Downs v. Ziegler
Court of Appeals of Arizona
477 P.2d 261 (1970)
The Downses (plaintiffs) had conveyed land to Ziegler (defendant) in exchange for a mortgage. When Ziegler struggled to make payments, he conveyed his interest to three doctors (defendants) in exchange for their taking over the payments; the agreement expressly labeled the deal a sale, not a loan, but included a clause letting Ziegler repurchase the property within a year for the payoff amount plus $10,000, and the doctors never inspected the property before signing. When the Downses sued to foreclose and hold the doctors personally liable for any deficiency, the doctors argued their arrangement with Ziegler was really a mortgage, not a sale, which would shield them from personal liability. The trial court agreed, and the Downses appealed.
Whether a conveyance that purports on its face to be a sale can actually be a mortgage if that is what the parties intended.