tending the proceedings were found to be $128, which, added to the damages, amounted to $3,198. The benefits assessed against the property affected, including those assessed to plaintiff, equaled this latter sum, exactly. Not being satisfied with the award of the viewers, plaintiff appealed to the circuit court, and on April 10, 1900, obtained a judgment for $2,662.50 damages over all benefits; and, having thereby increased her award, she was entitled to costs and disbursements on the appeal, which were taxed at $135.80. Notwithstanding the disposition made of the matter in the circuit court, a warrant was issued by the auditor on the assessment of benefits, by virtue whereof the chief of police sold the south half of block No. 11 to A. G. Noble for the amount of such assessment, which was turned into the city treasury, and went, with other collections, to make up the fund for the extension of Main street, by which it is known in the proceedings. Of this fund there was collected and put into the treasury $3,192.50. and on April 18, 1900, that sum was appropriated by ordinance to the payment of damages and costs, and warrants were authorized to be drawn against it in favor of the persons entitled thereto. One warrant (No. 14,239) for $128 (being costs of the proceedings) has been drawn, leaving in the fund $3,064.50. On August 2, 1900, the mayor and auditor drew a warrant covering the whole of the balance payable to plaintiff, and another upon the street and sewer fund for $51.03 (being for interest), and she was notified that the same had been drawn in payment of the judgment rendered in her favor and against the city, and were then in the auditor's office subject to her order. These warrants she never called for, and when the city attempted to open up the street she commenced this suit to restrain it from further action in the premises. The trial court rendered a decree dismissing the complaint, and plaintiff appeals.

Seneca Smith, for appellant. Ralph R. Duniway, for respondents.

WOLVERTON, J. (after stating the facts.) Two questions arise: First, whether the plaintiff could safely and lawfully draw her award from the fund thus created by the city; and, second, whether the appropriation of the fund and the issuance of the warrants (they being in excess of her award) were operative and effective as the final and requisite acts under the charter to accomplish the appropriation of her land. The award of the court on the appeal being for plaintiff's damages, in excess of all benefits received by her, relieved the south half of block 11 from the lien of the assessment for benefits. Henceforth the city had no claim under such lien, and the property was wrongfully sold to enforce it. If $402 be taken away from the fund remaining in the treasury, after deducting the warrant for

$128, there would remain but $2,662.50, the exact amount of plaintiff's judgment in the circuit court, less her costs and disbursements on appeal; so that it would be insufficient to pay her demand by $135.80. Now it is urged that plaintiff could not draw from the fund the amount of her judgment and costs, namely, $2,798.30, without impairing her remedy for the recovery of the south half of block 11, wrongfully sold. It is plain that, if she drew the full amount of her judgment, she would absorb a part of the $102 realized by the city from the sale of her own property, and put into the fund. Would this estop her from insisting upon the invalidity of the sale? Manifestly, the maxim caveat emptor applies as to Noble. He took the title at his own risk. and could have no recourse upon the city, under whose authority the sale was made, as it could not be held as a guarantor; nor could he be subrogated in any manner to the claim of the city against plaintiff for benefits, even if it was entitled thereto. Dowell v. City of Portland, 13 Or. 248, 10 Pac. 308; House v. Fowle, 22 Or. 303, 29 Pac. 890; Whiteaker v. Belt, 25 Or. 490, 36 Pac. 534; Keenan v. City of Portland, 27 Or. 544, 38 Pac. 2. If, however, the plaintiff would estop herself from reasserting title by taking her damages, Noble would be secure from attack, and it would not matter to him that all recourse was cut off as against the city. Either the plaintiff must be permitted to refuse to accept the fund, and thereby defeat the appropriation of her property sought to be condemned, or her acceptance will not estop her to recover the property unlawfully sold. The city cannot condemn her property in one direction, and sell other of her property to create a fund to pay for that which is condemned. Such a course would result in confiscation by indirection. The estoppel must proceed, if at all, from a ratification of the sale on the part of the plaintiff by acceptance of the purchase price, or part of it, knowing the sale to be invalid. She has done nothing to mislead the purchaser, or to cause him to pursue a different course from that which he would otherwise have done, because of which it would be inequitable to permit her to assert her rights. The city is, however, in her debt, and proffers the fund thus accumulated in payment thereof. If she takes it, it is not without consideration. She has given the city its equivalent. The city is under no obligation to refund to Noble, as he has no recourse, having purchased at his own risk; and why should a disbursement of the money to plaintiff, as a creditor of the city, work a ratification of the sale in his favor? She takes nothing from Noble, either directly or indirectly, in satisfaction of anything that is her due from him, or, in any sense, in recognition of the purchase; and it is of no consequence to her from what source the fund is accumulated,

