Lundquist v. Olympia Nat. Bank

• Decision Date: 02 April 1925
• Docket Number: 18997.
• Citation: 133 Wash. 600,234 P. 453
• Parties: LUNDQUIST et al. v. OLYMPIA NAT. BANK et al.
• Court: Washington Supreme Court

234 P. 453

133 Wash. 600

LUNDQUIST et al. v. OLYMPIA NAT. BANK et al.

No. 18997.

Supreme Court of Washington

April 2, 1925

Department 2.

Appeal from Superior Court, Thurston County; Wilson, Judge.

Action by the Olympia National Bank against the Olympia Fir Lumber Company, in which Frank Kotick was appointed receiver for defendant. After judgment for plaintiff, the receiver petitioned for an order declaring status of claims of F. J Lundquist and other creditors with reference to priorities. From judgment below, the receiver, the Olympia National Bank and others appeal. Modified and affirmed.

E. N Steele, of Olympia, and James C. McKnight, of Seattle, for appellants.

Troy & Yantis, of Olympia, for respondents Bank and Troy.

John S. Lynch and A. W. Tyler, both of Olympia, for respondents Adair and others.

MITCHELL J.

The Olympia Westside Lumber Company, a corporation, was engaged in the manufacture of lumber in the city of Olympia in 1920 and 1921. It became indebted to Hugh Ross and the Olympia National Bank, as evidenced by its several promissory notes to each. A mortgage was given to each by the Westside Lumber Company on its property to secure the payments of the notes. In March, 1921, it executed and delivered to the Olympia Fir Lumber Company, a corporation, a conditional sale contract of the mill plant and property and put the latter named company in possession of it. The Olympia Fir Lumber Company thereafter operated the business. In September, 1921, the executor of the Hugh Ross estate commenced an action to foreclose its mortgage. Among others, the Olympia Westside Lumber Company, the Olympia National Bank, and the Olympia Fir Lumber Company were made defendants and were served with summons and complaint. Such proceedings were had in the case that the Olympia Westside Lumber Company and the Olympia Fir Lumber Company were both adjudged to be in default, neither of them having made or entered any appearance in the case. A judgment on the notes and foreclosing the mortgages was entered in favor of the executor of the Hugh Ross estate and in favor of the Olympia National Bank. All of the property was sold to the judgment creditors by the sheriff on a special execution sale on December 3, 1921, the sheriff giving a bill of sale therefor.

On October 4, 1921, the Olympia Fir Lumber Company, to secure advancements made and to be made which were to be evidenced from time to time by promissory notes, for the purpose of purchasing logs by the mortgagor, entered into and delivered to the Olympia National Bank its mortgage on its property as follows:

'All of the sawed lumber and timbers at the mill of mortgagor, and in its yards or on its dock, and all lumber to be cut by the said mill, and stored in its yards or on its docks, and all logs in the said company's booms, at the said mill, and all logs to be placed therein from time to time, during the life hereof, it being the purpose of this mortgage to cover all logs, lumber or timbers, cut or to be cut, in boom or to be placed therein, so long as this mortgage subsists.'

On April 10, 1922, the Olympia Fir Lumber Company executed and delivered its second mortgage to the Olympia National Bank to the same general effect and on the same property as mentioned and described in the first mortgage. Both mortgages were duly acknowledged, and promptly placed of record in the office of the county auditor.

In the meantime, under date of January 3, 1922, the executor of the Hugh Ross estate and the Olympia National Bank, who were purchasers at the sheriff's sale in the foreclosure suit against the Olympia Westside Lumber Company, entered into a conditional sale contract with the Olympia Fir Lumber Company, whereby they agreed to sell and it agreed to buy the mill property described as follows:

'One Allis Chalmers bank mill, carriage feed engine, live rolls, log haul, one Erie engine, all shafting and pulleys, all machine shop machinery, consisting of lathes, drill, press, grinder, key, seater, power hacksaw, motor, and shafting pulleys in connection therewith, one 6X9 Berlin plance; filing room machinery consisting of gummer, grinder, swage, emery wheels, lap grinder, all tools, bank saws, wench, conveyor, linings; pipe gear, blower, pipe, and cyclone nigger, water pump, log burner, all blacksmith tools, including anvil, vise, tongs, hammers, blower used in connection therewith, conveyer chains, jew chains, and drives in connection therewith, 9,800 red brick; wharf and sawmill buildings, located on block 356 of Olympia tide lands, Thurston county, Washington; also all lumber purchased by the parties of the first part herein at execution sale on the ___ day of November, 1921.'

The price agreed on, $42,400, was to be paid by installments as set out in the contract, which contained the usual forfeiture clause at the election of the vendors upon default in making the payments. This contract was duly filed of record in the county auditor's office on January 5, 1922. Payments were not made as required by the terms of the contract, and written notice of intention to forfeit and thereafter written notice of forfeiture, according to the terms of the contract, were given and served by the executor and the bank on the Olympia Fir Lumber Company.

On May 28, 1922, the present action was commenced against the Olympia Fir Lumber Company by the Olympia National Bank on promissory notes payable to the bank and to foreclose the two mortgages that had been given by the ...