85 F. 896 | D. Alaska | 1898
On March 1, 1886, one W. M. Bennett owned, by virtue of prior occupation and possession, lot 4, and about 27 feet, fronting on Front street, of lot 3, all in block 2 in the town of Juneau, Alaska; also, a narrow strip of land, between high and low water, immediately across Front street, and of the same width, to wit, about 77 feet. March 10, 1886, Bennett sold to Stillman Lewis an undivided half
“Escrow Agreement.
“Juneau, Alaska, Oct. 28th, 1892.
“To Messrs. Koehler & James — Gentlemen; You are hereby instructed that upon the payment to- you by Wm. M. Bennett (or any one on his behalf) of the following named sums, and at the times mentioned herein, for the use and benefit of George M. Mason, you deliver to said Wm. M. Bennett the inclosed deed:
“The sum of $23.50, payable on or before Dec. 5th, 1892;
“The sum of $23.50, payable on or before Jan. 5th, 1893;
“ “ “ “ “ “ “ “. Feb. 5th, 1893;
“ “ “ “ “ “ “ “ Mar. 5th, ’93;
“ “ “ “ “ “ “ “ April 5th, ’93;
“ “ “ “ “ “ “ “ May 5th, ’93;
“ “ “ “ “ “ “ “ June 5th, ’93;
—and the further sum of $1,198.83, payable on or before July 1st, 1893, — and that upon payment of the last-named sum to you by the said Wm. M. Bennett, and before you pay the same to the said Geo. M. Mason, that you cause the said Geo. M. Mason to cancel and fully satisfy of record a certain mortgage from Wm. M. Bennett to one James Winn, and by the said James Winn assigned to Peter Wyborg, and by Peter Wyborg assigned to Stillman Lewis, and by the administrator of the estate of Stillman Lewis assigned to George M. Mason; and you are further instructed that on the failure of said Wm. M. Bennett to*545 meet any of said payments at the times mentioned herein, or for a period of thirty days thereafter, that you deliver the inclosed deed to said George M. Mason, — excepting therefrom the last payment above specified, which shall be made at the time herein specified. W. M. Bennett.
“G. M. Mason.”
Bennett failed to make the last two payments mentioned, and the deed was delivered to Mason, who caused the same to be recorded July 3, 1893, although he did not surrender the note or mortgage, or cause the latter to be canceled. On August 16, 1893, Bennett made another deed to the same property to Phillip Starr; the plaintiff Lewis claiming that the consideration therefor moved from him, and that the deed was made to Starr at his (Lewis’) special request. July 27, 1894, Starr received a deed from Mason for an undivided half interest in and to all of said premises; and, in consideration of this deed, Starr paid $500 in cash, and he and Lewis gave Mason their joint mortgage on their interests in the premises for $1,500. On May 4, 1895, Starr took up this mortgage by making a deed to Mason for an undivided fourth interest in and to the premises. February 10, 1897, Mason deeded this quarter to F. W. Young; and August 4, 1897, plaintiff Lewis bought up this interest in the premises, and took a deed from Young, and a confession of judgment in this action from both Mason and Young. This leaves in issue, and to be determined, the ownership of the undivided one-quarter interest in and to said premises remaining in the name of Phillip Starr.
While -there are many incidental questions to be considered, they are only of importance as throwing light upon the two important points in the case. These are: Was the deed from Bennett to Mason of October 28, 1892, and which was deposited with the escrow agreement, a deed or a mortgage? And did Starr occupy the position of trustee for Lewis, in handling the property? A determination of these two questions must determine the issues in this case. By far the most serious of the two is the former question; for while the courts, through a long line of decisions, have been opposed to the lender obtaining the title to the mortgaged property in any other manner than by a sale at public auction, it has also been their policy to encourage settle
And in Morris v. Nixon, 1 How. 126, it is stated: “The charge against Nixon is, substantially, a fraudulent attempt to convert that into an absolute sale which was originally meant to be a security for a loan. It is in this view of the case that the evidence is -admitted to ascertain the truth of the transaction, though the deed be absolute on its face.”
