Case Name: MARQUAM v. ROSS
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1905-12-04
Citations: 47 Or. 374
Docket Number: 
Parties: MARQUAM v. ROSS.
Judges: 
Reporter: Oregon Reports
Volume: 47
Pages: 374–423

Head Matter:
Argued 13 July,
decided 4 December, 1905;
rehearing denied 17 July, 1906.
MARQUAM v. ROSS.
78 Pac. 698, 83 Pac. 852, 86 Pac. 1.
Appeal — Nature of Order Decreeing Right to Redeem.
1. An order adjudging that a party is entitled to redeem from a mortgage sale, fixing the amount to be paid and the time within which the redemption must be made, and determining all the rights of both parties in and to the property, but reserving the details of an accounting for the rents and the distribution of the redemption fund, is a final order determining the rights of the parties, which is appealable, within the meaning of Section 517, B. & C. Comp.
Res Judicata.
2. The issues herein were tried in and are concluded by a prior decree between the same parties about the same property.
Right of Trustee to Purchase Trust Property.
3. A trustee holding the title to property will not be permitted to purchase it for his own benefit where his duty as trustee obligates him to secure a maximum price, or where such purchase would be otherwise in contravention or violation of his duty, and if such a purchase is made, equity will consider it as having been for the benefit of the cestui que trust, regardless of the price paid and without reference to actual fraud.
Effect of Instrument Conveying Security.
4. An instrument conveying property as a security for a debt is in equity a mortgage, whatever may be its form.
Right of Mortgagee in Possession to Purchase.
5. A mortgagee in possession, though in some sense a trustee, is qualified to purchase the security when it is sold at execution sale under his own or a prior lien, as a means of protecting his own claim.
Construction of Trust Agreement —Mortgagee in Possession.
6. Plaintiff, owning certain property largely incumbered, applied to a trust company to secure him a mortgage loan thereon. The trust company, being unable to obtain the amount required, agreed to itself loan the balance, in consideration of plaintiff executing a deed of the property to it, and a certain declaration of trust and agreement, which provided that the conveyance was in consideration of securing the loan and in secret trust for the purpose thereafter set out, stipulating for compensation to the trust company for its services in managing the property, collecting rents and profits, and to secure advances. The agreement vested no power of sale in the trust company, nor did it authorize it to convert the property into money. Held, that the trust company was a second mortgagee in possession as to the title, and that the trust created was confined to the possession and management of the property, together with the collection and disbursement of the rents and profits, and was therefore terminated on the foreclosure of the mortgage, as the trustee thereafter had no duties to perform.
Trusts —Duty of Trustee — Advances.
7. A mortgagor, at the time the mortgage was made, deeded the property to a trustee under an agreement that the latter should take possession and collect rents and profits and apply them to interest, taxes, expenses, etc. The deed obligated the trustee to make specified advances, interest on the mortgage not being specifically mentioned, and recited that it might become necessary for the trustee to make other advances, in which case it should be entitled to a lien on the property therefor. Held, that the trustee was not bound to make advances to pay interest on the mortgage to prevent a foreclosure.
Misconduct of Trustee in Possession.
8. In a suit to redeem certain property from foreclosure sale, evidence held insufficient to show that a trustee of the property in possession was responsible for the foreclosure, it appearing that the total receipts were not sufficient to pay interest on a prior mortgage as it became due, even when applied to that purpose, to the exclusion of taxes and other charges.
Trustees — Mutual Construction of Contract.
9. Where a trustee of the rents of mortgaged property makes charges and credits in its account according-to its understanding of the agreement under which it holds possession, and where itemized statements of these accounts containing such charges are rendered by such trustee to the mortgagor and retained by him without objection until after suit is brought to foreclose the mortgage, the mortgagor in several instances executing promissory notes for balances shown to be due by such statements, the mortgagor will be held to have accepted the construction of the agreement made by the trustee in so far as it relates to the right of the trustee to make the charges and credits shown by the statements. In such case the course of dealing constitutes a practical construction of the contract which will bind both parties.
Trustees — EvidbNCb oe Malicious Foreclosure.
