E.F. Hallack Lumber & Mfg. Co. v. Gray

• Decision Date: 22 November 1893
• Citation: 19 Colo. 149,34 P. 1000
• Parties: E. F. HALLACK LUMBER & MANUF'G CO. v. GRAY et al. [1]
• Court: Colorado Supreme Court

34 P. 1000

19 Colo. 149

E. F. HALLACK LUMBER & MANUF'G CO. v. GRAY et al. ^[1]

Supreme Court of Colorado

November 22, 1893

Appeal from district court, Arapahoe county.

Action by Henry N. Gray and another against the E. F. Hallack Lumber & Manufacturing Company. From a judgment for plaintiffs defendant appeals. Reversed.

The other facts fully appear in the following statement by GODDARD, J.:

On the 30th day of March, 1889, Gray Bros. & Co. instituted this action in the district court of Arapahoe county to recover from the E. F. Hallack Lumber & Manufacturing Company, a duly-organized corporation, damages for the conversion of certain collateral security. The conceded facts are that on the 1st day of January, 1885, Gray Bros. & Co. executed to the defendant company their certain promissory note for the sum of $2,214.25, payable, with interest at the rate of 12 per cent. per annum, on the 1st day of May, 1885. On the 27th day of imannum. It is hereby agreed on the part February 1885, the plaintiffs indorsed and turned over to the defendant company, as collateral security for this note, a note held by them against the Albuquerque Water Company for $5,441.66, dated September 1, 1884, payable, with interest at the rate of 12 per cent. per annum, on or before the 1st day of May, 1885, upon which had been indorsed a credit of $900 on November 18, 1884, under the following written agreement 'Denver, Colo., February 27, 1885. Received of Gray Brothers & Company a note signed by the Albuquerque Water Co. by W. K. S. Wilson, president, and L. A. Grant, secretary amount of note being $5,441.66, dated September 1, 1884, and due on or before May 1, 1885, bearing interest at twelve per cent. per annum, with an indorsement of $900, dated November 18, 1884. The note we hereby turn over to the E. F. Hallack L. & Mfg. Co. as collateral security for a note of $2,214.25 which they hold against us, said note being dated January 1, 1885, and due on or before May 1, 1885, with interest at twelve per cent. per annum. It is hereby agreed on the part of the E. F. Hallack L. & Mfg. Co. that the surplus, when collected, after paying the said note of the E. F. Hallack L. & Mfg. Co., is to be paid over to Gray Brothers & Co. We, the E. F. Hallack L. & Mfg. Co. agree to let Gray Brothers & Co. have the first $500 paid on said note, provided they can induce the company to pay that much on said note before it becomes due. E. F. Hallack L. & Mfg. Co. By E. F. Hallack, President.' The allegations of the complaint, upon which appellees base their cause of action, are as follows: 'Plaintiffs further state that they are informed and believe, and therefore allege on information and belief, that said defendant, fraudulently confederating and conspiring with the said water company, the makers of said collateral note, to cheat, wrong, and defraud the plaintiffs, by effecting a compromise and surrender of said note for less than its face value, on or about the 1st day of December, 1888, and while the same was in the possession of and held by defendant, as collateral to said note of the plaintiffs, without any notice whatever to plaintiffs, without their knowledge or consent, and notwithstanding said collateral note then amounted, with interest, to the sum of $6,922.98, wrongfully compromised and surrendered said collateral note to the makers thereof, the Albuquerque Water Company aforesaid, or to some one for the use of said company, or to some one for their use for cancellation, for and in consideration of the sum of about $3,100, being less than half the face value of said note and interest, which said sum was then and there paid to and received by said defendant in full for said note, and thereupon said defendant, without any notice whatever to the plaintiffs, wrongfully, and in violation of the rights of plaintiffs in the premises, compromised, sold, surrendered, and delivered up said note to said water company, to the damage of plaintiffs in the sum of $6,922.98.' The defendants deny these allegations, and aver that they sold the principal note of Gray Bros. & Co. for the amount then due thereon, to one A. A. Grant, and transferred the note, together with the note of the Albuquerque Water Company, to him, as collateral security for the payment of the principal note, as they had a legal right to do, and in no other way have they sold or disposed of said collateral note. To support the issues on their part, the plaintiffs introduced the following correspondence:

'Denver, Colo., August 29, 1888. Mr. G. F. Gray, San Francisco, Cal.--Dear Sir: At the request of Mr. E. F. Hallack, we write to inform you that nothing has been done by A. A. Grant, nor anybody else, towards the payment of your note. If you will make an immediate payment of $500 on the note, we are authorized to give further time, and refrain from advertising the collateral. If you are unable to do this by the 10th of September, we shall proceed to sell the collateral, and at the same time take such legal proceedings as, in our judgment, may be necessary to collect the amount of Mr. Hallack's claim. Very truly, yours, Markham & Dillon.'

