Appeal
from Circuit Court, Yamhill County; H. H. Belt, Judge.
Action
by W. B. Smith against B. B. Barner. From a judgment for
plaintiff, defendant appeals. Reversed and remanded.
The plaintiff alleges that on March 10, 1914, the
defendant, by written assignment, sold and delivered to him a
certain promissory note executed on August 18, 1913, for
value, by Frank H. Greenman and wife to21
the defendant, in the sum of $8,000, payable on or before
five years after date, with interest at 7 per cent. per
annum. As a part of the same transaction, the plaintiff says
the defendant assigned a certain mortgage deed executed to
secure the note, upon real property in the town of Sunnyside
Yakima county, Wash., which was then and is now of the value
of about $12,000. It is further alleged that at that time and
in consideration thereof the plaintiff paid the defendant
$6,700 in cash, and that:
" By the said sale and delivery of the said promissory
note and mortgage deed, the said defendant did covenant to
and with this plaintiff that he was the owner of and had good
right to sell and transfer the said instruments to this
plaintiff, and that they were valid instruments of the
character they purported to be."
It is
then averred that the defendant did not keep his covenant
and that the same was broken, " because the said
promissory note and mortgage deed were not valid
instruments" of the character they purported to be, but
their execution had been obtained from the said Frank H
Greenman and his wife by fraud and misrepresentations. The
facts constituting such fraud and
misrepresentations are then set forth in detail. By way of
estoppel the plaintiff alleges:
" That the said defendant ought not to be admitted to
deny the fraud and fraudulent representations alleged in the
procurement of said promissory note and mortgage, and as set
forth and alleged in the third paragraph of this complaint
for that
" On the 10th day of March, 1914, Frank H. Greenman and
Olive R. Greenman, his wife, duly commenced an action in the
superior court of the state of Washington for Yakima county,
which court was then and there a court of general
jurisdiction, under the laws of the state of Washington, and
had full and complete jurisdiction over the subject-matter of
the action, to cancel and set aside for fraud and
misrepresentations in obtaining the execution of the said
promissory note and mortgage above described, against one C.
W. Swartz and one J. R. Prigmore and the defendant B. B.
Barner, and caused summons in said suit to be served upon
each of the defendants prior to the 10th day of March, 1914,
and prior to the sale of said instruments to this plaintiff,
and
" For that the allegations made in said complaint,
commenced in Yakima county, Wash., aforesaid, were and are
the same allegations and statements of fraud and
misrepresentation as are those alleged and set forth in
paragraph 3 of this complaint, and
" For that the said C. W. Swartz, and the defendant B.
B. Barner and J. R. Prigmore failed and neglected to appear
in or answer the complaint in the suit to set aside and
declare void the said promissory note and mortgage above
described, although duly served with summons therein, as by
law provided in the state of Washington, and defaulted in
said suit, and
" For that thereafter, on the 23d day of May, 1914, a
decree of the said superior court of the state of Washington
for the county of Yakima was duly rendered and entered of
record in said suit in favor of the said Frank H. Greenman
and Olive R. Greenman, and against the said C. W. Swartz, B.
B. Barner, and J. R. Prigmore, defendants in said suit,
declaring, adjudging, and decreeing that the
said promissory note and mortgage deed above described were
obtained by fraud perpetrated by the said C. W. Swartz and B.
B. Barner upon the said Frank H. Greenman and Olive R.
Greenman, his wife, and that the same were fraudulent and
void, and should be and were canceled and set aside and held
to be of no effect, the fraud for which the court set aside,
canceled, and annulled the said note and mortgage being the
same as were contained in the complaint in the action then
pending in Yakima county, state of Washington, hereinabove
referred to, and being the same matters and things as alleged
and set forth in paragraph 3 of this complaint; that said
superior court for the state of Washington was then and there
a court of general jurisdiction, having full and complete
jurisdiction over the subject-matter of the action, and
" For that a decree of said court is conclusive and
binding, not only upon the said defendants in said action,
but upon this plaintiff.
" Wherefore, the plaintiff prays judgment that the said
defendant B. B. Barner should not be admitted to deny the
fraud in obtaining said instruments as hereinbefore alleged.
