Court Opinion

ID: 9302349
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:13:26.052999+00
Date Added: 2024-06-11T17:13:43.983726
License: Public Domain

On Rehearing.
(January 29, 1902.)
J. J. Balleray and Charles Carter, for plaintiff.
George Stout and Pipes & Tifft, for defendants.
BELLINGER, District Judge.
The facts in this case are stated in the opinion heretofore rendered on the final hearing. The petition for rehearing argues the legal questions involved in the case, about which there is no controversy, at some length. As to the fact that Isaacs executed the mortgage to the minor’s property before the guardian’s sale at which he pretended to get title, and that Lombard assumed a part of the mortgage in the purchase of the *17minor’s interest, it is argued that no other inference can be drawn than that Isaacs meant to procure title, and may have had an understanding or agreement with the guardian that he would bid for the property at the guardian’s sale when it should occur, and that, if such inference should be held sufficient to put Lombard on inquiry, the inquiry, if followed, would only lead to the record. It is claimed that the record was examined by Lombard, and rebutted whatever inference of fraud there may have been arising from the mortgage, and that this was as far as Lombard was required to go, and that there was no other source of information to which he' could go; that the existence of a device to mortgage the property through the meáns of a sale was rebutted by the fact that Isaacs did not deed the property back after Ibe mortgage, as he had agreed to do; that the conveyance by Isaacs to a third person was an abandonment of the device in question; and that the possession of Howard, Isaacs’ grantee, points a,way from the fraud to bona tides in the transaction. 'The petición then discusses the inferences drawn by the court from the facts stated, and argues from the testimony that Lombard bought the property in question in good faith and for a valuable consideration. It may be that the record facts in the case are not sufficient to charge Lombard with notice of a scheme to circumvent the law and incumber the minor’s property; but if, as seems to be conceded, diese facts might warrant an inference that Isaacs meant to procure title, and perhaps that lie had an agreement with the guardian that be would bid the property in at the guardian’s sale, then the ¡inusual circumstances so inferred were suggestive, at least, of the truth in the premises. It is needless to say that there can be no such assurances of title at a future guardian’s sale as will authorize a mortgage in advance of the sale. It is quite true that a grantor’s covenant of warranty will operate to convey' an after-acquired title, but it is not true that the practice obtains of mortgaging or selling land that the grantor does not claim to own. Tuck a transaction would be unusual, and, if it has occurred in a case that admitted of some binding agreement for a title in advance, I doubt if it has ever been heard of where the title was to come through a judicial sale. Concede, then, that there was enough to suggest to Lombard that Isaacs mortgaged the plaintiff’s property under an agreement with the guardian that the property was to be sold at guardian’s sale, and that he (Isaacs) should become the purchaser; does this lead to nothing, or, as is argued in the petition, does it lead away from the truth? If it does not conclusively prove, at least does it not warrant the inference of, concerted action between Isaacs and the guardian to effect a mortgage by the means1 of a sale? The argument that if there was such a device the failure of Isaacs to deed the property back, as he had agreed to do, and his conveyance to another, was an abandonment of the device, assumes that what would otherwise be a fraudulent expedient is made proper and lawful by the bad faith of one of the parties to the transaction; that Isaacs, having gone into a scheme to effect an illegal mortgage by a guardian’s sale upon an agreement to reconvey, could purge the sale of its fraudulent character by keeping the property, instead of keeping his word to restore it. If it is not *18conceded, it is conclusively proven, that the sale in question was a mere device to effect a mortgage; that Isaacs paid nothing for the property, and was to reconvey it, the mortgage scheme being consummated. Isaacs testifies that he purchased the property in question at the guardian’s sale at the request of complainant’s uncle and mother, the latter being his guardian; that the guardian’s sale was a mere form; that he did not purchase the property, but went through the form of a purchase, “just for the purpose of putting-that mortgage on it”; that it was understood beforehand that he was not to pay anything, and that he did not pay anything, — “never paid a cent”; that he was to turn the property back to the complainant after the mortgage was made, and he does not remember just how it was fixed up. Isaacs, as a matter of fact, joined Mrs. La Dow in a conveyance to Howard, from whom B. M. Lombard acquired it. Howard does not appear to have paid anything for the property. His relation to it seems to have been that of a mere agent or trustee, to manage the property, and pay for it out of the proceeds of a sale when he should make one. His testimony is important as to B. M. Lombard’s knowledge of all facts affecting the title he was acquiring, and of the character of payments made by him for the property. Howard says that, if he remembers correctly, the whole matter of title was talked over with B. M. Lombard, and especially the matter of Lewis La Dow’s having some equity in the property, or possible equity; that he