Gilbert C. Russell, once a Colonel in the On a subsequent visit to Louisville, in Oct., army of the United States, bought from Dr. 1830, Russell having discovered that the agJohn Floyd, of Virginia, a tract of land near gregate sum, to-wit: $4,829 82, acknowlthe city of Louisville, Kentucky for the con-edged to have been received from Southard, sideration of $12,960; and on the 22nd of was $100 more than the amount actually or May, 1826, Floyd and his wife conveyed to or nominally advanced; and, finding himself Russell the legal title to the land described as disabled by misfortune from then repaying the containing 216 acres-See bill, p. 5, of printed Record; Floyd's deed, p. 12, and deposition of R. Smith, p. 248.

money he had received, demanded of Southard $100 so as to make the sum nominally received equal to that for which he conveyed the land. Southard, after much diplomacy, finally paid him $100, and took from him on the 6th of October, 1830, a writing acknowledging the payment, for the purpose avowed by Russell, and, "in full for all demands."

by his will, his interest passed to his brother, Daniel R. Southard, who was present at the execution of the conveyance by Russell to his testator, had owned one of the claims assigned to Russell, and drew the defeasance, as he avers in his answer; Wordan Pope, a lawyer, having, at the instance of James Southard, drawn the absolute deed, and probably the defeasance also, which was copied by D. R. Southard.

As it was not then convenient for Russell to reside on the land thus bought, he placed on it J. W. Wing, as his agent and manager. On revisiting Louisville in September, 1827, from his residence in Alabama, Russell ascertained that Wing had incurred debts which could James Southard took possession of the land not then be paid otherwise than by borrowing immediately after the date of the written memoney or selling the farm :--and his desire to morials of the contract, and retained the posraise, in one mode or the other, a fund suffi-session until his death in the year 1840, when, cient for paying those debts, being made known he was offered $10,000 for his land in real esstate in Huntsville, Alabama--See the deposition of C. Talbot, p. 186. But, unwilling to accede to that offer for a purchase, Russell, thus unexpectly pressed for money far from home, made an arrangement with James Southard, of Louisville, whereby he obtained from Southard an advance of $2,000, (the sum he needed,) and also took an equitable assignment of two claims of doubtful value then in On the 23d of September, 1847, Russell, as litigation-one on Dr. Johnson for $1,270 94, a citizen of the State of Alabama, filed a bill and the other on S. M. Brown for $1,558 87; in chancery against D. R. Southard and others, each of which Southard carefully assigned to as citizens of Kentucky, in the circuit court of him without recourse, and exacted from him the United States for Kentucky, alledging, an acknowledgment of the receipt of $4,929 among other things, that the contract between 81, in "coin" of the United States. Russell's J. Southard and himself was not a sale, but interpretation of this arrangement was, that only a mortgage for securing the repayment it was a loan to be secured by a mortgage on of a loan; that the advance of the considerathe land he had purchased from Floyd; which tion recited in the written memorials was a he considered as effectuated by a conveyance loan; that the defeasance showed by its terms, signed by him on the 24th of September, 1827, that the absolute conveyance was intended to purporting to be absolute on its face--See p. 14-15, and by a separate defeasance signed both by Russell and Southard, of the same date-See p. 172.

By a writing simultaneously executed by Russell, he covenanted to procure his wife's relinquishment of dower within four months from that date; and covenanted that, in the event of a failure to do so, he would pay to Southard $,3,000, "as liquidated damages for that failure"-See p. 14.

operate only as a mortgage; that D. R. Southard had fraudulently procured and still with. held from him the document of defeasance; that his (Russell's) embarrassments had preSouthard had, ever since they had fraudu vented a redemption; that both J. & D. R. lently obtained the receipt and the possession of the defeasance, persisted in the false and fraudulent pretence that the contract was a conditional sale and not a mortgage, &c. &c., and, after propounding to the defendant, Southard, various interrogatories, concluding

with a prayer for a decree for redemption on equitable terms.

