Smith v. Boothe

175 P. 709 | Or. | 1918

Lead Opinion

BENSON, J.

1. We are clearly of the opinion that the demurrer to the complaint should have been sustained. A comparison of the complaint herein with the cross-complaint of these plaintiffs as defendants in the foreclosure suit, discloses at a glance that the facts upon which they relied in the former proceeding are practically identical with those upon which they base their claim for relief herein. The former case was a suit in equity, wherein they called upon the court to make a decree in which should be adjudicated between themselves and the defendants, all of the questions and controversies growing out of the same transactions which they now set out in their initial pleading. At the conclusion of the trial of that contest, they, by their counsel, moved the court for the decree which they obtained. That decree establishes the ownership in the defendant Bichardson of the Lumsden mortgage, not as a trustee for these plaintiffs, but as the absolute owner. It further determines his right to a repayment of the $2,000 which he had paid to plaintiffs, and also awards him the process of the court for the collection of these claims by ordering an execution and sale thereon.

Not a single act is alleged as occurring after the trial of the foreclosure suit, except the alleged conduct of the defendants in slandering the title to the real property, and thereby preventing a redemption. As to this phase of the case it may be said that the plaintiffs expressly disclaim any effort or intent to proceed herein as for slander of title, and if it were otherwise, the allegations in relation thereto are wholly insufficient to justify any recovery upon that theory.

2. The law is well settled that a judgment or decree rendered upon the merits is a bar to a subsequent action or suit between the same parties upon the same claim, as to every matter that was or might have been litigated in the action in which it was obtained: Colgan v. Farmers & Mechanics’ Bank, 69 Or. 357 (138 Pac. 1070), and cases there cited.

Appellant urges the consideration of many authorities upon the subject of an attorney’s duty to employ the utmost good faith in his dealings with a client’s property, but that subject is not before us.

We have read the evidence in this case with great care, but see no necessity for discussing it, further than to say that if the testimony of the plaintiffs themselves, in cross-examination, had been before the court in the trial of the foreclosure suit, it could never have found that defendants had been guilty of any bad faith.

The decree of the lower court is affirmed.

Affirmed.

McBride, C. J., and Burnett and Harris, JJ., concur.

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Rehearing

Former opinion sustained December 17, 1918.

On Petition for Rehearing.

(176 Pac. 793.)

Former opinion sustained on petition for rehearing. Rehearing denied.

Mr. Frederic H. Whitfield, for the petition.

Mr. A. E. Clark and Mr. M. E. Clark, opposed.

BURNETT, J.

Careful consideration has been given to the petition for rehearing filed by the plaintiffs attacking an opinion written by Mr. Justice Benson affirming the decree of the Circuit Court in this suit: It will be recalled that originally the plaintiffs were the owners of a tract of land in Multnomah County which they platted into smaller subdivisions, and for the purpose of more expeditiously marketing the lots, conveyed the whole property to a trust company with power to execute and deliver contracts and deeds to purchasers. All this property was subject to a prior mortgage of $10,000 held by Lucy A. Lumsden. Sundry contracts for sale had been issued and partial payments made thereon, which the plaintiffs received to their own use. The defendant Richardson acquired the Lumsden mortgage by purchase and proceeded to foreclose the same: Defending against that suit, the plaintiffs here narrated the history of their property substantially as already stated, and averred that they had applied to the defendant Richardson and his partner as attorneys to negotiate for them a loan of $15,000 with which to take up the mortgage in suit; that the attorneys conspired to cheat and defraud the present plaintiffs, the then defendants, out of their property and to that end stated to them it would be necessary for them to cause the trust company to convey to some designated person the title to the property; that the then defendants, plaintiffs here, should also convey their interest and that it would be requisite also to foreclose the mortgage. Agreeing to this under the influence of those representations, the plaintiffs here made such conveyance to a designated grantee, Edith King, upon payment to them of $2,000, which the attorneys, as the present plaintiffs claim, said was part of the loan of $15,000 then being negotiated. The defendants here denied the confidential relation and claimed that the present plaintiffs sold to them their equity of redemption in the property for the sum of $2,000. That foreclosure case was heard and the trial court made findings of fact substantially as the defendants had answered. Thereafter a decree was entered setting aside the deeds mentioned and decreeing the present plaintiffs to be the absolute owners of the land, subject, however, to the $10,000 mortgage and to the repayment by the plaintiffs herein of the $2,000 they had received. These sums with interest were impressed upon the land as liens, with the usual foreclosure order providing for a sale to enforce the same in default of payment. The finding’s of fact and conclusions of law were filed October 28, 1912, but entry of the decree was postponed to January 3,1913, and its terms stayed tlie issue of execution for fifty days thereafter. The land was sold under execution issued on the decree March 31, 1913, no attempt having been made to pay the amounts impressed upon the property as liens in favor of the attorneys, and the sale was confirmed April 8, 1913. No redemption having been made, the sheriff’s deed was executed, delivered and recorded April 9,1914.

