Assets Realization Co. v. Cardon

• Decision Date: 13 November 1928
• Docket Number: 4673
• Citation: 72 Utah 597,272 P. 204
• Court: Utah Supreme Court
• Parties: ASSETS REALIZATION CO. v. CARDON et al

272 P. 204

72 Utah 597

ASSETS REALIZATION CO. v. CARDON et al

No. 4673

Supreme Court of Utah

November 13, 1928

Appeal from District Court, Third District, Salt Lake County; W. M McCrea, Judge.

Action by the Assets Realization Company against Louis S. Cardon and others. Judgment for defendant named and another, and plaintiff appeals.

Judgment for defendant Cardon AFFIRMED, judgment for defendant Cardon Company REVERSED, and cause remanded, with directions to grant new trial.

Gustin & Pence, of Salt Lake City, for appellant.

J. D Skeen, of Salt Lake City, for respondents.

HANSEN J. THURMAN, C. J., and CHERRY, STRAUP, and GIDEON, JJ., concur.

OPINION

HANSEN, J.

The defendant Louis S. Cardon and the Cardon Company were awarded a judgment of no cause of action in the court below. The defendant Raft River Land & Live Stock Company was not served with summons and has not entered an appearance in this action. The plaintiff prosecutes this appeal from the judgment.

These are the facts disclosed by the record:

The plaintiff and the defendant Cardon Company are and for a number of years have been Utah corporations. The Raft River Land & Live Stock Company is and for a number of years has been an Idaho corporation. On August 14, 1920, the defendants Raft River Land & Live Stock Company and the Cardon Company jointly made, executed, and delivered to McCornick & Co., Bankers, of Salt Lake City, Utah, two negotiable promissory notes. Each of the notes was for the principal sum of $ 16,363.48. One of the notes matured May 1, 1921, and the other November 1, 1921. Each of the notes bore interest at the rate of 8 per cent per annum. The notes so executed by the Raft River Land & Live Stock Company and the Cardon Company were in renewal of notes theretofore made and executed by the defendant Raft River Land & Live Stock Company in favor of McCornick & Co., Bankers.

At the time defendant Cardon Company joined in executing the notes here involved, W. S. McCornick, president of McCornick & Co., Bankers, stated to the officers of the defendant Cardon Company that the notes of the Raft River Land & Live Stock Company were in a bad condition, and that the bank wished the Cardon Company to join in executing the renewal notes. It appears that, when these renewal notes were executed, it was contemplated that a new corporation would be organized to take over the assets of the Raft River Land & Live Stock Company. It further appears that the Cardon Company and its officers were interested in a plan to purchase the assets of the Raft River Land & Live Stock Company. At the time the renewal notes were executed W. S. McCornick stated that, when the new corporation was organized, McCornick & Co. would take the new corporation's notes in lieu of the notes executed by the defendants Raft River Land & Live Stock Company and the Cardon Company. A new corporation was organized, and the property belonging to the Raft River Land & Live Stock Company was conveyed to it; but it never executed any note or notes in lieu of the notes involved in this proceeding.

On August 27, 1920, the defendant Raft River Land & Live Stock Company entered into a written contract with the defendant Louis S. Cardon, whereby the Raft River Land & Live Stock Company agreed to sell and Louis S. Cardon agreed to buy 3,567.93 acres of land, together with the water rights used upon the land. The price to be paid for the land and water right was $ 160,556.85. By the terms of the contract the defendant Louis S. Cardon assumed and agreed to pay the two notes, in the principal sum of $ 16,363.48, each of which were executed by the Raft River Land & Live Stock Company and the Cardon Company in favor of McCornick & Co., Bankers. The remainder of the purchase price was to be paid by Cardon assuming certain mortgages on the property and paying the balance in money to the Raft River Land & Live Stock Company. The contract between the defendants Raft River Land & Live Stock Company and Louis S. Cardon contained, among its provisions, the following:

"That a deed for the said lands, together with the water rights pertaining thereto, and particularly describing the same, will be executed by the party of the first part [Raft River Land & Live Stock Company] to the party of the second part [Louis S. Cardon], also an abstract of said lands and water rights, showing legal and marketable title thereto, and deposited in escrow with Thatcher Bros. Banking Company, of Logan, Utah, and the said bank is authorized to deliver the said deed and abstract to the party of the second part, or his assigns, upon the payment to the said bank of the sum of $ 24,129.89 hereinbefore mentioned.

