Idaho State Bank of Twin Falls v. Hooper Sugar Co.

• Decision Date: 03 January 1929
• Docket Number: 4039
• Citation: 74 Utah 24,276 P. 659
• Court: Utah Supreme Court
• Parties: IDAHO STATE BANK OF TWIN FALLS, IDAHO, v. HOOPER SUGAR CO. et al

276 P. 659

74 Utah 24

IDAHO STATE BANK OF TWIN FALLS, IDAHO, v. HOOPER SUGAR CO. et al

No. 4039

Supreme Court of Utah

January 3, 1929

Rehearing Denied April 13, 1929.

Appeal from District Court, Second District, Weber County; J. N Kimball, Judge.

Action by the Idaho State Bank of Twin Falls, Idaho, against the Hooper Sugar Company and another. From an adverse judgment plaintiff appeals.

REVERSED AND REMANDED, with directions.

Henderson & Johnson, of Ogden, for appellant.

DeVine, Howell, Stine & Gwilliam, of Ogden, for respondent.

HANSEN, J. THURMAN, C. J., and CHERRY, STRAUP, and GIDEON, JJ., concur.

OPINION

HANSEN, J.

Plaintiff brought this action to recover on a promissory note executed by defendant Hopper Sugar Company and indorsed in blank by defendant Parley T. Wright. The note is in words and figures as follows:

"Ogden, Utah, September 5, 1919 $ 30,000.00 Gold.

On Six Months 191--, after date; for value received, the undersigned promise to pay to Parley T. Wright, or order, at the Pingree National Bank, of Ogden, Utah, Thirty Thousand and 00/100 Dollars in U.S. Gold Coin, with interest payable at the rate of seven per cent per annum from date until paid, both before and after judgment, together with reasonable dollars attorney's fee, if this note is collected by an attorney, either with or without suit. If the interest is not paid when due the holder may proceed to collect both principal and interest. The makers and endorsers of this note each expressly waive demand, notice of nonpayment and protest, and suit against the maker; and also agree that this note may be extended in whole or in part without their consent.

"By order of the Board of Directors,

"Hooper Sugar Company,

"By Job Pingree, Pres.,

"By J. H. Riley, Sec."

Default judgment was rendered in favor of plaintiff against the Hooper Sugar Company. Defendant Wright answered. In his answer he alleges, and the trial court found, substantially the following facts:

Plaintiff is, and at all times mentioned in the complaint was, a banking corporation of the state of Idaho. Defendant Hooper Sugar Company is, and at all times mentioned in the complaint was, a corporation of the state of Utah. Defendant Parley T. Wright is, and at all times mentioned in the complaint was, a director of the Hooper Sugar Company. On December 6, 1919, Parley T. Wright executed and delivered to the National City Bank of Salt Lake City, Utah, his promissory note for the principal sum of $ 30,000. The note was secured by 375 shares of the capital stock of the Hooper Sugar Company, and provided for the payment of interest at the rate of 6 per cent per annum. It was made payable at the Pingree National Bank of Ogden, Utah. The National City Bank paid $ 30,000 to the Hooper Sugar Company. On or about June 21, 1920, the Hooper Sugar Company executed and delivered to Parley T. Wright the note sued upon in this action. This note was executed and delivered to Wright to secure him against his liability on the $ 30,000 note which he had executed and delivered to the National City Bank under date of December 6, 1919. The note executed and delivered to Wright by the Hooper Sugar Company was dated September 5, 1919, with the intention that it should correspond with the date of the note that Wright executed and delivered to the National City Bank under date of December 6, 1919. The dates of the two notes are not the same, because the scrivener who made out the note of the Hooper Sugar Company to Wright misapprehended the date of the note of Wright to the National City Bank.

On September 2, 1920, Wright wrote his name on the back of the note executed by the Hooper Sugar Company to him as payee. He then delivered the note to J. H. Riley, cashier of the Pingree National Bank, with directions that the note be sent to the National City Bank at Salt Lake City. At the same time Wright executed a note payable to the National City Bank to renew the note which the National City Bank held against him for the sum of $ 30,000, dated December 6, 1919. The renewal note so executed by Wright was in words and figures as follows:

"Ogden, Utah, , 191--, $ 30,000.00 Gold.

"On , 191--, after date, for value received the undersigned promise to pay to the order of the The National City Bank of Salt Lake City, at the Pingree National Bank, of Ogden, Utah, Thirty Thousand and No/100 Dollars in U.S. Gold Coin, with interest payable quarterly at the rate of seven per cent per annum from date until paid, having deposited as collateral security for the payment of this note, and of any and all claims, demands, or other indebtedness due or not due by to said bank at the maturity of this note.

