Kraft v. De Forest

Headnote

Equity—Jurisdiction over Property Held in Trust - for a Debt.—Where real estate, with the fixtures appertaining thereunto, together with certain personal property, were conveyed in trust as security for the payment of a debt, and the creditor was obliged to resort to a Court of Equity to secure the protection of the personal property and fixtures from detriment and destruction: held, that the Court should take jurisdiction of the whole subject-matter of the litigation, and also decree a sale of the real estate proper.—[Reporter.]

Appeal from the District Court of the Tenth Judicial District, Yuba County.

The action was brought by the plaintiffs, as trustees, to foreclose a deed of trust made to them by Campbell & Welton, proprietors of the property known as the Blue Ridge Flume and Lumber Company, consisting of nine thousand one hundred and sixty acres of timber lands, with three steam saw-mills, fully equipped for making lumber; forty-four miles of flume for transporting the lumber from the mills to the Sacramento River, together with certain water rights and rights of way connected therewith; forty-four miles of telegraph line, and certain personal property, consisting of forges, houses, shops, logging teams, horses, mules, trucks, chains, harness, etc., used^in getting the logs to the mills. It appears from the complaint that Campbell & Welton, being indebted to a large number of persons in amounts aggregating one hundred and ninety-six thousand one hundred and thirty-nine dollars and eighty-two one-hundredths, made a deed February 1st, 1876, to the plaintiffs, as trustees for the creditors, conveying the said property, for the specific purpose, as stated in the deed, of. securing the payment of the said indebtedness. The deed as set forth in the complaint gives the names of the creditors and the amount due to each, and provides for the payment of the aggregate amount in specific installments. It also provides that in case Campbell & Welton fail to pay the installments as they become due, the trustees shall, upon request of the creditors, advertise for sale such portion of the property as may, in their judgment, be necessary, and sell the same at public auction, and, upon payment of the price bid, make an absolute conveyance of grant, bargain, and sale to the purchaser.

On February 28th, 1876, subsequent to the making of the deed of trust, Campbell & Welton made a conveyance and delivered possession of the property to the defendant, the Sierra Flume and Lumber Company, for two hundred and seventy-five thousand dollars — that company assuming the indebtedness of Camp,bell & Welton, and guaranteeing its payment. The first three installments, amounting to over one hundred

thousand dollars, were paid by the Sierra Flume and Lumber Company; but it then became unable to pay its debts as they matured, and July 10th, 1878, made an assignment of all its property, including the property embraced in the deed of trust aforesaid, to the defendants DeForest, Dean, and Cone, in trust for its creditors; and the said defendants, as such trustees, took possession of the property. The complaint further alleges that the defendants had removed a boiler and engine, certain saws, logging trucks, and other property, of the value of twelve thousand dollars, and were using the property in connection with outside property of the Sierra Flume and Lumber Company, in such a manner that there was great danger of its being lost or materially injured. It is also alleged that unless all the property is gathered together and reduced to actual possession, it cannót be sold for its full value, nor advantageously used before the sale. The complaint further avers that the .defendants intend to dismantle the Blue Bidge Flume and Lumber Company’s property; that the plaintiffs’ rights can be adequately secured only by the appointment of a Beceiver, and that the creditors have requested the plaintiffs to sue for a foreclosure of the lien created by the trust deed of February 1st, 1876. The amount due is alleged to be one hundred and thirty-one thousand eight hundred and forty dollars, and the actual value of the property, it is averred, does not exceed one hundred thousand dollars. The prayer .is for the sale of the property- and the appointment of a Beceiver pending the litigation.

The defendants, other than Campbell & Welton, filed a general demurrer, which was sustained, and the plaintiffs declining to amend, judgment was rendered against them, from which they appealed.