Pershing v. Wolfe

• Decision Date: 10 June 1895
• Citation: 40 P. 856,6 Colo.App. 410
• Parties: PERSHING et al. v. WOLFE et al.
• Court: Colorado Court of Appeals

40 P. 856

6 Colo.App. 410

PERSHING et al. v. WOLFE et al.

Court of Appeals of Colorado

June 10, 1895

Appeal from district court, Arapahoe county.

Bill by Maude Melburn Wolfe and D.T. Sanderson against Martha R Pershing and others to have a note and a trust deed securing it executed to defendants by the administratrix of plaintiffs' intestate declared void From a judgment for plaintiffs, defendants appeal. Reversed.

Bicksler McLean & Pershing, W. Henry Smith, and David P. Howard, for appellants.

Clay B Whitford, H.A. Lindsley, and Sullivan & May, for appellees.

BISSELL, J.

This litigation is an outgrowth of the administration on the estate of Lafayette A. Melburn. He died in 1890, leaving as his heirs the widow, Jane A., and three children, Clarence Beatrice, and Maude. The children are minors, and presumably under the guardianship of their mother, Jane A., except Maude, who since the death has intermarried with Joseph Wolfe, and who prosecutes this suit in her own name, and by her husband as her next friend. The widow was appointed administratrix of the estate, which comprised a large amount of real and personal property, and, speaking generally, was valued at upward of $300,000, of which about $226,000 was realty. At Melburn's death he was carrying on a carriage business in the city of Denver, and had a large amount of stock incidental to the business. The personalty was appraised and inventoried at about $68,000. After the taking out of letters, the creditors filed claims in the county court under the statute, and about $80,000 were duly allowed. A little more than half of this amount was secured by incumbrances on property. One of them, which had been adjudicated, was presented by the Commercial National Bank and amounted to about $24,000. This debt was secured by the pledge of various collaterals, consisting of notes, mortgages, and stock, but, at the time of the various transactions hereafter stated, it had not been paid. Some of the mortgages matured at early dates, and the administratrix had considerable difficulty in winding up the affairs without loss, meeting the maturing claims, and paying the various accumulations of interest. No fuller or more exact statement of the condition of affairs is essential. The widow continued as administratrix until October, 1893, when she resigned, and was succeeded by David T. Sanderson, who is joined with Maude as plaintiff. Before Mrs. Melburn's resignation, and on the 11th of July, 1891, she presented to the county court a petition setting up with much fullness and particularity the condition of the estate, both with respect to its assets and its debts, and stated facts whereon she based her claim of the necessity to borrow money on the real estate to take care of the pressing debts. She concluded her petition with a prayer for leave to incumber the realty for the purposes specified. All the proceedings in the county court are not before us. There is nothing in the record but the complaint, the answer of the defendants, and their cross bill. On these pleadings, together with a demurrer to the answer and the cross complaint, the court entered judgment for the plaintiffs. The nature and effect of this judgment will be more fully stated further on. On the petition for leave to mortgage process was issued and served on all persons in interest, returnable at the September term. The parties appeared. A guardian ad litem was appointed for the minors, who took issue on the petition, and prayed proof in the usual fashion. The decree which was entered on the 27th of October recites the appearance, the taking of proof, and the finding of the court. Speaking generally, the decree provided that the administratrix could mortgage any or all of the real estate at a specified term and rate of interest, or might lease it on specified conditions, together with other powers, which are unimportant. There was a definite grant of authority to the administratrix to mortgage, on the conditions antecedently named, lots 1 to 10, inclusive, in block 24, McCullough's addition, for the sum of $5,000. There was a limitation in the decree which restricted the general right therefore granted, and subjected the administratrix to the necessity of reapplying to the court for the exercise of the power as to any other property than what was designated. For some reason, which is undisclosed, this decree seems not to have been entirely satisfactory; and the court took further action on subsequent dates, to wit, in November, on the 5th, 17th, and 21st. Each of these later decrees appears to have been entered as part and parcel of the original proceedings, but in some particulars the judgments varied from the first decree, though there was no change made in the specification of the property on which the security might be