ERROR TO AND APPEAL FROM THE SUPREME COURT OF THE TERRITORY OF OKLAHOMA.
MR. JUSTICE WHITE delivered the opinion of the court.
Not unmindful that upon this record we are bound by the findings of fact below made and are confined to determining whether the facts as found sustain the judgment, if there is evidence supporting the findings, and, without departing from that rule, we at the outset refer, in chronological order, to some facts which are alleged in the pleadings, which are either directly or by necessary implication established by the findings, and as to which there can be no dispute whatever. We do this in order, if possible, to dispel the obscurity resulting from the prolixity of the pleadings, the unnecessary volume and confusion of the record, and the want of accuracy manifested by some of the assignments of error relied upon.
Prior to June, 1891, two partnerships were located in Texas -- one, Grigsby Brothers; the other, the Union Mills Lumber Company, sometimes called the Union Lumber Mills Company. The first (Grigsby Brothers) was composed of G.M.D. Grigsby and D.J. Grigsby; the second (Union Mills Lumber Company) of the two Grigsbys owning four-fifths interest and T.L.L. Temple, one-fifth. At the same time there was located in Arkansas a firm known as the Southern Pine Lumber Company, composed of T.L.L. Temple and Benjamin Whitaker. Prior to June, 1891, D.J. and G.M.D. Grigsby became the recorded owners of the following real estate situated in the city of Oklahoma and in the town of Guthrie, Oklahoma Territory, viz: 1st, an undivided four-fifths interest in five lots in block 60, Oklahoma City; 2d, an undivided four-fifths interest in one lot, in block 54 of the town of Guthrie proper; an undivided four-fifths interest in and to an undivided one-half interest in block 43 in the town of Guthrie, and a like undivided four-fifths interest in a one-half interest in two lots in block 43 and one lot in block 51, East Guthrie. A like one-fifth undivided interest in the same lots was simultaneously acquired and recorded in the name of T.L.L. Temple. In June, 1891, the National Bank of Jefferson, in Jefferson, Texas, discounted
for Grigsby Brothers a note of that firm for $5,000.00. The note was dated June 11, 1891; matured in ninety days; bore twelve per cent interest from maturity, and stipulated for a ten per cent attorney's fee in case of suit to collect. This note was secured by a deed of trust embracing the undivided interest of the Grigsbys in the lots above referred to. E.F. Pentecost, the trustee named in the deed, was empowered, in case of default in payment of the debt to the bank, to sell and apply the proceeds to the payment of the note. This deed was duly recorded in Oklahoma Territory. In August, 1891, the American Exchange Bank of St. Louis discounted for T.L.L. Temple a note of the Union Mills Lumber Company, drawn for it by D.J. Grigsby. This note was for $884.90, payable in ninety days; bore twelve per cent interest from maturity, and contained a ten per cent attorney's fee clause. It was indorsed by T.L.L. Temple individually and by the Southern Pine Lumber Company. This note not having been paid at maturity, the American Exchange Bank of St. Louis, in November, 1891, sued on the note in a state court at Dallas, Texas. The defendants were the two Grigsbys and Temple as partners in the Union Mills Lumber Company, the maker of the note, Temple and Whitaker as partners in the Southern Pine Lumber Company, the indorsers, and Temple individually because of his personal endorsement. Judgment was entered against all the defendants, as members of the two firms and individually, for $1,022.38, the principal, interest, and attorneys' fees. An execution was returned in February, 1892, satisfied "by collecting the full amount of principal and costs and interest of this execution from T.L.L. Temple." In September, 1892, a corporation called the Southern Pine Lumber Company was organized under the laws of Arkansas at Texarkana in that State. T.L.L. Temple was one of the incorporators and subscribed to 997 out of a total of 1,000 shares, and he became the president of the company. In October, 1893, at Texarkana, Texas, a corporation called the Southern Pine Lumber Company was organized under the laws of Texas. Temple was an
incorporator and became its president. In November, 1894, in the District Court for Logan County, Oklahoma Territory, a suit was commenced in the name of the American Exchange Bank of St. Louis against T. L. L. Temple and Benjamin Whitaker as partners in the Southern Pine Lumber Company; the Southern Pine Lumber Company, the Arkansas corporation, D. J. and G. M. D. Grigsby and T. L. L. Temple as partners of the Union Mills Lumber Company. The petition counted upon two causes of action: first, the judgment which had been rendered in the Texas state court at Dallas as if that judgment was still due the bank and had not been satisfied, and second, the sum of $294.56, which was an open account alleged to be due by the Union Mills Lumber Company and the partners thereof, the two Grigsbys and Temple, to the partnership known as the Southern Pine Lumber Company, composed of Temple and Whitaker. This open account, it was alleged, had been transferred by the partnership in 1893 to the Southern Pine Lumber Company, a corporation, which latter, it was averred, had transferred the account to the American Exchange Bank. The defendants, being all non-residents of Oklahoma, were summoned after affidavit by publication and upon affidavit attachments were issued. The undivided interest of the Grigsbys and Temple in the lots in Oklahoma and Guthrie were attached. Ultimately a judgment was rendered in favor of the American Exchange Bank and against the defendants for the amount of the Texas judgment plus the open account sued upon, with interest and costs. The liens of the attachments were recognized, and under execution the interest of the Grigsbys and Temple in the lots in Oklahoma and Guthrie were sold and bought in by "the Southern Pine Lumber Company, a corporation," for a sum less than the judgment debt. In the meanwhile the five thousand dollar note remained unpaid in the hands of the National Bank of Jefferson, the note having been extended from time to time. In 1896 that bank failed, and the note and trust deed were among the assets of the bank in the hands of the receiver appointed by the Comptroller
of the Currency. In December, 1898, with the approval of the Comptroller, sanctioned by an order of the United States District Court, there was paid the receiver of the bank in settlement of the rights of the bank, $2,000, and the receiver at the time of this payment by a writing assigned and transferred in blank all the right, title and interest of the bank in and to the note and the trust deed securing the payment of the same. The $2,000 was paid by means of a check of a corporation known as the
Grigsby Construction Company. With these undisputed facts in hand we now come more immediately to state the case.
