Glenn v. Hill

• Decision Date: 05 April 1895
• Citation: Glenn v. Hill, 11 Wash. 541, 40 P. 141 (Wash. 1895)
• Parties: GLENN v. HILL.
• Court: Washington Supreme Court

40 P. 141

11 Wash. 541

GLENN v. HILL.

Supreme Court of Washington

April 5, 1895

Appeal from superior court, King county; J. W. Langley, Judge.

Action by J. H. Glenn against Joseph B. Hill on two notes, and to foreclose a lien securing same. From a judgment in favor of plaintiff, defendant appeals. Affirmed.

Bausman, Kelleher & Emory, for appellant.

J. T Ronald, for respondent.

GORDON J.

On the 30th day of January, 1892, the respondent was owner of a portion of the capital stock of a corporation known as the Haley-Glenn Company, doing business at Seattle, which he was at that time desirous of selling to the appellant, who, prior to that time, had no interest in the corporation; and on said day respondent delivered to the appellant the following guaranty: "To Joseph B. Hill, Esq., Seattle Washington-Dear Sir: In consideration of your agreeing to become a purchaser of stock of the Haley Grocery Company, I undertake to hold you harmless against any loss which may accrue to you from any of the existing liabilities of the Haley-Glenn Company; and I guaranty that all the accounts assigned by the Haley-Glenn Company to the Haley Grocery Company can and will be collected. This guaranty and agreement to hold harmless shall be in proportion to the interest you may purchase in said Haley Grocery Company. Very truly, [Signed] J. H. Glenn." For the purpose of effecting the sale, it was agreed that the same should be carried out through the medium of a new corporation, to be known as the Haley Grocery Company, to be organized by respondent, appellant, and the stockholders of the Haley-Glenn Company; that the Haley-Glenn Company should transfer all of its assets to the Haley Grocery Company. There were 300 shares of stock in the new corporation, of which respondent was entitled to 190. Forty-five shares he sold to one Haley. The other 145 shares he sold to the appellant, for a consideration of $15,030.70 appellant paying $10,000 in cash, and executing two notes, of $2,515.35 each, bearing date on said January 30, 1892, and due, respectively, one and two years after date, with interest at the rate of 10 per cent. per annum from date until paid, said notes containing the following stipulation: "Interest to be paid quarterly, and, if not so paid, the whole sum of both principal and interest to become immediately due and collectible, at the option of the holder of this note." Respondent delivered to appellant 100 shares of said stock, and the remaining 45 shares, together with said notes, were then deposited with one Graves, under the following agreement:

"Seattle, Washington, January 30, 1892. E. O. Graves, Esq., Seattle, Wash.-Dear Sir: We deposit herewith the following papers: 1st. Two notes of Joseph B. Hill, for $2,515.35 each,-one dated on or before one year after date; the other dated on or before two years after date. 2d. Two notes of John Haley, exactly similar to the preceding. 3d. Forty-five shares of the capital stock of the Haley Grocery Company, originally issued to James H. Glenn, and by him indorsed to Joseph B. Hill. 4th. Forty-five similar shares, indorsed by J. H. Glenn to John Haley. The papers are left with you with the following mutual agreement and understanding: Messrs. Hill and Haley have purchased each the shares mentioned, respectively, and have paid J. H. Glenn in their respective notes. The shares are not to be delivered up to the purchasers until the notes are paid, nor are the notes to be removed or negotiated by the payee during the period which they run. On the payment of these notes, which can be done at any time before or after maturity, you will please deliver to the purchasers, respectively, their shares, and each of the purchasers shall have a right to a separate release on the payment of his individual notes. J. H. Glenn. Joseph B. Hill. John Haley.

"Witness: Fred Bausman.

"I assent to hold the aforesaid papers on said terms. E. O. Graves."

Respondent brought this action for the purpose of recovering judgment upon said notes, and foreclosing the lien claimed by him on the stock so deposited. Appellant denied the delivery of said notes, and, by way of affirmative defense and offset, set up the guaranty herein set out; that he relied upon the guaranty in making said purchase and in executing said notes; also that, "relying on the guaranty, he [respondent] further purchased shares in the Haley Grocery Company, and subsequently became the owner of all its capital stock." He also alleges that, of the accounts assigned by the Haley-Glenn Company to the Haley Grocery Company, the amount of $3,216.94 was uncollected and uncollectible, after the exercise of diligence, etc., and that the various debtors owing said accounts were and are insolvent; also, that certain assets purchased by the new company of the old corporation have not been delivered to the new company, the value of said property amounting to $3,842.26; also, that other assets were found to be deficient in value to the amount of $1,897.80. The respondent replied, denying the various allegations of new matter set up in appellant's answer. The court below directed a reference for the purpose of determining what accounts assigned by the old corporation to the new remained uncollected and uncollectible. A great deal of testimony was taken by the referee, who thereafter reported to the court that accounts amounting, with interest, to the aggregate sum of $4,002.46, remained uncollected and uncollectible, and that appellant was entitled to be credited upon said notes in said sum. This report was modified in the lower court by reducing the amount to $3,134.46, of which amount the lower court held that the appellant was entitled to be credited upon said notes in the sum of $1,514.96 only, being 29/60 of the whole amount of accounts found uncollectible. The court refused to receive proof upon behalf of appellant in support of the other items of counterclaim set up in the answer, and rendered judgment in favor of respondent in the sum of $4,388.88, said judgment being declared to be a lien upon the shares of stock so deposited, etc., and directing the sale thereof to satisfy said judgment. From said judgment this appeal is taken.

Assignments 1, 2, and 5 of appellant's assignments of error relate to the delivery of the notes, and will be considered together. Appellant insists that the proof shows that the notes were delivered in escrow, and that plaintiff cannot maintain the action. Upon the trial it was shown that plaintiff never had possession of the notes, but that Graves, with whom they had been deposited, held them until they were produced by him upon the trial. We do not think appellant's position is well taken....