given. These subsequent entries, in place of directly conferring power to mortgage, gave the administratrix the right to execute either a mortgage or a trust deed on the property. In the exercise of this power, the administratrix negotiated a loan with Martha R. Pershing. On the 22d of November, 1892, she borrowed $5,500, and gave a note promising five years from the date to pay the sum to Mrs. Pershing, with interest at 8 per cent., payable quarterly, according to 20 coupons which were attached. The note provided that, in case of a failure to pay the interest or any part of the sum payable by the terms of the obligation, the party, at her option, might declare the whole sum due. To secure this note, the administratrix executed a trust deed in the usual form common to this state, whereby she conveyed the described premises to James H. Pershing, as trustee, with authority to sell in case of default. This deed likewise contained a provision giving the option to the beneficiary to declare the whole sum due on a failure to pay the interest, or on breach of any of the other conditions contained in the deed. The trustee was likewise given the power to sell by giving four weeks' public notice by advertisement, making the sale at the door of the courthouse. There was a default in the payment of some of the legitimate charges under the arrangement, and Mrs. Pershing exercised her right to declare the whole sum due, and, at her request, the trustee advertised the property for sale. Under the notice, the sale would have occurred on the 18th of September, 1893, less than a year from the date of the original transaction. Whereupon Maude, in her own name, and by her husband, as her next friend, and Sanderson, as administrator, filed a bill in the district court setting up these various matters, alleging the invalidity of the proceedings in the county court, and prayed a decree for a perpetual injunction to restrain Mrs. Pershing from the enforcement of her note or its security, that they might be declared void, and for general relief. The only persons made defendants in that bill were Mrs. Pershing and the trustee and his successor. The defendants answered, and filed a cross bill. No attempt will be made in this statement to separate and assign the matters of fact stated in those pleadings, for they were both demurred to, and on the demurrer the court rendered final judgment. The other important facts which will be assumed for the purposes of this decision, since they are conceded by the demurrer, are substantially the good faith of Mrs. Pershing in the transaction, the situation of the estate, and some other orders of the county court and the ultimate disposition of the money. The loans were made on the strength of the decrees of the county court, and the deed was accepted after it had been approved by the county judge. Prior to the attempt to exercise the power of sale, the owner of the note presented it to the county court for allowance as a claim against the estate, and it was duly allowed. The existence of the claim filed by the Commercial National Bank is conceded, and the money which was borrowed of Mrs. Pershing was applied to the liquidation pro tanto of this adjudicated claim, and to that extent reduced the debts which had been filed and allowed. Nothing further of radical consequence, or which would form a basis for the judgment which the court entered, is deducible from the pleadings. Thereon the court entered a judgment perpetually restraining the defendants from enforcing their security according to the prayer of the complaint. It is a little difficult to exactly apprehend the scope of the judgment. The plaintiffs prayed that the trust deed and note be adjudged void, and the defendants be restrained from enforcing the security. In his opinion, the judge who tried the case held the note not to be a legal claim, and the security to be invalid. Under some circumstances, we might be compelled to determine whether the actual judgment entered, since it is as to its terms only ascertainable on the inspection of the prayer of the complaint, went so far as to adjudge the note invalid, and to restrain its collection, either through the ordinary proceedings of the county court or otherwise. Our conclusions render this unnecessary. We have stated all the facts essential to our conclusion.

The judgment cannot be upheld. There is not enough before us to permit the adjudication of every proposition which has been argued by counsel or which is presented by the record. It is likewise impossible for us to decide all the questions which are suggested by the proceedings in the county court. There is nothing in the record but the petition, and the several decrees, under some one of which the administratrix, in the execution of her supposed authority, executed the note and trust deed, and delivered them to Mrs. Pershing, who advanced the money. The three decrees entered in November may all be invalid, or they may be...