Case Name: SMITH v. BOOTHE
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1918-10-22
Citations: 90 Or. 360
Docket Number: 
Parties: SMITH v. BOOTHE.
Judges: McBride, C. J., and Burnett and Harris, JJ., concur.
Reporter: Oregon Reports
Volume: 90
Pages: 360–385

Head Matter:
Argued September 19,
affirmed October 22,
on petition for rehearing former opinion sustained December 17, 1918.
SMITH v. BOOTHE.
(175 Pac. 709.)
Judgment — Conclusiveness—Res Judicata — Matters Concluded.
1. Pacts identical with those relied on as a cross-complaint in a prior suit, wherein the complaining party drew up the decree, held concluded between the parties.
Judgment — Res Judicata — Matters Concluded.
2. A judgment upon the merits is a bar to a subsequent action between the same parties on the same claim, both as to matters that might have been as well as those that were actually litigated.
ON PETITION POR REHEARING.
Fraud — Opinion—Worth of Property.
3. Statements by purchasers of mortgage, attorneys for mortgagors, that premises were not worth more than was due them, and that they had procured all rights and title of mortgagors, made to mortgagors, were mere matters of opinion, not' constituting actionable fraud.
Fraud — Unactionable Threat or Bluff.
4. Statement by purchasers of mortgage, attorneys for mortgagors, to the mortgagors, that they, the purchasers, had been damaged in reputation and would not permit redemption after'foreclosure' by them without paying damages in addition to money required to redeem, was a mere threat, not constituting actionable fraud on the mortgagors.
Fraud — Allegations—Sufficiency of Evidence to Sustain.
5. In suit by mortgagors against attorneys, purchasers of mortgage, who foreclosed, and, as it was alleged, by false statements prevented mortgagors from securing money to redeem, evidence held insufficient to sustain allegations, having shown merely that defendants stood on legal rights as purchasers at execution sale under decree in foreclosure suit.
Judgment — Merger—Nature of Relief.
6. Where attorneys purchased a mortgage and foreclosed, mortgagors being their clients, and court in foreclosure decree executed trust in favor of mortgagors arising from confidential relation, by setting aside deed procured by attorneys, and declaring mortgagors to be owners, subject to lien of mortgage, confidential relation of attorneys and its abuse was merged in the decree.
Attorney and Client — Fiduciary Relation — Purchase of Mortgage by Attorneys.
7. Attorneys could buy and foreclose mortgage executed by clients, where they did not purchase at discount and undertake to charge clients for full face of mortgage.
[As to contracts of attorneys which are void as against public policy, see mote in 13 Am. St. Rep. 297. See, also, note in 139 Am. St. Rep. 598.]
From Multnomah.: William N. G-atens, Judge.
Department 1.
The history of this case, so far as it is of interest here, is about as follows: In the month of June, 1912, the defendant William P. Richardson purchased from Lucy A. Lumsden a promissory note secured by mortgage on certain real property executed by the plaintiffs herein, and in the same month began a suit to foreclose the same. These plaintiffs filed an answer to the complaint in foreclosure, wherein they allege that Richardson is an attorney at law, and that in April, 1912, they, being unable to meet the payments due upon the aforesaid note, .which was for the sum of $10,000, employed him to negotiate a new loan for them in the sum of $15,000, payable three years later; that having undertaken the employment, he represented to them that in order to get the title of the realty into such shape that a loan could be secured, it would be necessary for them to convey the legal title to a party to be named by him, which was done, the deed running to one Edith King; that at the time of making such conveyance Richardson paid to them the sum of $2,000, explaining that such sum was a part of the new loan he had secured for them, and that the remainder would be applied to the payment of the prior mortgage, accrued interest, and taxes; that just prior to the execution of the aforementioned conveyance, they were served with copies of the summons and complaint in the foreclosure suit, and that Eichardson then represented to them that the suit was merely a step in the process of clearing the title to the premises and would not affect their rights thereto; that he now asserts title to the property through the conveyance to Edith King, who, it. is asserted, holds the title for his convenience. They then allege the falsity of the representations so made, and their reliance upon them, and conclude with the following prayer:
“Wherefore, these defendants and cross-complainants pray and that this court will decree:
“1. That these defendants and cross-complainants, Emma A. Smith and Mary J. Cole, are the owners in fee simple of said premises.
