Spokane Security Finance Co. v. J. A. Anderson Co., Inc.

• Court: Washington Supreme Court
• Writing for the Court: PER CURIAM.
• Citation: Spokane Security Finance Co. v. J. A. Anderson Co., Inc., 39 P.2d 606, 180 Wash. 691 (Wash. 1935)
• Decision Date: 16 January 1935
• Docket Number: 24902.
• Parties: SPOKANE SECURITY FINANCE CO. v. J. A. ANDERSON CO., Inc.

39 P.2d 606

180 Wash. 691

SPOKANE SECURITY FINANCE CO. v. J. A. ANDERSON CO., Inc.

No. 24902.

Supreme Court of Washington, En Banc.

January 16, 1935

Appeal from Superior Court, Spokane County; William A. Huneke Judge.

On rehearing.

For former opinion, see 33 P.2d 102.

G. E Lovell, of Spokane, for appellant.

Danson Lowe & Danson, of Spokane, for respondent.

PER CURIAM.

Upon a rehearing En Banc, a majority of the court adheres to the dpartmental opinion heretofore filed herein, and reported in 33 P.2d 102.

BEALS J., dissents.

MILLARD, Chief Justice (dissenting).

On October 20, 1924, Rose M. Bevan purchased certain personal property (furniture, carpets, etc.) on conditional sale contract from Joseph Ellor and wife. A portion of the purchase price of the property was paid at the time of the execution of the contract and delivery of possession of the property to the vendee. The balance of the purchase price is evidenced by a negotiable promissory note, executed and delivered by the vendee to her vendors, for $6,000 payable in monthly installments of $75, beginning November 1, 1924. In 1931, the note was assigned by the payees thereof to the plaintiff. Subsequently, in satisfaction of the claim of her landlord (J. A. Anderson Co., Inc.), for rental of the hotel building in which she used the personal property, Vendee Bevan, by bill of sale, transferred her interest in the personal property to her landlord. The trial court found, and the evidence does not preponderate against that finding that, in consideration of the transfer to it of the personal property, the landlord orally agreed with Vendee Bevan to pay the balance due the plaintiff upon the indebtedness. The bill of sale recites that it is subject to the contract under which Rose M. Bevan purchased the personal property from the Ellors. The bill of sale does not provide for assumption by the landlord of payment of the indebtedness.

In August, 1932, plaintiff commenced an action against Rose M. Bevan, Joseph Ellor and wife, and J. A. Anderson Company, Inc., to recover the balance due upon the purchase price of the personal property in question. The complaint, so far as material, reads as follows:

'That on October 20th, 1924, defendant Rose Bevan made, executed and delivered to Joseph Ellor and Emily Ellor a promissory note in the sum of $6,000.00 which note was payable at the rate of $75.00 per month and is past due and unpaid.

'That the said note has been assigned and transferred to this plaintiff and this plaintiff is the legal holder and owner thereof.

'That the defendants, Joseph Ellor and Emily Ellor, endorsed the same, guaranteed the same * * * and are indebted on the said note for all the sums now due.

'That said note provides for a reasonable attorney's fee, and the sum of $100.00 is a reasonable attorney's fee herein.

'That as security for the said indebtedness at the time of making the same, Joseph Ellor and Emily Ellor, his wife, agreed to transfer to Rose Bevan, certain personal property under a conditional sale contract, and the said personal property was left in the possession and control of Rose Bevan. That the said personal property has, through mesne conveyances, been transferred to J. A. Anderson Co. Inc., and J. A. Anderson Co. Inc., is now the legal owner of the said personal property. That at the time of the transfer of the said personal property to the said J. A. Anderson Co. Inc., as a part consideration for the transfer thereof, the said J. A. Anderson Co. Inc., assumed and agreed to pay all claims against the said personal property including the claim set forth herein.

'That there is due on this note the sum of $989.93 * * *

'Wherefore, plaintiff prays judgment against the defendants and each and all of them in the sum of $989.93, and for its costs and disbursements in this action expended including a reasonable attorney's fee of $100.00.

