Deseret Sav. Bank v. Walker

• Decision Date: 09 September 1931
• Docket Number: 4996
• Citation: 78 Utah 241,2 P.2d 609
• Court: Utah Supreme Court
• Parties: DESERET SAVINGS BANK v. WALKER et al

2 P.2d 609

78 Utah 241

DESERET SAVINGS BANK v. WALKER et al

No. 4996

Supreme Court of Utah

September 9, 1931

Appeal from District Court, Fifth District, Millard County; Thomas H. Burton, Judge.

Suit by the Deseret Savings Bank against Josephine B. Walker, A. W Steele, and others. From the judgment, defendant A. W. Steele appeals.

AFFIRMED.

Geo. Y Wallace, of Salt Lake City, for appellant.

Van Cott, Riter & Farnsworth and J. A. Melville, Jr., all of Salt Lake City, for respondents.

FOLLAND J. CHERRY, C. J., and STRAUP, ELIAS HANSEN, and EPHRAIM HANSON, JJ., concur.

OPINION

FOLLAND, J.

From a judgment in favor of plaintiff providing for foreclosure and sale of 80 acres of land in Millard county, Utah, [78 Utah 243] and 80 shares of stock in Delta Canal Company, A. W. Steele, one of the defendants, appeals from that part of the judgment "wherein 40 shares of stock in Delta Canal Company evidenced by certificate 1718 were ordered sold in satisfaction of plaintiff's mortgage and the interests therein of said A. W. Steele and Mrs. A. W. Steele were foreclosed."

Prior to April 17, 1925, the appellant, A. W. Steele, owned 80 acres of land near Delta described as the E. 1/2 of the N.W. 1/4 of Sec. 34, Tp. 16 S., R. 7 W., Salt Lake Meridian, together with 80 shares of water stock appurtenant to the land evidenced by certificate 1633 in the Delta Canal Company. This he sold to the defendants Josephine B. Walker and W. R. Walker, her husband. The Walkers did not pay cash, but arranged to borrow $ 4,000 from the Deseret Savings Bank by mortgage on the land and water stock and instructed the bank to pay the money to Steele after deducting certain amounts to pay back taxes and expenses. The several steps were taken at the same time. The Steeles gave their deed to the Walkers for the land and indorsed and surrendered certificate 1633. The Walkers gave their mortgage to the bank covering the land and the water stock, and the bank turned the money over to Steele. Steele also received as part of the purchase price a note of the Walkers for $ 2,000 and a mortgage subordinate to that of the bank on the same land and water stock and also a crop mortgage on all crops grown on the 80 acres of land. At the time it was expected that the Walkers would divide the farm, keep and occupy one 40-acre tract with 40 shares of water appurtenant thereto, and sell the other 40-acre tract and 40 shares of water to a prospective purchaser. The only defendant that appeared in the suit was A. W. Steele who filed an answer making certain denials and admissions and setting up his note and mortgage executed by the Walkers. Plaintiff's complaint is in the usual and proper form containing all necessary averments to entitle it to a judgment for the indebtedness claimed and the foreclosure of its mortgage on the land and water stock.

The vital issue raised on this appeal is set forth in appellant's assignments of errors Nos. 1 and 2, which are as follows:

"1. The trial court erred in its judgment foreclosing the appellant's interest in the forty

(40) shares of water stock evidenced by certificate No. 1718 of the Delta Canal Company.

"2. The trial court erred in its finding of fact No. 6 in so far as it finds the history and transfer of forty (40) shares of water stock in the Delta Canal Company from certificate No. 1633 into certificates Nos. 1651 and 1652 and from certificate No. 1652 into certificate No. 1718, and that the appellant held said certificate No. 1718 subject to the plaintiff's mortgage and that plaintiff was entitled to have it foreclosed with the other property described in said mortgage, because there was no evidence whatsoever introduced on the trial to sustain such finding."

