Fountain v. Lewiston National Bank

AILSHIE, J.

(After making the foregoing statement.)— After an extended and laborious examination of the record, three hundred and fifty pages of briefs and scores of authorities, we are convinced that, however the other questions raised might be resolved, still the appellant could not recover on account of the bar of the statute of limitations. It is quite clearly established that William F. Kettenbach, Sr., did not at any time during this transaction occupy or assume a fiduciary relation toward Mary McQueen. The dealings and business transactions which took place between them were at arms-length, in the ordinary course of dealing in business transactions of the character involved, and no special, peculiar or extraordinary degree of trust or confidence appears to have been reposed in Kettenbach by Mary McQueen. She was a woman of ripe years, large experience, wide observation and more than average business capacity and intelligence. All of her contracts and agreements with Kettenbach and the bank were reduced to writing and placed of record, and it clearly appears that she was dealt with fairly and was at the time satisfied with the outcome of the transaction. The evidence abundantly supports the court’s finding that no trust or fiduciary relation existed between Kettenbach and Mary McQueen. In such a case, the finding of the trial court would not be disturbed unless it amounted to a substantial departure from the facts clearly established by the evidence. (Morrow v. Mathews, 10 Idaho, 423, 79 Pac. 201; Stewart v. Hauser (majority and dissenting opinions), 9 Idaho, 53, 72 Pac. 719; Mayhew v. Burke, 3 Idaho, 333, 29 Pac. 106; Deeds v. Stephens, 10 Idaho, 332, 79 Pac. 79.) Counsel for appellant cite and quote from Smitz v. Leopold, 51 Minn. 455, 53 N. W. 719; King v. Remington, 36 Minn. 15, 29 N. W. 352; Kirby v. Lakeshore R. R. Co., 120 U. S. 136, 7 Sup. Ct. Rep. 430, 30 L. ed. 569; Lant v. Manley, 75 Fed. 635, 21 C. C. A. 457, in support of the contention that a trust and fiduciary relation existed between Kettenbach and Mary McQueen. We think these authorities correctly state the principle of law, but as we read the record before us, the facts of this ease do not bring it within the .principle announced by these authorities.

Passing now to a consideration of the bar of the statute, we find that the lands over which this litigation is pending were unoccupied, semi-arid lands adjoining the city of Lewiston. The lands were in this condition on March 28, 1890, when Mary McQueen indorsed her release on the agreement of October 18, 1889. By the agreement of October 18, 1889, it was provided “that the party of the second part (Mary McQueen) is to have immediate possession of the said premises. ’ ’ This seems to have been a recognition at the time and among the parties thereto of the bank’s right of possession in the absence of this stipulation. No further specific acts of control or ownership, other than payments of taxes, appear to have been exercised by either party until 1893. In the latter year C. J. Smith, the purchaser from Kettenbach and the bank, let this land along with a large tract of adjoining lands to J. D. C. Thiessen. Thiessen used and occupied the land from that time till the 'trial of the cause for a sheep camp and grazing purposes. He occupied and used the land during the winter and spring months each year, and kept large quantities of wool and feed for his sheep stored there. Mary McQueen and also the plaintiff lived near the land and had actual notice that it was being occupied and used, and not only this, but Thiessen caused all other stock to be excluded from and kept off of the premises. This occupation and possession continued for ten years undisturbed, unquestioned, uninterrupted and exclusive. The appellant does not controvert the fact that respondents were during this period of time in possession of the premises. Appellant does argue with great earnestness that the possession was not adverse, but was, on the other hand, subordinate to and agreeable with the title and possession of Mary McQueen. It is contended that respondents could not claim title through and by virtue of the transactions with and transfer from the grantor and at the same time hold possession thereunder adversely to the title and interest of such grantor. Upon this contention the whole question rests.

