Scott v. Wyoming Oils, Inc.

• Citation: 52 Wyo. 433,75 P.2d 764
• Decision Date: 01 February 1938
• Docket Number: 2019
• Parties: SCOTT v. WYOMING OILS, INC
• Court: Wyoming Supreme Court

75 P.2d 764

52 Wyo. 433

SCOTT v. WYOMING OILS, INC

No. 2019

Supreme Court of Wyoming

February 1, 1938

ERROR to the District Court of Natrona County; P. W. METZ, Judge.

Action by J. T. Scott against the Wyoming Oils, Inc., to recover an amount due in consequence of plaintiff's payment of two promissory notes executed by defendant and indorsed by plaintiff for defendant's accommodation. Judgment for defendant, and plaintiff brings error.

Reversed.

For the plaintiff in error, there was a brief and oral argument by R H. Nichols and S. J. Lewis of Casper, Wyoming.

(1) The conclusions of fact numbered 3, 4, 6, 9, 10 and 11 are not supported by competent evidence or any evidence; (2) Conclusions of law numbered 1 and 2 are not supported by the conclusions of fact found or the law or evidence in the case (3) The conclusions of fact taken as a whole are not sufficient to support the judgment; the judgment is not sustained by competent evidence or any evidence and is contrary to law; (4) The court erred in admitting testimony of the witness McCamly as to his interest in defendant company and his understanding of the mortgage from refining company to plaintiff; (5) The court erred in admitting incompetent evidence throughout the trial. It is elementary that the mere acceptance, if there was an actual acceptance of an obligation of a third person, is not a release of the original obligor. 46 C. J. 624; Trabucco v. Collins, (Cal.) 179 P. 221; Temple v. Teller Lumber Co., (Colo.) 106 P. 8; Continental Co. v. Arnold, (Okla.) 159 P. 160; Jones v. Wettlin, 39 Wyo. 331; Mills v. McMillan, (Fla.) 82 So. 812; Morrison v. Kendall, (Ind.) 33 N.E. 370. There was no offer of proof supporting the allegation of payment and this was necessary to support a plea of novation. Redewill v. Mateznauer, (Ariz.) 255 P. 486; Kirup v. Anaconda Company, (Mont.) 197 P. 1005; Morrison v. Kendall, (Ind.) 33 N.E. 370. There is neither evidence of a finding that all parties agreed to the new contract, nor the extinguishment of the old contract. 46 C. J. 578, 600, 607, 616 and 618. The board meetings show that it was not the intention of the Refining Company to become liable for the notes. 46 C. J. 618, 685; Fuller v. Stout, (Okla.) 166 P. 898; Emerson Brantingham Implement Company v. Sawyer, 232 S.W. 1007; Morrison v. Kendall, 33 N.E. 370. The admission of McCamly's testimony was error. Portland Body Works v. Motor Supply Company, 119 N.E. 180. The court erred in admitting the testimony of witness Flaherty. Miller v. Billington, (Pa.) 45 A. 372; Central Electric Company v. Electric Company, 120 F. 925; Robins Mining Company v. Murdock, 77 P. 596; Jones v. Wettlin, 39 Wyo. 331; Studebaker Corporation v. Hanson, 24 Wyo. 222; Yount v. Strickland, 17 Wyo. 526; Stoltz v. Carroll, 124 N.E. 226; Redwood Co. v. Decken, 110 P. 591; Bloom's Son Co. v. Haas, 108 S.W. 1078; Bank v. Bagley Bros., 44 Wyo. 244. The judgment should be reversed.

For the defendant in error, there was a brief and oral argument by Edward E. Murane of Casper, Wyoming.

The money received from the Wyoming Trust Company on the notes in suit was used for the refinery unit. Scott's notes were assumed by the new company, which relieved defendant company of any responsibility thereon. Scott was the principal investor in both companies. He approved the Flaherty contract. The contract specifically stated that the debts chargeable to the operation of the refinery unit were to be assumed by the new corporation. A novation was pleaded in defendant's second affirmative defense. All parties agreed to the new contract and the extinguishment of the old contract. The new company accepted all of the refinery assets and agreed to accept all liabilities chargeable to the refinery unit. The new company took over the assets and the stockholders, officers and directors were the same. Flaherty was one of the original parties to the contract, before the court for interpretation. The authorities cited by plaintiff in error are not applicable upon the facts in the present case. The appeal should be dismissed.

RINER, Justice. BLUME, Ch. J., and KIMBALL, J., concur.

OPINION

RINER, Justice.