so long as she does not become a particeps criminis to an unlawful or wrongful act herself, and so long as the purchaser takes with his eyes open, and she does nothing to induce him to part with his money, or does not enter into collusion in any way with the city whereby to raise the fund. She is in no sense the guardian of the city, to see that it does right or proceeds legally in providing the fund by which to compensate her for property lawfully taken, and she can be accused of no wrong doing simply because she takes of the fund provided for her payment. Nor could the city be lawfully restrained from the payment of the amount of her award under the warrants issued. They are lawful to that extent, and the payment would be lawful. We hold, therefore, that she could safely accept her award out of the fund created, without risk of ratifying the sale to Noble, or jeopardy of incurring liability for wrongdoing.

The second question involves a construction of section 117 of the city charter (Sess. Laws 1898, p. 147), by which the common council is required at the expiration of the time limited for appeal, or, if taken, immediately after judgment, to make an appropriation for the amount of damages and costs assessed or adjudged, and direct warrants to be drawn on the treasury, payable out of the fund to be provided for that purpose, for the amount thereof, in favor of the owner or owners of each lot or part thereof to be condemned; and as soon thereafter as the full amount of the appropriation shall be in the city treasury, subject to such warrants, and the warrants therefor drawn and ready for delivery to the persons entitled thereto, such property shall be deemed appropriated for street purposes, and not otherwise. The appropriation to be made, the warrants drawn and ready for delivery, and the full amount of the appropriation to be in the city treasury, subject to the payment thereof, within six months after the termination of the time limited for appeal, or from the date of the rendition of judgment in the circuit court; otherwise the proceedings to become null and void. There seems to be no vague or double meaning in the language employed as to when the appropriation of the property condemned will take place, and the city be entitled to enter. The charter, proprio vigore, makes it at once when the conditions are fulfilled, and no other act or condition is necessary. We do not understand that the appellant questions the constitutionality of the method adopted whereby to accomplish the purpose. She merely challenges the acts of the common council and the officers of the city as not conforming to the charter requirements, in that the appropriation and the warrants were made, and were for a larger sum than she was lawfully entitled to receive. The object of the charter is to secure the owner just compensation for property taken

