Oregon Mortg. Co. v. Leavenworth Securities Corp.

• Decision Date: 27 December 1938
• Docket Number: 27126.
• Citation: 86 P.2d 206,197 Wash. 436
• Parties: The OREGON MORTGAGE CO., Limited, v. LEAVENWORTH SECURITIES CORPORATION.
• Court: Washington Supreme Court

86 P.2d 206

197 Wash. 436

The OREGON MORTGAGE CO., Limited, v. LEAVENWORTH SECURITIES CORPORATION.

No. 27126.

Supreme Court of Washington

December 27, 1938

Department 1.

Foreclosure proceedings by the Oregon Mortgage Company, Limited, a corporation, against Leavenworth Securities Corporation, a corporation, and others. From an adverse decree, the named defendant appeals.

Affirmed.

Appeal from Superior Court, Chelan County; W. O. Parr, Judge.

A. N Corbin, of Wenatchee, for appellant.

Sam R Sumner and Harvey F. Davis, both of Wenatchee, for respondent.

BLAKE, Justice.

This is an appeal from a decree foreclosing a mortgage on an orchard tract situated in Chelan county. The sole question for determination is whether the appellant, Leavenworth Securities Corporation, can set up as against the mortgagee respondent here, a tax title acquired subsequent to the execution of the mortgage.

The salient facts are: May 20, 1922, one Gilbert executed and delivered a mortgage to respondent, to secure a loan of eighteen hundred dollars. Subsequently, he executed and delivered a mortgage on the same property to Leavenworth State Bank, one of the defendants in the action. At all times with which we are concerned, Robert B. Field was president of the bank, and owned a majority of its stock. Likewise, he owned a majority of the stock of the appellant, Leavenworth Securities Corporation, of which he was vice-president. He was the actual manager of the bank. Although nominally another managed the appellant corporation, we think it is clear that Field was also the dominating power in its management. Both institutions occupied the same offices. Prior to 1933, the bank had been financing Gilbert in the operation of his orchard. In January of that year, Field ostensibly for Leavenworth Securities Corporation, purchased the property at tax sale for $143.10--the amount of the irrigation assessment for 1932. December 29, 1933, Field, on stationery of Leavenworth State Bank, and over his signature as 'President,' wrote respondent's attorney as follows:

'You will remember last summer discussing with me the taxes on the A. C. Gilbert place. Also you will recall that Mr. Pattullo [manager of respondent] was with us when I made the statement that I had purchased the water taxes on this tract and hoped to obtain a deed from the District on January 8th.

'Please take this matter up immediately with Mr. Pattullo, with the idea of drawing some sort of a document which will give Mr. Pattullo the same benefits he now has, as far as this land is concerned, after deed has been issued to us.

'My reason for writing you at this time is to go on record to the effect that we haven't the slightest intention of taking advantage of the Oregon Mortgage Co. in this situation and all we want them to do, is to agree to reimburse us for these taxes at a later date if it becomes necessary for them to foreclose on this particular property. My purpose in buying up these taxes was to avoid a foreclosure, as one is very imminent, and I sincerely trust that the Oregon people will go along with us in the hope that we can work out the proposition and thus avoid the necessity of their taking over the tract.'

January 12, 1934, the treasurer of Chelan county executed and delivered a tax deed to 'R. B. Field for Leavenworth Securities Corporation.'

Field again wrote respondent's attorney on April 18, 1934. This letter was also on the bank's stationery, and signed 'Robert B.Field, Pres.' In this letter, after summing up Gilbert's obligations to respondent and the bank Field outlined a plan by which he hoped that Gilbert's indebtedness to both respondent and the bank might be worked out without liquidating the property. The proposal included the following condition: 'In case of liquidation through failure to operate successfully bank's advances to come first, after which the balance would be split fifty-fifty between the mortgage company and the bank to apply on our present investments in this property.' In other words, it was proposed that the lien of the bank should be on an equality with respondent's mortgage with respect to the net proceeds from the sale of the property. Neither respondent nor its attorney made any written response to this proposal. But that the matter was discussed many times with Field, there can be no doubt. Nothing came of...