inserted in the conveyance, we insist that, on the face of these documents alone, the law On the 7th of February, 1848, Southard filed construes them as constituting a memorial of a long and elaborate answer, in which he de- a contract of a loan by Southard, and of mortnied that the contract was, as alleged, a mortgage by Russell. gage to secure a loan, insisting that it was an I. When an absolute conveyance is coupled absolute sale, and averred that the defeasance with a defeasance, the law inclines to conwas not "contempleted" by the original construe the contract as a mortgage, rather than a tract, was not executed until some days after conditional sale or a defeasable purchase-the date of the conveyance, and was altogeth- this is the dictum of every treatise on the er gratuitous! and that his testator had, on equitable doctrine of mortgages-Sparsimthe 6th of October, 1830, for the consideration see also Bloodgood vs. Zigly 2 Caine's cases of the sum of $100 then paid to Russell, fi--124 Longuet vs. Scaven 1. viz sr. 406-Newnally concluded all controversy concerning comb vs. Bonham 1st. Vernon 7-Manlove, the original contract; and lastly, pleaded the lapse of time.

On the final hearing, the circuit court dismissed the bill; and Russell has appealed to this court for a revision and reversal of the de

And, for establishing these positions in their numerical order, the appellant's counsel respectfully submit, to the consideration of the court, the following programme of argument as their Brief:

1. The considerations conducing to show a mortgage are of two distinct classes:-1st. Intrinsic. 2d. Extrinsic.

1st. Intrinsic Evidence.

vs. Bale & Bruton 2nd. Ib. 83. Chapman's ad'r vs. Turne 1 call 244. Robertson vs. Campbell 2ud. Ib. 353. Ross vs. Norvell 1. Washington 14-King vs. Newman 2. Munf'd 40. Thompson vs. Davenport 1. Washington 125. Robert's ad'r vs. Cox 1. Rand-121. Pennington vs. Hanby et al 4 Munf'd 140. Wilson vs. Carven 4. Haywood 93.-Haltier vs. Elinaud 2 Dess-571. Wharf vs. Howell 5. Binney 499. Dey vs. Duncomb 2. Johnson's chy R. 189. Blaney vs. Bearce vs. Grant R. 132. Harrison vs. Trustees of Philip's Academy 12 Mass. R. 457. Erskine vs. Townsend 2 Io 475. Taylor vs. Weld 5 Ib 100. Carey vs. Rawson 8 Ib 159 Brown vs. Bement 8th. Johnson R. 150. Patterson vs. Clark 15. Ib. 205. Skinner vs. Miller 5. Litt R. 86Heytle vs. Logan 1. A. K. Marshall p. 629. Edrington vs. Harper 3. I I. M. 354-Morris vs. Nixon 1. Howard-Livingston vs. Story 9th and 11 Peters.

Some of these cases expressly, and most of them virtually decide that a writing or writings, importing an absolute sale with a power of defeasance-nothing else appearing-imply The defeasance was not, as pretended by a mortgage-whatever may be the form or D. R. Southard, purely voluntary; 1st. Be- terms of the contract; and that, in all such cause, if, as its date and recitals import, it cases, the burthen of proof aliunde devolves was executed simultaneously with the con- on the party claiming a conditional or defeasveyance, they are integral and essential consti- able purchase. Coote, in this treatise on morttuents of one entire contract; 2d. If the de-gages, 16th Vol. Law Lib. p. 13, considering feasance was not formally executed until a the authorities as to the recognition and valididay or days after the execution of the convey- tyof defeasable purchases confused and doubtance, it was, nevertheless, prepared and sign- ful, notices the case of Floyer vs. Livingston ed in fulfilment of the understanding of the 1. Pr. Wms. 268-and that of Miller vs. Lees parties in making their original contract, and 2. Atkins 494, sometimes cited in support of à refusal to execute it would have been a reck- such contracts, and not only shows that Ld. less fraud, against the meditated effect of Hardwicke confined such constructive sale to which there might have been relief; Maxwell a rent charge, and repudiated it as to the fee vs. Montacute, Prechy 526-Walker vs. Walk-in the land itself, but intimated that these two er, 2. Atkins 99.

cases were decided on lapse of time and other peculiar circumstances, and not on the simple fact of an absolute conveyance and an accompanying defeasance.