10. The evidence does not show that the trustee in possession instigated or encouraged the foreclosure of a prior lien, in which proceeding the trustee foreclosed its lien, but it shows affirmatively that the trustee exercised due diligence to avert the foreclosure.
Effect oe Power of Sale in Deed oe Trust.
11. An authority to sell contained in a conveyance of property in trust does not authorize a sale except by a foreclosure and decree, under Section 423, B. & O. Comp., providing that a lien upon real or personal property, other than that of a judgment or decree, must be foreclosed by a suit in equity.
Construction oe Agreement.
12. The supplemental agreement under consideration here was in effect a mortgage of the property therein described to the trustee for the benefit of a named creditor, and it did not change the conditions created by the original contract between the same parties.
From Multnomah: Alfred F. Sears, Jr., Judge.
Suit by P. A. Marquam against J. Thorburn Ross and three corporations, asserting the right to redeem certain real property from a.purchase by Ross at a mortgage foreclosure sale. There was a decree for plaintiff at the circuit. A motion to dismiss the appeal was overruled, the opinion being written by Mr. Chief Justice Moore, and the case was decided on its merits. The main opinion was written by Mr. Justice BeaN. On a motion for a rehearing, the opinion was written by Mr. Justice Hailey.
Reversed.
Mr. Edward •Byers Watson and Mr. Albert Hawes Tanner for the motion.
Mr. Wallace McCamant, contra.

Opinion:
Decided 5 December, 1901.
On Motion to Dismiss the Appeal.
Mr. Chief Justice Moore
delivered the opinion.
This is a motion to dismiss an appeal. The material facts are that, a mortgage executed by plaintiff to the defendant the United States Mortgage & Trust Co. having been foreclosed, the real property incumbered thereby was sold under the decree December 10, 1900, and the sale confirmed: United States Mortgage Co. v. Marquam, 41 Or. 391 (69 Pac. 37, 41). This suit was instituted to redeem the premises from such sale on the ground that the purchaser was plaintiff's trustee, who had unlawfully caused the sheriff's deed therefor to be executed to the Oregon Company, a corporation, which, it is alleged, is not an innocent purchaser. It is stated in the complaint that since December 10, 1900, the plaintiff's trustee and the Oregon Company have been in possession of the mortgaged premises, collecting the rents arising therefrom, amounting to $3,000 a month. The prayer of the bill is for an accounting of the rents and profits of the real property received since the sale; that the sum required of plaintiff to redeem may be ascertained, and the time within which such payments are to be made prescribed ; that the purchaser at such sale and the corporations represented by him may be declared plaintiff's trustees, and hold the rents, issues, and profits so collected, and any right, title or estate in the real property acquired by reason of the sale and the sheriff's deed, in trust for him, and be required to convey the same to him upon the payment, within the time to be prescribed, of the sums so ascertained, or that all the real property may be resold; and for such further relief as may be equitable in the premises.
The cause being at issue was tried, resulting in a decree to the effect that the sale of the premises was made to the purchaser thereof, as trustee for plaintiff; that the Oregon Company was not an innocent purchaser; that plaintiff is entitled to redeem the premises sold on paying the sums alleged in the complaint to have been given therefor and interest thereon, to wit, block 178 in the City of Portland, $350,249.97, 80 acres of land in Multnomah County, $10,000, and lots 1, 2, 3, and 4 in block 120 in the City of Port land, $850, $750, $750, and $950, respectively ; that plaintiff is entitled to the rents and profits from December 10, 1900; that an accounting should be had to determine the amount thereof, together with deductions therefrom for disbursements, expenses, etc.; and that a referee be appointed to take evidence relating thereto, to state the account and to report the same, so that the balance, if any, may be deducted from the sums required to be paid for redemption; that plaintiff, his heirs or assigns, be allowed to redeem within six months after the decree upon such accounting shall have been entered ; that the several defendants may apply to the court to determine when plaintiff shall be deemed barred of his rights under the decree, and also-for directions as to which of the defendants is entitled to receive any money paid in redemption; and that plaintiff recover from the defendants his costs and disbursements, taxed at $_From this decree the several defendants appeal, whereupon plaintiff's counsel interpose this motion, contending that the order sought to be reviewed is only interlocutory. They argue that, as an accounting is a part of the relief demanded, no final decree can be rendered until the account is stated, and that an appeal prior to the rendition of a decree settling such account is premature, and should be dismissed. It is insisted by defendants' counsel, however, that the right .to redeem was the primary issue involved, which, having been determined in plaintiff's favor, necessarily carried with it, as an incident thereto, the recovery of the rents and profits accruing since the sale, less certain credits, and, the court having adjudged that defendants should pay the costs and disbursements incurred, the decree is susceptible of immediate execution, thereby precluding further inquiry, except such as is necessary to carry it into effect, and hence it is final and appealable.