“2. That said plaintiff and Edith King hold the legal title so vested in them as security only for the repayment of said Two Thousand Dollars, interest and taxes, if any, paid by them.
“3. That should the court find that said plaintiff is the owner and holder of the note and mortgage set out in his complaint, that the transfer of said note and mortgage to him, together with the conveyance to him by s.aid Bank & Trust Company and the conveyance by these defendants “to Edith King, constitute but one instrument intended as, and declared to be, a mortgage to secure the payment of said new loan agreed to be secured by said plaintiff, and that the amount of said new loan be decreed to be the principal amount represented by .note and mortgage set out in plaintiff’s complaint, plus the interest due thereon, plus the taxes paid, if any, plus. the said Two Thousand Dollars paid defendants by plaintiff, and that the terms of said new loan run three years from June 18, 1912, with interest at eight per cent per annum, and that plaintiff be denied the right to foreclose said mortgage set out in his complaint at this time and his suit dismissed.
“4. That the rights and interests of said purchasers be fully protected as their respective equities may appear; and to reform said instruments.
“5. That said defendants, L. D. Mahone, W. Bullis, M. L. Hamitt, Mrs. J. F. McKinney, W. G. Bohn, American Bank & Trust Company, and Will Wright, Superintendent of Bank, G. A. Schwartz, and cross-defendants, Quartz Gold Mining Company, a corporation, and F. P. Tobin, receiver of Mount Scott Bank, a corporation, have no right or interest in or to said premises.
“6. That these defendants and cross-complainants be given such other and further relief as may appear just and equitable in the premises.”
To this answer there was a reply filed denying the affirmative matter, and pleading further as follows:
“1. That prior to the time the plaintiff purchased said note and mortgage, he had informed these defendants that he was intending to purchase the same and notified them that he would foreclose said mortgage unless the interest was paid, whereupon said defendants said they could not pay the interest or make any payment thereof, but urged the plaintiff to find a purchaser for their interest in said premises, and in order to make suitable provision for the execution of a deed of conveyance to such purchaser as the plaintiff should find for said premises, on or about the 12th day of June, 1912, said defendants authorized the American-Bank & Trust Company of Oregon and Will Wright, Superintendent of Banks, in charge of the liquidation of said American Bank & Trust Company of Oregon, to make, execute and deliver a good and proper deed of conveyance of said real estate to the plaintiff, but such deed to be so executed by said American Bank &- Trust Company and Will Wright as Superintendent of Banks, was to be held by these defendants until such time as the plaintiff might find a purchaser for said property so that upon making a sale, the plaintiff could be in a position to convey the said lands to such pur chaser, but said deed was not executed by said American Bank & Trust Company of Oregon and Will Wright, Superintendent thereof, until the 25tH day of J une, 1912, seven days after the execution of the deed by these defendants to Edith King, the purchaser of said premises, as hereinafter mentioned.
“2. That after authorizing the American Bank & Trust Company and Will Wright, Superintendent of Banks, in charge of liquidation of said bank, to execute said note of conveyance to the plaintiff, said defendants, Emma A. Smith and Mary J. Cole, together with one Thomas H. Ruddy, their attorney in fact, repeatedly called upon the plaintiff and urged him to find some one who would he willing to buy their interest in said property. And in accordance, therewith the plaintiff procured a purchaser, namely: Edith King, who was willing to pay said defendants the sum of $2,000 for all their right, title and interest in and to said premises, subject to the mortgage thereon. That after finding said purchaser the plaintiff discovered that these defendants had not conveyed the property belonging to them and described in said mortgage to said American Bank & Trust Company, and informed the defendants that in addition to the deed so authorized by them to he made by the American Bank & Trust Company of Oregon and Will Wright, Superintendent of Banks, in charge of liquidation of said Bank, the said Edith King would require a deed of conveyance direct to her from these defendants, and in accordance therewith and with a full knowledge of all the facts and circumstances and with the advice of their attorney, Thomas H. Ruddy, said defendants on the 18th day of June, 1912, executed and delivered to said Edith King their deed of conveyance of said property, conveying to her all their right, title and interest in and to said property and every part thereof for the consideration of $2,000, which was then and there paid to them by the said Edith King.”
