Collins v. Denny Clay Co.

• Decision Date: 22 December 1905
• Parties: COLLINS et al. v. DENNY CLAY CO. et al.
• Court: Washington Supreme Court

82 P. 1012

41 Wash. 136

COLLINS et al. v. DENNY CLAY CO. et al.

Supreme Court of Washington

December 22, 1905

Appeal from Superior Court, King County; A. W. Frater, Judge.

Action by Angie B. Collins and others, executors of the last will of John Collins, deceased, against the Denny Clay Company and others. From a decree in favor of plaintiffs, defendants appeal. Modified and affirmed.

Blaine Tucker & Hyland, for appellants.

William Martin and James F. McElroy, for respondents.

RUDKIN J.

On and prior to the 11th day of November, 1897, John Collins, now deceased, was indebted to the defendant Denny Clay Company in the sum of $2,517.19, with interest thereon at the rate of 10 per cent. per annum from February 5, 1894. This indebtedness was secured by a pledge of 340 shares of the capital stock of the defendant McNaught-Collins Improvement Company, of the face, or par, value of $34,000. At the same time Collins was also indebted to A. A. Denny, now deceased, in the sum of $4,325. On said 11th day of November, 1897, Collins and the Denny Clay Company, through A. A. Denny, its president entered into the following agreement: 'This agreement made and entered into this eleventh day of November, 1897, by and between the Denny Clay Company, the party of the first part, and John Collins, the party of the second part, witnesseth: That, whereas, the party of the first part has commenced an action against the party of the second part in the superior court of the state of Washington in and for the county of King, said cause being numbered 24,133, for the purpose of recovering judgment against the party of the second part in the sum of two thousand five hundred seventeen and 19/100 dollars, with interest thereon from the 5th day of February, 1894, at the rate of ten per cent. per annum, upon a settled account, and for the purpose of foreclosing a pledge of three hundred and forty shares of the stock of the McNaught-Collins Improvement Company, of the nominal value of $34,000.00. And, whereas, said party of the first part is about to take judgment in said suit: Now, therefore, in consideration of the dismissal of said action and in satisfaction of the claim sued upon in said action, the party of the second part does hereby sell, assign, and set over unto the party of the first part said stock as the absolute property of the party of the first part and as a complete settlement of the indebtedness due by the party of the second part to the party of the first part upon said settled account sued upon in said action No. 24,133. The party of the first part is to dismiss said action at its own proper costs, and the party of the second part is to assign said stock to the party of the first part in the form prescribed by the by-laws of the McNaught-Collins Improvement Company. It is further agreed that the party of the second part shall have the privilege of purchasing said stock from the party of the first part, provided the party of the second part shall pay to the party of the first part on or before the 15th day of March next the sum of three thousand five hundred fifty-seven and 54/100 dollars, and any and all assessments which in the meantime may be levied upon said stock, or which the party of the first part may advance for the protection of said stock, or the property of the McNaught-Collins Improvement Company. And provided, further, that the party of the second part shall pay to one A. A. Denny the sum of four thousand three hundred twenty-five dollars, and interest thereon from this date, as evidenced by a promissory note of this date, made, executed, and delivered by the party of the second part to A. A. Denny. In case the party of the second part shall fail to make either of said payments, to wit, the payment of said three thousand five hundred fifty-seven and 54/100 dollars by the 15th day of March next, and any and all assessments or advancements made by the party of the first part for the protection of the stock or property of the McNaught-Collins Improvement Company, or said note, in the sum of four thousand three hundred and twenty-five dollars, that this right to purchase on the part of the party of the second part shall be at an end. It is further agreed that in case any dividend shall be declared and paid upon said stock that the same shall be deducted from the purchase price thereof under this agreement. It is further agreed that in case the party of the second part shall fail to purchase said stock that he shall be liable on said note, according to its terms and conditions.' On the day following the execution of this agreement the 340 shares of stock were surrendered to the McNaught-Collins Improvement Company, and reissued to A. A. Denny, and have at all times since been held by the said Denny or the executor of his estate.

This action was brought by the executors of the Collins estate against the executor of the Denny estate and others to declare the above agreement a mortgage or pledge, to enforce the right of redemption, and for an accounting. The court found, among other things, that the stock in controversy was of the value of $27,880 at the date of the execution of the above agreement, and of the value of $102,000 at the date of trial; that at the time of the commencement of this action the principal and interest due on the A. A. Denny note and the Denny Clay Company note aggregated $12,571.80; that dividends were paid on said stock to the executors and assigns of the Denny estate aggregating $21,960.83, or $9,449.03 in excess of the amounts due on the two notes. The court further found that the stock was transferred as security only, and was to be returned to Collins on the payment of the indebtedness secured thereby. On these findings the court entered its decree directing the executor of the Denny estate and his assigns to assign and surrender the stock in controversy to the plaintiffs, enjoining the defendants from incumbering or disposing of the same, and directing the defendant McNaught-Collins Improvement Company to cancel said certificate of stock and reissue the same to the plaintiffs. It was further decreed that in case it should thereafter be made to appear that the defendant executor, or the defendants Denny Clay Company or Denny Estate, Inc., had sold, disposed of, or incumbered, said stock, or placed it beyond their power or control to surrender the same since the commencement of this action, the plaintiffs, upon such showing, should have personal judgment against the executor and assigns for the sum of $102,000, the value thereof, and jurisdiction was reserved for the purpose of rendering such judgment. It was further decreed that the A. A. Denny note and the Denny Clay Company note be canceled, that the defendant executor and the defendant Denny Estate, Inc., be required to account to the plaintiffs for the sum of $9,449.03, and that the plaintiffs recover judgment against the executor for said sum. From this judgment the defendants appeal.

Objection is made to the sufficiency of the complaint to sustain the judgment as rendered against some of the appellants, but the proofs were received without objection, and this court will consider the complaint amended, if need be, to conform to the facts proved. Objection is also made to the sufficiency of the testimony to sustain the findings of the court as to the value of the stock of the McNaught-Collins Improvement Company at the time of the execution of the agreement in controversy, and also as to the amount of dividends paid thereon. Objection is also made to the competency of certain evidence received for the purpose of showing the value of the stock, and the competency and materiality of certain evidence excluded. In view of the fact that the sole object of...