The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 992
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250 FEDERAL REPORTER
which gives to one who sells real property a vendor's lien thereon for so much
of the price as remains unpaid and unsecured, otherwise than by a personal
obligation of the buyer. The property involved was conveyed in 1912 by deed
to the representatives and agents of the Realty Union, bankrupt, by appel-
lant, Hattie Chapman, and another acting for her.
The findings are that the business of the Realty Union was that of acquir-
ing real estate through sale of certificates, such as are hereinafter described,
for the purpose of holding the property with a view to selling at increased
prices; that appellant knew at the time of her transactions with the bank-
rupt corporation that she was not to have any preferred right over any other
holder of investment certificates in and to the realty transferred to the cor-
poration; that after negotiations concerning assumption of mortgages and
debts against the property-which were carried out-the consideration for
the transfers were the delivery to appellant of certain of its "investment cer-
tificates" signed by the officials of the corporation. One of the certificates
shows the form:
"Investment Certificate issued by the Realty Union.
"Incorporated 1910, under the Laws of Califorma.
"Ten years after date, the Realty Union promises to pay to Hattie Hardesty
Chnpman, of Alameda, California, ten thousand dollars, with interest at the
rate of six per cent. per annum, payable monthly, and whenever dividends paid
its capital stockholders exceed six per cent. per annum the rate of interest
paid thereon for the same periods shall be increased to equal the rate of said
"0% Gold 6%
"This certificate is transferable only upon indorsement and surrender. Any
owner of investment certificates of a paid-up value of not less than $100 may
exchange them for unimproved realty held for sale by the corporation."
It is also found that subsequent to the conveyances the Realty Union mort-
gaged the property, and that the mortgages do not purport to be subordinate to
any vendor's lien, and that appellant never asserted any right to a vendor's
lien until some time in 1915, when the Realt3 Union failed to pay interest on
the investment certificates. In September, 1015, the corporation was adjudged
Wm. M. Aydelotte, C. A. S. Frost, and W. F. Sullivan, all of San
Francisco, Cal., for appellant.
R. H. Cross, Black & Clark, and George Clark, all of San Francisco,
Cal., and J. A. Elston, of Berkeley, Cal., for appellee.
Before GILBERT, ROSS, and HUNT, Circuit Judges.
HUNT, Circuit Judge (after stating the facts as above). It is con-
tended that the District Court erred in concluding from the evidence
that the assertion of a vendor's lien was inconsistent with the purposes
for which the property was conveyed; that the evidence clearly shows
that the investment certificates were considered by appellant to be two
promissory notes, "simply as evidence of the Realty Union's indebted-
ness to her in the transaction in question; that she expected them to
be paid in full, with interest, as agreed; that she had no intention of
waiving any of her rights; that she knew nothing of the general na-
ture of the business of the Realty Union, nor supposed for a moment
that by accepting these investment certificates she embarked in any
speculative scheme of the Realty Union."
It is unnecessary to set out the evidence upon which the referee and
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/1007/: accessed January 18, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.