Blaisdell v. Steinfeld

• Decision Date: 02 January 1914
• Docket Number: Civil 1325
• Citation: 137 P. 555,15 Ariz. 155
• Parties: H. W. BLAISDELL, Appellant, v. ALBERT STEINFELD, HAROLD STEINFELD and F. R. PAULI, Appellees
• Court: Arizona Supreme Court

137 P. 555

15 Ariz. 155

H. W. BLAISDELL, Appellant, v. ALBERT STEINFELD, HAROLD STEINFELD and F. R. PAULI, Appellees

Civil No. 1325

Supreme Court of Arizona

January 2, 1914

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APPEAL from a judgment of the Superior Court of the County of Pima. W. F. Cooper, Judge. Reversed and remanded.

STATEMENT OF FACTS BY THE COURT.

Action by appellant to have certain contracts canceled for being usurious and to have returned to him certain securities and for moneyed judgment for interest paid under such usurious contracts. The case was tried to the court without a jury, and judgment was rendered in favor of appellees. The facts shown and admitted by the pleadings are substantially as follows:

That the plaintiff was the owner, and for some time had been such owner, of practically all the stock and bonds of the Yuma Electric and Water Company and Yuma Gas Company, of Yuma, Arizona; that for a number of years preceding July 2, 1910, plaintiff and defendant Albert Steinfeld had been intimate personal friends and had many business transactions with each other; that plaintiff had been a borrower of large sums of money from said defendant, who was a very successful business man of large financial interests; and that plaintiff reposed confidence in his business judgment and frequently sought his advice, which was freely and voluntarily given.

On July 2, 1910, the plaintiff was indebted to the Merchants' National Bank of Los Angeles, California, in the sum of $40,000, secured by $100,000 of the bonds of the Yuma Electric and Water Company, and the bank was demanding and insisting that plaintiff pay his indebtedness to it. On said date the plaintiff also owed defendant Albert Steinfeld the sum of $25,000, evidenced by various promissory notes to secure which plaintiff had deposited with said defendant the following securities: $27,000 par value bonds of the Yuma Gas Company; also a note of Blaisdell Filtration Company for the sum of $21,000; also debenture receipt No. 66 of Imperial Water Company No. 4 for $2,680; also $20,000 par value of the capital stock of the California Development Company; also 6,300 shares King of Arizona Mining Company; and all plaintiff's equity in the $100,000 bonds of the Yuma Electric and Water Company held by the Merchants' National Bank as security for said $40,000 indebtedness to it. Defendant Albert Steinfeld on said date was likewise demanding of plaintiff that he take up and pay off his demands. On said date the plants of the Yuma Electric and Water Company and the Yuma Gas Company were inadequate to meet the demands upon them and were greatly in need of enlargement, which was then under consideration.

A few days prior to July 2, 1910, plaintiff made arrangements with the Merchants' National Bank whereby the latter agreed to accept a payment of $20,000 on account and give an extension of time on balance. For a considerable period of time prior to July 2, 1910, defendant Albert Steinfeld had been advising plaintiff to sell his various properties and had asked plaintiff to pay off his indebtedness to him. That on said date said defendant Steinfeld, possessing full knowledge of plaintiff's financial embarrassments, agreed to pay to the Merchants' National Bank $20,000 on account and to take plaintiff's note therefor, due in six months, bearing interest at ten per cent per annum, payable monthly, upon the terms and considerations as expressed in the following agreement:

"This memorandum of agreement, made and entered into this second day of July, 1910, by and between Albert Steinfeld of Tucson Arizona, of the first part, and H. W. Blaisdell, of Los Angeles, California, of the second part:

"Whereas the party of the second part is indebted to the Merchants' National Bank of Los Angeles, California, in the sum of forty thousand dollars ($40,000) and has placed in said bank and as collateral for said loan, one hundred thousand dollars ($100,000) of the bonds of the Yuma Electric and Water Company, the same being the property of the said party of the second part; and

"Whereas, the said Blaisdell is now indebted unto the said Steinfeld, all as evidenced by the notes and obligations of said Blaisdell now in the hands of said Steinfeld; and

