Frost v. Mead

• Decision Date: 19 July 1963
• Docket Number: No. 9244,9244
• Citation: 86 Idaho 155,383 P.2d 834
• Parties: George F. FROST and Helen Frost, Plaintiffs-Respondents, v. A. R. MEAD and Juanita Dixon Mead, now known as Juanita Dixon, Defendants-Appellants.
• Court: Idaho Supreme Court

Page 834

383 P.2d 834

86 Idaho 155

George F. FROST and Helen Frost, Plaintiffs-Respondents, v. A. R. MEAD and Juanita Dixon Mead, now known as Juanita Dixon, Defendants-Appellants.

No. 9244.

Supreme Court of Idaho.

July 19, 1963.

Milton E. Zener, Pocatello, for appellants.

Johnson & Olson, Pocatello, for respondents.

TAYLOR, Justice.

At the times involved plaintiffs (respondents) were husband and wife and defendants were husband and wife. Sometime prior to 1960 the four parties organized a corporation known as the Star Cab Company, and thereafter operated a cab business in Pocatello under that name. The plaintiffs were owners of 50% of the outstanding capital stock and the defendants were owners of the other 50%.

In May, 1960, plaintiffs sold their stock in the corporation to defendants for the sum of $3,000 and defendants executed and delivered to plaintiffs their promissory note, in that amount. On the note, the signature of Juanita Dixon Mead (appellant) appears first, and A. R. Mead, second. The note was payable $1,000 cash 'on execution of this instrument' and $75 per month commencing July 1, 1960, with interest at 5%, and contained option to the holder to declare the entire amount due and payable upon default. The $1,000 down payment was made and an additional $225 of principal was paid on the note. Thereafter, upon default, plaintiffs declared the balance due and brought this action to recover thereon. In their complaint they alleged that the defendant, Juanita Dixon Mead, executed and delivered the note 'for her own use and benefit or for the use and benefit of her separate property,' and that the defendant, A. R. Mead, executed and delivered the note as 'accommodation maker or endorser or guarantor.' Default was entered against A. R. Mead.

Defendant Juanita Dixon Mead answered denying that the note was executed by her for her own use or benefit, or the use or benefit of her separate property, and alleged that the note was executed by her and A. R. Mead as co-makers; that, at the time, she and A. R. Mead were husband and wife; and that the note was given for a community obligation.

After trial to the court judgment was entered for plaintiffs, from which defendant Juanita Dixon Mead brought this appeal.

The assignments of error raise two issues, stated by appellant in her brief as follows:

'1. That the evidence shows it was a community obligation of Juanita Dixon Mead and A. R. Mead and not a separate obligation of Juanita Dixon Mead.

'2. That there is no evidence to prove an estoppel against Juanita Dixon Mead to assert the defense that the obligation in question was a community one.'

The record reveals substantially the following facts. In May, 1960, plaintiffs approached A. R. Mead; advised him that they could not continue on with the cab business; that it was failing and they wanted to sell their stock therein. Mead told them he had no money. Mead tried to borrow money, but was refused a loan by the bank for want of assets or credit. The plaintiffs then met with both A. R. Mead and Juanita Dixon Mead, on which occasion plaintiffs represented that they had invested $6,000 to $6,500 in the business, but would sell for $3,000. Juanita stated that she had confidence in her husband and believed that he could make the cab business pay, but she wanted time to consider plaintiff's offer. At a third meeting, the four parties being present, Juanita advised that the offer to sell for $3,000 was accepted. The attorney for the cab company and plaintiffs' attorney were then directed by the parties to conclude the transaction.

Juanita went to a bank, other than the one in which she regularly carried her account. There she gave a financial statement showing a net worth of $129,081.58. The bank made a loan to her of $3,000, which she deposited in her name, in the bank which made the loan. On this account she drew a check for $1,000, which was delivered to plaintiffs for the down payment required by the note in suit. The record does not show how or by whom the other $225 of principal was paid.

Plaintiff, Mrs. Frost, testified concerning the negotiations between the parties at the first meeting at which Juanita was present, as follows:

'A. Well, of course, we kept saying the same thing that it certainly was going under financially and we could not afford to put any more money into it, and we wanted to get out of the business, sell our share of the stock, and if we couldn't do that we would have to close the doors because we couldn't continue on the way we were, and in the discussion, why, Juanita said she had all the faith in the world in Art, that he could make a go of the cab company, so I turned to her and said, 'Well, if you have that much faith in your husband why don't you buy the shares of stock from us then?' So she asked for time to consider this personally then and decide whether she would buy our shares of stock, or not.

