Delaney v. Nelson

• Decision Date: 09 January 1925
• Docket Number: 18724.
• Citation: 132 Wash. 472,232 P. 292
• Court: Washington Supreme Court
• Parties: DELANEY et ux. v. NELSON.

232 P. 292

132 Wash. 472

DELANEY et ux. v. NELSON.

No. 18724.

Supreme Court of Washington

January 9, 1925

Department 1.

Appeal from Superior Court, Franklin County; Truax, Judge.

Action by George K. Delaney and wife against C. W. Nelson. Judgment for plaintiff, and defendant appeals. Affirmed.

Bausman Oldham & Eggerman, of Seattle, for appellant.

E. M Gibbons, of Pasco, and Moulton & Jeffrey, of Kennewick, for respondents.

BRIDGES J.

By this action the plaintiffs sought to have declared fully paid a note which they had previously given the defendant and to obtain a release and discharge of the mortgage given to secure it. The defendant denied the payment and by cross-complaint sought judgment for the balance due and foreclosure of the mortgage. The trial court granted the relief prayed for in the complaint, and this appeal results.

The plaintiffs are farmers living near Connell, in eastern Washington. The defendant lives in Seattle. He is the general manager of the Tri-State Terminal Company which operates a warehouse near Connell. There was also in the town of Connell a bank known as the Farmers' State Bank. The Tri-State Company was a stockholder in that institution and did most of its business there. The defendant was also a stockholder in the bank, was its president and a member of the board of directors. His services to the bank were more in the nature of supervision and business advice than looking after the details. While he had considerable correspondence with the bank cashier, he was actually present there but a few days of each year. The plaintiffs were also stockholders in the bank and did their business there, being at times quite heavy borrowers and at times had considerable moneys on deposit. In 1919 all of these parties knew that the bank was in a somewhat precarious financial condition because of the inability of farmers to promptly meet their loans. It had great trouble in keeping its cash reserve at the required amount. At that time the respondents were quite heavy borrowers from the bank and it wished the loan reduced. With that in mind it requested respondents to procure a loan on their farm in order to pay or at least reduce their loan to the bank. It assisted them in procuring a loan from the appellant. On February 7, 1919, they executed the promissory note here involved. It reads as follows:

'$6,000.

Connell, Wash., Feb. 7, 1919.

'On or before three years after date, without grace, we promise to pay to the order of C. W. Nelson six thousand ($6,000) dollars in gold coin of the United States of America of the present standard value, with interest thereon in like gold coin at the rate of nine (9) per cent. per annum from date until paid, for value received; interest to be paid annually. * * * The sum of one hundred ($100) dollars or any multiple thereof, of the principal sum of this note, may be paid at any date on which interest is payable under the terms hereof.'

The terms of this note were arranged through the bank and the latter sent to the appellant the abstract to the farm lands. The note and mortgage were drawn in Seattle under appellant's supervision and forwarded to the bank, where they were executed. The bank then sent both instruments to the appellant. At the end of the first year the respondents, without any notification from the appellant, paid the interest and $3,000 of the principal to the bank, which paid or credited it to the appellant. There were no further transactions concerning this loan for more than a year. The interest on the balance of the note due February 7, 1921, was not paid when due, and the appellant wrote directly to the respondents demanding the interest. Without answering this letter, the respondents paid the interest to the bank and the appellant received the cash therefor. In September, 1921, the respondents paid to the bank the balance of the principal of the note, together with interest to that date. At the time this payment was made there was some question between the cashier of the bank and the respondents as to whether the principal could be paid at the time, not being an interest-paying date. Mr. Delaney testified that he informed the cashier that according to the terms of the note he might pay the principal at any time. According to the testimony of the cashier, at the time this payment was made, it was agreed that the latter would take the matter up with the appellant and see whether the money would be accepted at that time. The respondent denies that there was any arrangement of this character. At any rate, at the time the money was left at the bank, it was charged against the account of the respondents and put to the credit of the appellant, and the respondents at that time had notice of that transaction.

Within a few days after this transaction, the respondent Delaney went to California for the winter. A few days later appellant appeared at the bank, and was informed by the cashier that the respondents had paid the balance of the principal and interest, and inquired whether it would be accepted. The appellant stated that the note had been sold to a bank in Seattle and that he did not remember its terms sufficiently to be able to say whether the payment could lawfully be made at that time. The cashier asked that, if the money was to be accepted, it would be left with the bank for the time being, but was informed that that could not be done, becuase the money would have to be paid to the bank holding the note. The appellant was not told that the money had been put to his credit in the bank, and did not learn of that fact until several months after the bank had closed its doors. A day or two after this conversation the cashier redeposited the money to the credit of the respondents. At the same time he wrote respondent Delaney a letter, informing him what had been done in this respect. This letter was addressed to the post office address in this state of the respondents. After some delay it was forwarded to him at California. He did not get it, however, until long after the bank had closed its doors, which was a few days after the transactions last mentioned. At the closing of the bank the money in question stood to the credit of the respondent. It also appears that the appellant made two or three other loans to persons who did business with the bank, and that they were negotiated through the bank, and payments made in substantially the same manner as in this instance. The foregoing are the principal facts; we will not take space to recite the minor ones.

The trial court found most, but not all, of the facts we have recited, and that the bank was the agent of the appellant in making the loan, and that it was also his agent for the purpose of receiving payments of interest and principal. The only question involved here is whether the note in question has been paid; that question involving the further question of agency on the part of the bank. We have been greatly assisted by the excellent briefs submitted to us.

We are of belief that the facts (most of which are undisputed) show that the bank was the agent of the appellant to receive payments from the respondents. It is quite true, as is pointed out by the appellant, that there is no direct testimony whereby the appellant made the bank its agent or authorized it to collect the sums due on this note. But agency does not necessarily depend upon specific appointment. It may be shown by a course of conduct. He...