Milo Theater Corp. v. National Theater Supply

• Decision Date: 02 July 1951
• Docket Number: No. 7678,7678
• Parties: MILO THEATER CORP. v. NATIONAL THEATER SUPPLY et al.
• Court: Idaho Supreme Court

Page 425

233 P.2d 425

71 Idaho 435

MILO THEATER CORP. v. NATIONAL THEATER SUPPLY et al.

No. 7678.

Supreme Court of Idaho.

July 2, 1951.

Elder, Elder & Smith, Coeur d'Alene, and Thomas Alderson, Seattle, Wash., for appellant George C. Blair.

Wm. S. Harwkins and E. L. Miller, Coeur d'Alene, for appellants National Theater Supply and O. L. Chiniquy.

Harold S. Purdy, Coeur d'Alene, for respondent.

PORTER, Justice.

Mr. Edward Metzgar is president of respondent corporation and acted for it in the transactions involved in this suit. Appellant O. L. Chiniquy is the general agent of appellant corporation, with offices in Seattle, Washington. Appellant George C. Blair is a dealer in theaters.

In the spring of 1948, respondent was the owner of a building in Smelterville, Idaho, which had been used as a theater but had been converted into a club. Respondent was desirous of reopening the building as a theater. To do so, it was necessary for respondent to purchase theater equipment. About April 1, 1948, Chiniquy called upon Metzgar in Coeur d'Alene with reference to the sale of such equipment. Metzgar and Chiniquy went to Smelterville, examined the building and made an estimate of the amount of equipment necessary to reopen the theater and the cost thereof.

Metzgar advised Chiniquy respondent did not have the money to purchase the equipment or to put the building in suitable condition, and that it would take about $7,000 to make the down payment on the equipment and to repair the building. He stated he had been making efforts to get the money locally and he would have to pay a premium of $2,500 to secure the loan. Chiniquy said for that amount of premium he could arrange the loan. He thereupon returned to Seattle.

After several telephone conversations, Metzgar went to Seattle and met with Chiniquy and Blair in the offices of appellant corporation. The parties talked over the proposed loan of $7,000 and the $2,500 premium; the loan to be secured by a second mortgage on the theater upon which there was a first mortgage of $5,000. Metzgar was told that the money for the loan was to be furnished by Blair. Blair called in his attorney, Mr. John Martin, and the proposed deal was explained to him. Mr. Martin advised Blair he could not make such a deal, that it 'would be a bald face case of usury and couldn't be handled in the State of Washington'; and that he was not familiar with the usury laws of Idaho and the matter should be handled by an Idaho attorney. Mr. Martin further suggested there were ways of getting around the usury laws and that the appearance of usury might be avoided by making a sale or pretended sale of the theater fixtures to Blair and adding the premium for the cash loan to the purchase price of the fixtures on a conditional sales contract from Blair to respondent. Mr. Martin also advised against a second mortgage and suggested that the loan be increased sufficiently to take up the first mortgage. The deal was not completed and Metzgar returned to Coeur d'Alene.

Later, Chiniquy telephoned Metzgar they had decided to make the loan for $12,000; that the premium would be $4,000; and the note and mortgage would be in the sum of $16,000.

On or about April 20, Blair and Chiniquy came to Coeur d'Alene and with Metzgar, called at the offices of attorney Jnudson for the purpose of completing the transaction. Mr. Knudson was instructed to prepare a promissory note in the sum of $16,000 in favor of Blair, due in one year, secured by a mortgage on the Smelterville property, and a conditional sale contract from Blair to respondent covering the equipment involved.

That same day, when the parties were in Spokane, Washington, Chiniquy computed the cash price for the equipment to be furnished as $6,342; and the time price on conditional contract of sale to be $6,672.44, payable $1,842 down and $397.54 per month for one year. (Plf's. Exh. No. 3)

After Chiniquy and Blair returned to Seattle, Chiniquy wrote a letter to attorney Knudson (Plf's. Exh. No. 15.), as follows:

'April 22, 1948

'Mr. Knutson, Attorney

'Coeur d'Alene, Idaho

'Dear Mr. Knutson:

'After leaving your office we talked over and decided to rearrange the loan to Mr. Ed Metzger and his corporation. As Mr. Metzger may have told you he has increased his purchase of the equipment in the amount of $655.00. Added to the $5687.00, makes it $6342.00, plus interest of $330.44, of which we want to add another $4000.00, making the Conditional Sales Contract for the amount of $10,672.44. Payments on this Conditional Contract are to be $1842.00, on the signing of the Contract and there is to be eleven monthly payments of $397.54, and the twelfth payment to be for $4,372.94. This covers the Conditional Contract with the exception of the list and serial numbers of the various pieces of equipment to be included and described on the Order and Conditional Contract.

'As to the first mortgage; the first mortgage will then be for $12,000.00, and this is to be secured by first lean on the property known as the Gem Theatre, Smelterville, Idaho. The interest to be charged on the $12,000.00, is to be $300.00, for the year. This is a flat interest and this mortgage and the Conditional Sales Contract should call for the highest interest rate the State will permit after maturity.

'I hope I have made myself clear in this matter and if there are any further questions, please feel free to call me collect by telephone.

'Respectfully,

'/s/ O. L. Chiniquy

'Oscar L. Chiniquy

'OLC/bb

'PS. This letter is written by me for Mr. George Blair and has his full approval.'

Chiniquy, at the same time, wrote to Metzgar telling him of the change of plans and stating that 'other than juggling the figures, it is the same as we originally planned.'

Under date of May 12, 1948, respondent signed and delivered its note and mortgage to Blair due in one year, in the sum of $12,300. At the same time, a conditional sale contract from George C. Blair to respondent was executed covering the equipment in question, in the principal sum of $10,672.44, payable $1,842 cash and the sum of $397.54 on the 10th of each month for eleven consecutive months and the sum of $4,372.94 on May 10, 1949.

In the meantime, appellant Blair gave to respondent his personal check for $500 when in Coeur d'Alene, and caused to be forwarded to attorney Knudson a draft for $11,500. With this money, Knudson paid off the first mortgage and certain liens and taxes on the building, paid the $1,842 first payment on the equipment and turned the balance of the money to respondent. The equipment was thereupon shipped by appellant corporation and received by respondent.

Appellants testified an oral sale of the theater equipment was made by appellant corporation to Blair prior to the execution of the conditional sale contract between Blair and respondent. On August 17, 1948, a written conditional sale contract was executed between the National Theater Supply and Blair covering the same equipment for the time price of $6,591.26 with the down payment of $1,842 and monthly payments of $395.78 for one year. This conditional sale contract was fully paid by Blair pursuant to its terms.

During the succeeding year, respondent made nine monthly payments on its conditional sale contract in the sum of $397.54 each. On May 31, 1949, respondent paid to Attorney Knudson for George C. Blair, the sum of $12,652.58 which sum represented the promissory note and $352.58 initial payment on a renewal conditional sale contract. The new conditional sale contract was between Blair and respondent, covered the same equipment, was in the principal sum of $5,652.58, representing the amount unpaid by the terms of the original conditional sale contract plus the sum of $400, and was payable in twelve consecutive monthly payments commencing June 10, 1949.

On May 31, 1949, respondent commenced this...