Bank of America Nat. Trust & Savings Ass'n v. Scully

• Decision Date: 07 September 1937
• Docket Number: No. 1533.,1533.
• Citation: 92 F.2d 97
• Parties: BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N v. SCULLY.
• Court: U.S. Court of Appeals — Tenth Circuit

92 F.2d 97 (1937)

BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N v. SCULLY.

No. 1533.

Circuit Court of Appeals, Tenth Circuit.

September 7, 1937.

Clarence A. Brandenburg, of Denver, Colo. (Stanley C. Brandenburg, of Denver, Colo., on the brief), for appellant.

Horace H. Hindry, of Denver, Colo. (Guy K. Brewster and Hayes R. Hindry, both of Denver, Colo., on the brief), for appellee.

Before PHILLIPS, BRATTON, and WILLIAMS, Circuit Judges.

WILLIAMS, Circuit Judge.

The appellant as plaintiff and the appellee as defendant in the court below will be referred to herein in the order in which they appeared in that court.

Plaintiff instituted suit in that court to recover from defendant on a promissory note. The defendant interposed a demurrer which was sustained. The plaintiff having declined to plead further, and judgment having been rendered dismissing the complaint, this appeal is prosecuted to review same.

A. G. Bartlett, Inc., owner otherwise referred to as "seller," sold and conveyed a tract of land in Los Angeles county, California, to Margaret Douglass, otherwise referred to as "buyer," who thereupon executed and delivered to said Bartlett, on account of the purchase price, her notes aggregating $1,100,000 secured by mortgage upon the purchased property.

Thereafter Margaret Douglass, the said buyer, conveyed the land subject to such mortgage to the Merchants National Trust & Savings Bank of Los Angeles, California, and at the same time the said Bartlett assigned to such bank the notes of the said Margaret Douglass, and the mortgage securing the same. Thereupon, on July 28, 1927, and as a part of the same transaction, the said Bank, as trustee, the said A. G. Bartlett, Inc., denominated as "seller," and the said Margaret Douglass, denominated as "buyer," executed a so-called subdivision trust agreement, which formed a part of plaintiff's complaint.

The said agreement authorizes the trustee "acting for the buyer" to subdivide the property into lots and to subscribe and record a map of the subdivisions, designating streets and alleys, and to consent to the abandonment of any street or alley, in accordance with maps prepared by the buyer, and provides that "all expenses of said subdivision or subdivisions and the improvements thereon shall be borne and paid by the Buyer," and also recited that the trustee "hereby acknowledges, certifies, and declares that it holds and will continue to hold the above described real property, and the said mortgage note and mortgage interest, for the purposes and upon the terms and conditions and provisions hereinafter specifically set out, without merger of the legal title to the said real property with the mortgage lien created by said mortgage, each being held separately by the Trustee."

In paragraph 2 it is provided that the trustee shall have authority to execute contracts for sale and to sell lots "for such prices as may from time to time be fixed by the Buyer," the minimum sale price to be fixed by the buyer, with the right on the part of the buyer to reduce such prices at will, under certain limitations.

Paragraph 4 provides that the contracts of sale and deeds are to be executed by the trustee "subject to such restrictions, conditions, reservations, and rights of way as shall be fixed by the buyer."

By paragraph 5, the buyer is given the privilege to retain possession of the property and "have management and control thereof as long as there is no default hereunder" subject to the provisions of the trust, and that the buyer may, for the purpose of making sale of lots, select and employ such agents and subagents as it may deem fit, "but such agents or subagents so employed by the buyer shall be construed to be the agents of the buyer and not that of the trustee or seller."

By paragraph 6 the buyer covenants to pay taxes, assessments of every nature levied or assessed against the trust property and "to pay for all street work or other improvements done or made upon said property," and "all of the expenses incurred in connection with the execution, acceptance, operation or termination of this trust payable by the buyer" as therein provided, and all of the trustee's fees and charges.

By paragraph 8, buyer is required to pay the cost of certificates of title.

