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ANDERSON v. MESSINGER.
(Circuit Court of Appeals, Sixth Circuit. June 5, 1906.)

No. 1,479. 1. TRIAL-FINDINGS- CONSTRUCTION.

Where the facts material to the judgment were agreed on, a recital that the court finds the issues of the case with the defendant should

be construed to refer to the issues of law. 2. SAME.

Where the facts are agreed on, they are the equivalent of facts found by the court.

[Ed. Note.-For cases in point, see vol. 46, Cent. Dig. Trial, § 880.] 3. MORTGAGES-ASSIGNMENT-FORECLOSURE.

Where a mortgagee assigned the mortgage with other property as collateral for debt owing by the mortgagee, and the assignee there after caused the mortgage to be foreclosed and purchased the property at a sale under a foreclosure decree, he held the mortgagor's title, in the absence of agreement to the contrary, for his own benefit, and not as trustee for the assignor.

Ed. Note.For cases in point, see vol. 35, Cent. Dig. Mortgages, 88

605, 1552–1556.] 4. JUDICIAL SALES—WHO MAY PURCHASE PURCHASE BY PLEDGEE.

The rule that a pledgee who is a trustee cannot become the purchaser at his own sale of the pledge is inapplicable to a judicial sale conducted by an officer of the law.

[Ed. Note. -For cases in point, see vol. 31, Cent. Dig. Judicial Sales,

§ 40.] 5. WILLS-CONSTRUCTION-REMAINDERS.

Testator declared that if either of his two sons died without lineal descendants, the survivor should take his estate, and if the survivor died without lineal descendants, then one-half both of the decedent's original portion as well as one-half of the portion taken by survivorship should go to testator's brother P., and the other half to such of testator's brothers and sisters as might be living at the time of the death of the surviving son. Held, that the sons thereby acquired a life estate in a moiety of the property with a remainder to the survivor of the one first dying, in the event he died without lineal descendants, the survivor then taking a life estate in both moieties, with remainder to his lineal descendants living at his death, otherwise to testator's collateral relatives.

[Ed. Note.-For cases in point, see vol. 49, Cent. Dig. Wills, $$ 1440

1414.] 6. TRUSTS-DURATION- LIMITATION.

Where testator directed that his trustees should deliver a settlement of their trust to each of his two sons on their reaching the age of 21 years, respectively, and then put them in possession of one-half of the property, except that there might be a reservation of a fraction of the moiety until the sons should, respectively, arrive at the age of 25 years, when the remaining part should be delivered to them, the trustees' authority as such expired by limitation on the arrival of the youngest son at 25 years of age.

[Ed, Note. For cases in point, see vol. 47, Cent. Dig. Trusts, $ 82.] 7. EXECUTORS-SALE OF LAND-AUTHORITY-PROBATE ORDER.

Executors not expressly authorized by the will cannot convey lands to pay debts except under the authority of an order of the probate court entered after notice to the parties interested.

[Ed. Note.For cases in point, see vol. 22, Cent. Dig. Executors and Administrators, $8 533-536, 558.]

146 F 59

8. TRUSTS—TRUSTEES—DEEDS.

Deeds by testamentary trustees, not delivered until after their author

ity as trustees had expired by limitation, were void. 9. LIFE ESTATES-LIFE TENANTS—CONVEYANCE IN TRUST-REMAINDERMEN.

Where, by testator's will, an estate in remainder after the death of his surviving son was given to his lineal descendants, it was beyond the power of the tenants for life to defeat or prejudice the remaindermen by an attempted declaration of trust of the property. In Error to the Circuit Court of the United States for the Northern District of Ohio.

R. P. Carey and C. H. Trimble, for plaintiff in error.
C. W. Everett and H. E. King, for defendant in error.
Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS, Circuit Judge. This is an action of ejectment brought by Anderson, the plaintiff in error, to recover the possession of certain lots in the city of Toledo, Ohio, described in his petition, of which he claims the legal title, and the possession of which, he says, is wrongfully withheld by the defendant. The answer denies the alleged title of the plaintiff, and denies the plaintiff's right to the possession. A stipulation was filed waiving a trial by jury, and consenting to a trial by the court. Upon the trial, proof of all the material facts was made by mutual stipulations which are incorporated in the bill of exceptions. The court rendered judgment for the defendant, the entry reciting that the court "does find the issues of the cause with the defendant. As the facts material to the judgment were agreed, this must mean that the court found the issues of law for the defendant. Supervisors v. Kennicott, 103 U. S. 554, 26 L. Ed. 486; Hulitt v. Ohio Valley Nat. Bank, 137 Fed. 461, 465, 69 C. C. A. 609. When the facts are agreed, they are the equivalent of facts found by the court, and the question of the propriety of the judgment is, in each case, the same. Supervisors v. Kennicott, 103 U. S. 554, 26 L. Ed. 486; Lehnen v. Dickson, 148 U. S. 71, 13 Sup. Ct. 481, 37 L. Ed. 373; St. Louis v. Telegraph Co., 148 U. S. 92, 13 Sup. Ct. 485, 37 L. Ed. 380. Some other matters hereafter to be referred to were received in evidence over objections which were incompetent to disturb or affect the ultimate material facts, and could not, therefore, affect the judgment. The case is properly here for review to determine whether the judgment is the one which the facts agreed required.