The statute of this State prescribing what constitutes an appealable judgment or decree is as follows :
"An order affecting a substantial right, and which in effect determines the action or suit so as to prevent a judgment or decree therein, or a final order affecting a substantial right, and made in a proceeding after judgment or decree, for the purpose of being reviewed, shall be deemed a judgment or decree": B. & C. Comp. § 547.
Though it is universally acknowledged that ultimate judgments only are appealable, a great diversity of opinion is to be found in the adjudged cases in respect to what constitutes a final decree. In McGourkey v. Toledo & Ohio Ry. Co., 146 U. S. 536 (13 Sup. Ct. 170, 36 L. Ed. 1079), Mr. Justice BrowN, in. commenting on this principle, says: "Probably no question of equity practice has been the subject of more frequent discussion in this court than the finality of decrees. It has usually arisen upon appeals taken from decrees claimed to be interlocutory, but it has occasionally happened that the power of the court to set aside such a decree at a subsequent term has been the subject of dispute. The cases, it must be conceded, are not altogether harmonious." In support of the legal principles insisted upon, our attention is called to several cases in which it is held that decrees awarding partition of real property and appointing commissioners to divide the premises equitably do not constitute final adjudications, and that in suits of this kind appeals will not lie, except to review the action of the trial court in disposing of the reports of the referees. These cases, in our opinion, are not controlling. The ancient rule relating to appeals from decrees dividing real property into respective shares, is thus stated by Mr. Justice Soott in Gudgell v. Mead, 8 Mo. 54 (40 Am. Dec. 120): "In proceedings in partition, both at law and in equity, there are two judgments and decrees ; the one interlocutory, and the other final. The first is 'quod partitio fiat inter partes de tenementis/ upon which a writ or commission goes commanding that partition be made'; and upon the return of this writ or commission executed, if the proceedings are approved by the court, the second judgment is given 'quod partitio prsedicta firma et stabilis in perpetuum teneatur.' This is the principal judgment, and of the other before this is given no writ of error does lie" — citing Thomas' Coke, vol. i, 807, 808. This old mode of partitioning real property is practically reenacted by our statute regulating the procedure in suits instituted for that purpose : B. & C. Comp. § 435-483. In construing the provisions of this act it has been held that a decree determining the rights of respective parties to real estate and directing a partition or sale thereof without further proceedings, or to be followed by an ultimate disposition of the report of the referees appointed, is only interlocutory : Bybee v. Summers, 4 Or. 354; Sterling v. Sterling, 43 Or. 200 (72 Pac. 741).
Our attention is also called to cases involving injunctions to restrain infringements of patents, in which the causes were referred to ascertain the amount of damages sustained. As such suits are instituted primarily to recover money for a violation of the exclusive rights of the pat-entee or his assignee, and the injunction is only incidental thereto, the cases are not in point: Winthrop Iron Co. v. Meeker, 109 U. S. 180 (3 Sup. Ct. 111, 27 L. Ed. 898). In that case it was held that a decree determining the right to and the possession of certain property, which the prevailing party was entitled to have carried into immediate execution, was final, though the trial court retained possession of so much of the decree as might be necessary to adjust the accounts between the parties, Mr. Chief Justice Waite saying: "The case is altogether different from suits by patentees to establish their patents and recover for the infringement. There the money recovery is part of the subject-matter of the suit. Here it is only an incident to what is sued for." The plaintiff's counsel cite numerous decisions from courts of last resort, state and federal, to the effect that, the rights of parties having been adjudicated, thereby determining the principal issues involved, but ordering a reference for an accounting, such decrees are only interlocutory; and the insist that reason and the weight of authority establish the rule that no decree is final that orders a reference to do what the court, but for its power of delegation, would itself be obliged to do before it could decide it. Whether the preponderance of judicial enunciation is as claimed it is not necessary to inquire, for we believe this court is committed to the doctrine that, where a decree settles the substantial merits of the case, but orders an account between the parties, it is, nevertheless, appealable: 2 Cyc. 588, note 82.
