Guaranty & Loan Co. v. Ruff

COSHOW, J. — The ruling of this court on the former appeal is the law of the case in this appeal: Reed v. Hollister, 106 Or. 407 (212 Pac. 367); Wallace v. Portland Ry., L. & P. Co., 103 Or. 68 (204 Pac. 147); Askay v. Maloney, 92 Or. 566 (179 Pac. 899). The instrument constituting the agreement between the defendant and Kaser did not constitute a lien *618 upon the land therein described. If the consideration to be paid Kaser by the plaintiff depends in any way upon the outcome of this suit, then by authority of the decision of this eourt on the former appeal the plaintiff is not entitled to relief. If the plaintiff is aiding Kaser to escape his obligations to the defendant as defined in the said agreement, then by the ruling of the former appeal herein the plaintiff is not entitled to recover. For many years prior to the timé the agreement between Kaser and defendant was executed defendant and her then husband had been living apart from each other. Defendant had been contemplating securing a divorce from her husband for some time. Kaser was an associate and friend of defendant’s husband and to a very large extent acted as a go-between for them. Some time prior to January, 1921, Kaser had taken a deed from defendant’s husband to the land involved in this controversy without the consent or knowledge of the defendant. "When the defendant discovered said deed she charged Kaser with attempting to aid her husband to defraud her of her interest in that land and to prevent her from recovering alimony in her contemplated divorce proceedings. At the time the agreement was entered into the defendant had an inchoate dower in the land. Her dower interest was such an encumbrance upon the land as would prevent Kaser from disposing of it to advantage. During the negotiations between defendant and Kaser, he conveyed his interest in the land to the plaintiff subject to the dower of the defendant. She had no knowledge of that conveyance. The evidence clearly , establishes that at the time the instrument between defendant and Kaser was executed the latter *619 represented to the former that there were no encumbrances against the land, except the mortgage in favor of the Hypotheek bank. This representation was clearly false because at that time the plaintiff held the deed from Kaser which was given, according to the testimony of both Potter, then president of plaintiff corporation, and Kaser, to secure to the plaintiff the payment of about $1,375. To Kaser’s knowledge that deed was in effect a mortgage. That the contract between defendant and Kaser was intended to secure to the defendant the payment of the sum of $3,000 for her interest in the land and her forbearance to malee Kaser a party to her contemplated divorce suit cannot be questioned. Defendant remonstrated with Kaser when she learned of the transfer of her husband’s interest to him as aforesaid. She then threatened to make Kaser a party to the divorce suit for the purpose of setting aside that deed in order that she might be able to secure an interest in the land and alimony from her delinquent husband. The $3,000 agreed to be paid to defendant by Kaser represented more than the consideration for the dower of the defendant. It also represented the consideration which Kaser agreed to pay for immunity from litigation between defendant and her' husband which would have involved the land Kaser was anxious and attempting to sell. There was a valuable basis for the compromise and settlement which was represented by the contract between defendant and Kaser. That contract, having been based upon a good and valuable consideration, was not to any degree vitiated by the subsequent divorce which destroyed defendant’s dower in the land involved. Indeed, the very purpose of the contract itself was to *620 secure defendant for the sum agreed to be paid by Kaser for defendant’s dower and his immunity from a suit involving the title to land which he was desirous of selling: Hirsch v. May, 75 Or. 403, 407 (146 Pac. 831); Roane v. Union Pac. Life Ins. Co., 67 Or. 264, 272 (135 Pac. 892); Klussman v. Day, 107 Or. 109 (213 Pac. 787, 214 Pac. 348); 12 C. J. 337, 339, §§ 33, 34. Kaser testified that at the time he executed the contract with defendant he believed and understood that he was creating a lien upon the land involved herein. Referring to the agreement to pay defendant $3,000, he testified on cross-examination as follows: “Q. You thought it was a fair instrument? “A. I did. “Q. You thought that this was giving Mrs. Ruff security on that land for $3,000, did you? “A. I did.” Mr. James P. Stapleton, as attorney for said Kaser, drew the instrument and testified in behalf of the defendant that it was intended for a lien upon the land. Defendant also testified that she understood and was informed both by Mr. Stapleton and her attorney, Mr. Manning, that the instrument constituted a lien upon the land and prevented Kaser from selling the land without paying her the $3,000. Mr. Manning, also as a witness in behalf of the defendant, testified to the same effect. Notwithstanding the instrument was intended to pledge the land as security for the payment of the sum of $3,000, Kaser, as a witness in behalf of the plaintiff, testified that when he discovered defendant had secured a divorce he considered her interest in the land had ceased and he therefore owed her nothing. Shortly after the divorce was granted to the defendant he conveyed the land absolutely to the *621 plaintiff, and soon thereafter this suit was begun to remove the cloud cast upon plaintiff’s title by the contract between defendant and Kaser and the claims of defendant thereunder. Kaser obtained from defendant all the benefits growing from the contract with defendant. She, relying upon her supposed security and the promise of Kaser to pay said sum of $3,000, procured her divorce without attempting to recover either alimony or her interest in the lands sold by her husband without her consent or knowledge. It