Herr v. Sullivan

delivered the opinion of the court.

From the foregoing statement it will be seen that the important questions presented in this case are, whether Sullivan or Herr is entitled to the unsold bonds that were issued by the Farmers’ Protective Association and delivered to Herr for the purpose of sale; and whether the trust deed given to secure the payment of the bonds constitutes a first lien upon the elevator property. The latter perhaps is the more important of the two, since it affects the value of the bonds, and the rights of the purchasers of the bonds that were sold, and.who are not parties to this action. The solution of both of these questions depends upon the force and effect to be given to the several agreements under which the bonds were placed and continued in Herr’s possession. By the tripartite agreement entered into on October 31, 1888, it is expressly provided, in consideration of Sullivan releasing the trust deeds held by him that constituted second liens upon both the mill and elevator properties, that in case the bonds should not be negotiated in accordance with the terms of the receipt given by Herr on October 12, and as then modified, that each and every of the bonds unsold should be delivered to Suilivan, to *199be owned and held by him as collateral security for the payment of his indebtedness theretofore secured by the trust deeds. It is clear that by this arrangement Sullivan, for a good and sufficient consideration, acquired a right to the unsold bonds. But it is contended by plaintiffs in error that because Sullivan did not demand the bonds at the expiration of the sixty days within which they were to be sold, but permitted them to remain in Herr’s hands, he waived this right. We can find nothing in the record to justify such an inference ; besides, acting in the confidential relation of attorney towards Sullivan, Herr was a party to this agreement, and continued the negotiation of the bonds with full knowledge of Sullivan’s rights in the matter; and, notwithstanding that in July, 1889, upon his purchase of the Allis & Company note, the association agreed, without the knowledge or consent of Sullivan, that he should hold the unsold bonds, together with other collateral, as security, on August 22,1891, he having purchased and being then the legal owner and holder of the Brown indebtedness, which constituted a first lien upon the elevator property, released the same in pursuance of a resolution of that date, wherein it was expressly provided that he should hold all the unsold bonds, together with other collaterals, as security “ except as to the claims of Sullivan,” thereby recognizing Sullivan’s claim as still existing upon the unsold bonds, and acknowledging that the right he acquired to the bonds was subject-to such claim.

To avoid the effect of this admission, it is insisted that the language of the resolution is ambiguous, and did not refer to the bonds, but to other notes and securities mentioned. The resolution is not susceptible of such a construction. The language used is plain and unmistakably refers to the bonds, as well as to other collateral; and clearly recognizes the existence of the right to the bonds that Sullivan acquired under the tripartite agreement.

We think, therefore, that the court below correctly found that he was entitled to their possession. It is insisted, however, that the release by Herr of the Brown trust deed, which *200constituted a prior lien upon the elevator property to that of the trust deed given to secure the payment of the bonds, should not be effective because made without consideration. That this claim cannot be sustained is evident for two reasons : First, not only was there a consideration, as shown by the resolution above referred to, but the release was made for the express purpose of making the trust deed given to secure the payment of the bonds a first lien upon the elevator property, in order to facilitate their sale; and he is therefore estopped from asserting that such deed is not a paramount and first lien. Second, as found by the court below, the sum realized by him from the bonds sold, and for which he is chargeable by reason of his conversion of those pledged, was more than sufficient to pay the indebtedness represented by the Brown note; and that the claim was in fact paid. But it is said that this finding is not conclusive upon this review, because not based upon conflicting testimony, but was in opposition to the uneontradicted testimony of Herr himself, corroborated by the accounts which he presented. It is true that he testified, and his accounts show, that he had disbursed more than the amount of the proceeds of the bonds that were sold. But these disbursements consisted largely of premiums paid for insurance upon the mill, interest on the bonds sold, and other items, which were properly disallowed as credits against the proceeds of the bonds. As expressed in the receipt of October 12, and as modified by the agreement of October 31, all money realized from the sale of bonds, after first redeeming the elevator property from tax sale, should be applied to the payment of the claims that constituted first liens upon the properties. And furthermore, the resolution of November 9, 1888, which authorized the trustees or the holders of the bonds to procure insurance upon the premises in case of failure on the part of the association'to do so, expressly provided that all moneys thus paid, with interest thereon at the rate of ten per cent per annum, should become an additional indebtedness secured by the deed of trust, and be a lien on the real estate in the same manner as is incorporated therein.

*201To apply the money received from the sale of bonds to the payment of these items would not only defeat the object for which the bonds were sold, but violate the express agreement of the parties. We think, therefore, that the court correctly found that Herr was authorized to deduct from the moneys received by him from the sale of the bonds, his commissions, the amount paid to redeem the elevator property from the tax sale, and the amount paid for taxes and insurance on the elevator only; and that the net proceeds realized, together with other sums received by Herr, and the value of the bonds pledged, was more than sufficient to pay the Brown claim, and that said indebtedness was paid in full.

The accounts are very voluminous, and show that Herr received money from various sources other than the sale of bonds. It appears that during a portion of the time he had possession of, and operated, the elevator and mill, and realized from the operation of the latter 19,956.28, against which he claims various credits. The court below investigated this account, and in determining the amount of indebtedness secured by the first trust deed on the mill, among other items of expenditure, allowed him credit for the claims above specified, and after deducting the same from the total receipts, found that there was due 139,375.54, which constituted a first lien upon the mill property. In arriving at this result, the court considered the various items of debit and credit in the light of the oral testimony, and if we had the right to do so, we see no reason for disturbing its conclusion ; nor do we think the court erred in fixing the amount due defendant in error without regard to the amount of certain uncollected securities held by him. He had realized nothing upon them, and we are aware of no rule that would justify the court in deducting them from the amount of his claim against the association. It is too well settled to admit of dispute that a creditor who holds several securities for the same debt has a right to realize the payment of his claim from any one of them, and Sullivan clearly had the right to enforce *202his lien against the bonds, and subject them to the payment of his claim, without first exhausting his other securities.

The testimony introduced on the part of defendant in error as to what occurred between O’Donnell, as the representative of Sullivan, and Herr, in contemplation of, and immediately preceding, the trustee’s sale on the morning of October 10, although disputed, is sufficient if accepted by the court as the true version of the matter, when taken in connection with the conduct of Herr at and subsequent to the sale, to justify its finding that the sale was fraudulent and void, and under the rule so frequently announced in this court, its finding, being based upon conflicting testimony, is conclusive upon this review, and its action in vacating the sale and canceling the conveyances made in pursuance thereof must be upheld. Upon a careful examination of the record we find no error that would justify a reversal. The judgment of the court below is accordingly affirmed.

Affirmed.