In Basche v. Pringle, 21 Or. 24 (26 Pac. 863), Mr. Justice Bean, in speaking of the kind of a judgment from which an appeal will lie, says : "It is one which concludes the parties as regards the subject-matter in controversy in the tribunal pronouncing it. It must be one which not only affects a substantial right, but which, in effect, determines the action." In State v. Security Savings Co., 28 Or. 410 (43 Pac. 162), it was held that an order overruling a demurrer to a bill of discovery, and requiring the defendant to answer interrogatories set forth therein, was final for the purpose of taking an appeal, the court saying: "The law, as we understand it, is that an order or decree is final for the purposes of an appeal when it deter: mines the rights of the parties; and no further questions can arise before the court rendering it except such as are necessary to be determined in carrying it into effect." In Rockwell v. Portland Sav. Bank, 35 Or. 303 (57 Pac. 903), a petition praying that the receiver of an insolvent corporation be required to treat the petitioners as creditors thereof having been denied, it was ruled that the order was final as determining the rights of the parties. In another trial of the same case (39 Or. 241, 64 Pac. 388,) it was held that an order, made pending the settlement of the estate of an insolvent corporation, allowing a claim and directing the payment thereof by the receiver, was appealable. "The rule," said Mr. Chief Justice Wolverton, in State ex rel. v. Downing, 40 Or. 309 (58 Pac. 863, 66 Pac. 917), "seems to be that, where it is the purpose of the court to pass upon all the questions at issue, and to finally consider and determine concerning them, and make and enter a concluding order respecting them, without any intention of holding the matter in abeyance so that it may subsequently modify or revoke the order, the judgment so entered will be deemed to be final." In Baker v. Williams Banking Co., 42 Or. 213 (70 Pac. 711), it was ruled that a decree determining the validity of a claim against a fund in the custody of the officers of a court, derived from the assets of an insolvent corporation, which decree was made prior to the final settlement of its estate, was a final adjudication of the right to participate in the fund, and could not thereafter be controverted by the then parties to the proceeding.
In Schwartz v. Gerhardt, 44 Or. 425 (75 Pac. 698), in a suit to establish a constructive trust and for an accounting, the relief demanded having been decreed, and an appeal therefrom taken, it was held that the cause was properly reserved for the purpose of an accounting. Mr. Justice Wolverton, in deciding the case,says: "The circuit court reserved the matter of the accounting for further hearing and consideration. This was regular, under the practice." In Lemmons v. Huber, 45 Or. 282 (77 Pac. 836), the merits of the case having been determined in a justice's court, which dismissed the action on the ground that the plaintiff had failed to sustain the allegations of his complaint, and rendered judgment against him for the costs and disbursements, from which no appeal was taken to the circuit court within the time prescribed, it was held that an appeal from a subsequent action of the justice's court on a motion to retax the costs did not bring up for review the prior decision, Mr. Justice BbaN saying, "A judgment is final for the purpose of an appeal when it determines the rights of the parties." In Wadhams v. Allen, 45 Or. 485 (78 Pac. 362), a decree dismissing the suit having been rendered, the costs and disbursements were taxed against plaintiffs, to which latter part of the decree they filed objections the day it was entered. More than seven months thereafter the objections were overruled, whereupon plaintiffs appealed, assigning as error the action of the trial court relating to the merits of the case, and not to the taxation of costs. It was held that the appeal was not taken within the time prescribed by law. The cases decided by this court to which attention is called are cited to show the general policy pursued relating to appeals, from which it will be seen that the original adjudication of the right involved within the issues is the judgment or decree from which an appeal lies, and that, if the decree "determines the rights of the parties" on the merits, though it reserves the matter of accounting for further hearing and consideration, it is nevertheless final:
Schwartz v. Gerhardt, 44 Or. 425 (75 Pac. 698).
