Dunn v. Utah Serum Co.

• Decision Date: 06 May 1925
• Docket Number: 4169
• Court: Utah Supreme Court
• Parties: DUNN v. UTAH SERUM CO. et al

238 P. 245

65 Utah 527

DUNN v. UTAH SERUM CO. et al

No. 4169

Supreme Court of Utah

May 6, 1925

Rehearing denied July 10, 1925.

Appeal from District Court, Second District, Weber County; George S Barker, Judge.

Action by H. W. Dunn against the Utah Serum Company, the Ft. Dodge Serum Company, and others. From the judgment, the second named defendant appeals.

AFFIRMED.

De Vine, Howell, Stine & Gwilliam and A. W. Agee, all of Ogden for appellant.

A. G. Horn, of Ogden, for respondent.

WOOLLEY, District Judge. GIDEON, C. J., and FRICK and CHERRY, JJ., concur. Chief Justice WEBER'S term expired. THURMAN, J., did not participate.

OPINION

WOOLLEY, District Judge.

In this action plaintiff sued to recover judgment upon a promissory note and decree of foreclosure upon a mortgage given to secure payment thereof, covering certain real estate situate in Weber county, Utah, executed by the Utah Serum Company.

There were four mortgages upon the same property, all executed by the same mortgagor, held by different parties to the action, given to secure payment of promissory notes in amounts and ranking in priority as follows: (1) A first mortgage to Joanna M. Ryan for $ 10,000; (2) a second mortgage to the Ft. Dodge Serum Company for $ 3,000; (3) a third mortgage to H. W. Dunn for $ 8,348.94; and (4) a fourth mortgage to T. D. Ryan for $ 4,263.60.

Plaintiff brought suit upon the third note and mortgage, naming as defendants the Utah Serum Company, mortgagor, the other three mortgagees above mentioned, and Conception Saval and Guy Saval. The two Savals made default, are not concerned in this appeal, and will not be mentioned further in this opinion.

Joanna M. Ryan, Ft. Dodge Serum Company, and T. D. Ryan, by appropriate pleadings, set up the making of their respective notes and mortgages by the Utah Serum Company, and prayed for judgments and decrees thereon. The Utah Serum Company, by cross-complaint against the Ft. Dodge Serum Company, sought a judgment against that defendant for $ 1,185.89, the balance alleged to be due upon a lease covering the mortgaged premises and dated May 23, 1923.

H. W. Dunn, the Utah Serum Company, and T. D. Ryan, making common cause against the Ft. Dodge Serum Company, in separate pleadings alleged, in substance, that the Ft. Dodge Serum Company is a foreign corporation organized under the laws of the state of Iowa; that from about June, 1922, until April 16, 1923, said corporation carried on business in this state without having any certificate or license so to do; that at the time said defendant's note and mortgage were executed, namely, on August 31, 1922, the said corporation had not qualified to do business in the state of Utah, having failed to do any of the acts or things that are necessary to be done by foreign corporations in order that they may be entitled to engage in business within this state; that the note and mortgage were made, executed, and delivered by the Utah corporation to the Iowa corporation within this state; that they are payable in this state, and the mortgage covers land in this state; that therefore the note and mortgage are void, and the mortgage constitutes no lien upon the property.

There was a discrepancy in plaintiff's note between the amount thereof as shown in figures and the amount shown in writing; the instrument reading in part as follows:

"$ 8,348.94. Ogden, Utah, Sept. 1, 1922.

"On December 28th, 1922, days after date, for value received, the undersigned promises to pay to the order of H. W. Dunn at the National Bank of Commerce of Ogden, Utah, at its banking house in Ogden, Utah, eighty thousand three hundred forty-eight and 94/100 dollars in U.S. gold coin, with interest," etc.

As to this discrepancy, plaintiff alleged, in substance, that through and by the mutual mistake of the parties to the note and of the person who wrote the same the word "eighty" was written instead of the word "eight," and that $ 8,348.94 was the correct amount for which the note should have been written. The Ft. Dodge Serum Company denied this allegation, but all of the other parties to the action admitted it.

