You are on page 1of 7


3D 706,AT 708

JOHN McGILL, Plaintiff-Appellee, v. JOHNNY BIGGS, Defendant-Appellant

No. 81-394

Appellate Court of Illinois, Third District

105 Ill. App. 3d 706; 434 N.E.2d 772; 1982 Ill. App. LEXIS 1715; 61 Ill. Dec. 417

March 19, 1982, Filed

PRIOR HISTORY: [***1] (1) the parties had discussed

collateral for the payment; (2) the
creditor had attempted to collect the
Appeal from the Circuit Court of debt; (3) the consideration as
Kankakee County; the Hon. WAYNE P. compared to the payback amount had
DYER, Judge, presiding. been in line with an installment loan
agreement; (4) the consideration had
DISPOSITION: been inadequate; and (5) the debtor
Judgment affirmed. had retained the property and had paid
the taxes. Finally, the court noted
CASE SUMMARY: that the deed's recording had been
delayed and that an agreement to
reconvey had been part of the
PROCEDURAL POSTURE: Defendant creditor transaction.
sought review of a judgment from the
Circuit Court of Kankakee County OUTCOME: The court affirmed the
(Illinois), which held that a debt judgment.
relationship existed between the
creditor and plaintiff debtor and that CORE TERMS: mortgage, funeral, deed,
the debtor's warranty deed to the warranty deed, reconvey, conveyance,
creditor was a mortgage. collateral, ownership, quitclaim deed,
half-sister, died, deed absolute,
OVERVIEW: After the debtor deeded inadequacy, grantor, owed,
property to the creditor in return for relationship existed, contract to pay,
the creditor's payment of a funeral unsuccessful, repurchase, delivery,
bill, the debtor continued to use the payback, falling, signing, intend,
property and to pay the taxes. When borrow
the debtor attempted to pay the debt,
the creditor refused payment and LexisNexis(R) Headnotes
recorded the deed. Consequently, the
debtor brought a quiet title action
against the creditor, and the trial
court held that a debt relationship Contracts Law > Contract
had existed between the parties and Interpretation > General Overview
that the deed had been a mortgage. Real Property Law > Deeds >
Thereafter, the creditor sought Construction & Interpretation
review. Under the circumstances, the Real Property Law > Financing >
court held that a debt relationship Mortgages & Other Security Instruments
had existed between the parties and > Definitions & Interpretation
that the deed had been intended to [HN1] Every deed conveying real
operate as a mortgage and not a sale. estate, which shall appear to have
In so holding, the court noted that: been intended only as a security in
the nature of a mortgage, though it be Real Property Law > Deeds >
an absolute conveyance in terms, shall Construction & Interpretation
be considered as a mortgage. Ill. Rev. Real Property Law > Financing >
Stat. ch. 95, para. 55 (1977). Mortgages & Other Security Instruments
> Definitions & Interpretation
[HN5] The fact that a grantor in a
Contracts Law > Contract deed absolute in form remains in
Interpretation > General Overview possession of the property so conveyed
Real Property Law > Deeds > and controls the property after the
Construction & Interpretation conveyance is evidence tending to show
Real Property Law > Financing > that the transaction, in fact, is a
Mortgages & Other Security Instruments mortgage, as is also the payment of
> Definitions & Interpretation taxes by the grantor after the
[HN2] In order to convert a deed conveyance. A grantee in an
absolute on its face into a mortgage, unqualified deed is entitled to
the proof must be clear, satisfactory, immediate possession and becomes
and convincing, and can come from liable for payment of taxes.
almost every conceivable fact that
could legitimately aid that
determination. Each case will depend Contracts Law > Contract
upon its own special circumstances. Interpretation > General Overview
Real Property Law > Deeds >
Construction & Interpretation
Contracts Law > Contract Real Property Law > Financing >
Interpretation > General Overview Mortgages & Other Security Instruments
Real Property Law > Deeds > > Definitions & Interpretation
Construction & Interpretation [HN6] Delay in recording a deed, while
Real Property Law > Financing > not of great significance standing
Mortgages & Other Security Instruments alone, is a circumstance indicating a
> Definitions & Interpretation lack of intention by a person to claim
[HN3] In order to convert a deed immediate ownership.
absolute on its face into a mortgage,
direct evidence is not required. In
