Court Opinion

ID: 6900482
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:54:27.301343+00
Date Added: 2024-06-11T16:06:09.266197
License: Public Domain

Decided 31 December, 1907.
On Motion von Rehearing.
Opinion by
Mr. Commissioner King.
8. Respondents, in their petition for rehearing, contend that we were in error in the statement in our former opinion to the effect that the signatures to the eight promissory notes, made payable to the order of C. B. Wade, trustee, were procured, and notes delivered, after he received the Teal note and mortgages duly assigned to him. It is true that the assignment of the *556Teal instruments, as well as of the new notes, are dated June 29, 1898, and the written agreement between Wade and appellants is dated the day following; and, while the $28,000 draft may have been forwarded to Teal by the Pendleton Savings Bank on July 1st, the money was actually paid to the bank for that purpose, and assignment of note and mortgages recorded, June 30, 1898. It is evident that respondents’ counsel make no distinction between the dates as they appear on the instruments in evidence and the actual time when the various steps were taken, and that they overlook the governing feature that the various transactions, although requiring several days for completion, must be considered as a whole.
On these points various facts and circumstances sustain the conclusion heretofore reached, an instance of which we quote from the testimony of Norborne Berkeley as follows:
“Q. At the time this transaction was made, in what capacity, if any, were you acting for Mrs. Desplain and the other defendants ?
A. 1 was acting as their agent in handling the affairs of the Despain estate.
Q. Tell the court how it occurred.
A. We owed Mr. Teal, or rather Mr. D. P. Thompson, I think, by a note made to J. N. Teal, $28,000. I thought there was an understanding we could pay part of it off, and I wrote to Teal and asked if we could sell a ranch and apply the money, and he said, No.’ Í thought that possibly we might get the money somewhere else, and I went to Mr. Wade. The first time I asked him if he could let us have $28,000, he said: No, we haven’t got the money now, but can probably let you have it later.’ And, probably during the same week, I went back to ask him about it, and he said: Nes, I think we can get the money now, and will let you have it.’ I told him: Tf you will buy this note and hold it and allow us.to pay it off in such sums as we can, it will suit us better, as we want to sell certain ranches and apply it whenever we can.’ He was to give us a lower rate of interest. We were paying 8 per cent, and he agreed to lot us have it for 7, for which he would charge us $1,500. When Mr. Wade told me they had the money, 1 went down there, and he had some notes prepared in the bank aggregating $29,500. The understanding was the first one of the *557notes paid Avas to be the bonus note paid to get the money, and get flic concession of interest, and to lie allowed to pay the matter off as Ave Avanted to. We had been informed that Mr. Teal had sent his note and assignment of his mortgage to the Savings .Bank, so Wade informed me Avhen Ave Avent in there. We went down, and he took up the note and assignment of the mortgage, and Avhen avc got back he shoAAred me he had this note in his possession. T surrendered him the $29,500 note, or notes, with the understanding they should be kept together.
Q. Were you acting for them as agent in this transaction?
A. Yes, sir.
Q. You kneAv those notes Avere to raise that money to pay off that loan of Teal’s?
A. No, I didn’t knoAv that they really OAved the money before he got the notes ; that is, he had the Teal assignment and Teal note before the notes were delivered to him.
Q. You say he had the money Avhen the assignment Avas delivered to him. How do you knoAV that?
A. I didn’t say he had .the money. I said he had the $28,000 note and assignment of mortgage AAr'hen the notes Avere delivered to him.”