In answer to the allegations concerning the invalidity of its note and mortgage (as well as two certain leases which it had taken upon the property of the Utah corporation), the Ft. Dodge Serum Company alleged, in substance: That during July, 1922, the Utah Serum Company, at Ft. Dodge, Iowa, represented to the Iowa corporation that it owned a serum plant at Ogden, Utah, upon which were certain liens which were being pressed for payment; that if the Iowa corporation would lend to the Utah corporation the sum of $ 3,000 to be used to pay off said liens, the latter would secure the debt by a mortgage upon its plant in Ogden, Utah, which mortgage would be subject only to a mortgage to be held by Joanna M. Ryan in the sum of $ 10,000, and that it would further give to the Iowa corporation a lease upon and an option to purchase the plant at any time within 18 months thereafter; that thereupon the said defendant, on August 2, 1922, deposited with the National Bank of Commerce of Ogden, Utah, the sum of $ 3,000, with instructions to the bank to pay the same to the Utah corporation upon its securing the same by note and mortgage, which would be a lien upon the property second only to the mortgage of Joanna M. Ryan aforesaid; that about 30 days thereafter the Utah Serum Company, by its board of directors, passed a resolution directing its officers to execute mortgages upon its property to the persons, in the amounts, and in the order of priority hereinbefore set out; that all of the said persons agreed that the mortgages should rank and take precedence as aforesaid, and ratified the arrangement between the two corporations; that this defendant advanced said money and took said note and mortgage in accordance with such arrangement, and that the money so advanced by this defendant was used by the Utah corporation to pay said two liens in the sum of $ 1,500 each which were prior in right to the lien of any of the parties to this action; that in the month of August, 1922, this defendant entered into a lease with the Utah Serum Company whereby this defendant went into possession of the serum plant, being the property covered by all the mortgages; that said lease also gave the Iowa corporation an option to buy the said property; that ever since the making of the said lease all of the parties to this action have had actual knowledge of the rights of this defendant in and to the property; that said lease and option was superseded by a new lease and option dated January 1, 1923, and that the last-mentioned contract was superseded by a new lease and option dated May 22, 1923, of the terms and conditions of which all of the parties hereto had actual knowledge; that under the terms of its lease this defendant was entitled to possession of the property and had the right and option to purchase the same up to April 1, 1924; that under its lease the said defendant was obliged to pay to the Utah Serum Company rent at the rate of $ 175 per month; that it was applying the rent on its note and mortgage, and would continue to do so during the term unless otherwise ordered by the court; that at no time prior to the agreement made by it with the Utah corporation to lend said $ 3,000 and the time it paid said money to the bank at Ogden, Utah, did this defendant transact any business within the state of Utah; that the only transaction it ever had up to that time in this state was to pay the money to the bank for the use and benefit of the Utah corporation and to comply with its agreement theretofore made at Ft. Dodge, Iowa; that it had nothing whatever to do with the drawing of the note and mortgage, nor with recording the mortgage, and the first knowledge that it had with reference thereto was when it received the note from the Utah corporation and the mortgage from the county recorder of Weber county, Utah, after it had been recorded by the Utah corporation; that none of the parties to this action has ever offered to return to this defendant the money so advanced by it, although they were all parties to the agreement by which it advanced the same, and they have all profited by the advancement of such money and the use thereof to pay the prior liens upon the mortgaged property; that all of the mortgages aforesaid were authorized by the Utah Serum Company at the same meeting of its board of directors, and that ever since such transaction the parties to this action have repeatedly; up to the filing of this action, ratified, approved, and adopted the act of this defendant in making said advancement and have accepted the benefits thereof.

As to the claim of the Utah Serum Company for rent due on the lease dated May 23, 1923, in addition to what is alleged concerning that matter as above stated, the Ft. Dodge Serum Company alleged that the Utah Serum Company had no interest in such rent, having theretofore assigned the same to the bank.

The allegations of the Ft. Dodge Serum Company, which are summarized above, touching the loan of $ 3,000 made by said defendant to the Utah Serum Company, and the transaction involving that matter, are denied by the other parties to the action.

The following salient facts are disclosed by the record and are not in dispute: That the Ft. Dodge Serum Company is a corporation organized and existing under and by virtue of the laws of the state of Iowa; that the said corporation qualified to do business within this state on April 16, 1923, by taking the necessary steps to that end as provided by our laws, but that prior to that date it was not qualified to do business within this state, not having taken any of the steps necessary to so qualify it; that the ...