The district court of Natrona County rendered its judgment declining to subject the Wyoming Oils, Inc., a corporation organized and existing under the laws of this state, to a liability asserted to arise in consequence of two promissory notes signed by it and endorsed by J. T. Scott for the accommodation of that corporation and delivered to the Wyoming Trust Company, a banking institution engaged in business in the City of Casper, Wyoming. The action wherein this result was reached was brought by Scott, as plaintiff, against the Wyoming Oils, Inc., as defendant. That corporation will subsequently be referred to as the "Oil Company" or the "defendant," while Scott, who has brought the record here for review by proceedings in error, may be at times conveniently mentioned as the "plaintiff."

The material facts required to be considered are as follows: The Oil Company on March 20, 1933, executed and delivered to the Wyoming Trust Company of Casper, Wyoming, mentioned above, payable to the latter's order, its promissory note for $ 1500.00, due ninety days after date, with interest at eight per centum per annum, duly endorsed by Scott as an accommodation endorser. It was indicated on said note that it was payable $ 250.00 in thirty days, $ 500.00 in sixty days and $ 750.00 in ninety days. On the principal of this obligation the Oil Company paid March 27, 1933, the sum of $ 250.00, and on May 9, 1933, the sum of $ 500.00, and these were the only payments ever made by it on said note. May 9, 1933, the Oil Company aforesaid also executed and delivered to the Wyoming Trust Company, already mentioned, drawn to the latter's order, another promissory note for $ 2500.00, which was payable $ 500.00 on July 10th and $ 500.00 on the 10th of each following month after date, with interest at eight per cent per annum, said note likewise being duly endorsed by Scott as an accommodation endorser. On account of this note the Oil Company never paid anything either as principal or interest.

In consequence of the failure of the maker of the note to meet these obligations, Scott was compelled to pay the balance due on the first note and the second one in full as follows: Under date of July 3, 1933, he paid the sum of $ 773.46; on August 10, 1933, the sum of $ 1000.00; on September 11, 1933, the sum of $ 500.00; on October 12, 1933, the sum of $ 500.00, and on November 16, 1933, the sum of $ 573.12. Upon Scott making these payments in liquidation of the obligations of the Oil Company, the Wyoming Trust Company endorsed the notes without recourse and delivered them to Scott. The Oil Company declined to reimburse him for these expenditures, and as already intimated, he brought suit in the district court aforesaid to recover the amount claimed to be due in consequence thereof.

The Oil Company was engaged in the oil refining business, and also after May 17, 1933, in operating a place where gasoline and oil were sold at retail. These two phases of its business activities may subsequently be mentioned as the "refinery unit" and the "filling station unit" respectively. There were originally and until some time in August or September, 1933, only eight stockholders in the Oil Company, each holding one share of stock, with the par value of $ 100.00 per share, one of these stockholders being Scott. It seems, also, that early in the Company's business operations, Scott placed the sum of $ 2500.00 in the Oil Company's treasury, and the sum of $ 946.54 was contributed apparently by the other stockholders. No additional shares of stock, however, seem to have been issued to any one in consequence of these contributions, but the control and ownership of the company continued in the eight stockholders, as indicated above, until the latter part of August, 1933. Scott was serving as an officer and director of the corporation at the times the notes aforesaid were given, and continued as such until April 24, 1934.

The business operations of the Oil Company were not very successful, and on August 29, 1933, one H. C. Flaherty submitted to the officers and directors of the Oil Company a proposal whereby it was suggested that the refinery unit should be separated from the filling station unit. This result, in outline, was to be accomplished through the formation of a new corporation which should take over the refinery unit, leaving the filling station unit in the hands of the Oil Company. The capital stock of the latter was to be changed from the par value of $ 100 per share to $ 15 per share. The co-operative plan of that company was to be somewhat altered from the one theretofore in use by it, and Flaherty was to undertake at his own expense a campaign to obtain a minimum of two hundred new stockholders and to improve the filling station unit business. Flaherty was to be given five per cent of the gross receipts from all filling station business, and he was to have "equal authority" with the Oil Company's board of directors to select that corporation's "chief filling station attendants and general manager and to determine all major managerial and policy phases directly connected with the operation of such filling station business." It was also proposed that "the corporation so receiving such refinery property and business to assume sole liability for payment of this company's present unpaid obligations properly chargeable to such business branch, a schedule thereof being hereto attached." The schedule mentioned was, however, not attached to the proposal. It was further proposed that the Oil Company should be required to purchase "all its filling station requirements for...