BELT
Justice.
This is
an action by the State Superintendent of Banks to recover the
amount due under an alleged contract entered into between the
State Bank of Scotts Mills and the defendants, who were
stockholders in such bank. A general demurrer interposed by
the defendant Brougher to the amended complaint was sustained
and, upon refusal of the plaintiff further to plead, the
action was dismissed.
After
alleging the appointment and qualification of the plaintiff
as Superintendent of Banks and the incorporation of the State
Bank of Scotts Mills, the plaintiff alleges:
"III.
That on or about September 23, 1931, defendants for value,
covenanted to and with State Bank of Scotts Mills under
their hands and seals to pay to the State Bank of Scotts
Mills the sum of $1,250.00 on or before
December 31, 1931, and the further sum of $2,000.00 on or
before December 31, 1932, a substantially true copy of
which covenant and bond is hereunto attached, marked
'Exhibit A' and made a part of this amended
complaint.
"IV.
That said sums have not been paid, nor any part thereof,
except that the sum of $1,250 accruing December 31, 1931,
has been paid in full, and that there is now due, owing and
unpaid upon said bond the full sum of $2,000.00, together
with interest thereon at the rate of six per cent. per
annum from December 31, 1932, until paid.
"V.
That on April 28, 1932, the State Bank of Scotts Mills and
the business and affairs thereof were taken in charge by
the above-named plaintiff for the purpose of
liquidation, and that said bond and covenant was a part of
the assets of said State Bank of Scotts Mills, and that
plaintiff now is the owner and holder thereof, as
Superintendent of Banks of the State of Oregon.
"VI.
That said defendants further promised and agreed that
should suit or action be brought upon such bond and
covenant that they would pay in addition to the costs and
disbursements allowed by statute, such additional sum as
the court may adjudge reasonable as attorney's fees in
said suit or action, and that $200.00 is a reasonable sum
for the court to allow plaintiff as attorney's fees for
the prosecution of this action for the collection of said
bond and covenant."
The
contract referred to in the amended complaint, so far as
material herein, is as follows:
"Whereas,
the Superintendent of Banks acting in conformity to the
laws of the State of Oregon has demanded and requested a
reduction of the investment in certain fixed assets; and
"Whereas,
such elimination or reduction would impair the capital of
said bank and render necessary an assessment
upon the shares of the capital stock of said bank; and
"Now
therefore, for value received and in order to prevent said
assessment we, J. O. Dixon, Albert Rich and A. L. Brougher
of Scotts Mills, Oregon, and each of us, each and all being
stockholders in said State Bank of Scotts Mills,
acknowledge ourselves to be held and firmly bound, jointly
and severally, unto the State Bank of Scotts Mills, Scotts
Mills, Oregon, its successors and assigns, guarantee
the reduction of the above mentioned fixed assets from
the present book value of $7682.00 to $4432.00, for which
reduction or payment, together with all costs of suit and
attorney fees, together with interest thereon, in the event
suit is brought on this obligation, well and truly to be
made, we, and each of us, bind ourselves, our heirs,
administrators, executors and assigns, jointly and
severally, conditioned that said reduction bearing our
guarantee need only be made in the amount of $1250.00
on or before December 31, 1931, and the balance of $2000.00
on or before December 31, 1932, and if not so made
or removed from the assets of the bank by the time
specified, this guarantee to be due and collectible
forthwith.
"We
expressly agree in signing this instrument that this
instrument shall be construed to be and is an absolute
guarantee of said reduction of fixed assets protecting the
bank and its depositors in the amount above set forth. This
guarantee shall never be released or cancelled by said bank
without the express written consent of the Superintendent
of Banks of the State of Oregon or his successor in
office." (Italics ours.)
The
defendant Rich did not demur, but filed an answer to the
amended complaint in which he denied generally the material
allegations thereof and, as an affirmative defense, alleged:
"I.