So in the case at bar the effect of the bill is to charge Mason with fraudulently attempting to maintain the escrow contract and deed to be a deed, when in fact it is but a mortgage.
The right of a mortgagor to sell the mortgaged property, to the mortgagee, and give him a perfect title thereto, cannot be denied, but courts of equity have always looked with suspicion upon such conveyances; and especially is this true where usury is shown to have entered into the contract, and where the consideration for the deed is wholly inadequate to the value of the property. Where any con
It is an elementary principle of law that, to constitute a legal contract, there must be an agreement of the minds of the parties, or the consent and harmony of their intentions, and they must propose and mean the same thing, and in the same sense. Accepting this as a correct definition, was there, at the time of the making of the escrow agreement and deed, such an agreement of the minds of Mason and Bennett, or such a consent and harmony of their intentions, as to constitute the transaction a purchase and sale? We think not. Bennett, at least, did not believe he was selling his property. He unquestionably relied upon the advice of his attorney, and believed he was but executing another form of security for the money he owed. Aside from the testimony of his attorney on this point, Bennett’s actions throughout clearly show this. But did Mason himself treat the escrow deed as absolute? Did he believe he had purchased Bennett’s estate in the property outright? His conduct would not indicate that he did. His whole actions go to show that he believed he still had but a lien upon the property, even after the escrow deed was delivered to him. He was unwilling to rely upon the deed, but retained his old note and mortgage for nearly two years after the escrow deed was executed, and only surrendered them when Starr and Lewis paid him $500, and executed to him a mortgage for $1,500 on the whole of the property in satisfaction of his claim. From this alone it is clear he relied, not upon his deed, but upon his note and mortgage, for his security. And for nearly two years he made no effort to take possession of the property which he claimed to have bought, nor did he demand or receive any of the rents or profits from the property. This is wholly inconsistent with the theory that he believed he was the owner of the property. Not until after Starr deeded him a quarter interest (May, 1895) did he claim or receive any of the rents, although the premises were constantly rented at from $80 to $100 a month. But one conclusion
The testimony in this case discloses the fact that the property was worth from $6,000 to $8,000. And this testimony is strongly corroborated by the following facts which appear: The property, only a,part of which had any improvements upon it, rented steadily at from $1,000 to $1,-200 a year, — an amount equal to the consideration price paid by Mason; and Mason and Young, after receiving a deed from Starr to a quarter interest in the property, sold the same to Lewis for $2,000, although the title was anything but good. The rental value increased from $80 to even $125 a month; showing that the property, instead of depreciating, was increasing in value. So conceding for the present that Mason paid the amount named in his mortgage, $1,027, and the interest thereon, for the property, it is grossly inadequate to the value of the same. This, coupled with the necessities of Bennett existing at the time he executed the deed, and the great advantage Mason had and exercised over him by virtue of his mortgage, is sufficient, under the authorities, to warrant a court of equity in scrutinizing the whole transaction, if not sufficient to warrant the court in setting aside the deed, even if it were intended to be such by the parties, and declaring it to be a
The second question to be considered is, what relation existed between Starr and Lewis with reference to this property? The death of Starr since the commencement of this action has necessarily excluded much testimony which might have shed light upon this feature of the case. Rev. St. § 858 (28 U.S.C.A. § 631 note). But sufficient appears in the record to show: That Starr had been the friend of Stillman Lewis, uncle of plaintiff R. F. Lewis, during his lifetime; was the administrator of the estate of Still-man Lewis, and after the distribution of the estate became the trusted agent of plaintiff Lewis; had the care and custody of his property in Alaska, collected all rents and moneys belonging to his principal, and had the custody
It only remains to determine and declare an accounting between the parties. There has been some testimony tending to discredit some of the accounts found in the books kept by Starr, but we are disposed to accept them as correct. Starr’s employment by Lewis terminated January 1, 1895; but the property has been in his possession and that of his representatives from that time to the date of appoint