The present complaint, after reciting all of these matters, avers:

“That the defendants falsely, during said period of redemption, stated to these plaintiffs and to other persons hereinafter named and to other persons not hereinafter named, whose names are to these plaintiffs unknown but as plaintiffs have been informed and be-believe, to wit: That said premises were not worth more than was due to the defendants; that a redemption could not safely be made because other persons besides these plaintiffs claimed to be the owners of certain equities and interests which it was impossible to determine; that the title was involved in doubt and uncertainty; that the reputation of the defendants had been injured in said foreclosure suit and the defendants would not permit the plaintiffs to redeem said premises without paying a large amount of money by way of damages to the defendants in addition to the money required to redeem said premises, and if a redemption were attempted to be made by the plaintiffs the defendants threatened to appeal or to involve said title and said premises in further litigation so that no redemption could be made; that the defendants had procured all the rights and title of plaintiffs and had settled with the defendants (plaintiffs) and there was no redemption to be made; which said statements were false and were made fraudulently by the defendants but were believed by the persons to whom they were made and the defendants thereby dissuaded said persons from furnishing the money with which to redeem and prevented these plaintiffs from making said redemption.”

It is further charged in the complaint that after procuring the sheriff’s deed, the defendants sold the realty to another party, thus depriving the plaintiffs of their property and its value in the sum of $18,000. They pray for. an accounting for the profits realized by the ■ defendant attorneys.

3,4. In passing, it may well be doubted whether the allegations of fraud are sufficient upon which to base a suit. In a certain sense, the premises were indeed involved in litigation. They had been sold and the time for redeeming from the sale had not expired, and disputes about the redemption were liable to arise in that very proceeding. That the premises were not worth inore than was due the defendants was a matter of opinion, which has constantly been held not to be fraudulent. Besides, the accuracy of that opinion had been demonstrated by the test of the sheriff’s sale. It is -plain that one redeeming the property would succeed to the estate of the plaintiffs, encumbered by their responsibility for the contracts which had been issued for the sale of the smaller tracts. This of itself would involve the title in doubt and uncertainty. The averment about the damage to the reputation of defendants and of not permitting- a redemption of the premises without paying damages in addition to the money required to redeem the premises, was a mere threat or bluff. It does not amount to a representation of fact. The same may be said of their threat to appeal or to involve the title in further litigations That the defendants had procured all of the rights and title of plaintiffs was a mere opinion as to the effect of the decree in the foreclosure suit and the sale in pursuance thereof.

5. Ignoring this, however, we again have carefully read all of the testimony in our quest for the merits of the case. The plaintiff Mrs. Smith testifies that she interviewed the defendant Richardson only and him but twice. The first time was in company with her agent and attorney in fact, one Ruddy, in January, 1914, during the fifty days’ stay of execution, when no one could know who would be the purchaser. We remember also the averment of the complaint that the alleged fraudulent statements were made during the period allowed for redemption, viz., after the sale. The next time was on April 10,1914. She is very definite and positive in fixing this date, because as she says it was her mother’s birthday, and she claims that at that time the defendant made some such representations as she sets forth in her complaint. This could not have influenced the ease, because the representations were made the day after the issuance of the sheriff’s deed; in other words, after the time for redemption had expired. She says that the only individuals she had a chance to obtain money from with which to redeem were three different men: Cronan, Griffin and Palmer; yet the testimony fails to show that either of these men, or she for them, ever offered to redeem or approached the defendants in any manner whatever. She frankly said as a witness that she had no money and offered none. She further testified that within three or four days after she and her coplaintiff had executed the King deed and had received the $2,000, the defendant Richardson called her by telephone, and told her he had heard she was dissatisfied and that if she would return the money he would gladly give back the deed. Meanwhile, however, the plaintiffs had given part of the money to Ruddy and could not return it.

