arranged by a deed to the insurance company by the mortgagor of all his interest, upon payment by them of all that was to be paid by the mortgagor, the positive testimony of the adjuster and of the mortgagor that there was no payment of the losses under the policies of insurance will not preclude a finding that the policies were paid, and that the mortgagor was entitled to a credit of the amount thereof, upon redeeming from the insurance company or its grantee. EVIDENCE-CREDIBILITY OF WITNESSES.-The positive testimony of witnesses may be overcome by circumstances showing that they are mistaken. A court may reject the most positive testimony, though the witness be not discredited by direct testimony impeaching him or contradicting his statements. The inherent improbability of a statement may dery to it all claims of belief.

TRIAL EQUITY CASE-SPECIAL ISSUES-IMPANELING JURY.-It is not error to impanel a jury in an equity case before framing the special issues to be submitted to them.

APPEAL from a judgment of the Superior Court of San Joaquin County, and from an order denying a new trial.

The facts are stated in the opinion.

W. C. Belcher, and J. W. Mastick, for Appellants.

The contract was one of conditional sale, and not a mort gage. (Grey v. Tubbs, 43 Cal. 359; Wilcoxson v. Stitt, 65 Cal. 596; 52 Am. Rep. 310; Morris v. Angle, 42 Cal. 236; Cook v. Lion Fire Ins. Co., 67 Cal. 368; Manasse v. Dinkelspiel, 68 Cal. 404; Page v. Vilhac, 42 Cal. 75; Henley v. Hotaling, 41 Cal. 26; Farmer v. Grose, 42 Cal. 169.) The written contract accompanying the deed could not be varied by parol evidence. (Code Civ. Proc., sec. 1856; Civ. Code, sec. 1625.) The amount found due cannot be deduced from the evidence by any arithmetical process, and the finding cannot be supported. (Parke v. Frank, 75 Cal. 364.) The policies of insurance were void. (May on Insurance, sec. 287; McCormick v. S. F. & M. Ins. Co., 66 Cal. 361.) The insurance company was entitled to be subrogated to the mortgagor's rights. (Foster v. Van Reed, 70 N. Y. 19; 26 Am. Rep, 544; Dick v. Ins. Co., 10 Mo. App. 376, 381; Etna Ins. Co. v. Tyler, 16 Wend. 385; Sussex County Ins.

Co. v. Woodruff, 24 N. J. L. 541; Honore v. Lamar Ins. Co., 51 Ill. 409.)

J. C. Campbell, and C. H. Clement, for Respondents.

The deed and contract to reconvey were prima facie a mortgage. (Civ. Code, sec. 2950; Daubenspeck v. Platt, 22 Cal. 330; Farmer v. Grose, 42 Cal. 169; 1 Hilliard on Mortgages, 23.) The existence of indebtedness is proved, and proves the transaction a mortgage. (Civ. Code, secs. 2924, 2925, 2950; Low v. Henry, 9 Cal. 538; Hickox v. Low, 10 Cal. 197; Lodge v. Turman, 24 Cal. 385; Page v. Vilhac, 42 Cal. 75; Farmer v. Grose, 42 Cal. 169; Jones v. Gardner, 57 Cal. 641; Sears v. Dixon, 33 Cal. 333.) Barnhart bought the crop, which he would not have done if the property was his. (Corcoran v. Doll, 35 Cal. 476; Dascey 1. Harris, 65 Cal. 357; Huerstal v. Muir, 62 Cal. 479.) The settlement with Barnhart was a waiver of the avoiding clause, and estops the company from setting it up. (May on insurance, secs., 501, 505; Fishbeck v. Phenix Ins. Co., 54 Cal. 422; Washington Fire Ins. Co. v. Kelly, 32 Md. 421; 3 Am. Rep. 149; Clay Fire etc. Co. v. Beck, 43 Md. 358; Ring v. Windsor etc. Co., 54 Vt. 434.)

FOOTE, C.-The plaintiffs were the owners of a certain tract of land in San Joaquin County. They had mortgaged the property to persons not parties to this action, the mortgage had been foreclosed, and the land sold, and the time for redemption was about to expire. In this emergency they applied to H. Barnhart to help them out of their difficulty by advancing the money necessary to satisfy the purchasers under the sale.

This Barnhart did, and an instrument which is a deed absolute in form was executed to him by the plaintiffs, and simultaneously an agreement in writing was entered into by the parties. Both the deed and agreement were duly recorded.

