43 Wash. 549 | Wash. | 1906
Lead Opinion
This action was commenced by the plaintiff Mark A. Munson, against the defendant, American Savings, Bank & Trust Company,' to recover the sum of $2,000 and interest, claimed to be due on two certain notes which plaintiff
On February 21, 1903, the Independent Lumber Company, a corporation of which the plaintiff, Mark A. Mnnson, was secretary, and in which he and one H. J. Bailey were stockholders, executed and delivered to the defendant, American Savings Bank & Trust Company, its demand note for $500, with said Mnnson as surety; and also pledged to said defendant certain lumber as further security. On March 23, 1903, plaintiff sold' his stock in said Independent Lumber Company to said H. J. Bailey, taking in payment two- notes, one for $500 and one for $1,500, secured by mortgage on real estate in the. city of Seattle. Plaintiff immediately assigned said notes and mortgage to one P. C. Ellsworth, for collection, who shortly thereafter commenced an action in his own name to foreclose the same-. On April 21, 1903, the defendant and said H. J. Bailey entered into a written contract by which Bailey agreed to sell certain of said pledged lumber and apply the proceeds on said $500 note, executed by said lumber company, but the hank never received any money from such sales. Afterwards the plaintiff Munson took charge of about 60,000 feet of said lumber, sold the same, aud applied the net proceeds, amounting to $289.42, ou the $500 Independent Lumber Company note. About this time the Independent Lumber Company passed into- the hands of a receiver and thereupon the defendant bank, having learned that Mnnson had transferred said $2,000 notes and mortgages to Ellsworth for collection, demanded that plaintiff turn the same over to- it as further collateral security. Munson immediately caused the notes and mortgage
“This Agreement made and entered into this 29th day of October, A. D. 1903, by and between American Savings Bank & Trust Company, a corporation, and James P. Gleason, parties of the first part, and Mark A. Munson, party of the second part. Whereas American Savings Bank & Trust Company and James P. Gleason have advanced certain moneys in securing title to. and in the purchase of mortgages, liens, judgments and various incumbrances upon lot twenty-two (22) in block four (4) of Capitol Hill Addition to Seattle!, First Division, being property formerly owned by Edna Bailey, and in procuring the title to said property parties of the first part have incurred certain expenses and will be compelled to incur certain other expenses and to advance certain other moneys before the title to said property is fully completed; the exact amount of money necessary to be advanced andexplenses to be incurred cannot at this time be specifically and definitely stated, and whereas, the Independent Lumber Co. and Mark A. Munson have become indebted to the American Savings Bank & Trust Co. by the making and endorsing of promissory notes in the sum of $500 and as security for such indebtedness the said Lumber Co. made a bill of sale of certain lumber of said company, the proceeds of the sale of which, after paying all expenses, costs and attorney’s fees and other expenses, is entirely inadequate to liquidate the indebtedness of said lumber company and Mark A. Munson to the said bank, and the said Munson hereby promises and agrees to pay any balance due said bank after it applies, the net proceeds of the sale of said lumber on such indebtedness, after first paying all expenses incurred by reason of the taking post-session, moving, storing and selling of the same, as all costs, attorney’s fees and other expenses whatever incident thereto;
The bank immediately proceeded in the matter of obtaining title to said real estafo and foreclosing liens thereon. It purchased a prior mortgage known as the King mortgage, for $1,129.79. It purchased a prior outstanding sheriff’s certifi
On the King mortgage, principal and interest... .$1,105.00
Attorney’s fee.............................. 150.00
On the Munson mortgage, principal and interest.. 2,140.00 Attorney’s fee...................„.......... 100.00
$3,495.00
In the decree it was adjudged that the several defendants who had filed cross-complaints had no valid liens, and that Gleason held the fee title to said real estate subject to said mortgages. The lien claimants appealed to this court, but the judgment against them was affirmed. See, Ellsworth v. Layton, 37 Wash. 340, 79 Pac. 947. On September 24, 1904, the property was sold to the bank at sheriff’s sale, its bid being $3,651.26, the exact amount then due on its judgment on the King and Munson mortgages, together with costs and accrued costs. Munson attended the sale and did not except to the bid made by the bank, ifo money was paid to the sheriff except $12.45, his costs, but the bank satisfied its judgment. Munson failed to exercise any election to take title to said property within the eighteen months stipulated in his contract with the bank, and after that period had expired the bank, exercising full acts of ownership', sold the real estate to a third party. Keither party to this action offered evidence to show the price for which the bank made said sale. Ko payment was ever made om the principal $500 note, except said $289.42 proceeds of lumber sold by Munson. A further
Munson’s theory is that the $500 note has been fully paid; that his $2,000 mortgage notes assigned to the bank were also paid by foreclosure and sale; and that the bank is now liable to him for their full amount, they having been released from the pledge 'made by him. The trial court found that in making said bid of $3,651.26, at said foreclosure sale the defendant bank was acting in pursuance of its purpose and intention to purchase said mortgaged premises and become the absolute owner thereof. Having found such intention, the trial court held that the bank was obliged to settle with Munson on the valuation of $3,651.26, and after deducting from said sum the amounts due on the first mortgage, the balance due on said $500 Independent Lumber Company note, certain disbursements, expenses, costs, and $350 attorney’s fee, gave Munson judgment for $1,697.31, but in doing so did not allow all the claims made by the bank. We think the theory upon which the trial court proceeded was correct (Ross v. Barker, 58 Neb. 402, 78 N. W. 730), but the final judgment should be modified as, according to our view of the evidence, the bank was not allowed the full amount to which it was entitled. The Munson notes and mortgage were pledged to the bank as additional collateral security for the payment of the Independent Lumber Company note. The fundamental rule pertaining to collateral securities is that, where a debtor has pledged to- his creditor a mortgage on real estate to secure the payment of a note other than the mortgage debt, and the creditor or pledgee in the exercise of his equitable rights forecloses said mortgage, and thereby acquires title to- the real estate in his own name, absolute as against the mortgagor, the pledgee holds such title i as security for his debtor’s note in lieu of the original mortgage; and the pledgees interest in the land may bei defeated