fact, no particular kind of evidence Contracts Law > Contract
is required. However, a debt Interpretation > General Overview
relationship is essential to a Real Property Law > Deeds >
mortgage. Construction & Interpretation
Real Property Law > Financing >
Mortgages & Other Security Instruments
Contracts Law > Contract > Definitions & Interpretation
Interpretation > General Overview [HN7] An agreement to reconvey is a
Real Property Law > Deeds > significant factor in distinguishing
Enforceability mortgages from absolute sales.
Real Property Law > Financing > Agreements made in writing at the same
Mortgages & Other Security Instruments time as the conveyance resolve any
> Definitions & Interpretation doubt as to the character of the
[HN4] The inadequacy of consideration conveyance in favor of a mortgage.
is a potent or strong circumstance However, the agreement need not be in
tending to show that a deed is writing.
intended to operate as a mortgage and
not a sale; and where consideration is COUNSEL:
grossly inadequate, a mortgage is
Timothy C. Evans, of Chicago, for
strongly indicated.
Mark R. Steffen, of Kankakee, for
Contracts Law > Contract appellee.
Interpretation > General Overview
JUDGES: with which his half-uncle, the
defendant, was familiar, and plaintiff
Justice Scott delivered the opinion requested defendant's assistance in
of the court. Barry, P.J., and Alloy, raising the funds necessary which
J., concur. approximated $ 1,500.
OPINION BY: Plaintiff asked defendant to
accompany him while he attempted to
SCOTT borrow the money at banks in Momence,
Kankakee and Chicago. Defendant
OPINION: accompanied plaintiff in his efforts
[*706] [**772] Plaintiff's to borrow the necessary funds for his
mother, Ivory Anderson, died on mother's funeral but they were
October 7, 1977, leaving him as the unsuccessful.
surviving [**773] joint tenant of Plaintiff and defendant then
certain real estate located in entered into an agreement whereby in
Kankakee County, commonly known as return for defendant's paying the
Route 3, Box 446, Momence, Illinois. funeral [***2] bill for plaintiff's
Plaintiff desired to provide her with mother (who
a funeral at the Wesley Funeral Home
[*707] was also the defendant's go to the house after his half-sister
half-sister) plaintiff would deed the died. Plaintiff continued to keep the
premises to defendant. property in good repair and to pay the
1978 and 1979 taxes on the property
Plaintiff was vague as to the and defendant made no attempt to pay
nature of the transaction, but any taxes on the property until
testified that defendant told him he October of 1980, when his check was
would need a quitclaim deed as returned, indicating that the taxes
"collateral." Plaintiff did not know had already been paid. In January of
what a quitclaim deed was but he 1980, plaintiff had offered to pay
understood the meaning of defendant the balance of the debt but
"collateral." Plaintiff testified that defendant refused payment. In June of
he didn't intend to permanently 1980, defendant recorded the deed.
transfer the title to the property to
the defendant. Plaintiff testified Defendant never used the property
that he valued the property at or interfered with plaintiff's use
approximately $ 15,000, while until June 1980, when plaintiff
defendant testified he didn't know the discovered that defendant was
value of the property. Defendant attempting to list the property for
admitted that he knew plaintiff was rent with a real estate broker.
upset and distressed when the Plaintiff contacted an attorney,
transaction took place. discovered the warranty deed and filed
the instant suit to quiet title, the
Plaintiff and defendant went to issue being whether the deed was
defendant's attorney's office where absolute with a contract back to
plaintiff signed a paper he thought repurchase, or whether it was intended
was a contract to pay defendant $ 115 as a mortgage to secure [***4]
a month for 15 months ($ 1,725). A repayment of the funeral bill.
warranty deed was prepared by
defendant's attorney and signed by From the trial court's ruling in
plaintiff when he went to the lawyer's plaintiff's favor (plaintiff was
office on October 9, 1977, two days ordered to pay the balance due on the
after his mother's death. The next loan of $ 1,610 plus 5% per annum on $
day, defendant paid the funeral bill 1,473.75 from January 10, 1980) that a
in the sum of $ 1,473.75. debt relationship existed between the
parties and that the warranty deed was
