BANK v. McCUL(No. 3584.) (Supreme Court of Montana. Jan. 22, 1916.) 1. APPEAL AND ERROR 695-MATTERS REVIEWABLE-MATTERS OF FACT-SUFFICIENCY OF RECORD. The court on appeal involving questions of fact cannot review on the merits the question of the sufficiency of the evidence to sustain the evidence, consisting of exhibits which were adfindings of the court below, where material mitted without objection, was omitted from the record, since to review the sufficiency of the must be included in the record. evidence to sustain the findings all the evidence [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 2911-2914; Dec. Dig. 695.] 2. DEEDS the track, the likelihood of encountering 211-ACTIONS TO SET ASIDEMISTAKE-FRAUD-EVIDENCE-SUFFICIENCY. Evidence of the defendant in an action to foreclose a deed as a mortgage held insufficient to sustain his allegations of fraud or mistake in the execution of the deed. [11] 4. The procedural errors which it is contended require a new trial have all been duly considered, but we do not feel that any of them merit discussion, save the refusal of appellant's proposed instruction 13. This request involved a proposition of law upon which the appellant was entitled to have the jury correctly instructed, viz., the assumption of risk based upon the choice of ways. But the court cannot be put in error for refusing it because it permits the decedent's choice of ways to be judged in the light of the event, and does not indicate that the choice, to be assailable, must have been of a method obviously dangerous, or obviously more dangerous than its alternative. Finding no reversible error in the record, the judgment and order appealed from are affirmed. Affirmed. [Ed. Note. For other cases, see Deeds, Cent. Dig. §§ 637-647; Dec. Dig. 211.] 3. ESTOPPEL 94 PERMITTING SALE OF PROPERTY-EVIDENCE. The grantee, who sued to foreclose a deed as a mortgage, was not estopped to claim a lien by the fact that he permitted his grantor, after the conveyance to him, to convey by warranty deed to the defendant, where his deed was on record prior to the transaction with the defendant; that being the only notice which he was required in law to give. [Ed. Note. For other cases, see Estoppel, Cent. Dig. §§ 245-247, 276-284; Dec. Dig. 94.] 4. ESTOPPEL 117 -- PROPERTY-EVIDENCE. PERMITTING SALE OF Where the grantee sued to foreclose his deed as a mortgage, and the defense was that he permitted a subsequent grantee of the same grantor to purchase, although he knew of the transaction, and knew that no title could be given by it, it was not error to exclude, as immaterial, evidence that the grantor was responsible financially at the time of the transaction with the defendant, and that he later became irresponsible; the rights of the parties being concluded on the date of the transaction by the fact that the plaintiff's deed had been recorded. [Ed. Note. For other cases, see Estoppel, Cent. Dig. § 307; Dec. Dig. 117.] 5. ESTOPPEL 117 PERMITTING SALE OF PROPERTY-EVIDENCE. Where the grantee sued to foreclose his deed as a mortgage, evidence that the defendant had made inquiry of the county clerk to ascertain whether his immediate grantor could give title, and that the clerk informed him that his title was good, was inadmissible, since the plaintiff could not be charged with a negligent act of the clerk; his title having been on record at the time. [Ed. Note.-For other cases, see Estoppel, Cent. Dig. § 307; Dec. Dig. 117.] 6. APPEAL AND ERROR 974 - EQUITY 377-TRIAL-JURY-SUBMISSION OF ISSUES. The judge in the trial of a cause in equity may call a jury to decide issues of fact, and, if he does so, he may submit such issues as he chooses, and error cannot be predicated on his jury in such case is only the act of the judge, BRANTLY, C. J., and HOLLOWAY, J., refusal to submit issues, since the act of the concur. and, when adopted by the judge, is considered | the taxes for that year, amounting to $30.61; as emanating from him, and not from a jury. [Ed. Note. For other cases, see Appeal and Error, Cent. Dig. §§ 3858, 3859; Dec. Dig. 974; Equity, Cent. Dig. §§ 788-793; Dec. Dig. 377.] Appeal from District Court, Yellowstone County; Geo. W. Pierson, Judge. Action by the Yellowstone National Bank, a corporation, against John McCullough and others. Decree for plaintiff as prayed, and the defendants John McCullough and M. B. Dutton appeal. Affirmed. Nichols & Wilson, of Billings, for appellants. Johnston & Coleman, of Billings, for respondent. At and that on November 6, 1912, to prevent the possible impairment of the security by fire, it had the buildings on the Joliet property insured at a cost of $21. It is demanded that out of the proceeds of sale of the property the plaintiff be reimbursed in these amounts, with interest from the dates at which they were respectively paid. Of the several persons named as defendants, none appeared except McCullough and Dutton, who filed separate answers. Not seriously controverting any of the allegations of the complaint, they allege three separate affirmative defenses, denials of which by the plaintiff's reply present the issues which were determined by the trial court. McCullough alleges in substance: (1) That as security for the payment of the note described in the complaint he agreed to give and the plaintiff agreed to accept a deed