Bradshaw v. Provident Trust Co.

• Decision Date: 20 June 1916
• Parties: BRADSHAW v. PROVIDENT TRUST CO. ET AL.
• Court: Oregon Supreme Court

158 P. 274

81 Or. 55

BRADSHAW v. PROVIDENT TRUST CO. ET AL.

Supreme Court of Oregon

June 20, 1916

Appeal from Circuit Court, Multnomah County; Geo. N. Davis, Judge.

Suit by James B. Bradshaw against the Provident Trust Company and others. Defendant Charles K. Henry answered and filed cross-complaint and, from a decree for plaintiff, appeals. Reversed, and judgment entered for cross-complainant.

Plaintiff James B. Bradshaw sues to foreclose a mortgage executed on December 22, 1913, in his favor by the Provident Trust Company to secure the payment of its note for the principal sum of $10,000. The note was indorsed by the defendant G. F Johnson, who was president and manager of the corporation at the time. The complaint is in the usual form, but in paragraph 9 thereof it is alleged, in substance, that on June 15, 1914, the mortgagor conveyed its interest in the mortgaged premises to the defendant Charles K. Henry; that for a valuable consideration he covenanted "with the said Provident Trust Company that the said note and mortgage of the plaintiff herein should be paid at maturity." Plaintiff prays for a personal judgment against the company Henry, and Johnson. Henry and wife answered admitting the execution of the mortgage and that the property was conveyed to him by the Provident Trust Company subject to the mortgage, but denying that he made the alleged covenant to the company. He set forth a further and separate defense by way of a cross-complaint in effect as follows: That prior to his taking the deed from the Provident Trust Company he held its unsecured bonds in the sum of $94,607.50, upon which it had defaulted in the payment of interest due thereon; that the company had acknowledged to him that it could not pay these bonds in money and had induced him to accept in part payment thereof a conveyance to him of its equity in a large amount of suburban property in the city of Portland, Or including that covered by plaintiff's mortgage, subject however, to certain mortgage liens thereon and street and sewer assessments; that Henry did not convenant nor agree with the company to assume or pay plaintiff's mortgage, but agreed only to take its equity therein at a stipulated value; that Miller Murdoch, attorney for the company, submitted to him a blank form of deed to be used by it in making the conveyance, which form contained no covenant or agreement on the part of the grantee to assume and pay any prior lien; that the company agreed to make the several deeds in conformity with this blank, and, reposing confidence in Murdoch and in Johnson, the company's president, he left the making of the deeds to them; that, intending to wrong him and without his knowledge or consent and contrary to their agreement, they purposely inserted in the deed a covenant binding the grantee to assume and pay a prior incumbrance upon the property conveyed, it being in part as follows, "and which incumbrances the grantor herein agrees to assume"; that, prior to the delivery of the deed in question, Johnson represented to Henry that all the deeds, eleven in number, were made according to the form previously submitted, and that, relying thereon, he did not examine them further than to check the descriptions of the property therein, with others assisting him; that he did not discover the wrongful insertion of the covenant until some time after the deeds had been recorded; that plaintiff demanded of him payment of the mortgage, whereupon he disclaimed liability thereon; that plaintiff is now claiming that the use of the word "grantor" in the covenant of said deed is a clerical error for grantee, and that he is bound personally to pay the debt of the Provident Trust Company. Henry prays for a reformation of the deed as against the company and the plaintiff, by striking out said pretended covenant. The Provident Trust Company replied to Henry's cross-complaint denying the material allegations thereof. Neither Johnson nor the plaintiff replied thereto, and the allegations thereof stand as admitted by them.

W. T. Slater, of Portland (Manning, Slater & Leonard, of Portland, on the brief), for appellant. Chester G. Murphy, of Portland, for respondent Bradshaw. Miller Murdoch, of Portland, for respondents Provident Trust Co. and G. F. Johnson.

BEAN J. (after stating the facts as above).

The issues to be tried are: (1) Whether Charles K. Henry, when taking the title from the Provident Trust Company, agreed to assume and pay plaintiff's mortgage; and (2) whether the covenant was put into the deed by the Provident Trust Company in fraud of Henry's rights. The parties affected by the contract being in court, it was proper for defendant Henry to plead the facts as a basis for the reformation of the deed. Albany City Savings Inst. v. Burdick, 87 N.Y. 40. If the clause binding Henry, the grantee, to assume and pay the mortgage, was inserted in the deed fraudulently or without his knowledge so that he never gave his intelligent consent to the agreement, he is not liable thereon to the mortgagee. Parker v. Jenks, 36 N. J. Eq. 398; Bull v. Titsworth, 29 N. J. Eq. 73; Albany City Savings Inst. v. Burdick, supra. Where one party to a contract is intrusted by the other to draw the written instrument to accord with the agreement, he will be held strictly to a faithful performance of the trust so reposed and will not be heard to say that the party defrauded should not have placed confidence in him. Barlow v. Scott, 24 N.Y. 40; Botsford v. McLean, 45 Barb. (N. Y.) 478; Archer v. California Lbr. Co., 24 Or. 341, 345, 33 P. 526. The failure of Henry to read the deeds before accepting them is not such negligence as will deprive him of the relief for which he prays. 6 Pom. Eq. Juris. § 680; 2 Pom. Eq. Juris. § 856; Archer v. Cal. Lbr. Co., supra; Howard v. Tettelbaum, 61 Or. 145, 120 P. 373.

The record shows that the proposition for the liquidation of the bonds of the Provident Trust Company held by Henry was largely by letter. On June 4, 1914, Mr. Henry wrote the company that:

"After considering the certified accountant's report and giving full consideration to the situation of your company and your proposal to accept properties in payment of the

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