Sanford v. Savings & Loan Soc.

• Decision Date: 03 October 1893
• Citation: 80 F. 54
• Court: U.S. District Court — Northern District of California
• Parties: SANFORD et al. v. SAVINGS & LOAN SOC. et al.

80 F. 54

SANFORD et al. v. SAVINGS & LOAN SOC. et al.

United States Circuit Court, N.D. California.

October 3, 1893

John A Stanly, Garrett W. McEnerney, George R. B. Hayes, and T. I Bergin, for complainants.

An. N Drown and Philip G. Galpin, for respondents.

MCKENNA Circuit Judge (orally).

In this action the complainants claim the right to redeem a piece of land in Contra Costa country, called 'Los Meganos,' or 'Marsh Ranch.' The respondents have the legal title, but complainants allege it was received in trust for James T. Sanford, and now held in trust for complainants, as his legal representatives. To quote from Mr. Stanley's argument: 'The record, bill, answer, and proof show that long prior to the connection of any party to this suit with the subject-matter the title had become so vested that 91/100 undivided parts belonged to one set of owners, and 9/100 belonged to another owner or owners. ' All parts, however, became vested in James T. Sanford prior to July 3, 1872, and afterwards passed from him, dividing again for a while, and afterwards uniting again in the respondents; and complainants, counsel says, therefore are affected by different states of facts and different rules and principles of law. The 99/100 parts came to Sanford by deed dated November 1, 1871, the deed being from Charles P. Marsh, and Alice F. and William Cameron. The deed recited that it was subject to a mortgage for $259,333 of the purchase money, and two deeds of trust made by Marsh to E. W. Burr and B. D. Dean. The mortgage was duly foreclosed, and the property bought in by Alice F. Cameron and Charles P. Marsh. The first, and, I think, the material, controversy, is about the redemption from this sale, and the parties by whom and the character in which the money was furnished. However, on the 3d of July, 1872, Sanford conveyed all of the property to the Brentwood Coal Company, and the latter gave him a mortgage to secure $90,000 of the purchase price. This mortgage was assigned by Sanford to one Bowdoin on the 12th of May, 1873, 'upon the terms and conditions contained in a certain agreement between the parties hereto, bearing even date herewith. ' This agreement shows that the assignment was in trust to secure the payment of a certain number of promissory notes made by Sanford to various parties, all of which were made April 1, 1873, and to become due at various dates in 1874. By the agreement recited they were made and delivered on the day of the agreement, to wit, the 12th day of May, 1873. The agreement recites that Sanford delivered the mortgages to secure the payment of the notes severally, as they should fall due, and Bowdoin accepted the mortgages for such purpose, and, if they should be paid as they fall due, he will, upon the request of Sanford, deliver up and satisfy the first-mentioned mortgage, and reassign to him the second. If the notes be not paid when due, Bowdoin, at the request of any holder of them, shall proceed to collect the whole and all of them by foreclosing said mortgages, or by such other legal process as may be lawful for that purpose in the state of California, and the property described in the first mortgage was to be sold first, and, if a surplus remained, it to be paid to Sanford, and the Brentwood Coal Company's mortgage reassigned to him. If the sale should not produce sufficient to pay the obligation, the premises in second mortgage to be sold, and the surplus, to the extent of $90,000, to be paid to Sanford, and the balance, if any, to the Brentwood Coal Company. If all the premises should not realize sufficient to pay the obligations, the amount realized to be divided proportionately. The Marsh-Cameron mortgage was foreclosed, as I have said, and the property bought by Alice Cameron and Charles Marsh for the sum of $199,183.80. It was redeemed on the 26th day of July, 1875, in the name of George S. Bowdoin. The certificate reciting the right to redeem was based on the mortgage made by the Brentwood Coal Company to Sanford, and assigned by him to Bowdoin, both of which have been described above. This certificate he assigned to E. W. Burr as security to the Savings & Loan Society for $150,000, which the corporation had advanced, and which sum was used in part to effect the redemption. To whom this sum of $150,000 was advanced is one of the contentions of the parties; the complainants contending it was advanced to Sanford, the respondent contending it was advanced to Bowdoin, and that he furnished the balance of the money. I think the evidence shows it was advanced to Sanford, and that he furnished the balance of the money. It is too conclusive to admit of doubt.

