Johnson v. Mortgage Guarantee Co.

JAMISON, J.,

pro

tem.

Plaintiff brought this action to establish a trust in his favor in certain real estate of which the National Surety Company claims to be the owner, for an. accounting by the National Surety Company and the appointment of a receiver.

The National Surety Company by its answer denied that it held said property in trust for plaintiff and filed a cross-complaint alleging therein that it was the owner of the property and that plaintiff had no right, title or interest therein. Judgment was rendered in favor of National Surety Company and from this judgment plaintiff appeals.

Substantially the facts of this case are as follows: In February, 1926, appellant, who was a contractor, entered into a contract with Carrie E. Craig and Jeannette Lohrum, who were the owners of the property described in the complaint, for the erection thereon of a French villa of nineteen houses for the contract price of $91,763, and for the faithful performance of said contract respondent executed on behalf of appellant a builder’s bond in the sum of $22,941 and a laborers’ and materialmen’s bond in the sum of $45,882 conditioned for the payment of claims of laborers and materialmen performing labor or furnishing material to be used in the performance of the work under said contract. As part payment of the contract price for the construction of said buildings, the said Carrie E. Craig and Jeannette Lohrum on February 19, 1926, executed their promissory note to appellant for the sum of $42,500 payable in installments of $500 per month until February 15, 1928, when the remainder was to be paid in full, and as security

[419]

for said promissory note they executed a deed of trust on said property to the Title Guarantee and Trust Company, as trustee, in favor of appellant, said deed of trust being subject to a trust deed executed by the said Carrie E. Craig and Jeannette Lohrum to the Title Guarantee and Trust Company for the benefit of the Mortgage Guarantee Company dated February 19, 1926, for the sum of $65,000. On or about March 1, 1926, appellant executed to the Hammond Lumber Company his promissory note for $32,500 payable on or before six months after date and as collateral security for the payment of same transferred to the Hammond Lumber Company the said note for $42',500 secured by the deed of trust as aforesaid. On December 29, 1926, the Hammond Lumber Company executed and delivered to respondent an assignment of the note for $32,500 and the deed of trust securing same, the consideration for said assignment being the sum of $20,486.65, which was the amount owing to said Hammond Lumber Company by appellant for material furnished under said contract. Thereafter on or about September 27, 1927, respondent made a private sale of the deed of trust, which was executed as collateral security securing the said $42,500 promissory note and at that sale respondent became the purchaser thereof. Thereafter, default having been made by Carrie E. Craig and Jeannette Lohrum in the payment of certain installments of the said $42,500 note, respondent caused a sale to be made of the property covered by said deed of trust by the trustee named therein, and at said sale respondent became the purchaser of said property, and thereupon the said trustee executed and delivered to respondent a trustee’s deed for said property.