Haag v. Baker

97 P. 473, 78 Kan. 437, 1908 Kan. LEXIS 82

• Court: Supreme Court of Kansas
• Decided: July 3, 1908
• Docket: No. 15,577
• Status: Published

Opinions

The opinion of the court was delivered by

Smith, J.:

The principal controversy is whether at the time Mrs. Baker bought the land at the master’s sale she should be held to have done so as trustee for her brothers and her mother’s estate. That she intended to purchase for herself alone can hardly be questioned under the evidence. It is contended that she had originally taken title to the land, with her brother John, as security for a debt owing to her from her brother B. F.; that she had accepted from John an assignment of a mortgage which he personally held against the land, and, also, an assignment of a mortgage from John as administrator of the mother’s estate; that such assignments were made- for the purpose of enabling her to get an extension of the mortgage to the Northwestern Life Insurance Company; that she released these mortgages of record, together with her own, for that purpose, and procured the extension for the benefit of herself, her brothers and co-heirs. From these facts it is argued that Mrs. Baker became a. trustee- for her brothers and co-heirs, and could not at her pleasure devest herself of the responsibility, but that all she did' thereafter in relation to the land must enure, pro rata, to the benefit of herself and those she so represented.

It is true that one occupying any relation of trust or agency to another should not be permitted to manipulate the property or business of such other to his own benefit or to the disadvantage of the other. On the other hand, where, as in this case, one has an interest in a property prior, and in a measure adverse, to the interest of another, and the other, with knowledge of the facts, places his interest in the hands of the one having the prior interest for protection, the ordinary rules governing trustees and cestuis que trust do not apply. It is at most a subservient trust or agency. Good faith, to be sure, must be exercised by the agent in the management of the property or business; but good faith does not in such a case require the relinquishment of the agent’s interest therein, nor of his priority.

■ B. F. Haag owned the land and mortgaged it to the insurance company for $6000, then to Mrs. Baker for $2500, then to John Haag for $1300, then to his mother, or to her estate, for $3000,- aggregating practically tne full value of the land. A judgment was about to be rendered against him for several hundred dollars, and voluntarily, for the purpose of avoiding a levy on the land for the judgment, and for the purpose of protecting the interests of his relatives, he deeded the land to Mrs. Baker and his brother John. B. F. Haag afterward paid the judgment, but became unable to pay the interest on even the first mortgage. The insurance company brought a suit against all the parties, and procured a judgment for about $6200 and a decree foreclosing the rights of all the defendants and an order for the sale of the land. Mrs. Baker sought unavailingly the assistance of her brother John and the coheirs of the estate to pay off .this judgment. They practically disclaimed any interest in the land, or faith in the outcome, although she offered to pay considerable more than her proportionate share of the money. Thereupon John assigned to her the two mortgages held by him, and she released them and her own mortgage of record. Then she borrowed the money and paid upon the judgment of the insurance company a sufficient sum to reduce it to $5000, and secured a contract from the company to stay execution of the remainder for three years, provided certain annual payments were made upon the principal and the interest was paid semiannually. It was evidently still intended to allow her brother B. F. to redeem the land, as he joined with her in the contract with the insurance company for the extension, and he was to make the payments thereunder. He made two payments of interest.. but failed to meet the first stipulated payment upon the principal. Thereupon the insurance company returned a proffered further payment of interest and proceeded, in accordance with their judgment, to sell the land. Still not one of. the parties to this suit raised a hand to assist, but Mrs. Baker borrowed the money, and, we must presume, at a regularly conducted public. sale was the highest bidder and became the buyer of the land. Had. she not bid thereon the land might have been sold at a lower price and left a deficiency judgment against B. F. Haag. All the rights -of all the parties to this action to that land were sold and extinguished by the sale, and all the. title Mrs. Baker now holds thereto was acquired by the master’s deed. By the findings of the court the land is considered to have been worth more than twice the amount it sold-for, but from common knowledge .of the public sale of lands at that time it must be said to have been sold at a price more proportionate to the real value than was then common.

The court found that Mrs. Baker in all these matters acted in good faith, and the finding is supported by evidence. B. F. Haag entered into written contracts leasing the land from Mrs. Baker for several years after the sale, and after, as he admits, he was informed by her that she was the sole owner thereof, and only sets up a claim of title and for an accounting when sued for rent. The other claimants remained- silent until made defendants to the suit on the application of B. F. Haag. One heir even then disclaimed any interest. These facts are immaterial except as circumstances tending to justify the findings of the court. That the land has greatly increased in value since the master’s sale and is now an abundant reward to Mrs. Baker for h.er valiant efforts to save it is equally immaterial.

The judgment is affirmed.