410 F.2d 583 (9th Cir. 1969), 22207, Lenske v. Knutsen

Docket Nº:22207.
Citation:410 F.2d 583
Party Name:Reuben G. LENSKE, Appellant, v. Magner Dale KNUTSEN and Judith Knutsen, Appellees.
Case Date:April 15, 1969
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 583

410 F.2d 583 (9th Cir. 1969)

Reuben G. LENSKE, Appellant,


Magner Dale KNUTSEN and Judith Knutsen, Appellees.

No. 22207.

United States Court of Appeals, Ninth Circuit.

April 15, 1969

Rehearing Denied May 12, 1969.

Page 584

Reuben Lenske, pro se.

Donald H. Pearlman (argued), of Keane, Haessler, Bauman & Harper, Portland, Or., for appellees.

Before POPE, 1 HAMLEY and MERRILL, Circuit Judges.

MERRILL, Circuit Judge:

This proceeding started out as a suit brought by the United States to foreclose a mortgage held by Farmers' Home Administration, an agency of the United States. The mortgagor-defendant was appellee Magner Knutsen, and appellant Lenske was joined as one claiming interest in the property. The rights and interests of the United States are not involved here. The dispute before us resulted from a cross-claim filed by Knutsen against Lenske asserting a right to be adjudicated owner of the property subject to the Government mortgage and charging Lenske with fraud in depriving him of title. In the District Court judgment was rendered in favor of Knutsen. His rights to the property were established and judgment against Lenske for fraud was rendered in the sum of $250 as general and $5,000 as punitive damages. This appeal followed.

The background of Knutsen's claim of fraud, briefly, is as follows:

Lenske had been Knutsen's attorney. Knutsen testified that on Lenske's advice he had deeded the property to one Heddon and wife (under the assumption that the grantees were fictitious) in order to

Page 585

prevent his former wife from reaching it to satisfy her claim for an accrued support obligation. It was his understanding that the property would be retransferred to him by Lenske as soon as his financial difficulties were at an end. When he sought to secure retransfer Lenske refused, stating either that he couldn't or wouldn't. Knutsen, learning that the Heddons were not fictitious, went to them seeking retransfer and was told that they had no knowledge of the deed to them. They refused to clear the title since they did not wish to get involved in the dispute between Knutsen and Lenske. At this point, Knutsen ceased making payments to the Government on the mortgage under the theory that he couldn't see any sense in buying property for Lenske or the Heddons.

Lenske's contention was that Knutsen owed him money for loans...

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