Travelers' Ins. Co. v. Redfield

• Decision Date: 08 April 1895
• Parties: TRAVELERS' INS. CO. v. REDFIELD et al.
• Court: Colorado Court of Appeals

40 P. 195

6 Colo.App. 190

TRAVELERS' INS. CO. v. REDFIELD et al.

Court of Appeals of Colorado

April 8, 1895

Error to district court, Arapahoe county.

Action by George S. Redfield and others against the Travelers' Insurance Company for the cancellation and rescission of a contract. From a judgment for plaintiffs, defendant brings error. Reversed.

Charles H. Toll, David V. Burns, and W.R Barbour, for plaintiff in error.

Willard Teller and J.P. Brockway, for defendants in error.

THOMSON J.

The allegations of the complaint are: That on October 20, 1884 plaintiff George S. Redfield and one Warner made their promissory note to one T.C. Henry for $6,400, due five years from date, with interest payable semiannually, at 10 per cent. per annum, and secured it by a deed of trust upon certain land owned by them. That after the giving of the note the plaintiff purchased from Warner his interest in the real estate, and assumed the payment of the trust deed. That the sole consideration of the note was a title to eight water rights, to be secured to the makers by the Fort Morgan Irrigation Company and the defendant, the Travelers' Insurance Company, the water to be taken from the canal of the irrigation company, and used in the irrigation of their lands. That the irrigation company had contracted a bonded indebtedness of $60,000, secured by deed of trust upon all of its property, executed to Gustavus F. Davis, vice president of the insurance company, as trustee and that this company was the owner of all the bonds so secured. That by a provision in the trust deed the irrigation company was authorized to sell water rights, and the trustee might issue to the purchaser a release of those purchased by him from the lien of the trust deed. That Henry was the agent of the insurance company, and, while he was the nominal payee of the note, the insurance company was the real party in interest, and was the principal in the transaction. That the note was made payable to him, and was by him indorsed to it, at its request. That it agreed, in consideration of the making of the note, to cause the trustee to release the water rights to be obtained from the irrigation company from the lien of the trust deed. That the irrigation company duly conveyed these rights to the plaintiff and Warner; but, having made default in the payment of its bonds, all of its property, including the eight water rights so conveyed, was sold under the deed of trust made by it, the insurance company being the purchaser at the sale. That the latter company then caused to be incorporated the Ft. Morgan Land & Canal Company, and caused the property purchased by it, including the plaintiff's water rights to be conveyed to the new company. That afterwards, in settlement of a dispute which had arisen concerning water rights purchased, an agreement was entered into between the parties to the dispute, by which, in so far as it affected the rights of the plaintiff, the canal company and the insurance company agreed to convey to the plaintiff his eight water rights by a good and sufficient conveyance. That on the day on which this agreement was made the canal company issued its bonds in the sum of $120,000, with interest at 10 per cent., and secured them by a deed of trust to Davis upon all of this property, including the water rights contracted to the plaintiff, of which bonds the insurance company became the owner and holder. That the canal company, in turn, made default, its trust deed was foreclosed, and the insurance company again became the purchaser, the purchase including the water rights in question. That the insurance company thereupon caused to be incorporated the Ft. Morgan Land & Water Supply Company, and conveyed to it the property purchased, including these water rights, receiving in payment all the capital stock of the supply company, which stock the insurance company still owns and holds. That the insurance company never caused any release to be made to the plaintiff of the water rights conveyed by the irrigation company, and by reason of the sale of its property under its trust deed the conveyance made by it became a nullity. That no conveyance was ever made under the agreement of settlement with the canal company and the insurance company. That the insurance company had often promised to carry out its agreement with the plaintiff, but no conveyance of the water rights had ever been made to him, although it was always within the power of the insurance company to cause the conveyance to be made, and that the plaintiff was still without title to these rights. That in fraud of plaintiff's rights, and for the purpose of defrauding him of his right and title to the water rights, and without giving him any consideration for the promissory note, the insurance company had advertised the land for sale under the trust deed, and was about to sell the same; and that the plaintiff was ready, able, and willing to pay the note and interest in full, if the insurance company would perform its agreements with him, and cause him to be invested with the title to his water rights. The prayer was for an injunction against the foreclosure of the trust deed, and for its cancellation, and that of the note which it secured.

The defendant's answer set forth two defenses. The first denied as follows: That T.C. Henry was the defendant's agent. That the defendant agreed to take the water in payment for water rights. That the note was made to Henry, or indorsed by him to it, at its request. That any part of the transaction was conducted with Henry as its agent. That the defendant was the principal in the transaction, in the sense that Henry was its agent. That the note was given in payment of water rights. That the consideration of the note was an agreement for the conveyance of water rights to the plaintiff and Warner by the defendant and the irrigation company free from the lien of the deed of trust. That the defendant failed to deliver to the plaintiff the release of Davis, trustee, to the water rights conveyed by the irrigation company, or that any part of the consideration of the note was an agreement to do so. That in the agreement of settlement there was a provision that the land and canal company and the defendant should convey the water rights to the plaintiff by a good and sufficient conveyance, or that the defendant ever promised to cause the water rights to be conveyed to the plaintiff. The second defense averred that the plaintiff and Warner first applied to T.C. Henry as their agent to procure for them a loan of $6,400, offering to secure the loan by a trust deed upon their real estate representing that they had a contract for eight water rights, the same being sufficient for the irrigation of the land offered as security, and that the money was wanted to pay for these water rights, and further offering two additional water rights as security for the loan. That Henry forwarded the application to the defendant, and requested it to make the loan, but for certain reasons the defendant hesitated to entertain the application. That the plaintiff and Warner then made the note payable to Henry, under some arrangement whereby he was to have the use of the money as a loan from them to him, and delivered the note to him. That on the 29th day of October, 1884, Henry presented the note secured by the deed of trust to the...