Centralia State Bank v. Hackett

• Decision Date: 25 June 1926
• Docket Number: 19818.
• Citation: 247 P. 463,139 Wash. 394
• Parties: CENTRALIA STATE BANK v. HACKETT et al.
• Court: Washington Supreme Court

247 P. 463

139 Wash. 394

CENTRALIA STATE BANK v. HACKETT et al.

No. 19818.

Supreme Court of Washington

June 25, 1926

Department 1.

Appeal from Superior Court, Lewis County; Reynolds, Judge.

Action by the Centralia State Bank against W. H. Hackett and another. Judgment for plaintiff, and defendants appeal. Affirmed.

Delos Spaulding, of Centralia, James A. Stinson, of Chehalis, and Hayden, Langhore & Metzger, of Tacoma, for appellants.

C. D Cunningham, of Centralia, for respondent.

FULLERTON J.

This action was brought by the respondent, Centralia State Bank against the appellants W. H. Hackett and W. B. Keir on a written instrument of guaranty, of which the following is a copy:

'Centralia, Wash., Feb. 3, 1921.

'For value received, we hereby guarantee payment of any and all indebtedness now owing or which may hereafter be owing or become due from Tilton River Bit. Coal Co. owned by Centralia State Bank of Centralia, Wash., its successors or assigns, to the extent of five thousand dollars ($5,000.00) whether or not said indebtedness or any part thereof be otherwise guaranteed or secured, and upon the failure to pay the amount thereof when due by the said Tilton River Bit. Coal Co. we jointly and severally promise to pay the same on demand, together with interest thereon to Centralia State Bank, or to the holder or holders of said indebtedness or any part thereof, and waive notice of the acceptance of this guaranty and of any and all indebtedness at any time covered by the same. This is intended as a continuing guarantee and requires no notice to the undersigned and shall remain in force until written notice of its discontinuance shall be received by Centralia State Bank.

'W. H. Hackett.

'W. B. Keir.

'A. U. Dann.'

In its complaint, the bank alleged the execution of the guaranty its subsequent delivery to the bank, and that the bank had advanced to the coal company named therein, on the faith of the guaranty, a sum of money in excess of $5,000, which that company had not paid, and which, because of its insolvency, it was unable to pay. In their answer to the complaint the appellants admitted the execution of the guaranty, but denied that it had been delivered to the bank with their knowledge or consent as an operative agreement, or as an agreement by which they undertook to guarantee to the bank any advancements made by it to the coal company. By an affirmative defense, they set up what they claimed to be the real purport of the instrument. They alleged that they were officers of and stockholders in the coal company, and that Dann was the president and manager of the respondent bank; that Dann had purchased certain shares of stock in the coal company, and had paid for the stock by deeding certain lands to the company, the title to which had proved defective, thereby preventing the coal company from realizing on the lands; that Dann, pending the perfection of the title (to quote from the answer as it is epitomized in the appellants' brief) 'agreed with appellants and said coal company to negotiate a loan for said coal company and to carry the same until such time as the title to said lands might be perfected, and to effectuate such loan said Dann took from said coal company two notes, bearing date January 21, 1921, for and in the respective sums of $2,000 and $3,000, payment whereof was by appellants guaranteed by indorsement of guaranty thereof upon the back of said notes, said Dann agreeing likewise to guarantee payment thereof and to negotiate said notes, and in the event of failure of title to said lands, to ultimately pay said notes, which payment would constitute a partial payment for his stock in said coal company. Deposit of money on said notes was to be made in respondent bank by said Dann, and the same to be made available for said coal company upon delivery of said notes in the prosecution of its affairs. Said Dann experienced difficulty in negotiating said notes, and on February 3, 1921, said coal company having checked against its funds in the respondent bank, in anticipation of deposit therein to its credit of moneys procured upon said notes, overdrew its account in said bank, and on said day, to wit, February 3, 1921, said Dann represented unto these appellants that it would be necessary for him to handle the notes aforesaid through respondent bank, and represented unto these appellants that he, said Dann, being president and manager of respondent bank, said bank could not accept the said notes bearing indorsement and guaranteed by said Dann, and thereupon requested from appellants that he be relieved from his agreement aforesaid to guarantee payment of said notes with these appellants upon negotiation thereof, and indicated to appellants that said notes without indorsement by said Dann were acceptable to respondent bank, and in order to carry out the agreement theretofore had between appellants and said Dann relative to said lands and payment for said Dann's stock in said coal company, the said Dann proposed unto these appellants that they enter into a separate agreement, whereby said Dann was to be liable unto appellants and said coal company for amounts paid by it and them upon said notes, in event of failure of such title to said lands. This being done in consideration that said Dann would be relieved from guaranteeing payment of said notes by direct guarantee thereof as aforesaid, and to effectuate this agreement the [guaranty] was executed, and upon execution thereof was delivered into the hands of said Dann for safe-keeping. The said [guaranty] was executed as a transaction between appellants and said Dann and not in any wise to secure an extension of credit from respondent unto said coal company.'

There was also a plea...