Robinson v. Linn

• Citation: 65 P.2d 669,155 Or. 591
• Parties: ROBINSON v. LINN et al.
• Decision Date: 02 March 1937
• Court: Oregon Supreme Court

65 P.2d 669

155 Or. 591

ROBINSON v. LINN et al.

Supreme Court of Oregon

March 2, 1937

Department No. 2.

Appeal from Circuit Court, Multnomah County; T. E. J. Duffy, Judge.

Action by Frances G. Robinson against Fletcher Linn and others. Judgment for the defendants, and plaintiff appeals.

Affirmed.

Keith A. Caldwell, of Portland, for appellant.

A. L Veazie, of Portland (Veazie & Veazie, of Portland, on the brief), for respondents.

BEAN Chief Justice.

This is an action upon a promissory note dated January 17, 1930, for the sum of $2,000, with interest at the rate of 7 per cent per annum, due on or before March 1, 1930, in favor of E. G Robinson. The note is in the usual form, signed by the Pacific Coast Linen Mills, by Fletcher Linn, treasurer, and A. T. Allen, assistant secretary, and indorsed on the back, as guarantors, by defendants Fletcher Linn, James G. Walker, Jr., and J. P. Rasmussen. The note was indorsed by E. G. Robinson to Frances G. Robinson, the wife of E. G. Robinson, on October 15, 1932. The cause was tried by the court without the intervention of a jury and findings of fact were made and judgment rendered in favor of defendants. Plaintiff appeals.

The testimony tended to show, and the trial court found, in substance, as follows: That on November 29, 1929, E. G. Robinson, husband of plaintiff and payee in the note, agreed with the Pacific Coast Linen Mills, a corporation, that it should elect him president and general manager at a salary of $350 per month, half of which should be payable in stock and half in cash, in consideration of which he should subscribe for $5,000 of the company's preferred stock to be paid for when he should collect his money on certain notes of the Portland Electric Power Company held by him and soon to fall due, and on the further condition that he should receive from the company 100 shares of its common stock and from the defendant Linn 50 shares additional of the common stock, which conditions the company and Linn agreed to and performed. Pursuant to such arrangement, E. G. Robinson was elected president and manager of the corporation on December 9, 1929. On January 17, 1930, E. G. Robinson stated to the defendants and indorsers that the Pacific Coast Linen Mills was urgently in need of money to meet its pay roll. He further stated to them that a payment would fall due to him in the near future on one of the notes of the Portland Electric Power Company, which he was under agreement to apply on his stock subscription, and he proposed to the defendants, named as guarantors on the note, whom we will hereafter call the defendants, and to the corporation, that if the Pacific Coast Linen Mills would sign a note in the form set forth in the complaint and the defendants would sign a guaranty thereon in the form set forth in the complaint, he would use the same to raise immediately thereon from a friend of his the sum of $2,000 for the use of the corporation, and that at or before the maturity of the note, Robinson would collect from the Portland Electric Power Company the sum of $2,000, and therewith take up said note from the holder and discharge the same as a payment of his indebtedness to the Pacific Coast Linen Mills of $5,000 for his agreed subscription to its capital stock. The Pacific Coast Linen Mills and defendants herein relied upon said representations and promises of E. G. Robinson and acceded to his proposal. Pursuant to said agreement and understanding, and for said particular purpose and no other, the form of promissory note and the form of guaranty set forth in the complaint were signed and delivered respectively by the Pacific Coast Linen Mills and by the defendants and were received and accepted by E. G. Robinson. Mr. Robinson did not use the note and guaranty for the special purpose for which they were delivered, but instead thereof he raised the amount of $2,000 by obtaining a loan on January 18, 1930, from the Hibernia Commercial & Savings Bank by giving his own note therefor and pledging to the bank the promissory note of the Portland Electric Power Company for the amount of $2,500, principal, maturing on March 1, 1930, same being one of the notes from the proceeds of which he had promised and agreed to make payments on his stock subscription, and being the particular note about the fall due, to which he had referred in his negotiations with the defendants. On January 18, 1930, E. G. Robinson deposited to the account of the Pacific Coast Linen Mills in said bank the sum of $2,000, and he was thereupon credited on the books of the company with that sum. On March 1, 1930, E. G. Robinson collected from the Portland Electric Power Company on the note the full amount of principal and interest due thereon and with said funds he discharged his loan obtained from the Hibernia Commercial & Savings Bank. At this time he was president and general manager of the Pacific Coast Linen Mills and all of its business affairs were being conducted under his general supervision. In view of the special purpose for which the note and guaranty had been signed and his agreement in respect thereto, as stated, it was his duty in good faith to the Pacific Coast Linen Mills and defendants herein, when he received the payment from the Portland Electric Power Company to concel and retire the note and guaranty, but instead of doing so he has wrongfully retained possession thereof and transferred the same long after maturity to his wife, the plaintiff herein. On January 18, 1930, when E. G. Robinson was given credit on the books of the Pacific Coast Linen Mills for said $2,000, he was indebted to the corporation on account of his agreement to subscribe for $5,000 of its stock. A payment of $2,000 fell due on his stock subscription when he received payment of his promissory note from the Portland Electric Power Company on March 1, 1930. In 1930 the Pacific Coast Linen Mills, with the knowledge and acquiescence of E. G. Robinson, charged him on its books with the amount of his stock subscription of $5,000, and thereby the amount of $2,000 was applied on his stock subscription and the note was paid in full.

It is contended by E. G. Robinson, on behalf of the plaintiff, that the $2,000, the principal amount of the note sued on, was a "straight out and out loan" to the company. The testimony on behalf of defendants is strictly to the contrary.

It perhaps should be mentioned that the findings of fact made by the trial court, under the statute (Code 1930, § 2-503), have the same force and effect as the verdict of the jury; hence the court is not concerned with a conflict in the testimony. Unquestionably the testimony tended to show that E. G. Robinson promised to subscribe for $5,000 of the stock of the company, and it was understood and agreed that the $2,000 should be in part payment for the subscription of stock.

Upon receiving 100 shares of the capital stock from Fletcher Linn, pursuant to the agreement, E. G. Robinson executed the following receipt:

"February 25, 1930. Received of Fletcher Linn one hundred shares of common stock of Pacific Coast Linen Mills, which is to be held by me and voted at stockholders' meetings and is to become mine only on payment of my subscription for $5,000. E. G. Robinson."

A letter signed by E. G. Robinson, dated January 2, 1930, addressed to the company, which shows a part of the transaction, reads as follows:

"After my systematic and analytical study of the industry in Europe, and after making a thorough investigation of your plant at Vancouver, Washington, and discussing with your officers your program for the future, I am greatly pleased to invest my capital and become President and Official Head of your Company."

Plaintiff assigns that the court erred in permitting the defendants to prove the contract in regard to purchase of stock and the arrangement in regard to obtaining $2,000 for the company in part payment of the stock, contending that it is varying and contradicting the terms of the promissory note. The testimony tended to show, in effect, that the agreement between the parties was that the $2,000 obtained by the note should be applied in part payment for the stock subscription by E. G. Robinson and that said $2,000 was so obtained, and when the money was received by Robinson from the Portland Electric Power Company and the transaction was perfected, the note was thereby satisfied and paid. We see no infringement of the rule in regard to contradicting the terms of a written instrument. The defendants, as the testimony indicated and the court in substance found, were accommodation parties and signed the note as indorsers, without receiving value therefor and for the purpose of lending their names to E. G Robinson. See section...