thinks the character of the equity was discussed; that .he (the witness) knew that the object of the guardian’s sale was to mortgage the property, and he thinks he talked to Lombard about that, and his recollection is that Lombard said' the record of the property was all right; that he (the witness) had received some back lots, and he talked with Lombard about fixing the matter with complainant by giving him those back-lots; that Avitness and Lombard discussed the matter, and concluded that when complainant became of age he (complainant) would be willing to quitclaim the property if he received those back lots. Howard seems to be as well disposed toward one side as the other. His statements with reference to conversations with Lombard are cautious, but they are explicit enough to make it clear that B. M. Lombard knew all there was to know about the title he was dealing with, and I haAm no doubt of the truthfulness of the witness. B. M. Lombard is by profession a lawyer, and he is a real estate dealer. He was impressed with the binding character' of the record. He relied upon that. But his eyes Avere open. He saw and heard and knew the facts out of which the record grew. He could, not ignore the information he received from Howard in their many conversations on the subject. If B. M. Lombard was relying on the probate record, he was also hoping to extinguish complainant’s right or “equity,” and to get his deed. What did he want this' deed for? What was Lewis’ equity, which had been so fully talked over between Howard and B. M. Lombard? Moreover, consider what HoAvard says as to what B. Ml Lombard paid for this property. The transaction is so involved in the ramifications of a trade that the witness cannot tell whether, as a net result, he got anything or not. He ad-*19mils that Lombard paid him $1,000, and that he got something out of 64 outside town lots traded to him by Lombard, and handled and disposed of by the latter. The story of these suburban lots, six miles from Portland and two miles from the Willamette river, an<l of Lombard’s connection with them after the sale, shows the complaisance of Howard, and makes it easy to understand his inability to tell whether he finally, at the end of a trade with Lombard that it would take him a half a day to explain, got anything or not. B. M. Lombard denies the statements of Howard as to conversations respecting Lewis La Dow's rights and equities. Hr. Wade, cashier of the First National Bank at Pendleton, testifies to conversations had with B. M. Lombard and Howard together, in which they said “that a part of the consideration and trade, and the understanding throughout, was that, when this liad been settled up, that Lewis La Dow was to get the back lots, but they felt very confident that they were getting the property cheap at that.” This witness further testifies that he would not be “real positive,” but that lie is “morally certain,” that Lombard told him “that he was fully acquainted with all the conditions that existed.” This testimony is strongly corroborative of Howard’s testimony, and it leaves no room to doubt that Lombard knew all about the rights of Lewis La Dow in the premises, and that he relied on his ability to get the latter's deed by the transfer of the back lots; that he had traded to Howard a lot of worthless so-called town lots, and could afford to take chances as to complainant’s interests. He felt, as Wade testifies, “very confident that they were getting the property cheap at that.” John D. Wilcox corroborates Lombard, but there are portions of his testimony which show that his memory is indistinct in important particulars. He sold out or traded out his interest to Lombard, but so long a time had intervened, and the matter was so involved in “forty trades” that the witness testifies he had had with the latter, that he does not remember whether he got any cash out of it or not.
The petition for rehearing criticises the statement contained in the opinion heretofore rendered that the assumption by Lombard of the illegal mortgage was at complainant’s expense. That statement was made upon the theory that Howard intended to account to the complainant for the property held by him, and for which he (Howard) appears not to have paid anything at the time the Lombard deal was entered into. Upon this theory, Lombard's agreement to pay an illegal demand against complainant as a part of the consideration for the property taken — an agreement which he subsequently escaped through an adjudication that the debt was illegal — was at the expense of complainant’s interest. If those concerned in the transaction did not intend to restore the fee of this property to the owner, then it must be admitted that, so far as he was concerned, it made no difference whether Lombard paid anything for it or not. And yet the fact remains that this property was conveyed, not sold, in order to effect a mortgage upon it, which the law did not permit; and the party taking the title, with the understanding that he should reconvey it after the mortgage was exe*20cuted, conveyed it to a third person without consideration outside of the mortgage, and manifestly to protect the mortgage. There was no other consideration for these conveyances than the mortgage. So that what Lombard assumed of the mortgage for which complainant was not liable was at the expense of the property and of complainant’s interests. There are no disguises that can conceal the fact that when a man takes property upon an agreement to pay, and thereafter avoids payment, he gets to that extent something for nothing, and when he does this it is usually at the expense of the owner of the property so acquired.
The petition for a rehearing is denied.