without his consent, and against his will and wish. It takes the place of a tender, and stands in its stead, and should be as safe and certain, and attended with no hazard, contingency, or casualty; and there must be a sure and adequate fund provided, to which the owner may resort. Payment into court of damages assessed have been held in this state to be sufficient. Railroad Co. v. Hill, 9 Or. 377. This is so held because the depository is safe, and, when the money is placed therein, it is beyond the retraction of the appropriator, and nothing is left for the owner whose property has been taken but to demand and receive his compensation. His case under the charter differs from that but slightly. The appropriation of the money must be made by the common council, the fund created, the warrant drawn, and the money actually in the fund, before the appropriation of the property for public use is accomplished. When all this is regularly attended to, there is nothing left, except for the owner to take down the amount of compensation. There would seem to be no contingency or hazard attending the matter. The city plights its faith for payment; and, not only this, it sets aside a fund, supplies it with means, and directs the owner, by warrant, to take out of it his award. We have treated of the manner in which the money was put into the treasury, and have seen that plaintiff could make no valid objections on that account. That the appropriation and the warrants were for more than plaintiff's award for damages, with costs added, and therefore for more than she was entitled to, do not conflict in any degree with the object of the charter to secure to her the compensation first assessed. It is amply secured, as she may go and take of the fund all of that to which she is entitled, and there is nothing to deter and hinder her. This being so, why does not the appropriation of her property for public use follow, notwithstanding the authorities have appropriated a larg er sum, and tendered her warrants for more, than is justly her due? It is suggested that she might be enjoined from drawing the fund. This might and would, we think, be so, respecting the overplus, as she has no right whatever to that, but not as to the amount to which she is lawfully entitled; and the warrants are just as effective to enable her to draw that amount as though it was stated exactly therein. We do not think this error in making the appropriation and drawing the warrants, whether it be clerical or by misapprehension of the authorities in directing the course of the procedure, is fundamental or vitiates the proceedings ab initio. All of plaintiff's inherent and constitutional rights have been safeguarded by the course pursued, and the appropriation of her property was perfected by the procedure.

The decree of the trial court will therefore be affirmed.

(41 Or. 391) UNITED STATES MORTGAGE & TRUST CO. v. MARQUAM et al.1 (Supreme Court of Oregon. June 3, 1902.)

FOR

MORTGAGE - POSTPONEMENT OF LIEN FEITURE- USURY FRAUD ON CREDITORSTRUST-TERMINATION-DUTY AND RIGHTS OF TRUSTEE-FORECLOSURE PROCEEDINGCROSS COMPLAINT-SCOPE OF RELIEF.

1. A finding of the trial court that a trustee, empowered by a trust deed executed by a mortgagor to take possession of the mortgaged property, and to collect the rents and profits, and apply them to the payment of interest and taxes, was not the agent of the mortgagee, was conclusive on appeal, where the evidence was not brought up.

2. A mortgagor on the date of the mortgage deeded the property covered thereby, together with certain other property, to a trustee; the latter to take possession and collect the rents and profits, and apply them to the payment of interest and taxes, etc. The trustee was further empowered to lease the property, and to extend the term beyond the maturity of the mortgage, not exceeding one year. The court found that the trustee made two leases extending beyond the maturity of the mortgage, neither of which was at the instance of the mortgagee. Held insufficient to postpone or forfeit the mortgage lien.

3. Hill's Ann. Laws, § 3593, provides that all contracts "on which the rate of interest is 8 per cent. or under, whereby one party shall agree to pay the taxes on the debt, credit or mortgage," shall not be deemed to be usurious. Held, that a contract whereby a mortgagee agreed to pay 7 per cent., with taxes added, was not usurious, though commissions and other charges were also made in addition thereto, where the whole charge, exclusive of taxes, did not exceed 8 per cent.

4. A mortgagor on the date of the mortgage deeded the property covered thereby, together with certain other property, to a trustee; the latter to take possession and collect the rents and profits, and apply them to the payment of interest and taxes, etc. The trustee was further empowered to lease the property, and to extend the term beyond the maturity of the mortgage, not exceeding one year. Held, that an answer in a suit to foreclose the mortgage, showing that some five leases were executed beyond the time designated, but not showing what rents were stipulated for, or how they were injurious to the mortgagor's reversionary estate, but merely averring that the leases were apparent incumbrances and clouds on the mortgagor's title, was insufficient to show an estoppel, or to require a forfeiture of the mortgage lien.

5. An objection that a mortgage and deed of trust executed by a party is a fraud on his creditors is available only to the latter, and cannot be made by the party himself, it appearing that the instruments themselves had a good consideration.

