1. MORTGAGES — Conditional Sale and Mortgage Distinguished. — Where a note containing an unconditional promise to pay was secured by an assignment by purchaser of a real estate contract, and the makers did not have the option to pay or not as they pleased, the transaction could not amount to a conditional sale. p. 667.
2. PLEDGES — Pledge Distinguished From Other Transactions — Note Secured by Assignment of Real Estate Contract. — Where a note containing an unconditional promise to pay was secured by an assignment by purchasers of a real estate contract, the transaction could not constitute a pledge because personal property only can be the subject of a pledge. p. 667.
3. MORTGAGES — Equitable Mortgage — Assignment of Real Estate Contract. — Where a real estate contract was assigned by purchasers as security for a note containing an unconditional promise to pay, the assignment amounted to a mortgage which could only be enforced through proper foreclosure proceedings, since the contract assigned created in assignees, an equitable interest in the real estate which was the security given for the debt. p. 667.
FLANAGAN, J.
On December 20, 1941, appellants were in possession of certain real estate in Blackford County, Indiana, which they were buying on contract. On that date they borrowed $1300 from appellee. They gave appellee a promissory note in the usual form, due in thirty days, and for the purpose of securing the debt assigned to him their real estate contract. The assignment provided that if the debt should not be paid at maturity the contract should become the absolute property of appellee upon service of notice by him upon appellants and delivery to them of their note duly cancelled. The note was not paid at maturity, appellee served the notice and delivered the note properly cancelled and brought this action for possession of the involved real estate.
Issues were formed; trial was to the court which found the facts specially as we have stated them in substance; and judgment was rendered for appellee.
Appellants contend that the assignment of the real estate contract amounted to a mortgage only and foreclosure was therefore a prerequisite to any right on appellee's part to possession of the real estate.
The note contained an unconditional promise to pay. Appellants did not have the option to pay or not as they pleased and the transaction could not therefore amount to a conditional 1. sale. Voss v. Eller (1886), 109 Ind. 260, 10 N.E. 74.
The transaction could not constitute a pledge because personal property only can be the subject of a pledge. 41 Am. Jur., p. 586, § 7; 49 C.J., p. 902, § 18; Restatement of the Law 2, 3. of Security, p. 5, § 1; and no personal property is here involved. The contract which was assigned created in appellants an equitable interest in the real estate described therein. Burham v. Burk (1884), 96 Ind. 270; Bucher v. Young (1932), 94 Ind. App. 586, 158 N.E. 581. This equitable interest in real estate was the security given for the debt. It necessarily follows that the assignment of the real estate contract amounted to a mortgage, Wilson v. Fatout (1873), 42 Ind. 52; 66 C.J., p. 1077, § 866, and cases cited; 36 Am. Jur., p. 750, § 126, which could only be enforced through proper foreclosure proceedings.
Judgment reversed with instructions to the trial court to restate its conclusions of law in conformity with this opinion.
NOTE. — Reported in 53 N.E.2d 544.