Allen v. Pierson

Williams, J.:

The judgment should be reversed and the demurrer sustained, with-costs to the appellants, with leave to the respondent to plead over on payment of the costs of the demurrer and of this appeal. .

The action is brought» to foreclose a trust mortgage. The trustee "was requested to bring the action, but failed to do so, and thereupon one of the cestui gue trust brought this action. The defect in the complaint is the failure to allege a request or notice to the trustee to bring the action made as provided in the mortgage.. There is no dispute but the action can be maintained by the.cestui gue trust if the trustee, failed to bring it upon proper request or .notice. The mortgage is annexed to the complaint" and forms a part thereof. The circumstances under which the mortgage was given are fully recited in the mortgage and are in brief as follows: June 17, 1897, Edwin 0. Pierson owed debts to various parties amounting to $36,589.73, a list of which was annexed to the mortgage. He transferred all his real and personal property, nursery stock and nursery business- to his two sons, the mortgagors, and they gave the mortgage upon the property to the trustee William B. Clark. The mortgagors gave their promissory'notes for the debts and liabilities constituting, the then existing indebtedness of their fatíier. The mortgage also recited that the sons might bé ' obliged, to borrow money not exceeding $4,000 annually ,for the purpose of carrying on the business. This loan • of $4,000 could only be made from time' to time, however, on the Consent and approval of the trustee. Notes were to be given, we assume, for these loans and advances. The mortgage was given to secure paymeñt of such loans to carry on the business, and the then existing' debts and liabilities, and the default clause in the mortgage was as follows: “In case default shall be made in the payment of the advances and loans made to parties of the first part for the purpose of carrying on. their business as aforesaid, or in the payment of the .claims as aforesaid, and in the manner herein set forth, and' if any such default shall continue for the space of thirty days, then and in such- case the said William B. Clark or his successors in the trust created or declared by this Indenture may and upon Hie reguest in writing-of any one on whose note default shall have been made, or upon the reguest in writing signed by.amagorityin amount of the holders of claims hereto■ annexed shall -take possession of said property and enforce the right of said creditors, under these presents by. entry and sale of the property herein conveyed in such manner as authorized by law or the practice of the court, * * * and after deducting-from the proceeds of-such sale * * * allowances for all expenses or 'costs, to first' reimburse said parties for their advances made as herein provided, and then distribute the remaining, proceeds arising from the sale among the creditors named in the list hereto annexed in equal pro r«to,pro.portions and without preference or priority to any, and if any surplus remains to pay the . same to the parties of the first part or to dispose of the same as any court of competent jurisdiction rn'ay direct.”

It is alleged in the complaint that the plaintiff was one of the creditors holding claims against the father and was named in the list annexed to the mortgage ; that default occurred in the payment of her debt when due and continued for thirty days, and then she gave notice in Writing under the default clause in the mortgage, and requested that the trustee proceed to enforce her rights by. tak- ■ ing possession of and selling the property, and that the trustee refused to comply with such notice and request. • The right of plaintiff to maintain this action is based upon such notice, request and refusal.

Under the clause in the mortgage, however, the notice and request, if it emanated from the, creditors of the father, a list of whom was annexed to the mortgage, could only he effectual if signed by a majority in amount of the holders of those claims. Plaintiff’s claim was only about $2,600, and the whole amount was upwards of $35,000.,

There were two classes of creditors whose claims were secured by the mortgage, those who made the loans and advances annually for carrying on the business, and any one of them could give the notice and make the request, but no one creditor in the list annexed to the mortgage could give the notice and make the request unless his claim was a majority in amount of the claim in such list. There can be no doubt as to this being the proper construction of the default clause in the mortgage. All this list of creditors held notes for their claims, and if any one of them holding such a note could alone give the notice and make the request then the second clause relating to such notice and request would be meaningless. The suggestion-that plaintiff was not a party to the trust agreement and knew nothing about it is absurd. She took her note under it, and her right of action as alleged in her complaint is founded upon it.

Our construction of the default clause in the mortgage does not permit the plaintiff to maintain this action upon the facts alleged, and, therefore, the complaint fails to state facts constituting a causé of action, and the demurrer thereto must he sustained.

Nash, J., concurred ; Spring, J., concurred in separate memorandum ; McLennan, P. J., dissented in an opinion in which Kruse, J., concurred in separate memorandum.