Thereafter a trial was had, resulting in a decree of which the following is a part:
“The above-entitled canse having been heretofore regularly tried, and the court having made and filed its Findings of Fact and Conclusions of Law, Now therefore on motion of Geo. D. Young, attorney for Emma A. Smith and Mary J. Cole, defendants, and cross-complaints, it is ordered, adjudged and decreed, as follows: * *
“4. That the deed made by Emma A. Smith, Mary J. Cole and Chester Cole on the 18th day of June, 1912, to defendant Edith King, now Edith Richardson, which deed on the 19th day of June, 1912, was recorded in Book 590 at page 144, Records of Deeds of Multnomah County, be and the same is hereby set aside, and
“It is further ordered, adjudged and decreed that the plaintiff and the defendant Edith Richardson convey to the said Emma A. Smith and Mary J. Cole, all right, title and interest conveyed to plaintiff by the said American Bank & Trust Company, and by plaintiff conveyed to defendant Edith King, and also all right, title and interest conveyed to defendant Edith Richardson, and also all right, title and interest conveyed to plaintiff conveyed to defendant Edith King, and also all right, title and interest conveyed to defendant Edith Richardson, by a deed made on June 18, 1912, when the said Emma A. Smith and Mary J. Cole shall pay to the plaintiff herein the sum of $2,000 with interest thereon at 6 per cent from the 18th day of June, 1912, provided the said Emma A. Smith and Mary J. Cole shall make payment of said sum of $2,000 and interest to the plaintiff within fifty days from date of this decree.
“5. That Emma A. Smith and Mary J. Cole are the owners of the land described as follows:
“Beginning at a stone 1320 feet West of the Northeast comer of Section 2, Township 1 South of Range 3 East of the Willamette Meridian; thence South 1870.5 feet to a stone; thence West 455 feet to an iron pipe; thence South 324.7 feet to a stone; thence West 1442.8 feet to an iron pipe; thence North 2190.9 feet to an iron pipe on Base Line; thence East 1869.0 feet along Base Line to the place of beginning, containing 91.8 acres, situate and being in the County of Multnomah, State of Oregon; and that defendant, Edith King, is not the owner of said real estate or any part thereof.
“It is further ordered, adjudged and decreed that the ownership of said land is vested in said Emma A. Smith and Mary J. Cole subject to a mortgage made to Lucy A. Lumsden to secure the sum of $10,000.00 with interest at eight per cent from the 7th day of December, 1910, and the taxes on said premises for the year 1911, to the amount of $147.80 -with interest thereon from the 15th day of June, 1912, and subject to the payment of $2,000.00 and interest thereon at six per cent from the 18th day of June, 1912; that said sums of $10,000.00 and interest, $147.80 and interest, and $2,000.00 and interest are payable to the plaintiff herein.
“6. That the said Emma A. Smith and Mary J. Cole shall pay to the plaintiff the sum of $2,000.00 with interest thereon from the 18th day of June, 1912, and shall make said payment within fifty days from the date of this decree, and
“It is further ordered, adjudged and decreed that if the said Emma A. Smith and Mary J. Cole shall fail or neglect to make payment of said sum of $2,000.00 and interest within the time above provided, then the same shall be and hereby is decreed to be a lien upon the following-described real estate, to wit: Beginning at a stone 1320 feet West of the Northeast comer of •'Section 2, Township 1 South of Range 3 East of the Willamette Meridian; thence South 1870.5 feet to a stone; thence South 324.7 feet to a stone; thence West ■1442.8 feet to an iron pipe; thence North 2190.9 feet to an iron pipe on Base Line; thence East 1869.6 feet álong Base Line to the place of beginning, containing 91.8 acres, situate and being in the County of Multnomah, State of Oregon, and said lien is hereby decreed to be subject only to the lien of said mortgage for $10,000.00 and interest, said sum of $147.80 and interest, ánd to the contract rights of the defendants William Hull, Cedric McIntyre, P. Beckler, H. E. Werner, E. W. • Moore and A. A. Graham, and
“It is further ordered, adjudged and decreed that if the said Emma A. Smith and Mary J. Cole shall fail or neglect to pay said $2,000.00 and interest within-the time provided in this decree then the plaintiff may he, and shall be entitled to a decree, foreclosing said lien for $2,000.00 and interest, and that the said sum shall be paid to the plaintiff out of the proceeds of the sale of said premises after the payment of the $10,000.00 mortgage and the taxes aforesaid. * *