It seems that one Moore was one of the parties who had contracted to purchase part of the land prior to the foreclosure suit. During the period of redemption and against the protests of Richardson, Moore had built a house on the tract, thinking that probably it would be redeemed and he would have an opportunity to complete his purchase. Some of his friends, members of a fraternal order, thinking that he had acted unwisely and was in danger of losing not only what he had invested and which was foreclosed by the decree to which he was a party, but also his building, formed themselves into a voluntary committee and went to interview the defendants to persuade them to allow Moore to pay up the balance due on the contract and take, conveyance from them of his tract prior to redemption. One of these parties was a man named Hamilton, who appeared as a witness for the plaintiffs. He says he had but one interview with the defendants and that only at the time the committee visited them. He narrated substantially that Richardson declined to do anything for Moore during the redemption period. Whereupon Hamilton said, “Then we will redeem.” Richardson, asked him how much it would require for that purpose and Hamilton informed him that as he had computed it from the record it was in the neighborhood of $13,600. • Whereupon Richardson said ■ it would take $3,000 or $4,000 more for money which he had advanced to the plaintiffs. Richardson flatly denies all this testimony of Hamilton. It appears in evidence that Hamilton had taken an option from the plaintiffs to buy the property and to redeem it, paying to them at the time and afterward certain amounts specified. His testimony is weakened considerably by the fact that his contract, introduced by the plaintiffs as one of the exhibits, contains his own recital that it would require $16,000 to effect redemption. It is further weakened by the testimony of the other members of the committee, who were present at the time, not one of whom says that Richardson demanded more for redemption than the amount provided by the statute. More than all that, the amount required for redemption was a matter of record and no one had the right to act upon or be deterred from redemption by any such language of Richardson even if he used it. The witness Keasey, one of the committee, declares Richardson said he did not want to sell and did not think the title could be delivered without foreclosure to wipe out the contract claimants. The witness Lundberg, in substance, testified that the defendants would not sell to Moore the three acres during the redemption period. Another member of the committee, Mr. Deitz, said Richardson declared he could not do anything until the time for redemption had expired. George Thomas, another man who went there in Moore’s interest, said that Richardson claimed the defendants were not in possession or in position to say what they would do, but did not encourage the committee to think they would sell three acres to Moore, as it might interfere with a future sale. The defendants as witnesses in their own behalf explicitly deny making any statement derogatory to the title.

On the merits of the present complaint and on the theory that it states a cause of suit, the testimony does not sustain the allegations of the complaint. The defendants simply stood on their legal rights as purchasers at the execution sale under the decree in the foreclosure suit. The rights of the plaintiffs as redemptioners were fixed by the statute as it then stood. Section 248, L. O. L.:

“The .judgment debtor, or his successor in interest, may, at any time prior to confirmation of sale, and also within one year after the confirmation of sale, redeem the property on paying the amount of the purchase money, with interest thereon at the rate of ten per centum per annum from the date of sale, together with the amount of any taxes the purchaser may have been required to pay thereon.”

The plaintiffs and the defendants were concluded by the decree in the foreclosure suit. All the former had to do was to pay the decree, for which a respite of fifty days was given them not counting the interval between the announcement of the decision and the entry of the decree. Afterward and until a year beyond confirmation of sale they .could have given notice to the purchasers of their intention to redeem, and paid the required amount to the sheriff who made the sale, despite anything the defendants said.

The true state of the affair on the facts, as we think, is succinctly narrated in the testimony of George Thomas:

‘ ‘ Then I took the matter up with Mr. Manley and we went over to Boothe and Richardson’s office, talked the matter over with them and asked them if they had a deed, and they delivered the abstract to me and Mr. Manley examined it very thoroughly and came to the conclusion on account of the contracts that had been made that it would not pay ns to go into the matter. The agreement was that if we did redeem we were to have the original owners’ equity in consideration of twenty-five hundred dollars, and we came to the conclusion that it would not be good business, and we turned it down.”

