Benson v. Pedro

'BUNNELL, District Judge. The issue for determination on the trial of a cause are those made up by the pleadings. The contention of the defendants Gustafson and Herkenrath is that “the posting by them as provided by law, of nonliability notices disclaiming all liability for any material or labor furnished for said Mary E. Pedro while conducting mining operations on the ground,” as an affirmative defense, requires on the part of the plaintiffs a denial by reply; otherwise, it stands admitted and no proof thereof is necessary, while the plaintiffs contend that the same is simply a conclusion of law, and therefore requires no denial, for a denial is only necessary where averments are properly pleaded. It is conceded that no one has yet defined the term “conclusion of law” with such exactness and nicety that the definition will always be the true test. Text-writers have been content with stating that certain specific allegations are or are not conclusions of law. It is stated in 31 Cyc. 62, that: “Averments that certain demands are not lawful, that a proceeding was unauthorized, without force or effect, or void, that an act was or was not done as required, by law, etc., have been held to be mere legal conclusions.” The many cases there cited are decisive, and it must therefore be held that the allegation above quoted from the affirmative defense of Gustafson and Herkenrath is a conclusion óf law. Turning now to the necessity of denying a legal conclusion, the rule as -stated in 31 Cyc. 265, is: “But neither legal conclusions, matters of inducement, nor facts pleaded by way of recital, are admitted by failure to deny.” Denver Circle Ry. Co. v. Nestor, 10 Colo. 403, 15 Pac. 714; Larsen v. Oregon R., etc., Co., 19 Or. 240, 23 Pac. 974; Schultz v. Selberg et al., 80 Or. 668, 157 Pac. 1114; Northwestern Mut. Life Ins. Co. v. Commonwealth, 164 Ky. 255, 175 S. W. 337; Bliss on Code Pleading, §§ 212-234; Saling v. Bolander, 125 Fed. 701, 60 C. C. A. 469. The case of Saling v. Bolander above cited, an Oregon case before the Ninth Circuit Court of Appeals, was heard before Gilbert, Ross, and Morrow, Circuit Judges, and Circuit Judge Gilbert, delivering the opinion of the court, stated: “It is unimportant that the defendant in error toot no issue upon the averment of the answer that the written application was in [6] tended as an assignment. By failing to reply to the answer, -he admitted only the facts which were well pleaded.” It therefore follows that the court cannot find that the plaintiffs have admitted that the defendants Gustafson'and Herkenrath filed on the premises nonliability notices as provided by law. The evidence with reference to the deeds and leases and options discloses the following state of facts: On the 6th day of March, 1915, Mary E. Pedro was indebted to the defendant Gustafson in the sum of $2,7.17.18. As security for this indebtedness he held a mortgage on claim Number One above Discovery on Pedro Creek, subject to a prior mortgage upon an undivided one-half interest in said claim to the defendant Herkenrath. Gustafson was insisting upon payment of this indebtedness. Mrs. Pedro was without funds. The result was the execution and delivery of the following quitclaim deed: “Quitclaim Deed. [$3. — Internal Revenue Stamps.] “This deed, made this 6th day of March, 1915, by and between Mary E. Pedro, party of the first part, and J. A. Gustafson party of the second part, witnesseth: “That whereas, the party of the first part herein is indebted to the party of the second part in the sum of $2,717.18, evidenced by two promissory notes, one dated October 25, 1913, for $2,250, with interest at one per cent, per month until paid, and the other dated November 3, 1913, for $1,800, with interest at one per cent, per month until paid. Said notes are secured by mortgages upon the mining claim of the party of the first part herein, know as creek claim Number One above Discovery, situate on Pedro Oreelc, in the Fairbanks recording precinct, Alaska, subject to a prior mortgage upon an undivided one-half interest in said claim to Peter Herkenrath; and “Whereas, the said notes and mortgages are overdue and said party of the first part unable to pay said indebtedness, evidenced by them, but desires to liquidate the same without the said mortgages being-foreclosed: “Now, therefore, in consideration of the premises 'and in the satisfaction of said indebtedness, which satisfaction is hereby acknowledged by the party of the second part, and the surrender and cancellation of said notes and mortgages, which surrender and cancellation by the party of the second part is hereby