'Q. At that time was there anything said about the price of the stock?

'A. Well, we had,--I don't know whether we decided that evening or not on the price. We wanted to get out full amount of $6500.00 out of the price, but I think she said she would like to decide and wait until we met the next evening, or within the next two or three days,--I don't recall just how long a time we had on that.

'Q. Did she think it over?

'A. Yes.

'Q. What happened next?

'A. Well, we met then and she said she had,--* * * and Juanita said she had decided she would buy the shares of stock, but she wouldn't pay us that much. She said she would pay us the three thousand dollars, as we come to agreement on. * * *

'Q. Now, with regard to the sale of the stock, was the stock to be sold only to Juanita Dixon?

'A. That was our understanding, yes. Juanita is the only one who had any money to buy it.

'Q. I see. And that was your understanding?

'A. That is right.

'Q. That it was to be sold only to,----

'A. Art already had his half in it, and we figured she wanted the other part. * * *

'Q. * * * Mrs. Frost, whose choice, if anyone's, was it as to in whose name these stock certificates would be place--, if you know?

A. No. I don't know of any choice. We just talked with Juanita because she was the one who had the money and could buy the stock, we just figured it would be her share of the stock. In other words, it would be complete ownership then if they took over. Art already had half of the shares, and we assumed she would take her half from the other part. That is just the way we felt about it, any way. * * * She said she had all the faith in the world in her husband making a go of the business. She felt he could do it; he was able to make that business pay.'

Plaintiff George Frost testified:

'A. Well, we figured that Juanita was a pretty good business woman and she would give us some advice on what we could do, and she didn't come up with anything, because we wanted out of it; we couldn't go any further,--we felt we couldn't go any further with it, and so we wanted her advice on what to do, and she talked like she had all the confidence in the world for Art, that he could continue on with the business, and so we just asked them why they couldn't take over our stock, and we would give them a price on it and let them have it.

'Q. Then,--go on.

'A. And so then that was left to decide between the two of them on what could be done; and we met,--I don't know whether it was the next day, but it was right suddenly, any way, and Juanita agreed to take our shares and turn them over to the Star Cab;'

and further: that at the first meeting with Juanita plaintiffs offered their stock for $3,000; and that at the second meeting with Juanita:

'Q. Now, what happened? What was said?

'A. Well, they had come to an agreement they would,--Juanita had come to the agreement she would take the three thousand dollars, and that went right from there to the lawyer's. * * *

'[Cross examination] Q. Mr. Mr. Frost, actually you didn't care to whom you sold this stock as long as the money was forthcoming; isn't that correct?

'A. Well, we felt the way Juanita felt towards Art that is where it should go; she had the money to take it over and that is the way it should go.

'A. But you din't care whether you sold it to Juanita alone, or to Art and Juanita together, or just how?

'A. Well, Art was in no position to take it.

'Q. But as long as the money was forthcoming you didn't care whom you sold it to; is that right?

'A. Well, there was nobody else to sell it to. There were the four of us in there and Juanita could take care of it, and that is the way it went.'

Juanita testified:

'A. Well, I can't recall the exact conversation this long after, but they did want to sell the stock and get out from under, and they wanted to put no more money into it, and it was discussed our buying the stock, but was never discussed as me buying it personally. * * * I can remember saying 'Give me time to think this over;''

and also further testified that she knew Mr. Mead had no assets; that he had attempted to negotiate a loan with the bank prior to her application for a loan; that he had not been successful; that she borrowed the $3,000 on her own credit; that it was deposited in her name and she was the only one authorized to draw thereon; and that the entire amount was spent for the benefit of the cab business, including the $1,000 paid on the note.

A. R. Mead testified that the plaintiffs asked him to buy them out; that he told them he had no money; that the agreement was that the Star Cab Company would purchase plaintiffs' stock, and----

'Q. Was Juanita Dixon Mead, was she to purchase the stock?

'A. No; she was only the secretary.

'Q. And now how did you carry this agreement out?

'A. We turned everything over to Oliver; he was our corporation attorney;'

and also testified that at the time it was his hope to continue with the cab business; that he had no assets nor credit; and that both the Frosts understood that he could not buy their...