It is argued that McLeod received his note June 29, 1898, and our attention is directed to certain testimony in support of this contention; but the answers cited do not support this theory, nor do Ave find anything in the record to that' effect. True, it is disclosed that McLeod gave a check to Wade on that date for $7,000, for Avhieh he A?as to receive a note to be executed by appellants; but he does not state that the note was turned over at that time, and it is clear, from the record, that all the money necessary for taking up the Teal note and mortgages Avas advanced to Wade, and that the Teal instruments had been assigned to and Avere held by him as trustee, when this aaris done. All of this is consistent Avith Berkeley’s statement to the effect that, AA-hcn Wade told him he had the money, the notes were then prepared, and, on learning he had the assignment of the $28,000 note and mortgages, the new notes AArere then deliA'ered to him. McLeod’s check, dated June 29th, is sliOAvn by the stamp of the bank thereon to have been cashed the folloAving day. The testimony of both McLeod and Hartman indicates that it was the *558understanding between all the parties that the new notes should be secured by an assignment of the Teal note and mortgages to Wade/'as trustee, and should be held by him in that capacity; the legal title to remain in him until the $29,500 consideration expressed in the new instruments should be paid in full, during all of which time the old note and mortgages should continue in full force and effect. By mutual consent he thereby became the holder and owner of the legal title to the indebtedness, as well as the party with whom defendants were expected to deal and to whom they were to make their, payments. The claim of $29,500 was, accordingly, represented by the various instruments in the aggregate, and, as formerly stated, was in the same position as if the contents, conditions and effect of all the new instruments and agreements had been written across or attached to the old note and securities, and made a part thereof, though the method adopted was more convenient by reason of the separate notes representing and distinguishing their respective interests, etc. It is, accordingly, immaterial whether the signatures of the new notes were secured before or after June 29th, as they were of no binding effect until the entire transaction, including the assignment of the Teal note and mortgages, became complete, which, by relation, antedates the delivery 'of the notes, and which fact respondents are es-topped to question, since the new notes, on which a decree is here sought, contained the indorsement: “This note is secured by a note of $28,000, signed by same parties, which is secured by real estate mortgages assigned to C. B. Wade, trustee.” It is conceded that this indorsement was upon these notes at the time of their delivery. In fact, it is through this indorsement that respondents maintain their rights to foreclose the Teal mortgages.
It is also necessarily conceded that the old note and mortgages remained in force at least until the new notes were executed, which being true, it follows that when the new notes were delivered the Teal note and mortgages, by reason thereof, were either paid or not paid. If not paid, they then remained in *559full force ancl effect until the entire indebtedness was liquidated, and, Nade having been made their custodian, and it having been required, as a part of t'he conditions upon which the money was advanced, that ho should hold the same for respondents; it cannot be seriously questioned but that the payments made under such circumstances were made to the party authorized to receive them, and respondents would be bound accordingly. In that event, it would become a purchase outright, concerning which respondents would necessarily be bound by Nades acts as much so as if the money advanced had been furnished without the execution and receipt of the new instruments. On the other hand, if the execution of the new notes paid the old debt, it would follow that the former note and mortgages became extinguished, and, while the new notes contain the indorsement that they are secured by the Teal instruments, yet, if paid and extinguished, this fact could be admissible only for the purpose of proving an oral agreement to execute a mortgage to secure the payment of the money advanced, or, what is its equivalent, an oral agreement to revive a mortgage that has been fully paid, to include not only the canceled claim, but an additional note of $1,500. Nil ether such agreement could be enforced in equity is not necessary to a determination of this suit. It is sufficient to observe that respondents do not seek a specific performance of such contract, nor is an issue to that effect disclosed by the pleadings.
But it appears here that the mortgages and note were duly assigned to Nade, and that Teal was paid in full by him with funds, advanced by respondents for that purpose, thereby, up to that point, making it a purchase outright. Then, as evidence of the fact that neither the mortgages nor the note were deemed canceled, it was expressly understood and agreed, and so stamped upon each note issued, that it was secured by the old note and mortgages, thus clearly indicating that each was to remain in force and effect, to he available at any time there should be a default in the payment of any portion thereof, in accordance with the terms of the new notes, which not only secured the *560interest of each of the parties advancing the money with which the Teal note and. mortgages were purchased, but contained the additional terms in reference to the interest and the time of payment granted to appellants. We thus find them retaining and using the old note and .mortgages through Wade, as holder of the legal title, with which to secure the indebtedness represented by the new instrument. The illustration given by Sturgis-’ counsel, where a party may be made a trustee by mere operation of law to protect innocent holders of negotiable instruments, is not applicable to the case at bar. The notes here involved are held by persons who, in law as well as in fact, are parties to the agreement whereby Wade was made their trustee, and where, by express agreement stamped on the notes, it is provided that the old instruments shall secure the payment thereof, and that this security was to be held by this expressly created trustee. In the one instance the trustee is created by operation of law, and, in the other, by an express and implied agreement of all concerned. The act of Wade (in his effort to perfect the deal and thereby make certain the $1,500 bonus, which he would otherwise have lost), in guaranteeing the -payment of some of the notes, is not in any manner inconsistent with his position as agent for respondents during the transaction as well as after it became complete.