"Whereas, the said Blaisdell is desirous of obtaining assistance from the said Steinfeld to pay said indebtedness unto said bank, or a part thereof, and is further desirous of securing the said Steinfeld for any moneys he may now advance or loan for said purpose and is also desirous of further securing the said Steinfeld upon the indebtedness now existing and the money now owing, as well as the moneys hereafter to be owing by the said Blaisdell unto the said Steinfeld, and the said Steinfeld is willing to assist the said Balisdell in said matters, and upon the terms and conditions hereinafter set forth:

"Now, therefore, in consideration of the sum of one dollar ($1.00), cash in hand paid unto each of the parties hereto, one unto the other, and of the covenants and conditions hereinafter contained, and to be kept and performed, it is agreed:

"(1) That the said Albert Steinfeld shall forthwith propose to the Merchants' National Bank of Los Angeles, California, to pay unto said bank the sum of ten thousand dollars ($10,000) upon the said indebtedness to said bank of the said Blaisdell, said bank to fortheith deliver unto the said Albert Steinfeld twenty-five thousand dollars ($25,000) of the said Yuma Electric and Water Company bonds, now held by said bank, and further, in the event the said Steinfeld's proposal to said bank shall be accepted that he will pay to said bank, on account of said indebtedness of said Blaisdell to said bank, and on or before four (4) months from date hereof the further sum of ten thousand dollars ($10,000) the said bank at this time, that is to say, at the time said ten thousand dollars ($10,000) shall be paid, to deliver unto the said Steinfeld an additional twenty-five thousand dollars ($25,000) of the bonds of the said Yuma Electric & Water Company; and the said Steinfeld will further propose to said bank, and as a condition for making the above payments unto said bank, that said bank shall extend the time of payment for the remaining twenty thousand dollars ($20,000) of said indebtedness unto said bank, for at least the period of six (6) months from date hereof.

"(2) The said Steinfeld shall have the right and option to pay the said Merchants' National Bank of Los Angeles, the said remaining twenty thousand dollars ($20,000) of said indebtedness at any time on or before four (4) months from date hereof, and in such event shall obtain and have delivered unto him the remaining fifty thousand dollars ($50,000) of the bonds of the said Yuma Electric & Water Company held by said bank as aforesaid.

"(3) The said Blaisdell shall forthwith execute unto the said Steinfeld, his note in the sum of ten thousand dollars ($10,000) payable on or before six (6) months from date hereof, together with interest thereon from date, at the rate of ten (10) per cent. per annum until paid, interest payable monthly, and provisions for attorney's fees; and the said twenty-five thousand dollars ($25,000) of the bonds of the said Yuma Electric & Water Company which the said Steinfeld shall obtain from the said bank upon making the said first payment to said bank of ten thousand ($10,000) shall be held by the said Steinfeld as collateral security for the payment of said ten thousand dollar note of the said Blaisdell to said Steinfeld.

"(4) At the time the said Steinfeld shall make said second payment of ten thousand dollars ($10,000) unto said bank, as above mentioned, the said Blaisdell shall execute his note unto the said Steinfeld in the sum of ten thousand dollars ($10,000) which note shall bear interest from date at the rate of ten (10) per cent, per annum until paid, interest payable monthly, and with provision for attorney's fees, and which said note shall be due on or before six (6) months after date; and the twenty-five thousand dollars ($25,000) of Yuma Electric & Water Company bonds which the said Steinfeld shall receive from said bank upon payment of said second ten thousand dollars ($10,000) shall be held by said Steinfeld as collateral security for the payment of said last-mentioned note of the said Blaisdell to the said Steinfeld.

"(5) In the event the said Steinfeld shall elect to pay said bank the last remaining twenty thousand dollars ($20,000) of the indebtedness of the said Blaisdell to said bank, then the said Blaisdell shall at the time the said Steinfeld shall pay the same, execute his note unto the said Steinfeld in the sum of twenty thousand dollars ($20,000) together with interest thereon, from date at the rate of ten per cent. annum, interest payable monthly, and said note to be payable on or before six months after date; and the said Steinfeld shall in the event receive and have delivered unto him the remaining fifty thousand dollars ($50,000) of the bonds of the said Yuma Electric & Water Company and which said bonds the said Steinfeld shall holds as collateral security for the payment of said note.

"(6) The said Blaisdell shall forthwith assign and transfer unto the said Steinfeld certificate of stock No. 13 for 945 shares of the capital stock of the Yuma Electric & Water Company as further security for the payment of each and all of said notes of said Blaisdell to the said Steinfeld, and as further security for any and all other indebtedness now existing or which may hereafter exist by the...