This appears clearly from the deposition of Dr. Johnson, (see his answer p. 210 question 3rd) which is fortified by the bungling and incredible answer of D. R. Southard-and is If the general principle of construction, for made indisputable by the strong and almost establishing which most of the foregoing cases conclusive improbability that such a man as are cited, should be overruled or disregarded J. Southard would voluntarily have given such as Deeds cannot be contradicted or explained a defeasance, after an absolute purchase in by oral testimony, without proof of fraud, good faith, of such a tract of land, for a price mistake, or illegality,-rapacious money lendso glaringly inadequate. ers might, and often would, impose on neces sitous borrowers defeasable purchases from which they could never extricate their property by proof or by a precise compliance with the prescribed terms. The principle, for which

Then starting, as we think we have a right to do, with the postulate, that the conveyance and the defeasance are parts of one indivisible contract, just as if the defeasance had been

we contend, seems to us therefore to be as just other party, as a mortgage. In this case such and reasonable, as it is authoritative. efforts appear on the face of the papers. Look The fact that there is in this case no express at the superfluous repetitions, and redundant promise by Russell to pay the $4,929 81% to adjectives-such as "absolutely conveyed"Southard, is not sufficient per se to overrule "this agreement shall be at an end and null and the prima facie implication of a mortgage. A void"-" this agreement of resale, is condi contract, we admit, cannot be a mortgage, as tional and without a valuable consideration !" to one of the parties and not as to the other."and entirely dependent &c.,"-" and this There must be mutuality in the right of one agreement is to be valid and obligatory only, to redeem, and of the other to foreclose and upon the said James Southard, upon the punctual payment, &c."

make his debt.

But it is not necessary to the existence of a mortgage that the reciprocal rights of the parties shall be coextensive-or that they should run quatuor pedibus. It is sufficient that each party may enforce the contract as a mortgage. This the mortgagee may do, although there is neither an express, nor a collateral undertaking by the mortgagor to pay the debt to secure which the mortgage was made.

What motive prompted all this superfluity and tautology? It was neither necessary nor useful, for any other purpose than to disguise or distort the real contract, as intended and understood by Russell. It is like inserting in a contract the declaration" this is bona fide, no fraud, is intended;" and which is, itself a significant badge of fraud, indicating that the party was thinking of fraud, and trying to This is shewn by many of the cases already conceal it; and, in this case, Southard's were cited-see also Wilcox's heirs vs. Morris 1. thinking of a mortgage and trying to elude it. Murphy 117-Conway's Ex's vs. Alexander 7. The provision, in the defeasance, for the reCranch 218-Hart vs. Burton 7. J. J. Marshall linquishment of Dower, should not have any 322-also Howell vs. Rice 1 Pr. Wim's 290-effect on the construction of the contract. King vs. King 3, Ib. 361-Powell on mort- Such relinquishment was as proper in the case gages p. 16-where in a note Mr. Coventry of mortgage, as in that of a sale-and had been says- a Bond and Covenant are said to be of amply secured by the covenant already noticed no use if the estate be ample." with its liquidated damages.