The redemption was made on the last day allowed by law. Bowdoin made no movement to redeem. It was first intended to redeem in Sanford's name. Afterwards, and almost at the last moment of time, it was resolved to redeem in Bowdoin's name. Bowdoin's testimony is conclusive of it. He made no movement to redeem, and on application of Sanford allowed his name to be used, expressly agreeing to subordinate the rights he had as trustee to the lien of the money required for redemption, and with extreme care stipulated against liability of himself and those he represented. In his deposition he testified that he authorized the redemption of the property, but not for the parties he represented. 'It was redeemed in my name,' he said, 'but I did not furnish the money, or borrow it. I came to make the redemption, because Mr. Sanford said, through my counsel, that if I redeemed he would furnish the money; and my object was that, in the event that the property realized more than Sanford paid, he would be able to meet the balance of the notes which I still held against him, he having already paid the first maturing notes. I did not authorize the borrowing of the money from the Savings & Loan Society for the purpose of making the redemption, and I did not authorize the borrowing of any money from any person or corporation. ' As to the assignment of the certificate, he testified he first assigned it by telegraph, and afterwards in writing, but neither borrowed nor authorized the borrowing of any money on it, 'and the assignment, I presume, from what my counsel told me, was on behalf of Mr. Sanford. ' This testimony shows conclusively that Bowdoin did not borrow from the Savings & Loan Society the $150,000 as claimed by it. The testimony further shows that the balance of the redemption money was furnished by Sanford by drafts from New York, and by sums raised here on his credit.

These facts establish a trust in favor of Sanford to the extent of the interest conveyed by the assignment of the certificate of redemption. Hidden v. Jordan, 21 Cal. 92. This redemption, and the relations established by it, become the test of the case, and explain all that took place afterwards. By the foreclosure and sale of the 91/100, the balance, 9/100, was left subject to the mortgage from the Brentwood Coal Company to Sanford, which we have seen was assigned to Bowdoin in trust. The Brentwood Coal Company was adjudged bankrupt by the district court of the United States of the Southern district of New York, and one George H. Carey was duly appointed assignee of the estate, and was duly authorized to sell, and did sell, the estate of said company in said 9/100 of said rancho free and clear of any lien thereon, of the mortgage of the company to Sanford; the lien to attach to the proceeds of the sale; and George S. Bowdoin became the purchaser thereof. The court subsequently authorized the said assignee to take the receipt of Mr. Bowdoin for $45,000 in payment for the property; that is, to accept his receipt, which was virtually the receipt of Sanford for that much of the debt of the coal company to him. There are a number of other transactions in which Sanford conveyed interests in the rancho after the redemption from the foreclosure sale, and there were sales for taxes, and sales under a judgment obtained against him by F. A. Eaton, who had advanced part of the money for the redemption from the Marsh and Cameron foreclosure sale. These interests were purchased by the Savings & Loan Society.

On whose account they were made, as well as the purchase of the 9/100 of the rancho from Bowdoin, is the second contention of the parties. Sanford, immediately after the redemption of the foreclosure sale of the Marsh mortgage, went into possession of the land, made leases to others, and disposed of its rents and profits; and it is claimed that in consideration of the surrender of the agricultural portion to the bank, he retaining the house and certain grounds, the bank was to advance to him funds sufficient to purchase said claims and pay off certain enumerated indebtednesses. The agreement was afterwards modified, it is further claimed, to include the surrender of the house and grounds; and in lieu of their retention Sanford was to receive a certain monthly sum. This is denied by the bank, but I think it is supported by a fair preponderance of the testimony. The oral testimony is conflicting, but there are circumstances in the case which cannot be accounted for on any other supposition. The value of the property supports it. It was sufficient to make the bank secure. Interlocutory decree for complainant, with reference to the master for an accounting.

(February 23, 1897.)

McKENNA Circuit Judge.

The controversy in this case was as to the status of certain tracts of land described in the bill,-- whether the respondent society was the owner of them, or whether they were held in trust by it for Sanford to secure the sum of $150,000 and interest and certain advances and disbursements. The interlocutory decree determined the latter. Upon what facts and reasoning, is set out with sufficient...