9. Nor are we aware of any rule precluding an agent from guaranteeing to his principal the pa3mient of claims handled by him for such principal, especially, as in this case, where the agent was to be one of the beneficiaries in conjunction with the parties whom he was to and did represent. In this case, it appears that he was not only willing to guarantee the pajmient of some of the notes, but also consented to retain the old note and mortgage seeurhy,' and that he received moneys from time to time, all of which constituted a means of aiding and insuring the payment of not only, the full amount of money advanced, with interest, to the parties furnishing it, but his bonus as well, in proportion to the respective interests of each, thereby furnishing additional security to respondents for the mone3'- advanced by them. It is *561hardly possible, nor is it reasonable, to assume that Wade was acting in any other capacity than as their agent, or to assume that, after the transaction was completed, he was agent for appellants in reference to matters here involved, for to do so would be to accept the conclusion that respondents adopted an extremely unbusinesslike method in this instance by retaining only the new notes, and, through Wade, as appellants’ agent, permitting the payors and mortgagors to retain the mortgage security. The mere statement of this theory is sufficient for its answer.
It is also urged that there is nothing in the evidence of either of the parties indicating any agreement to the effect that the proceeds of the sale of the lands should be paid to Wade, and by him applied on the mortgage indebtedness, it being insisted that the proceeds received from the rent only could be thus considered. After a re-examination of the testimony, we find that the conclusion reached on this point in our former opinion is not only clearly deducible from the proceedings taken as a whole, but is manifest from the testimony of McLeod, as well as of Hartman, Sturgis’ agent. McLeod, after stating that Wade was to hold the old note and mortgage as security for the notes, was asked:
“Q. Did he tell you anything about having these other notes further secured by having the city rents turned over to him ?
A. I asked how he was to pay the interest on these notes. He said the rents was to come to him, and if any of the property was sold they would apply it on these notes. That is the reason he gave on or before five years after date, so they could have a chance to sell it.
Q. He also told you he would have these rents assigned to him to apply on the notes ?
A. He,said he could pay the interest because he was getting the rents.
Q. How did you get your interest payments you have on there ? How was it paid to you and by whom ?
A. He gave that credit on the back of them, and he made a memorandum of it always and held it, and always gave me credit on the back for it.
*562Q. Then yon would bring in the note, and he would indorse the amount on the back?
A. Yes, sir.”
That McLeod knew of the transactions going on, and received the benefits without objection,- is manifested by the following question propounded to him, and his answer thereto: “Did you ask him (Wade) about any releases of mortgages he had made at any time? A. He said he was releasing property.”
10. That Sturgis knew of the transactions, and with such knowledge recognized Wade as her agent and received'the benefits thereof during all of this time, clearly appears from the-various facts and circumstances disclosed by the record. For example, she authorized Wade to draw $7,000 from her bank account with which to procure the Teal note and mortgages seeming the same. Both she and McLeod understood that Wade should collect and receive the rents of the mortgaged property, that the debt should be paid in installments, and that Wade would hold the Teal mortgages as security for respondents’ notes. They were largely interested in the bank in which he was cashier and trusted him with the money. • They went to him for their payments and never approached the appellants, or any of them; and, in addition to these circumstances, Mr. Hartman, the agent of Sturgis, says:
“Q. Tell us what Mr. Wade told you about that note.