6. A mortgagor on the date of the mortgage decded the property covered thereby to a trustee; the latter to take possession and collect the rents and profits, and apply them to interest and taxes, etc. The deed obligated the trustee to make certain advances for the benefit of the mortgagor. The life of the trust was made dependent on the existence of the mortgage, and the trustee was given a lien for advances made. Held, that foreclosure of the mortgage terminated the trust, and, where made a party defendant to the foreclosure suit, the trustee was entitled to file a plaint seeking to have its own lien foreclosed.

cross com

7. A mortgagor on the date of the mortgage deeded the property covered thereby to a trustee; the latter to take possession and collect the rents and profits and apply them to interest and taxes, etc. The deed obligated the trus

1 Rehearing denied July 11, 1902.

tee to make certain specified advances to the mortgagor, advances for interest on the mortgage not being specifically mentioned, and recited that it might become necessary in the matter of the trust for the trustee to make advances, etc. Held not to obligate the trustee to make advances to meet the interest.

8. A cross complaint brought against a mortgagor by one of the parties defendant to a suit to foreclose the mortgage may extend to all the property covered by the cross complainant's lien, and need not be confined to the property covered by the original mortgage.

Appeal from circuit court, Multnomah county; John B. Cleland, Judge.

Action to foreclose a mortgage, brought by the United States Mortgage & Trust Company against P. A. Marquam, Emma Marquam, and others, in which the Title Guarantee & Trust Company, one of the defendants, filed a cross complaint. Decree in favor of plaintiff and of the title company on its cross complaint, and ordering a foreclosure of the mortgage, and defendants P. A. Marquam and Emma Marquam appeal. Affirmed.

On November 13, 1894, P. A. Marquam and Emma Marquam, his wife, executed and delivered to plaintiff a mortgage on certain real property to secure the payment of $300,000 in five years from date, with interest at 7 per cent. per annum, payable quarterly. There is a stipulation in the mortgage that, in case of default in payment of interest or in complying with the conditions thereof, and as often as there was a failure in either respect, the mortgagee might at any time declare the whole of the principal due, and foreclose at once. The quarterly interest due in February, May, and August, 1899, being defaulted, shortly prior to November 13th following, the date upon which the principal sum was made payable, the mortgage company commenced this suit to foreclose. The Title Guarantee & Trust Company was made a party defendant, with numerous others having or claiming interests in the premises mortgaged. On the date of the execution of the mortgage Marquam and wife and the title company entered into a trust agreement with relation to the property mortgaged, together with four lots in block 120, in the city of Portland, all of which was conveyed to the title company, which recites in brief: That whereas, in consideration of the premises and of the agreements on the part of Marquam and wife, hereinafter contained and heretofore understood between the parties hereto, said title company has rendered certain serv ices, and will advance certain sums of money, and has secured for Marquam and wife a loan in the sum of $300,000 from the mortgage company, to secure the payment of which they have executed their mortgage on certain real property (describing it): Now, therefore, it is mutually agreed that Marquam and wife will pay the title company the sum of $4,500 for exchange, title insurance, abstract of title, and brokerage in the matter of said loan, and during the life of said trust will pay said title company for its services rendered in the

