Balfour v. Parkinson

• Decision Date: 31 January 1898
• Citation: 84 F. 855
• Parties: BALFOUR et al. v. PARKINSON et al.
• Court: United States Circuit Court, District of Washington, Northern Division

84 F. 855

BALFOUR et al. v. PARKINSON et al.

United States Circuit Court, D. Washington, Northern Division.

January 31, 1898

Harold Preston, for complainants.

Thomas Burke, for defendant Hopkins.

HANFORD District Judge.

This is a suit in equity by Robert Balfour, Robert Brodie Forman, and Alexander Guthrie, to foreclose a mortgage executed by the defendants Parkinson and wife, covering certain real estate situated in the business part of the city of Seattle. It is unnecessary to describe with particularity the property mortgaged, but, for convenience of reference, it will be designated as lots 7, 8, 9,and 10. Said mortgage was made to secure a loan of $60,000, which money was expended by Parkinson in the erection of a building upon lot 7. The defendant Charles Hopkins, by a cross bill, also sets up a mortgage to him covering the same property, given by Parkinson and wife, to secure part of the purchase price for said property, amounting to $61,502.15. In his pleadings Hopkins claims that his mortgage is a prior lien upon the whole property, but it is shown by the papers and evidence upon which he relies that he has no just claim to priority as to that part of the property which I have designated as lots 7 and 8. The real controversy in the case is as to which of the two mortgages is entitled to rank as a prior lien upon lots 9 and 10. Hopkins was the owner of the whole property, and by a contract in writing signed by both Hopkins and Parkinson, it was mutually agreed between them that Hopkins would sell it to Parkinson, and give time for payment of part of the purchase price, and permit Parkinson to give a first mortgage upon lots 7 and 8 for an amount not exceeding $60,000, to be used in the erection of a building upon the part which was to be so incumbered; and that, in consideration of the unpaid part of the purchase money, Parkinson would give to Hopkins his promissory notes for part of the amount, secured by a first mortgage, upon lots 9 and 10; and also give promissory notes for the remaining part of the purchase money, secured by a mortgage upon said lots 9 and 10, and also by a second mortgage on lots 7 and 8. To execute this agreement, Hopkins and wife made a deed conveying the property to Parkinson, and Parkinson and wife made their promissory notes for the unpaid part of the purchase money, to be due and payable as provided in said agreement, and, as security for all of said notes, made one mortgage covering all the property, which mortgage contains a provision that the same shall be a first mortgage upon the property and premises mortgaged, except only as against a first mortgage for $60,000, which the mortgagors were at liberty to place upon lots 7 and 8, as per said written agreement. Parkinson also executed a bond, with sureties, in favor of Hopkins, whereby he further obligated himself to erect the brick building on lot 7, as provided in the original agreement, and said deed, bond, notes, and mortgage were placed together, in escrow, with the National Bank of Commerce of the city of Seattle, to be retained in the custody of said bank until the sum of $60,000 should be received by said bank, or placed in its control, for the uses and purposes specified, the bank should deliver said deed to Parkinson upon his demand therefor, and deliver said bond, promissory notes, and mortgage to Hopkins on his demand therefor. While the papers were in escrow, Parkinson, in carrying on negotiations for a loan represented to an attorney employed by the complainants to examine his title, that a deed conveying the property from Hopkins and wife to him was in the custody of said bank, to be delivered whenever said bank should receive for his use the sum of $60,000. Said attorney visited the bank, and repeated to the cashier the representations made by Parkinson, and upon receiving from the cashier confirmation of Parkinson's statement, requested permission to examine the deed, and, said request being granted, he did inspect and examine said deed. Afterwards, at the request of an agent of the complainants, and upon receiving from said agent a verbal promise that the entire sum of $60,000 would be paid by the complainants to said bank, in installments, as the same should be required to pay the cost of construction of said building, and be demanded by said bank, but before any part of said money had been actually paid into said bank, and without notice to Hopkins, the cashier delivered said deed to said attorney for the complainants, who, without making further inquiry as to the authority or right of the cashier to surrender said deed, received the same, and on the same day filed it for record, together with the mortgage to the complainants which they have sued upon. Five days afterwards the bank received on account of said loan the sum of $20,000, and the remaining $40,000 was paid in installments as called for, during the progress of the building. Hopkins did not receive notice from any one and had no knowledge of the delivery of his deed until five or six days after the first payment of $20,000 on account of said loan had been received by the bank. As soon as apprised of the recording of his deed and the mortgage to the complainants, he upbraided Parkinson and the cashier of the bank for what they had done, and he at once took from the bank the bond, notes and mortgage, and filed the mortgage for record. Within a few days afterwards Hopkins' attorney, accompanied by the attorney who had transacted the business for the complainants, visited an agent of the complainants at Portland, Or. The evidence does not show clearly the purpose for which they called upon said agent, nor what statements or representations were made to him during the interview. The result is shown in a letter written by the agent, proposing to release from the operation of the complainants' mortgage that part of the property which Parkinson was not authorized by Hopkins to include in a first mortgage, upon certain conditions, to which letter the following response, dictated by Hopkins, was sent:

'Jan'y 10, 1893.

'Messrs. Balfour, Guthrie & Company, Portland, Oregon-- Gentlemen: The proposition contained in your communication to me, dated 7 Jan'y, 1893, to release in favor of Captain Hopkins, upon certain contingencies or conditions, a portion of the water front or submerged lands referred to in the mortgage from John Parkinson and wife, has been submitted by me to Captain Hopkins, and, after being duly considered, he thinks it not worth the trouble to give the same further attention at present, and therefore declines the same.'

After the building had been completed, Hopkins, in company with Parkinson, called upon the same agent at Portland, and requested a release from the complainants' mortgage of that part of the property to which Hopkins claimed a right to have a prior lien, and his request was refused. Hopkins then demanded from Parkinson additional security, and, in compliance with that demand, Parkinson and wife gave Hopkins a mortgage upon a tract of land in the state of Oregon, which mortgage has been foreclosed, and the land bid in by Hopkins at a sale thereof, pursuant to the decree. Hopkins' mortgage in suit herein has also been foreclosed in a suit to which the complainants were not made parties, in the superior court of the state of Washington for King county, and the property sold to Hopkins under the decree in that case; and, as the purchaser at said foreclosure sale, he entered into possession of the property, and for a time received the rents and income; and, from the rents and income which he received from the new building, he has made payments...