Case Name: BROWN v. BRYAN
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 1898-01-24
Citations: 6 Idaho 1
Docket Number: 
Parties: BROWN v. BRYAN.
Judges: Huston and Sullivan, JJ., concur.
Reporter: Idaho Reports
Volume: 6
Pages: 1–21

Head Matter:
(January 24, 1898.)
BROWN v. BRYAN.
[51 Pac. 995.]
Trust Deed a Mortgage Under Statutes op Idaho. — A trust deed executed to secure a given debt, payable at a specified time, upon real estate, is, under the statutes of Idaho, a mortgage,’ and cannot be foreclosed by notice and sale, under a power of sale in such trust deed; and such trust deed can only be foreclosed by judicial sale, pursuant to decree rendered in an action brought therefor in the proper court.
(Syllabus by the court.)
APPEAL from District Court, Blaine County.
Brown & Henderson, for Appellant.
If a deed absolute upon its face be in truth a mortgage, the title still remains in the mortgagor; no right of possession is .given the mortgagee under such a deed — it still is a Ren. (Kelley v. Leachman, 3 Idaho, 392, 29 Pae. 849.) The statutes •of Idaho not only provide that there shall be no other method ■of foreclosure, except that in a court, and the decree of a court (section 4520), but also provide that any contract for forfeiture ■of property subject to a Ren in satisfaction of a- debt secured thereby, and any contract in restraint of the right of a redemption form a Ren, are void (section 3334)’. A deed of trust to secure the payment of indebtedness is a mortgage in nearly all the states, whatever the ruling of the state may be as to power of ■sale. (SMUaber v. llobvnson, 97 U. S. 68; (argument of Dil- Ion, J.); 2 Am. Law. Reg., N. S., 648-650, and cases cited; Eaton v. Whiting, 3 Piclc. 484; Dubuque Banlc v. Weed,, 57 Fed. 513; Pichett v. Forbes, 36 Fed. 514; Union Banlc v. Kansas City Bank, 136 U. S. 223, 10 Sup. Ct. Rep. 1013; Dupee v. Bose, 10 Utah, 305, 311, 37 Pac. 567; disapproving Koch v. Briggs, 14 Cal. 257, 73 Am. Dec. 651.) Where states have provided a statutory foreclosure, as the method of exercising the power, such statute excludes all other forms — excludes private sales, and the statute must be strictly followed and the power can only be exercised in statutory manner. (Shillaber v. Robinson, 97 U. S. 68; Grover v. Fox, 36 Mich. 461; Lee v. Mason, 10 Mich. 403; Sanford v. Flint, 24 Mich. 26; Mowry v. San-born, 68 N. Y. 160; McDonald v. Kellogg, 30'Kan. 170, 2 Pac. 507.) In many other states they have held that any contract contained in the same instrument by which the money is borrowed to shorten or change or diminish or abolish the equity of redemption, is absolutely null and void. (Lawrence v. Trust Co., 13 N.Y. 200; Ingle v. Culberson, 43 Iowa, 265; Woodruff v. Robb, 19 Ohio, 216; Waters v. Randall, 6 Met. 479, 484; Pugh v. Davis, 96 U. S. 337; Jackson v. Lawrence, 117 U. S. 681, 6 Sup. Ct. Rep. 915.)
Kingsbury & Parsons and Johnson & Johnson, for Respondents.
On the presentation of this cause, upon the former hearing, no argument was made by plaintiff’s counsel upon the question of the right to foreclose at trustee’s sale. It seemed to be taken for granted by both parties that the decision of the supreme court of the United States in the case of Bell Silver etc. Min. Co. v. First Nat. Bank, 156 U. S. 470, 15 Sup. Ct. Rep. 440, and the decisions in adjoining states, whose statutes governing the question are identical with ours, settled the question. The California court, in Bateman v. Burr, 57 Cal. 483, says: “The instrument annexed to the complaint and marked exhibit fD’ is a deed of trust which authorizes the trustees therein named to sell and convey the lands described, upon default in the payment of the note or interest, and it is not a mortgage requiring judicial foreclosure.” (Koch v. Briggs, 14 Cal. 256, 73 Am. Dec. 651; Fogarty v. Sawyer, 17 Cal. 589.)