This suit was commenced in May, 1900, by a petition filed on behalf of W. B. Ward in the District Court of Logan County, Oklahoma, alleging himself to be the owner of the five thousand dollar note originally held by the National Bank of Jefferson. A decree for the sum of the note, principal, interest and attorney's fees, and for the foreclosure of the trust deed, was prayed. It was alleged that although the note had been renewed from time to time, but was then past due, Pentecost, the trustee, had declined to act, and therefore he was made a defendant. It was, moreover, alleged that certain persons, who were named, asserted title to the property embraced by the trust deed in virtue of an alleged purchase made under an execution issued to enforce a judgment rendered in favor of the American Exchange Bank, and that said claim was a cloud upon the title to the property embraced by the trust deed, which the plaintiff wished to have removed; that all the proceedings in the attachment suit were without effect upon the rights of the holder of the note, because neither the trustee nor the National Bank of Jefferson were made parties to that suit, although the trustee was at the time when the suit was brought a resident of Oklahoma and the trust deed was there duly of record. It was, moreover, alleged that the judgment and sale in the attachment suit were void, because no actual or even constructive notice had been given to the defendants in the suit, and that the purchaser at the sale had knowledge
of the trust deed, of the failure to make the trustee a party and of the absence of notice, actual or constructive, to the defendants in the attachment suit. A judgment was prayed decreeing the proceedings in the attachment suit and the sale made therein to be void and for an enforcement of the trust deed by a sale of the property to which that deed related. The persons made defendants were Pentecost, the trustee; the Southern Pine Lumber Company, a corporation existing under the laws of the State of Arkansas; T. L. L. Temple and Benjamin Whitaker, partners under the name of the Southern Pine Lumber Company; G. M. D. Grigsby and D. J. Grigsby, composing the firm of Grigsby Brothers; G. W. R. Chinn and his wife, and T. L. L. Temple individually, and other persons whom it is unnecessary to name. The defendants, the Southern Pine Lumber Company, T. L. L. Temple, G. W. R. Chinn and his wife, filed a joint answer. The discount of the five thousand dollar note by the National Bank of Jefferson and the execution of the deed of trust securing the same was admitted, but the right of Ward to sue upon the note was denied, it being averred that the note had been extinguished by payment made to the receiver of the National Bank of Jefferson. The proceedings for the sale of the property in the attachment suit were also admitted, and the validity of the purchase made in virtue of the execution issued in that suit was asserted. It was alleged that the answering defendants G. W. R. Chinn and his wife have a complete and perfect title in fee simple to the lots embraced in the trust deed situated in Oklahoma City, and that "the Southern Pine Lumber Company claims and charges that it has perfect title to all the property described in said trust deed situated in the city of Guthrie, Oklahoma Territory, which they acquired by purchase." The answer admitted that although the trust deed was of record at the time of the attachment proceedings, as no notice was given to the trustee or the National Bank of Jefferson, those proceedings did not affect the rights secured by the deed, but that all such rights, if any, had ceased to exist in virtue of the payment
of the note, to secure which the trust deed had been executed.Charging that the trust deed as remaining on the record was a cloud upon their title, the prayer was not only for a dismissal of the petition of the plaintiff, but for affirmative relief in favor of the defendants by decreeing them to be the owners of the property, free from the operation of the trust deed.
The two Grigsbys answered, admitting the execution of the note and trust deed by which it was secured, and that the note was due by them to Ward, the plaintiff, who held the same, as well as the trust deed, by a valid assignment from the National Bank of Jefferson. By way of answer to the affirmative relief prayed by the other defendants, and as a cross-complaint, it was, with great elaboration, alleged that the proceedings in the attachment suit and the sale made thereunder were absolutely void. To support this averment it was charged that the attachment suit was a mere fraudulent scheme devised by Temple for the purpose of defrauding them of their undivided interest in the lots in Oklahoma City and Guthrie; that the judgment sued on in Oklahoma in the name of the American Exchange Bank of St. Louis had long prior to the bringing of the suit been satisfied, and that the suit was brought in the name of the American Exchange Bank without the knowledge of that bank or under its authority, and was therefore actually prosecuted by Temple against himself in order to accomplish the fraud which he had in view. That the alleged open account embraced in the attachment suit had never, in any way, been transferred to the American Exchange Bank, and that that bank had no knowledge of or connection with the account. It was, moreover, alleged that the proceedings in the suit were additionally void, because of the entire absence of legal ...