Gertner v. Limon Nat. Bank

• Decision Date: 06 June 1927
• Docket Number: 11640.
• Parties: GERTNER v. LIMON NAT. BANK.
• Court: Colorado Supreme Court

257 P. 247

82 Colo. 13

GERTNER v. LIMON NAT. BANK.

No. 11640.

Supreme Court of Colorado, En Banc.

June 6, 1927

Rehearing Denied June 27, 1927.

Error to District Court, Cheyenne County; Wilbur M. Alter, Judge.

Suit by the Limon National Bank against Barbara Gertner, impleaded with Oscar Ewy and others. Judgment for plaintiff, and named defendant brings error.

Modified and affirmed.

Butler J., Burke, C.J., and Denison, J., dissenting.

Klockenteger & Magee, of Seibert, and Allen, Webster & Drath, of Denver, for plaintiff in error.

Ralph W. McCrillis, of Denver, and Robert H. Schaper, of Limon, for defendant in error.

ADAMS J.

This is a suit brought by defendant in error, the Limon National Bank, plaintiff in the district court, against Gertner and others, to foreclose a deed of trust as a mortgage. Findings judgment, and decree for plaintiff. Defendant, Mrs. Gertner brings the case here for review. When not otherwise designated, we shall refer to the bank as plaintiff and to Mrs. Gertner as defendant their respective positions in the trial court.

The trust deed that was foreclosed is dated March 30, 1920; it was executed by two of the other defendants, Oscar J. Ewy and his wife, Marie J. Ewy, to the public trustee in Cheyenne county, Colo., to secure their note in the principal sum of $20,000, of even date therewith, due in two years, in favor of the Limon Cattle Loan Company. The trust deed covers two sections of land in Cheyenne county, containing 1,280 acres, more or less, and was recorded in that county on April 20, 1920. A credit of $14,800 is indorsed on the note, and the balance alleged to be due is the sum of $5,200 principal, besides accrued interest and attorney's fees. Plaintiff, the Limon National Bank, was the holder and owner of the note at the time of the commencement of the action. The parties defendant are Mr. and Mrs. Ewy, who executed the note and trust deed, Barbara Gertner, the present record owner of the land, and, lastly, the public trustee in Cheyenne county, the trustee named in the deed of trust. The Ewys defaulted, and the public trustee confessed the bill. The defendant, Barbara Gertner, is the only one that assigns error and that is before us complaining of the decree of foreclosure.

The genuineness and due execution of the note and trust deed are admitted. The sole defense is that a payment of $14,411.70, made by one Gottlieb Gertner on or about November 22, 1922, should be accepted in full payment and discharge of the $20,000 lien. On November 11, 1922, Ewy and his wife, at that time owners of the land in question, deeded it to Gottlieb Gertner, subject to certain incumbrances named, containing the words, 'which second party (Gertner) assumes and agrees to pay.' Gertner is now deceased. He owned the land when he died, and the defendant, Barbara Gertner, is his widow and sole heir. She contends that the land is in fact free and clear of all liens and incumbrances, and that the bank or loan company should have executed a full release, and therefore that plaintiff has no right of foreclosure.

An acquaintance with the personal relations of the parties between themselves may help somewhat to a better understanding of the case. The Gertner and Ewy family ties are very close. Mrs. Ewy was brought up in the Gertner home in Minnesota, and was looked upon by Mr. and Mrs. Gertner as their own child; they are referred to by the parties as Mrs. Ewy's foster parents, and as 'mother' and 'father' by the Ewys them selves. These intimate relations did not cease when Gottlieb Gertner died. This is apparent from the fact that after his death, his widow, the defendant, Barbara Gertner, came to Colorado and makes her home with her foster children, the Ewys, who reside on the land in dispute. The Ewys have continued to remain on the land, notwithstanding its sale to Gottlieb Gertner. The parties agree that Mas. Ewy will inherit Mrs. Gertner's estate upon the latter's demise.

The Limon Cattle Loan Company is a Colorado corporation. Its officers are officially connected with the plaintiff, the Limon National Bank. They worked together, and, as to the matter here involved, their rights and duties are identical. For such purposes, and with the consent of plaintiff and defendant, we shall treat the loan company and the bank as substantially the same concern, to save time. We shall use their names separately, together, or interchangeably, as occasion may require, but in every instance it will have reference to the rights and duties of the plaintiff, the Limon National Bank.

