Case Name: FIRST NAT. BANK v. COURTRIGHT
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1916-06-27
Citations: 82 Or. 490
Docket Number: 
Parties: FIRST NAT. BANK v. COURTRIGHT.
Judges: Mr. Chief Justice Moore, Mr. Justice Bean and Mr. Justice Burnett concur.
Reporter: Oregon Reports
Volume: 82
Pages: 490–503

Head Matter:
Argued May 31,
affirmed June 27,
rehearing granted October 24, reargued November 14,
modified on rehearing December 27, 1916. Further rehearing denied January 16, 1917.
FIRST NAT. BANK v. COURTRIGHT.
(158 Pac. 277; 161 Pac. 966.)
Venue — Foreclosure of Lien.
1. Under Section 396, L. O. L., providing that suits in equity for the foreclosure of a lien on real property must be tried in the county where the property is situated, the trial court had no jurisdiction to foreclose plaintiff’s lien on real property situated outside of the county.
Appeal and Error — Jurisdiction of Appellate Court.
2. In an action to foreclose a lien on real property outside of the county, where the trial court did not have jurisdiction for that purpose, the Supreme Court does not have jurisdiction on appeal.
ON REHEARING.
Fraudulent Conveyances — Burden of Proof.
3. Where a debtor conveys substantially all his estate to a near relative, ostensibly to satisfy his debt to the latter, in a suit by creditors to set aside a deed for fraud, the grantee must establish dearly that there was a valuable consideration therefor.
[As to proof of fraud in a suit to set aside a conveyance as being fraudulent as to creditors, see note in 11 Am. St. Rep. 587.]
Interest — Computation—Partial Payments.
4. The rule for casting interest, where partial payments have been made, is to apply the payment, in the first place, to the discharge of the interest then due. If the payment exceeds the interest, the surplus goes toward discharging the principal, and the subsequent interest is to be computed on a balance of principal remaining due. If the payment be less than the interest, the surplus of the interest must not be taken to augment the principal; but interest continues on the former principal until the period when the payments, taken together, exceed the interest due, and then the surplus is to be applied toward discharging the principal, and interest is to be computed on the balance as aforesaid.
Mortgages — Trust Deed.
5. Where land is transferred to a trustee to secure a loan from a bank, it is to be treated as a mortgage, and foreclosed only in the statutory manner.
Mortgages — Duty of Trustee Under Trust Deed — Foreclosure.
6. The cestui may call upon the trustee to foreclose such mortgage by appropriate legal proceedings, and apply the proceeds to the debt, or the judgment in whieh the debt has been merged.
Mortgages — Form of Decree.
7. In a creditors’ suit, in whieh plaintiff was the cestui of a deed securing its loan, and the trustee of such trust and the debtor and others were defendants, the complaint asking for decree requiring the trustee to “sell and dispose” of the property held by him as trustee, a decree would be entered merely directing the trustee to foreclose the mortgage by appropriate proceedings, although the plaintiff conceded that it did not seek to obtain strict or ordinary foreclosure of the conveyance, since, in any event, a decree directing the trustee to sell and dispose of the land would not empower a sale without suit to foreclose the mortgage.
From Multnomah: George N. Davis, Judge.
Department 1. Statement by Mr. Justice Benson.
