Appeal
from Circuit Court, Umatilla County; C. L. Sweek, Judge.
RAND
Justice.
This is
an appeal from a decree foreclosing a mortgage on 320 acres
of farm land in Umatilla County, Oregon. The mortgage was
given on October 17, 1932, by James T. Lieuallen and his
second wife to the First Inland National Bank of Pendleton.
The plaintiff, as agent for the shareholders of the bank, was
substituted for the receiver of the bank.
The one
question is whether, under the terms of a contract entered
into between Lieuallen and his deceased former wife and the
mutual wills by them executed in pursuance of said contract
he had a lawful right to encumber this property with a
mortgage. If he had no such power, then the lien of the
mortgage against the land is invalid and unenforceable.
It is
admitted that, on June 10, 1918, James T. Lieuallen and Lucy
I. Lieuallen, his former wife who has since died and whose
will has been probated and whose estate he has
since received, entered into the following contract in
writing:
"We
James T. Lieuallen and Lucy I. Lieuallen, husband and wife
hereby agree as follows:
"That
we will make and execute with due and legal formalities a
joint will to our property, willing all the real and
personal property to each other during the lifetime of the
survivor, and will nominate the survivor as the executor of
executrix of the said will without requiring bonds;
that the survivor shall have the sole and exclusive handling
of the property and each and every part thereof, but will not
be empowered to sell any of the farm lands, but will be
allowed and empowered to sell all personal property of every
kind or nature, the lands belonging to the estate known as
the 'Mountain Land' and any city property which may
be owned by each of us at the time of the death of one of us.
The survivor is to have all of the rents, issues and profits
of the farm lands and to use the same as he or she may
dictate. We, however, jointly suggest that the overplus over
a sufficient amount to reasonably maintain the survivor, be
converted into farm property or loaned upon farm security.
"In
the event of the purchase of any additional farm lands out
of the proceeds of the sale of the Mountain Land or the
personal property, or the rents, issues and profits, the
same shall be kept as intact as the present farm lands.
After the death of the survivor of us, and at the time of
the youngest child arriving at the age of majority, the
land shall be divided share and share alike among our
children, Lawrence L. Lieuallen, Fred A. Lieuallen, Stella
Lieuallen, James T. Lieuallen, Jr., Ethel Bayne, Lucy I.
Woodward, Ravella L. Lieuallen, Paul Lieuallen and Francis
C. Lieuallen; the sons and daughters shall be allowed to
select and occupy parts of the lands as a home, but they
shall never be allowed under the will to sell, mortgage,
hypothecate or encumber any of the lands during their
lifetime. The land shall be apportioned by
choice, with the first choice to the youngest child and the
other choices following in the order of their seniority. In
the event of the death of any of the children, leaving
issue of his or her body prior to our death, the share
which would go to the parent shall be governed so far as
the selling, encumbering or otherwise disposing of the same
by the same rule as the other children, that is, the
grandchildren during their lifetime will not be allowed to
sell, hypothecate, or encumber the property, and in the
event of the children not being able to divide the farm
lands amicably they shall select three disinterested
persons who shall make a distribution of the lands, which
shall then be subject to choice in the manner provided
herein. The lands which are occupied by each child shall be
under the exclusive charge and jurisdiction of that child
and he or she shall in no event be required to account for
any use, occupancy of rents, issues and profits of the
premises.
"The
land at the time of the death of the children, except in
the event of the death of a child prior to our death, shall
vest in fee simple in the grandchildren. In the event of
the trust not being fully completed on the death of the
survivor of us the two eldest children are hereby nominated
as trustees to complete the administration, without
requiring bonds for security for the discharge of their
trust, and it being our desire that no compensation for
such service be paid other than necessary Court costs and
attorney fees.
"It
is understood that nothing herein shall prevent mutually
the making of a new will or the making of a new agreement,
either or both, but our said wills may under no
circumstances be changed or altered after the death of one
of us.
"In
Witness Whereof we have hereunto set our hands and seals
this 10th day of May, 1918.
"J. T. Lieuallen (Seal)
"Lucy I. Lieuallen (Seal)
"Witnesses:
"C.
M. Comstock
"J.
G. Thomas."
It is also admitted that, on the same day, in
conformity with said contract, both Mr. and Mrs. Lieuallen
executed a mutual or reciprocal will, each containing the
same identical terms as those contained in the other with the
sole exception that the names of the parties were transposed
and the words "husband" and "wife" were
substituted for each other wherever the same was proper. Mrs.
Lieuallen's will reads as follows:
"Know
All Men by these Presents: That I, Lucy I. Lieuallen, now
of Walla Walla, Washington, but lately of Umatilla County
Oregon, being of sound mind and memory and not suffering
under duress, menace, fraud or undue influence of any
person or persons whatsoever, and judging it best to make,
hereby do make this my last will and testament:
"It
is my will that my debts and that the charges of my funeral
be paid as soon as conveniently may be after my decease,
and I leave the charge of my funeral to the direction of my
family.
"Having
heretofore made an agreement with my husband, James T.
Lieuallen, as to the disposition of our community
property, now in confirmation of such agreement I give and
devise all of my estate, real and personal, in the following
manner, to-wit:
"All
of my property, real, personal, or mixed of whatever the
same may consist or wherever the same may be found, I give,
devise and bequeath to my beloved husband, James T.
Lieuallen, to have and to hold the same during the term of
his natural life, giving and granting unto my said husband
the sole and exclusive handling of the property and each
and every part thereof, but not empowering my said husband
to sell any of the agricultural property of which we are
possessed at all times, however, giving and granting to my
said husband the right to sell any or all personal property
of every kind or nature, and also to sell that part of our
estate known as the 'Mountain Land'
and which land is not agricultural property, and also to
sell any city property or town lots which may be owned by
me or by us at the time of my death. My said husband shall
have all of the rents, issues and profits of the farm lands
and shall have the right to use the same as he may desire.
I, however, strongly recommend and suggest that all
overplus over a sufficient amount reasonably necessary to
maintain my said husband and such of our family as reside
with him be converted into farm property or loaned upon the
security of mortgage upon agricultural property, and in the
event that additional farm lands shall be purchased out of
the proceeds of the mountain land or personal property, or
from the rents, issues, and profits, I desire that the same
shall be kept as intact as the present farm lands.
"After
the death of my husband, provided that at such time our
youngest child shall have arrived at the age of majority, I
direct that the real estate in which I and my husband are
interested shall be divided share and share alike among our
children, to-wit: an undivided one-ninth (1-9) to each of
the following named sons and daughters: Lawrence L.
Lieuallen, Fred A. Lieuallen, Stella Lieuallen, James T.
Lieuallen, Jr., Ethel Bayne, Lucy I. Woodward, Ravella L.
Lieuallen, Paul Lieuallen and Francis C. Lieuallen.
"It
is my direction that with the consent of my said husband
and by mutual agreement that our sons and daughters shall
each be allowed to select and occupy parts of the farm
lands as a home; provided, however, that it is not the
intention of this indenture, nor is it my will that any of
our said children shall be allowed or permitted to sell
mortgage, hypothecate or encumber any of the lands during
their lifetime, and in the apportionment of lands to each
of our children, it is my desire that the land shall be
divided into parcels of the same value as near as may be,
this apportionment to be made either by mutual agreement
among the heirs, or in case of inability among the heirs
the portioning of said land to be performed by three
disinterested parties appointed by the Court
having jurisdiction of my estate, and then after said lands
shall have been parcelled I direct that the youngest child
shall have first choice as to the parcel he or she may
desire, and thereupon each of the children in the order of...
