Farmers State Bank of Riverton v. Riverton Const. Co.

CourtUnited States State Supreme Court of Wyoming
Citation39 Wyo. 238,270 P. 1082
Docket Number1423
Decision Date16 October 1928

Rehearing Denied March 12, 1929, Reported at: 39 Wyo. 238 at 260.

APPEAL from District Court, Fremont County; VOLNEY J. TIDBALL Judge.

Action by Farmers' State Bank of Riverton against the Riverton Construction Company, N. G. Petry, and others in which M. F Brothers intervened. From the judgment, the second named defendant and the intervening defendant appeal.

Modified and Affirmed.

F. Chatterton, Kinkead & Ellery and H. Donzelman, for appellant.

There was no evidence that Petry was indebted to the construction company upon an open running account as alleged in the pleadings. The mere entry of charges against Petry did not make the claim a book account or warrant a suit by the Company against Petry, 1 C. J. 649; Lyman v. Bechtel & Ross, et al., (Ia.) 7 N.W. 673-674; Brown v. Starbird, (Me.) 56 A. 903; Fenn v. Early, (Pa.) 6 A. 58-60; Purvis v. Kroner, (Ore.) 23 P. 260-261; Frontier Co. v. Loveland, 15 Wyo. 313, 318; Kramer v. Gardner, (Minn.) 116 N.W. 925-926; Trust Co. v. Doe, (Calif.) 146 P. 692, 694. A transfer by a trustee in bankruptcy of uncollected accounts does not transfer a right of action against a carrier for injuries by delay in shipment. Bluegrass Co. v. Ry., 119 S.W. 769; Pierson v. County, (S. D.) 134 N.W. 212. Any right of action against Petry based on negligent management sounded in tort. Jackson v. Co., (Okla.) 246 P. 426; 1 R. C. L. 321; Stamp v. Corp., 11 Fed. (2) 172; Conaty v. Torghen, (R. I.) 128 A. 338; Fletcher Enc. Corp., 4, p. 3670, 3689; Barnes v. Anderson, 298 F. 614. An amendment of the pleadings to conform to proof would have involved the statement of a different cause of action. Derosia v. Firland, (Vt.) 76 A. 153, 5707 C. S.; State v. Kruse, (Kan.) 50 P. 882; Schleier v. Bonella, (Colo.) 214 P. 537. Such amendment would have been reversible error. Nevada Mining Co. v. Rae, (Nev.) 218 P. 93; Western Cornice Co. v. Meyer, (Minn.) 76 N.W. 23; Casazza v. Rosenblum, 180 N.Y.S. 253; Nave v. Dieckman, (Mo.) 208 S.W. 273; Walrath v. Ins. Co., (N. Y.) 110 N.E. 426. There is no evidence showing liability of Petry on account of the construction company, through negligence, bad faith or fraud. Fletcher on Corp., p. 3707; Gubbins v. Bank, 79 Ill.App. 150; Holmes v. Crane, 182 N.Y.S. 270; David Co. v. Conrad, (Md.) 60 A. 737; Zinc Co. v. Harwood, (Mass.) 103 N.E. 1037; Lewis v. Council, 291 F. 148; Building v. Conrad, 60 A. 737; Barnes v. Andrews, (S.D.N.Y.) 298 F. 614. The burden of proving mismanagement and wrongful appropriation of moneys was on the plaintiff. Kelley v. Dolan, 233 F. 635. The construction company was estopped from alleging, as against Brothers, that Petry was indebted to it. Seaman v. Big Horn Canal Ass'n, 29 Wyo. 391; Pomeroy's Eq. Jr. Vol. 2, p. 1421; Ford v. Libby, 22 Wyo. 464; Gross v. Leach, (Ala.) 68 So. 297; Allen v. Hance, (Calif.) 118 P. 527; Grain Co. v. McAllister, 296 F. 611. Plaintiff bank having received from the Construction company a portion of the trust fund, should be required to pay the same into the court to make the fund available. Bank v. McClure, (Ind.) 111 N.E. 191; Clingham v. Hill, (Kas.) 215 P. 1013; Bunting v. Ricks, 32 Am. Dec. 699; Mfg. Co. v. Whitehurst, 72 F. 496; Jeffray v. Towner, 53 A. 183; Schulein v. Hainer, (Kan.) 29 P. 171. The judgment should be reversed with instructions that judgment be entered in favor of Brothers, for the money in the hands of the trustee, and that plaintiff bank be required to pay to the trustee, or to Brothers the final estimate of $ 3,200.00, paid by the Government to the Construction Company, and by Chatterton to the plaintiff bank, with knowledge on the part of the bank, that said sum was part of the trust fund mentioned in the agreement.

