Washington Save Deposit & Trust Co. v. Lietzow

Crow, J.

Some years prior to 1904, Paul Lietzow was paid $1,000 by the Hamburg-Bremen Fire Insurance Company, and $500 by the Liverpool, London & Globe Fire Insurance Company, upon two separate policies of insurance for losses on property destroyed by fire. Early in 1904 he, claiming to be actuated by conscience, informed the insurance companies that he had burned the property to secure the insurance, and that he desired to make restitution. He then held a written contract for the purchase of eighty acres of land in Spokane county from the Northern Pacific Railway Company, upon which $80 of the consideration remained unpaid. On May 11, 1904, negotiations took place between him and one Harry C. Boyd, who represented the insurance companies, with the result that Lietzow assigned the contract of sale to Boyd as trustee for the companies. The contract was never recorded. The insurance companies paid the remainder of the purchase money, and the Northern Pacific Railway Company executed and delivered a deed to Harry C. Boyd, trustee. Thereafter Harry C. Boyd, at the request of the insurance companies, conveyed to Rudolph Herold, Jr., who held as their trustee. Although Boyd was a married man, his wife did not join in his deed. Later the Washington Safe Deposit and Trust Company, a corporation, the plaintiff herein, purchased the land from the insurance companies, taking a deed from Rudolph Herold, Jr., and caused its attorneys to examine the title. They called plaintiff’s attention to the fact that the records failed to disclose any express trust; that the word “trustee” written in the deeds might have been used as description only; that the land might in fact have been the community property of Boyd and wife, and that quitclaim deeds should be obtained to quiet the title. Efforts were made to obtain these deeds, during which plaintiff learned of Lietzow’s former connection with the property. In the meantime Boyd had died intestate, leaving a widow and heirs at law. To quiet its title plaintiff commenced this action against Paul Lietzow, the insurance companies, the widow and heirs of Boyd, and all unknown persons and parties claiming any right, title, estate, lien or interest in or to the land.

After service all the defendants were defaulted except Paul Lietzow who, answering, in substance alleged, that on August 11, 1904, he held the contract to purchase from the Northern Pacific Railway Company; that he was indebted to the insurance companies in the sum of $1,738.33; that they requested him to assign the contract to Harry C. Boyd so that lie might obtain and hold the title until such indebtedness should be discharged; that Boyd was acting as trustee and agent for the companies in obtaining security; that Lietzow assigned the contract for that purpose only; that thereafter the companies paid $62.40 principal and interest remaining due on the purchase price; that the railway company thereupon executed and delivered a deed to Boyd as trustee, who conveyed to Rudolph Herold, Jr., to hold as bis successor for the insurance companies, and that Herold, for the purpose of defrauding Lietzow, conveyed to the plaintiff corporation, which at the time had knowledge of all the facts, and of Lietzow’s interest. The plaintiff, in its reply, alleged that the transfer and deed to Boyd as trustee were absolute and not a mortgage. The trial court made findings in favor of the plaintiff and entered a decree quieting its title. The defendant, Paul Lietzow, has appealed.

The appellant, in substance, contended that the transactions between him and Harry C. Boyd, which resulted in an assignment of the contract of sale to Boyd and a subsequent conveyance of the title to him as trustee by the Northern Pacific Railway Company, created the relation of mortgagee and mortgagor between him, as trustee for the insurance companies and the appellant, and that he and his assignees thereafter held the title as mortgagees securing appellant’s indebtedness. The trial court held that the absolute title had passed. Appellant, by his assignments of error, contends that the trial court erred (1) in not permitting him to testify to conversations between himself and Boyd, whose death had been alleged by respondent, and (2) in failing to hold that Boyd took the title as mortgagee in trust for the insurance companies.

Respondent introduced evidence to show that Boyd died prior to the commencement of this action, and appellant now contends that it was insufficient to establish the fact of his death. We hold it sufficient. His death was publicly announced in the daily papers of Spokane, was commonly reported and discussed in that city, and an undertaker, called as a witness for respondent, testified that he had embalmed and shipped a body which came into his custody as the body of, and under the name of, Harry C. Boyd.

As to appellant’s second contention, we think the evidence shows that the transfer made to Harry C. Boyd, trustee, was an absolute conveyance. No note or obligation was given by appellant to Boyd, or to the insurance companies. While it is true that Lietzow’s original indebtedness and the expenses incurred by the company were figured and ascertained, and that an unsigned memorandum stating the same was left with Lietzow by Boyd, we nevertheless conclude from all the evidence that the absolute title to the property was transferred to Boyd as trustee, with power to sell and convey. The evidence shows that the sale to respondent was made for a fair, adequate, and valuable consideration, without collusion or fraud. Before a deed absolute in form will be adjudged a mortgage, clear, satisfactory, and cogent proof must be produced to establish the fact that it was given as security for an indebtedness, and that both parties so intended. Reynolds v. Reynolds, 42 Wash. 107, 84 Pac. 579; Sahlin v. Gregson, 46 Wash. 452, 90 Pac. 592. We look in vain throughout the record for any direct, clear, satisfactory, or convincing evidence that the transfer was intended to be, or was, a mortgage. Boyd was dead, and the appellant was not permitted to testify to the negotiations between them which resulted in the assignment of the contract, and the execution of the deed by the Northern Pacific Railway Company. The only other person present at the negotiations was one Weister, a friend of the appellant, who testified as follows:

“Mr. Boyd stated that all his company desired was just simply to be paid the amount paid for the insurance, and Mr. Lietzow was to turn over certain lands to them for this purpose. Mr. Boyd thought that the land, possibly, was not sufficient to balance his claim, but he would hold the land until it would — or sell off that land, and whatever was over and above that would satisfy their claim, was to be returned to Mr. Lietzow.”

This statement, if it indicates anything, shows that Boyd was to take the title with power to sell and convey. That is precisely what he and Herold did. The presence of Weister at the negotiations had been requested by appellant who called him as a witness. Yet he makes no statement showing, or tending to show, that the transaction was intended as a mortgage. On the contrary, his evidence indicates that it was not so intended. Boyd’s power to sell and convey and the absence of any written obligation executed by appellant are inconsistent -with the mortgage theory. No note or other written evidence of appellant’s indebtedness was given by him. A deed absolute upon its face will not be held a mortgage except upon clear, convincing, and positive evidence. Had the parties intended this deed to be a mortgage, it would not have been difficult to execute some instrument or memorandum signed by one or both of them disclosing such intention. Appellant claims that some such instrument was signed and delivered to him by Boyd. He has been unable to produce it, although he did produce an unsigned memorandum in Boyd’s handwriting not sufficient to sustain his contention. It seems strange that he should so carefully retain this useless memorandum, and at the same time misplace the one which would have established the rights he now seeks to enforce. The evidence was not sufficient to show a mortgage.

The judgment is affirmed.

Rudkin, C. J., Parker, Mount, and Dunbar, JJ., concur.