When, however, there is an agreement between the parties that the pledgee may acquire title in his own right, and he does so at a fair valuation, openly, without fraud, with the knowledge and consent of the pledgor, and evinces an intention to hold the title so acquired for his own benefit and not in trust, a duty then devolves upon him to account to the pledgor for the valuation at which he so acquired the title. Jennings v. Wyzanski, supra; Plucker v. Teller, 174 Pa. St. 529, 34 Atl. 208, 52 Am. St. 825. In this case the defendant claims it had no intention of acquiring the title to the real estate for its own benefit. The trial court found, however, that it did so intend, and we agree with and adopt such finding. The written contract of October 29, 1903, clearly shows such intention. The Munson notes had already been assigned as collateral, before said contract was executed. The bank at once proceeded to acquire title by obtaining deeds to Gleason. It took immediate possession of the property. It collected the rents and, in an account with Munson, gave him credit therefor. It is true that the bank could not obtain an absolute title, as against Munson, within the period of eighteen months immediately succeeding the date of the contract. It could and did acquire title, however, subject to Munson’s right to. purchase on the terms named. When his option had expired, the title of the bank became absolute. Its subsequent conduct shows that it so understood the transaction, for it then sold to a third party and has not disclosed by its evidence the price it obtained. As far as the record discloses it may have either realized a profit or sustained a loss
From all the circumstances of this case, we are convinced that it was the intention of the bank to take the property at $3,651.26, and retain the title in itself at such valuation, in the event of the failure of Munson to exercise his option within the eighteen months fixed by his contract, and that Munson has assented to its doing so. This being true, the bank should now settle with Munson on the basis of such valuation. The bank could not know during the eighteen months whether Munson would exercise his option, so during that period it kept an account charging him with all disbursements and giving him credit for rents collected. It delivered to him a written statement of this account about the time his option expired. He has taken no exception, to the items therein contained, except to an attorney’s fee of $350. In fact, his testimony shows that the disbursements therein enumerated were made with his full knowledge and consent. We think the $350 attorney’s fee which the trial court allowed was reasonable and should be now allowed. This statement shows that, on September 24, 1902, the date of the sheriff’s sale, the bank had made proper disbursements to the total amount of $2,422.43, which included $100 of the attorney’s fees. Additional items for which Munson was at that time liable have been since paid, and the bank is entitled to retain the following sums out of the bid it made for said real estate:
Disbursements to Sept. 24, 1904, as per statement. $2,422.43
Sheriffs’ costs.....................:.......; 11.95
Additional interest to September 24, 1904...... 29.22
Clerk’s costs, Kidder v. Bank................. 6.00
Attorney’s expenses to supreme court........... 9.50
Remainder of attorney’s fee................... 250.00
Filing remittitur ............................ 1.00
Balance due on Independent Lumber C'o,’s note.. 265.28
$2,991.58
From the time the bank took possession of the property until the 24th of September, 1904, the date of the sheriff’s sale; it collected $340 in rents. It also collected $55, supreme and superior court costs, for which it should account to the plaintiff. We therefore find the plaintiff entitled to* $340 rents and $55 costs collected, being $395 in all, as he has been charged with interest, taxes, insurance and, in fact, all disbursements made on account of the property. Deducting this $395 from the charges of the bank, which amount to $2,-991.58, leaves $2,602.58 as the net charges the bank is entitled to make against Munson. Deducting this sum from $3,651.26, the bid made for the property, we find the sum of $1,048.68 to* have been due the plaintiff on September 24, 1904. The plaintiff is entitled to judgment against the bank for said amount, with interest from that date. This allows the bank all costs expended, $350 attorney’s fee; $503 paid Gordon & Company, not allowed by the trial court; $125 paid for title deeds not allowed by the trial court; also insurance, taxes, recording fees, and, in fact, all expenses shown by the bank’s statement prior to September 24, 1904, and to which Munison did not object. It does not allow plaintiff any credit for the lumber claimed to* have been sold by Bailey, as we do not think that claim has been sustained by the evidence. The defendant by its assignments, of error and in its briefs has contended that the complaint does not state a cause of action, that the trial court erred in overruling its demurrer thereto, and that the plaintiff has no right to* maintain this action or recover any judgment herein. Each and all of
It is ordered that the judgment of the trial court he modified by entering judgment in favor of th'e plaintiff and against the defendant for $1,048.68, with, interest from S'eptember 24, 1904, at six per cent per annum. It is further ordered that the plaintiff recover costs in the superior court, and that the defendant recover its costs! in this- court.
Mount, G. J., Root, Dunbab, and Hadley, JJ., concur.
Dissenting Opinion
(dissenting) — I think the written contract set forth in the majority opinion was intended to supersede all prior agreements express or implied between- the parties thereto, and that if the plaintiff has any right of action- it is by reason of said written contract. I therefore dissent.
