McLeod v. Despain

• Decision Date: 31 December 1907
• Citation: 92 P. 1088,49 Or. 536
• Parties: McLEOD v. DESPAIN et al.
• Court: Oregon Supreme Court

92 P. 1088

49 Or. 536

McLEOD v. DESPAIN et al.

Supreme Court of Oregon

December 31, 1907

On rehearing.Petition for rehearing denied.

For former report, see90 P. 492.

Wirt Minor, T.G. Hailey, and Chas. H. Carter, for appellants.

John McCourt, for respondentJ.S. McLeod.

Jas. A Fee, for respondentLina H. Sturgis.

KING, C.

Respondents in their petition for rehearing, contend that we were in error in the statement in our former opinion to the effect that the signatures to the eight promissory notes, made payable to the order of C.B. Wade, trustee, were procured and notes delivered, after he received the Teal note and mortgages duly assigned to him.It is true that the assignment of the Teal instruments, as well as of the new notes, are dated June 29, 1898, and the written agreement between Wade and appellants is dated the day following; and, while the $28,000 draft may have been forwarded to Teal by the Pendleton Savings Bank on July 1st the money was actually paid to the bank for that purpose, and assignment of note and mortgages recorded June 30, 1898.It is evident that respondents' counsel make no distinction between the dates as they appear on the instruments in evidence, and the actual time when the various steps were taken, and that they overlook the governing feature that the various transactions although requiring several days for completion, must be considered as a whole.On these points various facts and circumstances sustain the conclusion heretofore reached, an instance of which we quote from the testimony of Norborne Berkeley as follows:

"Q.At the time this transaction was made, in what capacity, if any, were you acting for Mrs. Despain and the other defendants?A.I was acting was their agent in handling the affairs of the Despain estate.Q.Tellthe court how it occurred.A.We owed Mr. Teal, or rather Mr. D.P. Thompson, I think, by a note made to J.N. Teal, $28,000.I thought there was an understanding we could pay part of it off, and I wrote to Teal and asked if we could sell a ranch and apply the money, and he said, 'No.'I thought that possibly we might get the money somewhere else, and I went to Mr. Wade.The first time I asked him if he could let us have $28,000, he said: 'No, we haven't got the money now, but can probably let you have it later.'And, probably during the same week, I went back to ask him about it, and he said: 'Yes, I think we can get the money now, and will let you have it.'I told him: 'If you will buy this note and hold it and allow us to pay it off in such sums as we can, it will suit us better, as we want to sell certain ranches and apply it whenever we can.'He was to give us a lower rate of interest.We were paying 8 per cent., and he agreed to let us have it for 7, for which he would charge us $1,500.When Mr. Wade told me they had the money, I went down there, and he had some notes prepared in the bank, aggregating $29,500.The understanding was the first one of the notes paid was to be the bonus note paid to get the money, and get the concession of interest, and to be allowed to pay the matter off as we wanted to.We had been informed that Mr. Teal had sent his note and assignment of his mortgage to the Savings Bank, so Wade informed me when we went in there.We went down, and he took up the note and assignment of the mortgage, and when we got back he showed me he had this note in his possession.I surrendered him the $29,500 note, or notes, with the understanding they should be kept together.Q.Were you acting for them as agent in this transaction?A.Yes, sir.Q.Youknew those notes were to raise that money to pay off that loan of Teal's?A.No, I didn't know that they really owed the money before he got the notes; that is, he had the Teal assignment and Teal note before the notes were delivered to him.Q.Yousay he had the money when the assignment was delivered to him?How do you know that?A.I didn't say he had the money.I said he had the $28,000 note and assignment of mortgage when the notes were delivered to him."

