Charles Baker v. John Schofield

• Decision Date: 06 March 1917
• Docket Number: No. 133,133
• Parties: CHARLES H. BAKER, Algernon S. Norton, and Seattle Water Front Realty Company, Appts., v. JOHN W. SCHOFIELD, as Receiver of the Merchants' National Bank of Seattle
• Court: U.S. Supreme Court

243 U.S. 114

37 S.Ct. 333

61 L.Ed. 626

CHARLES H. BAKER, Algernon S. Norton, and Seattle Water Front Realty Company, Appts.,

v JOHN W. SCHOFIELD, as Receiver of the Merchants' National Bank of Seattle.

No. 133.

Submitted January 15, 1917.

Decided March 6, 1917.

Messrs. B. S. Grosscup and Corwin S. Shank for appellants.

Messrs. Frederick Bausman, R. P. Oldham, and R. C. Goodale for appellee.

Mr. Justice Day delivered the opinion of the court:

This is an action by John W. Schofield, as receiver of the Merchants' National Bank of Seattle, Washington, insolvent since 1895, against Charles H. Baker, receiver of the bank from 1895 to 1899, and others, seeking a decree declaring the defendants to be holders of certain real property in Seattle in trust for the plaintiff, and asking a conveyance thereof to the plaintiff.

The property in controversy is block 430 of Seattle tide lands, a tract of some 12 acres, and the leasehold of the harbor area lying in front of that block. In conformity with the provisions of the state law, the Merchants' National Bank had, prior to its failure, made application to purchase these lands. After the failure and the appointment of Charles H. Baker, receiver, this application was accepted by the State Board of Land Commissioners, and upon January 12, 1897, a contract was entered into between the state of Washington and the bank, through the receiver, by which the state agreed to sell and the bank to purchase block 430 of Seattle tide lands for $1,488, payable in ten annual instalments, sub- ject to all liens for filling, and all taxes and assessments that might be levied or assessed on the land, and with a forfeiture clause in case the bank should fail to pay any of the amounts, either principal, interest, taxes, or assessments, when the same should become due and for six months thereafter. Permission to make this contract was obtained by the receiver from the Comptroller of the Currency, and thereafter partial payments were made upon the contract.

Upon October 6, 1897, by order of the United States circuit court, upon the receiver's petition to that effect, he was authorized to sell at private sale certain doubtful personal assets of the defunct bank, and thereafter, Baker, as receiver, assigned to S. G. Simpson the contract above mentioned for the consideration of $198.30, the transfer being approved by the Commissioner of Public Lands.

The assignment authorized the state of Washington to receive from Simpson, or his assigns, the performance of all covenants and agreements specified in the contract to be performed by the bank, and upon such performance to execute to him a patent for such tide land. By virtue of the ownership by Simpson of the contract to purchase tide lands block No. 430, he became entitled, under the laws of the state of Washington, to the preference right to lease certain harbor area adjacent and appurtenant to block No. 430. Upon the purchase by Simpson of the contract to purchase the tide lands, there was issued to him by the state of Washington a certain lease, designated 'harbor lease No. 181,' covering the harbor area appurtenant to the block.

In March, 1899, the contract between the bank and the state of Washington for the purchase of block No. 430, together with the harbor lease, was transferred by Simpson to Baker in his personal capacity, the record title continuing in the name of Simpson. On August 11, 1905, Simpson, acting for and on behalf of Baker, assigned the contract for the purchase of block No. 430, together with harbor lease No. 181, to one Norton, the consideration named being $1. This assignment contained the same authorization as to the patent to be issued by the state as was contained in the assignment to Simpson. On October 16, 1905, the state of Washington issued to Norton a patent covering block No. 430, with the exception of a strip of land, 30 feet wide, which had been granted to a railroad company. In August, 1907, there was organized under the laws of the state of Washington the Seattle Water Front Realty Company. Upon incorporation of this company, Norton conveyed to it block No. 430, together with harbor lease No. 181, in payment for the issue of its capital stock of $250,000. About 95 per cent of the stock was issued to Baker, or to others, who held for him.

In April, 1899, and a month after receiving the assignment from Simpson, Baker resigned as receiver; whereupon A. W. Frater was appointed receiver. On February 12, 1913, Frater resigned, and the present plaintiff was appointed receiver in his stead, and this suit was immediately begun.

Under this state of facts, the district court entered a decree adjudging that the assignment by Baker to Simpson was fraudulent, and was made for the sole use and benefit of Baker, and that the assignment of the contract to the defendant Norton by Simpson, and the conveyance of Norton to the Seattle Water Front Realty Company, were null and void. The decree provided that the Realty Company should execute and deliver to the clerk of the court below, for the benefit of the plaintiff, as receiver, a deed covering its interest in block No. 430 and the assignment of harbor lease No. 181, and the receiver was directed to pay to the clerk of the court, for the Realty Company, the sum of $10,977.13, being the amount of the payment, with interest, made by the defendants to the state of Washington under the contract for the purchase of block No. 430, and upon the harbor lease, and for taxes. 212 Fed. 504. Upon appeal, this decree was affirmed by the circuit court of appeals for the ninth circuit. 136 C. C. A. 320, 221 Fed. 322.

Both the district court and the circuit court of appeals found that the sale from Baker to Simpson was only colorable, and that Simpson purchased the property for Baker. Our consideration of the evidence must be governed by the well-settled rule in this court that, when two courts have reached the same conclusion on a question of fact, their finding will not be disturbed unless it is clear that their conclusion was erroneous. Stuart v. Hayden, 169 U. S. 1, 14, 42 L. ed. 639, 643, 18 Sup. Ct. Rep. 274; Baker v. Cummings, 169 U. S. 189, 198, 42 L. ed. 711, 715, 18 Sup. Ct. Rep. 367; Towson v. Moore, 173 U. S. 17, 24, 43 L. ed. 597, 600, 19 Sup. Ct. Rep. 332; ...