Johnson v. Cherry

Facing foreclosure after defaulting on roughly $120,000 owed to various creditors, including the seller of his property and his ex-wife, Johnson (plaintiff) turned to Cherry (defendant), allegedly for a loan; the two executed a deed from Johnson to Cherry, a one-year lease back to Johnson for $25,000, and an option for Johnson to repurchase for $132,000, with Cherry giving Johnson $120,000 and assuming his debt to his ex-wife. When Johnson failed to pay the lease and Cherry sued to evict him, Johnson countered that the transaction was really a disguised loan; a real estate appraiser testified the property was worth $320,000 and a fair lease value was no more than $4,500 a year, and the jury found the deed was actually a mortgage with title remaining in Johnson, a finding the appellate court reversed as a sale.