A. He said he was taking it up — this large note of Teal’s for $28,000— and wanted to handle it here at a reduced rate of interest, so that when the rents were collected, and any property sold, it could be applied on the payment of the notes in partial payments.”
Here we have the purpose made known to Hartman before the deal was consummated, which, being followed with the making of Wade trustee for all, and acceptance of the note with statement endorsed thereon, through which she, with others interested, seek this foreclosure, makes the conclusion inevitable that Sturgis, with other respondents, in law, as well as in fact, recognized Wade as her agent; and while Wade, during the transaction until its completion, was the pivot around which all the *563parties to the deal were acting, and to whom they looked for its proper consummation, his relationship with appellants, so far as the questions here involved were concerned, was at an end on its completion, and he thereafter continued as the agent of respondents only. He was made the custodian of and held the legal title to the Teal note and mortgages on which appellants, by agreement, oral and written, were bound to pay all rents and proceeds of sales to him, and in accordance therewith all payments were made to him, which acts respondents, to say the least, impliedly approved and did not question so long as they received the benefits, but seek to avoid that part of the arrangements thus made and recognized which may appear to be to their injury. It is settled that such cannot be sanctioned by courts of equity. Eespondents, under such circumstances, are estopped from questioning Wade’s authority to receive payments from defendants on this indebtedness, and that he was acting as their agent throughout the proceeding. It is too well settled to admit of serious discussion that the principal must adopt or reject the act of his agent as an entirety, and cannot receive the benefit of such agency without bearing its burdens: Coleman v. Stark, 1 Or. 116; La Grande Nat. Bank v. Blum, 27 Or. 215 (41 Pac. 659).
11. We are quoted, in effect, as saying that all oral agreements between the parties were subsequently reduced to writing. In this deduction counsel are in error; our statement being that, as a part of the transaction, an agreement was entered into concerning the collection and disbursement of rents, which was afterwards reduced to writing, being the instrument there quoted. But we neither said, nor meant to say, that all the transactions were included in the written contract, as many took place afterwards. Nor was it necessary, under the status of the parties at the time suit was brought, that the written instruments should have included all dealings between them. Lands were sold and mortgages released, and the proceeds thereof having been accepted, and the oral agreements executed and acted upon, is sufficient to take the case out of the statute of frauds. *564In fact, it is too well settled to admit of serious doubt that agreements, whether oral or partly oral only, when once executed, are binding on all parties thereto. As formerly stated, the old note, although in Wade’s possession, is treated and recognized, not as evidence merely, but as having sufficient life to continue the mortgages in force and to entitle respondents to maintain this suit for their foreclosure, but for all other purposes are treated as' extinguished, for, if available only as evidence of the existence and effect of the mortgages, it is to no purpose, as it could only tend to prove an intent to revive a canceled instrument, for which purpose it would be insufficient. In this connection it must be remembered that this is not an action on the notes, but a suit to foreclose the mortgages.
It is urged by counsel for Mrs. Sturgis that, as she did not file this suit, the statement in our former opinion to the above effect, to use counsel’s language, “has been washed away by an avalanche from the record itself.” True, she did not bring this suit, and appears only as one of the defendants; but, notwithstanding that feature, she has no interest in common with appellants, and was made a defendant only because of having an interest in the subject-matter involved, and by reason of refusing to join as one of the plaintiffs. Although a defendant, she affirmatively pleads and formally sets up her interests, and makes similar averments and seeks the same relief as the plaintiffs. From this it follows that, whether she be termed a plaintiff or defendant, or whether she joined in the filing of the suit, or subsequently saw proper to move and assert similar rights in the same manner through the same source, is immaterial, and, to say the most in favor of counsel’s contention in this respect, is what might be termed a “distinction without a difference.” The inconsistency of her position is manifest, whether we say, “for the purpose of bringing this suit,” etc., or adjust our statement to what is, in effect, counsel’s position on this point, and say, “for the purpose of seeking a decree of foreclosure in her favor she recognizes the old note as having sufficient life to entitle her to foreclose the mortgages for which she recognizes Wade *565as her trustee, but considers the note extinguished, and denies Wade’s trusteeship for any other purpose.”
