Nodine v. Richmond

87 P. 775, 48 Or. 527, 1906 Ore. LEXIS 125

• Court: Oregon Supreme Court
• Decided: December 4, 1906
• Status: Published

Opinion

Mr. Justice Hailet

delivered the opinion of the court.

1. In support of the claim for an accounting, it is alleged that the trustees have failed, neglected and refused to account to plaintiffs for the property transferred to them. To sustain the contention for damages for permitting the sale of the lands upon execution, it is charged that the trustees had in their possession and control sufficient funds arising from the trust property to have paid these claims and prevented the sales of the lands. Neither of these contentions is proved by the evidence. On the contrary, it is shown that Nodine was advised and consulted with regarding the sale and disposition of all property, real and personal, and that all proceeds therefrom were fully accounted for by the reports made in December, 1894, and again in December, 1895, and the sale and lease to Townley, and that, so far as the rents and profits of the lands were concerned, he consented that the trustees should farm the lands and apply the crops and other proceeds thereof to the payment of the maintenance and running expenses, and the surplus, if any, to his debts, and that he consulted and advised with and assisted them in the farming operations and the management of the property and sales. The evidence shows that, instead of having trust funds on hand unaccounted for which could have been applied to the payment of the judgments upon which executions were issued, the trustees had not only exhausted all personal property in the payment of pressing claims and had done so with Nodine’s knowledge, and had fully accounted to him for all receipts and expenditures, which account he had approved and accepted after having gone over it in detail, but had also used all reasonable means to sell the real estate in accordance with the terms of the contract, and failed. It was not until after all these things had been done, when all resources had been exhausted, that the executions were issued upon the judgments, and the evidence shows that at least one of the executions was issued at Nodine’s request. The proof is therefore wanting to support the charge of funds sufficient on hand to pay the judgments.

2. To recover the lands or the value thereof and have canceled certain deeds thereto, fraud and conspiracy upon the part of all the defendants are charged in procuring the original contract between Starr and plaintiff Fred Nodine, and in all the subsequent acts of defendants in relation to the plaintiffs and the trust property and its proceeds. It is alleged that defendant Starr was attorney and agent for all of the defendants in procuring the contract with Nodine, and that the defendants Marshall and Connell were cashier and vice-president, respectively, of the defendant Ainsworth National Bank, and that the defendants Wright and Townley were president and director of defendant First National Bank of Union, and that the trustees, conspiring with the other defendants, failed to pay, when they had sufficient trust funds therefor, certain judgments existing against the plaintiff Fred Nodine which were liens upon all his lands, and one of which was owned by the defendant Marshall and the other by the First National Bank of Union, and caused executions to issue thereon and upon a mortgage foreclosure decree in favor of the Western Hjawaian Investment Co., and had the lands of the plaintiff sold thereunder, and prevented competitive bidding at the sheriff’s sale of such lands by falsely representing that they were greatly incumbered by mortgages and other liens, and were being sold subject to such mortgages and liens, and thereby purchased the same at grossly inadequate prices, and that said trustees failed to notify plaintiff of the issuance of such executions and of the sales thereunder. It is further alleged that the defendant Connell, acting with the other defendants, by false and fraudulent representations, procured from the plaintiffs a quitclaim deed to all the lands so sold at sheriff’s sale, and also by the same means procured an assignment of the plaintiff’s interest in a certain suit then pending in the Circuit Court of the State of Oregon for Union County, brought by plaintiffs against all the defendants herein, except Connell, and that the defendant Richmond and wife made certain quitclaim deeds to defendants Connell and Marshall of said lands so sold to defraud plaintiffs and without their consent.

It is sufficient to say that the evidence fails to show any fraud on the part of Starr in the procurement of the original contract with Nodine, and none of the other defendants had anything to do with its inception, and Richmond and Wright were acting as trustees at the request of Starr and Nodine, but Starr was not agent or attorney for any of the defendants in that matter. The official relation of Marshall and Connell to the Ainsworth National Bank is admitted, but there is no evidence that any of them had anything to do with the management or disposition of any of the trustee property, except that Marshall, as cashier, in order to avoid the expense of foreclosing his mortgage upon a part of the plaintiff’s land, caused an execution to issue upon the judgment which he had bought from Couper and which was a prior lien to his mortgage, and had the lands sold and bought them, in for the bank, all of which he had a legal right to do, for both the judgment and mortgage were prior in time to the transfers to the trustees, who took subject thereto. The only evidence upon which the plaintiffs relied to prove fraud and conspiracy upon the part of the bank or its officers in connection with the trustees in the sale under the Marshall judgment was the fact that Wright and Connell looked over plats of the lands and drove over the lands, and Wright pointed out to Connell the west boundary of the lands mortgaged to Marshall, who held for the bank.