In support of the contention that respondent’s possession was agreeable and pursuant to the title and possession of Mary McQueen, counsel cite Parish v. Coon, 40 Cal. 33; Kerns v. McKean, 65 Cal. 411, 4 Pac. 404; Kerns v. Dean, 77 Cal. 555, 19 Pac. 817; Southern Cal. Ry. Co. v. Slauson (Cal.), 68 Pac. 108; Davis v. Davanney, 7 Idaho, 742, 65 Pac. 500; Kirk v. Smith, 9 Wheat. 288, 6 L. ed. 92; Alexander v. Wheeler, 69 Ala. 341; Allen v. Smith, 6 Blackf. 528; Armstrong v. Risteau, 5 Md. 279, 59 Am. Dec. 115; Clarke v. McClure, 10 Gratt. 310; Potts v. Coleman, 67 Ala. 228; 4 Rose’s Notes on U. S. Supreme Court Reports, p. 505.

In Farish v. Coon the party claiming under adverse possession had located school land warrants on tide lands which belonged to the state of California. Under the statute, however, school land warrants could only be located on land belonging to the United States, and it was held that a location on any other lands was null and void as against the true owner, and that it was impossible for the locator to acquire adverse possession, for the reason that he would be under the necessity of initiating and maintaining such possession by an act or acts of trespass. It was also held in that case that such a location did not amount to a color of title. In Kearns v. McKean, “by the terms of a written contract for the sale of land A. (from whom plaintiff claimed") was authorized, on default in the payment of principal or interest by B. (under whom defendant claimed), to declare the contract forfeited and ended, by depositing a written notice to that effect in the county recorder’s office, and immediately thereupon' he should be at liberty and have the right to re-enter into free and full possession of the premises, and be restored to his former estate therein; and, said default occurring, A. did file the notice as allowed by the agreement,” and it was held that A. thereby became entitled to the right of possession of the land and the recovery thereof, and that B., while holding under such executory contract, was not in adverse possession of the premises.

Kerns v. Dean involves the same state of facts passed upon in Kerns v. McKean, and the court again said: “Defendant having entered into possession under contract with the vendor, his holding cannot be adverse unless its hostility has been manifested by unequivocal acts brought expressly, or by legal implication, to the vendor’s knowledge.”

In Southern California R. Co. v. Slauson, both the facts and conclusion of the court are sufficiently stated in the third paragraph of the syllabus to give the view of the court upon the possession or a diverse possession as there discussed. It is said: “A railroad company and a land owner agreed that, if the former would lay its tracks over the land, and put in a station, the owner would make a deed of the right of way; and thereafter the road was built and operated, but no station was built, nor did trains stop on the land. Held that, the railroad having gone into possession under permission and in consonance with the owner’s title, which it was not to have until the performance of conditions which had not been performed, the possession of the railroad was not adverse to the owner.”

In Davis v. Davanney, the claim of adverse possession was predicated upon a possession of some six years held under a contract to purchase the premises which consisted of a dam and irrigation ditch and land lying under the ditch. This court held in that case that a title by adverse possession or prescription could not be obtained by permissive use and occupation.

An examination of the other cases cited by appellant discloses that the same principle runs through those eases that has been uniformly maintained in the cases just reviewed. The principle upheld in all these cases, and I take it to be a well-established principle of law, is that wherever the claimant enters into possession under an agreement or contract, whereby in any event or upon the happening of any contingency he may be under the duty or necessity of restoring possession to the grantor or true owner of the premises, then and in that ease his possession is the possession of his grantor or the true owner, and cannot be considered as adverse 1o the possession of him under and from whom he received his possession.

The citation from Bose’s Notes is an extract from Zeller’s Lessee v. Eckert, 4 How. (U. S.) 289, 11 L. ed. 979, where it is said: “When one enters in privity with the owner, the statute does not begin to run until there is a clear, positive, open disavowal of his title brought home to his knowledge.” This is undoubtedly a correct statement of the law, but there seems to have been more or less confusion among the courts as to just when a person enters or holds in privity with grantor or adversely to him. It is clear, however, upon principle, that one who purchases a tract of land and pays the purchase price and enters into the possession thereof, believing he has title, whether he receives a good deed of conveyance, an imperfect one, or no deed at all, nevertheless! enters into a possession adversely to the vendor and all the rest of the world, and while the entry is made with the permission of the owner it is from that moment adverse to him, and an adverse and hostile possession is the real intent of the party to such a contract. A phase of this character of entry and possession is considered in Merryman v. Bourne, 9 Wall. 592, 19 L. ed. 683; Bybee v. Oregon etc. R. Co., 139 U. S. 663, 11 Sup. Ct. Rep. 641, 35 L. ed. 305; Oregon Short Line Ry. Co. v. Quigley, 10 Idaho, 770, 80 Pac. 401.