This is a creditor’s suit by the First National Bank of Portland, whereby it is sought to subject certain property now in the hands of defendant Morris L. Courtright to the payment of a debt contracted by Harry M. Courtright. The substance of the complaint is that, for the past six or seven years, Harry M. Courtright has been engaged in the business of purchasing delinquent tax certificates and in other transactions germane thereto; that in carrying on the occupation he borrowed large sums of money from the. plaintiff; that on November 4, 1914, he owed plaintiff $43,500, to evidence which he executed to it his promissory note, bearing interest at the rate of 7 per cent, with the customary provision for attorney’s fees; that, upon the failure of the maker to pay this note at maturity, an action was commenced for its recovery, resulting in a judgment for plaintiff in the sum of $45,190 and $300 as reasonable attorney’s fees, which was duly docketed in the judgment lien docket of Multnomah County; that, during the time Harry M. Court-right was so borrowing money from the plaintiff, largely, if not wholly, with the money so borrowed he purchased and acquired, in addition to a large number of certificates' of delinquency from the sheriffs of Multnomah and Clackamas Counties, certain real property in the City of Portland, a description of which is set out in the complaint; that, while he was so borrowing moneys from plaintiff, he represented to it that his net worth exceeded $100,000; that about November 4, 1914, the date of the execution of the note above mentioned, he represented to plaintiff that he desired to secure the indebtedness due plaintiff, and, without solicitation on the part of plaintiff, he executed to the defendant Security Savings & Trust Company deeds of conveyance of certain real property situated in Skamania County, Washington, and Clackamas County, Oregon, representing that these properties had considerable value, but that, in fact, as plaintiff afterward discovered, were practically worthless; that at various times during the year 1914 while Harry M. Courtright was so indebted to plaintiff, for the purpose of hindering, delaying and defrauding it, he conveyed to Morris L. Courtright, his father, all of the Portland real estate above mentioned, and assigned to him substantially all of the certificates of delin quency held by him aggregating about $37,500 in value; that these transfers were without consideration, and were made with the understanding that the father should hold the property in trust for the sole use and benefit of the son, and that such action has placed the property beyond the power of the court to reach in an action at law, or upon execution; that the purpose of these transfers was to cheat and defraud plaintiff and prevent it from collecting the money due it; that the father paid no consideration therefor, but, at the time and prior to the execution thereof, had full knowledge of the son’s fraudulent intent and conspired with Harry M. Courtright to defraud plaintiff, and well knew at the time of such transfers that his son had no other property with which to satisfy plaintiff’s claim; that the son has no property within the jurisdiction of the court subject to execution other than certain personal property already seized by the sheriff of about $1,218 in value; then follow allegations upon which to base a temporary restraining order to certain officials in regard to the disposal of certain property. The prayer is for a decree canceling the transfers to the father as fraudulent and applying the property to the payment of plaintiff’s claim; asking the appointment of a receiver; also for an accounting with the father, and for a foreclosure of plaintiff’s lien upon the real estate in Skamania County, Washington, and Clackamas County, Oregon, and for general relief.
To this complaint the father and son file separate answers in which, after denying the allegations of fraud and deceit, they allege affirmatively that on August 1, 1914, the son was indebted to the father on account of moneys loaned in the amount of about $50,000, for which security had been given to the amount of about $15,000; that on the same day the father demanded payment from the son of this debt; that the son then assigned to him delinquency certificates of the value of about $20,000; that on November 4, 1914, the son still owed the father $15,000, and in payment thereof conveyed to him the Portland property above mentioned; that the assignments and conveyances were made in good faith in payment of a bona fide debt without the intent to defraud; and that plaintiff at all times was fully informed as to such indebtedness.
A trial being had, a decree was entered in favor of defendants, from which plaintiff appeals.
Affirmed.
For appellant there was a brief over the name of Messrs. Dolph, Mallory, Simon & Gearin, with an oral argument by Mr. Joseph Simon.
For respondents there was a brief over the names of Mr. Morris L. Courtright and Messrs. Ridgway & Johnson, with an oral argument by Mr. Albert B. Ridgway.
On transfer of property by debtor in satisfaction of debt, see note in 36 L. R. A. 341, 361. Reporter.

Opinion:
Mr. Justice Benson
delivered the opinion of the court.
It will be seen from the statement of the issues that we are simply to determine from the evidence whether or not the transfer of property from the son to the father was an honest one and in payment of a bona fide debt. The evidence is voluminous, and covers a vast number of individual transactions. We have gone through this record with extreme care, at a considerable expense of time, labor and patience. A detailed. analysis would not be of any value to the individual litigants or to the bar generally. It is therefore deemed proper to say that we are unable to find any convincing evidence that Morris L. Court-right was guilty of any fraud or deceit in connection with the transactions of which complaint is made. It is true that the conduct of Harry M. Courtright has been far from praiseworthy or commendable. He did •submit to the plaintiff bank several written statements of his financial condition which represented him as having net assets in excess of $100,000, when in fact he had no assets of any appreciable value. He does not in any definite way account for the large sums of money which passed through his hands, and the glaring fact remains that he has grossly wronged the bank that befriended him; but we think the evidence justifies the findings of the trial court that he did owe his father a large amount of money, the value of the property transferred does not exceed the indebtedness, and there is nothing in the record disclosing any knowledge upon the part of the father in relation to his son's 5 wrongful acts.
We cannot decree a foreclosure of plaintiff's lien upon the real property in Skamania County, Washington, and Clackamas County, Oregon, for the trial court had no jurisdiction for that purpose, and it is therefore beyond our power: Section 396, L. O. L.; 27 Cyc. 1519, and cases there cited.
It follows that the decree of the trial court must be .affirmed, and it is so ordered.
Affirmed. Modified on Rehearing.
Mr. Chief Justice Moore, Mr. Justice Bean and Mr. Justice Burnett concur.