to the Laurel property; that, contrary to this express agreeincluded therein the Joliet property also; fendant, the scrivener who prepared the deed that in this particular the deed as written and executed did not express the agreement and intention of the plaintiff and the defendant; and that this defendant would not have executed and delivered it had he known of the mistake. (2) That prior to September 3, 1908, he was indebted to the plaintiff in a sum which, with the exception of accrued interest, was the same as the indebtedness mentioned in the complaint; that the plaintiff held as security for it an unrecorded warranty deed from him and his wife to the Joliet property; that on or about that date, having an opportunity to exchange with the defendant Dutton this property, or a portion thereof, for farming lands in Carbon county, this defendant conferred and advised with the plaintiff respecting the exchange; that thereupon the plaintiff “permitted, advised, and directed" him to effect the exchange, and agreed that, if the exchange should be made, it would release its lien upon the Joliet property under the unrecorded deed, and would accept as security in lieu thereof a lien upon the Laurel property; that, relying upon this agreement, the defendant entered into an agreement with Dutton to make the exchange, and thereupon so informed the plaintiff; that thereafter, on September 3, 1908, to effect the agreement between the plaintiff and this defendant, a new deed was prepared by the plaintiff, which was thereupon executed by this defendant and his wife; that it was then understood by defendant that this deed contained only a description of the Laurel property; that, in reliance upon the direc tion and advice of the plaintiff and his agreement relating to the Joliet property, this defendant conveyed to Dutton by warranty deed all the Joliet property; that Dutton thereupon entered into possession thereof, BRANTLY, C. J. Prior to September 3, 1908, the defendant John McCullough and his wife, Florence, became indebted to the plaintiff in the sum of $3,700 for borrowed money. This indebtedness was evidenced by two promissory notes, one for $2,200, and the other for $1,500. At the time these notesment, and without the knowledge of this dewere executed it was understood and agreed between the parties that security would presently be furnished by McCullough and his wife for the entire amount. McCullough was then the owner of 6 lots, with the buildings and improvements thereon, in the town of Joliet, in Carbon county, and 30 unimproved lots in the town of Laurel, in Yellowstone county. For convenience, the first-mentioned property will hereafter be referred to as the Joliet property, and the second as the Laurel property. On September 3d McCullough and his wife took up the two notes held by the plaintiff, substituting therefor their note for $3,700, the amount of both, due one year from that date, with interest at the rate of 10 per cent. per annum. the same time they executed and delivered to the plaintiff their warranty deed to all the property referred to above. This deed was designed to operate as a mortgage security; it being orally agreed that upon the payment of the note the plaintiff would reconvey the property to McCullough. The deed was recorded in Yellowstone county on October 8 and in Carbon county on December 29, 1908. On March 6, 1909, McCullough and his wife by warranty deed conveyed to the defendant M. B. Dutton the Joliet property in exchange for 160 acres of farming land in Carbon county. No part of the indebtedness due upon the note having been paid, except the sum of $500, paid on March 17, 1909, the plaintiff brought this action to obtain a decree directing a sale of the property to satisfy it. The complaint, besides alleging the facts necessary to obtain the foreclosure, alleges further that on July 5, 1911, in order to protect its security, the plaintiff was compelled to pay the taxes upon the property for the years 1908, 1909, and 1910, together with penalties for delinquency, amounting to $84.74; that on December 2, 1911, it was compelled to pay tiff with the understanding that it would accept the Laurel property as security; (10) that the deed was prepared under plaintiff's direction; (11) that it was executed as security for the payment of the note signed by McCullough and his wife; (12) that the plaintiff, to protect its security, was com the complaint for the years 1908, 1909, 1910, and 1911; and (13) that in accepting the conveyance from McCullough Dutton did not rely upon any representation by the plaintiff or any agreement between it and McCullough, but accepted it with constructive notice of plaintiff's deed. Upon these findings it was adjudged that the plaintiff was entitled to recover from McCullough and wife the amount of the note, the taxes paid as alleged in the complaint, and counsel fees to the amount of $300, and to have a decree of foreclosure as against all the defendants. The appeal is from the decree. claiming it under this deed; and that plain- | McCullough did not sign the deed to plaintiff, by reason of the premises, is estopped to assert any lien upon or interest in the Joliet property. (3) That the deed of September 3, 1908, was prepared under the direction of the plaintiff; that the plaintiff fraudulently