In Error to the District Court of the United States for the District of Oregon; Charles E. Wolverton, Judge.

Action by the Northwestern Mutual Life Insurance Company against the Security Savings & Trust Company. Judgment for defendant, and plaintiff brings error.

The insurance company brought this action against the Security Savings & Trust Company to recover rent from the trust company. In 1910 one Peterson owned lot 2 in 'block 7 in the city of Portland, and one Mallory owned two lots adjoining in the same block. On February 12, 1910, Peterson leased his ground for 23 years to a corporation which may be called the building company. Thereafter, in August, 1910, the building company, to secure an issue of bonds, made a mortgage to the trust company, conveying, assigning, transferring, and setting over to the trust company, as trustee, all and singular the “leasehold property lease and premises” described in and leased by the Peterson and Mallory leases. The mortgage also included a fire-proof concrete building being erected upon all the lots herein-before described. Thereafter, on February 15, 1911, Peterson and his wife, to secure a loan made to Peterson by the insurance company, executed and delivered to it a mortgage on lot 2, which had been theretofore leased, and at the same time and as part of the same transaction, as additional security, executed an instrument wherein it was recited that Peterson and wife “do hereby sell, assign, transfer, set over, and deliver” unto the Insurance company, its successors and assigns, ■ “that certain lease now owned by us, dated February 12, 1910, given by said John H. Peterson and Ona ft. Peterson, as lessors, to Railway .Exchange Building Company, lessee, * * - together with all our right, title, and interest in and to said lease and the rental reserved within, to have and to hold the said lease, together wii'h all our rights and privileges therein and thereto belonging, unto said the Northwestern Mutual Life Insurance Company, its successors and assigns, forever.”

The instrument recited that the assignment was made as “additional security” for the payment of the note, and continued: “The right is hereby reserved and granted to said John H. Peterson and Ona R. Peterson to collect the rentals arising from the premises above described as they accrue under said lease and to enforce the collection of the same, and also to enforce all other provisions of said lease, so long as there is no default whatever on the part of said Peterson In the payment of any installment of interest upon the note and mortgage above described, or in the payment of any part of the principal thereof, and so long as there is no breach of any condition contained either in said note or in said mortgage.” It was stipulated that, if default should occur in payment upon the note and mortgage-the insurance company would refrain from “the exercise of its rights as assignee of said lease for the period of 60 days after such default or breach of condition, at the end of which 60 days, however, said company shall be at liberty to enforce its security under said lease if such default or breach of condition shall then continue”; also that, if it should become necessary for the insurance company, for the protection of its interests, “to assert its rights as assignee of said lease and to enforce payment of the indebtedness subsisting under said note and mortgage, or any part thereof, from the leasehold interests hereby assigned, it will account and pay over to said John H. Peterson and Ona R. Peterson all amounts realized by it from rents collected under said lease in excess of the then existing indebtedness of said Peterson to said company,” together with the amounts advanced for taxes and insurance and such costs as the insurance company might be obliged to incur “in thus enforcing its rights as assignee of said lease.” It is provided that upon the performance of all conditions and obligations of the note and mortgage, and upon full discharge by Peterson of all debt to the insurance company, the “assignment” should be of no effect, and thereupon and in that event the insurance company was to “reassign” to Peterson and wife “all of its right, title, and interest in and to said lease, now acquired under and by virtue of this assignment.”

It is alleged that foreclosure proceedings were had and the insurance company became purchaser and owner of the leasehold interest of the lessors in the ground lease and of the real property. The trust company denied that prior to the purchase by the insurance company of the lessors’ rights under the lease, or at any other time, it took possession as the successor of the interest of the lessee, and denied that it was in possession at the time the plaintiff alleged it became owner of the rights of the lessors. It is alleged that when the insurance company took the assignment of lease from Peterson it had knowledge of the deed of trust executed by the building company to the trust company; that in July, 1916, the building company defaulted in payment of interest upon its bonds and became hopelessly involved and unable to care for the building; that the building company applied to the trust company, trustee under the mortgage, to take charge of the building and premises, collect the rentals, pay operating expenses, and hold the surplus for the benefit of the bondholders; that, with a view of preserving the property from injury, the trust company collected the rents and paid the necessary expenses incident to the care of the building, and notified all persons that it had taken over the custody and control of the building and would collect rental and pay expenses; that defendant also advised the insurance company that it would turn over and deliver the I’eterson portion of the building to 1he insurance company, and that the trust company notified the insurance company that it would not assume any obligation of the lease: that when the portion of the property sold was delivered to the purchaser, the Peterson portion of the property was on Juno 12, 1917, returned to the building company, from which latter date the trustee had no further connection with the same.

The District Court gave judgment to the trust company and against the insurance company, and the insurance company brought the case here.

The secretary of the trust company testified that about July 13, 1916, the building company had become delinquent in the payment of interest on maturing bonds, rents, and taxes, and in the requirements with respect to ihe sinking fund; that the trust company as trustee requested payment; that on July 13, 1916, the president of the building company told the trust company that it was impossible to proceed, and turned over the possession, management, and control of the building to the trust company as trustee, stating that the building company was unable to continue, was insolvent, and that all rents had been attached. Witness said that the trust company then took charge, and that upon taking possession the trust company as trustee notified the tenants in future to pay rents to the trust company as trustee; that an agent was employed by the trust company to collect the rents and to look after and care for the building, and that all parties in interest were notified in writing of the action by the trust company. Under date of July 22, 1916, Peterson and wife and Ainsworth, as trustee for a bank to which Peterson owed money, and also as agent, and the insurance company, were notified of default of the building company, and that in order to protect the interests of the holders of the bonds the building company had voluntarily surrendered to the trust company as trustee, which latter company was in possession of the premises. The letter advised the addressees that the trust company desired it distinctly understood “that it assumes no responsibility in reference to the said lease and will pay no rent other than as the Income from the Peterson property will provide therefor.”

It also appears that on July 10, 1916, a resolution was adopted by the building company, wherein the trust company was requested to take possession of the property covered by the deed of trust under article 4 of the deed of trust, and to proceed to carry out the provisions of article 4. Article 4 referred to provides that, if the building company shall default in payment of interest, or in the performance of the other conditions of the mortgage, and such default shall continue for one month, then the building company, upon demand of the trustee, should forthwith surrender to the trustee actual possession, and that the trustee shall be entitled forthwith, with or without process of law, to enter upon and take possession of the mortgaged property. There was also a provision in article 10 of the deed of trust that the trustee would not “ in any way be responsible for the consequences of any breach on the part of said building company, or any of the covenants herein contained, or any act of said company or its agents or servants.”