“10. That the plaintiff have and recover judgment . against the defendants Emma A. Smith, Mary J. Cole and Chester Cole for the sum of $10,000.00 with interest thereon at eight per cent from the 7th day of December, 1910, and for the further sum of $147.00 for taxes with interest thereon from the 15th day of J une, 1912, and that the mortgage made by said Emma A. Smith, Mary J. Cole and Chester Cole to Lucy A. Lumsden be foreclosed, and that the premises described in said mortgage, to wit: Beginning at a stone 1320 feet West of the Northeast corner of Section 2, Township 1 South of Range 3 East of the Willamette Meridian ; thence South 1870.5 feet to a stone; thence West 455 feet to a stone; thence West 1442.8 feet to an iron pipe; thence North 2190.9 feet to an iron pipe on Base Line; thence East 1869.6 feet along Base Line to the place of beginning, containing 91.8 acres, situate and being in the County of Multnomah, State of Oregon, be sold to satisfy the said sum of $10,000.00 and $147.80 with interest, as aforesaid, and
“It is further ordered, adjudged and decreed that the plaintiff is not entitled to issue execution upon this decree until after the expiration of fifty days from the date of this decree, the same being the number of days fixed within which said Emma A. Smith and Mary J. Cole shall pay to the plaintiff said sum of $2,000.00 with interest from June 18,1912.
“12. It is further ordered and decreed, that plaintiff do not recover costs or disbursements of or from defendants or any of them, and that defendants and cross-complainants do not recover costs and disbursements from plaintiff or defendant Edith Richardson, and that no costs or disbursements be awarded to any party to this suit. ’ ’
Thereafter, on October 6, 1915, these plaintiffs, who were defendants in the foreclosure proceedings, began this suit by filing their complaint in which it is alleged that in December, 1910, they mortgaged certain real property which is described, to Lucy A. Lumsden, to secure the payment of a promissory note for the sum of $10,000; that the equity and interest of plaintiffs in the property was and is worth $18,000 over and above all encumbrances and adverse claims thereto. It is then alleged that in the month of February, 1912, plaintiffs employed the defendants to secure for them a new loan of $15,000 in order to pay off the Lumsden debt; that defendants accepted the employment, and undertook, as the agents and attorneys of plaintiffs to attend to the matter and to charge a reasonable price for their services; that thereafter, between February, 1912, and June 18, 1912, defendants conspired together to cheat and defraud plaintiffs,' by purchasing the Lumsden mortgage for their own benefit and foreclosing it, and pretending that the foreclosure was a step in the process of negotiating the new loan of $15,000, and by preventing a redemption from foreclosure sale, secure a sheriff’s deed and dispose of the same for their own benefit; that on July 15, 1912, in violation of their duty as attorneys and agents of plaintiffs, they purchased the Lumsden note and mortgage, without informing plaintiffs of such action, and never informed plaintiffs that they were the owners thereof, or had any interest therein adverse to plaintiffs; that on June 15, 1912, they informed plaintiffs that it was necessary for plaintiffs to convey their title and interest in the premises to some one person for the purpose of clearing the title and that their rights would thereby be protected and it would render it possible to negotiate the new loan; that relying upon such representations, they conveyed the premises to Edith King, now Edith Richardson, wife of defendant ¥m.. P. Richardson; that at or about the time of said conveyances, and the purchase of the Lumsden mortgage by defendants, the latter began a suit to foreclose such mortgage, and on July 18,1912, plaintiffs were served with sunimons- and complaint therein, at the office of defendants, who at that time represented to them that the foreclosure was merely a matter of form which was necessary in order to procure the new loan, and at the same time paid to plaintiffs the sum of $2,000, representing that it was a part of the new loan and that the remainder of such loan would be accounted for to plaintiffs after paying off the Lumsden mortgage, taxes, interest, and expenses. It is then averred that all of these representations were false and fraudulent, in that it was not necessary to the negotiation of a new loan that the conveyances mentioned should have been made, and the foreclosure of the mortgage was not begun in order to clear the title, or to assist in making a new loan, but that such foreclosure was had' as a part of the conspiracy to. secure plaintiffs’ equity in the property. These allegations are followed by the further averments that in the foreclosure suit it was found and adjudged that the defendants were acting as attorneys for the plaintiffs at the time of the purchase of the mortgage and the institution of the foreclosure suit, and that defendants acted in bad faith toward plaintiffs therein, and it was adjudged that on account of defendants’ fraud and deception' they were not entitled to recover attorney’s fees or costs, but that they were entitled to recover the actual amount expended by them in the purchase of the mortgage, together with the $2,000 advanced by them to the plaintiffs.