The ease at bar differs somewhat in its facts and circumstances from any of the eases cited. Here whatever a court might hold as to the legal effect of the deed and agreement of October 18, 1889, and the release of March 28, 1890, the fact remains that from and after the latter date all the parties to these transactions understood and believed that both the legal and equitable title to ';his property had passed from the grantor, Mary McQueen,’ to the Lewiston National Bank, and they thereafter dealt with reference to the property on that theory. The full purchase price as agreed upon was paid by the bank and received by the vendor, and the bank and its successor received and maintained the peaceable, open and uninterrupted possession continuously thereafter until the commencement of this action. This possession was surrendered by the vendor and taken up by the vendee with the knowledge that the full purchase price had been paid and under the belief that a good title had passed. Under this state of facts is the subsequent possession of the vendee adverse to the vendor? It must be admitted as settled law that the possession of a mortgagee acquired by reason of being mortgagee is the possession of the mortgagor and cannot become adverse to him. (1 Cyc. 1071, and authorities cited.)

It has also been quite generally held that an entry under color of title is sufficient on which to predicate adverse possession. (1 Cyc. 1082-1085, and authorities cited.)

The question here, then, is reduced to a somewhat simpler form, viz.: Did the bank or its successor in interest enter and hold possession as mortgagee or as purchaser with title or under color of title? There is no doubt but that all the parties thought the bank was taking possession as purchaser with title. If, then, what they supposed was title should prove to be only color of title, with reason, and not without authority, we must say the possession so taken and maintained was adverse and hostile to the appellant and her ancestor, Mary McQueen. The United States circuit court of appeals for the eighth circuit discussed this identical principle in Schlawig v. Purslow, 59 Fed. 848, 8 C. C. A. 315, a case where some of the facts were very similar to the case at bar, and in the opinion by Judge Thayer, it is said: “It follows from this view of the case that when Schlawig and wife surrendered the premises to Purslow about December 1, 1878, it was understood by both parties that he went into possession under a claim of title as owner of the fee, and not merely as an encumbrancer or mortgagee. All of Purslow’s subsequent acts, as well as the conduct of his grantees, are consistent with this view, and wholly inconsistent with the theory that he merely took possession as mortgagee under an unsatisfied mortgage.....It is insisted, however, if the conveyance of December 1, 1877, was in fact and in legal effect a mortgage,- that, by taking possession under the same, Purslow became subject to all of the liabilities and disabilities of a mortgagee in possession, and that neither he nor those claiming under him could assume a different relation with respect to the mortgaged premises. In other words, it is broadly contended that the possession taken by the grantee under the conveyance of December 1, 1877, could not ripen into a title under the statute of limitations, because, that instrument being merely a mortgage, such possession was not adverse to the mortgagor. We do' not dispute the general proposition that, where one takes possession of lands under a written instrument, the nature of that possession is ordinarily determined by the character of the instrument; .nor the further proposition that possession by a mortgagee of the mortgaged premises is usually not adverse, but consistent with the rights of the mortgagor.....These concessions, however, are of no benefit to the appellant on the state of facts disclosed by the present record. The distinguishing feature of this case is, that the parties did not regard the conveyance of December 1, 1877, as a mortgage, and Purslow did not enter into possession as mortgagee, but as the rightful owner of the fee, of which faó+ Schlawig must have been well aware. It is doubtful, to say the least, whether, from the face of that conveyance, it should be construed as a mortgage, or as a deed which secured the grantor the right to repurchase the land at a fixed price within a specified time. That the parties did not intend it to operate as a mortgage is made manifest, we think, by the oral testimony, by the circumstances which attended its execution, and by the subsequent conduct of both of the parties thereto. Under the conveyance, Purslow took possession on December 1, 1878, and for more than ten years thereafter he and his grantees exercised a dominion and control over the property which would have convinced anyone who was not willfully unconscious of the significance of their acts that they claimed to be the rightful owners of the property, and that they were holding it discharged from the lien of the alleged mortgage. In view of these facts, we are constrained to decide that the plea of the statute of limitations was fully sustained by the proof, and that the bill was properly dismissed on that ground. In our judgment the record discloses more than ten years’ adverse possession of the premises in controversy under an open, notorious, and continuous claim of ownership, which is sufficient, under the Iowa statute, to bar the present suit.” (1 Cyc. 1094.)

