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BAKER ET AL. v. SCHOFIELD

March 6, 1917

BAKER ET AL
v.
SCHOFIELD, RECEIVER OF THE MERCHANTS' NATIONAL BANK OF SEATTLE



APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT

White, McKenna, Holmes, Day, Van Devanter, Pitney, McReynolds, Brandeis, Clarke

Author: Day

[ 243 U.S. Page 115]

 MR. JUSTICE DAY delivered the opinion of the court.

This is an action by John W. Schofield, as receiver of the Merchants' National Bank of Seattle, Washington, insolvent since 1895, against Charles H. Baker, receiver of the bank from 1895 to 1899, and others, seeking a decree declaring the defendants to be holders of certain real property in Seattle in trust for the plaintiff, and asking a conveyance thereof to the plaintiff.

The property in controversy is block 430 of Seattle Tide Lands, a tract of some twelve acres, and the lease-hold of the harbor area lying in front of that block. In conformity with the provisions of the state law, the Merchants' National Bank had, prior to its failure, made application to purchase these lands. After the failure and the appointment of Charles H. Baker, receiver, this application was accepted by the State Board of Land Commissioners, and upon January 12, 1897, a contract was entered into between the State of Washington and the bank, through the receiver, by which the State agreed to sell and the bank to purchase block 430 of Seattle Tide Lands for $1488, payable in ten annual installments, subject

[ 243 U.S. Page 116]

     to all liens for filling, and all taxes and assessments that might be levied or assessed on the land, and with a forfeiture clause in case the bank should fail to pay any of the amounts, either principal, interest, taxes or assessments, when the same should become due and for six months thereafter. Permission to make this contract was obtained by the receiver from the Comptroller of the Currency, and thereafter partial payments were made upon the contract.

Upon October 6, 1897, by order of the United States Circuit Court upon the receiver's petition to that effect, he was authorized to sell at private sale certain doubtful personal assets of the defunct bank, and thereafter, Baker, as receiver, assigned to S. G. Simpson the contract above mentioned for the consideration of $198.80, the transfer being approved by the Commissioner of Public Lands.

The assignment authorized the State of Washington to receive from Simpson, or his assigns, the performance of all covenants and agreements specified in the contract to be performed by the bank, and upon such performance to execute to him a patent for such tide land. By virtue of the ownership by Simpson of the contract to purchase tide lands block No. 430, he became entitled, under the laws of the State of Washington, to the preference right to lease certain harbor area adjacent and appurtenant to block No. 430. Upon the purchase by Simpson of the contract to purchase the tide lands, there was issued to him by the State of Washington a certain lease, designated "Harbor Lease No. 181," covering the harbor area appurtenant to the block.

In March, 1899, the contract between the bank and the State of Washington for the purchase of block No. 430, together with the harbor lease, was transferred by Simpson to Baker in his personal capacity, the record title continuing in the name of Simpson. On August 11, 1905, Simpson, acting for and on behalf of Baker, assigned the

[ 243 U.S. Page 117]

     contract for the purchase of block No. 430, together with harbor lease No. 181, to one Norton, the consideration named being one dollar. This assignment contained the same authorization as to the patent to be issued by the State as was contained in the assignment to Simpson. On October 16, 1905, the State of Washington issued to Norton a patent covering block No. 430, with the exception of a strip of land, thirty feet wide, which had been granted to a railroad company. In August, 1907, there was organized under the laws of the State of Washington the Seattle Water Front Realty Company. Upon incorporation of this company, Norton conveyed to it block No. 430, together with harbor lease No. 181, in payment for the issue of its capital stock of $250,000. About ninety-five per cent. of the stock was issued to Baker or to others who held for him.

In April, 1899, and a month after receiving the assignment from Simpson, Baker resigned as receiver; whereupon A. W. Frater was appointed receiver. On February 12, 1913, Frater resigned, and the present plaintiff was appointed ...


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