Develop-Amatic Engineering v. Republic Mortgage Co.

Plaintiff corporation appeals from a judgment following a court trial by which it was ordered that plaintiff take nothing by its complaint. The action was one for declaratory relief, accounting, and an injunction seeking to have a deed absolute in form declared to be a mortgage in fact, and that title be quieted for plaintiff against sundry defendants.

*147 Plaintiff owned some 355 acres of real property in Sonoma County. This property was encumbered by a $300,000 deed of trust in favor of defendant bank. In dire financial straits and faced with an impending foreclosure of the parcel, plaintiff entered into a transaction with defendant Republic Mortgage Co., a corporation (hereinafter referred to as “Republic”), whereby plaintiff sold the subject property to Republic for $450,000 in order to provide sufficient funds to satisfy the deed of trust and to provide working capital for plaintiff’s business. The fair market value of the property at that time was $900,000. As part of the agreement of sale Republic granted plaintiff a two-year repurchase option at a price of $650,000. This option was transferable. The agreement provided that all leases on the property were to be…