Elwert v. Pacific First Federal Savings & Loan Ass'n

• Decision Date: 31 January 1956
• Docket Number: Civ. No. 7857.
• Parties: Mary A. ELWERT, Plaintiff, v. PACIFIC FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF TACOMA, WASHINGTON, a Corporation, The Bank of California, N. A., a Corporation, Defendants and Third-Party Plaintiffs, Leo ELWERT, Third-Party Defendant.
• Court: U.S. District Court — District of Oregon

138 F. Supp. 395

Mary A. ELWERT, Plaintiff, v. PACIFIC FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF TACOMA, WASHINGTON, a Corporation, The Bank of California, N. A., a Corporation, Defendants and Third-Party Plaintiffs Leo ELWERT, Third-Party Defendant.

Civ. No. 7857.

United States District Court D. Oregon.

January 31, 1956.

Norman B. Kobin, Portland, Or., Peter S. Herman, Salem, Or., for plaintiff.

Lofton L. Tatum, of Wood, Matthiessen, Wood & Tatum, Portland, Or., for defendants Pacific First Federal Savings & Loan Ass'n of Tacoma, Wash., and Bank of California, N. A.

S. J. Bischoff, Portland, Or., for third-party defendant, Leo Elwert.

EAST, District Judge.

This action came on for trial before the Court without a jury, the plaintiff, Mary A. Elwert, hereinafter referred to as Mary, appearing in person, and being represented by her counsel, Norman B. Kobin and Peter L. Herman, the defendant, Pacific First Federal Savings and Loan Association of Tacoma, Washington, a corporation, hereinafter referred to as Loan Association, and the defendant, The Bank of California, N. A., a corporation, hereinafter referred to as Drawee Bank, appearing by and through their counsel, Lofton L. Tatum, and Leo Elwert, third party defendant, hereinafter referred to as Leo, appearing through his counsel S. J. Bischoff.

It conclusively appears from the undisputed evidence in the case and from the pre-trial order, that:

At all pertinent times the Loan Association "was and is a corporation organized and existing under the laws of the United States relating to federal savings and loan associations, with its principal office in Tacoma, Washington, and an office in Portland, Oregon;" the Drawee Bank "is a corporation organized and existing under the national banking laws of the United States, with its principal office located in the State of California, and (a) branch office located in Portland, Oregon;"

Mary, at all pertinent times, was a resident and a citizen of the State of Oregon, and she and Leo were wife and husband and also co-partners in the ownership and operation of a co-partnership known as the Tualatin Valley Nursery, with its principal place of business at Sherwood, Washington County, Oregon;

That during the year, 1945, Mary and Leo, then being wife and husband, became the owners by an estate by the entirety of certain timber lands consisting of two parcels described as follows:

(a) The West one-half of the Southwest quarter, the Southeast quarter of the Southwest quarter, the Southwest quarter of the Southeast quarter of the Section 8, Township 13, South, Range 8 West of the Willamette Meridian, Lincoln County, Oregon.

(b) The Southeast quarter of Section 32, Township 12 South, Range 8 West of the Willamette Meridian, and Lots 3 and 4 in the Southeast quarter of the Northwest quarter and the Southwest quarter of the Northeast quarter of Section 4, Township 13, South, Range 8 West of the Willamette Meridian, Lincoln County, Oregon.

and that the purchase price paid by Mary and Leo for said timber lands was from moneys accumulated by said parties in the course of their co-partnership ownership and operation of said nursery business;

That on or about the 20th day of February, 1948, the Coos-Pacific Timber Company, a subsidiary of Dant and Russell, Inc., entered into an executory contract wherein Mary and Leo agreed to sell and the said timber company agreed to purchase the aforesaid timber land for the sum of $55,090.98. The initial down payment upon said purchase price, in the sum of $27,592.98, was paid by a check payable to the order of Leo Elwert. The proceeds of which check were deposited in the Tigard Branch of the United States National Bank on or about February 25, 1948, in an account designated Leo or Mary Elwert "Real Estate Account;"

Subsequently maturing installments of purchase price under said contract were made payable by some six checks of the said Dant and Russell, Inc., payable to the order of Leo and Mary Elwert. The disposition of the proceeds of these checks are of no materiality to this matter except the following three checks which are the subject of plaintiff's action:

1. (Exhibit 5) Check, dated February 17, 1949, in the amount of $7,287.50, drawn on Drawee Bank, and payable to the order of Leo and Mary Elwert, the proceeds of which check were on or about February 25, 1949, deposited with the Loan Association in an account numbered 94380 under the name of Mr. G. M. Bloomquist.