"

Considering, as the court will, the convey- Then stripped of all artifice and studied ance and defeasance as one entire document, drapery, what is the contract, properly conthe contract should be interpreted precisely sidered in its own nakedness? Is it not an as it would have been had both documents entire agreement to convey land, on the adbeen incorporated in the usual style, begin- vance of a certain sum, and to re-convey the ning with an absolute conveyance and con- same land on the return of that sum with accluding with a condition which might entitle cruing interest within a prescribed time? the conveyor to a re-conveyance. And, thus And, according to reason, as well as the citaconsidered, the entire memorial of the contract tions already made, is not such an agreement imports that Southard had advanced to Rus- prima facie to be deemed a mortgage for secursell a consideration estimated at $4,929 81% ing the repayment of the money advanced? --for which the latter had conveyed to the If the land, as is the fact, was worth more former a certain tract of land-the parties in- than the money, there was no motive for taktending thereby that the one might use the ing a bond or express promise to pay it-and money, and the other enjoy the land for four such an undertaking, was doubtless, not exmonths, and that, on payment of the money acted by Southard, because it was unneceswith interest, within that time, the land should sary, and if made, would have been a strong be re-conveyed. Is not this, in its constructive badge of a mortgage. The omission of it may effect, a mortgage? Notwithstanding the elab- be evidence of a fraudulent design, but cannot orate effort of the Southards, and their Law- operate as decisive proof of a bona fide sale, yers to give it the semblance of an absolute instead of a mortgage. This is proved by sale, and a conditional repurchase, does it not, many of the cases herein before cited. in its substance import that the land was conveyed to secure the payment of the consideration advanced?

It is difficult to make such an entire contract for a conveyance and a conditional reconveyance, as will or ought to be construed Does it not amount, after all the ingenious a sale, and not a security, (see especially elaboration of disguises, to a loan on one side Longuet vs. Scaven, Supra.) And, when and a collateral security on the other? there is nothing else but an absolute convey

It is settled by many of the foregoing au-ance in form, on the advance of money, and a thorities that, whatever may be the form or covenant to reconvey on no other condition the words of a conveyance, it will be construed than the payment of the same sum with ina mortgage if designed or given as a security, terest, we doubt whether there is any adjudgor for the purpose of coercing or securing a ed case, now entitled to respectful considerapayment. The form is not essential-the tion, in which it has been decided that the intent is the vital spirit which fixes the cha-contract was not intended as a security. Such racter of the thing. Calling a contract we consider the modern and more rational a conditional sale does not make it so. doctrine-as most of the foregoing authorities Extraordinary efforts to give it that complex- conduce to shew-and as Coote intimates, ion are even evidence tending, and sometimes when he says:-(20th L. Lib'y p. 17)—" the strongly, to shew that it was intended, by the circumstance of an agreement to reconvey,

no extraneous

although entered into at the time of the con- made an absolute conveyance to Logan, who, veyance, is not sufficient to convert the trans- at the same time paid him $3000 in money, action into a mortgage, if there be evidence and gave him a written privilege to repurto rebut the presumption,"-which imports chase the property within eleven months, by that the fact, that the conveyance and the paying $3000. There was agreement to reconvey on the sole condition of proof. Nevertheless the court of Appeals of restitution of the consideration were made at Kentucky, on the face of these papers alone, the same time, and were therefore constituent decided that the contract was a constructive elements of one entire contract, will create the loan and mortgage, in the absence of any expresumption, prima facie, that the transaction trinsic evidence to the contrary. The reason was intended as mere security, or a mortgage of that decision seems to have been--that, as -and that consequently a court should decide the property conveyed was worth more than that the contract was a mortgage, unless the the amount advanced by Logan, and was party opposing that construction should rebut therefore an indubitable security for it as a that presumption. An additional reason for loan, and as the reconveyance was to be made that presumption, having already suggested on the payment of that sum and about 15 one, is that a conveyance, for a certain sum, per cent interest thereon, it was altogether and a defeasance on condition of paying it probable that the form of a sale and condiback, import a loan-and if the consideration tional repurchase was given to the contract, as be a loan, no mere form of contract can make a contrivance to evade the law against usury the conveyance a conditional sale. The "evi--and that, on such facts, public policy, the dence," to rebut the presumption of a mort- integrity of the law, and the safety of necesgage, must therefore be such as to shew that sitous borrowers of money, required that the the consideration of the conveyance was not a contract should be construed a mortgage to seloan; nothing else will be sufficient. Thus, cure a loan. in the case of Barrell vs. Sabine 1. Vernon 269-the grounds on which the court decided that the contract was not a mortgage, were first that there was proof that the original agreement, which was some time afterwards consummated by a conveyance, was for a sale, for a stipulated price; and that therefore the consideration was not advanced as a loanand secondly that the price, on the payment of which Barrell covenanted to reconvey, considerably exceeded the sum he had paid and the interest thereon.

