Eldriedge v. Hoefer

• Decision Date: 07 January 1908
• Citation: 93 P. 246,52 Or. 241
• Parties: ELDRIEDGE v. HOEFER et al.
• Court: Oregon Supreme Court

93 P. 246

52 Or. 241

ELDRIEDGE v. HOEFER et al.

Supreme Court of Oregon

January 7, 1908

Appeal from Circuit Court, Marion County; Geo. H. Burnett, Judge.

Suit by F.J. Eldriedge against John Hoefer and others. From a decree for plaintiff, defendants John Hoefer and another appeal. Reversed and remanded.

Geo. G. Bingham and P.H. D'Arcy, for appellants.

T.G Hailey, A.M. Cannon, and L.K. Adams, for respondent.

MOORE J.

This is a suit by F.J. Eldriedge against John Hoefer and Casper Zorn partners as Hoefer & Zorn, and David Keen, to have a deed absolute in form, of certain real property, decreed to be a mortgage and Keen declared to be plaintiff's trustee; that a redemption of the land be allowed, within a reasonable time, on the payment of $14,600, the sum admitted in the complaint to be due from the plaintiff to Hoefer & Zorn, but if such payment cannot be made within the time limited, that the premises be sold, and if the sum realized therefor does not equal $42,000, the price which it is alleged was offered for the land, that Hoefer & Zorn be required to account for that sum, less the debt so specified. The admitted facts are that plaintiff's father died seised of two farms situated in Marion county, containing 728.89 acres, whereupon his mother was appointed and duly qualified as administratrix of the decedent's estate, to pay the debts of which it became necessary to sell the real property. The plaintiff, desiring to purchase the land, but not having the means with which to pay for it, applied to Hoefer & Zorn for a loan of money for that purpose, but they declined the request because he was not then of age, and for the further reason that his mother held a dower interest in the premises. Mrs. Eldriedge, at plaintiff's request, executed a deed of such life estate to Keen, who, at a sale of the land by the administratrix, bid therefor $14,577.80, to pay which he borrowed from Hoefer & Zorn $15,600, giving his promissory note for that sum, payable in five years from October 10, 1892, with interest thereon at the rate of 7 per cent. per annum, payable yearly, and also stipulating in the note to pay all taxes that might be assessed against it. The sale by the administratrix having been confirmed, she executed a deed of all the estate the decedent had in the land at the time of his death to Keen, who immediately conveyed the premises to Hoefer & Zorn, taking from them a bond for a deed, wherein they covenanted to reconvey the land to him on the payment of the note. No part of the taxes assessed against the note having been paid to Hoefer & Zorn, Keen, on January 25, 1896, executed to them a quitclaim deed of the premises, without securing a surrender of the note or the indorsement of any payment thereon as a consideration for the conveyance, and in August, 1905, this suit was instituted. The complaint states the facts in detail, the substance of which is hereinbefore set forth, and avers, in effect, that at the time the money was so loaned it was agreed by all the parties hereto that in all the transactions mentioned Keen was plaintiff's trustee, which fact was assented to by Hoefer & Zorn, and that the original deed, executed by Keen to Hoefer & Zorn, was given to secure the payment of the promissory note, and the bond taken as a defeasance; that when the land was sold to Keen the plaintiff took immediate possession of the premises, which he retained until October, 1893, when he leased the real property, ever since which his tenants had been in possession thereof; that the plaintiff paid the interest on the note for the first three years after it was given, and in October, 1895, he also paid $1,000 on account of the principal; that about the date last mentioned the plaintiff, desiring to make certain improvements on the land, so as to increase the profits therefrom, and to pay the cost of such betterment from the income received from the premises, entered into an agreement with Hoefer & Zorn whereby they stipulated to accept the rents of the real property in full payment of the interest and taxes, and each year thereafter they receivd the landlord's share of the crops annually raised on the premises, pursuant to such agreement; that in July, 1905, the plaintiff was offered for the land $42,000, which sum would then have been paid for the premises, if he could have given a sufficient deed therefor; and that, upon receiving such bid, he notified the defendants thereof, in writing, and demanded that he be permitted to redeem the real property by paying the sum of $14,600, but they refused to comply with his request and would not join him in executing a deed of the land. The answer denies the material allegations of the complaint, and that any payments were made on the promissory note prior to January 25, 1896, except $509.50, which sum is the value of grain delivered the preceding year to the defendants; and states that Keen, being unable to pay the note or the interest thereon, and desiring to be relieved from such obligation, executed, with plaintiff's knowledge and consent, a deed of the premises to Hoefer & Zorn in full payment and discharge of the note; that upon the receipt of such deed Keen delivered the possession of all the real property, particularly described in the complaint, to Hoefer & Zorn, who, on April 20, 1896, leased the land to one F. Goffin, and the latter thereafter, and until the commencement of this suit, paid to them the rents, profits, and income of the premises, setting forth the value thereof each year from 1896 to 1904, inclusive, amounting to $6,902.72, and averring that the estimated rent for 1905 was equivalent to $682.62; that Hoefer & Zorn paid the taxes for the years 1892 and 1893, the amount of which they could not state, but approximately $250, and that they also paid the taxes on the real property from 1895 to 1904, inclusive, stating the sum paid each year, amounting to $2,039.88; that in all the negotiations