acknowledged by the party of the first part, the party of the first part does by these presents grant, bargain, sell, convey and quitclaim untO' the party of the second part, all and singular, an undivided one-half interest in and to said placer mining claim known as creek claim Number One above Discovery on Pedro Creek, in the Fairbanks recording precinct. [7] territory of Alaska, together with the improvements thereon and the appurtenances thereunto belonging. “To have and to hold the same and the whole thereof unto the party of the second part, his heirs and assigns, forever. “It is further specifically declared and agreed between the parties hereto that this deed is not intended as a security for said debt above mentioned, but that said debt is satisfied and liquidated, and it is the intention that this deed shall pass all the legal and equitable title of the said party of the first part to the undivided one half interest in the mining claim above described. “In witness whereof, the party of the first part has hereunto affixed her signature the day and year first above written. “'Mary E. Pedro.” “In the presence of: “F. J. Oleary. “T. A. Marquam.” This deed was duly acknowledged before a notary public.' The notes were surrendered and canceled, and the mortgage was satisfied of record. There is some testimony to the effect that Mrs. Pedro did not desire to thus satisfy her indebtedness, but that she was willing to do so providing she could lease the property for a period to expire November 1, 1916, under certain terms and conditions, with an option to purchase the same. Thereafter the lease and option to purchase was duly executed. A similar state of facts existed with reference to the deed to the defendant Herkenrath, and the lease and option to purchase, with the exception that the amount due to Herkenrath was the sum of $4,100, and the date of the several transactions was the 17th of March, 1915. The deed was filed for record two days later. Thereafter Mrs. Pedro entered upon the premises under her lease, operated the property until about the middle of September, 1915, and quit with a loss of something over $8,000, in addition to the amount sued for herein. As a witness for the plaintiffs, Mrs. Pedro has repudiated every act of hers that would'be in any way against her own interest. Although operating the property at a loss of over $10,000 for a part of the mining season of 1915, she unhesitatingly fixes the value of the property, for the purpose of showing inadequacy of consideration, at the sum of $20,000. It is apparent that, immediately after she occupied the premises under the leases, she conceived the scheme to, if necessity demanded, lay a foundation to have her deeds to Gus [8] tafson and Herkenrath declared mortgages. Under the terms of the leases the lessors were to be given due notice of each cleanup, and were to have the privilege of attending or being' represented by an agent to witness the same, and the weighing of the gold dust resulting therefrom. It appears that each party was represented by agent, and that under the directions of Mrs. Pedro the receipts, as prepared for the agents to sign for royalties under the leases, contained the words, “to apply on the mortgage of,” or “to be applied on the mortgage of,” Gustafson or Herkenrath, as the case might be. There is nothing to show that the agents were authorized to receive or did receive any gold dust from Mrs. Pedro, except under the provisions of the leases; nor is there anything to show that any acts of the agents in excess of their authority were ever ratified or assented to by Gustafson and Herkenrath or either of them. Such petty schemes and tricks are to be severely condemned, and should not be countenanced in a court of equity. Deeds should not and will not be declared mortgages on mere suspicious circumstances. Before a court is warranted in declaring a deed to be something other than its plain wording imports, there must be evidence clear and convincing, and leading to that conclusion. The debt was extinguished when the deeds were delivered, and I have no doubt that Mrs. Pedro so intended. It is apparent that the order of foreclosure should provide that the interest of Mary E. Pedro in the property charged with the liens of the plaintiffs be first disposed of and applied in satisfaction of' the costs and amounts due plaintiffs, before proceeding to a sale of the Gustafson and Herkenrath interests. In accordance with the views expressed herein, findings of fact and conclusions of law may be prepared and submitted. Footnotes [1] fe»See same tonic & KEY-NUMBER in all Key-Numbered Digests & Indexes