Luther Lumber Company v. Sheldahl Savings Bank

• Decision Date: 23 March 1914
• Docket Number: 725
• Citation: Luther Lumber Company v. Sheldahl Savings Bank, 139 P. 433, 22 Wyo. 302 (Wyo. 1914)
• Parties: LUTHER LUMBER COMPANY v. SHELDAHL SAVINGS BANK
• Court: Wyoming Supreme Court

139 P. 433

22 Wyo. 302

LUTHER LUMBER COMPANY v. SHELDAHL SAVINGS BANK

No. 725

Supreme Court of Wyoming

March 23, 1914

ERROR to the District Court, Laramie County; HON. RODERICK N MATSON, Judge.

The material facts are stated in the opinion.

Affirmed.

Lee &amp Mallin, for plaintiff in error.

The court was without authority to change or modify the finding of facts after the expiration of the term at which the judgment was entered and after execution had issued thereon.(Bethel v. Bethel, 6 Bush.(Ky.)65;Barber v Biloxi,25 So. 298;Peterson v. Bank,88 Ill.App. 190;Doe v. Min. Co.,60 F. 643;Buckles v. Bank,63 Ill. 268;DeCastro v. Richardson,25 Cal. 49;Horner v. Horner,37 Ill.App. 199;Ry. Co. v. Haynes,82 Tex. 448;Heert v. Cruger,14 Misc.(N. Y.) 508;Dillon v. R. R. Co.,58 Neb. 472;Emerson v. Heard,81 Ala. 443).There was a failure of proof, for the note sued upon was alleged to be the note of the Luther Lumber Company and A. B. Schuetz as makers, while the evidence disclosed that Schuetz was surety only.(Weinreich v. Johnson,20 P. 556;Washington v. Timber Lake,74 Ala. 259;Cotes v. Campbell,3 Cal. 192;Boren v. Bank,8 Ark. 500;Becker v. Ins. Co.,68 Ill. 412;Bank v. Hubbard,4 Ark. 419;Jordan v. Reed,77 N. J. L. 584;Ashley v. Henderson,76 N.E. 985;Wyo. Comp. Stat. 1910, Sec. 4406).The court originally found by the order entering judgment that the plaintiff below knew the purpose for which the money was borrowed.Having that knowledge, the plaintiff was not in a position to assert its claim against the defendant, assuming that the defendant purchased the stock as claimed.(Wyo. Comp. Stat. 1910, Sec. 3983;Thompson v. West,59 Neb. 677;Adams & W. Co. v. Deyette,8 S.D. 119;Alexander v. Campbell,83 N.Y. 480;Burrows v. Niblack,84 F. 111;Anderson v. Kissam,35 F. 699;Tolman v. Min. Co.,22 N.W. 505).The court found as matter of law that the defendant was estopped from denying the validity of the note, though in the same order it was found that the plaintiff knew the purpose for which the money was borrowed.Where both parties have knowledge the rule of estoppel does not apply.(Lucasv. Trans. Co., 70 Ia. 541;Durkee v. People,155 Ill. 354;Bundy v. Jackson,24 F. 628;Bank v. Bank,16 N.Y. 125;Converse v. Emerson Co.,242 Ill. 619;Bank v. Bank & Tr. Co.,116 S.W. 792;Kenyon R. Co. v. Bank,31 L. R. A. (N. S.) 169).The owner of stock in a corporation cannot lawfully authorize the borrowing of money by the corporation with which to purchase the stock.(Graves v. Mono Lake Co.,22 P. 665).The finding in favor of the bank was contrary to the law and the evidence.(Bank v. Church,109 N.Y. 512;Maroney v. Cole,103 N.Y.S. 560;Tire Repair Co. v. Price, 115 N.Y.S. 171).

Herbert V. Lacey and John W. Lacey, for defendant in error.

