321 F.2d 921 (9th Cir. 1963), 18403, Atterbury v. Carpenter

Docket Nº:18403.
Citation:321 F.2d 921
Party Name:H. E. ATTERBURY, Appellant, v. A. S. V. CARPENTER, Appellee.
Case Date:August 14, 1963
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 921

321 F.2d 921 (9th Cir. 1963)

H. E. ATTERBURY, Appellant,

v.

A. S. V. CARPENTER, Appellee.

No. 18403.

United States Court of Appeals, Ninth Circuit.

Aug. 14, 1963

Page 922

Duncan, Brophy, Wilson & Duhaime and Robert B. Duncan, Medford, Or., for appellant.

Roberts, Kellington, Branchfield & Heffernan, G. W. Kellington and George M. Roberts, Medford, Or., for appellee.

Before ORR, JERTBERG and MERRILL, Circuit Judges.

MERRILL, Circuit Judge.

Appellant Atterbury pledged stock as security for a loan made to another. The borrower defaulted. Atterbury (with jurisdiction founded upon diversity of citizenship) has brought this action to restrain the pledgee from selling the stock. He contends that he has been discharged as surety because of changes made in the loan agreement without his consent. The district court held that Atterbury was an indemnitor and not a surety, and therefore was not entitled to be discharged. The basic question upon this appeal is whether the district court erred in that holding.

The borrower is the Southern Oregon Moulding Company, hereinafter called 'Somco.' In 1956, through past business dealings, Somco owed Atterbury $44,200, and Atterbury owed $60,000 to Wells Fargo Bank of San Francisco. Somco gave its note to Wells Fargo in the amount of $60,000, secured in part by a pledge of securities by Atterbury. By 1958, Wells Fargo was pressing for payment. Atterbury wished his stocks to be released from pledge and insisted that Somco pay off its $44,200 share of the bank obligation or be liquidated. Somco then got in touch with appellee

Page 923

Carpenter who, it knew, had engaged in the business of corporate financing. Its obligations as a result were refinanced as follows:

$45,000 was borrowed by Somco from the United States National Bank of Portland, Oregon, at 4 1/2% Interest, with Carpenter endorsing the note and giving a pledge of securities. Wells Fargo was then paid off, Somco paying $44,200 of the principal plus all interest charges, and Atterbury paying the balance of principal. Atterbury's pledged securities were then released to him.

To compensate Carpenter for his risks and services an endorser and surety, it was agreed that he was to receive one quarter of one per cent of the loan per annum. As an additional inducement, and to reduce his risk, Atterbury, on July 15, 1958, entered into an agreement...

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