O. N. Gibson and A. C. Allen, for respondent.

The notes covered by the guaranty agreement were renewals of other notes upon which guarantors were indorsers and their liability as indorsers was sufficient consideration for the guaranty contract even though executed subsequent to the notes. 28 C. J. 917. The notes were executed pursuant to an understanding, that the guaranty would be given, and this alone was sufficient to support the guaranty. 28 C. J. 918 and cases cited. The word "settle" is so ambiguous as to require parol evidence explaining the sense in which it was used, in order to show the intention of the parties. Auzerais v. Naglee, 15 P. 371; Jackson v. Ely, (Ohio) 49 N.E. 792; Backster v. State, 9 Wis. 38; State v. Staub, (Conn.) 23 A. 924; Tooms v. Stockwell, (Mich.) 92 N.W. 288. It was the duty of Petry to account for all funds of the corporation and if he claimed credit for expenditures, the burden was upon him to establish the facts. 4 Fletch. Cyc. Corp. 3682-3752. 2 C. J. 737, 39 Cyc. 376; Davenport v. Shutt, 45 Iowa 510. A trustee is required to show that his account is correct and that his expenditures are necessary. The burden of proving all affirmative defenses is likewise on the trustee, 39 Cyc. 500 and cases cited. A custom to make advances to sub-contractors must be shown to be reasonable, 17 C. J. 467; 27 R. C. L. 159. The various agreements and assignments of Petry relating to the proceeds under the Bridge contract with the United States were void. Sec. 3477 R. S. U.S. Manhattan v. Paul, (N. Y.) 111 N.E. 478; Spofford v. Kirk, 97 U.S. 484; Bank v. Downey, 218 U.S. 345; in re Hudford Co., 257 F. 432; Hall v. Chandler, 289 F. 645. They cannot divest the company of any right of counter claim or set-off which existed in its favor, 5580 C. S., 34 Cyc. 706; 24 R. C. L. 826. Even where the cause arises out of tort it may be waived and an action as upon implied contract brought, where the law implies a promise to reimburse. 1 C. J. 1031; 41 C. J. 12. Failure to object to evidence at the time offered, is a waiver of objections that is not admissible under the pleadings. 31 C. J. 754; 3 C. J. 1336. Before estoppel can be raised, there must be certainty to every intent. Nothing can be supplied by intendment. 21 C. J. 1139; 2 C. J. 858 and cases cited. An admission, to have the effect of estoppel must be made with full knowledge of the facts, or for the purposes of fraud to bind the party. Tillotson v. Mitchell, 111 Ill. 518; McAferty v. Conover, 7 O. St. 99; Fisher v. Stanasic, 18 O. C. C. (N. S.) 440. The pleadings are sufficient to support an implied contract. 1 C. J. 1031 and cases cited. 13 C. J. 244, Walrath v. Bohenkamp, (Mo.) 97 S.W. 112. An action to compel a trustee to account, and not for the recovery of damages, is not one sounding in tort, although the facts may be such that an action for damages would lie. Harrigan v. Gilchrist, 121 Wis. 127, 99 N.W. 909. Lumber Co. v. Reynolds, 44 P. 309. Failure to make a motion is deemed a waiver of defects to which motion lies, 31 Cyc. 718. Objections to pleadings will not be considered on appeal unless properly presented by assignments. 3 C. J. 1334, 1336. The evidence clearly established Petry's liability to the Company for the amount claimed. Being an officer of the company he was liable for all accounts outside the scope of his authority. 4 Fletch. Cyc. Corp. 3682 Et. seq. Plaintiff is not estopped from asserting Petry's indebtedness to the Company, 2 C. J. 856. 3 Fletch. Cyc. 3333. No estoppel arises where the conduct of the party that is to be estopped is due to ignorance or innocent misconduct. 21 C. J. 1125. Payment by the United States under the bridge contract, did not come into the hands of the plaintiff impressed with a trust in favor of the trustee under the trust agreement. 3477 U.S. R. S. Porter v. Co., (Ida.) 128 P. 548; In re Waters Co., 206 F. 845; Stofford v. Kirk, 97 U.S. 484.

METZ, District Judge. BLUME, Ch. J., and RINER, J., concur.


METZ, District Judge.

This case is in the Supreme Court on petition in error and is the outgrowth of a seven-cornered law suit tried in the District Court of Fremont County in 1925. The pleadings are exceptionally voluminous, occupy two hundred pages of Volume 1 of the record on appeal, and each party in the case filed numerous amended pleadings, answering and replying to each other's charges and counter-charges. We will not attempt to analyze all these pleadings. This opinion would become entirely too extended. Suffice it to say, the real contentions of the parties are as follows:

The plaintiff bank sued the Riverton Construction Company to recover upon three promissory notes executed and delivered by the construction company to the bank for large sums of money borrowed from the bank to carry on their operations as general contractors. Two of these notes were for $ 5,000 each and the third for approximately $ 7,500. The $ 7,500 note was endorsed by J. A. Delfelder, N. G. Petry, W. J. McLaughlin and E. H. McLaughlin. Plaintiff also sued on a $ 10,000 guaranty signed by J. A. Delfelder, E. H. McLaughlin and N. G. Petry. There was a half-hearted attempt on the part of the defendant, construction company and endorsers of the notes to defend against the bank's claim, but the trial court did not think the defense sufficient and we quite agree with the lower court on that much of the case.

Plaintiff bank also alleged that Harry B. Henderson, trustee, had in his possession certain moneys assigned and transferred to him in trust by the construction company and Petry and claimed that it was to be applied on the construction company's and Petry's indebtedness to the bank. Henderson was made a party because of his holding certain of the funds in trust. There was no attachment or other proceeding instituted against Henderson, or the funds in his possession. The action against the defendants Petry, W. J. McLaughlin, and the Executrix...

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