102 S.W. 932
ROTAN GROCERY CO. 
v. 
TURNER et ux.
Court of Civil Appeals of Texas.
May 25, 1907.
        Appeal from District Court, Freestone County; L. B. Cobb, Judge.
        Action by C. J. Turner and wife against the Rotan Grocery Company. From a judgment for plaintiffs, 
defendant appeals. Reversed and remanded.
        W. B. Boyd, O. C. Kirvin, and Prendergast & Williamson, for appellant. W. B. Moss and Daviss & 
Williford, for appellees.
        TALBOT, J.
        C. J. Turner and wife brought this suit against the Rotan Grocery Company to recover a lot of ground 
with a brick storehouse thereon, situated in the town of Wortham, Freestone county, Tex. It is alleged, in 
substance, among other things, that on June 1, 1902, the said C. J. Turner was the head of a family 
residing in the town of Wortham, engaged in the mercantile business, and using and occupying said brick 
building as his business homestead; that the said Rotan Grocery Company was a private corporation 
engaged in the wholesale grocery business in the city of Waco, Tex., and the said C. J. Turner was 
indebted to it in a considerable sum of money; that on June 1, 1902, Turner executed to his bookkeeper, 
G. G. Stallings, a deed to said storehouse, the deed reciting, as a consideration therefor, three promissory 
notes of Stallings of $1,000 each, and that a vendor's lien was reserved on the storehouse and lot to 
secure the payment of said notes; that the appellee Nannie Turner, wife of C. J. Turner, did not join in the 
execution of said deed at that time, and the same was not acknowledged by C. J. Turner; that, as 
previously agreed, said notes were transferred and delivered to the Rotan Grocery Company as collateral 
security for Turner's indebtedness to it; that the Rotan Grocery Company knew that the property was the 
business homestead of Turner and wife, and the transaction created no lien upon it, and no liability on the 
part of Stallings for the payment of said notes; that on or about the 1st day of October, 1903, C. J. 
Turner, by reason of crop failures, became financially embarrassed, but was still using and occupying the 
said storehouse as his business homestead; that the Rotan Grocery Company, knowing Turner's financial 
condition, and being one of his creditors, offered to assist him in the straightening up of his affairs; that 
by promising to buy in his stock of merchandise, notes, and accounts at the bankrupt sale, and to sell 
them back to him and to reconvey to him the property in controversy, as soon as he received his 
discharge in bankruptcy, the Rotan Grocery Company induced the said Turner to acknowledge the deed to 
Stallings and his said wife, Nannie Turner, to sign and acknowledge said deed; that, immediately upon the 
execution and delivery of the deed to Stallings, the said Stallings executed and delivered to the Rotan 
Grocery Company a deed to said property; that it was definitely understood and positively agreed that the 
deed from Turner and wife to Stallings, and the deed from Stallings to the Rotan Grocery Company, 
purporting to convey the property in controversy, "should be for no other purpose, and have no other 
effect, than that of security to defendant (Rotan Grocery Company) for plaintiff C. J. Turner's said 
indebtedness." It was further alleged that, after the filing of the said Turner's petition in bankruptcy, the 
Rotan Grocery Company procured the sale of the assets of his estate, and became the purchaser thereat 
of the stock of merchandise, and has failed and refused to sell the same to the said Turner, and has also 
failed and refused to reconvey to him the property in controversy, as had been agreed upon. The Rotan 
Grocery Company pleaded a general denial, not guilty, and specially, in substance, among other things, 
that on the 1st day of October, 1903, Turner and his wife abandoned the property sued for as a business 
homestead, and on said day for a valuable consideration sold, and conveyed the same to G. G. Stallings 
and executed a proper conveyance therefor; that said conveyance was executed to ratify and confirm the 
sale of said property which was made on June 1, 1902, and was, as it appeared upon its face to be, an 
absolute conveyance of the title to the property therein described, and not a mortgage; that such also was 
the nature of the deed from Stallings to it. The trial court instructed the jury that, if the intent and 
agreement of the plaintiff and defendant in the execution of said deeds was merely to create a lien upon 
the property to secure the debt of C. J. Turner to defendant, to find for the plaintiffs; otherwise, to find for 
the defendant. From a verdict and judgment in favor of the plaintiffs, this appeal is prosecuted.