He says that occurred possibly thirty days before the expiration of the redemption period and after the visit of the committee, and he repeats thus:

“After investigating it we came to the conclusion that it wasn’t worth it, and on account of the contracts there and possible trouble we would get into; in other words, A. B. Manley’s words were, ‘Well, we are right in the same shoes those ladies are now, if we take it.’ ”

6,7. Counsel for plaintiffs has cited a wealth of authority on the well-known principle that an attorney or other person occupying a fiduciary relation to another and employed to defend title to real property cannot go out and buy in his own interest an adverse title, without having imputed to him a trust in favor of his client. The Circuit Court in rendering the decree of foreclosure applied these principles in favor of the plaintiffs, not only declaring the trust, but also executing it by setting aside the deeds procured by the defendant attorneys and declaring the present plaintiffs to be the absolute owner's of the property, subject, of course, to the lien of the mortgage which they had themselves contracted to pay, and to the lien of the $2,000 which they admitted they had received from the defendants. Thus they were fully restored to their own. The confidential relation and its abuse had been worked out to final solution and merged in the decree. This answers counsel’s Socratic argument:

“If the question of duty of attorneys to client is not in .this case, when did it drop out?”

The relation alluded to was considered adjudicated and terminated by the decree. That determination of the court in ordering a conveyance to plaintiffs of the King interest and that derived from the Trust Company gave back to the plaintiffs all that they ever parted with to anyone by reason of the alleged fraud. Its consequences were wiped out. There was thereafter no trust relation between them and their former attorneys, the present defendants. Thenceforward they dealt not in a confidential relation but at arm’s-length, if not at swords’ points. The plaintiffs had ample opportunity to do equity by paying the amount they justly and admittedly owed for the money they had received from the defendants and upon the mortgage. That the attorneys could buy the mortgage is taught by McKenna v. Van Blarcom, 109 Wis. 271 (85 N. W. 322, 83 Am. St. Rep. 895). This was not inequitable, because it would cost the plaintiffs no more to pay to the attorneys than it would to the original creditor. The authorities cited by the plaintiffs would have been applicable if the attorneys had bought the Lumsden mortgage at a discount and had undertaken to charge their clients for the full faceof it. No showing of such a condition exists. In brief, the decree in foreclosure settled the rights of the parties and gave ample opportunity to the plaintiffs to perform their part of it. They did not perform, and the defendants had the right as antagonistic parties, and not standing in any confidential relation to the plaintiffs, to collect their money in the ordinary process of the law. The testimony fails to show that they did anything during the redemption period to prejudice the right of redemption. They violated no confidence in asserting the right the decree gave them. The plaintiffs have failed to do the equity required of them and must take the consequences which the plain letter of the statute visits upon a judgment debtor who does not pay.

The counsel for the plaintiffs murmurs in the petition for rehearing to the effect that when the latter applied for a new loan they had an equity in the land worth $18,000 and when the proceedings terminated they had only $2,000 and the defendants had the land. The fallacy of this argument lies in the assumption that the residue of the estate of the plaintiffs was of that value. It is true the Circuit Court signed a finding of fact to that effect in the foreclosure suit. Instead, however, of impressing a lien upon the land in favor of these plaintiffs and against the present defendants for that amount, the trial court returned to the plaintiffs here the land itself and gave a lien to the other parties for the amount of their claims. Whatever the value was, therefore, the plaintiffs had it all. In judicial proceedings the ultimate test of values is a fairly conducted sale under process of court. Judged by that standard, the assumption of a value of $18,000 is refuted in the present juncture and the argument fails.

It is a matter of regret that the plaintiffs were not able to pay their debts and, as often happens, have lost their property; but the record shows nothing to avert that result. We adhere to the former opinion.

Rehearing Denied,

Case Details

Case Name: Smith v. Boothe

Court Name: Oregon Supreme Court

Date Published: Oct 22, 1918

Citation: 175 P. 709

Court Abbreviation: Or.