2. (Exhibit 6) Check dated August 3, 1949, in the amount of $7,012.50, drawn on the Drawee Bank, payable to the order of Leo and Mary Elwert, the proceeds of which check were on or about August 23, 1949, deposited with the Loan Association in said account No. 94380.

3. (Exhibit 8) Check dated February 26, 1950, in the amount of $7,012.50, drawn on the Drawee Bank, payable to the order of Leo and Mary Elwert, the proceeds of which check were deposited with the Loan Association on March 7, 1950 in account No. 94954, held in the name of "L. C. Albee."

That the aforesaid Loan Association accounts numbered 94380 and 94954, were each opened and established by Leo through the acquiescence of an officer of Loan Association under the fictitious names of "Mr. G. M. Bloomquist" and "L. C. Albee," as aforesaid, respectively.

That Loan Association credited said accounts with the amounts of said checks as aforesaid and then forwarded said checks through the Portland clearing house for collection to the Drawee Bank, which Drawee Bank, in the course of normal banking business debited the amount of said checks against the account of the maker, Dant and Russell, Inc., and credited the account of Loan Association.

That each of the said three checks upon presentation to the Loan Association were apparently duly endorsed by Leo Elwert and Mary Elwert.

That subsequently and during the months of September and October, 1950, said two accounts numbered 94380 and 94954 were reduced to zero in amount of funds therein by reason of withdrawals by Leo, the ultimate disposition of which funds is unexplained, except that it is conclusive that Mary received no part thereof.

That on or about May 16, 1950, Mary and Leo duly executed a deed conveying legal title to the aforesaid timber lands to the purchaser thereof.

Mary contends that she was the owner of an undivided one-half interest in and to the proceeds of said three checks and that her purported endorsement, "Mary Elwert" on each of said three checks was not authorized or otherwise genuine and in fact were forgeries, and that by reason of the contended forgery of her endorsement thereof, the collection thereof by the Loan Association and ultimate payment thereof by the Drawee Bank constituted a conversion of her property to their own use.

The Loan Association contends:

That this court lacks jurisdiction over it because the controversy herein as between itself and Mary "is not between citizens of different states."

That Mary's endorsements were made by Leo upon the actual authority, knowledge and consent of Mary, or, alternatively, upon the implied and apparent authority of Leo.

That Mary, by reason of her actions, delay and failure to notify Loan Association within a reasonable time after said three checks had been negotiated and after Mary, with reasonable diligence knew or should have known of the endorsement and negotiation of said checks, has ratified the endorsement appearing upon said checks and is estopped from asserting any lack of authority on the part of Leo, and, further, that by reason of said actions, delay and failure to notify Loan Association, has prevented Loan Association from recouping the amount of said checks from the account of Leo with Loan Association.

That Leo and Mary were the owners of said three checks either as tenants by the entirety or as tenants in partnership and that therefore Leo had authority to exercise full dominion and control over said checks and funds obtained therefrom.

That if Loan Association should be held liable to Mary by virtue of honoring said three checks with said endorsements that Loan Association is entitled to recover such sums for which it is so liable from Leo as third-party defendant by reason of his act or actions in endorsing said checks.

The contentions of Drawee Bank, for the purposes of this action, are identical with the contentions of Loan Association, except that Drawee Bank concedes the Court's jurisdiction over it.

Leo, as third-party defendant, contends and adopts each and every one of the aforesaid contentions of Loan Association and Drawee Bank, except that he denies that Drawee Bank would be entitled to judgment against him in the event that plaintiff prevails. Further, that there is no privity between Mary and either of the corporate defendants and that the said checks and proceeds thereof were owned by Mary and himself as tenants by the entirety, and, finally, that the sole controversy presented by the contentions of all of these parties resolves to one between Mary and himself determinable in a proceeding for an accounting between them for their partnership affairs and that by reason thereof this Court has no jurisdiction of the subject.

It appears from a preponderance of all the evidence in the case that Mary did not at any time receive for her own use and benefit any of the proceeds of the purchase price of said timber land sale and that throughout the entire transaction and the collection of the installments represented by said six checks Leo acted with the intent to and did defraud and cheat Mary of her interest therein. That Mary did not at any time have any actual knowledge of the issuance of said three checks cashed by Loan Association as aforesaid, until some time during the month of July, 1952, at which time she was confronted by agents of the United States Internal Revenue Service concerning a delinquency of income tax by reason of said sale and other financial matters of the...