For some year» prior to September 22, 1888, George W. Yen-able, George Y. Bryan, and George H. Boberts bad been mining' partners, each owning one-third in the Bed Elephant and other mining properties, described in the complaint. On the said date the partners met and effected a settlement of previous accounts, which had been kept in such a manner that it was difficult to tell how much each had advanced, each had drawn, and how much each was debtor or creditor of the firm. This settlement culminated in the following agreement, to wit:
“Whereas, the undersigned, George H. Boberts, George Y. Bryan, and George W. Venable, are mining partners and working the Bed Elephant group of mines, in Mineral Hill mining district, in Alturas county, Idaho territor}^ and have been so working said mine for some time past; and whereas, for the purpose of carrying on the work of said mine, and the payment of the debts of said partnership, said George W. Venable has advanced to said company, on May 1, A. D. 1888, the sum of five thousand ($5,000) dollars, bearing interest at the rate of six per cent per annum: Bow, in consideration of the premises, it is mutually agreed, by and between said parties, that the said George W. Venable shall be paid out of the first proceeds of said mine the sum of $5,000, with the interest as aforesaid, and the same shall be sc paid him as the same accrues. And the said Bryan and Boberts hereby transfer and assign to said Venable the proceeds of said mine until the said $5,000, and interese shall be fully paid. And it is further agreed on the part of said Venable that said Boberts and Bryan shall each have the-right to draw from the proceeds of said mine $200 per month;, until a further agreement is made by and between the parties hereto. And it is further agreed that the said Boberts shall, at this time, draw the sum of $500, the same to be on account of said $200 per month, he to receipt for the same as such; such amounts, to be so drawn by said Bryan and Boberts, to be charged to them against their respective interest in said mines. It is further understood and agreed that, after the said sum of $5,000 shall have been fully paid and liquidated, the proceeds of said mines, after deducting the monthly dividend to be paid to said Bryan and Boberts as herein provided, shall be placed in a fund for the purpose of the future operation of said mines, to be used for tbe erection of machinery or otherwise, as the said parties may agree. And it is understood and agreed, by and between the parties hereto, in adjustment of the several amounts due from the partnership to the several members thereof, that there is due George W. Venable, in addition to the said sum of $5,000 above mentioned, the sum of $5,664.18, moneys advanced by him for the use of said partnership, and it is agreed that the same shall bear interest at the rate of six per cent per .annum from November 1, 1887; and that there is due George H. Boberts from said partnership, for moneys advanced by him for the use of said partnership, the sum of fifteen hundred dollars ($1,500) dollars, which it is agreed shall bear interest at the rate of six per cent per annum from November 1, 1887. .And this arrangement and agreement shall be in full adjustment and settlement of all past accounts between said parties, and shall form the basis of new accounts from this date forward. In witness whereof the said parties have hereunto set their hands this twenty-second day of September, A. D. 1888.
(Signed) “GEO. H. ROBERTS.
(Signed) “GEO. W. VENABLE.
(Signed) “GEO. V. BRYAN.
“Witness: (Signed) LYTTLEON PRICE.”