The bank had nothing to do with any of the transactions shown in the evidence other than the loaning by it of the money to the Lumber Company and taking its note therefor.The note is in terms joint and several.The general principle that a court may not after the term change or modify its finding of facts is subject to the exception that if steps be taken during the term, by motion or otherwise, to set aside, modify or correct the findings, the court has the same power at another term to which the proceedings may be continued as it would have had at the original term. (Bronson v. Schulter,104 U.S. 410;Goddard v. Ordway,101 U.S. 745;Watson v. Skating Rink Co.,177 Ill. 203, 52 N.E. 317;New Orleans v. Fisher,91 F. 574, 34 C. C. A. 15;Guinan v. Donnell,201 Mo. 173, 98 S.W. 478;Niles v. Parks,49 O. St. 370;O'Keefe v. Foster,5 Wyo. 343;Walker v. Moser,117 F. 230;Bruner v. Marcum,50 Mo. 405;Mining and S. Co. v. Billings,150 U.S. 31;Breeding v. Nelson, (Mo.)121 S.W. 1080;Carey Co. v. Vickers,134 P. 851).The court distinctly held that the evidence failed to disclose any knowledge on the part of the bank that the purpose of the loan was to purchase stock of the corporation.We think the correctness of the statement of the rule by counsel on the subject is to be doubted, but the claimed purchase was not in fact a purchase, but merely carrying out the condition named in a previous sale.The original sale to Judd was upon a condition subsequent, which in fact defeated the sale to him, and the money borrowed was used in settling the matter with him.A mere knowledge by the bank that the Lumber Company intended to use the money for a particular purpose is not a participation in that purpose by the bank.(Feineman v. Sachs,33 Kan. 621, 7 P. 222;Tracy v. Talmage,14 N.Y. 162;Brewing Ass'n. v. Mason,44 Minn. 318, 46 N.W. 558;Delavina v. Hill,65 N.H. 94, 19 A. 1000;Gambs v. Sutherland's Est.,101 Mich. 355, 59 N.W. 652;Sortwell v. Hughes,22 Fed. Cas. 801;Ins. Co. v. Distilling Co.,182 F. 590;Armstrong v. Bank,133 U.S. 433).The variance in the proof was immaterial.(Zeigler v. Wells Fargo & Co.,28 Cal. 264;Dart v. Sherwood,7 Wis. 523;Hunt v. Adams,5 Mass. 358;Inkster v. Bank,30 Mich. 143;Lucas v. Smith,42 Ind. 103;Nolte v. Hill,36 O. St. 186;Lampkin v. Chisom,10 O. St. 541;Bank v. Woods,28 N.Y. 545;Kuhn v. McKay,7 Wyo. 42;R. R. Co. v. Pollock,16 Wyo. 321;Wyo. Comp. Stat., Secs. 4438,4591;Coates v. Bank,91 N.Y. 20;O'Connor v. Delaney, (Minn.)54 N.W. 1108).The evidence clearly establishes that the execution of the note by the treasurer of the corporation was ratified.Ratification need not be pleaded.(Goetz v. Goldbaum, (Cal.)37 P. 646;Bigler v. Baker,40 Neb. 325, 58 N.W. 1026;Smith v. Bank, 107 Ia. 620, 78 N.W. 238;Long v. Osborn, 91 Ia. 160, 59 N.W. 14;Hoyt v. Thompson's Ex'r.,19 N.Y. 207;Hubbard v. Williamstown,61 Wis. 397;Min. Co. v. Donat,10 Colo. 529, 16 P. 157;Watson v. Bigelow,47 Mo. 413;Perkins v. Boothby,71 Me. 91;Willis v. St. Paul S. Co., (Minn.)55 N.W. 550;Whitney v. Trust Co.,65 N.Y. 576).Illegality must be pleaded.(Atchison &c. R. Co. v. Miller, (Neb.)21 N.W. 451;Mitchell v. Branham, (Mo.)95 S.W. 939;Ry. Co. v. Bagley, (Kan.)56 P. 759).

Lee & Mallin, for plaintiff in error, in reply, contended that the evidence was insufficient to sustain the amended finding as to the bank's knowledge of the purpose of the loan.And, further, that a contract beyond the power of a corporation cannot be ratified so as to create a liability, citing: 16 Cyc. 1070 & notes;Orr v. Lacey, 2 Doug.(Mich.) 230;Bank v. Sherwood,10 Wis. 230;Building Co. v. Bank,181 Ill. 35;McCracken v. San Francisco,16 Cal. 591;Hotchin v. Kent,8 Mich. 526;Nellie Co. v. Nellie,62 Hun, 63;Brady v. N. Y.,20 N.Y. 312;Lyndon Mill Co. v. Lyndon Lit. Inst.,22 A. 575;Marsh v. Fulton Co., 10 Wall. 676;126 P. 757.

BEARD, JUSTICE.SCOTT, C. J., concurs.POTTER, J., did not sit.

OPINION

BEARD, JUSTICE.

The plaintiff below, Sheldahl Savings Bank, a corporation, filed its petition in the District Court against Luther Lumber Company, a corporation, and A. B. Schuetz as defendants.For a first cause of action it alleged that on March 7, 1908, the said defendants(the Luther Lumber Company by the name and style of "Luther Lumber Co.") for value, made, executed and delivered to plaintiff their promissory note in writing, (a copy of which is hereto attached marked "Exhibit A.") and thereby for value promised to pay plaintiff the sum of fifteen hundred dollars with eight per cent. per annum from date until paid and reasonable attorney's fees if suit be brought on the note; that a reasonable attorney's fee was one hundred and fifty dollars; that the note was payable on demand; that due and proper demand had been made on defendants for payment, which was refused, and that the note was due and unpaid.

For a second cause of action it alleged that on March 7, 1908, the plaintiff at the request of the defendants, and each of them, paid to the use of the defendants the sum of fifteen hundred dollars, all of which, with interest thereon at eight per cent. per annum, is still due plaintiff from the defendants and unpaid.Exhibit A. attached to the petition is in form a promissory note of the date, tenor and effect as alleged, and signed, "Luther Lumber Co. by A. B. Schuetz, Treas."And "A. B. Schuetz."

The answer of the Lumber Company denied the allegations of the petition, and alleged that if such a note was executed it was wholly without authority on the part of the defendant, the Luther Lumber Company.The defendant Schuetz was not served with summons and did not enter an appearance.

A jury being waived, the cause was tried to the court, which found generally for the plaintiff, and further found that the plaintiff furnished to the defendant the sum of $ 1500 on March 7, 1908, and received therefor the note in suit; that defendant has at all times since retained said moneys so received, and appropriated them to its own use, and that the defendant cannot therefore repudiate the note upon which the said moneys were received.That the method of the borrowing of said money was as follows: The money was borrowed by the defendant upon the note sued on and placed to the credit of A. B. Schuetz, who was then treasurer of the defendant company; that the money was checked out by the said A. B Schuetz and placed in the Luther State Bank and was paid for stock purchased by and for the defendant in this cause of one Judd, which stock the defendant received for its own use, and that the plaintiff and the defendant knew of the borrowing of the money for the said purpose, and that said stock was part of the stock of the defendant company, which by agreement between the defendant company and Judd, the defendant company has become obligated to purchase.That counsel had agreed that $ 250 was a reasonable attorney's fee for plaintiff's...