The transactions shown in this ease clearly bring it within the principles announced and recognized in Coleman v. Stark, 1 Or. 116; Wills v. Wilson, 3 Or. 308; Swegle v. Wells, 7 Or. 222; La Grande Nat. Bank v. Blum, 27 Or. 215 (41 Pac. 659). And these decisions on the points here involved are in harmony with the great weight of cases in this country, many of which are cited in our former opinion. As is in effect clearly held in Swegle v. Wells, “the ordinary rules relating to commercial paper,” referred to by counsel for McLeod, cannot apply to such eases; nor can it make any difference that the verdict of the jury in that case, to which our attention is directed, was left undisturbed, as the conclusion here reached is in harmony with the result there, both as to the law and the facts under consideration.
12. Other points upon the merits are urged by counsel for respondents, but all of them, like some we have here re-éxamined, are discussed in our former opinion, and sufficient reasons are not advanced to entitle them to further consideration. Our attention, however, has been especially directed to the moneys paid to Wade by appellants, concerning which it is maintained that his receipts are insufficient to cancel the indebtedness. In this connection, our attention is called to the “Wade-Despain Trust Account,” by reason of which it is claimed that an agency is shown between Wade and defendants; that it shows a deposit to the credit of that account of $46,313.78 and a payment to the owners of the new notes of but $18,650; that this account discloses $7,000 yet due on the McLeod note, and $1,157.45 on the Sturgis' note; and that the balance of the deposits was applied in payment of interest on the notes, taxes and insurance for defendants, including moneys paid to the Berkeleys and Despains, and in the cancellation of a certain note and mortgage on defendants’ property in Union County, showing disbursements from this fund of $1,501 more than received. The fallacy in this contention lies in assuming that appellants are bound by everything shown by the books and checks relative to the Wade-Des*566pain Trust Account. This account was adopted by Wade after he had entered upon his duties as trustee for the holders of the new notes, and was merely a method adopted for his own convenience, over which appellants had no control. The money was paid to Wade, out of which certain sums were to be first paid, such as the $150 per month to Mrs. Despain and payment of taxes, etc., in accordance with the understanding of all; but it was immaterial to her, as well as to the other appellants, as to how the account was kept in the bank after having been paid to the party entitled to receive it. All in excess of the sums to be expended under the written agreement was paid to him for the purpose of reducing the principal and interest on the indebtedness covered by the mortgages, and was under the control of Wade only. He held the mortgages and original note, neither of which was extinguished until fully paid. Appellants, accordingly, paid the money to the holder of the legal title thereof, and it was not incumbent upon them to see that it was credited on the proper instrument: Swegle v. Wells, 7 Or. 222; Hatfield v. Reynolds, 34 Barb. 612.
The question as to the application of moneys received on the debt when collected by Wade became a matter between him and respondents only, and, if applied as it should have been, the debt was canceled, while, if not so applied, the effect, so far as the same may affect appellants, must be determined according to, and under, the well-known maxim that “equity looks upon that as done which should have been done/'’ which would entitle the notes and mortgages to cancellation. In respect therefore to this account, it was opened by Wade as a trustee, and he thereby became the depositor, and, as such, alone had authority to draw upon it. A large part of the money deposited to the credit of this account is shown to have been paid to him by check, which checks were made payable to his order as trustee. The money therefore paid to and received by him was received in his trust capacity, and, so far as any part thereof was paid to appellants or disbursed on expenses of the trust, they are properly chargeable, but, so far as not thus paid, are chargeable against respond*567ents. The books, statements, etc., showing the condition of the account, constitute admissions against his interest as trustee, and as such, were properly admitted in evidence for the purpose of showing the payments to him to be applied on appellants’ indebtedness, for which they are accordingly entitled to credit thereon to the full amount of the sums shown by this account, as well as those disclosed by any other statements or receipts to have been received by him, in excess of disbursements made to and for them under their agreement. The moneys therefore drawn from this account, which are properly chargeable to the appellants, are the sums paid to Mrs. Despain for her support, to the Berkeleys, for collecting rents and for taxes, insurance, repairs, etc., amounting to $17,756.50.