Plaintiff made one payment to in fact a mortgage, defendant has
defendant before losing his [***3] appealed.
job and generally falling on hard
times by drinking heavily. No further We note initially that it is
payments were made to defendant. provided by statute that:
Plaintiff and his family made
temporary use of the premises on
several occasions after delivery of [HN1] "Every deed conveying
the deed to defendant at his lawyer's real estate, which shall
office. Defendant conceded he did not appear to have
[*708] been intended only as a 335 N.E.2d 506; Warner v. Gosnell
security in the nature of a mortgage, (1956), 8 Ill. 2d 24, 132 N.E.2d 526;
though it be an absolute conveyance in Illinois Trust Co. v. Bibo (1927), 328
terms, shall be considered as a Ill. 252, 159 N.E. 254; Miller v.
mortgage." Ill. Rev. Stat. 1977, ch. Thomas (1853), 14 Ill. 428; Wilkinson
95, par. 55. v. Johnson (1963), 29 Ill. 2d 392, 194
N.E.2d 328.
[HN2] In order to convert a deed
absolute on its face into a mortgage, The defendant contends the trial
the proof must be clear, satisfactory, judge erred in finding a debt
and convincing ( Burroughs v. relationship when neither party
Burroughs (1973), 11 Ill. App. 3d 176, directly testified that plaintiff owed
296 N.E.2d 350), and can come from a debt to defendant, or that defendant
almost every conceivable fact that [***6] would reconvey to plaintiff
could legitimately aid that upon payment of such debt. [HN3]
determination. [**774] Each case However, direct evidence is not
will depend upon its own special required. In fact, no particular kind
circumstances. Warner v. Gosnell of evidence is required. ( Burroughs
(1956), 8 Ill. 2d 24, 132 N.E.2d 526. v. Burroughs (1971), 1 Ill. App. 3d
697, 274 N.E.2d 376.) However, a debt
Many circumstances have been relationship is essential to a
recognized or considered by Illinois mortgage.
courts, including the existence of an
indebtedness, [***5] the close In the case at bar, there are a
relationship of the parties, prior number of circumstances which prove
unsuccessful attempts for loans, the the existence of a debt relationship.
circumstances surrounding the Plaintiff signed the warranty deed
transaction, the disparity of the after defendant told him that the only
situations of the parties, the lack of way to get money for the funeral would
legal assistance, the unusual type of be to sign a quitclaim deed for
sale, the inadequacy of consideration, collateral. Although plaintiff thought
the way the consideration was paid, he was signing a contract to pay off
the retention of the written evidence the funeral bill, defendant testified
of the debt, the belief that the debt that they discussed collateral to get
remains unpaid, an agreement to money for the funeral expenses, and
repurchase, and the continued exercise came to the agreement that plaintiff
of ownership privileges and would sell his property to the
responsibilities by the seller. defendant for the amount of the
Burroughs v. Burroughs (1971), 1 Ill. funeral bill and then pay defendant $
App. 3d 697, 274 N.E.2d 376; Burroughs 115 per month for 15 months to get it
v. Burroughs (1973), 11 Ill. App. 3d back. The plaintiff, however, did not
176, 296 N.E.2d 350; Robison v. intend to sell his property.
Moorefield (1952), 347 Ill. App. 508, The bulk of evidence in this case
107 N.E.2d 278; Havana National Bank is the testimony of the plaintiff and
v. Wiemer (1975), 32 Ill. App. 3d 578,
[*709] defendant. The trial judge In determining the issue presented
believed they were both honest. Their in this appeal, we direct our
testimony differs, but not attention to what we deem to be
substantially. They both had pertinent factors. [HN4] The
difficulty making responsive [***7] inadequacy of consideration has been
answers, but the answers they gave regarded as a potent or strong
often shed light on the nature of the circumstance tending to [**775]
transaction. show that a deed was intended to
operate as a mortgage and not a sale;
A debt relationship was indicated and where consideration is grossly
by defendant's attempt at collection. inadequate, a mortgage is strongly
Defendant confronted and questioned indicated. Burroughs v. Burroughs
plaintiff about plaintiff's failure to (1971), 1 Ill. App. 3d 697, 705.
make the monthly payments as he had
promised. This is a reasonable action Here, the consideration was less
for defendant, who was concerned about than 10% of the value of the property.
plaintiff falling behind in his debt
Several factors regarding the
