First National Bank of Green River v. Ennis

Decision Date13 September 1932
Docket Number1734
Citation44 Wyo. 497,14 P.2d 201
PartiesFIRST NATIONAL BANK OF GREEN RIVER v. ENNIS, ET AL
CourtWyoming Supreme Court

APPEAL from the District Court of Sweetwater County; VOLNEY J TIDBALL, Judge.

Suit by the First National Bank of Green River against George H Ennis and another. Judgment for defendants, and plaintiff appeals.

Affirmed.

For the plaintiff and appellant there was a brief and also oral argument by Mr. T. S. Taliaferro, Jr., of Rock Springs Wyoming.

This action is prosecuted in the interest of the settlers and bondholders. State v. Tidball, 35 Wyo. 496. The court erred in dismissing respondent's action without day with costs, such dismissal being premature and erroneous and disallowing appellant time to reply to the amended answer. The court erred in denying an equitable accounting, and in allowing the cross-examination of the witness Howell upon accounts not material to the controversy. The court erred in admitting in evidence the unratified and unconfirmed deed of the receiver. The hearing set for October 17, 1929, was not upon the merits, as clearly shown by the record, hence the error in the court's order of dismissal. 1 C. J. 643. The court erred in permitting the witness to testify as to circumstances influencing his bid. The position taken by the respondents is of no force whatsoever. It was not necessary that all stockholders should be before the court when the order was made appointing the receiver, which order should be regarded as a proceeding in rem. Howard v. Angle, (N. Y.) 56 N.E. 492. The procedure in the distribution of the property of the Eden Company shows that it was a proceeding in rem, and the orders of the court are binding not only upon Ennis, who was in privity, with the Eden Company and the receiver, but said orders were binding upon all the world. Henry v. Woods, 77 Mo. 277. Ennis is bound by the decree. Kolb v. Swan, (Md.) 13 A. 380, 34 C. J. 747; Fernald v. Church, (N. H.) 88 A. 705; Whittmore v. Cope, (Utah) 40 P. 259; 34 C. J. 1009, Sec. 1431. Appellant submits that the judgment of the trial court should be reversed with directions to strike the amendment to the answer of respondent Ennis and also his evidence offered in support of said amended answer, further that the trial court be directed to appoint a master commissioner to take the accounting.

For the defendants and respondents there was a brief and oral argument by W. A. Muir, of Rock Springs, Wyoming.

The law protects purchasers and assignees against grantors and assignors in the right to enjoy in full the subject of the purchase, or assignment. 5 C. J. 968; Dexter v. Manley, 4 Cush. 24; Greer v. Exchange, (Minn.) 163 N.W. 527, L. R. A. 1917F, p. 440; Gray v. Cavalliotis, 206 F. 565. The asserted proceeding "in rem" urged by appellant, cannot avoid the necessity of an assignment in this case, nor obviate the failure of the receiver to secure an assignment. The appellant cannot sue as an assignee if there has been no assignment. There is no basis for recovery upon the Putnam-Flaherty claim by appellant, as against respondents for the following reasons: (1) The receipt taken by the receiver shows $ 5000.00 paid in full settlement of the Putnam-Flaherty claim, which was thereby extinguished. (2) Putnam and Flaherty never made an assignment of their claim to the receiver, or to the appellant or to anyone else. (3) Even though such an assignment had been made, under the court's order of January 21, 1927, and the receiver's deed, such assignment would inure to the benefit of respondent's as being after acquired property sold and granted to them. (4) It permits the receiver to impair the value of the thing that he has sold and assigned to Ennis. Margaret T. Boyder has no standing in this litigation and appellant can recover nothing on account of an assignment from her. The C. E. Howell claim is barred by estoppel. The claim of Augustine Kendall presents the only question requiring consideration. The record shows that he called on Ennis at Los Angeles representing that he had no financial interest in the project; his only interest being through the bank, because of loans to farmers on the project. After the purchase, it developed that Kendall really called on Ennis as a salesman, and in the receivership proceedings set up a claim for commission on account of the sale of the Eden Irrigation and Land Company to Ennis, which claim was denied. He misled Ennis by taking an interest in the $ 70,000.00 on notes and contracts. He stands in the same position as Howell. He is bound by the fraudulent misrepresentations of his partner Howell. 47 C. J. 887; 30 R. C. L. 916. Strang v. Bradner, 114 U.S. 555, and cases cited. Neither Howell nor Kendall are in court with clean hands, and the nominal plaintiff herein should not be permitted to recover anything on the property assignment of either. No case for an accounting has been made as to any of the claims involved, and the judgment of the trial court denying an accounting should be sustained. We ask that this brief be considered by the court in defenses of liability of Ennis.