There is no evidence whatever to support the charge of fraud in regard to the sale under the foreclosure decree of the Western Hawaian Investment Company’s mortgage. Eighty-four acres of the lands sold at this sale were bought by Townley for $800, the sale confirmed and deed issued as in the other cases. The lands bought by him were separated from the main body by the investment company and adjoining other lands he had bought at the first sale. In each of these skies the judgment or mortgage lien existed long prior to the transfer from plaintiffs to the trustees, and each of the parties had a right to enforce the payment of his claim by the sale of any of or all lands upon which it was a lien. It is not contended that any of these claims were fraudulent in any way, but that the sales thereunder were collusive and fraudulent. The evidence fails to bear out the contention. Neither Marshall nor the bank of which he was a cashier was in any way connected with the plaintiffs or either of the trustees, and no duty rested upon them to refrain from buying plaintiff’s lands at a sale based upon the judgment against him. The Western Hawaian Investment Company was not connected in any way with the plaintiffs or the trustees, and had a perfect right to make the amount of its debt out of plaintiff’s property. The Marshall judgment and investment company mortgage, both being prior in time to the transfer to the trustees, were also, it is conceded, prior in right thereto. No confidential relations existed between either Marshall or the bank he represented, or the investment company and Nodine or the trustees. There was no fraud or collusion, and no interference of any bind in bidding at either of these sales.

3. The only remaining reason alleged for setting them aside, if any, is inadequacy of price. This court, in accord with the great weight of authority, has held in Farmers’ Loan Co. v. Oregon Pac. R. Co., 28 Or. 70 (40 Pac. 1093), “that mere inadequacy of price, where parties stand on an equal footing, and there are no confidential relations between them, is not of itself sufficient to set aside a sale, unless the inadequacy is so gross as to be proof of fraud, or to shock the judgment and the conscience.” The plaintiff personally, as shown by his letters to Starr, had made an effort to sell his lands to pay his debts, and had failed. Starr, Richmond and Wright and all the various agents by them employed had likewise failed to sell the lands, and plaintiff had been willing to accept at one time an average of $15 an acre if he could get out and have something left. After all this the lands bought by Marshall, being about 1,440 acres, were offered at public sale by the sheriff. Marshall’s judgment then amounted to over $2,000. It and taxes were a first lien upon 280 acres lying about If miles east of the remaining lands levied upon, which were contiguous and also subject to the lien of his judgment and taxes, and 1,040 acres thereof subject to a subsequent mortgage in his favor for $4,000 and two prior mortgages for $4,000 each in favor of Balfour, Guthrie & Co., while 40 acres of the remaining 160 were subject to a prior mortgage in favor of the Western Hawaian Investment Company, with other lands, for $5,000 under which they were taken from Marshall, and the 120 acres were subject to a mortgage for $1,200 in favor of the Alliance Trust Company, making a total of claims against the property, other than taxes and the Marshall judgment, of over $13,200, and, adding the taxes and judgment, the liens would exceed $15,000.

4. There is evidence in the record that the entire Nodine tract was worth in 1894, 1895 and 1896 an average from $15 to $30 an acre, but much of it was swamp land, used for fall and winter pasture, and plaintiff claims in the original complaint filed in the other ease, and which was introduced in evidence in this ease, that much of the meadow had been destroyed before 1896, when this sale occurred, and the evidence shows it had been badly flooded each spring by the waters of Catherine Creek, which flow through it, and was not in a good state of cultivation, being infested with fox tail and mustard to such an extent that portions of the crops had to be harvested in patches, and the evidence is strong throughout the record that it could not be sold at any reasonable price, even the lowest given by the witnesses. It is also in the record that after the Ainsworth National Bank had acquired title to the lands through the sale to Marshall, and had paid all taxes and other claims against them, it sold them for only $19,800, and gave the purchasers long time in which to make their payments. These facts are not sufficient to support the claims of inadequacy of price so far as the sale to Marshall is concerned. The sale under the decree foreclosing the Western Hawaian Investment Company mortgage is in practically the same condition. Eighty-four acres not included within the meander lines of Tule Lake were bought at that sale by defendant Townley for $800, and the remainder, about 1,000 acres, mostly within the meander lines of Tule Lake, and title to which was in dispute and on appeal in this court at the time of sale, were bought by the investment company for the amount of its decree,' less the $800 bid by Townley, and afterwards sold for $8,500, which was about the amount of its judgment, costs and expenses. In view of the foregoing facts and the financial conditions then existing, and the status of the lands sold as to incumbrances and title, we cannot say that the price bid was even inadequate, and it was clearly not so grossly inadequate as to be proof of fraud or to shock the judgment or conscience.