payments. It is not reasonable to
transaction in this case are similar
expect a person obligated to reconvey
to the circumstances in Burroughs.
to be encouraging the other party to
The property was not advertised or
exert their "rights."
offered for sale. The consideration
Further support of a debt was not paid to the plaintiff, but was
relationship comes from defendant's paid to the Wesley Funeral Home for
own characterization of the agreement the funeral bill of plaintiff's
to reconvey. Defendant consistently mother. In addition, defendant did
referred to the payments plaintiff not even consider the value of the
could make as "my money." He spoke in property when he purchased it, or the
terms of expectation of payment, as if amount of consideration.
the money to be paid by plaintiff was
Plaintiff tried to borrow money for
his already which was owed to him for
his mother's funeral in three
payment of the funeral bill. This is
different cities, with no mention of
supported further by defendant's
collateral. Defendant offered to go to
testimony that upon payment by
his friends for help, [***9] and
plaintiff, defendant would "redeem"
plaintiff ended up with defendant in
his property back to him.
the office of his attorney signing a
Another circumstance to consider is warranty deed instead of a loan
the value of the consideration as agreement. This situation is similar,
compared to the payback amount. The but even more significant than the one
consideration was approximately $ noted in Burroughs, and should be
1,500 and the total payback amount weighed accordingly.
after 16 months [***8] would be $
In Totten v. Totten (1920), 294
1,725. These figures would be in line
Ill. 70, 80, 128 N.E. 295, 299, the
with a typical installment loan
court stated: [HN5] "The fact that the
grantor in a deed absolute in form has
[*710] in possession of the others, indicating a lack of intention
property so conveyed and controlled by defendant to claim immediate
the property after the conveyance is ownership.
evidence tending to show that the
[HN7] An agreement to reconvey has
transaction, in fact, was a mortgage,
long been considered a significant
as is also the payment of taxes by the
factor in distinguishing mortgages
grantor after the conveyance." The
from absolute sales. Agreements made
reason for this rule is obvious, since
in writing at the same time as the
the grantee in an unqualified deed is
conveyance resolve any doubt as to the
entitled to immediate possession and
character of the conveyance in favor
becomes liable for payment of taxes.
of a mortgage. ( Illinois Trust Co. v.
In the instant case the uncontradicted
Bibo (1927), 328 Ill. 252,159 N.E.
testimony was that plaintiff and his
254.) However, the agreement need not
family made use of the premises on
be in writing. Miller v. Thomas
several occasions after the delivery
(1853), 14 Ill. 428.
of the deed, and that he kept a lock
on the door. Defendant conceded he In the case at bar, the agreement
had not been in the house since his to reconvey was [***11] admitted by
half-sister died. Plaintiff paid the the defendant to be a part of the deed
1978 and 1979 taxes and defendant made transaction. If there is doubt as to
no attempt to pay taxes until October the intent of the conveyance, it
1980, when his check for [***10] the should be resolved in favor of a
1979 taxes was returned because they mortgage.
were already paid. It is clear he
attempted to exercise none of the Any one of these preceding factors
prerogatives of an owner until over should be enough to find the trial
two years after the time he claims to court did not commit manifest error.
have become the owner and at a time The mass of relevant circumstances
when plaintiff was in default on all clearly and convincingly prove that
of the payments on the alleged the intention of the parties was to
contract except the first. It is of create a debt arrangement with a
further significance that defendant security. Based upon these
failed to take another step usually circumstances, the trial judge was
associated with ownership. [HN6] He correct in finding a debt relationship
did not record his deed at the time of existed, and that plaintiff's warranty
delivery or until well beyond the time deed to defendant was a mortgage.
that the 15 months had expired. This For the foregoing reasons, the
delay, while not of great significance judgment of the circuit court of
standing alone, is a further Kankakee County is affirmed.
circumstance, when considered with