Wallace v. Thomas

• Decision Date: 28 February 1938
• Docket Number: 26925.
• Court: Washington Supreme Court
• Parties: WALLACE v. THOMAS et al. DAIRY COOPERATIVE ASS'N v. WALLACE et al.

76 P.2d 1032

193 Wash. 582

WALLACE v. THOMAS et al.

DAIRY COOPERATIVE ASS'N v. WALLACE et al.

No. 26925.

Supreme Court of Washington

February 28, 1938

Department 1.

Appeal from Superior Court, Cowlitz County; Howard J. Atwell, Judge.

Action by Dora A. Wallace and D. L. Wallace, for whom the first-named plaintiff was substituted as administratrix following the latter's death, against Clifford Thomas and others, wherein the Dairy Cooperative Association filed an interpleader action making all of the original parties, and others, defendants, involving the right to the proceeds of a dairy operated by the defendant Thomas. From an adverse judgment, Dora A. Wallace, as administratrix and individually, appeals.

Affirmed.

E. H. Kohlhase, of Kelso, for appellant.

Ronald Moore and Lester Huntington, both of Kelso, for respondents.

SIMPSON Justice.

This action was originally commenced by D. L. Wallace and Dora A Wallace against Clifford Thomas and his wife to recover rent claimed to be due from Mr. and Mrs. Thomas. Later the Dairy Cooperative Association filed its interpleader action making all of the above parties defendants.

We will hereafter refer to the Dairy Cooperative Association as plaintiff and the other parties to this action as defendants.

In its complaint the association alleged that defendant Clifford Thomas was and had been for some time a member of the plaintiff's association and had marketed milk and cream through such association and on October 17, 1932, had assigned to defendant Security State Bank all of the proceeds from milk or cream sold by Thomas to plaintiff; that thereafter on March 1, 1934, defendants Thomas assigned to defendants Wallace out of the proceeds accruing to them from the milk and cream sales the sum of $2700, payable at the rate of $225 per month, at which time the Thomases were occupying a certain farm owned by the Wallaces, and that the assignment of the $2700 was given to secure the payment of the rental for such property. It was further alleged that the farm lands leased to defendants Thomas were located in Cowlitz County Diking Improvement District No. 5 and were subject to certain taxes and assessments for diking and drainage, which liens for taxes and assessments were foreclosed by the county in January, 1936; that thereafter the lands were sold by the treasurer of Cowlitz county to the county, which became the purchase thereof and acquired title on behalf of the diking improvement district; that thereafter plaintiff association was notified by defendants Wallace that the tax deed was invalid and they demanded that plaintiff resume the monthly payments of $225. The plaintiff further alleged that all of the defendants claimed some right, title, or interest to the money it had received from the sale of milk to it from defendants Thomas and therefore asked that the defendants be required to appear and assert their respective claims to the amount the plaintiff association paid into court.

Thereafter the various defendants made their claims concerning such fund, defendants Thomas contending, first, that the defendants Wallace had agreed by an instrument in writing that no further rent should be paid because of the fact that a foreclosure proceeding was had on account of the delinquent taxes and assessments; second, that the county treasurer of Cowlitz county had delivered to Cowlitz county a deed to the property in question, which deed was valid upon its face, and that such defendants were required to pay the rent to Cowlitz county on behalf of the diking district.

Defendants Wallace answered and alleged that they were entitled to the amount of money paid into court by virtue of the fact that they owned the property occupied by defendants Thomas, that they had leased it to the Thomases for a certain agreed amount, that the tax foreclosure deed was invalid, and that the money paid into court by the plaintiff association was money that had been assigned to them on account of the amounts due on the lease by defendants Thomas. They then asked for a judgment against defendants Thomas for the rental due them up to the time of the trial at the rate of $225 per month, and asked further that the money paid into court by the plaintiff association be subjected to the lien of defendants Wallace's judgment.

The Security State Bank in its answer contended that it was entitled to the money paid into court for the reason that defendants Thomas had assigned to such bank all the money resulting from the sales of milk to the plaintiff association by them and had been released from the assignment made to defendants Wallace by Mr. and Mrs. Thomas.