That on or about the 23rd day of September, A.D. 1931, the
defendant jointly with the State Bank of
Scotts Mills, J. O. Dixon and A. L. Brougher, entered into
a certain contract and agreement, substantially in terms
and conditions as set out and described in Paragraph III of
plaintiff's complaint as 'Exhibit A.'
"II.
That said contract and agreement was made and executed by
this defendant for the purpose only of guaranteeing the
compliance by the State Bank of Scotts Mills, a banking
corporation, with an arbitrary demand of plaintiff, A. A.
Schramm, Acting Superintendent of Banks of the State of
Oregon, that the fixed assets of said State Bank of Scotts
Mills should be reduced on the books of said Bank of Scotts
Mills from a book value of $7,682 to a book value of
$4,432; said reduction to be made: $1,250 thereof on or
before December 31, 1931, and the balance of $2,000 or on
before December 31, 1932.
"III.
That in compliance with the terms and conditions of said
guaranty, the said State Bank of Scotts Mills did, on or
before December 31, 1931, reduce the book value of its
fixed assets in the amount of $1,250 in accordance with the
terms and conditions of said contract and agreement.
"IV.
That prior to the 31st day of December, 1932, and to-wit:
on the _____ day of April, 1932, the performance of the
condition in said bond contained for the reduction of said
assets in the amount of $2,000 on or before December 31,
1932, was rendered impossible to perform by said State Bank
of Scotts Mills, and by this defendant, by operation of
law, in that the plaintiff herein, A. A. Schramm, as
Superintendent of Banks of the State of Oregon, took charge
of and assumed control of said State Bank of Scotts Mills
and of all its assets and immediately began to liquidate
said
bank and dispose of its assets for the benefit of its
several creditors.
"V. That from and after said _____ day of
April, 1932, said State Bank of Scotts Mills was at all times
in charge of and under the control of the plaintiff herein by
reason of which it was impossible for the said State Bank of
Scotts Mills and for this defendant to cause the reduction in
fixed assets to be made as herein designated."
The
defendant Dixon made no appearance.
A
demurrer to the further and separate answer was interposed by
plaintiff, who, upon the same being overruled, refused
further to plead. Judgment was entered dismissing the action
as against the defendant Rich. Plaintiff appeals from both
judgments.
The
amended complaint is drawn on the theory of an absolute and
unconditional promise of the defendant stockholders to pay to
the bank the sum of $2,000 on or before December 31, 1932.
The plaintiff purports to plead the legal effect of an
instrument which has been set out in haec verba and made a
part of the pleading. Hence it is the instrument itself that
prevails and not the conclusions of the pleader as to the
legal effect thereof. Young v. Evans, 104 Or. 619,
208 P. 741; O'Neil v. Twohy Bros. Co., 98 Or.
481, 190 P. 306.
It
appears from the writing in question that the Superintendent
of Banks had demanded a reduction in the book value of
certain fixed assets of the bank and that, to avoid
assessment for the purpose of restoring the impaired capital,
the defendant stockholders convenanted to pay to the bank the
sum of $1,250 on or before December 31, 1931, and the balance
of $2,000 on or before December 31, 1932, in the event that
reductions in the fixed assets were not made by the bank in
the above amounts on the dates specified. More briefly and simply stated, the defendants agreed to pay
certain sums of money to restore impaired capital if the bank
did not make up such deficiency within the above specified
time. Defendants only "guaranteed" to pay in lieu
of an assessment should the bank fail to make the reduction
in assets demanded by the Superintendent of Banks, the
"reduction in fixed assets" meaning the difference
between the book value of such assets and the "actual
cash market value" thereof.
We
cannot agree with appellant that the obligation to pay was
primary and unconditional. The instrument speaks for itself
in that respect. Certainly if the bank, through its earnings
or by reason of a legally authorized reduction in its
capital, had met the objections of the Superintendent of
Banks to the book value of certain fixed assets, there would
be no liability on the part of the defendant stockholders. We
hold, therefore, that the obligation of the defendants to pay
was secondary. There could be no liability established
against the defendants under the instrument set forth in the
amended complaint until it was shown that the bank...
