Robbins v. Wilson Creek State Bank, 27967.

• Citation: 5 Wn.2d 584,105 P.2d 1107
• Decision Date: 03 October 1940
• Docket Number: 27967.
• Parties: ROBBINS v. WILSON CREEK STATE BANK.
• Court: United States State Supreme Court of Washington

105 P.2d 1107

5 Wn.2d 584

ROBBINS v. WILSON CREEK STATE BANK.

No. 27967.

Supreme Court of Washington

October 3, 1940

Department 1.

Action by Charles P. Robbins, shareholders' agent of the shareholders of the Exchange National Bank of Spokane, Wash an insolvent national banking association, against Wilson Creek State Bank to recover money allegedly received by defendant bank as trustee for plaintiff. From a judgment for plaintiff, the defendant appeals.

Affirmed.

BLAKE C.J., dissenting.

The consideration which supported transfer by bank of one of several notes secured by a common mortgage also supported a subsequent agreement by bank that holder should have first call on proceeds of mortgage, and that any claim bank might have against maker and his wife, either secured or unsecured was subordinated to claim of holder, especially where giving of such agreements was customary with bank and had been done on earlier notes assigned by bank to holder.

Appeal from Superior Court, Stevens County; Chas W. greenough, judge.

T. B. Southard, of Wilson Creek, and Thomas I. Oakshott, of Colville, for appellant.

Thomas A. E. Lally and John J. Lally, both of Spokane, for respondent.

SIMPSON Justice.

This is an action to recover money allegedly received by defendant bank, plaintiff's contention being that defendant bank held that money as trustee for plaintiff.

April 9, 1928, E. O. Rosenberg executed and delivered to defendant bank his promissory note for $458.50, payable September 28, 1928. At the same time, and as part of the same transaction, Rosenberg executed two other notes to defendant bank, one in the amount of $1,400, the other $2,200. The note for $458.50 was indorsed and sold to the Exchange National Bank of Spokane on May 14, 1928. Plaintiff is the shareholders' agent of the indorsee bank, now insolvent. At the time the three notes in question were signed, Rosenberg executed a chattel mortgage to defendant covering livestock, farm machinery, and other personal property. This mortgage, dated April 6, 1928, was filed April 11, 1928, which the Auditor of Stevens County, Washington.

Shortly after the assignment of the $458.50 note to the Exchange National Bank (to which we shall refer as 'plaintiff bank'), defendant bank passed a resolution, dated June 5, 1928, in which the board of directors agreed to diligently attend to the collection of the notes, and to apply the proceeds first in the payment of the note which had been sold to plaintiff bank. They further agreed that any and all interest that defendant bank might have in those notes or in the security thereof, or any claim and demand whatsoever it might have against the maker and his wife, either secured or unsecured, was thenceforth to be subrogated to the claim of plaintiff bank against Rosenberg and his wife.

In August, 1928, plaintiff bank sent the $458.50 note to defendant bank for collection.

In January, 1929, plaintiff bank was placed in the hands of a receiver. During January, 1929, defendant bank, after having suspended operations for two months, entered into an agreement with the supervisor of banking whereby certain doubtful assets were to be assigned to three trustees, who were to collect them and apply the proceeds to paying the depositors of the bank, surplus collections to be turned over to defendant bank. As part of the same agreement, the depositors, whom the trustees were to represent, waived sixty percent of the amount due to them from the bank. Included among the doubtful assets turned over to the trustees were the notes of Rosenberg in the amounts of $1,400 and $2,200, along with the mortgage securing those notes and the one which plaintiff bank had purchased.

In July, 1930, the receiver of plaintiff bank wrote to defendant bank and inquired about the note here in question, asking that it be returned to plaintiff bank. Defendant replied through its cashier, informing the plaintiff bank that the note was thought to have been paid, and that an investigation would be made. No further word having been received, the receiver of plaintiff again wrote regarding the matter October 17, 1930, but received no answer to his letter. The receiver testified during the trial that oral statements had been made to him subsequently by the attorney for defendant bank to the effect that the note had been lost. Again in June, September, and October, 1934, further letters were directed to defendant bank regarding the note, but no replies were received.