A consideration of these assignments requires that we set out fully those portions of the complaint and answer referring to certificate No. 1718. These are paragraph 6 of the complaint and paragraph 4 of the answer, which are as follows:

"6. That the water stock evidencing the water right for the irrigation of the land described in said mortgage was evidenced by certificate No. 1633, dated March 2, 1925, for eighty shares of the capital stock of the said defendant, Delta Canal Company, and by the terms and provisions of said certificate of stock the water right which it evidenced was made appurtenant to the land described in said mortgage, being the E1/2 of the NW1/4, Section 34, Township 16 South, Range 7 West, Salt Lake Meridian, and to no other land. That the said certificate No. 1633 at the time said mortgage was executed and delivered was of record in the office of defendant Delta Canal Company in the name of defendant A. W. Steele, but that the said defendant A. W. Steele prior to the execution and delivery of said mortgage, for valuable consideration sold, assigned, endorsed, transferred and delivered said water stock certificate No. 1633 to the defendants Josephine B. Walker and W. R. Walker. That the defendants Josephine B. Walker and W. R. Walker mortgaged, pledged and delivered said stock and the said certificate of stock to the plaintiff as aforesaid as a part of the said mortgage, and as a part of the security securing the payment of said note. That thereafter, to wit, on or about the 21st day of April, 1925, this plaintiff mailed said certificate of stock No. 1633 to the defendant W. R. Walker for the purpose only of having it transferred to the defendant Josephine B. Walker and to have her endorse the new certificate or certificates and return to this plaintiff, to be held by this plaintiff, in lieu of certificate No. 1633, as a part of its mortgage security. That the said W. R. Walker surrendered the said certificate No. 1633 to the Delta Canal Company and caused to be issued in lieu of the same two certificates No. 1651 for forty shares, dated May 11, 1925 in favor of Josephine B. Walker, and that the same was made appurtenant to the NE1/4 of the NW1/4 of Section 34, Township 16 South, Range 7 West, in Millard County, Utah, being one forty acre tract described in said mortgage, also certificate No. 1652 for forty shares, dated May 11th, 1925, in the name of the defendant Josephine B. Walker, which was made appurtenant to the SE1/4 of the NW1/4 of Section 34, Township 16 South, Range 7 West, Millard County Utah, being the other forty acre tract described in said mortgage. That the defendant W. R. Walker forwarded to this plaintiff said certificate No. 1651, and in violation of plaintiff's instructions and without any right or authority so to do delivered the certificate No. 1652 to the defendant A. W. Steele and thereafter on May 14, 1926, the defendant A. W. Steele without any right or authority to do so surrendered said certificate of stock No. 1652 to the defendant Delta Canal Company and had it cancelled and had issued to himself in lieu of the same, certificate No. 1718 issued by the Delta Canal Company, dated May 14, 1926, in favor of himself and the new certificate does not recite that it is appurtenant to any tract of land and, that said A. W. Steele now holds certificate No. 1718 and the defendant A. W. Steele claims to have some right, title or interest in and to the same, and refuses to surrender it to this plaintiff but his claim, if any, is subsequent in point of time, subordinate in right and subject to plaintiff's lien upon the same by virtue of the said mortgage and plaintiff is entitled to have the said certificate of stock No. 1718 foreclosed with the other property described in said mortgage and the proceeds of sale of all of the property applied in satisfaction of the amount due plaintiff and in satisfaction of the judgment which plaintiff may recover in this action."

"4. Answering paragraph No. 6 this defendant has no knowledge nor information sufficient to enable him to either admit or deny all of the allegations therein contained and for want of such knowledge or information he denies all of said allegations except that he admits that W. R. Walker delivered to him said certificate No. 1652 but denies that it was wrongful or unlawful, or that this defendant had any knowledge of any instructions from the Deseret Savings Bank to said Walker. Admits that this defendant took said certificate to the Delta Canal Company and had issued to him certificate No. 1718 in lieu thereof and that the new certificate is not appurtenant to any land. The said defendant denies that he is holding said certificate No. 1718 but alleges that he has sold and pledged it for a valuable consideration as security for a note which is payable upon demand to an innocent pledgee for value."

The attorney who filed the answer for Steele withdrew as such attorney before trial by serving and filing the proper notice. Steele was notified by the plaintiff of such withdrawal. When the case was called for trial, Steele appeared in person and entered into a stipulation which is as follows:

"Mr. Mellville: (Attorney for plaintiff) It may be stipulated in the record as follows: that in the case before the court Mr. Steele is in court personally, and it is stipulated between Mr. Steele and the plaintiff that the plaintiff's mortgage described in the complaint, on the 80 acres of land and the 80 shares of water stock, is a first and prior mortgage on the land and water stock, and that his real estate mortgage is a second mortgage on the same land and water stock. That his mortgage is a second mortgage, subsequent and subordinate to plaintiff's mortgage, and that in the foreclosure proceedings the property may be sold and from the proceeds of sale the sheriff will pay, first, the amount due the plaintiff on his note and first mortgage; and second, the balance, if any, to Mr. Steele to the extent of the amount due him, and of course if there is anything above that it...