It will be seen, by the terms of this agreement, that the claim of $5,000, which is admitted to be what is termed the “Stevenson claim,” was to be paid out of the first proceeds of the mine. After this amount was settled, it was agreed that Roberts and Bryan were each to receive $200 per month, until a further agreement is made between the parties; and after the said sum of $5,000 was paid, and after deducting the monthly dividends to be paid to said Bryan and Roberts, the proceeds of the mine were to be placed in a fund for the future operation of said mines. It was also agreed that there was due the said mining partners as follows: To George W. Venable the sum of $5,664.18, and to George H. Roberts the sum of $1,500; both of which sums were to bear interest at the rate of six per cent per s-nnnm from November 1, 1887. This agreement is dated September 22, 1888. The said mine, or a portion thereof, was then, on the 24th of September, 1888, leased to George V. Bryan aforesaid. On the twenty-fifth day of January, 1889, the said George H. Eoberts gave a trust deed to Frank Taylor, of Hailey, Idaho, for the benefit of the First National Bank of Hailey, party of the third part, to secure the payment of the sum of $1,500 on the twenty-fifth day of July, 1889, upon the following property, to wit: The Eed Elephant lode, the Queen Fraction lode, the Caledonia lode, the O. K. claim, and the Eed Elephant, Central, Queen Fraction, and Caledonia mill sites, describing the same. Said trust deed contained a power of sale, which authorized the holder of said trust deed and promissory note given said hank for said money, in case of default of payment of the same, to sell said property at public sale, after advertising the said sale by publishing the time and place of the same, with description of the property, for three weeks, in some newspaper published in the county where said property is situated, and authorizing the holder of said note, or his assigns or agent, to become the purchaser of said property. On the twentieth day of July, 1889, the First National Bank of Hailey sold and transferred all its interest in said note and trust deed to J. H. Moore, of the city of New York. The said Moore was the agent of the said George W. Venable; acted for and was his agent in the purchase of said note and trust deed, and all his subsequent proceedings with relation thereto; and from first to last acted under the direction of the said Venable in all things, and had no personal interest in said trust deed, nor in the purchase of the property therein described. On the seventeenth day of August, 1889, the trustee, Frank Taylor, after giving notice as required by the terms of said deed, exposed for sale and sold, at public auction, the property therein described, and now in controversy in this cause, to J. H. Moore, who was, in all the proceedings, the agent of George W. Venable, as aforesaid; and the said Frank Taylor conveyed to said Moore, on the twenty-sixth day of August, 1889, the said property. The sale.of the mining property under trust deed was attended by W. H. Watt, who was also the agent of G. W. Venable, and under Venable’s instruction, purchased the property for Venable in the name of Moore, and his fee of $100 for his service was charged to the Bed Elephant Mining Company — that is, the partnership of G. V. Bryan, G. W. Venable, and G. H. Roberts, mining partners, in the same property — and said fee was paid by G. V. Bryan by check, signing himself as ^Supt.,” meaning superintendent of said Bed Elephant Mining Company. In March, 1889, a short time before G. W. Venable purchased the trust deed from the First National Bank, Venable testifies that he received $1,550 from the Bed Elephant Company — that is, from Bryan, Venable, and Roberts (sent him by said G. V. Bryan) — which he credited to the company on his books. The prrrehase of the trust deed was made by Venable through his said agent, Moore, from the First National Bank of Hailey, on July 30, 1889. On June 39, 1889, the said.G. W. Venable charged the Bed Elephant Company with $1,000; and July 37th, seven days after purchase of trust deed, said Venable charged said company with $558.35, being in all $1,558.35, the amount Venable paid for the trust deed against Roberts. The evidence further shows that, by direction of Venable, Moore transferred the interest so acquired from Roberts to himself and G. V. Bryan. On the thirteenth day of February, 1890, the plaintiff in this case, having before that acquired from said Boberts all his interest in the said Bed Elephant Mining Company’s property, tendered to Frank Taylor, trustee as aforesaid, the sum of $1,900, being amount due on said .trust deed, with interest, and all costs and expenses attending the execution of said trust, and demanded a deed from said Taylor of the said Bed Elephant Company’s mining property. This tender was made for the purpose of redeeming said property from the sale made on the seventeenth day of August, 1889.

Opinion:
MORGAN, C. J.