Each of the parties derives his title from Edward Bissell, a former resident of Toledo. On May 19, 1838, Bissell, claiming to be the owner of the premises, gave his bond to Charles Butler of New York for the sum of $21,500, payable one year from that date, with interest at 7 per cent., and to secure the payment thereof, gave, with his wife, to said Butler, a mortgage on the premises in question. This bond and the mortgage were assigned by Butler on September 23, 1841, to Henry Anderson, a resident of Holly Springs, Miss., to secure the payment of his note to Anderson for the sum of $20,000 and interest thereon; and for further security Butler assigned to said Anderson 546 shares of the Erie and Kalamazoo Railroad Company of the par

value of $50 per share. Butler having defaulted in the payment of his note, Anderson, on September 19, 1843, filed his bill in chancery in the court of common pleas for Lucas county, Ohio, to foreclose the Bissell mortgage, making Bissell and his wife, Butler and other parties, defendants. These parties other than Butler were served with process. Butler was not served and did not appear. That suit was pursued to a decree which was rendered April 1, 1844, for the sum of $29,139.01. A sale was ordered and a master appointed to conduct it. The mortgaged lands were bid off by Henry Anderson at the price of $6,910. The sale was duly confirmed and the master was ordered to make the proper deed to the purchaser. At this stage of the proceedings and on October 4, 1844, an agreement was entered into between Butler and Anderson, which, after reciting the giving of the bond and mortgage by Bissell, the assignment thereof by Butler to Anderson and the assignment of the 546 shares of railroad stock to secure Butler's note, and the above-stated proceedings for the foreclosure of the mortgage, proceeded as follows:

"And, whereas, the said Henry Anderson at the instance and request of the said Charles Butler and in consideration of the covenant of the said Charles Butler hereinafter contained, is willing to relinquish and surrender to the said Charles Butler, the collateral securities, so assigned as aforesaid, for the payment of said note of twenty thousand dollars, so far as the same may be done without prejudice or injury to the order obtained for the sale of the said mortgaged premises, and the rights of the said Henry Anderson under the same, and without prejudice to the personal liability of the said Charles Butler, to the said Henry Anderson on the principal debt.

“Now, therefore, these presents witness, that in consideration of the premises and for the purpose of giving effect to the same, and said Henry Anderson has on the day of the date hereof executed and delivered a power of attorney to the said Charles Butler, empowering and authorizing him fully and effectually, if he shall see fit to do so, to release and discharge the said Edward Bissell of and from all personal claim, demand or liability, whatsoever for or on account of the said bond and mortgage, but without prejudice to the proceedings, which have been or may be adopted, to effect the sale of the said mortgaged premises, and that the said Henry Anderson has also by instrument in writing released and transferred to the said Charles Butler the said five hundred and forty-six shares of Erie & Kalamazoo Railroad Company stock.

“And the said Charles Butler, in consideration of the surrender and relinquishment of the securities, hereby covenants and agrees to and with the said Henry Anderson, that the same shall not be held or construed in any way to affect or impair the liability of him the said Butler on the said note for twenty thousand dollars, and the said Charles Butler also covenants and agrees to and with said Henry Anderson that he, the said Butler, will well and faithfully apply and pay over to the said Henry Anderson, on account of the said note, all sums of money or other valuable consideration which he, the said Butler, may receive or derive, by reason of the surrender and relinquishment of the securities aforesaid, by him the said Henry Anderson.

"In testimony whereof the said Henry Anderson and Charles Butler have hereunto respectively set their hands and seals in duplicate this fourth day of October in the year one thousand eight hundred and forty-four. “[Signed]

Henry Anderson. “Charles Butler."

Thereafter, on November 18, 1844, the master in pursuance of the above-mentioned decree and of the sale and the order of confirmation

thereof, executed and delivered his deed of conveyance to Anderson, his heirs and assigns of the premises here in question, and which, as above stated, had been bid off by him. Prior to the date of this lastmentioned agreement between Butler and Anderson, Butler had, on February 22, 1843, obtained a quitclaim deed of these premises from Bissell and wife. But this deed was not recorded until after Anderson's death, nor until October 13, 1849, and it does not appear that the latter ever had notice of it. After the contract of October 4, 1844, Butler made no further payment on his debt to Anderson during the lifetime of the latter, nor to his representatives until October, 1849.