" That by reason of the said fraud so perpetrated by the
said B. B. Barner and the said C. W. Swartz in the aforesaid
transaction between themselves and the said Frank H. Greenman
and Olive R. Greenman, wherein the said promissory note and
mortgage were executed, and by reason of the said decree of
the said superior court of the state of Washington, for the
county of Yakima, declaring the said transaction of the said
promissory note and mortgage fraudulent and void, this
plaintiff was and is forever precluded from foreclosing the
said mortgage deed, or collecting the sum named in the said
promissory note, or any part thereof."
It is
asserted that by reason of such facts the plaintiff was and
is now damaged in the sum of $6,700, with
interest from March 31, 1914, for which he prays judgment.
In his
answer the defendant admits the purchase and assignment of
the note and mortgage as alleged, but denies every other
allegation in paragraphs 2, 3, 4, and 5, of the complaint
except as set forth in the further and separate answer, and
makes a general denial of paragraph 6. For affirmative
defense, he alleges that on June 4, 1913, one C. W. Swartz
was the owner in fee of the real property described in the
complaint, and desired to transfer the title to the
defendant, to be held by the latter in trust for him; that on
June 5, 1913, Swartz made such conveyance without any
consideration; that since that time the defendant has held
the bare legal title to said property as trustee, having no
authority to transfer it without the express consent of
Swartz, and--
"
That on or about the 18th day of August, 1913, the said
Swartz stated to the defendant herein that he was about to
exchange said property for 640 acres of farming land in
Alberta, Canada, and directed said defendant, as trustee for
said Swartz, to execute a deed to said property in Yakima
county, Washington, to one Frank Greenman and Olive R
Greenman, husband and wife, and further stated to this
defendant that said Greenman and wife would execute to this
defendant a deed for said property, together with a mortgage
in the sum of $8,000 on the said property in Yakima county,
Washington, being the same property conveyed by this
defendant as the trustee for said Swartz. That on the 18th
day of August, 1913, the said Greenman and his wife deeded to
this defendant, as the trustee for the said Swartz, the said
land in Canada, subject to a mortgage of $4,000, and this
defendant, acting as a mere trustee for said Swartz, without
interest, deeded the said Sunnyside property in Yakima county
in Washington to the said Greenman and his wife, and on the
23d day of August, 1913, the said F. H. Greenman
and his wife executed and delivered to this defendant, as
trustee for Swartz, their note for $8,000, secured by a
mortgage on said Sunnyside property in Yakima county, Wash.
Said mortgage was duly filed for record. That this defendant
acted merely as trustee in said transaction for said Swartz,
and took no part in the negotiations for the exchange of said
properties, made no statements or representations to said
Greenman or his wife, concerning said exchange of property,
knew nothing of the terms or conditions of the exchange, and
in truth and in fact never saw or held any conversations or
communications, written or otherwise, with the said Frank H.
Greenman or his wife, and had no other knowledge of the said
transactions, nor any knowledge as to what was said by said
Swartz to said Greenman and wife. That subsequent thereto the
said Swartz stated to this defendant that he had sold said
note and mortgage, executed by said Greenman and wife to the
plaintiff herein, and subsequently presented to this
defendant a written transfer and assignment of said note and
mortgage for execution, which he (Swartz) had caused to be
prepared, and requested defendant to execute the same for and
on his, the said Swartz's, behalf. That this defendant in
obedience thereto did transfer said note and mortgage to the
plaintiff herein. That this defendant took no part in the
negotiations leading up to the sale of said note and mortgage
to the plaintiff, held no written or other communications
with the plaintiff regarding the same, made no
representations to plaintiff, but acted merely as the trustee
for and on behalf of said Swartz. That all of the
negotiations prior and subsequent to said sale of said note
and mortgage were carried on solely and only between the
plaintiff herein and said Swartz. That no consideration moved
from the plaintiff herein to this defendant personally. That
this defendant received the sum of $6,700 in cash only as the
trustee for said Swartz, and immediately after the same was
received said sum was paid over to the said Swartz by
defendant. That the plaintiff herein had full
knowledge of all these facts, and had full knowledge that
this defendant was a mere t...