financial management and oversight of said property $1,000 per annum and certain specified commissions; and it is further agreed that during the life of said trust the title company shall have the entire control and management of said property for the use and purposes hereinafter set out. And whereas, under a certain preliminary agreement. entered into between Marquam and wife and the title company and others on the 30th of August, 1894, the title company agreed to advance for Marquam, when said loan of $300,000 should be consummated, the funds in excess of said loan necessary to discharge certain specified indebtedness and expenses; and whereas, it may be necessary in the matter of said trust for said title company to advance money from time to time to Marquam and wife,-it is further mutually agreed that when any of such advances are made they shall execute their promissory note for each sum advanced, to become due and payable on or before two years, unless they would mature at a date subsequent to the maturity of the mortgage, in which event they should be so drawn as to fall due contemporaneously with said mortgage; that the lots in bleck 120 should be held in trust as collateral security, and the remainder of the property in trust to carry out the purposes of this agreement, and to collect the rents and profits arising therefrom for the following purposes: (1) To pay operating expenses, repairs, for services in collecting rents, interest on loan, taxes, and public charges; (2) to pay all amounts advanced and to be advanced to Marquam and wife; (3) to pay certain other indebtedness specified; (4) to pay the title company for services in executing the trust; and (5) after said loan shall be discharged, and all requirements of the trust satisfied, to reconvey the property. On February 13, 1895, the parties entered into a supplemental agreement, whereby the original is so construed as to authorize the title company to execute leases to any and all of said property, and, where necessary, to secure desirable tenants; to extend the time beyond the life of the trust, not exceeding one year, having due regard for Marquam's interest after the life of said trust as to the amount of the rentals, and not to collect beyond the life of the trust in advance. Still another agreement was entered into with reference to the trust property, to which the Northern Counties Investment Company became a party, but it is not important within the range of the present controversy. On December 1, 1899, Marquam and wife filed an answer in abatement denying the mortgagee's authority to declare the whole of the principal sum due for the nonpayment of interest charges, and setting up that the title company was the agent of the plaintiff, and that as a part consideration for said loan, and as an essential condition thereof, the agreement was entered into between Marquam and wife and the title company as hereinafter set forth; that said title company has collected

sufficient funds with which to discharge the unpaid interest notes, over and above the expenses and cost of management of the property, but has misapplied and misappropriated them in violation of said trust, and that by neglect of duty it has failed to obtain and collect a large amount of rentals it could and should have collected by the exercise of proper diligence and oversight, and that an accounting is necessary to a proper determination of the matter. And for a further defense it is alleged that the title company, while acting as such trustee for the mortgage company, and at its instance and with its approval, but without consent of Marquam and wife, made divers leases of divers parcels of real property extending beyond the 13th of November, 1899,-all of which were in violation of the conditions of the trust; that such leases were incumbrances and clouds upon the title to said realty; and that any sale under foreclosure during the period in which any of said leases have to run will cause Marquam and wife irreparable loss and injury, and pray for a dismissal of the suit. A trial being had under issues tendered by a denial of all the material allegations of the answer, it was found, among other things, that the trust agreement was not a part of the contract with the mortgage company for the loan of $300,000, and that the mortgage company was not a party thereto; that the title company was not the agent of the mortgage company in any sense in so far as it related to the trust agreement, nor has it collected rents and profits sufficient with which to meet said interest payments, over and above costs and expenses of operating and managing the property; that it made the leases complained of at its own instance, without the approval of the defendants Marquam and wife, and that the mortgage company as mortgagee did not consent to the making of more than two of them; and thereupon dismissed the plea. Later, Marquam and wife answered the complaint, again alleging that the trust agreement was entered into as a part consideration for the 1 an made by the mortgage company, and that its execution was an essential condition precedent to the making of said loan; that for a long time prior to the date of said mortgage and trust agreement the title company had been and was the agent for the mortgage company for making loans and the investment of its funds in and about the city of Portland and collecting and remitting interest under an agreement that the title company should charge and collect from the parties to whom money had been loaned by the mortgage company a reas nable compensation for its services in making such loans, and collecting and making remittances in the form of brokerage, and thereby wholly relieve the mortgage company from such expense; that the loan to Marquam and wife was made in pursuance of such agreement, and that said trust agreement was entered into for the benefit of said mortgage company, to enable it