and wrongfully caused to be inserted therein the description of the Joliet property; and that thereafter, without knowl-pelled to pay as taxes the amounts alleged in edge of the fact that the Joliet property had been included therein, he executed and delivered the deed to the plaintiff. The prayer is that this deed be reformed so as to express the true intention of the parties, and that a decree of foreclosure be granted as to the Laurel property only. In his answer Dutton relies upon the foregoing, supplementing the facts alleged as an estoppel by the addition of the following: That the plaintiff, with the knowledge that it held the record title to the property described in the deed of September 3, 1908, and with the knowledge that McCullough intended to exchange the Joliet property for the farming property owned by this defendant, advised and permitted McCullough to make the exchange, he being then financially responsible, and this defendant to occupy and improve the property without the assertion of any title thereto, for a long time after McCullough's debt was due; that at no time during the pendency of the negotiations between McCullough and this defendant, nor for years after he had conveyed his lands to McCullough, did this defendant have any knowledge of the deed to the plaintiff; that in his negotiations with this defendant McCullough relied upon the conduct of the plaintiff in advising and directing him to make the exchange, and the agreement of the plaintiff to release the Joliet property and accept in lieu thereof a lien upon the Laurel property; that he would not otherwise have conveyed the Joliet property to this defendant; and that on April 19, 1912, the defendant McCullough was adjudged a bankrupt. The court found: (1) That it was agreed and understood that the deed to the plaintiff should include both the Joliet and Laurel property; (2) that there was no mistake in the drafting or in the execution of it; (3) that the descriptions of the property to be included in it were furnished to the attorney who drew the deed by McCullough himself; (4) that prior to the execution of the deed the plaintiff did not hold any deed to the Joliet property as security for any debt; (5) that the plaintiff knew that defendant was negotiating with Dutton for an exchange of the Joliet property for the farming property; (6) that plaintiff did not agree to accept a deed to the Laurel property in lieu of the Joliet property; (7) that the plaintiff first learned of the conveyance to Dutton on or before (about?) May 2, 1911; (8) that the plaintiff "advised and directed" McCullough [1] Counsel for the plaintiff challenge the right of the defendants to have the appeal heard on the merits, for the reason that it appears from the transcript that much evidence of a substantial character was not incorporated in the bill of exceptions, and therefore this court cannot fairly determine the propriety of the findings. The evidence in question consists of some 30 exhibits in the form of letters exchanged between A. L. Babcock, the president of the plaintiff, and McCullough, after the former had been informed of the conveyance to Dutton, and letters exchanged between plaintiff's counsel and McCullough upon the same subject. With one or two exceptions, these were admitted without objection and as a part of plaintiff's evidence in rebuttal. The contention has merit, for the reason that the principal argument of counsel for defendants in this court is that the findings are not justified by the evidence, and it does not appear from the recital in the bill of exceptions or from the certificate of the presiding judge that the bill embodies all of the evidence introduced at the trial. So far as this court is informed, these letters may have made such disclosures in the way of admissions by McCullough as to render it impossible for the trial court to find otherwise than it did. The statute imposes upon this court in this class of cases the duty to review and determine all questions of fact arising upon the evidence, as well as questions of law (Rev. Codes, § 6253); but this we cannot safely do unless all the material evidence is embodied in the record. The extent of review required, so far as it includes the evidence, is not to try the case de novo, but, as we have frequently said, to make such examination and to reach such conclusion as in the nature of things is permissible upon the printed record, unaided by observation of the demeanor of the living len v. Heinze, 32 Mont. 354, 80 Pac. 918; Cop- for $2,200; that, not knowing then how per Mt. Min. Co. v. Butte & Corbin Co., 39 much money he would need, it was agreed Mont. 487, 104 Pac. 540, 133 Am. St. Rep. that later, after ascertaining the amount re595; Gibson v. Morris State Bank, 49 Mont. quired, he would obtain it, and then give se60, 140 Pac. 76. Furthermore, we have as curity for it upon his real estate; that on frequently held that we cannot consider the August 24th he obtained $1,500; that he did question of insufficiency of the evidence to not execute any deed to the bank or give any sustain the findings or verdict, when it does security other than the personal notes of himnot appear, either positively or inferentially, self and wife; that it had been expressly that the record contains all the material evi- agreed that