(After Stating the Facts). — In the view we take of this case, there is no necessity of determining whether the trust deed given to the First National Bank of Hailey can be foreclosed by notice and sale, as was done in this case, or whether it must be foreclosed by suit, as seems to be required by sections 4530 and 4533 of the Revised Laws of Idaho. I may say, however, that this court has repeatedly decided that a deed absolute on its face, and a contemporaneous contract foi reconveyance upon payment of amount due grantee — that is, an article of defeasance — although, in a separate paper, constituted a mortgage, and must be foreclosed, as by section 4520 et seq. is required. (First Nat. Bank v. Williams, 2 Idaho, 670, 23 Pac. 552; Kelley v. Leachman, 3 Idaho, 392, 29 Pac. 849, and eases there cited; Wilson v. Thompson, 4 Idaho, 678, 43 Pac. 557.) If a deed absolute, with a contract of defeasance on a separate paper, is a mortgage, upon what ground can it be said that a trust deed, which repeatedly recites that it is given to secure an indebtedness, with a clause of defeasance in the instrument itself, is not a mortgage? Notwithstanding the authorities that are and may be cited to sustain the contrary doctrine, I am constrained to say that this court cannot be a party to setting aside a plain and positive statute by judicial decision. Considerable space in the brief of respondent is occupied in showing, by argument and authority, that one member of a mining partnership may buy out the interest of his copart-ner in the property with his own money, and hold, retain, and cwn it in his own right, and the mining partnership continue in ihe management and working of the mine. There can be no doubt of the correctness of this proposition. This court has so decided, substantially, in the case of Hawkins v. Mining Go., 3 Idaho, 241, 28 Pac. 433; but to claim that, therefore, one partner has the right to use the partnership funds on his own motion, without authority of the other partners, to purchase an outstanding mortgage or trust deed given by his copartner upon the mining propertjq cause it to be foreclosed by notice and sale, to be bid in in the name of his agent, and then transferred to himself or to himself and another partner, and thereby obtain title in himself, is a non sequitur.
On September 22, 1888, Roberts, Venable, and Bryan agree, inter alia, that Roberts shall be paid $200 per month until the parties otherwise agree. In April, 1889, Venable, defendant herein, ordered Bryan to cease paying Roberts the $200 per month, which was accordingly done. Each of the parties, Bryan, Roberts and Venable, owned one-third interest in the property. Therefore each had equal authority in the management of the mine and its proceeds. Venable had no more authority to stop this payment, without agreement of the others, than Boberts alone would have had to order its beginning. (Hawkins v. Mining Co., supra.) That he was a larger creditor of the partnership than was Boberts gave him no more authority, in the absence of legal proceedings, than Boberts. The money due Boberts then accumulated until the purchase of this trust deed, which was July 20, 1889. On March 18, 1889, by direction of "Venable (as shown by the books kept by Venable with the mining partnership), the sum of $1,500 was sent to him from the proceeds of the mine. This was after the Stevenson indebtedness had been paid in full. Boberts then had as much right to direct Bryan to pay this money to him as had Venable to require it to be paid to himself. If it had been paid to Boberts, he could have taken up the trust deed. On June 20, 1889, Venable used this money to buy up the Boberts deed. At least, Venable charges the firm, Boberts, Bryan and Venable, with the money used to buy the trust deed. The account kept by Venable's bookkeeper, by direction of Venable, and the latter's testimony, shows it was so charged — $1,000 on June 29 and $558 on July 27, 1889. The mine then purchased the trust deed against Boberts, and the latter had as much right to control the funds of partnership as Venable. In our opinion, the funds of the partnership having purchased the trust deed, the title is held in trust for the benefit of Boberts or his grantee. Venable then directed Moore to foreclose the trust deed by notice and sale, bid the property in, and afterward transfer it to himself and George V. Bryan, the mining partner; all of which with all due diligence, Moore obediently did. That the purchase of the trust deed was made with the money of the firm, and afterward foreclosed in the interest of Venable and by his direction, was apparently concealed from Boberts until the transaction was fully completed. Now this court is asked to approve of this method of acquiring the property of the mining partner. The court cannot be made a party to such proceeding. This court holds that, upon the showing made, the transfer to Bryan and Venable, respondents, of the mining property described in said deed, should be set aside and held for naught, and the interest therein attempted to be conveyed be decreed to be the property of the plaintiff herein.
(Jan. 24, 1898.)
The only question submitted to this court by the appellant is, "Can one partner take the funds of the partnership, go out and buy a deed of trust of the interest of his copartner, foreclose it secretly, bid it in, and hold title to the whole?" This question is sufficiently answered in the opinion. The order of the court below, overruling plaintiff's motion for new trial, is reversed, and a new trial ordered upon the issues formed by the pleadings, costs awarded to appellant.
Huston and Sullivan, JJ., concur.