In McMurray v. Day, 70 Iowa, 671 (28 N. W. 476), a suit having been instituted to set aside a deed to real property, the relief demanded was decreed, but the cause was referred to ascertain certain items of debt and credit between the parties, and, the account having been stated and filed, a decree was rendered approving it, whereupon defendant took an appeal, but after the statute allowing the right had run against the first decree. It was held that the prior adjudication was a final determination of the substantial rights of the parties, and that the time for taking an appeal was to be computed from the day the first decree was rendered, and not from the order of the court approving the report of the referee, Mr. Chief Justice Adams, saying: "The first question presented is as to whether the original decree.of December 17, 1884, is now subject to review. The plaintiffs insist that it is not. Their position is that that decree constitutes a final judgment, and is reviewable-in this court only upon an appeal therefrom, taken within six months from the time of its rendition. Counsel for the defendant concede an appeal cannot be taken from a final judgment after six months from its rendition, but they deny that the decree of December 17, 1884, was a final judgment. It was, of course, not a final judgment in the sense that it was the last judgment rendered in the case ; but it is manifest that there is another sense in which the words 'final judgment' may be used, and that is to denote the final determination of a substantial right for which the action was brought. This action was brought to determine the plaintiff's right to the land in question. They asserted that right, and the defendant denied it. The court adjudged that the plaintiffs had such right. It is true that, there were certain equities in favor of the defendant. He had paid the plaintiffs a certain sum for the land, and was entitled, after accounting for rents and profits, to be reimbursed. The exercise of the right on the part of the plaintiffs was made contingent upon their paying the defendant what he was equitably entitled to. But for that fact there would have been no need of a second decree. But the former adjudication was in no way dependent upon the state of the account, or upon the plaintiffs' payment. Noth-ingcould be developed in the subsequent proceeding which could affect its correctness, or require it to be changed. It was final, we think, if a decree ever can be final where something more is to be ascertained and done in order to give the party i.n whose favor it was rendered a right to its enjoyment." The rule announced in that case was approved in Carter v. Davidson, 73 Iowa, 45 (34 N. W. 603), where a suit was instituted to quiet title to real property, and, a decree having been rendered in favor of plaintiff establishing the right asserted, the cause was continued in consequence of the filing of a petition of intervention. A subsequent decree having been rendered against the intervener and the defendant, the latter appealed therefrom, but after the statute had run against the right of appeal from the original decree; and it was held that the appeal did not bring up for review the prior action of the court.
In Adams v. Sayre, 76 Ala. 509, a suit was instituted to redeem real property sold under a mortgage on the ground that the purchaser was the mprtgagor's trustee, and, a decree having been rendered as prayed for, the cause was referred to state an account between the parties concerning the rents and profits of the premises, to be offset by taxes paid, cost of repairs, and the value of permanent improvements. Thereafter, when the register proceeded to state the account, the complainant at a subsequent term of the court secured a modification of the decree, and, the account rendered having been approved, it was decreed that upon the payment of the sum found due the mortgage should be satisfied. From this latter decree an appeal was taken, and it was held that the trial court was without power to modify the original decree, Mr. Justice SoMer-ville saying: '"It is the settled doctrine of this court that, as a general rule, there can be but one final decree upon the merits of a chancery cause, which is required to settle all the equities litigated or necessarily involved in the issues of the particular suit. The policy of the rule is found in the indisposition of the appellate courts to mul tiply appeals by undertaking 'to review litigated cases piecemeal': Randle v. Boyd, 73 Ala. 282. A decree may, nevertheless, be partly final and partly interlocutory; final, so far as it determines all issues of law and fact, constituting the equities proper of the cause, and interlocutory as to ulterior proceedings regulating its mode of execution. There may be, therefore, and often are, under our system of chancery practice, two final decrees in the same cause; the one settling the substantial merits of the case, and the other based on the final report of the register, upon an account taken between the parties computing damages, from each of which an appeal will lie to this court." In Jones v. Wilson, 54 Ala. 50, Mr. Chief Justice Bricicell, in speaking of the ultimate conclusion of a court of equity in a case pending before it, says: "The test of the finality of a decree, so as to support an appeal, which our decisions have.prescribed, is not whether the cause is still in progress in the court of chancery, awaiting further proceedings, which may be necessary to entitle the parties to the full possession and enjoyment of the rights it has been declared they have, but whether a decree has been rendered settling these rights. If these are settled by the decree, though a reference to the register may be necessary, and may be ordered, to ascertain the amount due from one to the other on the basis of the rights as adjudged, the decree is final, and will support an appeal."