The agreement recited that for a certain sum of money,

if paid in a certain time, Barnhart would sell the lands to plaintiffs, and they agreed thus to purchase them, and to pay the amount named in the agreement.

The following is a clause of that instrument (the words italicized being so marked by the writer of this opinion): "Time is hereby especially made the essence of this contract, and in the event of the failure to comply with the terms hereof by said parties of the second part, the said parties of the first part shall be released from all obligations in law or equity to convey said property, and shall be entitled to the immediate possession of the same, said parties of the second part shall forfeit all rights thereto, and said parties of the first part shall be entitled to a strict foreclosure of this contract; and the said parties of the first part, on receiving such payment at the time and in the manner above mentioned, agree to execute and to deliver to the said parties of the second part, or to their assigns, a good and sufficient deed." It was not provided that in any contingency the plaintiffs were to be released from their obligation to pay. And it is understood that the stipulations aforesaid are to apply to and bind the heirs, executors, administrators, and assigns of the respective parties," etc.

At the same time Barnhart obtained from the defendant corporation two policies of insurance, one for two thousand five hundred dollars on the house upon said land, and another for one thousand dollars upon the barn thereon. These policies were issued to Barnhart as the owner of the property, and not as mortgagee. The sum of money mentioned in the agreement above referred to was made up of the amount paid by Barnhart upon the redemption of the land from the foreclosure sale, the expenses of preparing the deed, agreement, and other papers, the premiums on the policies of insurance, and five hundred dollars in addition, which last sum we surmise to have been as compensation to Barnhart for laying out of the use of his money for the

time specified in the agreement, at the expiration of which the plaintiffs were to purchase back their land.

There was also executed upon the same day with the other instruments heretofore mentioned a bill of sale of the crop growing upon the land of the plaintiffs. After all these agreements were made, the plaintiffs still continued to remain, reside upon, and apparently control, the premises, Barnhart in the meanwhile receiving money from the proceeds of the crop. On the 18th of September, and before the maturity of the agreement, the house on the premises was destroyed by fire, and shortly afterward the barn.

The adjuster for the defendant corporation appeared on the scene, visited the premises, saw the plaintiffs in possession, and objected to paying the insurance money.

Then it appears that by an arrangement between him and Barnhart, Barnhart received from the insurance company all the money which he claimed the plaintiffs had agreed in their contract to pay him, less what he had admitted he had already received from them, transferred all his interest under the contract to the corporation, and made it a deed to the property. After this suit was commenced they made a conveyance of it to the inter

venor.

The plaintiffs before suit brought and before the time stated in the agreement, when their right to purchase the land would expire, tendered to the defendant corporation the money which the plaintiffs claimed to be due under the terms of their contract with Barnhart, and demanded a deed. Defendant offered to receive the money as so much on account, but refused to execute a deed.

The money thus tendered was then deposited in a bank, and was thereafter so kept, ready to be paid the defendant on demand.

On December 17, 1886, a few days after the tender and refusal, plaintiffs filed their complaint herein, al

leging that the deed from them to Barnhart was intended to be and was a mortgage, and prayed for a reconveyance of the land by the defendant to them, upon the payment of $1,000.20, which they had tendered.

Upon leave being given to intervenor to file his complaint of intervention, plaintiffs answered that pleading and filed a cross-complaint. To the cross-complaint the intervenor demurred, the demurrer was overruled, and the intervenor answered the cross-complaint.

A trial by jury was had upon certain specific issues. The court below afterward adopted the findings of the jury upon them, and filed other findings, which sustained the contention of the plaintiffs, that the deed which they had executed to Barnhart was a mortgage, and adjudged that the intervenor should execute and deliver to the plaintiffs a deed to the premises, upon the payment to him of the amount of their tender and deposit in bank.

A motion for a new trial was made by the defendant and intervenor, and refused; from the judgment and order this appeal is taken.

We perceive no error in impaneling the jury before framing the special issues to be submitted to them; the issues could not be tried by a jury until it was impaneled. Nor can we perceive any error in the finding that the deed to Barnhart was executed to secure a debt due from the plaintiffs to him. Looking at the deed and the contract in the nature of a defeasance, irrespective of the oral testimony in the record, it is apparent from the clause which we have italicized that it was intended that the deed should be a mortgage, securing the payment of a debt. It appears therefrom that there was a sum of money to be paid, and the grantee in the supposed deed was not to be entitled to the possession of the property until there was a failure to pay said sum. This is inconsistent with the theory of an absoluto deed. Moreover, this provision is supplemented with language about the "foreclosure" of the plaintiff's rights.