Equitable Loan Assn. v. Hewitt

135 P. 864 | Or. | 1913

Mr. Justice Eakin

delivered the opinion of the court.

1. When plaintiff made the loan and accepted the mortgage, it did not deliver the money either to Hewitt or to defendant Mrs. Wright, but retained it for its own protection against liens on the mortgaged property. The property evidently was a vacant lot, and the building of the house was contemplated by plaintiff as a basis for making the loan. Otherwise it would not have made the loan. Therefore, for its own protection, as well as for the protection of the owner, it should have diligently paid the money only upon the expense of the erection of the dwelling; but, as appears by the evidence, through its overconfidence in Hewitt, it carelessly and wrongfully paid the money over to Hewitt regardless of its application. Mc-Kercher, its secretary, testified that he did not know that Mrs. Wright was the real owner of the property, but later admits that the matter of the loan was on plaintiff’s books in the name of Mrs. Wright, and that as soon as the construction was commenced, which he says was immediately upon the making of the loan, it was considered as Mrs. Wright’s house. He said: “Of course, all the money we loaned to the property is assumed to go into that particular house.” Then he admits that all the money did not go into the house; that “some money somewhere has been sadly diverted in this proposition; but I confess I don’t understand it to this day.” Yet it was his business to know where the money went. The testimony of Hewitt is not convincing upon any matter of which he speaks, except that he used the money on other houses as well as on *284this one. He kept no accounts, does not recollect what any work or material cost, nor can he or anyone give the cost of the building. When plaintiff undertook to hold the money to see that it was paid out to the proper parties, it was responsible for not doing it.

2. There is some question raised as to the legality of the assignments of the liens, but this we deem immaterial, as by the terms of the mortgage the plaintiff was authorized to pay off the liens if any were created, and that they should thus become a part of the mortgage debt. This right depends on the terms of the mortgage, and not on the title to the liens. This suit is not one to foreclose the liens. The liens have expired by lapse of time, and would not operate to defeat plaintiff’s right to recover if they existed and if plaintiff paid them over and above the money it held for that purpose; but it was its duty to pay these claims independently of the liens before they were perfected, until the $2,500 should be exhausted. Therefore, to entitle plaintiff to recover for these claims, the burden was on it to show the application of the money to the purposes for which it was retained, and that these claims were incurred in the erection of the house over and above the $2,500, in plaintiff’s hands. This does not appear. Therefore these were claims which it was plaintiff’s duty to pay and for which it cannot recover. It is not sufficient for it to say that it paid over the money to Hewitt, the mortgagor, as the money was retained from Hewitt to pay. these bills; and long before any of it was paid out, namely, immediately after the making of the loan, if not before, plaintiff knew that the money was for the use of Mrs. Wright. It is contended by it that the house cost $4,000, that defendant should not be relieved from paying the difference between that and the amount of the loan, and that Shay was her agent in the erection of the building. To the *285extent necessary to make defendant liable, he is made so by the statute, but as to representing her he was not her agent, being the original contractor for $3,000, $500 of which was paid to him, and Hewitt was a subcontractor for $2,500. There is no evidence of any facts that show or tend to show that the house cost more than $3,000.

Error is also assigned to the finding of the court that the defendant tendered into court $3,049, being the full amount of the mortgage debt with interest, that there has been no breach of the terms of the mortgage and that the suit should be dismissed. The record shows this to be the fact, and it is undisputed. Therefore there was no error. This renders it unnecessary to consider the alleged error of the court in sustaining the demurrer to the first separate answer.

The decree is affirmed.. Affirmed.

Mr. Chief Justice McBride, Mr. Justice Bean and Mr. Justice McNary concur.