Hoefer & Zorn refused to deal with the plaintiff, but recognized, and did business with, Keen alone, as the principal, at whose solicitation they accepted the deed in discharge of the condition of their bond, and in which transaction they dealt in good faith, believing that he was the owner of the real property against all the world but themselves, and that they were acquiring an absolute title in fee to the premises; that on January 25, 1896, the land was of no greater value than the principal and interest then due on the note, and that they had no notice or knowledge that the plaintiff had or claimed any estate or interest in or to any part of the land, except as the tenant or agent of Keen; and that Hoefer & Zorn, in good faith, took possession of all the real property with plaintiff's knowledge and consent January 25, 1896, and have ever since been in the quiet and peaceable possession thereof under a claim of right as the owner in fee simple, and without objection from the plaintiff or any other person, and have received the rents and profits of the land and appropriated the same to their own use. The reply put in issue the allegations of new matter in the answer, and the cause being tried, it was decreed that the plaintiff might redeem the land on or before October 10, 1906, by paying into court for Hoefer & Zorn, in gold coin, $14,600, upon the receipt of which they were required to execute to him a deed of the premises, but if they neglected to comply therewith, the decree should operate as a deed; that if the plaintiff failed to pay that sum within the time specified, the real property should be sold in the manner provided by law for the foreclosure of liens upon land, and the proceeds arising from such sale applied as in such cases; and that the sum so found to be due should bear interest at the rate of 7 per cent. per annum from October 10, 1906, after which date the plaintiff was to receive the rents and profits of the land. From this decree Hoefer & Zorn appeal. The plaintiff also appeals from the action of the court in refusing to award him a recovery against Hoefer & Zorn of $42,000, less the debt which he claims to be due.

Without alluding to the testimony on this branch of the case, we think the original deed, executed by Keen to Hoefer & Zorn who will hereafter be designated as the defendants, was intended by all the parties as a mortgage to secure the payment of $15,600, as evidenced by the promissory note, and that Keen was acting for the plaintiff as the trustee of an express trust. Though there is some conflict of judicial utterance as to the power of an infant to create a trust, reason and the weight of authority support the principle that a minor may call into existence a trust which is valid until avoided. Flint, Trusts, § 11; Perry, Trusts, § 33; 28 Am. & Eng.Ency.Law (2d Ed.) 868. The rule is universal that, when a deed, absolute in form, was intended by the parties at the time it was executed to be the means of securing the payment of a debt, the performance of a duty, or the discharge of an obligation, the sealed instrument will, in a suit instituted for that purpose, be decreed to be a mortgage, and such intention may be established by parol. Hurford v. Harned, 6 Or. 362; Stephens v. Allen, 11 Or. 188, 3 P. 168; Swegle v. Belle, 20 Or. 323, 25 P. 633; Adair v. Adair, 22 Or. 115, 29 P. 193; Trust Co. v. Loewenberg, 38 Or. 159, 62 P. 647. The court found, according to the averments of the complaint, that for the first three years after October 10, 1892, the plaintiff paid the defendants the interest agreed upon, and within that time he also gave them $1,000 on account of the principal, thereby reducing the debt to $14,600; that about September 30, 1895, he entered into a contract with them, whereby it was stipulated that thereafter they would accept...