That case therefore, even if still recognized as right, is no authority against our position. And thus also it was decided by the court of Appeals of Kentucky, that a covenant by a purchaser under execution to convey the property so bought to the original owner, on the payment of the purchase money and interest, is not a mortgage because these facts, alone, show that there was no loan. But in Yoder vs. Strandford 7, Monroe 480-the same court decided that "a fair purchaser at Sheriff's Sale, under a contract with the defendant that he may redeem, holds as in mortgage--and the reason is that the money was advanced on a contract which contained a stipulation for a reconveyance on the payment of the same sum with interest. Nor can we doubt that in Conway's Ex'r vs. Alexander, Supra, the court would have construed the transaction between the parties a mortgage, had not the party resisting that construction shown that the consideration was not a loan, but was paid on an executory sale of land covenanted to be conveyed to him, and also proved other facts corroborating that deduction and shewing that a redemption would be inevitable. In the case of Heytel vs. Logan-supra-it appeared that Logan refused to loan money to Heytel--but consented for 3000 cash to be then paid to purchase from him Town Lots, worth in like payment something less than $4000, probably about $3800--that, thereupon, Heytel

Whereupon we conclude that, as the land was conveyed by Russell on an agreement which bound Southard to reconvey it on the payment, within four months, of the amount he had advanced, with legal interest, thereon, the prima facie presumption is that the contract was a mortgage-res ipsa loquitur. And we think we are also authorised to conclude that Southard, on whom the proof devolved, has failed to shew that his advance was not a loan. On the contrary there are considerations derived from the writings, which fortify the first ground just considered. The few cases in which the courts of Kentucky have recognised conditional sales, were decided on peculiar grounds, perfectly consistent with the principles for which we are contending.

2. 'Defeasance" is inscribed on the head of the collateral document, as the name the parties themselves gave it. And does not this import that the parties intended to defeat or hold void the conveyance in the event of the prescribed restitution of the amount advanced and its interest? And if they intended this, is not their contract a mortgage? Did not Russell so understand it?

3. The fact that Russell took more than half of the consideration in debts of remote and uncertain availability, and agreed, as a condition of reconveyance to pay the nominal amount, and interest on it, before he could hope to collect, if he ever could collect these debts or either of them, shews that he was unwilling to sell absolutely his land for anything like what he received from Southard, and tends also, strongly to shew that Southard's object was to convert those debts into money without the trouble, risk, or expense of the pending suits. All this implies a purpose indirectly to borrow and lend at exorbitant interest, and which purpose it was important to the usurer to conceal. By making his doubtful claims and his $2000 produce him, within four months, their nominal amount in cash and

interest and the rent of such a tract of land, considerations to show that a mortgage is eshe speculated largely on the necessities of tablished by Extrinsic facts. Russell. This sacrifice, Russell's condition Whatever may be the opinion of this court may have compelled him to encounter, and his as to the general admissibility of oral to explain conduct, as exhibited on the face of the con- or contradict written evidence, all the memtract, indicates that he intended nothing else,bers of it will concur in the competency of or more than to loose the usury, to secure such testimony whenever there is proof of miswhich may be presumed to have been South-take or fraud in the execution of a writing, or ard's chief and controlling object.

of illegality in the consideration or object of the contract of which it purports to be a memorial. To cite authorities to prove this po sition, would be as superfluous as citations for certifying the doctrine that a purchaser, with notice of a trust, must take the legal title under a trust implied, in invitum.