It is argued that McLeod received his note June 29, 1898, and our attention is directed to certain testimony in support of this contention; but the answers cited do not support this theory, nor do we find anything in the record to that effect.True, it is disclosed that McLeod gave a check to Wade on that date for $7,000, for which he was to receive a note to be executed by appellants; but he does not state that the note was turned over at that time, and it is clear, from the record, that all the money necessary for taking up the Teal note and mortgages was advanced to Wade, and that the Teal instruments were assigned to and held by him as trustee when this was done.All of this is consistent with Berkeley's statement to the effect that, when Wade told him he had the money, the notes were then prepared, and, on learning he had the assignment of the $28,000 note and mortgages, the new notes were then delivered to him.McLeod's check, dated, June 29th, is shown by the stamp of the bank thereon to have been cashed the following day.The testimony of both McLeod and Hartman indicates that it was the understanding between all the parties that the new notes should be secured by an assignment of the Teal note and mortgages to Wade, as trustee, and should be held by him in that capacity; the legal title to remain in him until the $29,500 consideration expressed in the new instruments should be paid in full, during all of which time the old note and mortgages should continue in full force and effect.By mutual consent he thereby became the holder and owner of the legal title to the indebtedness, as well as the party with whom defendants were expected to deal and to whom they were to make their payments.The claim of $29,500 was, accordingly, represented by the various instruments in the aggregate, and, as formerly stated, was in the same position as if the contents, conditions, and effect of all the new instruments and agreements had been written across, or attached to, the old note and securities and made a part thereof, though the method adopted was more convenient by reason of the separate notes representing and distinguishing their respective interests, etc.It is, accordingly, immaterial whether the signature of the new notes were secured before or after June 29th, as they were of no binding effect until the entire transaction, including the assignment of the Teal note and mortgages, became complete, which, by relation, antedates the delivery of the notes, and which fact respondents are estopped to question, since the new notes, on which a decree is here sought, contained the indorsement: "This note is secured by a note of $28,000, signed by same parties, which is secured by real estate mortgages assigned to C.B. Wade, trustee."It is conceded that this indorsement was upon these notes at the time of their delivery.In fact, it is through this indorsement that respondents maintain their rights to foreclose the Teal mortgages.

It is also necessarily conceded that the old note and mortgages remained in force at least until the new notes were executed, which being true, it follows that, when the new notes were delivered, the Teal note and mortgages, by reason thereof, were either paid or not paid.If not paid, they then remained in full force and effect until the entire indebtedness was liquidated, and Wade having been made their custodian, and it having been required, as a part of the conditions upon which the money was advanced, that he should hold the same for respondents, it cannot be seriously questioned but that the payments made under such circumstances were made to the party authorized to receive them, and respondents would be bound accordingly.In that event, it would become a purchase outright, concerning which respondents would necessarily be-bound by Wade's acts as much so as if the money advanced had been furnished without the execution and receipt of the new instruments.On the other hand, if the execution of the new notes paid the old debt, it would follow that the former note and mortgages became extinguished, and, while the new notes contain the indorsement that they are secured by the Teal instruments, yet, if paid and extinguished, this fact could be admissible only for the purpose of proving an oral agreement to execute a mortgage to secure the payment of the money advanced, or, what is its equivalent, an oral agreement to revive a mortgage that has been fully paid, to include not only the canceled claim, but an additional note of $1,500.Whether such agreement could be enforced in equity is not necessary to a determination of this suit.It is sufficient to observe that respondents do not seek a specific performance of such contract, nor is an issue to that effect disclosed by the pleadings.

But it appears here that the mortgages and note were duly assigned to Wade, and that Teal was paid in full by him with funds advanced by respondents for that purpose, thereby, up to that point, making it a purchase outright.Then, as evidence of the fact that neither the mortgages nor the note were deemed canceled, it was expressly understood and agreed, and so stamped upon each note issued, that it was secured by the old note and mortgages, thus clearly indicating that each was to remain in force and effect, to be available at any time there should be a default in the payment of any portion thereof, in accordance with the terms of the new notes, which not only secured the interest of each of the parties advancing the money with which the Teal note and mortgages were purchased, but contained the additional terms in reference to the interest and the time of payment granted to appellants.We thus find them retaining and using the old...