Federal Land Bank of Berkeley v. Salt Lake Valley Sand & Gravel Co.

MOFFAT, Justice. This is an action in equity seeking that a release of mortgage “be cancelled or annulled” as to a tract of 15.63 acres of land out of a total of something over 800 acres included in the original mortgage and the release thereof. The trial court denied plaintiff Bank relief and dismissed its complaint on the merits. In addition to cancellation and annulment of the release of mortgage plaintiff also prayed that the release be reformed, which by necessary consequence required a reformation of the mortgage so as to make it applicable only to the 15.63 acre tract and for foreclosure of the mortgage as thus reformed. There appears to be no dispute as to the controlling facts notwithstanding some conflict of evidence on incidental issues. This being an equity case we are required to examine the evidence and determine the facts for ourselves. It has sometimes been stated that the review of an equity case under *361 our constitution and laws is a trial de novo upon the record. In equity cases the review in this court “in effect is a trial de novo on the record,” Jensen v. Howell, 75 Utah 64, 282 P. 1034, 1038. In an equity case, this court is authorized to review both questions of law and of fact.” Independent Oil & Gas Co. v. Shelton et al., 79 Utah 384, 6 P. 2d 1027, 1032. There being no substantial conflict in the evidence except as above noted, we state the facts substantially as counsel themselves have stated them. On March 1, 1922, Heber Bennion, Jr., and his wife obtained a loan from Appellant, hereinafter referred to as the “Bank,” in the sum of $5,500 and to secure payment executed and delivered to the Bank a mortgage covering approximately 850 acres of land in Salt Lake County, Utah. The mortgagors on February 28, 1923, conveyed all of the land covered by the mortgage to the Provo Reservoir Company, hereinafter referred to as the Reservoir Company. The conveyance was made subject to the mortgage. On the 28th day of March, 1929, the Company by quitclaim deed conveyed to William H. Haigh the 15.63 acres in question. The company in the quitclaim deed agreed “to pay all installments on a mortgage covering the land” conveyed held by the Bank as they became due. On March 22, 1929, Haigh and wife conveyed by warranty deed, excepting the mortgage from the warranties to Frank M. Maher and J. J. Stewart, Jr., and on May 8, 1929, Maher and Stewart and their wives conveyed by warranty deed to the Sand and Gravel Company, hereinafter referred to as the Gravel Company, the tract excepting the mortgage to the Bank from the warranties. Of these grantees the Reservoir Company is the only one who assumed or agreed to pay the mortgage. All however recognized the existence of the mortgage to the Bank. Default occurred in payment of principal, interest and advancements for assessments, etc., and on October 10, 1933, the Bank wrote to the Reservoir Company as to payment. On October 28, 1933, the Reservoir Company indi *362 cated to the Bank that “it is quite impossible” to pay the delinquencies and offered to deed their “equity in the property” to the Bank. The Bank then transmitted abstracts covering the property to a licensed abstracter for continuation. The abstract and certificate thereto showed title in the Reservoir Company subject to the mortgage and taxes. No reference was made or shown as to the conveyances of the 15.63 acres out of the original acreage described in the original mortgage. The Bank then sent a warranty deed to the Reservoir Company covering the property as described in the mortgage, which was executed and returned by the Reservoir Company and recorded by the Bank. All of the conveyances were duly and about the time of execution recorded. After the Bank received the deed from the Reservoir Company the note was cancelled and returned to the Reservoir Company and the release of mortgage was sent to the abstracter with instructions to record it if the title to the property remained subject only to the mortgage and taxes. The abstracter recorded the release. The record discloses that about July, 1934, the Bank was advised by the County Recorder’s office of Salt Lake County that upon checking certain redemption tax certificates that the receipts did not include the 15.63 acre tract and that the Bank was advised of the conveyances on record relating thereto. The Bank then wrote to the Reservoir Company and the abstracter calling attention to what, to the Bank, was a mistake and requesting explanations. On September 28,1935, the Bank conveyed approximately 53 acres of the property by warranty deed to Charles E. and Geneve C. Mercer, and on March 4, 1936, entered into a written agreement to sell to Heber A. Smith the balance of the property excepting the 15.63 acre tract. This action was instituted on May 5, 1936, for the purposes indicated. The errors assigned by appellant Bank, have been grouped into two subdivisions: *363 The second subdivision relates to the admission of testimony. Such testimony as is complained of in this regard relates to the value of the 15.63 acres, former ownership thereof, and that the evidence was immaterial. Counsel states “that while such testimony is valueless for any purpose, it has no place whatever in this proceeding.” The cause was tried to the court. It is presumed in equity cases tried to the court that the court disregard incompetent, immaterial, or “valueless” evidence. Salt Lake Foundry & Machine Co. v. Mammoth Min. Co., 6 Utah 351, 23 P. 760, decree affirmed 151 U. S. 447, 14 S. Ct. 384, 38 L. Ed. 229. The first situation may be stated in the nature of a conclusion: Was the court justified in concluding that the Bank was not entitled to the relief prayed? Specifically it is prayed that the release be cancelled and annulled as to the 15.63 acres of land, or that the release be reformed so that the effect of it will be to release all of the security covered by the mortgage except the 15.63 acres of land. Foreclosure is also asked. It is apparent that Appellant’s prayer is not for a rescission of the release claimed to have been by mistake of fact executed and recorded, but that Appellant seeks a reformation of the release, a reformation of the mortgage and possibly a revival of the debt obligation evidenced by the note the mortgage was executed to secure. The Gravel Company was not a party to any of these contracts. We are of the opinion the trial court reached the correct result. There may be some inconsistencies and troubles to harmonize the findings and conclusions reached. In an equity case a correct result will be supported even though erroneous reasons were given therefor. Briefly, however, though defendant, Gravel Company, was not a party to the release nor consulted about it, and although there appears to have been no actual notice of the *364 conveyance of the 15.63 acres, the Bank had constructive notice because the conveyances had been recorded and the Gravel Company in possession for years. The Reservoir Company who made the conveyance had actual knowledge. The most that can be said for the situation as between the Bank and the Reservoir Company who had assumed and agreed to pay the mortgage is that there was but a partial failure of consideration. The Gravel Company was not a party to the release nor to the mortgage but had taken a part of the land subject to the mortgage. Its status was changed when the release was recorded. The Bank after actual notice of the alleged error and actual notice of the conveyances of the 15.63 acres conveyed a part and contracted to convey the balance except the 15.63 acres thus changing the status of not only itself but of all parties from the original mortgagors down to the last grantee or con-tractee. To grant what the Bank asks raises a multitude of problems equitable and otherwise and would result in the reviving of liabilities that would affect all parties from the original mortgagors to and through all those who were parties to the various contracts and conveyances shown to have been made since the execution of the original note and mortgage. Judgment affirmed, costs to respondent. FOLLAND, C. J., and LARSON, J., concur.