Easton v. Brant (19 F.2d 857, 1927)

RUDKIN, Circuit Judge.

This is an appeal from a final decree dismissing a complaint in equity. The issues in the case are very simple; the questions involved are questions of fact only, and any attempt on our part to review the voluminous testimony or set forth in detail the many collateral issues brought into the ease would serve no purpose.

In 1910, the Imperial Valley Land & Irrigation Company of Lower California purchased 32,000 acres of raw land in Mexico from the Colorado River Land Company for the sum of $1,200,000. A part of the purchase price was paid in cash and the balance was secured by mortgage on the granted lands. The cash payment seems to have been made by one Cudahy, who had arranged in some way with the appellant, Easton, to finance the Imperial Valley Company and take in return 75 or 80 per cent, of its capital stock. Differences thereafter arose between Easton and Cudahy, which are not material here. These differences were settled and compromised by a transfer of one half of the 32,-000 acres to Cudahy individually; the title to the other half remaining in the Imperial Valley Company. Later the Imperial Valley Company sold 1,000 acres of the land, so that for some time prior to July 1,1915, that eom- • pany owned the remaining 15,000 acres, subject to a mortgage in favor of the Colorado River Land Company in the sum of $325,000, due July 1,1915. Easton at that time owned all of the capital stock of the Imperial Valley Company. In 1915, the time for the payment of the mortgage debt was extended for a period of two years, because of certain difficulties encountered in securing the recordation of the conveyance in accordance with the laws of Mexico. This two-year extension was procured largely through the instrumentality of O. E. Brant, now deceased. The extension period expired on July 1, 1917, and, while Grant favored a further extension, the officers of the mortgagee were unwilling to grant it.

Under date of November 21, 1917, Brant made a proposition to Easton in the form of an escrow agreement, whereby Gen. M. H. Sherman, Harry Chandler, one Lindsay, and Brant would purchase from Easton the entire capital stock of the Imperial Valley Company, paying therefor the sum of $17,500 in cash and conveying to Easton a tract of some 440 acres of land owned jointly by Sherman, Chandler, Lindsay, and Brant. After due consideration, Sherman, Chandler, and Lindsay refused to agree to this proposition, feeling that they would be subject to criticism as officers or stockholders of the mortgagee, if they became purchasers of the mortgaged premises without paying the mortgage debt, and that they were not then prepared to do. Thereafter Brant, on November 28, 1917, substituted his home place in Los Angeles for the 440-acre tract; the deal was consummated, the home place was conveyed by Brant to Easton, and the $17,500 cash payment was made. At the same time the Imperial Valley Company stock was transferred to Brant. Later Easton conveyed the Brant home to the Engineering Exploration Company, Limited, a corporation under his control. The Exploration Company mortgaged the property for the sum of $15,000, which was paid to Easton, and rental in the sum of $250 per month was paid by Brant to Easton, or to the Exploration Company, from the date of the transfer until the property was reeonveyed to Brant by the Exploration Company on April 1, 1919, subject to the $15,000 mortgage placed thereon by the Exploration Company, and in consideration