Dalliba v. Riggs

• Decision Date: 20 June 1901
• Citation: 7 Idaho 779,67 P. 430
• Parties: DALLIBA v. RIGGS
• Court: Idaho Supreme Court

67 P. 430

7 Idaho 779

DALLIBA v. RIGGS

Supreme Court of Idaho

June 20, 1901

TRANSFER OF PROPERTY BY DEED-CONTRACT TO TAKE STOCK IN CORPORATION AS PAYMENT, IN PART-SECURITY FOR BALANCE-LIEN UPON PROPERTY SOLD.-Where a party sells real estate and personal property by quitclaim deed, and at the same time makes a contract, by the terms of which he agrees that the purchaser may sell to other parties or organize a corporation, and in case of a corporation, he to receive a certain portion of the paid-up nonassessable stock, to be placed in the hands of a trustee to be named by him, and such stock is issued and placed as by the terms of the contract agreed upon, the balance of the purchase price to be paid out of the net earnings of the property sold, he accepts such stock as his security for such balance, and has no lien upon the property so sold.

(Syllabus by the court.)

APPEAL from District Court, Bingham County.

Demurrer sustained. Reversed and remanded. Costs to appellant.

Dietrich Chalmers & Stevens, for Appellants.

"Equitable lien" is a phrase of expansive meaning, but we take it to mean one of two things--namely, a lien arising by operation of law--a vendor's lien; or a lien intended by the contracting parties, said intention having failed for some reason to be evidenced by a formal instrument of mortgage. Plaintiffs seem studiously to avoid any claim to a vendor's lien in terms and for obvious reasons: 1. By the terms of the contract in question, the vendee was authorized to dispose of said property free of liens or claims. 2. By accepting one-third of the stock of the corporation, Dalliba accepted a new and substitute security. (Greenberg v Cal. Bituminuous Rock Co., 107 Cal. 667, 40 P. 1053.) 3. The property sold was both real and personal, possession of all being delivered to the vendee, the whole having been sold en masse without segregation of purchase price. Such a sale cannot reserve a vendor's lien. Where there is a sale of both real and personal property for a gross sum, the vendor's lien does not exist, because the court cannot accurately ascertain and define the amount of the charge to be imposed on the land and enforced out of it. (Fetter on Equity, 234, and citations.) 4. Plaintiffs pray for foreclosure, and the court grants a decree of foreclosure upon personal property of which the defendant company and its grantor Riggs has had the actual and exclusive possession since 1892. Vendor's lien on personal property depends on possession by the vendor. (Rev. Stats., sec. 3443.) The original vendor, Dalliba, only owned one-third interest in the contract when suit was brought. Young and Cutbirth are assignees, each of one-third. Only the vendor, not an assignee, can have vendor's lien. (Rev. Stats., secs 3440, 3441.) A grantor's lien on the premises conveyed, for the purchase price, is a personal privilege, not assignable with the debt; nor can the creditor of the grantor be subrogated to the same. (First Nat. Bank v. Salem Flour Mills, 39 F. 89, and see page 95, where Judge Deady quotes from the opinion of Chief Justice Field in the leading case of Baum v. Grisgby, 21 Cal. 176, 81 Am. Dec. 153.) Section 3440 of our statutes is section 3046 of the Civil Code of California and the same doctrine is held in that state. (Avery v. Clark, 87 Cal. 624, 625, 25 P. 919; Gessner v. Palmateer, 89 Cal. 92, 24 P. 608, 26 P. 789; Woolley v. Wickerd, 97 Cal. 71, 31 P. 733; Ketchum v. St. Louis, 101 U.S. 306, 25 L. ed. 999; 1 Jones on Mortgages, sec. 162.) Decree is erroneous for insufficient description of property. There is no sufficient description in complaint or decree. The facts are on all-fours with those involved in Crosby v. Doud, 61 Cal. 557, where it was held such judgment was void on collateral attack. This extreme view is modified in De Sepulveda v. Baugh, 74 Cal. 468, 5 Am. St. Rep. 455, and note, 16 P. 223, and it was held that such error must be corrected upon appeal or by motion. (Railway Co. v. Jordan, 87 Cal. 23, 25 P. 273.) The right to sell property is incident to its ownership, but may the owner not for a consideration bind himself not to sell for a period? Ownership of and power to vote stock may be separated. ( Smith v. San Francisco etc. Ry. Co., 115 Cal. 584, 47 P. 582.) A corporation may pledge its unissued stock, but there is a difference of opinion as to whether the pledgee is liable as an absolute stockholder on such stock. (Cook on Stock and Stockholders, sec. 465, and note; Beach on Private Corporations, par. 69.) In the United States, and especially in the state of Illinois, by the laws of which this transaction should be governed, the general rule is that a corporation may even purchase its own stock. (Cook on Stock and Stockholders, sec. 311, and note, 314; Republic Life Ins. Co. v. Swigert, 135 Ill. 150, 25 N.E. 680; Bank v. Salem, 39 F. 89; Burgess v. Seligman, 107 U.S. 20, 2 S.Ct. 10; Matthews v. Albert, 24 Md. 527; Union Saving Assn. v. Seligman, 92 Mo. 635, 1 Am. St. Rep. 776, 15 S.W. 630; Trust Co. v. Weed, 2 F. 25; Houston Ry. Co. v. Bremond, 66 Tex. 159, 18 S.W. 448; Powell's Appeal, 133 Pa. 550, 19 A. 559; Protection Ins. Co. v. Osgood, 39 Ill. 69; Melvin v. Lamar Ins. Co., 80 Ill. 446, 22 Am. Rep. 199; Peterborough Ry. Co. v. Nashua, 59 N.H. 385; Casquet v. Crescent City B. Co., 49 Hun, 496.)

