Opinion ID: 873211
Heading Depth: 2
Heading Rank: 3

Heading: Purchase and Use of the Ski Cabin

Text: In June 1993 the Browns negotiated the purchase of the Ski Cabin from Gilbert Jensen. Brown paid Jensen a $5,000 earnest-money deposit. After the parties agreed on the terms of the sale, Jensen conveyed undivided one-half interests in the cabin to two trusts, the Gilbert Willard Jensen Trust and the Myrna Merrill Jensen Trust (the Jensen Trusts). Each of the Jensen Trusts then -3- conveyed its one-half interest in the cabin to Tingey, as trustee for the Family Trust. To pay for the cabin, Brown supplied personal funds via a cashier’s check payable to the title company to cover the down payment of approximately $72,000. Brown also executed a $200,000 promissory note in favor of the Jensen Trusts, on which he was the sole obligor. As security for the note, he executed a trust deed to the cabin, naming the Jensen Trusts as beneficiaries and himself as the trustor. The trust deed was recorded on June 23, 1993. Brown also executed a security agreement for two pieces of collateral: (1) a Thiokol Snowcat (a snowplowing implement) and (2) a share of stock in the Silver Lake Company. The share of stock represented the water rights to the cabin; Jensen had prepared a stock certificate in Brown’s name at the time of the sale. Jensen valued the share at $50,000, and said that lots without water rights were not marketable. Also, the closing statements, bill of sale, and seller’s escrow instructions all reflected that the Jensen Trusts were the sellers and Brown was the buyer of the cabin. Soon after the closing, a replacement promissory note bearing the date of the closing (June 22, 1993) was executed, naming as obligors both Brown and Tingey, in his capacity as trustee for the Family Trust. A replacement trust deed was also executed, naming as trustors both Brown and Tingey, again in his capacity as trustee. After the 1993 purchase the Browns promptly began using the Ski Cabin. They performed maintenance work and paid the utility bills and premiums on an -4- insurance policy for the cabin issued in Brown’s name. Tingey performed no maintenance on the cabin. And the Browns used the cabin without Tingey’s permission or supervision. Indeed, the district court found that “Tingey knew little or nothing about how the Browns used the [Ski Cabin].” Aplt. App. at 149 (Findings of Fact & Mem. Op. at 19, United States v. Brown, Nos. 2:07-cv-00810BSJ & 2:07-cv-00127 BSJ (D. Utah Oct. 11, 2011) (Mem. Op.). In 2005 Brown leased the cabin to his friend, Charles Jorgensen, and Brown instructed him to pay “rent” directly to the Jensen Trusts to cover the payments on the note. Tingey knew nothing of this transaction. In addition to payments from Jorgensen, payments on the note came from various sources and in various amounts. The district court found that many payments came from sources closely connected to Brown, including payments directly from the Browns, 2 the Brighton Factor Dealers (Brown’s business), a law firm representing Brown, and a company that employed Brown. Other payments came from the Wrenhaven Trust, another trust for which Tingey served as the trustee and to which Brown contributed the assets. Ultimately, Brown’s brother James purchased the Jensen Trusts’ remaining interest in the cabin in late 2007 and foreclosed on the trust deed. The Family 2 Although Mr. Jensen, referring to a payment log that he prepared, testified that some payments came from the Browns, he was not more precise about the names on the accounts on which the payment checks were written. -5- Trust’s interest in the foreclosure sale proceeds was $154,236.02, which has been deposited in the district court’s registry.