'That it may be decreed that J. A. Anderson Co. Inc., is the primary debtor and that the other defendants herein are sureties.'

The cause was tried to the court, which found that the personal property was transferred by Rose M. Bevan to J. A. Anderson Company, Inc., 'in full satisfaction of and in consideration of the discharge of all claims of lien which said J. A. Anderson Co. Inc., had in equities of the vendors in and to the said personal property.' The court further found that, at the time of the conveyance, the Anderson Company agreed with Rose M. Bevan 'to pay the balance due the plaintiff upon said indebtedness. That there is due on said note the sum of $989.93 with interest. * * *'

The trial court filed a memorandum opinion reading, in part, as follows, and entered judgment of dismissal:

'In purchasing the Englehorn hotel, Anderson orally assumed and agreed to pay the note which had been given by a former purchaser to evidence a part of the purchase price of the hotel and which still remained in part unpaid, and to recover which this action is brought. Anderson's signature nowhere appears on the note, and defendant contends he cannot be held liable under the section named. The language of that section is:

"No person is liable on the instrument whose signature does not appear thereon * * *'

'And in Frazey v. Casey, 96 Wash. 422 (165 P. 104), the Supreme Court held, under like circumstances, that the purchaser of land who had orally assumed a note secured by mortgage on the land could not be held liable for the note, because his signature did not appear on the note. Their language leaves no room for construction. They say, 'Under this section of the statute, Mr. Casey's signature must appear upon the note Before he may be held liable thereon. Mr. Casey was not the maker of the note. He did not endorse it, and if this section means what it says, it is difficult to understand how Mr. Casey may be held liable in an action at law upon the note which he did not sign or endorse.' This construction was upheld in Security State Bank v. Adkins, 134 Wash. 94 (235 P. 18), and again in Federal Land Bank v. Miller, 155 Wash. 479, 484 (284 P. 751). The case of Rodger v. Johnson, 148 Wash. 675 (270 P. 105) is almost identical with the present case on the facts, and the Supreme Court there held that an assignee of property conditionally sold, who assumes payment of a note as part of the consideration is liable in an action on the note. I assume the assumption was oral though that fact does not appear. Manifestly, the statute was not called to the Court's attention for it is not mentioned, and the same is true respecting the Frazey Case supra. The Rodger Case was decided upon equitable principles and not upon this statute. If the statute had been called to the court's attention, no doubt the judgment would have been otherwise, for equity will always yield to a countervailing statute. * * * Not only is that language of the Frazey Case clear and as yet unmodified, but the statute itself is clear and hardly susceptible to construction other than its clear statement. * * *'

By departmental opinion, we affirmed the judgment on plaintiff's appeal therefrom. Spokane Security Finance Co. v. J. A. Anderson Co., Inc., 33 P.2d 102. The cause is again Before us, appellant's petition for a rehearing En Banc having been granted.

There can be no sensible distinction between the case of a legal title conveyed to secure the payment of a debt, and a legal title retained to secure payment. Taylor v. Interstate Investment Co., 75 Wash. 490, 135 P. 240. It follows, as counsel for appellant argues, that conditional sale contracts may be assumed orally the same as any other mortgage indebtedness, payment of which has been orally assumed by a grantee. We held in Rodger v. Johnson, 148 Wash. 675, 270 P. 105; Great Western Theatre Equipment, Inc., v. M. & E. Theatres, Inc., 164 Wash. 557, 3 P.2d 1003, 7 P.2d 1119; National Credit Co. v. Casco Co., 173 Wash. 275, 22 P.2d 670; and other cases, that the purchaser of property may orally assume the obligations of a conditional sale contract and be bound thereby.

Insisting that this is not an action to enforce the terms of the conditional sale contract, but an action upon a note orally assumed, respondent argues that the statute (Rem. Rev. Stat. § 3409) declaring that no person shall be liable on a negotiable instrument whose signature does not appear thereon precludes enforcement of payment against respondent, who did not sign the note either as maker or indorser.

We held, in Swenson v. Stoltz, 36 Wash. 318, 78 P. 999 1000, 2 Ann. Cas. 504, that...