American Perforating Co. v. Oklahoma State Bank

• Decision Date: 06 January 1970
• Docket Number: No. 42330,42330
• Citation: 1970 OK 4,463 P.2d 958
• Court: Oklahoma Supreme Court
• Parties: The AMERICAN PERFORATING COMPANY, Inc., a corporation, Charles S. Mayfield and Dorothy Mayfield, individually, Plaintiffs in Error, v. OKLAHOMA STATE BANK, Ada, Oklahoma, a corporation, Defendant in Error.

Page 958

463 P.2d 958

The AMERICAN PERFORATING COMPANY, Inc., a corporation, Charles S. Mayfield and Dorothy Mayfield, individually, Plaintiffs in Error, v. OKLAHOMA STATE BANK, Ada, Oklahoma, a corporation, Defendant in Error.

No. 42330.

Supreme Court of Oklahoma.

Jan. 6, 1970.

Appeal from the District Court of Pontotoc County; Lee R. West, Trial judge.

Benjamin E. Stockwell, Norman, Marian P. Opala, Oklahoma City, for plaintiffs in error.

A. W. Trice, Harvey J. Lambert, Lambert, Roberts & Lewis, Ada, for defendant in error.

LAVENDER, Justice.

This appeal arises in an action in replevin, in which the defendant in error herein, Oklahoma State Bank, Ada, Oklahoma, also sought a money judgment against the plaintiffs in error herein, as defendants, on seven promissory notes, each of which, the bank alleged, was secured by a separate security agreement and a separate financing statement (provided for in the Uniform Commercial Code) upon which the bank based the replevin branch of its case.

The appeal, by the defendants in the trial court (The American Perforating Company, Inc., a corporation, and Charles S. Mayfield and Dorothy Mayfield), is bottomed upon the action of that court in sustaining the bank's separate demurrers to the defendants' answer and cross-petition.

When the bank's demurrers to the answer and cross-petition were sustained, the defendants were given time within which to amend their answer and cross-petition, but, during that time, filed a written election not to plead further and to stand on such answer and cross-petition. Thereafter, upon the bank's motion for judgment, and a hearing thereon, the trial court entered judgment for the bank and against the defendants, substantially as prayed for in the petition, after allowing proper credit for the proceeds of personal property listed in the security agreements and financing statements and sold, in replevin, after the commencement of the bank's action.

A photographic, signed cipy of each of the twenty-one instruments pleaded by the bank in attached, as an exhibit, to the petition, and, except that one of the notes (the third one) does not bear the name of Dorothy Mayfield as an endorser, each of the instruments is executed and/or endorsed in the names of the various defendants as alleged in the petition.

According to the tenor of each of the first three notes, the defendants promise to pay to the bank, or order, a stated principal amount of money ($20,525.00, $7,873.00, and $4,017.04, respectively) on a date specified therein; and, according to the tenor of each of the last four notes, the defendants promise to pay to the bank, or order, a stated principal amount of money ($11,029.67, $1,700.00, $2,500.00, and $6,758.15, respectively) on demand. Each of the notes provides for the payment of interest, and for an attorney's fee in the event of default. A payment of $200.00, prior to the expressed maturity thereof, is endorsed on the first note, and the defendants do not deny making such a payment on that note.

The bank's petition, which alleges default on all seven of the notes (except for the $200.00 payment on the first note) was filed more than two months after the date of the last demand note and more than six months after the latest maturity date specified in any of the notes having a stated maturity date.

In their answer, and cross-petition (for damages allegedly resulting from wrongful acts by the bank in commencing its action and taking and selling, in such action, a portion of the personal property listed in the financing statements and security agreements pleaded by the bank), the defendants admitted the execution of each of the twenty-one instruments pleaded by the bank as indicated by the exhibits attached to the bank's petition, and also admitted receiving from the bank, on the date of each of the seven notes, money equal to the principal amount of the note. They then pleaded facts and conclusions intended to constitute a defense to the bank's action and a basis for their own action for damages, and allegations concerning their alleged damages.

