Albany & S.W. Ditch or Canal Co. v. Crawford

• Decision Date: 19 May 1884
• Citation: 4 P. 113,11 Or. 243
• Parties: ALBANY & SANTIAM WATER DITCH OR CANAL CO. v. CRAWFORD.
• Court: Oregon Supreme Court

4 P. 113

11 Or. 243

ALBANY & SANTIAM WATER DITCH OR CANAL CO. v. CRAWFORD.

Supreme Court of Oregon

May 19, 1884

Appeal from Linn county.

Powell & Bilgen and Bonham & Ramsey, for appellant.

Flinn &amp Chamberlain and R.S. Strahan, for respondent.

WATSON, C.J.

This is a suit in equity to have a deed, absolute on its face declared a mortgage in accordance with the alleged intention of the parties. The deed was executed April 21, 1876, and the complaint filed April 4, 1881. All the property of the appellant, both real and personal, and including the Albany &amp Santiam Water Ditch or Canal, with its right of way, water privileges, etc., several small tracts of land, and a boat called "Red Jacket," situated in Linn county, is covered by the deed. Possession accompanied the execution of the deed to the respondent. He paid $33,900. Appellant claims that this was a loan merely, and that the deed, although absolute in terms, was only intended as a mortgage. This is disputed by the respondent, who insists that the transaction was in fact what on its face it purports to be,--an absolute and unqualified sale. This seems to us the only material issue in the case, and it is one of fact simply, to be determined by the evidence in the record. There is no controversy over the proposition of law involved in the very institution of the suit itself, that a deed, absolute in terms, may be shown by parol evidence to have been intended as a mortgage in a court of equity, and such intention preserved and effectuated. But the evidence to justify this interposition should be clear and satisfactory. 2 Whart.Ev 1032. The presumption is that the transaction was in fact an absolute conveyance, just as it appears from the face of the deed to have been, and it is one of no little weight either.

The great amount of evidence in the case renders any detailed examination impracticable, as it certainly would be unprofitable. A general analysis is all that would be attempted. A noticeable feature of the appellant's case is the entire absence of any direct evidence of the alleged agreement by the respondent to loan it the money, and take the deed for his security. Not a single witness has testified to a personal knowledge of such fact, or name the party making such an agreement with Crawford, or in behalf of the company. Here was a large corporation engaged in an extensive, costly enterprise, with its capital stock of $30,000 all paid up and expended in the prosecution of the work, and an indebtedness of $33,000, incurred in completing it, still hanging over it a board of seven directors and a large membership of stockholders deeply interested in the company's affairs, and most, if not all, residing in the immediate vicinity of the company's principal office or place of business at Albany, Linn county, this state; and yet not a particle of direct testimony as to the alleged agreement on Crawford's part; that is, to convert the deed, absolute on its face, and including all the company's property, into a mortgage. Every one of the directors, save D.M. Thompson, who had deceased when the testimony was taken, and a majority of the stockholders, have testified in the case, but not one of the whole number attempts to give the time, place, or parties, when, where, or with whom Crawford entered into the alleged agreement. The only proof the company offers upon this vital issue consists of declarations made by Crawford, and the "understanding" the individual members of the company had as to the character of the transaction at the time, and the opinion of witnesses as to the "general understanding" of the company at the time in respect to the matter. Luther Elkins is the only witness for the company who testifies to declarations made by Crawford before the sale. The precise bearing and real value of his testimony cannot be properly estimated without a brief reference to previous events leading up to the sale, and disclosing its inducements, as well as to his subsequent conduct.

The company was incorporated January 28, 1871, for the purpose, among others, of constructing and operating the water ditch or canal described in Crawford's deed. This work was completed in 1874, but, as already stated, leaving the company largely in debt. About $22,000 of this indebtedness was held by six or seven of the stockholders, of whom Elkins was one, and was secured by mortgage on the ditch and other property of the company. In 1873, and again in 1875, the company sought to raise the necessary funds to liquidate this indebtedness by increasing the amount of its capital stock, but apparently without avail. On January 11, 1876, the board of directors ordered a meeting of the stockholders called for February 25th ensuing, to consider a proposition to sell the property to pay such indebtedness, divide any surplus, and dissolve the corporation. The stockholders met accordingly, and by a vote--122 to 2--authorized the sale, but requiring that it should be at public auction, and upon four weeks' notice. Before taking this action, however, the meeting rejected a proposition by Elkins to accept additional subscriptions to the capital stock, upon certain designated terms, and to issue and sell bonds of the company, secured by a first mortgage on its property, to raise the necessary funds to meet its obligations. The board of directors thereupon gave notice of the sale by publication for four weeks in the States Rights Democrat, a weekly newspaper published at Albany, and fixed the time at 1 o'clock P.M., April 15, 1876. At this sale the directors and stockholders were generally present. Crawford did not make his appearance until about 3 o'clock, and the property was not offered until his arrival. Elkins says that Crawford came to the court-house, where the sale had been advertised to take place, about half past 3 o'clock, and, seeking him out, told him he desired to talk with him; that they walked back into the court-house, behind the staircase, together, and Crawford then told him he was about to loan the company a sufficient amount of money to pay the debts, and asked him what amount the company owed; that he told him upwards of $30,000, perhaps $32,000 or $33,000, but he could not tell him precisely, it might be a little more or a little less; that Crawford repeated that he had agreed to loan the company the money necessary to pay its debts, and that the time was five years, and as much longer as the company desired to keep it,--as long as he lived, for that matter; that he further said the ditch and property were to be turned over to him as security, and he was to have the income to pay his interest, and that the company were his old friends and neighbors, and had done a great work for Albany and the whole country, and he would sooner they should have the money than others; that Crawford said, just as they were about to separate, "if he bid upon the property at all he would bid it in for the company," and that "upon that agreement" he went with Crawford to the door, and in a few minutes the property was put up for sale, and bid off by Crawford. This is the only declaration by Crawford operating as an admission of an agreement by him to loan the money bid at the sale to the company, and take the deed as a security for its repayment, made prior to the sale, that the company has offered any evidence to prove.

Crawford denies having any conversation whatever with Elkins before the sale, and upon this point he is strongly corroborated by Allen Parker, a director of the company, who was also present at the sale. But Crawford admits that he did talk with Elkins after the sale, and told him if he formed a new company and could not dispose of all the stock he Crawford, would sell them the property and take $5,000 of the stock in the new company. Elkins himself bid $33,800 on the property, or within $100 of the price at which it was knocked off to Crawford. J.F. Backensto, a director of the company at the time, and one of its most important witnesses in this suit, says that Elkins came to him after Crawford had made his last bid and asked him if that would cover the debts. And that upon his replying that "it would, and more too," Elkins smiled and said, "that is all I want." Jason Wheeler, also a director, but a witness for Crawford, says that Elkins asked him during the sale if he thought Crawford would give any more. That if he, Wheeler, thought so, he, Elkins, would raise him another hundred. That he told him he might try, as Crawford might bid higher, but Elkins concluded not to do so, giving as his reason that Crawford might let him take the property, and that would ruin him, as he could not raise the money to pay for it. Now, it is plain from the testimony of Elkins himself that if any loan was contemplated by any one at the time of this alleged conversation with Crawford, that no amount had been settled upon. If he is to be credited, Crawford designed to advance only money enough to pay off the debts, which he then and there informed him amounted to from $30,000 to $33,000, possibly a little more or less. Yet Crawford is not shown to have manifested any surprise...