For several years prior to and including the year 1920, the bank and loan company had been carrying cattle loans to the defendants Mr. and Mrs. Ewy. Some, at least, were secured by chattel mortgage. These loans ran as high as $34,000, and the loan company' required the Ewys to give additional security. This resulted in the execution of the deed of trust on March 30, 1920, to secure the sum of $20,000, which was later foreclosed for the unpaid balance in the suit we are now considering. This trust deed is referred to by some of the witnesses as 'collateral security' to the larger indebtedness of the Ewys to the bank or loan company.

In 1922, the loan company insisted that the Ewys reduce their indebtedness. They had no money and no place to look for it unless Mrs. Ewy's foster father, Gottlieb Gertner, then living in Minnesota, could be induced to come to their rescue. After talking with representatives of the bank and loan company, Mr. and Mrs. Ewy went back to Minnesota about October 10, 1922, for this purpose. At this point the dispute begins. Defendant claims, and the Ewys so testified, that the bank or loan company agreed to fully cancel their $20,000 lien on the land in question if the Ewys would sell the land to Gottlieb Gertner for $14,500 and apply the amount thus received in reduction of the Ewy indebtedness to the bank and loan company, but in any event it would not, defendant says, be a further charge on the land, so her deceased husband would have acquired the premises free and clear of all liens and incumbrances. Mrs. Ewy admits that she said nothing to her foster father about the $20,000 incumbrance, but gave him to understand that the land could be bought clear for $14,500. Mr. Ewy did not talk with Mr. Gertner. Mrs. Ewy persuaded Gertner to get the money for them, and one A. F. Meyer, cashier of Westbrook National Bank, of Westbrook, Minn., Mr. Gertner's business advisor and agent, negotiated a loan for the latter on some Minnesota land that he owned and realized $14,500 from it. Meyer transmitted $14,411.70 of the amount to the Limon National Bank, the difference having been deducted by him to pay for recording fees and other expenses connected with the Minnesota loan. The Limon bank placed the money to the credit of Ewy's checking account, but eventually endorsed a credit of $14,800 on the Ewy $20,000 note. We assume that the amount in excess of the sum received from Minnesota, that went to make the total of $14,800 credited, was paid by the Ewys. There is no dispute over these minor differences.

Plaintiff's version of the affair is different from defendant's in essential particulars. Plaintiff admits that the Ewys went back to Minnesota to get money, if they could, from Gottlieb Gertner, with plaintiff's knowledge, but denies that the bank or loan company agreed to fully cancel the $20,000 lien for the sum of $14,500. Plaintiff says that they did not then know, nor did any one know at the time, what amount of money, if any, the Ewys would be able to get, and that no definite arrangement was made before they went East as to how the security should be adjusted; that the bank or loan company was willing to give Gottlieb Gertner, and did give him, his choice of one or two alternatives; i. e., that the bank would either turn over to Gertner a first trust deed on the land in the sum of $14,500, the title to the land in such case to rest in Oscar Ewy and his wife, or else let the title be in Gertner and credit the trust deed down to $5,200. The bank was then carrying some 'plain notes' of Ewy's, for which they explained they wanted some semblance of security. D. W. Wills, secretary of the loan company, and an officer of the bank, testified that if the Ewys had kept the land and if Gertner had been given a first trust deed, it would have thus enabled the bank to take a second mortgage or trust deed for the balance. Wills also explained in a letter to Meyer that with Ewy owning the land the latter could make a better showing than as a renter, and yet Mr. Gertner would be fully protected. The loan company expected the Ewys to pay out on their cattle; the Ewy paper was extended to give them a chance, but the bank or loan company was not willing, in view of the Ewys' precarious financial condition, to surrender all of their land security, and permit the Ewys to transfer this Colorado land clear of incumbrances to their foster-father in Minnesota. As Wills testified: 'We did not do business that way.'

The further position of the plaintiff is that after considerable correspondence between the loan company and Meyer, in Minnesota, representing Gertner, the latter chose the second alternative, namely, that the title to the land should rest in Gertner, subject to a first trust deed in favor of the loan company to secure the $5,200 balance due, and that such was the situation when the foreclosure suit was begun.

It is further shown that after the transaction between plaintiff and Gottlieb Gertner was closed, and while the title to the land was vested in Gertner's name, both Mr. and Mrs. Ewy went through bankruptcy. The lien of the trust deed was too old to be affected by that adjudication, and was not there involved, but...