Counsel for appellant call our attention to sections 4062 and 4039 of the Revised Statutes, and insist that those provisions of the statute support the contention that there could be no adverse possession by the defendants in this case. The sections cited are as follows:

“Sec. 4062. An action to redeem a mortgage of real property, with or without an account of rents and profits, may be brought by the mortgagor of those claiming under him, against the mortgagee in possession, or those claiming under him, unless he or they have continuously maintained an adverse possession of the mortgaged premises for five years after breach of some condition of the mortgage. ’ ’

“Sec. 4039. In every action for the recovery of real property, or the possession thereof, a person establishing a legal title to the property is presumed to have been possessed thereof within the time required by law, and the occupation of the property by another person is deemed to have been under and in subordination to the legal title, unless it appear that the property has been held and possessed adversely to such legal title, for five years before the commencement of the action.”

The provisions of these sections applicable to appellant’s contention amount to this: That- the mortgagee as such cannot initiate an adverse possession until after breach of some condition of the mortgage, and that a person seeking to redeem must commence his action before the full period of five years’ adverse possession is completed. Under section 4039, a person seeking the recovery of real property who establishes his legal title thereto may thereupon rest on the presumption which the law raises that he who holds the legal title has been during the same time in the possession of the premises, either in person or through his tenant or agent. What we have said above is, we think, in strict accord and harmony with these provisions of the statute.

The defendants upon their trial by legal and competent evidence overcame the presumption of law which section 4039 gives to a plaintiff in such case. The foregoing sections must also be read in the light of and in harmony with the provisions of sections 4036 and 4037, which are as follows:

“Sec. 4036. No action for the recovery of real property, or for the recovery of the possession thereof, can be maintained, unless it appear that the plaintiff, his ancestor, predecessor or grantor, was seised or possessed of the property in question within five years before the commencement of the action; and this section includes possessory rights to lands and mining claims.

“See. 4037. No cause of action, or defense to an action, arising out of the title to real property, or to rents or profits out of the same, can be effectual unless it appears that the person prosecuting the action, or making the defense, or under whose title the action is prosecuted, or the defense is made, or the ancestor, predecessor, or grantor of such person was seised or possessed of the premises in question within five years before the commencement of the act in respect to which such action is prosecuted or defense made. ’ ’

Plaintiff’s cause of action was clearly and undoubtedly barred by the provisions of the two latter sections. The bank and its successors had been in the actual, exclusive, open and adverse possession of the premises for a period of about ten years immediately preceding the commencement of this action, and this possession, the nature thereof and the claim of right under which it was initiated and maintained was within the actual, personal knowledge of the plaintiff and her ancestor, Mary McQueen. This action had therefore been barred for a period of about five years at the time it was instituted. (Ryan v. Woodin, 9 Idaho, 525, 75 Pac. 261.) The conclusion we have reached as to the application of the bar of the statute of limitation makes it wholly unnecessary and unimportant for us to consider the other questions raised in the case, and especially the question as to whether or not the transactions narrated amounted to a transfer of title or remained in law a mortgage only. In view, however, of the great amount of labor and research that the respective counsel have evidently given this case, and the exhaustive briefs filed on the various branches thereof, we have examined very carefully into the merits of the case with a view to determining with whom the equities of the case rest. We are of the unanimous opinion that the equities of this case rest with the respondents. The bank evidently paid a good price for the land at the time of the transaction — as much as any other like premises similarly situated could be sold for at the time. The transaction was fair and open, and the grantor was satisfied with the terms of the sale and the price received. After many years of fluctuation in values and uncertainty as to the growth of the city, and the possibilities of this land becoming valuable as city property, and large expenditures having been incurred to make the property salable, it would be both inequitable and unjust at this late date after all the parties to the transactions and all the witnesses but one are dead, to enforce a redemption of the property. The judgment is affirmed with costs in favor of the respondents.

Stockslager, C. J., and Sullivan, J., concur.