the security, when given, would dence introduced at the trial or the substance be in the form of a mortgage or deed, includof it relating to the particular question of ing both the Joliet and Laurel property; that fact at issue. Stevens v. Ravalli County, 25 the deed was prepared by Mr. Johnston, the Mont. 306, 64 Pac. 876; Landt v. Schneider, attorney for the bank, and delivered to it by 51 Mont. 15, 77 Pac. 307; King v. Pony Gold him or from his office; that prior to this time Min. Co., 28 Mont. 74, 72 Pac. 309; Currie v. McCullough had stated that he was negotiatMontana C. Ry. Co., 24 Mont, 123, 60 Pac. ing for an exchange of the Joliet property for 989; State v. Shepphard, 23 Mont. 323, 58 that of Dutton, and Babcock had advised Pac. 868. him that he thought the exchange ought to be made, as he (Babcock) thought well of the Dutton property; and that he had nothing to do with the preparation of the deed further than to refer McCullough to Mr. Johnston. He stated positively that the bank had never before that time had in its possession any mortgage or deed from McCullough for se [2] But, assuming that the omitted evidence was without probative value, after a careful study of so much as is found in the record, we cannot say that it preponderates against the findings. As to the allegation of mistake in the execution of the deed of September 3, 1908, McCullough testified that prior to this date, being indebted to the plain-curity for a loan or for any other purpose. tiff in the amount of the notes referred to His statement of the origin of the indebtedin the statement, he and his wife had execut- ness, the unsecured condition of it prior to ed to the plaintiff as security a warranty September 3d, and the agreement as to what deed to the Joliet property; that it had been property should be included in the deed, is agreed that the bank should for the time not fully corroborated by Waldron, who was cogput this deed upon record, in order that nizant of the whole transaction. He is furMcCullough's credit would not be impaired; ther corroborated by the fact that the records that this deed had been prepared by Mr. of the bank for several years prior to the Waldron, the cashier of the bank, and ac- transaction in question disclose that McCulknowledged before him as a notary; that, lough had not been indebted to the bank at while this condition of affairs prevailed, he any time for any sum. He is also corroboratinformed Babcock that he was engaged in ed by McCullough's own admission that he negotiating an exchange of the Joliet prop- never made demand upon the bank or Baberty for the Dutton farm; that it was cock, or Waldron, for return to him of the thereupon agreed between him and Bab- unrecorded deed, and that he never asked for cock that the bank would accept a deed to a release of the Joliet property. Furtherthe Laurel property in lieu of the Joliet more, Waldron testified that he had never property; that he brought his deed to the prepared a deed for McCullough; that he Laurel property to the bank and left it with was never a notary public or qualified to Babcock in order that he might have the new take acknowledgments; and that the bank deed prepared; that he returned on Sep- had never had in its possession a deed from tember 3d to execute it; that, relying on the McCullough to any property. The facts repromise of Babcock, he signed the new deed lating to the preparation of the deed are reprepared by the direction of Babcock without lated by Mr. Johnston as follows: That he reading it, and thereupon sent it to his wife was informed by Babcock that he was to at Minneapolis, Minn., to have her execute prepare the deed; that in the early morning it. He is corroborated to some extent by the of September 3d McCullough came to his statement of Dutton that, when Dutton first office bringing his deeds to both the Joliet obtained actual knowledge of the deed from and Laurel property, in order that Johnston McCullough to the bank, he went with Mc- might have the correct descriptions, and gave Cullough to see Babcock to ascertain wheth-them to him so that he might get them; that er Babcock would agree to make some adjust- he prepared the deed which, after it had ment of the matter, so that he would not been acknowledged before James Johnston, a suffer loss, and that Babcock then admitted notary and brother of the attorney, was dethat he had agreed to release the Joliet prop-livered to the bank. Upon this evidence the erty. These statements are categorically and positively denied by Babcock. He testified that McCullough had not been indebted to the bank for any amount prior to August 20th; that on that day he obtained the loan trial judge was fully justified in finding as he did, that the deed of September 3d expressed the true intention of the parties. If the bank never had in its possession the unrecorded deed to the Joliet property, and Mc Cullough furnished to Mr. Johnston a de- | him whatever. The findings referred to must scription of the property in order that the therefore be construed as relating to the time deed might be prepared (and whether these prior to the execution of the deed to the bank. were the facts depended upon the credit ac- So understood, they are not inconsistent with corded to the witnesses), the conclusion can- the other findings or with