Bank of Haw. v. Char
| Decision Date | 23 April 1959 |
| Docket Number | NO. 4015.,4015. |
| Citation | 43 Haw. 223 |
| Parties | BANK OF HAWAII v. Y. H. CHAR, WM. H. CROZIER, JR., JOHN G. DUARTE AND T. S. SHINN. |
| Court | Hawaii Supreme Court |
OPINION TEXT STARTS HERE
ARGUMENT ON REHEARING.
R. G. Dodge ( Heen, Kai & Dodge, Enos Vincent and O. P. Soares with him on the briefs) for appellants T. S. Shinn and John G. Duarte.
H. B. Kidwell ( Anderson, Wrenn & Jenks and Richard E. Stifel with him on the brief) for appellee.
Upon the filing of our opinion reported on page 17, ante, appellants presented their petition for rehearing predicated on our statement in reference to their contention that they were discharged as endorsers by reason of diversion of security by the bank.
That contention was not made in the circuit court. It appeared for the first time in appellant's opening brief on appeal. Appellants do not complain about our disposition of the points on which they relied in the circuit court. Because the contention was not made in the circuit court, the bank moved that it be stricken from the brief. We granted the motion. Thus, any statement with respect to the contention was unnecessary for the determination of the appeal and was dictum, unless we erred in our ruling on the motion.
Our statement was made on the assumption that, in alleging a diversion of security, appellants had reference to the application of the proceeds of the security to the payment of the obligations secured by the assignment to the surety and not in payment of the note. It is clear from the allegations of the petition for rehearing that appellants also had such application of the proceeds in mind when they charged that the bank diverted the security. However, our assumption was erroneous; and appellants framed their petition on the same erroneous assumption. The bank, in its reply to the petition, pointed out that the proceeds of the security were not applied in payment of the obligations secured by the assignment to the surety but in payment of the contractors' obligations to the bank other than the note in question. Thus, the petition, predicated as it was on an erroneous factual assumption, was left without substance. Appellants then advanced the contention that the assignment to the bank was security for a specific debt, namely, the note in question, and that there was a diversion because the proceeds were not applied in payment of that specific debt.
The contention that the assignment to the bank secured only the note in question raised an issue that was not raised in the circuit court, nor in the briefs or argument on appeal, nor even in the petition for rehearing. However, we granted a rehearing in view of Kennedy v. Silas Mason Co., 334 U.S. 249. In that case, the District Court first denied and later granted summary judgment for the defendant; the Court of Appeals affirmed; but the Supreme Court vacated the judgment and remanded the case to the District Court for reconsideration in the light of a contention that was not submitted either in the District Court or in the Court of Appeals, was not consistent with the theoretical basis of the decisions in the lower courts, and was fully presented for the first time in the reply brief in the Supreme Court.
Initially, it seemed to us that the reasoning in Kennedy v. Silas Mason Co. might require us to take an action in the instant case similar to the action taken in that case. However, it is clear, from a rereading of the opinion, that the action of the Supreme Court was based on the fact that the issue raised for the first time before it was an issue of great public import having a bearing on the cost of prosecuting the war. Appellants and the bank agree that the instant case does not involve any such public issue but is concerned only with a controversy between private parties.
Appellants urge upon this court to reverse the judgment of the circuit court on the record before us because although the record is voluminous, it is uncomplicated and is adequate for the determination of the issue of diversion of security. The bank, on the other hand, asserts that the contention regarding diversion in the present posture raises an issue of fact and that a reversal of summary judgment may not be...
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