The first question in the case is what, as the consequence of these proceedings for foreclosure, the sale of the property to Henry Anderson under the decree, and the agreement of October 4, 1844 between him and Butler, was the nature of the title conveyed to Anderson by the master's deed. The contention for the plaintiff is that it conveyed to him the title to the property freed from the incumbrance of the mortgage, and that the price which he paid was properly applicable to the payment pro tanto of Butler's note. For the defendant it is contended that Anderson being assignee of the mortgage and having bid off the property and taken the master's deed to himself, acquired only Bissell's equity of redemption and held the property thereafter as trustee for Butler and as a continuing security for the payment of the latter's note. It is a well-settled rule of law that when the owner of securities pledges them to secure the payment of his own debt, he impliedly transfers the right to the remedies which will make the securities available for the payment of his debt in case of his own default. Schlieman v. Bowlin, 36 Minn. 198, 30 N. W. 879; Slee v. Manhattan Co., 1 Paige (N. Y.) 48, 78. And there necessarily goes with this power to make the securities available, the incidental power to transfer the assignor's interest in the securities; otherwise the purchaser does not get the property pledged by the securities, but an indefinite interest depending on contingencies over which he has a remote, if any, control, a circumstance which would greatly depreciate the value of the pledge.

There is also another rule of general application which is that a pledgee, who is a trustee, cannot become the purchaser at his own sale of the pledge. But this rule is not applicable to a judicial sale conducted by an officer appointed by law. Nor indeed is such a purchase absolutely void in all circumstances when the sale is a private sale and the purchaser has an interest to protect. In either of the laststated instances, the sale would be voidable if the purchaser were guilty of any fraud or other wrongful practice in the transaction; in the first instance by a refusal of the court to confirm the sale or by some judicial proceeding to impeach it, and in the latter instance by such appropriate action private or judicial as he should elect to make his objection effective. Richards v. Holmes, 18 How. 143, 15 L. Ed. 304; Smith v. Black, 115 U. S. 308, 6 Sup. Ct. 50, 29 L. Ed. 398; Allen v. Gillette, 127 U. S. 589, 8 Sup. Ct. 1331, 32 L. Ed. 271; Pewabic Mining Co. v. Mason, 145 U. S. 349, 12 Sup. Ct. 887, 36

Ed. 732.

In Richards v. Holmes, supra, a deed of trust had been given to secure the payment of a note, which, at the time of the sale under the trust, was held by Harper. The latter authorized the auctioneer to make a bid for him, and that being the best price offered, the property was struck off to him. Upon a bill filed by a subsequent incumbrancer to redeem, it was contended that the sale under the trust deed was void upon the ground that the beneficiary of the trust could not bid at the trustee's sale, and that the first mortgage continued subject to redemption. But the court by Mr. Justice Curtis, observing that no fraud appeared, said:

"It was for the advantage of these complainants, as subsequent incumbrancers, that this property should sell for the best price which could be obtained. Even improper practices to enhance the price, if any such had been resorted to, could not be complained of by them. It is only some practice to prevent bidding, or procure a sale for less than the property would have otherwise brought, which can be relied on by them to avoid the sale. have no doubt the creditor, for the satisfaction of whose debt the sale was made, had a right to compete fairly at the sale; but whether he had or not, his doing so could not be injurious to the complainants.”

It would have made no difference in that case if the bid had been in the trustee's name, for his act would have enured to his cestui que trust who was the real party. And the learned justice further said:

"And the same remark applies to the trustee. It was his duty to obtain for the property the best price he could by the use of due diligence in a fair sale. It would have been improper for him, in behalf of the creditor, to employ the auctioneer to buy at anything short of that best price. But there was no impropriety in his employing him to bid a particular sum for the creditor, to prevent a sacrifice of the property."

But in any such case, the pledgor may, if he chooses, affirm the sale, and if he does, the ground of objection is removed. Glidden v. Mechanics' Bank, 53 Ohio St. 588, 42 N. E. 995, 43 L. R. A. 737.

If, in the present case, the property had been sold to another party, there could be no doubt that the sale and deed would have carried to the purchaser the title which the mortgagor, Bissell, had when he made the mortgage, and would have transferred any interest which Butler had in the property to the proceeds of the sale.

The trust would attach to them. And to the extent of the sum due on Butler's debt they would be a satisfaction of it. If there were a surplus it would belong to Butler. Nor could it make any difference that Anderson bid off the property. The result would be the same. If he paid to the master the amount of his bid, it would be paid back to him on its being brought into court, a formality generally dispensed with by the master's taking the receipt of the creditor for so much of the proceeds as the decree adjudges to be due to him and bringing the balance into court to be paid over to the party entitled. If as here the party who might be so entitled was beyond the process of the court, he could come in by petition and on showing his right, obtain it. Butler, the assignor, was not served with process. He was a proper, but not an indispensable, party, and he was not within the jurisdiction of the court. The object in making him a party would be to enable him to make any objections which his interest might require and to

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