5. Plaintiffs vigorously contend that the sale to Townley under the bank execution should be set aside. The record shows that prior to the issuance of this execution Marshall had issued execution upon his judgment and levied upon a part of plaintiff’s lands, and that the Farmers’ & Traders’ Bank of La Grande had brought suit against plaintiff to foreclose its mortgage upon other lands, and that plaintiff, having failed in his efforts under the Starr contract to sell his land, thought that his lands must go to pay his debts, and so indicated, to Wright, and suggested that the bank, whose customer he had been, try to save itself, and the execution was then issued, not through fraud or collusion as claimed,-but practically at plaintiff’s request. The judgment in favor of the bank was valid, and is not questioned, and it had been docketed in December, 1893, long before the transfer to the trustees, but was subsequent in time to the Marshall judgment. The execution on the latter judgment having already been levied upon certain lands, the execution on the bank’s judgment was levied on the remaining lands of plaintiff, which were incumbered as heretofore stated and the title to the greater part thereof imperfect and in dispute in the foreclosure suit of the Farmers’ & Traders’ Bank, and also questioned by owners of lands bordering the Tule Lake, who claimed that Tule Lake was not swamp land, but a lake the bed of which belonged to them as riparian owners, and one of them so far asserted his claim in the summer of 1896 as to fence a large portion of the lands included in the Townley mortgage, but was afterwards ejected as a trespasser. The lands were sold at public auction by the sheriff, and it is claimed that Wright and Townley prevented competitive bidding, or, as it is sometimes called, "chilled the bidding,” by falsely telling prospective bidders that the lands were greatly incumbered. The evidence on this point is to the effect that while the property was being offered for sale by the sheriff, in the presence of Wright and Townley at the courthouse, N. Schoonover came out of the courthouse and made a bid upon the property, which bid was raised by Townley, who then told Schoonover that the lands were being sold subject to mortgages thereon. Whereupon Schoonover went away and the lands were bought by Townley, the sale confirmed and deed issued without objection of any kind on the part of plaintiffs. Schoonover, when asked if he had been kept from bidding, answered, "No, sir; I could have gone on and bid for that matter.” This was the only sale where anything was said about mortgages or liens by any one so far as the evidence shows, and the facts disclosed wholly fail to prove the allegation of preventing competitive bidding, or that the representations made were false; but, on the contrary, the record shows that they were true. In Leake v. Anderson, 43 S. C. 458 (21 S. E. 439), a similar truthful statement made by an intending purchaser to other prospective bidders regarding the title to the land offered for sale was commended, “as it tended to prevent an unwary bidder from 'buying a lawsuit.’ ”

6. It is contended that the purchase was made by Townley for the joint benefit of himself, Wright and the Bank of Union, but this contention is largely based upon inferences drawn from the fact that Wright and Townley were connected with the bank at the time of the sale, the former as president and the latter as a director. So far as the bank and Townley were concerned, they owed no duty to the plaintiff, and either of them had a right to purchase at the sale for their individual or joint benefit so long as there was no collusion or fraud between them and any one who did owe a duty to plaintiff. The only evidence connecting Wright with this sale is in relation to the issuance of the execution and his presence at the sale, and the former was done at the suggestion of plaintiff, while the latter was the ordinary act of a bank officer in sales wherein his bank is interested. Even granting, as plaintiff claims, that Wright as well as Townley told Schoonover at the sale that the property was being sold subject to mortgages, it was the truth, and the same rule would apply as to the statement there made by Townley. The fact that Wright and Townley, officers of the bank, were present at the sale is not enough to warrant an inference that Townley bought for the joint benefit of all. Especially is this true in view of the fact that Townley testifies positively that he bought for himself and gives his reasons why he did so, and the sheriff’s certificate of sale and the deeds thereunder were issued to him, and there is nothing in the record that contradicts these facts. It is true that some three years later, when he was vice-president of the bank, the certificate of sale for the lands bought by the Western Hawaian Investment Company was assigned to him as trustee for the bank; but at this time the plaintiff and all the defendants herein had lost all rights to the land by foreclosure sale, and the rights which he acquired as trustee for the bank and afterwards from it for himself were not acquired as a redemptioner or in any confidential or fiduciary character, but as a purchaser from one who had rightfully acquired all rights of the plaintiffs in the lands purchased, and not for the purpose of perfecting any questionable rights he might have in the property as against the plaintiff. We fail to see wherein the claim of purchase by Townley for the joint benefit of himself, Wright, and the bank is established.