They pleaded that, because of, and under, an oral agreement between the bank and the defendants, none of the indebtedness indicated by any of the seven notes pleaded by the bank had become due and payable, and that, therefore, the bank had no right, at the time of commencing the action, to bring such an action for a money judgment on any of the notes or for possession and sale of any of the personal property listed in any of the financing statements and security agreements, and the taking and sale, in such action, of a portion of such property constituted a conversion of the property.

The defendants alleged that, prior to the execution and delivery of the first note pleaded by the bank, the bank, acting by and through its proper officers, and the defendants, with the individual defendants acting for themselves and as proper officers of the corporate defendant, entered into a Comprehensive oral agreement concerning the financing of the corporate defendant in starting a business of 'customizing' and equipping trucks for special work in oil fields (well cementing work) and renting and/or selling such trucks to others for that purpose.

They alleged that, in such oral agreement (which, they alleged, was renewed, ratified and affirmed at the time each of the notes was executed and delivered to the bank), it was agreed that the corporate defendant would purchase three trucks and the equipment needed to customize and equip them for such service and would do the work of customizing and equipping them for rental and/or sale to others; that the bank would advance the money, from time to time as needed by the defendant, required for purchasing and equipping the three trucks; that the bank would attempt to obtain, from the Small Business Administration of the United States, a commitment to make a long-term loan to the defendants, when all of such trucks were ready for utilization in the corporate defendant's business, in an amount sufficient to repay the bank for its advances, with interest, but, if such a commitment could not be obtained from that federal agency, all of such indebtedness would, after all these trucks were ready for utilization in the corporate defendant's business as contemplated by such agreement, be incorporated in a single, long-term, promissory note payable to the order of the bank, to be executed by the corporate defendant and endorsed by the individual defendants as guarantors.

The defendants also alleged that, in such oral agreement, it was agreed that, at the time of each advance by the bank, the defendants would so execute and endorse a note payable to the order of the bank in principal amount equal to such advance; that none of such notes would constitute a binding promise to pay in accordance with the provisions thereof, but each such interim note would only constitute written evidence of indebtedness in the amounts stated therein, which would be included, along with the amounts stated in all other such interim notes, in the single, long-term, promissory note (to the Small Business Administration or to the bank, as the case might be) provided for in such comprehensive oral agreement.

They also alleged that, in part performance of such comprehensive oral agreement, the bank advanced the money as needed by the defendants for the purposes contemplated by such oral agreement, in the respective principal amounts stated in the seven notes, and that, relying upon the original, comprehensive oral agreement and the renewal, ratification and affirmation thereof at the time of each of the advances by the bank, and in part performance of such oral agreement, the defendants executed and delivered each of the seven notes as the money was advanced by the bank, and used all of the money so advanced by the bank for the purposes contemplated by such comprehensive oral agreement. In connection therewith, the defendants alleged that none of the seven interim notes, so executed and delivered to the bank, was intended by the parties to constitute a written memorandum of a separate oral agreement concerning the particular subject matter of that note, which preceded or accompanied the execution of the note, but that the execution of each of such interim notes was intended by the parties to be but a part performance of their comprehensive oral agreement.

The defendants also alleged that, subsequent to the fifth advance and note but prior to the sixth advance and note, the bank, in part performance of the comprehensive oral agreement, wrote to the Small Business Administration about a long-term loan to the defendants to repay the bank for all indebtedness incurred under such oral agreement, and thereafter, in part performance of the comprehensive oral agreement, continued in its efforts to that end, but no commitment for such a loan was obtained from that federal agency; that, shortly before the bank commenced its action, all of the customizing work on all of the turcks contemplated by the oral agreement was completed and all of the trucks were ready for utilization in the corporate defendant's business as contemplated by such oral agreement, but that no long-term promissory note contemplated by such oral agreement (to the Small Business Administration, or to the bank) was ever signed or endorsed by any of the defendants; and that, therefore, the bank's action against the defendants was commenced before any of the indebtedness indicated by any of the seven notes became due and payable and there was nay default whatsoever in the payment of any of such indebtedness.

In explaining why they had not signed, endorsed and delivered the single, long-term, promissory note to the bank provided for in the comprehensive oral agreement pleaded by them (even though every other act provided for in the oral agreement had been fully performed), the defendants alleged that, on two different...