The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-01-04
THE TRANSFER WAS GOOD,
Pacific Bank Property Belongs
to the Peoples
Home.
TWO DEEDS WERE EXECUTED,
Judge Seawell's Decision in the Suit
of Clinton Day and P.
F. Dundon.
TWO DEEDS WERE EXECUTED.

erty 10 Ine Heople' Home . aylng Bank IN
favor of the Peoples Home. The action was
brought by Clinton Day against the Peo-
pies Home to set aside the absolute trans
fer and P. F. Dundon interviewed in the
suit. Judge Seawell's decision upholds the
transfer.
The complaint alleged that on June %,
1898, the Pacific Bank, IN violation Of it's
trust toward it's depo sitors, conveyed GER
tain real property to the Peoples Home
Savings Bank without any consideration,
the theory being that the Pacific Bank
held the property in trust for the benefit
OF all its depositors and as a security to
them for the repayment of the amount of
their deposits. The action was brought to
subject the property to the same trusts
while in the hands of the savings bank as
incum bered it while in possession of the
Pacific Bank. 1t was prayed that the
property be declared to be held by the saw
lngs bank in trust for the benefit of the de-
positors of the Pacific Bank, and that a
receiver be appointed with power to sell
the property and distribute the proceeds
among the Pacific Bank creditors and
that the savings bank be compelled to
convey the property in question to the re-
ceiver II he were appointed.
Lt dCI1On WAS COM neDEeu IN SGDIGnl-
Der, 1898. Early in Decem Der, 1895, COM
plant in Intervention was filed by P. F.
Dundon, also a depositor in the Pacific
Bank, in which he alleged, in addition to
the charges made by Day, that the deed of
June %, 1898, was intended to secure the
payment of certain Indebtedness due by
the Pacific Bank TO the savings bank aud
that the savings bank was thereby made
preferred creditor and the transaction
prevented fair and ratabie distribution
Of the assets OF the bank among its de-
posltors. Dundon further alleged t., at
when the deed was executed a majority of
the stock Of the Pacific Bank and of the
Peoples Home was owned by the same
persons, and that they simply conveyed
the property from themselves as Pacific
Bank shareholders to themselves as Peo-
pies Home stockholders; and further,
that on August 3, 1885, the Pacific Bank
for the purpose OF extinguishing the debt
which had before been merely secured,
executed a deed of absolute conveyance of
the property formerly conveyed as security.
In rendering judgment, Judge Seaweu
holds that the deed of June %, 1893 was
only deed of security for an indebted
ness OF over $500, 000-in fact was merely a
mortgage. Proceedings were brought in
December, 1898, to foreclose this mortgage,
and in March, 1896, Judgment was rem
dered In favor OF the savings bank to the
effect that the deed was really a mortgage
to secure the payment OF $219, 448 20, and
that the property be sold to satisfy the
mortgage.
The deed of August 8, 1895, the court
continues, was executed Tor the purpose of
satisfying this judgment, and also in order
to settle all the differences between the
two banks, although at the time of the
last deed the value OF the property was
much less than the judgment sought to be
satisfied. In his opinion Judge Seawell
says:
Assuming that the Pacific Bank, upon its in
solvency, held said real property as we'll as all
It's other assets, as trust fund for the payment
OF its depositors pro a, the entire title 10 the
property WAS nevertheless vested in the bank
subject to the execution OF the trust. The deed
OF june 1893, being merely n mortgage, did
not pass 10 the savings bank the title to the
property, and it did not acquire any estate
which could be basis for the enforcement OF
the alleged trust, The Pacific Bank after the
execution OF that deed, still continued to be
the owner OF the property, and could only be
Invested OF II by foreclosure and sale. Ii in
this action receiver should be appointed, as
prayed by plaintiff, q deed executed by him
by the savings bank would pass no title, and
sale by the receiver would be an idle proceed
ing.
The Pacific Bank is the proper party to bring
an action affecting its title to property. Parti-
cularly Is this the case where the bank is as
here in liquidation under the Bank Commits
sioners' act. Assuming that the complaint
states a cause OF action against the savings
bank, II is one existing in favor of the Pacific
Bank as trustee Tor It's creditors and stock
holders. No reason Is alleged or shown why
this action should have been commenced by
depositor.
the only contingency in which de-
positor could, If at all, maintain
action OF this character. would be
where the directors after demand made
upon them by q depositor, refused to bring it,
or where a majority Of the directors then in
office h ad participated i'll the alleged wrong
doing. In all cases where case of action is as
gnrt hXy CiT0- rT hold 1f
banking corporation in favor OF such corpora
ton, the latter is q necessary and indispens-
able party. When made defendant because
the directors refuse to bring the suit, it is
nevertheless the real plaintiff. Any litigation
involving the validity OF the mortgage, TO
which the Pacific Bank was not party, would
action could afford the savings bank any re-
lief, neither woulda judgment in favor of the
latter bind the Pacific sank. This is not mere
~ non-joinder OF parties which are involved
by failure to plead it.
In proper case II would be the duty OF the
court 10 oroer the omitted-necessary-pa
TO be brought in. Such a-course would not be
proper here, for the reasons that the deed of
June, 1898, was merely "a mortgage, and that
since the action was commenced the Pacific
Bank has become eStopped to deny the valid
ity OF the mortgage. Ii answer was now made
that the Pacific Bank be made a party defend
ant il would take effect rs of this date, and
would not relate back TO the commencement
OF the action
The complaint in Intervention OF Dundon
was hled after the entry OF judgment in the
foreclosure suit The depositors of the Pacific
Bank were not necessary or proper parties to
that action, and as there IS no allegation that
the judgment was procured by collision or
frauc, they, as well as the stockholders of the
Pacific Bank, are estopped from denying the
validity OF the mortgage or the Indebtedness
adjudged to be secured thereby. The amount
Of the mortgage debt being largely in excess of
the value OF the property mortgaged, the de-
positors OF the Pacific Bank have no reason to
complain that they executed a deed OF the
property TO the savings bank in satisfaction OF
the judgment, and thereby not only saved the
expenses OF a SheriffS SALE but also settled all
other differences between the two banks.
/ have not deemed it necessary 10 express
any opinion upon the other questions dis
cussed by counsel. find, however, that at the
date OF the deed of June, 1898, the Pacific
Bank was insolyent and the savings bank had
notice OF such insolvency.
Judgment for defendant
nu6T Ueimhmu mD noA CmTo1ro