1,383, Brundage v. Home Sav. & Loan Ass'n of Minneapolis

Decision Date01 March 1895
Citation39 P. 666,11 Wash. 277
CourtWashington Supreme Court
PartiesBRUNDAGE ET AL. v. HOME SAVINGS & LOAN ASS'N OF MINNEAPOLIS ET AL. (NO. 1,383.

Appeal from superior court, Spokane county; Jesse Arthur, Judge.

Action by Jennie Brundage and Byron Brundage against the Home Savings & Loan Association of Minneapolis, Minn., and the Northwestern & Pacific Hypotheek Bank, praying for the appointment of a receiver of certain mortgaged property, for its restitution, and damages for withholding it, and for any other just and proper relief. From an order appointing a receiver, the loan association appeals. Reversed.

Samuel R. Stern, for appellant.

ANDERS J.

The appellant is a corporation organized and existing under the laws of the state of Minnesota, and was at all times hereinafter mentioned doing business in this state at the city of Spokane. The object for which the association was incorporated was, according to its charter, "to assist its members to buy real estate, and build, enlarge, or repair houses, paying for the same in weekly or monthly installments, and to accumulate funds from payments on stock subscribed by its members, and to loan such funds to its members on approved real-estate security or the paid-up stock of its members." It appears that, under its charter and the laws of Minnesota, it is empowered to loan its funds only to its members. It also appears that on or about July 28 1892, the respondents made and signed an application for membership in this association, and subscribed for 160 shares of its "running" or installment stock, and agreed to abide by the terms and conditions of its charter and by-laws. The association thereupon issued and delivered its certificate for said shares of stock to the respondents, who thereby became members of said association. About the time respondents made their application for membership and subscribed for the stock above mentioned, they executed and delivered to the association a written application for a loan of $16,000, which they represented they desired for the purpose of paying off and discharging an incumbrance upon their property situated upon the northwest corner of Monroe street and College avenue, in the city of Spokane, and erecting thereon a one-story brick building, to cost $5,000. The association advanced the sum of $16,000 to the respondents, and also the further sum of $3,200, for the purpose aforesaid, to secure which sums the respondents, on August 19, 1892, executed and delivered to the appellant association two mortgages on the above-mentioned property,-one for $16,000, and the other for $3,200,-both of which were recorded on the following day. Instead of erecting the building mentioned in their application for a loan to the appellant, the respondents entered upon the construction of a building of an entirely different character, and of much greater cost, having two stories and a stone basement, not contemplated in the original plan for the building. When the building was partially erected, they found they had not sufficient funds to complete it; that it was open and exposed to the elements, and was being greatly damaged; and that liens to the extent of about $3,000 had been filed against the property. Being so circumstanced, the respondents urged the appellant to advance sufficient money to properly complete the building and offered to give additional security for the payment thereof. After some hesitation, the appellant agreed to advance the further sum of $7,500; and respondents, to secure this sum, executed a third mortgage, covering the property upon which the other two mortgages were given and other property known as the "Brundage Block," on Post street, and also their homestead in Spokane. This mortgage so far as the Brundage block was concerned, was subject to a first mortgage, held by the defendant bank, in the sum of $10,000. To further secure the sums advanced and owing, the respondents executed to appellant, simultaneously with this last-mentioned mortgage, an agreement reciting that it was executed to secure the payment of the mortgages above mentioned, and in order to secure this loan, and providing that the rents and income should be collected and received by the defendant association, and applied to the reduction and payment of the mortgages above mentioned, to the expense of caring for said property, and collecting and disbursing said rents, and paying light and water rates, and making repairs which the mortgagee might deem necessary to have made, to the payment of any other liens existing against the property which the appellant might deem advisable to have paid; and until all such sums were paid, the appellant was to "take and hold the exclusive possession of all the property herein mentioned"; to rent any of said property, upon such terms and conditions as seemed best to appellant; to make leases for such times and upon such terms as appellant might deem best for its interests; to care for the said property in such manner as appellant might deem proper; to employ such agents as it deemed proper, who were to have full power and authority, under the direction of appellant and at the expense of respondents, to do any and all things in regard to the said property which the appellant might deem proper to do; to apply the moneys received as above stated; and to return to the plaintiffs any moneys remaining in its hands after the foregoing application had been made; and at least once in every six months to render a true and itemized statement of all moneys received and disbursed. This agreement was duly acknowledged and properly recorded in the auditor's office of Spokane county. Before the expiration of the six months within which the appellant was, under the provisions of the contract, to furnish an itemized statement, the respondents instituted this action praying for the appointment of a receiver, for the restitution and possession of the property, for $5,000 damages for the withholding thereof, for $2,750, value of rents and profits, and for such other and further relief as to the court might seem just and proper.

The complaint alleges, in substance, that on the 31st day of March, 1893, the respondents were the owners in fee and seised and possessed and entitled to the possession of the property described in the complaint; that, while so seised and possessed and entitled to the possession of said land and premises, the defendant did, on the day and year aforesaid without right or title, enter into and upon the same, and oust and eject plaintiffs therefrom, and ever since that day has willfully withheld and still withholds the possession thereof, to plaintiffs' damage in the sum of $5,000; that the value of the rents and profits of said land and premises from the 31st day of March, 1893, and while the plaintiffs have been excluded therefrom, is $2,750; that on the 31st day of March, 1893, a pretended agreement was prepared by defendant, whereby it was sought to have the plaintiffs deliver the possession of the property heretofore described to the defendant; that said defendant falsely and fraudulently represented to the plaintiffs that the said agreement for possession of the property was in part security for the payment of the said sum of $7,500, which the defendant agreed to loan to the plaintiffs for the purpose of completing the construction of a certain brick building in course of erection on part of the said described property, and that the agreement was never sent to the defendant and never signed by it, and that no part of the $7,500 was ever paid to the plaintiffs; that, upon procuring respondents' signatures to the said agreement in the manner aforesaid, the defendant caused the said pretended agreement to be recorded in the office of the auditor of ...

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