would be hard to conceive of anything more inequitable than to allow Kaser to retain the benefits of his agreement with defendant and repudiate his own promise to pay to her the sum of $3,000 with interest as agreed. Plaintiff takes the position that the contract not being a lien upon the land defendant is not entitled to relief against it or the land either. The amended answer alleges that plaintiff had knowledge of all the relations between Kaser and defendant and of the contract entered into between them. The evidence abundantly supports this allegation. The amended answer also charges the plaintiff with aiding Kaser to defraud. The charge in the answer is as follows: “The plaintiff at the time of and prior to the negotiations between W. E. Kaser and the defendant, was fully informed and well knew of the condition of the title to said lands and of the interest of the defendant therein, and the claim made by defendant to said lands as hereinbefore alleged and of her intention to begin suit or action concerning the same, and as a part consideration of the purchase of said lands by it from the said W. E. Kaser, induced and required the said W. E. Kaser to secure a deed from the defendant for all her interest in said lands for the sum of $3000.00 and interest as aforesaid, and to secure the *622 payment of the same by a lien for the said amount upon the whole of said lands, and for the purpose of assisting and enabling the said W. R. Kaser to procure a deed from the defendant as aforesaid, concealed from the defendant all knowledge of the deed it had received from the said W. R. Kaser, although it well knew said W. R. Kaser was falsely representing to the defendant that he was still the owner of said lands, and that the said W. R. Kaser was intending to execute and deliver to the defendant a mortgage or lien upon said lands to secure the payment of the sum of $3000.00 and interest as aforesaid. “After the making of the said deed by the defendant to the said W. R. Kaser; the said W. R. Kaser, at the instance and request of the plaintiff, executed and delivered to the plaintiff a second deed to the said lands, and at the time of the delivery thereof the plaintiff was informed of and knew of the execution by the said W. R. Kaser of the contract, Exhibit £A,’ and of the contents thereof, and that the same was by W. R. Kaser executed for the purpose of creating a mortgage or lien upon said lands in favor of the defendant for the amount stated therein, and that the defendant had accepted and received the same as such mortgage or lien, and the plaintiff agreed to and with W. R. Kaser that it would and did accept a deed from him to the said lands, subject to the defendant’s lien or mortgage as aforesaid.” The Circuit Court found in accordance with the allegations of the amended answer and also found: “That at the time the plaintiff received the said second deed from said Kaser it entered into a secret understanding with the said Kaser which provided that the consideration to be paid the said Kaser thereafter was to be dependent upon the outcome of the present suit to quiet title; that the plaintiff has been and is now aiding the said Kaser to escape his said obligation to the defendant; that this suit was instituted for mutual benefit of plaintiff and said Kaser.” *623 This court always gives serious consideration and much weight to the findings of fact made by the trial judge in equity cases for the reason stated in the numerous opinions heretofore rendered. This practice is especially applicable to the instant suit. The principal witness for the plaintiff was Mr. Potter, then president of the plaintiff corporation. The trial court stated during the examination of Mr. Potter that he had known the witness from early boyhood, had gone to school with him and knew him to be a very intelligent man. Independent of°that and the other advantages that the trial judge has over this court in passing upon the evidence, we are of the opinion that the finding of the court, set out above, is in accordance with the preponderance of the evidence. The plaintiff does not come into equity with clean hands. The plaintiff has not done equity. “Tie who seeks equity must do equity.” A court of equity will not lend its support to one who seeks to clinch an unconscionable transaction. Plaintiff gave Kaser an option at the time the second deed was delivered to it to repurchase the land for $12,000 within one year from that date. At that time Kaser was owing plaintiff approximately $7,685. Included in the items making up the $12,000 was the sum of $500 attorney’s fee for prosecuting a suit to quiet plaintiff’s title or to remove a cloud therefrom, according to the testimony of both Kaser and Potter, plaintiff’s witnesses. The evidence clearly indicates a deliberate attempt on the part of Kaser to repudiate his promise to pay defendant $3,000. It also tends strongly to prove that plaintiff was actively helping Kaser to avoid that obligation. It also convinces us that this suit was instituted for the purpose of executing that *624 nefarious scheme. Plaintiff knew that Kaser had no right to sell and convey the land without paying defendant the amount he agreed to pay her. The transaction between plaintiff and Kaser has the earmarks of a deliberate attempt to swindle defendant. Equity will not lend its aid to further such a scheme: 1 Pomeroy, Equity (4 ed.), § 380. The decree of the court in effect impresses a lien upon the premises described in the complaint for the purpose of satisfying the sum of $3,000 with interest as provided in the contract between defendant and Kaser. Plaintiff urges here that Kaser is not a party to this suit and for that reason the defendant should not be permitted to urge her contentions here. No relief is sought against Kaser. His interest in the land has been transferred to the plaintiff. He would have been a proper party but is not a necessary party. The decree is affirmed. Affirmed. Burnett, C. J., and McBride and Band, JJ., concur.