Smith v. Schultz

129 P. 640, 23 Idaho 144, 1912 Ida. LEXIS 93
CourtIdaho Supreme Court
DecidedDecember 19, 1912
StatusPublished
Cited by3 cases

This text of 129 P. 640 (Smith v. Schultz) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Schultz, 129 P. 640, 23 Idaho 144, 1912 Ida. LEXIS 93 (Idaho 1912).

Opinions

AILSHIE, J.

— This action was instituted for the foreclosure of a vendor’s lien on 480 acres of land. The amount alleged to be due was $5,000 and interest evidenced by four promissory notes. Judgment was entered for the plaintiff and defendant appealed.

The assignments of error are too numerous to be taken up in detail, and, indeed, as we view them, they are all reducible to a few propositions which we shall group and treat briefly herein. It appears that J. A. Schultz, individually and as president and principal owner of the capital stock of the Farmers’ Store Co., had some dealings with respondent, Theodore ~W. Smith, and advanced him money and finally took a deed to the land here in question as security for the amount ■due from Smith to the Farmers’ Store Co. The business ran along that way for some time and finally they had a settlement, and it was agreed that in consideration of the amount due and the execution of the four promissory notes, aggregating $5,000, that Schultz should have the land, and that the deed which had previously been held as security should become an absolute conveyance and should be so regarded and treated. The notes were accordingly executed and the business transactions with reference to the sale of the land were thereupon closed. In the meanwhile, Smith seems to have been residing on the land at such times as he was in the county. On the other hand, he had been absent from the county a considerable portion of the time since the first transaction. About the same time, Schultz, who had been in the employ of the bank of Nez Perce, became indebted to the bank, and also the Farmers’ Store Co., of which Schultz was president and principal owner, became likewise heavily indebted to the bank. In settling this indebtedness, Schultz deeded the land previously acquired from Smith to the bank, and the bank subsequently conveyed the land to the appellant, O. M. Collins, who was president of the bank.

The following are the essential questions which are presented on this appeal and the determination of which will be decisive of the case: First, does the fact that the conveyance from Smith to Schultz, in the first place, was intended as a [148]*148mortgage defeat Smith’s right to assert a vendor’s lien and to foreclose the same? Second, does the fact that Schultz’s wife signed the four notes representing the balance of the purchase price for the land, constitute security and amount to a waiver of the vendor’s lien? And, third, if Smith is entitled to assert a vendor’s lien against the property, is there sufficient evidence in the record to show that Collins had either actual or constructive notice of Smith’s lien at the time of his purchase from the bank, and had the bank either actual or constructive notice of the lien at the time of its purchase from Schultz? The answer to these questions will be determinative of the ease, and will cover all the material and essential assignments of error presented by appellants.

Addressing our attention to the first question above suggested, it may be observed that there is no controversy or dispute but that the conveyance when first given by Smith to Schultz was intended as security, and, under the decisions of this court, was a mortgage. (Kelley v. Leachman, 3 Ida. 392, 29 Pac. 849; Felland v. Vollmer M. & M. Co., 6 Ida. 120, 53 Pac. 268; Hannah v. Vensel, 19 Ida. 796, 116 Pac. 115; Bergen v. Johnson, 21 Ida. 619, 123 Pac. 485.) The parties to this action, however, are confronted with a number of subsequent transactions which have become admitted facts in the case that necessarily change their relations to the original transaction. After the adjustment of the accounts between Smith and Schultz, an actual sale took place, and while no new deed passed from Smith to Schultz, it is clear and apparent from the record that it was the agreement and understanding between them that the original deed should stand as an absolute deed of a fee simple title from Smith to Schultz, and the deed on its face purported to convey a clear and fee simple title. All their subsequent dealings were had upon the theory and basis that this did convey a clear and perfect title, and the notes were given by Schultz to Smith on that theory and understanding.

The author in 20 Am. & Eng. Ency., 2d ed., 942, says: The voluntary surrender or cancelation of a defeasance or an instrument in the nature of one, as a general rule, renders the [149]*149conveyance absolute and vests complete title in the grantee therein. Such a case is an exception to the maxim, ‘Once a mortgage, always a mortgage. ’ ’ ’

In Green v. Butler, 26 Cal. 596, the court, speaking of this same principle of law, said: “Where a deed and defeasance are in separate instruments, thus constituting a mortgage, a purchase of the equity of redemption by the mortgagee from the mortgagor for its full value, and a surrender of the defeasance to the mortgagee to be canceled, and the retention of it by the mortgagee, is in law a cancelation of the defeasance, though not actually destroyed. ’ ’ To the same effect, see note to case of Bradbury v. Davenport, 55 Am. St. 105; Gravlee v. Lankin, 120 Ala. 210, 24 So. 756.

There is still another and equally valid reason why appellants cannot now urge that the original conveyance from Smith to Schultz was a mortgage only. They are claiming their title through this same deed. The law is well established that “a party cannot be permitted to claim under and against the same deed.” (Gibson v. Lyon, 115 U. S. 439, 6 Sup. Ct. 129, 29 L. ed. 440; 11 Ency of Law, 446.) Of course, the deed being absolute on its face, though intended as security, could have furnished a basis for innocent purchasers to acquire a valid title, but the title would not be valid if they had notice of the fact that the conveyance was only intended as security. If, on the other hand, they had no notice of the fact that it was intended as security only and purchased on the theory that title was absolute, and at the same time had notice that the original vendor had a lien on the property for the balance of the purchase price, they would not be allowed to subsequently deny the absolute character of the conveyance in order to defeat the vendor’s lien. They must adopt one theory and pursue that consistently and adhere to it as well when it proves detrimental to their interests as when it proves beneficial. It is clear to us that the appellants cannot urge at this time that the conveyance from Smith to Schultz was only a mortgage and did not pass a clear title.

[150]*150Passing to the second proposition as to whether or not the fact that Mrs. Schultz signed these promissory notes with her husband for the balance of the purchase price of the land constitutes such security as amounts to a waiver of a vendor’s lien, we find that discussed in a twofold aspect. First, if this was purchased by Schultz, the husband, as appears to have been the case, then under the decisions of this court the wife did not become responsible on the note. (Bank of Commerce v. Baldwin, 12 Ida. 202, 85 Pac. 497.) Under the statutes of this state and the decisions of this court, “A married woman cannot bind herself personally for the payment of a debt that was not contracted for her own use or benefit or for the use or benefit of her separate estate, or in connection with the control and management thereof or in carrying on or conducting business therewith,” unless the contract and obligation is made so as to create a lien or encumbrance on her separate estate or some portion thereof as security for the payment of the debt.

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Bluebook (online)
129 P. 640, 23 Idaho 144, 1912 Ida. LEXIS 93, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-schultz-idaho-1912.