Paragraph 9 is as follows:

"In the event that the beneficial interests of the Buyer hereunder become vested by assignment or otherwise in the following named persons, either in whole or part of such beneficial interests and whether or not such part not held by the following named persons continues to be held by said Buyer, Margaret Douglass, or by other successors or assignees, to-wit, in Frank R. Strong, George W. Dickinson, A. Z. Taft, Jr., Thomas D. Barnett, Walter R. Wheat, W. E. Dimmick and George L. Reynolds, then upon the happening of any such contingency and the said persons above-named becoming vested with any part of said beneficial interest thereafter said above-named persons shall constitute and be a committee in full charge of all matters connected with the Buyer upon behalf of this trust and it is expressly understood and agreed that thereafter the written instructions of any four of said committee directed to said Trustee in regard to any matters in which the said Buyer shall have the right to direct said Trustee under the terms of this trust agreement, shall absolutely be binding upon said Trustee and said Trustee in all respects where said Buyer under the terms hereof shall have the right to direct and instruct said Trustee, shall act as directed and instructed by any four of said committee.

"It is understood and agreed that this power given to said committee as herein provided is irrevocable and shall exist for the full term of this trust indenture, and it is specifically understood and agreed that if said members of said Committee acquire any of the Buyer's beneficial interest under this trust it will be done so in consideration of this power given and granted to said Committee and it is specifically understood and agreed that this shall in all respects be binding upon the present buyer, Margaret Douglass, and it is further agreed that if any assignments or transfers are made by the said Margaret Douglass or any of said Buyer's beneficial interests to any persons other than said Buyer, Margaret Douglass, and said Committee that said transfer and assignment shall be and is in all respects subject to terms and provisions of this paragraph Ninth of this trust indenture, and such assignee or successor shall in all respects be bound hereby.

"It is specifically understood and agreed that the power and right given to said Committee as herein provided is absolute and unrestricted and that no holder of any part of the Buyer's beneficial interest under this trust or said present buyer, Margaret Douglass, shall have any right in any respect to question or disturb any decision, direction or instruction given by four of said Committee to said Trustee and said Trustee shall disregard each and every protest, demand, instruction or direction of any holder of any part of the beneficial interest of the buyer hereof.

"It is understood and agreed that any four of said Committee shall have the right to fix all prices at which any property covered by said trust shall be sold, subject only to the terms of this trust agreement as to minimum sales prices and release prices, to determine the character of improvements thereon and the cost thereof, to determine all expenditures that shall be made for and on behalf of the Buyer under said trust and in connection with said trust property, and to incur any and all indebtedness in and about said trust and said trust property and the Buyer's interest thereunder, as any four of said Committee shall determine to be proper and right, and shall have the right to determine upon any sale of the whole of said property if it seems expedient to sell the whole thereof instead of by subdivision. Any four of said Committee are hereby given the right and power to direct said Trustee in and about the manner and disbursement of all funds to be paid to the Buyer under this trust agreement.

"In enumeration of these specific powers it is not in any way intended to and does not limit the general provisions of this agreement, to-wit, that any four of said Committee shall have and are hereby given the irrevocable right and power to manage, conduct, carry on or operate in every manner the Buyer's interest under this trust and to direct and instruct the Trustee in every respect under the terms of this agreement in which the Buyer has the right to direct said Trustee. Said Trustee shall act upon the directions and instructions of any four of said Committee above-named, and it is agreed that in and when so acting any such action upon the part of the Trustee shall conclusively bind Buyers as beneficiaries hereunder and shall bind the holder of every and any part of the beneficial interest of the Buyer under the terms of this agreement. It is understood and agreed that the members of said Committee are only qualified to act in so long as they are the holders of a part of the beneficial interest of the Buyer under the terms of this trust. In the event any member of said Committee is no longer the holder thereof, then he shall no longer be entitled to his place upon said Committee and shall have no further power under the terms of this agreement. In the event any member of said Committee is disqualified by reason of his no longer holding his part of the Buyer's beneficial interest under this trust or by reason of death or inability to act or disqualification or incompetency of any character, then a successor shall be immediately chosen and such successor shall be selected on the written order of the holders of beneficial interest constituting a majority in value of the total beneficial interests of the successors of the buyer hereunder and when such successor has been selected in that manner he...