"In the event the said party of the second part shall fail to make the said payments when the same become due, and for a period of 90 days thereafter, then the said bank is authorized, upon demand of the party of the first part, to return the deed and abstract so deposited with it to the party of the first part, and upon any such default being made the payments made prior to the date thereof may be kept and retained by the party of the first part, as liquidated damages for the failure of the party of the second part to perform."

The contract between the Raft River Land & Live Stock Company and Louis S. Cardon was executed in triplicate; one copy was retained by Cardon, one by the Raft River Land & Live Stock Company, and one was delivered to Thatcher Bros. Banking Company, of Logan, Utah, together with the deed to the property covered by the contract, abstract of the property and other papers connected with the transaction. The copy of the contract which was delivered to the Raft River Land & Live Stock Company was by it delivered, but not assigned, to McCornick & Co., Bankers.

On May 18, 1921, McCornick & Co., Bankers, because of financial difficulties, entered into a contract with the Federal Reserve Bank of San Francisco, Walker Bros. Bankers, Utah State National Bank, Utah Savings & Trust Company, National City Bank, Deseret National Bank, and National Copper Bank, for the purpose of liquidating the business of McCornick & Co., Bankers. Under the plan adopted by the contracting parties, the plaintiff, Assets Realization Company, was organized for the purpose of disposing of and converting into cash the assets which were assigned and transferred to it by McCornick & Co., Bankers. One of the notes involved in this action was transferred directly to the plaintiff by McCornick & Co., Bankers. The contract wherein defendant Cardon agreed to purchase the land and water right from the defendant Raft River Land & Live Stock Company was also delivered to the plaintiff. The other note was transferred to the Federal Reserve Bank of San Francisco, which, in turn, transferred it to the plaintiff under date of May 16, 1923. Neither of the notes has been paid.

Under date of September 15, 1920, Louis S. Cardon and his wife, Rebecca B. Cardon, entered into a written contract with the Malta Land Company, a corporation, whereby the Cardons agreed to sell, and the Malta Land Company agreed to buy, the land and water right which defendant Cardon had agreed to buy from the Raft River Land & Live Stock Company. The contract between the defendants Raft River Land & Live Stock Company and Louis S. Cardon was never consummated, because of a controversy between them concerning the title to the water right covered by the contract. It appears that Cardon claimed that the Raft River Land & Live Stock Company did not have a marketable title to the water which it agreed to sell. The controversy resulted in a rescission by mutual consent of the contract between the defendants Cardon and the Raft River Land & Live Stock Company. The contract, deed, abstract, and other papers deposited with Thatcher Bros. Banking Company of Logan, were redelivered to the Raft River Land & Live Stock Company.

Under date of May 29, 1922, the defendant Raft River Land & Live Stock Company, defendant Cardon Company, Malta Irrigated Lands Company, L. S. Mann, John Y. Rich, and Charles McClure entered into a written contract whereby a new corporation was to be organized, to be known as the Bridge Land Company. The Bridge Land Company was organized, and the property described in the contract between the defendants Raft River Land & Live Stock Company and Louis S. Cardon was transferred to it.

Upon substantially these facts the plaintiff claims that it is entitled to a judgment against the defendants Cardon Company and Louis S. Cardon for the amount owing on the two promissory notes made, executed, and delivered to McCornick &amp Co., Bankers, by the defendants Raft River Land & Live Stock Company and Cardon Company. There is much merit to plaintiff's claim that it is entitled to a judgment against the defendant Cardon Company upon the record before us. Concededly plaintiff is the owner and holder of the two notes, and they have not been paid. Defendant Cardon Company is...