4. Russell's covenant to procure his wife's relinquishment, being an integral portion of the contract of conveyance, may be properly considered in connexion with it, and as a provision in it. It was allowable, and might have been prudent for a mortgagee to require a relinquishment of dower by the mortgagor's In this case, not only usury, but both miswife. But why did Southard exact a covenant take and fraud also may be inferred from the to pay, 'as liquidated damages, which could facts in the record. If the parties, by their not be resisted or reduced, and prescribe an oral agreement, intended a loan, as we expect amount, $3,000, nearly equal to the value of to show, there was usury, because not only all he had advanced or was ever to advance were the two claims taken at par not worth so on the land? Had he been an absolute pur-much, but Southard reserved six per cent. chaser in good faith, and had it been his only the legal rate of interest, on the whole nomiobject, as in that case it would probably have nal amount of the advance, and the rent of been, to secure his title against the contingent the farm also. There must, also, have been incumbrance of dower, he would not have re- both fraud and mistake in the execution of quired, nor would Russell have given, any the documents: Russell avers that the defeassuch monstrous covenant. But, if Russell's ance, by its terms, shewed a mortgage; which understanding was, that he was only borrow is a virtual allegation that if its terms maniing and giving a mortgage as security, he had fest a conditional sale, he did not understand it no strong motive of interest to induce him to and signed the writings under a mistake; and refuse to execute such a covenant, because he such should be presumed to be the fact if he knew that he could avoid it by redemption, thought he was borrowing; and the other parwhenever he might redeem. And the only con-ty, on that hypothesis, was guilty of fraud. sistent motive imputable to Southard is, that If, as we think they do, the allegations of the he wished to add another disguise to the trans-bill amount to a charge of usury, fraud, or action, forge another chain for binding down mistake, a more formal and direct imputation Russell, and, by holding up the $3,000 in ter- of all or either of them is not necessary. Toram, to increase his chances of keeping the Then, if the court should construe the conland for what he had advanced, or possibly for tract, on the face of the documents, to be a less than half of it, by recovering the $3,000. conditional sale, and not a mortgage, we subFor the reasons suggested in the foregoing mit the following extraneous considerations outline, we submit to the court whether the for shewing that the advance was made as a contract should not be deemed a mortgage loan; that the loan was illegal; that the mewithout the aid of the extraneous facts. Can morials were procured by fraud or mistake, or the artful effort of the Southards and their both, though either usury, fraud or mistake lawyer, to give the "defeasance" the name of a will be enough; and consequently, that the "conditional sale," change the essential qual-real contract was a mortgage, and no sale. ity and legal effect of the thing? Every mort- 1. Russell had. only about sixteen months gage literally purports to be a conditional sale. before the date of his conveyance, bought the Can the false and fraudulent allegation in the farm for the purpose, as may be presumed, of "defeasance," that it was voluntary and with-making it his ultimate residence, and had paid out consideration transmute the conveyance for it in cash nearly three times as much as into an absolute sale in good faith? On the the nominal sum advanced to him by Southcontrary, does not this false and bungling ar-ard. It is not probable, therefore, that he detifice rather expose a fraudulent design to hide the truth by clothing the transaction with a delusive dress?

sired, so soon, to sell on any other condition, or for any other purpose than to pay the debt incurred by Wing in managing the farm one year; nor even then, for that purpose, if he could conveniently procure the money by a loan. James Southard was a citizen and merchant of Louisville; and was, probably, a lender of money at usurious interest-See Heinshaw's dep'n, 233; Farquar's, 244. And men of that cast prefer loaning their money at high interest to buying and cultivating farms. Besides, Russell got only $2,000 in II. Should the court not concur in the fore-money, or in means either entirely or immedigoing conclusion, we suggest the following lately available, and which could have served

We consider the principle controlling the cases in 2d Vernon, 15th Johnson, and 1 A. K. M., and in many others, supra, as decisive of the question involved in our first position. The extraordinary character of the written memorials tends to fortify, rather than repel, the presumption of a security arising from the fact that the conveyance was defeasable on the return of the money advanced.