the conclusion that not be avoided that McCullough understood the bank was entitled to claim the full benefit what Johnston was to do, and what he had of its security. Moreover, when the exchange done when the deed was acknowledged; and, had been made, the bank's deed was put upif this was the fact, the alleged agreement on record. McCullough's alleged conversaby Babcock to release the Joliet property could not have been made. There was therefore no mistake. Much less is there any substantial basis for an inference of fraud. The fact that McCullough did not read the deed before he executed it does not in any wise affect the case. [3] It is strenuously insisted, however, that even though there was no mistake, the bank is estopped to claim a lien upon the Joliet property because the evidence discloses, and the court found (findings 5 and 8) that Babcock knew, when McCullough executed the deed to the bank, that McCullough and Dutton were negotiating for the exchange, and that Babcock advised and directed McCullough to make the exchange. In view of the fact that the court found that Dutton did not rely upon any representations by Babcock or any agreement between him and McCullough, these findings were wholly immaterial. Standing alone, they cast doubt upon what the trial judge had in mind in making them, because they are somewhat equivocal in meaning. But, when we consider them in the light of the allegations of the answer and the evidence, which we must do under the rule of the maxim, that that is to be deemed certain which can be made certain (Con. Gold & S. Min. Co. v. Struthers, 41 Mont. 565, 111 Pac. 152), they become entirely clear in their meaning and consistent with the other findings. It will be noted that such conversation on the subject of the exchange as occurred between McCullough and Babcock, occurred before the deed to the bank was exe tion with Babcock was not communicated to Dutton. He was not misled by any representations made by Babcock, nor even by Babcock's silence after he had been informed that the exchange had been effected. Babcock had performed his duty to the bank and to all persons who might thereafter seek to acquire title to the property by putting the deed on record, and was under no obligation to disclose to Dutton, either before or after the exchange, that the bank was claiming an interest in it. It may be remarked here that the use of the word "direct," in finding 8, was evidently an inadvertence because Acthere is no evidence justifying its use. cording to McCullough's statement, Babcock did not go further than to commend and advise the proposed exchange. The very purpose of the recording statutes is to require the owners or incumbrancers of real property to give notice of their rights, by recording the evidence of them. When they have done so, they have done all that can be required of them, and may thereafter preserve silence, even though they know that others are about to deal with the property, unless the circumstances are such that they must disclose their rights. Cornish v. Woolverton, 32 Mont. 456, 81 Pac. 4, 108 Am. St. Rep. 598; Porter v. Wheeler, 105 Ala. 451, 17 South. 221; Ogden v. Ball, 40 Minn. 94, 41 N. W. 453; Waits v. Moore, 89 Ark. 19, 115 S. W. 931. Here the bank's deed was on record. It had notified Dutton of its claim as required by law. If it be conceded that the conversation between McCullough and Babcock actually occurred as testified to by McCullough, it was not communicated to Dutton; Dutton was not misled by it, but by them. Common prudence would have dictated this course. McCullough might well allege Babcock's statement as somewhat excusatory of his conduct, but that this is so cannot aid or avail Dutton. cuted. Whether this was before or after the loan was effected and the agreement to secure it was made does not appear. It is denied by Babcock that any conversation oc-ords and act upon the information afforded by the fact that he failed to consult the reccurred, other than that he expressed approval of the proposed exchange. But, assuming that it occurred as alleged, it related wholly to the condition as it existed prior to the execution of the deed to the bank, and not afterwards. After this occurred McCullough was wholly devested of his right to sell the Joliet property, except subject to the bank's right, and could not, as a reasonable man, have thought otherwise. There is no evidence that he did think so; for, while he testified that he informed Babcock some months afterwards that he had made the exchange, he did not venture to testify that Babcock ever spoke to him on the subject after the close of the transaction with Babcock and before the conveyance was made "There is no principle better established in this court, nor one founded on more solid considerations of equity and public utility, than that which declares that if one man knowingly, though he does it passively, by looking on, suffers another to purchase and expend money on land, under an erroneous opinion of title, without, making known his claim, he shall not afterwards be permitted to exercise his legal right against such person. It would be an act of fraud and injustice, and his conscience is bound by this equitable estoppel." Wendell v. Van Rensellaer, 1 Johns. Ch. (N. Y.) 344. This statement of the rule by Chancellor |
