U.S. Supreme Court
Russell v. Southard, 53 U.S. 12 How. 139 139 (1851)
Russell v. Southard
53 U.S. (12 How.) 139
When the question before a court of equity is whether a deed which purports upon its face to be an absolute deed was in reality a deed or a mortgage, extraneous evidence is admissible to show that it was only a mortgage.
Upon such a question as this, depending upon the general principles of equity jurisprudence, this Court does not hold itself bound by the decisions of the highest court of the state in which the land in question was, but will be governed by its own view of those principles.
The decisions of the courts of Kentucky examined.
Such evidence is admissible when it is alleged and proved that a loan on security was really intended and the defendant sets up the loan as a payment of purchase money and the conveyance as a sale.
In examining the question whether the transaction was a sale or mortgage, it is of great importance to inquire whether the consideration was adequate to induce a sale.
In the present case, the Court decides from the evidence that the consideration was grossly inadequate; that he was a stranger, without friends or other resources there than the land in question; that it is true he offered to sell, but there is no evidence to show that he offered to sell for the amount of money which he actually received.
The papers executed between the parties show a conditional sale, but in doubtful cases the court leans to the conclusion that the reality was a mortgage, and not a sale.
The absence of a personal obligation by the grantor to repay the money furnishes no conclusive test to determine whether the conveyance was a mortgage or a conditional sale.
Nor do the facts that the grantor endeavored to obtain the relinquishment of his wife's dower, and actually surrendered the paper under which he had the right to reclaim his land, amount to a bar of his claim under the circumstances of this case.
Three years after the transaction, the grantor received one hundred dollars from the grantee upon the ground of an arithmetical error, and signed a release of all further demands. But apart from other considerations bearing upon the purchase of an equity of redemption, in the present case it was the duty of the grantee to correct errors, and consequently he paid nothing for the equity of redemption.
Where there was a long lapse of time and the original mortgagee had been dead for many years, an account of rents and profits and of interest upon the money loaned will be decreed to commence from the filing of the bill.
Where there were purchasers during the intermediate time and the record did not enable this Court to determine upon their rights, the case will be remanded to the circuit court for its adjudication thereon.
A motion made in this Court after the decision of the case here to set aside the decree and remand the case to the circuit court for further preparation and proof upon the ground that new and material evidence has been discovered since the trial of the case in that court cannot be sustained.
Affidavits of newly discovered testimony cannot be received. This Court must affirm or reverse upon the case as it appears upon the record.
The established chancery practice is so, and if it were not, the Act of Congress passed on March 3, 1803, would be decisive of the question.
This was a bill filed by Russell, the appellant, to redeem what he called a mortgage, and the question in the case was whether it was a mortgage or conditional sale. The facts are set forth in the opinion of the Court. Upon the trial, the circuit court dismissed the bill, and Russell appealed to this Court. chanroblesvirtualawlibrary