Cache Valley Banking Co. v. Logan Lodge No. 1453, B. P. O. E

• Decision Date: 15 April 1936
• Docket Number: 5664
• Citation: 56 P.2d 1046,88 Utah 577
• Court: Utah Supreme Court
• Parties: CACHE VALLEY BANKING CO. v. LOGAN LODGE NO. 1453, B. P. O. E

56 P.2d 1046

88 Utah 577

CACHE VALLEY BANKING CO. v. LOGAN LODGE NO. 1453, B. P. O. E

No. 5664

Supreme Court of Utah

April 15, 1936

Appeal from District Court, First District, Cache County; Melvin C Harris, Judge.

Action by the Cache Valley Banking Company against Logan Lodge No 1453 of the Benevolent and Protective Order of Elks. Judgment for plaintiff, and defendant appeals.

JUDGMENT VACATED.

Leon Fonnesbeck, of Logan, for appellant.

George D. Preston, of Logan, for respondent.

EPHRAIM HANSON, Justice. ELIAS HANSEN, C. J., and FOLLAND, MOFFAT and WOLFE, JJ., concur.

OPINION

EPHRAIM HANSON, Justice.

This action was begun by plaintiff to recover on four promissory notes alleged to have been executed by the defendant April 24, 1923. Each note is sued upon in a separate cause of action; all causes of action containing the same allegations, except for certain changes to fit the particular note relied on. The notes are set out in haec verba and the indorsements of the payments made thereon shown in detail. The notes were made payable to plaintiff as trustee for the Farmers' & Merchants' Savings Bank. It is then alleged that the savings bank conveyed and assigned said notes to plaintiff for a valuable consideration prior to the commencement of this action, and the plaintiff is the owner and holder of the same. It is also alleged that each note was secured by a mortgage on certain real property, executed at the same time as the notes, which mortgage was duly recorded. It is further alleged that this mortgage was a second mortgage; that the Beneficial Life Insurance Company held a first mortgage, which mortgage had been foreclosed prior to the commencement of this action in an action brought by the insurance company against the plaintiff and defendant in this action, and pursuant to such foreclosure proceedings the present plaintiff "has been and was thereby foreclosed of all its right, title, claim, lien and demand against said premises, and the security of defendant's second mortgage has been and now is entirely exhausted and that said note is unsecured." Each cause of act on contains the usual allegations as to attorney's fees. The prayer asks for judgment for the balance owing as principal on each note together with the interest owing and for attorney's fees.

While defendant demurred to the complaint and its brief contains some argument to the effect that the lower court committed error in overruling its demurrer, there is no assignment of error covering this phase of the case, and we shall not, therefore, consider the same.

Since the case is here upon the sustaining of plaintiff's demurrer to defendant's answer and since such answer contains several separate issues, in order to avoid repetition we shall state the essential allegations of the various parts of such pleading and dispose of the questions raised by this appeal in connection therewith as we proceed with such statement.

The answer first alleges that the persons, the exalted ruler and secretary, who signed the notes had no authority or power to sign the same. Defendant contends that this constituted a defense. It is to be observed, however, that the answer admits that these officers did sign the notes. The complaint alleges payments on the notes extending over a period of six years. There is no denial of these payments. It appears, therefore, that the defendant voluntarily made payments on these notes for six years. Under such conditions it could not now deny the authority of its officers to execute these notes. Ratification may be implied by acquiescence in, or recognition of, the act of the officers by the corporation or by acts tending to show an acceptance or adoption of the contract. 14a C. J. 382, 383; Tyng v. Constant-Loraine Inv. Co., 47 Utah 330, 154 P. 767; United States Bond & Finance Corporation v. National Building & Loan Ass'n, 80 Utah 62, 12 P.2d 758, 17 P.2d 238; Gonzalez & Co., Brokers, Inc., v. Thomas, 42 Ariz. 308, 25 P.2d 552.

The answer further alleges that defendant was not, at the time said notes were given, nor has it since become, indebted or obligated to the Farmers' & Merchants' Savings Bank in any sum whatsoever; that there is a total want of consideration for the execution of said notes, and the notes are for that reason invalid and not binding upon defendant. It is then alleged in a separate defense that defendant's officers who signed the notes were induced to sign the same through fraud and mistake arising our of the following circumstances: The plaintiff, through its officers and agents, represented that there was an outstanding mortgage in favor of the Farmers' & Merchants' Savings Bank against the defendant's home premises in the sum of $ 3,000 and accumulated interest, which mortgage had been given by the Paramount Candy Company, defendant's predecessor in interest, to the said savings bank and was duly recorded; that plaintiff represented this mortgage was then a valid and subsisting obligation and lien upon said premises, and that the same would or could not be canceled and released of record unless the obligation so secured was assumed by defendant; that the Paramount Candy Company was at the time insolvent, so that a deficiency judgment against it would be worthless; that the fact was that said mortgage had been canceled and released of record January 3, 1923, and did not constitute a lien against said premises when the notes sued on were signed, which fact defendant's officers did not know but plaintiff was fully apprised thereof; that defendant's officers signed said notes with the mistaken understanding and belief that said mortgage was a valid and subsisting lien, and that it was necessary to do so in order to cancel and release said mortgage; that said understanding and belief was induced through the said misrepresentation of plaintiff, its officers and agents; that, had the truth been known, said officers of defendant would not have signed said notes.

It is the plaintiff's contention that the allegation of want of consideration is a mere conclusion and does not state a defense. There is some diversity among the authorities as to whether an allegation that a note was given without any consideration...