The county answered that it had secured title to the property in question through foreclosure proceedings, was the owner of the property and entitled to receive rent from the Thomases and that the money paid into court should be turned over to the county.

The case was tried to the court sitting without a jury and after trial judgment was entered dismissing the action in so far as defendants Wallace were concerned and awarding all of the moneys paid into court by the Dairy Cooperative Association to be the property of the Security State Bank free and clear of any claim or right of any of the other parties to the litigation.

From such judgment the defendants Wallace have appealed, urging as assignments of error the action of the court in adjudging the Security State Bank to be the owner of and entitled to the possession of the money paid into the court and in refusing to adjudge the money due and owing to defendants Wallace.

The facts are summarized as follows. Respondent Clifford Thomas had been for many years prior to the beginning of this action a dairy farmer living in the vicinity of Woodland, Wash and, being without sufficient funds to conduct his business, made arrangements with respondent Security State Bank for certain loans. To secure these various loans he assigned to the bank all sums of money to be received from the sale of his milk and cream. This assignment was dated October 22, 1932, and up to the time of the trial had not been revoked. March 24, 1933, appellants leased to respondents Thomas a dairy farm for the period of one year at a rental of $2700, payable monthly at the rate of $225. The lease also provided 'an assignment of $225 per month to be paid direct from the creamery, or party, or firm, or corporation purchasing from' Thomas. Later a formal assignment of the sum of $225 each month was made to appellants by respondents Thomas of moneys coming from milk delivered to the Dairy Cooperative Association. This assignment was agreed to by the bank. The lease was extended on two subsequent occasions, bringing the termination of the last extension to March 24, 1936, rental being in the same amount, but no formal assignment of funds was made. The farm lands leased by appellants to respondents Thomas were located in Diking Improvement District No. 5 of Cowlitz County. The diking taxes and assessments on the rented property became delinquent, and on January 15, 1936, judgment was entered foreclosing such lien. February 1, 1936, the farm was sold to Cowlitz county on behalf of the diking district and a tax deed was issed to the county by its treasurer February 3, 1936. Immediately upon receipt of the deed the diking commissioners called it to the attention of respondents Thomas and demanded that the rent be paid to the diking district. February 3, 1936, respondents Thomas wrote the Dairy Cooperative Association notifying it of the fact that the diking district had taken over the farm lands and directed the association not to pay the Wallaces any further money under the order that had been given to the association by them. The association then stopped paying rent to appellants. Some time prior to February 18, 1936, appellants and respondents Thomas had a consultation relating to the further payment of rent and the fact that a deed had been given to Cowlitz county as result of the foreclosure proceedings. At this conference appellant Dora A. Wallace, acting for herself and husband, agreed that if they were paid the sum of $112.50 they would release the Thomases and the association from further rent payments. The agreement was evidenced by a note or letter as follows:

'Woodland, Washington,

'February 18, 1936.

'Dairy Co-op. Sirs: Please pay Mrs. Wallace one more check of $112.50.

'Clifford Thomas.

'Mr. Henry: Dear Sir: After receiving a check for $112.50 from Mr. Thomas's account I will release you from further payments.

'Mrs. Dora Wallace.' (Mr. Henry was a representative of the Dairy Cooperative Association.)

This amount was thereafter paid to appellants.

Respondents Thomas and the diking commissioners then entered into an agreement by the terms of which the Thomases were to have the use of the farm for thirteen months for the agreed sum of $2,000, most of which was paid in making improvements and repairs to the farm buildings, the balance being paid to the commissioners of the diking district.

July 11, 1936, a second tax sale under the foreclosure proceedings was had, and later, October 7, 1936, a new deed was issued by the county treasurer of Cowlitz county to the county on behalf of the diking district.

On the 5th day of October, 1936, the prosecuting attorney of Cowlitz county presented a petition to the superior court asking that the first deed, dated February 3, 1936, be set aside upon the grounds that the sale and the deed were void and of no force and effect for the reason that notice of such sale had not been given to the recorded owners as required by law.

Acting upon this petition the court made its order, dated October 5 1936, to the effect that the sale and deed referred to in the petition were void...