The findings of fact, conclusions of law, decree, and the answer and cross-complaint in the foreclosure proceeding are attached to the complaint herein and made a part thereof. After the above-mentioned recitals we find the following allegations:
“That after the entry of said decree and during the period of redemption, the plaintiffs undertook to redeem said premises from said foreclosure sale, and for that purpose procured a number of persons who were ready, able and willing to redeem said premises and furnish the necessary money to the plaintiffs to make said redemption and the plaintiffs would have made said redemption and could have made said redemption but were prevented from so doing by the repeated and continued misrepresentations and deceit of the defendants, pursuant to said plan of the defendants hereinbefore referred to, which misrepresentations and deceit on the part of the defendants are as follows :
“That the defendants falsely, during said period of redemption, stated to these plaintiffs and to other persons hereinafter named and to other persons not hereinafter named, whose names are to these plaintiffs unknown but as plaintiffs have been informed and believe, to wit: That said premises- were involved in litigation, and that said premises were not worth more than was due to the defendants; that a redemption could not safely be made because other persons besides these plaintiffs claimed to be the owners of certain equities and interests which it was impossible to determine; that the title was involved in doubt and uncertainty; that the reputation of the defendants had been injured .in said foreclosure suit and the defendants would not permit the plaintiffs to redeem said premises without paying a large amount of money by way of damages to the defendants in addition to the money required to redeem said premises, and if a redemption were attempted to be made by the plaintiffs the defendants threatened to appeal or to involve said title and said premises in further litigation so that no redemption could be made; that the defendants had procured all the rights and title of plaintiffs and had settled with the defendants and there was no redemption to be made; which said statements were false and were made fraudulently by the defendants, but were believed by the persons to whom they were made and the defendants thereby dissuaded said persons from furnishing the money with which to redeem and prevented these plaintiffs from making said redemption.
“That said misrepresentations were made to these plaintiffs and to Dorr E. Keasey, E. E. Moore, William Hull, J. G. Hamilton, E. A. Lundberg, L. E. Palmer, a Mr. Thomas, a Mr. Cleveland, and a Mr. Young, whose full names are unknown to plaintiffs, and to others whose names are not known to plaintiffs; some of said false statements being made to some of said persons and others to others of said persons.
“That said misrepresentations were made orally at the office of the defendants in the Board of Trade Building in Portland, Oregon, so far as plaintiffs are now informed, at various days and times between the date of said decree and April 9,1914. Said misrepresentations were made in the presence of these plaintiffs and of the persons above named, and to others not known by plaintiffs'.”
There are also recitals of the issuance of the sheriff’s deed, the subsequent transfer of title to one Beid, a demand for the payment of $18,000, as the excess value of the property over the amount of defendants’ interest therein, followed by a prayer for an accounting. To this complaint defendants filed a demurrer upon these grounds:
“1. That said complaint does not state facts sufficient to constitute a cause of suit.
‘ ‘ 2. That the court is a court of equity and has no jurisdiction of the subject matter thereof.
“3. That there is an improper joinder of causes in that there is an attempt to allege on the one hand a cause of suit, and upon the other hand a cause of action for alleged slander of title.”