N. H. Clark, M. K. Young and S. J. Rich, for Respondents.

The forty-third alleged error to the effect that the findings of fact and conclusions of law are intermingled is not apparent. All the findings of fact may be reached by the rule laid down in Levins v. Rovegno, 71 Cal. 273, 12 P. 161. The contract in question was beyond the jurisdiction of the court. All authorities hold that when a paper is beyond the jurisdiction of the court, secondary evidence may be introduced, to which point we cite the following: Bishop v. American Preservers Co., 157 Ill. 284, 48 Am. St Rep. 317, 41 N.E. 765; Thompson Electric Co. v. Palmer, 52 Minn. 174, 38 Am. St. Rep. 540, 53 N.W. 1137; Gordon v. Sering, 8 Cal. 50; Zellerbach v. Allensberg, 99 Cal. 73, Knickerbocker v. Wilcox, 83 Mich. 200, 21 Am. St. Rep. 595, 47 N.W. 125; Wisconsin River etc. Co. v. Walker, 48 Wis. 614, 4 N.W. 803; Burton v. Driggs, 20 Wall. 125, 22 L. ed. 299. In Wickersham v. Crittenden, 93 Cal. 29, 28 P. 788, the court say: "The directors of a corporation hold a fiduciary relation to the stockholders, and have been intrusted by them with the management of the corporate property for the common benefit and advantage of each and every stockholder, and by their acceptance of this office they preclude themselves from doing any act or engaging in any transaction in which their private interest will conflict with the duty they owe to the stockholders, and from making any use of their power of the corporate property for their own advantage. (Cook on Stocks and Stockholders, sec. 684; Morawetz on Private Corporations, sec. 516; Cumberland Coal Co. v. Sherman, 30 Barb. 571; Hoyle v. Plattsburgh etc. R. R. Co., 54 N.Y. 329, 13 Am. Rep. 598; Barnes v. Brown, 80 N.Y. 535; San Diego v. San Diego etc. R. R. Co., 44 Cal. 106; Wilbur v. Lynde, 49 Cal. 209, 19 Am. Rep. 645; Farmers' etc. Bank v. Downey, 53 Cal. 466, 31 Am. Rep. 62; Capital Gas. Co. v. Young, 109 Cal. 143, 41 P. 869.) The case of Gest v. Packwood, 39 F. 525, is similar to the one at bar. A case directly in point is the Charter Oak Life Ins. Co. v. Gisborne, 5 Utah 319, 15 P. 257, holding that an assignment of the rents, issues and profits of mining property for the payment of a debt creates a lien upon the corpus of the property sufficient to sell the whole thereof for the payment of the debt. A lien for the purchase money expressly reserved by a vendor in his deed and conveyance is a lien created by contract and not by implication of law. It is a contract that the land shall be burdened with the lien until the note is paid. It is a real mortgage. It passes by an assignment of the note secured by it. It is foreclosed as a mortgage. (Rust v. Carpenter, 18 Colo. 340, 32 P. 992; Ketchum v. St. Louis, 101 U.S. 306; Slide etc. Gold Mines v. Seymour, 153 U.S. 509, 14 S.Ct. 842, 38 L. ed. 802.) In the case of Anderson v. Wainwright, 67 Ark, 62, 53 S.W. 566, the court says: "An agreement by one to whom a lien or promise is given to secure payment of a debt liquidated her claim from the rents of the premises, and not by a sale thereof, obligates her to refrain from enforcing the lien by sale only for a reasonable length of time, and when, after four years, the rents have failed to materially reduce the amount of the debt, she will be deemed to have waited a reasonable time and will be allowed to foreclose and sell." (Clemmens v. Luce, 101 Cal. 432, 35 P. 1032; Prescott v. Grady, 91 Cal. 518, 27 P. 755; Blen v. Bear River etc. Co., 15 Cal. 97.) The thirty-three thousand three hundred and thirty-four shares of stock delivered to Antisdale, as trustee, is absolutely void, because a corporation cannot pledge its capital stock as security for an indebtedness, and for the further reason that a valid issue of stock for a valid purpose cannot be deprived of its voting power. (Brewster v. Hartley, 37 Cal. 27, 99 Am. Dec. 237; Adams etc. Co. v. Deyette, 5 S. Dak. 418, 49 Am. St. Rep. 887; Ex parte Holmes, 5 Cow. 426; Ex parte Barber, 6 Wend. 510.) A contract depriving stock of the power to vote is void as against public policy. ( Harvey v. Linville Imp. Co., 118 N.C. 693, 54 Am. St. Rep. 752; Thompson on Corporations, sec. 6604, Idaho Const., art. 11, sec. 4.) The following cases hold a vendor's lien is not waived by taking collateral security: Burgess v. Fairbanks, 83 Cal. 215, 17 Am. St. Rep. 230; Tierman v. Thurman, 14 B. Mon. (Ky.) 277; Kent v. Williams, 114 Cal. 537, 46 P. 462; Kent v. San Francisco Sav....