BARTHOLD L. WAHL and ANNA WAHL, Appellants,
ROUND VALLEY BANK, a Corporation, JAMES P. REAGAN and MELVIN BROWN, Appellees
APPEAL from a judgment of the Superior Court of the County of Apache. Joseph S. Jenckes, Judge. Judgment affirmed.
Mr. Thorwald Larson, for Appellants.
Mr. Dodd L. Greer, for Appellees.
McALISTER, C. J.
It appears that the plaintiffs, Barthold L. Wahl and Anna Wahl, his wife, delivered to the Round Valley Bank on July 15, 1919, their promissory note for $1,760, payable six months thereafter, and to secure the payment thereof that they [38 Ariz. 412] executed and delivered the following day an instrument in form a warranty deed but which contains a defeasance clause stating that "it is further agreed that in case the note for $1,760 secured by this deed is paid on or before the date due (December 20th, 1919) the above attached deed is null and void."
The complaint alleges that at the time the deed was executed and delivered the plaintiffs turned over to the bank as additional security for the payment of their note the following described property: A chattel mortgage transferring to it a number of head of cattle owned by them and the promissory notes of John R. Coleman for $786, Emma J. Saffell for $514, and Tomas C. Baca for $450, all payable to plaintiffs.
The complaint avers further that before their note became due the plaintiffs paid the bank at various times, including the sums collected on these three promissory notes, an amount sufficient to satisfy it and to release the real estate described in the mortgage from the lien thereof but that the bank failed to give them credit therefor upon their indebtedness; that they were, therefore, indebted to the bank in no sum whatsoever when their note matured but, notwithstanding this, it "wrongfully, fraudulently and for the purpose of cheating and defrauding plaintiffs claimed and pretended that only a small portion of said indebtedness had been paid" and refused to render them any statement as to the payments made thereon and the sums collected on the three notes held as additional security; that by reason thereof the bank became and is a trustee ex maleficio of the amount thus collected but, instead of accounting to plaintiffs therefor, has appropriated it to its own use.
It is further alleged that on July 16, 1922, the defendant, James P. Reagan, began occupying the premises described in the deed to the bank as the tenant of plaintiffs and paid them a monthly rental therefor [38 Ariz. 413] until July 23, 1923; that some time prior to the latter date he and the bank entered into a conspiracy to defraud plaintiffs by agreeing that the bank would convey to him the premises held by him as tenant for the purpose of investing him with full title thereto, and that pursuant to this conspiracy the bank made, executed and delivered to him on July 23, 1923, its deed attempting to convey them, and he, in furtherance thereof, claimed and pretended thereafter that the premises were his in fee simple; that he used his tenancy as a means of gaining possession as owner without the payment of any consideration therefor and in violation of the trust imposed upon the bank as trustee for the equity of redemption owned by the plaintiffs from the date of the execution of the deed above referred to; that for the purpose of further carrying out their scheme to defraud, the bank and Reagan thereafter conspired with the defendant, Melvin Brown, to complicate further the status of said real estate by Reagan's conveying its title to Brown and that pursuant thereto Reagan and wife executed and delivered their deed to him and he took possession thereunder on May 29, 1924, has held it since and now claims to be the sole owner thereof, though neither the attempted conveyance from the bank to Reagan nor the one from Reagan to Brown had any effect whatever as a transfer of title.
It appears also from the complaint that the bank made no effort to foreclose the instrument set out and referred to as a mortgage notwithstanding it claimed that the promissory note of plaintiffs secured thereby was still unpaid to the amount of $782.36 when it executed and delivered the deed to Reagan on July 23, 1923.
After demurring specially and generally defendants interposed a plea in bar claiming that the alleged cause of action had been adjudicated. As a basis therefor they averred that in an action, No. 1292, [38 Ariz. 414] brought in the superior court of Apache county, Arizona, by Barthold L. Wahl and Anna Wahl, his wife, the plaintiffs here, against the Round Valley Bank, a corporation, James P. Reagan and Melvin Brown, the same defendants as in this case, in which the same cause of action alleged here, namely, an action to quiet the title to the identical real property involved herein and to recover rental therefor was pleaded, a final judgment was rendered on September 10, 1927, after trial on the merits, in favor of the defendants and against the plaintiffs, and no appeal therefrom was taken.
The plea of res adjudicata, following a hearing on that question alone, was sustained completely as to the defendants, Reagan and Brown, and also as to the defendant, Round Valley Bank, except in so far as the complaint sought an accounting by it of the moneys received from the collection of the three promissory notes alleged to have been assigned as security. Thereupon the bank answered admitting that the plaintiffs did on July 15, 1919, deliver to it two notes, one executed by John R. Coleman for $750 and one by Emma J. Saffell for $500, and on November 24, 1919, another executed by Tomas C. Baca for $350, but alleged that they were delivered for collection and not as security and that it did collect each of them with interest and paid the amounts received thereon either to the plaintiffs or others upon their order; that it rendered plaintiffs a full accounting of such receipts and the disbursements
thereof; and that it was indebted to them in no sum whatsoever. These allegations were sustained by the evidence in behalf of the bank and following its introduction, the plaintiffs offering none, the court held that the bank had fully accounted and ...