to collect and have remitted its interest and principal sum, whereby the brokerage and commissions for such services were to be paid by Marquam and wife; that the said title company, while in possession of the property under said trust, has received and retained to its own use commissions amounting to the sum of $3,000, and claims brokerage and salary in the further sum of $9,000. adding which to the stipulated interest of 7 per cent. would make the rate unlawful and usurious; and that the loan is therefore void, and the principal sum should be forfeited to the school fund. For a second defense it is alleged, as in the plea in abatement, that leases have been made extending beyond the date of the maturity of the mortgage at the instance and by and with the consent of the mortgagee to the end that it might realize more than it was entitled to from the rents, issues, and profits of the property, and without the consent of Marquam and wife, whereby their title has been clouded and irreparably damaged, and the lien of plaintiff's mortgage waived, and it is estopped from foreclosing the same. For a third defense it is alleged that the property conveyed in trust to the title company was substantially all the property that Marquam and wife owned at the time; that Marquam was then indebted to divers persons other than the plaintiff and the title company in the sum of more than $70,000, and the conveyances operated to harass and hinder them in the collection of their demands, and that such was the intent and purpose of the trust agreement and the mortgage company in instigating it; and that such mortgage and trust agreement was, in effect, an assignment for the benefit of a part, only, of Marquam's creditors, and was therefore illegal and void. For a counterclaim it is alleged that the title company, acting as the agent of the mortgage company, has collected large sums of money, which it has wrongfully and negligently failed to apply towards the payment of said interest notes, and has converted the same to its own use in the aggregate of over $50,000; and that an accounting is necessary for the ascertainment of the true amount thereof, and a dismissal of the suit is demanded. The answer was held to be insufficient in every particular tested by motion and demurrer directed to specific parts and to the whole thereof. On November 6, 1899, the title company filed a cross complaint setting up its trust agreement with Marquam and wife, the subsequent modification, and its operations and doings thereunder; that it has made large advances to Marquam and wife from time to time, and taken their notes therefor, and has made further advances for which notes have not been given, and has rendered to them from time to time statements of account, which were approved and have been settled, and that at the date of the filing of said cross complaint there was due and owing from Marquam and wife to the title company a

large sum of money amounting to $40,897.81, with accrued interest. Marquam and wife answered again, setting up the trust agreement, and alleging that the requirements of the trust have not been fully satisfied; that it has not yet terminated; that by the terms thereof the title company was obligated to make further advances and to perform further services, and that the trust must yet continue for an indefinite period. The second defense is akin to this, and avers that the title company is now in possession of the property, assuming and pretending to be engaged in the performance of its duties under the trust. By the third it is alleged that the title company has been negligent in its duty in leasing the property, to the damage of Marquam and wife in the sum of $90,000; and a fourth defense is of like tenor, alleging damages in the sum of $36,000, arising from the same cause. A fifth defense alleges that the title company failed to pay the taxes or to make advances to Marquam and wife as it had agreed, whereby they are damaged in the further sum of $50,000, and it was sought to have the cross complaint dismissed, or an accounting had before the trust should be wound up. The first and second defenses were held insufficient upon demurrer, and other parts of the answer were stricken out on motion. After trial upon the merits under the remaining issues between Marquam and wife and the title company, the court found, among other findings of fact, that the title company, upon the execution of the first agreement with the Marquams, entered into possession of the trust property, and has since controlled and managed it; that from time to time and frequently during the supervision thereof, and as late as January 13, 1899, the title company rendered them statements of account, whereby it fully disclosed and truly stated the matters of account between them arising from said trust; that no objections were ever made thereto prior to the month of July, 1899, and that on the 13th day of May, 1900, there was then due the title company $28,667, exclusive of attorney's fees; that the title company has been prudent, careful, and diligent in renting the various properties, and in the conduct and management of said trust, and has been guilty of none of the acts of negligence, carelessness, or maleficience specified in the answer of defendants. By the final decree it was considered that the trust agreement had been fully carried out and completed; that it was, in effect, a mortgage, and constituted the company a mortgagee in possession, and a foreclosure decreed; and the assets to arise from a sale under execution were marshaled with reference to the relative equities of the plaintiff and the several parties defendant. Marquam and wife appeal.

E. B. Watson and U. S. G. Marquam, for appellants. Wallace McCamant, for respondent.