serving declarations has no application to the testimony of a witness. Statements of parties outside of court are ordinarily inadmissible, unless they come within some of the exceptions to the hearsay rule, either where they are made as a part of the res gestae, or where they are declarations against interest as classified in our statute (sec. 10514, Rev. Codes), which would be more properly designated by the term "admission," or some of the other recognized and established exceptions to the hearsay rule. In the situation which was before the trial court, neither the hearsay rule nor its exceptions were applicable. Accordingly, the court below very properly permitted the witness to testify as to what her intention was in the execution of these instruments. The weight to be given to this testimony, in the light of the other facts and circumstances, was for the trier of the facts, in this case the trial judge.
The other specifications of error all relate to the subject of the sufficiency of the evidence to support the findings, judgment and decree.
The burden of proving that the deed was intended as a mortgage [3] was upon the plaintiffs. ( Elling v. Fine, 53 Mont. 481, 164 P. 891, Ann. Cas. 1918C, 752, and cases there cited.) It is argued on behalf of the defendants that one who asserts that a [4] deed absolute on its face is in fact a mortgage must prove the same by clear and convincing evidence. ( Johnson v. Opheim, 67 Mont. 126, 214 P. 951.) In the case of In re Wray's Estate, 93 Mont. 525, 19 P.2d 1051, 1054, we said: "In this jurisdiction civil cases are to be decided according to the greater weight of the evidence, and a bare preponderance in favor of the party holding the affirmative of the issue is sufficient to warrant, and should result in, a decision in his favor. ( Gehlert v. Quinn, 35 Mont. 451, 90 P. 168, 119 Am. St. Rep. 864; Parchen v. Chessman, 53 Mont. 430, 164 P. 531.)" What we there said applies here. In the case of Silfvast v. Asplund, 99 [5, 6] Mont. 152, 42 P.2d 452, 454, we declared: "In the case of In re Mullen's Estate, 97 Mont. 144, 33 P.2d 270, 273, it is written: `This court will not reverse a judgment unless the evidence strongly preponderates against the decision of the trial court, and where there is a conflict in the evidence, and it furnishes reasonable ground for differing conclusions, the judgment will not be disturbed on appeal. ( Kirby v. Hoeh, 94 Mont. 218, 21 P.2d 732; Baker v. Citizens' State Bank, 81 Mont. 543, 264 P. 675.)' In a case such as this, where it is asserted that the evidence preponderates against the findings, this court enters `upon a review of the evidence indulging the presumption that the judgment is correct ( State ex rel. Woare v. Board of Commrs., 70 Mont. 252, 225 P. 389); every legitimate inference will be drawn from the evidence to support this presumption ( Security State Bank v. Soule, 70 Mont. 300, 225 P. 127); and the testimony will be viewed in the light most favorable to plaintiff and considered as establishing every material fact which it tends to prove ( Awbery v. Schmidt, 65 Mont. 265, 211 P. [346] 348).' ( Baker v. Citizens' State Bank, supra.)" These same rules have been applied by this court to a case of this character. ( Nolan v. Benninghoff, supra, and cases there cited.)
We have not attempted to set out in great detail the testimony [7] appearing in the voluminous transcript, which, as we have already observed, on all material questions and many of slight materiality is in hopeless and sharp conflict. The evidence given by Mrs. Welch, if believed by the trial judge, as it was, clearly supports the judgment.
It is argued that in her testimony Mrs. Welch did not remember [8] a great many events about which counsel inquired. True, they were testified to by witnesses for the defense. She denied that many of the statements about which they testified were ever made, and that many of the alleged occurrences never happened; hence, as to these, she could not remember them. Some other facts, she testified, she did not remember. The testimony, however, of many of the defendants' witnesses — testimony given by much younger persons — likewise was demonstrated to be inaccurate and somewhat inconsistent.
It is argued on behalf of the defendants that we should follow the rule announced by this court in the case of Casey v. Northern P. Ry. Co., 60 Mont. 56, 198 P. 141, and other cases following that decision. The rule announced in that decision applies where the testimony is inherently improbable in the light of admitted facts and the probabilities as applied to such facts. We are unable to apply the rule of that case here. Within itself the testimony of Mrs. Welch is not improbable in the light of the admitted facts. The trial court in this case had the superior advantage of observing the various witnesses testify, and was in a better position than are we to determine who was to be believed; hence we are unable to say that the evidence preponderates against its findings and judgment.
Lastly, it is argued that there was a fatal variance between [9] the pleadings and the proof. True, if the defendants' version of the facts and circumstances were to be believed, plaintiffs failed to prove their case; but the testimony offered in support of plaintiff's case was substantially in support of the allegations of their complaint. This contention cannot be sustained.
Judgment affirmed.
ASSOCIATE JUSTICES MATTHEWS and STEWART concur.
MR. CHIEF JUSTICE SANDS, being absent, did not hear the argument and takes no part in the foregoing decision.