Page 933
        Appellant contends that the evidence adduced was insufficient to authorize the jury's finding that the 
deeds under which it claims were given as a mortgage to secure the payment of Turner's indebtedness, 
and not as an absolute or conditional sale. This contention presents the controlling question on the appeal, 
and must, we think, be sustained. It was shown that the appellee Turner, both in June, 1902, and in 
October, 1903, was the head of a family, a merchant, and using the property in controversy as his place 
of business; that, notwithstanding at both of said dates he was largely indebted to appellant, and about 
June 1, 1902, as alleged, executed a deed to Stallings purporting to convey to him said property, reciting 
as a consideration therefor three promissory notes of the said Stallings of $1,000 each, and that a 
vendor's lien was reserved on the property to secure the payment of said notes, and notwithstanding two 
of said notes were transferred and delivered by Turner to appellant as collateral security for his 
indebtedness to it, yet the deed to Stallings was simply signed by Turner, and not acknowledged by him at 
that time, nor was it signed or acknowledged by Mrs. Turner. In this attitude of the transaction, the deed 
was ineffectual for any purpose, and the notes in the hands of appellant, whether they knew of the 
condition of the deed or not, were worthless, in so far as fixing a lien upon the property sued for is 
concerned, and could avail but little, if anything, in giving character to the subsequent transaction. When, 
however, Turner and his wife executed the said deed in October, 1903, and Stallings conveyed the 
property to appellant, it acquired title to said property, unless this transaction was made with intent and 
agreement that, by the deeds, appellant should acquire only a lien upon the property to secure the 
payment of Turner's debt to appellant. That the testimony shown by the record does not warrant this 
conclusion seems clear. C. J. Turner testified that Rowe, who was the agent of appellant, "told me that, if I 
would make them a good deed to this property, they [appellant] would deed this property back, that I 
could go into bankruptcy, and after the bankruptcy matter was over they would deed the property back to 
me, and that they [appellant] would also buy the stock of goods and sell them back to me at 10 per cent. 
additional over the cost, and then they would sell me the house back." In another place, he says: "The 
deed to my business homestead was made to the Rotan Grocery Company, and the understanding was, 
and the agreement was, that they would deed it back to me whenever they bought in those goods. The 
price they were to get for it was what they had agreed to give me, $2,000. They were to get the same as 
$2,000, when they sold the property back. They were going to sell it back to me. I was going to give them 
$2,000 for the business house. I guess they gave me credit for $2,000 when they got the deed from 
Stallings, but do not know. I did not get to look over their accounts." G. G. Stallings testified that he 
executed the deed to appellant in cancellation of two of the notes mentioned in Turner's deed to him, and 
the verbal agreement of appellant to take care of the other note; that Rowe told Turner appellant would 
deed him the house back, but, if there was any consideration mentioned for which it was to be deeded 
back, it was not mentioned in his (Stallings') hearing. H. H. Shear testified that he was president of the 
Rotan Grocery Company; that Turner did not hesitate to execute the deed; that no promises were made 
him (Turner) at all, and Turner did not ask for anything; that the two notes held by appellant were 
canceled and surrendered when the deed to Stallings was executed by Turner and wife. He further 
testified: "We considered the notes good, but did not consider it any preference. It was the same collateral 
we formerly held, only in a different form. We were simply getting our collateral in better shape." John F. 
Rowe, the agent and adjuster for appellant, testified: "I had no conversation whatever with Mr. Turner in 
reference to that building, or a resale of it, or a reconveyance of it to him. I did have a discussion in 
reference to the stock of merchandise. He was anxious to buy it back, and he and I had discussed it with 
Mr. Shear. I told Mr. Turner that I would recommend selling it [the stock of merchandise] back if he would 
get up some security. He said he could not get the proper security for the stock of merchandise. He has 
never at any time proposed to buy that storehouse back from us. At the time of the conveyance and 
cancellation of the vendor's lien notes and agreement to take up the third, credit was given Mr. Turner on 
his account by the Rotan Grocery Company for $2,000."
