Seaside National Bank v. Allen

• Decision Date: 07 May 1929
• Docket Number: Civil 2813
• Citation: 277 P. 68,35 Ariz. 302
• Parties: THE SEASIDE NATIONAL BANK, a Corporation, Appellant, v. C. F. ALLEN, EDNA GREGG and JANE GREGG, Appellees
• Court: Arizona Supreme Court

277 P. 68

35 Ariz. 302

THE SEASIDE NATIONAL BANK, a Corporation, Appellant, v. C. F. ALLEN, EDNA GREGG and JANE GREGG, Appellees

Civil No. 2813

Supreme Court of Arizona

May 7, 1929

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge. Judgment affirmed.

Mr. C H. Richeson and Mr. F. L. Zimmerman, for Appellant.

Messrs Sloan, Holton, McKesson & Scott, for Appellees.

OPINION

LOCKWOOD, C. J.

C. F Allen, Edna Gregg and Jane Gregg, hereinafter called appellees, on January 12th, 1926, entered into a contract with John P. Matthews for the purchase of a confectionery store, part of the consideration being cash and the balance in deferred payments, evidenced by certain notes, and entered into possession of the store and ran it until some time in November, 1926. On the twenty-third day of July, Matthews delivered to Morgan Mill & Cabinet Company, hereinafter called the company, his promissory note for $3,000, together with two notes of $3,000 each, given by appellees in pursuance of the contract of purchase above referred to, as collateral to his note. At this time the following indorsements were placed upon appellees' notes by Matthews, or at his suggestion:

"As collateral for Loan $7,225.00.

"JOHN P. MATTHEWS."

"Los Angeles, Cal. , 192 .

"For value received hereby grant and assign the within note together with all rights accrued or to accrue under the deed of trust securing the same, so far as the same relates to this note, and waive presentment, demand, notice, protest and notice of protest."

On August 9th the company borrowed $3,000 from the Seaside National Bank, a corporation, hereinafter called appellant, and pledged as collateral security for its note the Matthews note above referred to, together with the two notes executed by appellees. About the middle of November appellees came to the conclusion that they desired to abandon their contract of purchase of the confectionery business, and after some discussion with Matthews turned back the business to him, upon the agreement that the contract was to be terminated, Matthews taking the business back and returning to appellees all instruments of any kind executed by them, particularly the notes in question.

The Matthews note was not due until July 5th, 1927, and the two notes made by appellees were due respectively July 1st, 1927, and January 1st, 1928. The company note to appellant, which was due November 7th, 1926, carried with it permission to sell the collateral attached, and on December 20th, 1926, appellant sold the Matthews note to one Bradfield, its auditor, for the sum of $25, and eight days later purchased it back from him. The record is silent as to whether or not this sale and resale expressly included appellees' notes.

In April, 1928, Appellant brought this suit on the two $3,000 notes signed by appellees. The latter set up in defense the original contract, that the notes in question were given merely as evidence of the deferred payments in the contract, and that it had been terminated by mutual consent and an agreement had been made for the return of the notes and a redelivery of the business to Matthews as above, and alleged that appellant, at the time it received the notes in question, had full knowledge of the original contract. The case was tried to a jury, which returned a verdict in favor of appellees, and from the judgment on the verdict the bank has appealed.

There are four assignments of error, which we will consider as seems advisable. Two of them refer to matters of procedure, and the others go to the sufficiency of the evidence. It is admitted that, as between appellees and Matthews, the defense set up by the former would have been a good one, and it is further admitted that, if appellant had actual knowledge of the contract referred to at the time it took the company note with its accompanying collateral, or knowledge of such facts that its action in taking appellees' notes amounted to bad faith, it cannot recover in the present action.

The first assignment is that the court erred in admitting the contract of sale between Matthews and appellees, without first requiring proof that the bank had actual knowledge of it. If there was sufficient evidence in the case to go to the jury on the question of the bank's actual knowledge, or of facts from which the jury might impute bad faith on the part of plaintiff, the contract would, of course, be admissible. The order of proof is always discretionary with the court, and if, at any time before the case went to the jury, the necessary evidence above referred to appeared, it was not error for the court to admit the contract, even though it was placed in evidence out of the ordinary and natural order. Logia Suprema, etc., v. Aguirre, 14 Ariz. 390, 129 P. 503; Independent Meat Co., etc., v. Crane Co., 21 Ariz. 1, 184 P. 992. We therefore pass the determination of this question until we have examined all the evidence.

The third assignment is that the court erred in giving a certain instruction. It is the law, of course, that exception cannot be taken to isolated parts of instructions, but they must be considered as a...