In October, 1934, plaintiff sued E. O. Rosenberg and his wife on the note. The answer to the complaint, made in October, 1934, stated that April 9, 1929, the mortgage and notes were fully paid and released by the execution of a new note and mortgage for $3,600 payable to the trustees; that the last-mentioned note and mortgage were fully paid and released by a new mortgage and note dated August 14, 1931, for $3,369.54, made payable to the trustees; that the last-mentioned mortgage and note were paid and discharged by a new note and mortgage, in the amount of $3,600, payable to the same trustees and that the last-mentioned note and mortgage were fully paid and discharged December 15, 1933.

Immediately upon receipt of the foregoing answer, the receiver for plaintiff bank wrote to defendant bank, setting forth the details of the answer, and asking for a reply at once. No reply was received. From time to time conversations were had with officers of defendant bank, but the receiver for plaintiff was unable to receive any information. Finally, in January, 1937, an amended complaint was drawn, naming the Rosenbergs and appellant as defendants. Letters were sent by the cashier and attorney of defendant, both stating that the note was lost and had not been paid. The letter from the attorney stated that he would try to get all information regarding the matter together, and asked that in the meantime the case be allowed to rest as it then stood. A letter from the attorney March 9, 1937, again expressed a desire to adjust the matter without a trial, and asked that plaintiff bank refrain from action until the matter had been discussed.

The case finally went to trial February 9, 1938. In the amended complaint it was alleged:

'V. That if the said notes and mortgages were paid by defendant Rosenberg, as above alleged, they were paid to the said Wilson Creek State Bank.

'VI. That when the said Receiver, Thomas A. E. Lally, learned of the facts pleaded in said answer, he made an investigation and diligently tried to learn the true facts regarding the said allegations of defendant Rosenberg, and as to what actually did take place in regard to the note sued on herein; that he has made a diligent attempt to learn the facts, and that he and the plaintiff herein do not at this time know exactly what the true facts are with reference to the allegations of defendants, Rosenberg and wife, in their answer, as above set out, and will not and cannot know until the said defendants, and defendant, Wilson Creek State Bank, fully answer herein, and offer evidence at the trial of this cause.'

Defendant bank demurred upon all of the grounds mentioned in Rem.Rev.Stat.§ 259.

The demurrer was not argued but the attention of the court was called to it at the beginning of the trial at which time counsel stated that there was a question in his mind 'as to whether the bar of the statute of limitations does appear in the complaint or not, or whether it is going to be a matter to be determined by the evidence.'

The trial judge stated that he overruled the demurrer.

The answer of defendant bank alleged that the note was never paid to defendant or anyone authorized by it to receive or accept payment; that the action was not commenced within six years from the date of any payments thereon, and was therefore barred by the statute of limitations; and that the note was never paid by the makers.

During the trial it was shown that the trustees, in taking the new notes and mortgages, had not released the original mortgage securing plaintiff's note, along with the two others; that some $1,300 was received by the trustees, partly from a governmental agency, upon the release of the mortgages executed to the trustees by the Rosenbergs, partly from the Rosenbergs, the major portion of the payments from the Rosenbergs having been the proceeds of the sale of the balance of the chattels covered by the original mortgage here involved; and that the mortgages executed by the Rosenbergs to the trustees, including the one released to the governmental agency, covered the same chattels as were mentioned in the original 1928 mortgage.

Upon the disclosure of the foregoing facts, plaintiff bank asked for and was granted leave to amend its complaint in the following manner:

'XI. That as plaintiff is informed and believes and on information and belief alleges the facts to be: Said Wilson Creek State Bank, at a time unknown to plaintiff or his predecessors in interest and without their knowledge, collected from defendants E. O. Rosenberg and wife and from third parties unknown to plaintiff the full amount that was due and payable from said E. O. Rosenberg and wife by reason of said note and mortgage described in paragraph III of the amended complaint; that said money was obtained by defendant Wilson Creek State Bank, as above alleged, and by having said defendants E. O. Rosenberg and wife execute new mortgages on the chattels described in said first-mentioned mortgage and by directing said third parties to convert said last-mentioned mortgages and chattels in consideration of the sum of money then paid by said third parties to said defendant bank; that all of said assets are now out of existence and are not available as security, or otherwise, to plai...