(revised 8-15-07; 1st & 2nd paragraph corrected 1-17-08 - corrections in red)
This case involved an action of unlawful detainer by a grantee (actually, it was a grantee's successor in interest) under a deed given to secure payment of a debt. As part of the conveyance to the (original) grantee, he and the grantor contemporaneously entered into a separate land contract under which the grantor could buy back the property conveyed upon payment of a certain sum in five equal installments with interest. The grantor made no payments; the grantee conveyed its interest to another - its successor in interest - and the successor thereafter initiated an action of unlawful detainer against grantor to obtain possession of the premises.
After a jury trial, the jury found in favor of the grantor (Editor's Note: the original version of this post inadvertently stated that the jury found in favor of the grantee; correction made 1-17-08) and, on appeal, the Wisconsin Supreme Court affirmed. The ruling was to the effect that (1) the transaction creating the relationship between plaintiff and defendant was an equitable mortgage; and (2) an action of unlawful detainer, under the statutes then in effect, could not be maintained unless the conventional relation of landlord and tenant existed at the time between the plaintiff and the defendant.
In affirming, the court made the following statements and observations (bold text is my emphasis; excerpts broken up for ease of reading):
1) "The question, therefore, recurs whether the facts so submitted to and found by the jury authorized the maintenance of this action of unlawful detainer."
2) "There is no claim that the facts bring the case within the remedy given by sec. 3359, R. S. The contention is, however, that they do bring the case within the provisions of sec. 3358, R. S. 1 This court has repeatedly held that such an action cannot be maintained under that section unless the conventional relation of landlord and tenant exists at the time between the plaintiff and the defendant. Buel v. Buel, 76 Wis. 413, 45 N.W. 324; Menominee R. L. Co. v. Philbrook, ante, p. 142; and cases cited in the opinions."
3) "Such an action is a summary remedy given by statute, but was never intended as a substitute for ejectment or a bill in equity. "A justice of the peace has no jurisdiction to try the title to land. But the facts upon which the right of removal is based may be put in issue by the answer, and the issue so raised may be tried and determined in a justice's court. . . . Even where the facts show that the defendant has an interest in the premises which can only be fully protected in a court of equity, yet, if they are such as to disprove the conventional relation of landlord and tenant, they will be sufficient to defeat such action of unlawful detainer." 76 Wis. 413, 416, 417."
4) "The question to be determined, therefore, is whether the facts found by the jury in the portion of the charge quoted in the foregoing statement, were such as to create the conventional relation of landlord and tenant between the plaintiff and the defendant."
5) "Such facts were to the effect that the quitclaim deed was given to the plaintiff by the defendant and wife in pursuance of an arrangement and agreement that the defendant should retain an interest in the land with the privilege of selling the same, within the time named, for a price exceeding the amount due on the contract, and, in case of such sale, retain such excess; that, in case the plaintiff should sell during said period for an amount more than his due, then he should turn such excess over to the defendant; that if the defendant paid the amount due on the contract during said period, then the plaintiff should reconvey the land to the defendant."
6) "In accordance with numerous adjudications of this court, we must hold that the agreement thus found left in the defendant an equity of redemption in the land, and of course disproved the conventional relation of landlord and tenant."
7) "A few of these cases only are cited. Starks v. Redfield, 52 Wis. 349, 9 N.W. 168; Rockwell v. Humphrey, 57 Wis. 410, 15 N.W. 394; Schriber v. LeClair, 66 Wis. 579; and cases cited in the opinions."
8) "It is contended, in effect, that the absence from the arrangement of any express personal agreement on the part of the defendant to repay the money barred him of all equity of redemption in the premises. But that fact is not always conclusive, as shown by numerous authorities in the cases cited."
9) "Once a mortgage, always a mortgage, is the rule generally recognized in the cases. Ibid. When the facts and circumstances of the transaction are equivocal, the question whether it constitutes a pledge, security, mortgage, or a conditional sale is one of intention. Ibid. Whenever the relation of debtor and creditor is created by the transaction, or previously existed, and by express language or fair implication continues, and the possession is retained by the grantor, the transaction is usually held to be a pledge, security, or mortgage, especially if the value of the property conveyed is considerably in excess of the price allowed. Ibid."
10) "But the cases cited so fully discuss the questions here involved as to require nothing additional in this opinion. It is enough to say that the facts found negatived the existence of the conventional relation of landlord and tenant between the parties. Buel v. Buel, 76 Wis. 413, 45 N.W. 324; Menomonie R. L. Co. v. Philbrook, ante, p. 142."
Go here for other posts on the claiming the equitable mortgage doctrine in actions seeking eviction of a homeowner who signed away a deed as collateral for a loan (ie. actions for ejectment, unlawful detainer).
Go here for all posts on the equitable mortgage doctrine in Wisconsin. Wisconsin equitable mortgage zeta emdefense