Bullion & Exchange Bank v. Spooner

BELCHER, C. In 1890 the plaintiff was a corporation engaged in the business of banking at Carson City, in the state of Nevada. The defendant M. E. Spooner did business with the plaintiff, and on December 27, 1890, was indebted to it in the sum of $14,240.79, on an overdraft account. On that day he executed to the plaintiff a deed, absolute in form, of certain real property situated in Ash valley, Lassen county, California, and known as the “Spooner Ranch”; and at the same time he also executed to the plaintiff his promissory note for $20,000, payable “on or before three years after date,” with interest, payable monthly, at the rate of nine per cent per annum from date until paid, and a chattel mortgage, to secure payment of the note, on certain personal property situated in said Ash valley, and described as two hundred head of horses, more or less, including three thoroughbred stallions, and six hundred head of cattle, more or less, with all the increase of such horses and cattle. The mortgage provided “that, if the

[532]mortgagor shall fail to make any payment as in the said promissory note provided, then the mortgagee may take possession of said property, using all the necessary force so to do, and may immediately proceed to sell the same in the manner provided by law, ’ ’ etc. These papers were all parts of one transaction, and were made to secure payment to the plaintiff of the said overdraft account. The deed and mortgage were thereafter, on January 9, 1891, duly recorded in the recorder’s office of Lassen county. At the time of the execution of the above-mentioned papers, the plaintiff also executed to the defendant its written obligation to reeonvey to him, “on or before the twenty-seventh day of December, A. D. 1893,’’ all of the real property described in the said deed, provided the defendant shall, on or before the day named, have paid to the plaintiff the sum of $20,000, according to the terms and conditions of the said promissory note, a copy of which was set out in the undertaking. Thereafter the amount due on the overdraft account was carried forward in the general bank account of defendant, and from time to time up to October 1, 1892, defendant deposited with and paid to plaintiff various sums of money, aggregating, as the court below found, $64,046.83, which sums were credited generally upon said account. The defendant drew checks against the money so deposited, and his checks were paid up to the fall of 1892, when the plaintiff refused to pay any further drafts. Meantime, the plaintiff had computed interest monthly, at the rate of nine per cent per annum, on the amount due it, and had charged the same in the account. At the time of the commencement of the action, the amount claimed by plaintiff to be due on the account was $12,146.50. On the 12th of August, 1892, the plaintiff and defendant agreed upon and designated in writing one James Marshall as a pledge-holder to go to Ash valley, and to immediately take possession of and hold all the personal property mentioned in the said chattel mortgage as security for the payment of the said indebtedness. Afterward, the plaintiff, claiming that the value of the property which it held as security was insufficient to secure the balance-due on the said account, and that defendant had fraudulently misrepresented the value of the property at- the time of executing the deed and chattel mortgage as aforesaid, demanded of defendant that he give further security; and, this demand