"Certificate No. for 375 shares Hooper Sugar Company stock with authority to sell the same, or so much thereof as may be necessary, at public or private sale, at the option of said bank, on the failure to pay either principal or interest on any of said claims when due, and without notice, and with the right of said bank or the holder of this note to become purchaser at the sale. If this note is placed in the hands of an attorney for collection, I agree to pay ten per cent additional as an attorney's fee. If interest is not paid at the time the same becomes due, the holder may declare both principal and interest due. Demand notice and protest waived and time of payment may be extended without my consent.

"Should the security depreciate in value, I agree to furnish additional security to cover any such depreciation when called upon by the bank.

"No. 7079 Due Nov. 6, 1920.

"Parley T. Wright."

This note and the note indorsed by Wright were then transmitted by mail to the National City Bank. Accompanying the notes was the following letter:

"The Pingree National Bank,

"United States Depository,

Ogden, Utah, September 2, 1920.

"Mr. Frank Pingree, Cashier, Salt Lake City, Utah--Dear Sir: Mr. P. T. Wright called in this morning and said that he talked to you over the telephone and you requested him to send a renewal note for $ 30,000.00, and we have had him fill one out as near as we can. You are authorized to fill in the date and time to run.

"His note received from the Hooper Sugar Company is also enclosed to be filed with the Trustee. I am also enclosing my note for $ 15,000.00 and ask that you file it at the same time and get proper receipt.

"If Mr. Wright has not already paid for the Revenue Stamps, send us a memorandum and we will collect from him.

"Yours truly, J. H. Riley, Cashier."

At the time the notes were sent to the National City Bank, negotiations were being had whereby the Hooper Sugar Company was to be sold to the Interstate Sugar Company. It was planned that the proceeds realized from the sale should be used to pay the creditors of the Hooper Sugar Company. The deal was to have been consummated through the Bankers' Trust Company of Salt Lake City. The trustee mentioned in the communication of J. H. Riley accompanying the two notes was the Bankers' Trust Company. It was for the purpose of filing his claim against the Hooper Sugar Company with the Bankers' Trust Company that Wright indorsed the Hooper Sugar Company note and caused the same to be forwarded to the cashier of the National City Bank. Wright, by letter dated August 10, 1920, and by his testimony at the trial, stated that the National City Bank had agreed to accept the claim of Wright against the Hooper Sugar Company on account of its $ 30,000 note held by Wright in full settlement of the note which the National City Bank held against him.

On September 3, 1920, Frank Pingree, cashier of the National City Bank, acknowledged receipt of the two notes by mailing the following letter to J. H. Riley:

"I acknowledge receipt of your letter of the 2nd, enclosing Parley T. Wright's note for $ 30,000.00, payable to our order, and the Hooper Sugar Company notes of $ 15,000.00 and $ 30,000.00 payable to your order and P. T. Wright's order respectively.

"You suggest that the last two notes be filed with the Trustee for the stock owned by the Hooper Sugar Company, but I think there would be no particular advantage in filing these notes until the Trustee has specifically instructions as to the disposition of the stock held in trust. I am therefore holding pending instructions being forwarded to the Trustee."

On September 3, 1920, the cashier of the National City Bank caused Wright's renewal note to be altered in the following particulars: The note was dated June 6, 1920, and was made payable November 6, 1920, as authorized by the letter accompanying the note. The interest rate of the note was changed from 6 to 7 per cent per annum. The words, "The National City Bank of Salt Lake City at," were erased, and in lieu thereof the words, "The Stock-growers Bank & Trust Co., Pocatello, Idaho," were written in the note. The words, "Hooper Sugar Company note for $ 30,000.00." were inserted in the note immediately below the words, "Hooper Sugar Company stock." Frank Pingree, the cashier of the National City Bank, testified that Wright in a telephone conversation authorized the making of all of the alterations made on the renewal note. Wright denied that he had given Pingree any authority to alter the renewal note except the authority granted in the letter which accompanied the note.

The trial court found that the alterations of the renewal note by changing the rate of interest, the name of the payee, and adding the words, "Hooper Sugar Company note for $ 30,000.00," were made without authority from Wright. The evidence is sufficient to support the trial court's finding in such respect.

After Wright's renewal note had been thus altered, it and the note indorsed in blank by Wright were transmitted to the Stockgrowers' Bank...