Hays v. Bank of Arizona
| Decision Date | 17 February 1941 |
| Docket Number | Civil 4263 |
| Citation | 57 Ariz. 8,110 P.2d 235 |
| Parties | ALBERT A. HAYS, Receiver of J.D. Halstead Lumber Company, a Corporation, Appellant, v. THE BANK OF ARIZONA, a Corporation, Appellee |
| Court | Arizona Supreme Court |
APPEAL from a judgment of the Superior Court of the County of Coconino. Richard Lamson, Judge. Judgment reversed.
Messrs Cunningham & Carson and Mr. Joseph T. Melczer, Jr., for Appellant.
Messrs Favour, Baker & Crawford, for Appellee.
This is an appeal by Albert A. Hays, as receiver of J.D. Halstead Lumber Company, a corporation, hereinafter called the company, from a judgment in favor of the Bank of Arizona, a corporation, hereinafter called the bank. The facts of the case are not in serious dispute and may be stated as follows.
For many years C. W. Lincicum was the manager of the Williams branch of the company. He and his wife owned certain property in Williams, and on July 27, 1937, applied to the bank for a F.H.A. loan to build thereon. Plans and specifications were quickly approved but it took some time to clear the title to the real property, and it was not until December 28, 1938 that a note for $3,500 and a mortgage securing it were finally executed, and the mortgage duly recorded on the next day. Prior to this time, however, the bank had advanced a certain sum for construction purposes, and Lincicum had purchased materials from the company and placed them on the premises, the total value thereof up to December 30th being $547.41. On that date Lincicum requested the bank to advance him under the mortgage a sufficient amount of money to pay off his account with the company for the materials already furnished, and to purchase all additional materials required to complete the house, stating that he could thus secure a discount on the price of the materials. The bank, therefore, advanced to him $1,500 of which $202.20 was deducted to pay certain notes which Lincicum had previously given to the bank, and the balance of $1,297.80 was deposited in the bank to the personal account of Lincicum. On the same day Lincicum drew his personal check in favor of the company in the sum of $1,186.32 and deposited it in the bank in the company account. This check was charged by the bank against Lincicum's personal account, and credited to the yard account of the company. Instead, however, of crediting this amount in the books of the company to his personal account for materials already purchased and to be purchased, as he had told the bank he intended to do, Lincicum credited it to various other accounts to cover up a shortage existing in his accounts with the company. Shortly thereafter the shortage was discovered and the bank made application to the company for a credit of the amount thus paid the latter by Lincicum, part on the debt for the lumber bought by him, and the balance as a trust fund in favor of the bank. The company had in the meantime filed a materialman's lien against the Lincicum premises for the materials already furnished. When the company refused to comply with the request of the bank, the latter brought this suit asking, among other things, that the debt of Lincicum to the company be declared satisfied and that it be held to owe the bank the balance of the amount paid by him. Judgment was rendered in favor of the bank and the company appealed.
It is the position of the bank (a) that the company had imputed knowledge of the agreement between Lincicum and the bank in regard to the application of the amount advanced by the bank, and was, therefore, bound to carry out the agreement, and (b) that in any event its mortgage is a claim prior to the materialman's lien of the company, for the reason that the latter had imputed knowledge through its agent Lincicum long before any material was furnished that the mortgage was to be placed upon the premises, and that under section 62-213, Arizona Code 1939, the materialman's lien was subsequent to the lien of the mortgage.
It is the position of the company, on the other hand, (a) that upon the facts stated above no knowledge was imputed to it of the agreement between Lincicum and the bank as to the disposition of the money advanced, and that it was therefore, not bound to apply the money so...
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