As tending to support the principle here announced that a decree is final though the cause is referred to state an account, see Decatur Land Co. v. Cook, 125 Ala. 708 (27 South. 1022); Townsend v. Peterson, 12 Colo. 491 (21 Pac. 619); Fry v. Rush, 63 Kan. 429 (65 Pac. 701); Perrin v. Lepper, 72 Mich. 454 (40 N. W. 859); Hake v. Coach, 105 Mich. 425 (63 N. W. 306); Ayer v. Termatt, 8 Minn. 96 (Gil. 71); Arnold v. Sinclair, 11 Mont. 556 (29 Pac. 340; 28 Am. St. Rep. 489); France v. Bell, 52 Neb. 57 (71 N. W. 984); Tennessee Railroad Co. v. Campbell, 109 Term. 655 (73 S. W. 112).
Statement by Mr. Justice Bean.
This is a suit by P. A. Marquam against the United States Mortgage & Trust Go., a New York corporation, hereinafter called the "Mortgage Company," The Title Guarantee & Trust Co., an Oregon corporation, hereinafter called the "Title Company," the Oregon Co., and J. Thorburn Ross to redeem block 178, known as the "Marquam Block," and lots 1, 2, 3 and 4, in block 120, in the City of Portland, and 80 acres of land in or near that city from a purchase by Ross, as trustee for the Title Company, at a sheriff's sale, under a decree in a suit brought by the Mortgage Company against Marquam, the plaintiff herein, the Title Company, and others, to foreclose a mortgage on such property, and to require the Title Company and the Oregon Company, its successor in interest, to account for the rents and profits accruing after tlie purchase. The facts are these : In August, 1894, the plaintiff was the owner of the property in question, which was incumbered with mortgages and attachments for more than $300,000. His creditors /were pressing him for payment, and he was obliged to secure a new loan or suffer a forced sale of the property. He made application to the Title Company, the local correspondent of the Mortgage Company, for a loan from the latter of $400,000, at 5{- per cent interest, to be secured by mortgage on the Marquam Building, offering, if the loan were made, that the rents of the property should be impounded as additional security therefor, and collected and disbursed by the Title Company. The Mortgage Company declined to make the loan as applied for, but after considerable negotiation finally agreed, on October 16th, to lend $300,C00, for five years, at 7 per cent, secured by a mortgage on the Marquam Block and the 80 acres of land; the management and control of the property and the collection of the rents to be in charge of the Title Company during the existence of the loan. The plaintiff was willing to accept this offer. As the $300,000 was not sufficient to pay his pressing demands, however, or relieve his property from liens, the Title Company agreed, at his request, to advance sufficient money to make up the deficiency, such advances to be secured by a lien on the property and the rents subsequent to that of the Mortgage Company. Plaintiff thereupon entered into a contract with two of his attaching creditors, the Portland Nat. Bank and George B. Ellis, 'which, after reciting his desire to borrow of the Mortgage Company $300,000, and secure the same by mortgage on the Marquam Block and the 80 acres of land, and stating in detail his indebtedness and the claims against the property, proceeds as follows:
In the case at bar, the issue involved is the right to redeem, and, this having been adjudged in plaintiff's favor, and the property affected thereby particularly described, the sum to be paid therefor specified, and the costs and disbursements taxed to the defendants, the decree, in our opinion, "determines the rights of the parties," is susceptible of immediate enforcement by tendering to the clerk of the court the sums prescribed, with interest, less $3,000 a month, alleged to have been received as rent, leaving the remainder to be paid on confirmation of the referee's report; and is therefore final and appealable.
It follows from these considerations that the motion to dismiss the appeal should be denied, and it is so ordered.
Motion to Dismiss Overruled.