Morrill v. Title Guaranty & Sur. Co.

• Decision Date: 13 January 1917
• Docket Number: 13513.
• Citation: 94 Wash. 258,162 P. 360
• Court: Washington Supreme Court
• Parties: MORRILL v. TITLE GUARANTY & SURETY CO. et al.

162 P. 360

94 Wash. 258

MORRILL v. TITLE GUARANTY & SURETY CO. et al.

No. 13513.

Supreme Court of Washington

January 13, 1917

Department 1. Appeal from Superior Court, Clarke County; Bert Linn Judge.

Action by Annie F. Morrill against Agnes L. Guernsey and W. F Guernsey, her husband, with cross-complaint by defendants against the Title Guaranty & Surety Company and others. Judgment for plaintiff and cross-defendants, and Guernseys appeal. Remanded, with direction to enter judgment for defendants.

Henry Crass, of Vancouver, for appellants.

Jas. B Murphy and Robt. C. Saunders, both of Seattle, for respondents.

CHADWICK J.

W. F Guernsey, the appellant husband, in company with one Kincaid, under the firm name of Guernsey & Kincaid, obtained a contract to construct a part of the Pacific Highway, known as 'State Aid Road No. 61,' in King county. Under the law, the contractor is required to give a bond conditioned for the faithful performance of his contract. Respondent Title Guaranty & Surety Company became surety for Guernsey & Kincaid. This respondent will be referred to as the Surety Company. To secure it from possible liability upon the bond, it took a deed to a certain block of land situate at Vancouver, Wash. The deed was taken in the name of an employé who is admitted to be a trustee for the company. A trust was declared in writing by appropriate words:

'Now, therefore, it is specifically understood and agreed that said conveyance and transfer was made for the express purpose of insuring the Title Guaranty & Surety Company against loss on the above contracts and as soon as the above contracts have been performed and all liability for loss has ceased then the said the Title Guaranty & Surety Company, by its duly authorized agent, John R. Scott, shall redeed and reconvey unto said W. F. Guernsey and A. L. Guernsey, his wife, all the right, title and interest in and to all property conveyed by reason of the foregoing contract.'

The road contract was completed in September, 1911. The contractors had not met all the claims, and, it coming to the knowledge of the Surety Company that the contractors had assigned all moneys due, and to become due, upon the contract to M. M. Morrill, a banker at Kent, Wash., it began an action in the federal court to restrain the state from making further payments, and all others from disbursing any funds on hand until the right of the claimants and creditors could be ascertained. Thereafter all parties met, counsel being present, and it was agreed, in consideration of a dismissal of the suit and a release of the impounded funds, that Morrill should pay all claims and demands against road No. 61.

In June, 1912, Morrill took a mortgage from Guernsey and wife to secure an indebtedness growing out of Guernsey's road contracts in the sum of $5,270. This action was brought by the mortgagee, the wife of Morrill, to foreclose the mortgage. Issues have been framed between the defendants. We shall briefly state the facts and disputations out of which they arise. It is contended by appellants that at the time it was stipulated that the injunction suit should be dismissed and Morrill engaged to pay all the claims arising out of road No. 61 contract, all the claims were listed and understood by all parties; that thereafter, in January, 1912, all parties and counsel for the company being present, all just and lawful claims against the firm of Guernsey & Kincaid were paid, and discharged by Morrill; and that Guernsey then and there demanded a reconveyance of the property held in trust, and that counsel for the company said he would take the matter up with the home office. Other demands, oral and by way of letters, were thereafter made, and finally, on March 19, 1915, a formal written demand was made upon the company for a reconveyance of the property. The testimony clearly shows that the property had greatly depreciated in value since January, 1912, in consequence of a general slump in real estate values. Appellants pray for damages in the total sum of $7,822.50 for depreciation, loss of sale, and taxes and interest paid.

The company asserts that no demand for a reconveyance was made at the time of the settlement; that there was no understanding that all of the claims were known, and that it was impossible that it could be so for Guernsey & Co., a company of which appellant husband was the manager, had defaulted on No. 69 state aid road which abutted No. 61 on the south, upon which it was surety, the work on the two contracts having been carried on at the same time and as if it were one contract; that it was impossible to know whether all claims had been discharged on No. 61 until all had been discharged on No. 69; that at no time prior to the actual taking of testimony in the instant case have the appellants satisfied, or attempted to satisfy, it that all claims upon No. 61 had been paid; that it had been put to an expense of $500 in the prosecution of the case in the federal court which it asserted as a claim against the trust deed; that it was not bound to reconvey so long as it had a bona fide claim against the property, however ill founded; and finally, that no deed was ever prepared by appellants, and offered with a demand that it sign the same.

Were it necessary or permissible for us to rest our decision upon the two facts, whether all claims against No. 61 had been satisfied in January, 1912, that the company knew it, and that a demand for a deed had been made, we would unhesitatingly find for the appellants, but the law will not permit a substantial recovery even under the facts found by us. The contract was completed in September, 1911, and all claims were paid in January, 1912.

The legal title to the property is, and at all times has been, in appellants. All damages now asserted accrued subsequently to the time when the trust was discharged by the acts of the parties, and, under the wellsettled principle that one who has a cause of action shall not delay his cause that damages may accrue pending its submission to a court, a party, so situate, is not permitted to postpone his suit to his own profit. This rule applies with particular emphasis where a mortgagee refuses to release or satisfy a mortgage when it is paid off or discharged. With seeming purpose to avoid such consequences, and to avoid speculative damages, the Legislatures in many states have passed laws providing, usually, for a season of grace, after demand, a right of action and a statutory penalty. Jones on Mortgages (6th Ed.) § 992 et seq. Some states provide for actual damages in addition to the penalty; the rule under such statutes being that the penalty is substituted in lieu of exemplary damages. Swallow v. First State Bank, 28 N.D. 283, 148 N.W. 630. Our statute makes no provision for damages other than the penalty.

'If the mortgagee shall fail so to do after sixty days from the date of such request or demand, he shall forfeit and pay to the mortgagor the sum of twenty-five dollars, to be recovered in any court having competent jurisdiction, and said court, when convinced that said mortgage has been fully satisfied, shall issue an order in writing, directing the auditor to cancel said mortgage, and the auditor shall immediately record the order and cancel the mortgage as directed by the court, upon the margin of the page upon which the mortgage is recorded, making reference thereupon to the order of the court and to the page where the order is recorded.' L. 1886, p. 117, § 2; Rem. Code 1915, § 8799.

The recovery permitted by the statute, although so denominated, is not strictly a penalty. It is intended as a compensation to the mortgagor, as well as a punishment to the mortgagee. Engle v. Hall, 45 Mich. 59, 7 N.W. 239.

The effect of the statute is to substitute remedies. It postpones a right of action in...