Wells Fargo Nevada Nat. Bank of San Francisco v. Barnette

• Decision Date: 12 May 1924
• Docket Number: 4178.
• Citation: 298 F. 689
• Parties: WELLS FARGO NEVADA NAT. BANK OF SAN FRANCISCO et al. v. BARNETTE.
• Court: U.S. Court of Appeals — Ninth Circuit

298 F. 689

WELLS FARGO NEVADA NAT. BANK OF SAN FRANCISCO et al. v. BARNETTE.

No. 4178.

United States Court of Appeals, Ninth Circuit.

May 12, 1924

Rehearing Denied June 16, 1924.

On January 5, 1911, the Washington-Alaska Bank, a Nevada banking corporation engaged in business at Fairbanks, Alaska, went into the hands of receivers. E. T. barnette had been the president and manager of the bank from its incorporation. There were 1,400 creditors. In February, 1911, Barnette's wife, the appellee herein, went from Los Angeles to Seattle where she joined her husband, and with him she proceeded to Fairbanks with the intention of assisting in the liquidation of the bank's business. Six weeks after their arrival at Fairbanks, and after a consultation with their attorney, they executed a trust deed to one of the depositors of the bank as trustee, conveying real estate of Barnette and real estate claimed as the separate property of the appellee, for the benefit of the depositors of the bank and to secure payment of their demands. Acceptance of the deed was refused, on the ground that thereby criminal prosecution of Barnette and enforcement of his civil liability might be prejudiced and waived. Thereafter Barnette and his wife executed a similar deed to the receivers. The receivers refused to accept the trust on the same grounds as those on which the depositor had refused. Thereupon Barnette and his wife filed a petition in the District Court for the territory of Alaska, praying for an order that the receivers be required to accept the trust deed. In that petition they referred to the fact that certain legal proceedings were contemplated and about to be commenced against the petitioners, which would subject their real estate in Alaska to the process of the court and prevent them from dealing with or disposing thereof, and entail great and unnecessary expense, 'and,' said the petition, 'your petitioners desire to prevent the commencement of such legal proceedings and the incurring of said unnecessary and great expense by surrendering all the real estate and lands of the said petitioners to the said receivers. * * * It is the desire and intention of your petitioners, and each of them that all said depositors in said Washington-Alaska Bank shall be paid in full their respective deposits, with interest thereon at the rate of 6 per cent. per annum. ' Upon a hearing the court made an order referring the petition to the receivers. They reported adversely, but asked for instructions from the court. The court thereupon made an order instructing the receivers to accept the deeds and administer the trust. The deeds were executed by Barnette and his wife, and the latter acknowledged that she executed them voluntarily 'and did not wish to retract. ' The receivers took possession of the property in Alaska so conveyed, and at the commencement of the present suit they were still administering the trust.

On November 16, 1914, the appellee commenced a suit in the District Court for the territory of Alaska to set aside the deed of her separate property, but when the case came on for trial on August 1, 1918, she took a voluntary nonsuit, having in the meantime, on July 24, 1918, brought in the superior court of the state of California for the county of San Francisco the present suit to set aside her conveyances which cause was removed to the court below. The substance of the complaint is that, for a long time prior to the execution of the deed whereby her separate property was conveyed to the receivers, the appellee was subjected continuously to duress by depositors and creditors of the bank; that the duress consisted of threats to the effect that such depositors would, unless the appellee joined with her husband in securing the payment of their claims, take the life of the appellee and inflict upon her person great physical and bodily injury, at the same time accusing her husband of having purposely caused the failure and robbed the bank; that they also threatened to cause the arrest, indictment, and imprisonment of her husband for larceny and embezzlement of the funds of the bank, unless their claims were paid or secured; that she believed that those threats would be carried into effect, unless she complied with their demands; that in consequence thereof, and the importunity and solicitation of her husband, she joined in the execution of said trust deed; that at and prior to that time she was ill and suffering from disease and debility, and she was in such physical and mental condition as to be deprived of her free will and her power to assent to the execution of the deed. The complaint further alleged that the receiver had received $52,000, the proceeds of the sale of said property, and deposited the same with the Wells Fargo Nevada National Bank. The prayer of the complaint was that said money be adjudged to be property of the appellee and that the receiver be required to pay the same to her. The answer denied duress, and pleaded laches and ratification of the conveyance and estoppel. The court below found that the trust deed had been executed under duress, and upon the accounting ordered by the court the appellee was awarded $31,000 and costs. From that decree both parties have appealed.

F. De Journel, of Fresno, Cal., and Jerome B. White, Heller, Powers & Ehrman, and Heller, Ehrman, White & McAuliffe, all of San Francisco, Cal., for appellants and cross-appellees.

Wm. H. Chapman and R. P. Henshall, both of San Francisco, Cal., for appellee and cross-appellant.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

GILBERT Circuit Judge (after stating the facts as above).

We do not find it necessary to inquire whether under the facts as found by the trial court, the duress was in law such as to render the conveyance voidable. It may be said, in passing, that according to the evidence no duress was practiced by the receivers. Nor is it suggested by pleading or by proof that either the receivers or the great majority of the creditors of the bank were aware that duress had been practiced, or that undue influence had been exerted, to obtain the deed. The reported cases hold that where the grantee of the deed has not instigated the duress, or connived therein, or had knowledge thereof, duress by others is not ground for avoiding the conveyance. Rogers v. Adams, 66 Ala. 600; White v. Graves, 107 Mass. 325, 9 Am.Rep. 38; Green v. Scranage, 19 Iowa, 461, 87 Am.Dec. 447; Sheard v. Laird, 15 Ont.App.Rep. 336.

We are of the opinion, however, that the court below should have dismissed the appellee's bill on the ground of her laches in instituting the suit. Granting that there was local pressure, duress, and threats on the part of certain depositors interested in securing the payment of their claims, and that under such duress the appellee joined in the conveyance, the duress terminated upon her return to Los Angeles in March, 1911. We say terminated, because we are not convinced that the fear that she may still have had that her husband would be prosecuted criminally continued to operate as duress in law. She acquiesced, so far as the record shows in the transfer of her property from the date of the deed until she brought her action in the Alaskan court in ...