'Albuquerque, N. M., September 22, 1888. The E. F. Hallack Lumber and Manufacturing Company, Denver, Colo.--Gentlemen: I am in receipt of a letter from Mr. A. A. Grant, which leads me to believe that I can collect from him, for you, the amount of the claim which you hold against Gray Brothers, if you will turn over to him the note of the Albuquerque Water Company, held by you as security for your claims. If you see fit to send these notes to me, with instruction that I may retain five per cent. commission as fee for making the collection, I will retain the notes until October 15th, and am pretty much satisfied that I can collect the face of the claim against Gray Brothers, by your assigning the notes which you hold as security. If you have any hesitation about sending the notes to me direct, send them to one of the banks here, with instructions to deliver notes to me on or before October 15th, upon my paying to the bank the face of the claim of yours against Gray Brothers, less my commission of five per cent. Also, send a detailed statement of the amount of the claim against Gray Brothers. I want this, because, if I make arrangements with Mr. Grant, he will want an assignment of your claim against the water company. Send the notes indorsed in blank, and assignment of your claim against Gray Brothers. Please answer at once. Yours, very truly, W. B. Childers.'

'Denver, Colo., September 24, 1888. W. B. Childers, Albuquerque, N. M.--Dear Sir: Yours of 22d, in reference to Gray Brothers' and Albuquerque Water Company's notes, is received. In reply, we have advertised the water company's note for sale, which comes off on the 29th, and, after that date, should we be the owners of the paper, we will then consider your proposition. Should Mr. Grant desire the paper, he can have it by forwarding the money here to pay our note against Gray Brothers before the date of the sale. Yours, truly, E. F. Hallack Lumber & Manufacturing Co.'

'Albuquerque, N. M., October 15, 1888. E. F. Hallack Lumber & Manufacturing Company, 1825 Holladay street, Denver, Colo.--Gentlemen: In reply to yours of September 24th. Since receiving your letter, I have received one from Mr. Grant, from Boston, instructing me to inquire of you what is the least amount that you will take for your claim against Gray Brothers, and assign it to him, and also the water company, which is held as collateral security, to go along with the assignment. Telegraph me, upon receipt of this letter, what is the lowest price you will take for the same, and, if we can agree upon price to be paid, forward to either bank in Albuquerque, and the amount will be paid you. Yours, very truly, W. B. Childers.'

'Dated Denver, Colo., October 18, 1888. To W. B. Childers, Albuquerque: Will take face of note, and interest, and turn over collateral. Allow $100 commission. E. F. Hallack Lumber & Manufacturing Company.'

The principal note and collateral were afterwards, and on October 23, 1888, sent to W. S. Strickler, cashier of the Albuquerque National Bank, with the following letter of instructions:

'Denver, Colo., October 23, 1888. W. S. Strickler, Esq., Cashier, Albuquerque, N. M.--I inclose for collection and credit, when paid,--no protest,--No. 6713, Gray Brothers & Co., $2,214.20. Interest, $1,016.29. Collateral note, Albuquerque Water Company, $5,441.66, attached. When W. B. Childers pays the note of Gray Brothers & Co., with interest to date of payment, less $100, deliver it to him, together with the note of the Albuquerque Water Company. Please notify him. Respectfully, yours, A. A. Denman, Cashier.'

The plaintiffs also read in evidence the deposition of W. S Strickler, as follows: 'My name is W. S. Strickler. Residence, Albuquerque, N.M. Cashier of Albuquerque National Bank. I am not acquainted with any of the parties to this action. I am acquainted with W. B. Childers. We received the note of Gray Bros., to the defendant company the latter part of October, 1888, for collection, with instructions to deliver same to W. B. Childers on payment of the amount due, less $100. There was a note of the Albuquerque Water Company, for $5,441.66, attached to the note of Gray Bros., which we were instructed to deliver to W. B. Childers upon the payment of the note of Gray Bros. above referred to,'--and also the deposition of A. A. Grant, which is as follows: 'Name, Angus A. Grant. Live at Albuquerque, N.M. I am acquainted with E. F. Hallack and with Gray Bros., plaintiffs. I have been president of the Albuquerque Water Company since May, 1886. I have in my possession a certain promissory note for $5,441.66, executed by the Albuquerque...