RINER, Justice. KIMBALL, C. J., and BLUME, J., concur.

OPINION

RINER, Justice.

The First National Bank of Green River, a corporation organized under Federal law to transact a banking business, brought an action in the District Court of Sweetwater County to exact an accounting from George H. Ennis and Rock Springs Water Company, a Wyoming corporation, as defendants, because of certain moneys alleged to have been collected and received by the defendants in consequence of their purchase and possession of certain water right contracts in which the bank asserted an assigned interest. The District Court, by its judgment in the matter, declined to allow the relief sought and this proceeding, by direct appeal, was instituted by the unsuccessful litigant to obtain a review of the record made in the case.

The facts developed and material to be considered here, as we view them, are these:

On the 3rd day of June, 1920, the Eden Irrigation and Land Company, a Wyoming corporation, hereinafter usually referred to as the "Irrigation Company," having previously acquired water rights for certain lands in Sweetwater County--said lands being approximately 11,640 acres--to be disposed of to settlers in accordance with the provisions of the Federal law generally known as the "Carey Act" and the regulations thereunder, contracted with Charles E. Howell, Augustine Kendall and John P. Boyer, as co-partners, and thereby gave them the exclusive right "to settle and colonize any of said lands and to sell the water rights" therefor until November 1, 1920. This contract provided maximum and minimum prices per acre at which such water rights might be sold by the co-partners, the net amount of money which the Irrigation Company was to receive for such sales, the amounts it should pay to the co-partners for making the sales and, quoting from the contract:

"When any payment is made under the terms of this agreement the application or applications, and all moneys appertaining to the same or to the purchase of water rights, or in reference to this agreement are to be deposited in the FIRST NATIONAL BANK, of Green River, Wyoming, to the credit of the EDEN IRRIGATION AND LAND COMPANY, party of the first part, and all settlements between the said first party, and the said second parties under this contract shall be made at the said FIRST NATIONAL BANK, of Green River, Wyoming, which said bank will deliver on behalf of the said first party to the said second parties, or to the applicants for and purchasers of water rights, all water contracts and water deeds when such applicants and purchasers are entitled to receive the same."

It was further agreed that the Irrigation Company, as the first party to the contract, should not be bound to third parties, except in accordance with its customary water right contract with them, a blank form of which was attached and made a part of the agreement with the co-partners aforesaid, the second parties thereto. This form of water right contract used between the Irrigation Company and the purchasers of water rights, among other things, provided that the money paid by such purchasers should be delivered to the Irrigation Company, its successors or assigns, in nine yearly specified installments, the duty of collecting the payments to accrue necessarily resting upon that corporation.

With some modifications relative to extending the time within which the purchasers of water rights should make their first payments therefor, the contract of June 3rd aforesaid was, by a supplemental arrangement between the parties, of date March 1, 1922, extended until February 28, 1923.

A few days before the execution of the first contract above described and on May 20, 1920, an agreement was signed between "A. Kendall and J. P. Boyer, doing business under the firm name and style of Kendall and Boyer" and I. D. Putnam and H. C. Flaherty, also a co-partnership wherein it was recited that Kendall and Boyer had "a contract with the Eden Irrigation and Land Company, a corporation, to dispose of certain land and water rights owned and controlled by" that company and "located in Sweetwater County, Wyoming." By this agreement, Kendall and his partner gave to Putnam and Flaherty "the exclusive right to sell and dispose of water rights owned and controlled by said Eden Irrigation and Land Company in connection with not less than twelve thousand (12,000) acres of land in Sweetwater County, Wyoming, now segregated and being under the ditch of said Eden Irrigation and Land Company, in accordance with the laws, rules and regulations of the 'Carey Act' so called." This privilege was given by Kendall and Boyer in consideration...

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