        This is practically all of the material evidence bearing upon the question and the principles of law 
applicable are well settled. In the case of Alstin v. Cundiff, 52 Tex. 453, it is held that, "in determining 
whether a conveyance absolute on its face, with a written agreement to repurchase, signed by the parties, 
is a mortgage or a conditional sale, reference must be had to the inquiry whether the relation of creditor 
and debtor continues to exist. If it does, it is a mortgage; otherwise, a conditional sale." To the same 
effect are the cases of Miller v. Yturria, 69 Tex. 549, 7 S. W. 206, and Goodbar & Co. v. Bloom (Tex. Civ. 
App.) 96 S. W. 657; and this is the test: Whether the agreement to resell is written or verbal. Coe v. 
Cassidy, 6 Daly (N. Y.) 242. Mr. Jones, in his work on Mortgages, says: "If an absolute conveyance be 
made and accepted in payment of an existing debt, and not merely as security for it, an agreement by the 
grantee to reconvey the land to the grantor upon receiving a certain sum within a certain time does not 
create
Page 934
a mortgage, but a conditional sale, and the grantee holds the premises subject only to the right of the 
grantor to demand a reconveyance according to the terms of the agreement. A debt either pre-existing, or 
created at the time, or contracted to be created, is an essential requisite of a mortgage. An absolute deed 
delivered in payment of a debt is not converted into a mortgage merely because the grantee therein gives 
a contemporaneous stipulation binding him to reconvey, on being reimbursed within an agreed period, an 
amount equal to the debt and interest thereon. If the conveyance extinguishes the debt, and the parties 
so intended, so that a plea of payment would bar an action thereon, the transaction will be held an 
absolute or conditional sale, notwithstanding. And so, if there was in fact a sale, an agreement by the 
purchaser to resell the property within a limited time, at the same price, does not convert it into a 
mortgage. * * * But if the indebtedness be not canceled, equity will regard the conveyance as a 
mortgage, whether the grantee so regards it or not. He cannot at the same time hold the land absolutely 
and retain the right to enforce payment of the debt on account of which the conveyance is made. The test, 
therefore, in cases of this sort, by which to determine whether the conveyance is a sale or a mortgage, is 
found in the question whether the debt is discharged or not by the conveyance. If in the subsequent 
transaction of the parties there is no recognition in any way of the relation of debtor and creditor, and the 
vendee for a considerable period holds possession without paying interest or rent, these facts go to show 
that there is only an agreement for purchase, and not a mortgage."
        Moreland v. Barnhart, 44 Tex. 275, Miller v. Yturria, supra, and other cases in this state, it is 
distinctly held that, in order to establish that an absolute deed is intended as a mortgage, it must be 
proved with clearness and certainty. Manifestly, the proof before us is not of this character; nor does it 
show, in our opinion, with reasonable certainty that the intention of the parties was that the deeds here in 
question were to be held merely as a security for the payment of a debt owed by appellee Turner to 
appellant. The deeds were in form absolute conveyances, and the extraneous testimony offered by 
appellees, which was contradicted by appellant, as shown by the record sent to this court, does no more 
than to establish a mere sale of the property sued for, in consideration of the extinguishment of $2,000 of 
C. J. Turner's indebtedness due by account to appellant, not merely the cancellation of the collateral 
notes, but, in addition thereto, with a contract of repurchase by him for that amount of money. According 
to this testimony, the relation of creditor and debtor did not continue to exist between Turner and 
appellant, as to this $2,000 of extinguished indebtedness, after the execution and delivery of said deeds in 
October, 1903, and the agreement of appellant, if any, to resell the property to appellee at a stated time, 
for $2,000, did not convert the absolute deeds into a mortgage. It follows that the judgment of the lower 
court must be reversed, and, inasmuch as the record indicates to us that the case has not been fully 
developed, the case will be remanded for another trial, instead of judgment being rendered here for 
appellant.
        No other reversible error is disclosed by the assignments. The court's charge was not upon the 
weight of the evidence; nor do we think either of the special charges requested should have been given. If 
it can be said that the court's charge was not full enough in stating the issues, the error was slight, and 
one of omission, of which appellant cannot complain in the absence of a requested charge supplying such 
omission.
        For the reason stated, the judgment is reversed, and the cause remanded.