Also known as: absolute conveyances · absolute transfer
Written by attorneys — see sources below.
A conveyance transferring property or rights free of conditions or qualifications and not intended as security for an obligation. Courts admit parol evidence to determine whether a deed absolute in form was in substance given only as security and must therefore be treated as a mortgage.
Martin grants Apex Lending LLC a mortgage on his apartment building. The mortgage states that if net rental income falls below $50,000 the mortgage automatically converts into an absolute deed giving Apex full ownership with no redemption right. When income drops, Apex records the deed. Martin sues to quiet title. The court declares the conversion clause void and preserves Martin's equity of redemption.
The state legislature repeals prior grants of land and attempts to annul the absolute conveyances already executed to private purchasers. The grantees sue to quiet title. The Court holds that an absolute conveyance is a completed contract protected by the Constitution and cannot be divested by subsequent legislation.
The suit was instituted on several covenants contained in a deed made by John Peck, the defendant in error, conveying to Robert Fletcher, the plaintiff in error, certain lands which were part of a large purchase made by James Gunn and others, in the year 1795, from the state of Georgia. The contract for which was made in the form of a bill passed by the legislature of that state. The first count set forth a breach in the covenant that the legislature of the state of Georgia at the time of passing the act of sale had good right to sell and dispose of the same in manner pointed out by the said act. The second count assigned as a breach that the original grantees had promised and assured members of the legislature an interest in the lands if they voted for the bill. The third count alleged that a subsequent legislature passed an act annulling and rescinding the law under which the conveyance to the original grantees was made. The fourth count assigned as a breach that the right to the soil was in the United States and not in Georgia. In the circuit court there were demurrers to three pleas and a special verdict found on an issue joined on the fourth plea. The pleas were all sustained and judgment was rendered for the defendant. After the opinion of the court was delivered on the initial demurrers, the parties agreed to amend the pleadings and the cause was continued for further consideration. The special verdict found the grant of Carolina by Charles the second to the Earl of Clarendon and others. It found the subsequent erection of Georgia as a colony. It found the surrender of the grantees to the crown in 1752. It found the appointment of governors with commissions describing the boundaries. It found the 1763 proclamation creating new colonies and reserving lands on the western waters for the use of the Indians. It found the 1787 convention between South Carolina and Georgia settling their boundary line. The verdict described the situation of the lands in such manner that their lying within the limits of Georgia as defined in the proclamation of 1763, in the treaty of peace, and in the convention between that state and South Carolina has not been questioned. The case comes before this court on the amended pleadings consisting of sundry demurrers and the special verdict.
View caseBrainard executes instruments purporting to transfer future income into trust. The Commissioner challenges the transfers as incomplete. The court examines whether the instruments operated as absolute conveyances or merely as promises to create a trust later, applying contract principles to determine enforceability.
In December 1927, the taxpayer contemplated trading in the stock market during 1928 after deciding that conditions were favorable. He consulted a lawyer who advised that it was possible for him to trade in trust for his children and other members of his family. He stated to them that he declared a trust of his stock trading during 1928 for the benefit of his family. Taxpayer agreed to assume personally any losses resulting from the venture, and to distribute the profits, if any, in equal shares to his wife, mother, and two minor children after deducting a reasonable compensation for his services. The taxpayer’s two children were one and three years of age at the time. During 1928 the taxpayer carried on the trading operations contemplated. At the end of the year he determined his compensation at slightly less than $10,000, which he reported in his income tax return for that year. The profits remaining were then divided in approximately equal shares among the members of his family, and the amounts were reported in their respective tax returns for 1928. The amounts allocated to the beneficiaries were credited to them on the taxpayer’s books, but they did not receive the cash except to a small extent in the case of the taxpayer’s mother. The Board of Tax Appeals held that the income in controversy was taxable to the petitioner as a part of his gross income for 1928 and decided that there was a deficiency. The petitioner seeks review of that decision in this court.
View caseA settlor transfers substantially all his property to trustees under an agreement that leaves him full lifetime control. After his death his widow claims her statutory share. The court determines whether the absolute conveyances to the trust were effective or merely illusory attempts to defeat the spouse's expectant interest.
Ferdinand Straus died on July 1, 1934, leaving a last will and testament dated May 5, 1934, which contained a provision for a trust for his wife for her life of one-third of the decedent’s property both real and personal. On June 28, 1934, three days before his death, he executed trust agreements by which, in form at least, he transferred to trustees all his real and personal property. The beneficiary named in the trust agreement brought this action to compel the trustees to carry out its terms. The widow challenged the validity of the transfer to the trustees. The trial court found that the trust agreements were made, executed and delivered by said Ferdinand Straus for the purpose of evading and circumventing the laws of the State of New York, and particularly sections 18 and 83 of the Decedent Estate Law. The trial court also found that the settlor reserved the enjoyment of the entire income as long as he should live, and a right to revoke the trust at his will, and in general the powers granted to the trustees were in terms made subject to the settlor’s control during his life.
View caseCourts admit parol evidence to establish that a deed absolute on its face was given as security for an obligation and must be treated as a mortgage. The evidence may include side letters, board minutes, continued possession by the grantor, and payment of carrying costs. Once the debt is repaid the grantee must reconvey.
No. Any provision that converts a security interest into an absolute conveyance or eliminates the right to redeem is an impermissible clog on the equity of redemption and is void as against public policy. The mortgagor retains the right to pay the debt and obtain reconveyance before foreclosure.
No. Recording protects subsequent purchasers but does not bar the original parties from showing the true character of the transaction. Parol evidence remains admissible between grantor and grantee to establish that the deed operated only as a mortgage.
No. The equity of redemption is an essential attribute of every mortgage that cannot be waived or unreasonably restricted at the time the security is created. Courts invalidate such waivers regardless of the parties' sophistication or bargaining power.
…executing their contracts by conveyances. It would be strange if a contract to convey was secured by the constitution, while an absolute conveyance remained unprotected. If, under a fair construction of the constitution, grants are comprehended under the term contracts, is a grant from the state excluded from the operation of the…