7. Inadequacy of price is also relied upon and strenuously urged to set aside this sale. The same rule applies to this, sale as to the sales to Marshall and the investment company cited, supra. Townley was not acting as trustee or in any confidential relation to the plaintiff or the trustees. He was merely a tenant whose rights were being interfered with by an execution issued at the request of plaintiff upon a judgment prior to his lease, and as such tenant he had a right to purchase the lands: 18 Am. & Eng. Enc. Law (2 ed.), 423. The plaintiff and at least one of the trustees knew of the issuance of the execution, and the trustee was present at the sale, and under such circumstances it cannot be presumed that the purchase was for the benefit of the trustees or the plaintiff.

8. The only question then is: Was the price so grossly inadequate as to come within the rule cited, supra? The mortgages upon these lands have been heretofore mentioned, and at the time of sale a foreclosure suit by the Farmers’ & Traders’ Bank of La Grande was pending, and the title to much of the 1,800 acres embraced in Tule Lake was in dispute, and owners of bordering fractional lots were claiming as riparian owners as heretofore stated. In addition to the judgment lien of the bank the mortgages heretofore referred to aggregated, with interest, about $15,000, all prior to the judgment lien. Part of the lands were meadow lands, but floods during the three springs preceding the sale had greatly injured crops, and much of the land was foul with fox tail and mustard. Considering these facts, and the further fact that the lands bought by Brewster and the investment company were sold some time later for scarcely more than the purchase price, and that, too, after the dispute as to riparian claims had been settled in favor of the lands, we are forced to conclude as in the other sales that the price was not inadequate.

The foregoing conclusions call for an affirmance of all that part of the decree appealed from by the plaintiffs.

9. The remaining questions relate to the quitclaim deed made by plaintiffs to defendant Connell January 8, 1897, and by Richmond and wife to Marshall and to Connell after the sale to Marshall. The record shows that after the sale to Marshall had been confirmed by the court and the sheriff’s deeds issued to him in November, 1896, and he had conveyed to the bank, or J. C. Ainsworth as its representative, the bank was anxious to get its money- out of the lands bought, but could make no disposition of them without first procuring the inchoate right of dower of plaintiff’s wife, who had not been a defendant in the judgment under which it had sold and purchased the lands through Marshall, its cashier, or barring such right by foreclosure of the mortgages against the lands. Defendant Connell was sent to negotiate for her right, and after considerable delay a quitclaim deed was made to him by plaintiffs of all their lands that had been'sold, and at the same time they assigned to him their interest in the suit then pending against the trustees and other defendants heretofore referred to, he at the time paying Nodine $1,000, which he claims was for the deed, but plaintiff claims it was for the assignment of their interest in the suit. An agreement was also signed by Connell and plaintiffs’ son that one-half of the results of the suit should go to the son, and this plaintiff testifies was for the benefit of plaintiffs, so that in effect the assignment was only for one-half of the results of the suit. The testimony of Connell and two other witnesses who were present, one of whom was wholly disinterested, is to the effect that the deed was procured to secure the inchoate dower interests of Mrs. Nodine and enable his bank to get its money out of the Nodine lands, while plaintiffs claim that the deed was an after consideration to the assignment of their interests in the suit and to assist Connell in prosecuting the suit, but both deed and assignment were signed at the same time. In view of the fact disclosed by the record that Nodine had theretofore assigned the same interest in the lawsuit to a lawyer for the same purpose he assigned to Connell, and without other consideration than that of a promise to prosecute the suit, we think the contention of Connell, supported, as it is, by the evidence of a disinterested witness, the more reasonable that the quitclaim deed was given for a consideration and for the purpose claimed by him for the bank, and that the assignment of the interest in the lawsuit was for the purpose of having it prosecuted by him, especially does this appear reasonable in view of the fact that, so far as his bank and Marshall were concerned, a motion to strike out parts of the complaint in the suit had been allowed and they were virtually out of the ease. Such being the case, the deed should stand, and, the plaintiffs having thereby parted with whatever interest they might then have had in the land, they could not now question the deeds made by Eichmond and wife, whose interests had been sold under the executions.

10. As heretofore stated, the decree against Starr was entered upon an amended complaint not served upon him, and under Section 100, B. & C. Comp. and Goodale v. Coffee, 24 Or. 346, 356 (33 Pac. 990), this was error. It follows that the decree must be modified as to the decree against Starr and the defendants Marshall, Connell, and the Ainsworth Bank, and a decree entered here dismissing the suit as to them, and affirming the decree in all other respects.

11. Costs will be awarded to the defendants. Modified.