This demurrer was overruled, and defendants answered denying all of the allegations of fraud and deceit and alleging affirmatively that prior to any transactions between plaintiffs and defendants, plaintiffs had disposed of a great many lots or parcels of the land under contracts of sale, and upon deferred or installment payments, the rights under which were subordinate to the Lumsden mortgage, but paramount to plaintiffs ’ rights that the equity of the plaintiffs at that time had small market value and they were eager to sell it for $2,000, and that it-was then distinctly understood that defendants’ payment of $2,000 for the legal title was dependent upon their securing and foreclosing the Lumsden mortgage, since in no other way could a valid and valu- ■ able title be obtained. The proceedings in the foreclosure suit are admitted as alleged in the complaint. The answer concludes as follows:
“In this connection these defendants further aver and allege, that the decision of the court in said cause was announced October 28th, 1912; that for the purpose of giving the plaintiffs in said suit every opportunity to make redemption of the premises from the foreclosure sale adjudged by the decree aforesaid, the Findings of Fact and Conclusions of Law, and the decree in said foreclosure suit was not signed and entered until January 3d, 1913; and by the terms of said decree executed thereon was stayed for a period of 50 days after the entry thereof. The decree not having been satisfied by the plaintiffs in this suit prior to the time fixed when execution might issue, execution was duly issued upon said decree, and under and by virtue of said decree, and the execution issued thereon, and on or about the 31st day of March, 1913, the said premises were duly and regularly sold, to satisfy the amount due upon the aforesaid mortgage, interest and costs, and conformably to the requirements of said decree; and the said sale having been dnly reported to the Court, on or about April 8th, 1913, the said foreclosure sale was duly and regularly confirmed by the court; that á sheriff’s certificate of sale was duly and regularly issued; that the defendants became the purchasers of said foreclosure sale as by law, and the said decree, they were authorized so to do. That no redemption was made by the plaintiffs, or by anyone in their behalf, and no offer, effort or attempt to redeem was ma.de by the plaintiffs, or anyone in their behalf, so far as these defendants were ever advised; that the period allowed by law for redemption having expired, a sheriff’s deed, as by law provided, was issued to these defendants.”
A reply having been filed, a trial was had., resulting in a decree for defendants, from which plaintiffs appeal.
Aeeirmed.
For appellants there was a brief and an oral argument by Mr. Frederic H. Whitfield.
For respondents there was a brief over the names of Mr. M. H. Clark, Mr. A. E. Clark and Mr. C. A. Johns, with an oral argument by Mr. M. H. Clark.

Opinion:
BENSON, J.
We are clearly of the opinion that the demurrer to the complaint should have been sustained. A comparison of the complaint herein with the cross-complaint of these plaintiffs as defendants in the foreclosure suit, discloses at a glance that the facts upon which they relied in the former proceeding are practically identical with those upon which they base their claim for relief herein. The former case was a suit in equity, wherein they called upon the court to make a decree in which should be adjudicated between themselves and the defendants, all of the questions and controversies growing out of the same trans actions which they now set out in their initial pleading. At the conclusion of the trial of that contest, they, by their counsel, moved the court for the decree which they obtained. That decree establishes the ownership in the defendant Bichardson of the Lumsden mortgage, not as a trustee for these plaintiffs, but as the absolute owner. It further determines his right to a repayment of the $2,000 which he had paid to plaintiffs, and also awards him the process of the court for the collection of these claims by ordering an execution and sale thereon.
Not a single act is alleged as occurring after the trial of the foreclosure suit, except the alleged conduct of the defendants in slandering the title to the real property, and thereby preventing a redemption. As to this phase of the case it may be said that the plaintiffs expressly disclaim any effort or intent to proceed herein as for slander of title, and if it were otherwise, the allegations in relation thereto are wholly insufficient to justify any recovery upon that theory.
The law is well settled that a judgment or decree rendered upon the merits is a bar to a subsequent action or suit between the same parties upon the same claim, as to every matter that was or might have been litigated in the action in which it was obtained: Colgan v. Farmers & Mechanics' Bank, 69 Or. 357 (138 Pac. 1070), and cases there cited.
Appellant urges the consideration of many authorities upon the subject of an attorney's duty to employ the utmost good faith in his dealings with a client's property, but that subject is not before us.
We have read the evidence in this case with great care, but see no necessity for discussing it, further than to say that if the testimony of the plaintiffs themselves, in cross-examination, had been before the court in the trial of the foreclosure suit, it could never have found that defendants had been guilty of any bad faith.
The decree of the lower court is affirmed.
Affirmed.
McBride, C. J., and Burnett and Harris, JJ., concur.