American Loan & Trust Co. v. Billings

Gilfillan, C. J. Appeal from an order overruling a demurrer to the complaint. The complaint alleges in brief that the defendant Billings was the owner in fee of an undivided one-fifth of real estate therein described, the title to which was in William McKinley, in trust for the use and benefit of himself, Billings, and three others, and was also owner of and entitled to a one-sixth interest in the [190] stock of a certain corporation, and was indebted to plaintiff in large sums of money, and desirous of obtaining from it further advances, and was desirous of securing plaintiff on said indebtedness and future advances, and the plaintiff was desirous of obtaining such security, and at its instance and request he and his wife executed a power of attorney to William McKinley, which was delivered to plaintiff, and accepted by it as such security. The power, of which a copy is attached to the complaint, recites that Billings is indebted to plaintiff, and expects to make future loans from it, and that he is desirous that his interest in his said real estate and stock (which are described in the power) shall be disposed of, and the proceeds thereof applied to payment of such indebtedness due and to become due; wherefore, in consideration of the premises, and of one dollar to the grantors paid, they constitute said McKinley their attorney, and in their name to sell and convey the real estate for such prices and on such terms as to him shall seem meet, to accept and receive and receipt for said stock, and sell and assign the same for such prices as to him shall seem meet, and pay the proceeds of any sales to plaintiff, to be applied on such indebtedness due and to become due. It declares, in terms, that it is given for the purpose of securing future advances as well as advances theretofore made by plaintiff to Billings, and that it is irrevocable. This power was duly recorded. Afterwards he caused to be recorded an instrument executed by him, purporting to revoke said power. The only question raised by the demurrer is, was the power of attorney revocable by act of the grantors? To the general rule that a power of attorney may be revoked by the party who makes it there are certain recognized and well-established exceptions: First. Where, it is executed as security for the payment of money, or for the performance of any act which is deemed valuable. Hunt v. Rousmanier, 8 Wheat. 174. Second. Where it is coupled with an interest in the subject of it, in which case even the death of the grantor does not revoke it. Third. Where it is a valid power under the statute. 1878 G-. S. ch. 44. This power is very near to coming within each of the second and third of these exceptions; and also, the legal title to the land being [191] in tlie attorney, it comes very near to creating a valid trust under tlxe statute. But, as we have no doubt that it is valid as a security, and therefore irrevocable by act of the grantors, we need not consider it with reference to those two exceptions, nor whether it creates a trust under the statute. It is in no case necessary, in order to sustain a security, that it be vested in the person for whose benefit it is created. It may be vested in another, and, if he accepts, his relation is, in law, that of a trustee, whatever name the instrument creating the security may give him. To sustain a security it is not necessary there should be a new consideration. The existence of the debt secured is sufficient. The grantors are not the only parties to this instrument. The do-nee of the power, as soon as he accepted, became a party, and so the beneficiary, the plaintiff, on accepting it as its security, became a party to and interested in it as fully as a mortgagee in an ordinary mortgage becomes a party by accepting. While it remained inchoate, a mere intention to create the security, — that is, before acceptance, — it was in the power of the grantors to withhold it. But, after the beneficiary became interested by acceptance, it was a perfected security, and they could not recall it. The real intention of such an instrument is to pledge the property for the payment of the debt, not to pledge merely the power to sell it. The intention is that the property shall be sold, if need be, and the proceeds applied on the debt. And as the law regards the substance, and not the mere form, of contracts, — the ultimate purjiose the parties have in view, rather than the manner agreed on for effecting the purpose, — such a contract creates a. lien on the property which the courts may enforce and will enforce if for any reason the person appointed cannot or will not do so. And so far, certainly, as concerns the real estate, it would be better for all parties, in order to avoid complication, to seek enforcement through the courts. The death of the grantor or grantee of the power might prevent enforcement in any other way; but the death of any or all the parties would not affect the lien. Order affirmed. Buck, J., absent, sick, took no part.. (Opinion published 59 N. W. 998.)