After a careful re-examination of the accounts, statements, deposit books, etc., showing receipts and disbursements by Wade, under his trust, we find the sums for which respondents are chargeable to be as follows:
June 29, 1898, 8 notes payable to Wade as trustee,
aggregating .................................$29,500.00
Interest on same to December 30, 1904, date of last
credit ....................................... 13,422.50
Aggregate amount paid to N. E. Despain.......... 8,500.00
Amount paid to Norbome Berkeley............... 1,470.75
Amount paid to C. Berkeley.......... 129.35
Amount paid for insurance, taxes, repairs, etc...... 4,644.04
Aggregate interest on last four sums (approximate) 3,425.00
Total .......................................$61,091.64
Moneys received by Wade, as trustee, from appellants and their agents are as follows:
Between July 29,-1898, and September 11, 1903, cash
from Snyder ................................$13,685.69
July 18, 1898, cash from LaEontaine.............. 5,500.00
March 7, 1899, paid to C. B. Wade from sale of
Grande Bonde ranch.......................... 8,000.00
March 30, 1899, from sale of other property........ 3,500.00
September 4, 1899, cash from Campbell from sale of
land ....................................... 302.00
September 8, 1903, cash from Florence Berkeley.... 1,408.00
*568December 8, 1903, cash from Peringer............. 1,050.84
Aggregate amount of. interest on these payments from
date of each thereof...........•............... 11,414.80
Total amount of rents collected................... 17,756.50
Total credits................................$62,617.83
It will be observed, therefore, from the statements, books, etc., introduced in evidence, that Wade, as trustee, received from appellants and for respondents, to be applied in the payment of the instruments secured by the mortgages, about $1,200 more than sufficient for the cancellation thereof.
It is urged, however, that the item of $3,500 was a loan to Wade by appellants, and that they should not be credited with, this item; but we find nothing in the record to justify this inference, nor is there anything in the statement made by Berkeley to Hartman, testified to, when considered in connection with Berkeley’s explanation thereof, to justify such conclusion. In fact, the receipt itself, which it is conceded was given for the money, is sufficient to rebut counsel’s theory, it being as follows:
“Pendleton, Oregon, Mch. 30, 1899.
Beeeived from the Despain Estate on account of Wade trustee mortgage, against the estate property, thirty-five hundred dollars to be applied on notes in final settlement — interest in accordance with terms of mortgage.
C. B. Wade, Trustee.”
13. It is also contended that the $8,000 received from the sale of the Grande Eonde ranch should not be applied on respondents’ claim. This again overlooks the legal effect of the agreement by which Wade was made the holder of the legal title to the Teal note and mortgages which were not to be deemed canceled until the entire amount represented therein should be paid. The evidence discloses that this land was sold and deeded to Wade by the Despains for the consideration of $8,000 over and above the mortgage liens thereon, under an express agreement that this sum should be applied on the mortgage indebtedness held by him against them, and that the deposit books of the Wade-Despain Trust Account show that he received this money *569from them, placing it to the credit of this fund. This transaction was the same in effect as if the Despains had sold the farm, subject to the mortgage, to any other person, and paid the $8,000 received therefor to Wade on the mortgages, and he, in place of paying it to respondents under his trust, had loaned it to the purchaser, or to any other person with which either to cancel the lien on the farm sold or for any other purpose. In short, the question as to what he may have done with this or any other fund received from appellants for application on the mortgage indebtedness became, under the record herein, a matter for adjustment between the respondents and Wade, as their agent, and could not, as a matter of law, concern appellants.
Under any construction that may reasonably be applied to the evidence, as “well as from any inference that may logically be deduced from the record, it appears that more than sufficient funds have been paid to the party lawfully entitled to receive them for the cancellation of the indebtedness.
It follows that the petition for rehearing should be denied.
Reversed : Rehearing Denied.