Stockyards Nat. Bank of South Omaha v. Bragg

• Decision Date: 07 August 1925
• Docket Number: 4180
• Citation: 245 P. 966,67 Utah 60
• Court: Utah Supreme Court
• Parties: STOCKYARDS NAT. BANK OF SOUTH OMAHA v. BRAGG et al

245 P. 966

67 Utah 60

STOCKYARDS NAT. BANK OF SOUTH OMAHA v. BRAGG et al

No. 4180

Supreme Court of Utah

August 7, 1925

Rehearing Denied May 5, 1926.

Appeal from District Court, Third District Salt Lake County; Ephraim Hanson, Judge.

Action by the Stockyards National Bank of South Omaha against Laura I. Bragg and others. Judgment for plaintiff, and defendants appeal.

Reversed and remanded, with directions to dismiss in part and reversed and remanded in part.

H. C. Brome, of Basin, and W. T. Gunter, of Salt Lake City, for appellants.

Morsman, Maxwell & Haggart, of Omaha, Neb., and Van Cott, Riter & Farnsworth, of Salt Lake City, for respondent.

STRAUP, J. GIDEON, C. J., and THURMAN, FRICK, and CHERRY, JJ., concur.

OPINION

STRAUP, J.

This is an action to foreclose two mortgages on real property in the business district of Salt Lake City, Utah. Three of the mortgagors executing the one were adults and two executing the other were minors. The court entered a decree of foreclosure as to all of them. They all appeal.

The claims made are: That the mortgage on behalf of the minors is void for want of authority of their guardian who executed it; that all of the mortgagors were sureties, and that the written obligation secured by the mortgages was, without their consent, materially changed and thereby they were released from their surety obligation; that the adults signed and delivered the mortgage on their behalf on the agreement and understanding that all the right, title and interest of the minors in and to the mortgaged property be also mortgaged by a good and sufficient mortgage, but that the mortgage on behalf of the minors was void, and, since the minors are not bound, neither are the adults.

Fred Bragg, a resident of Wyoming, died in January, 1917. He left surviving him Laura I. Bragg, his widow, and William F., Robert R., Frederic I., and Laura L. Bragg, his children; the last two named being minors. All were residents of Wyoming. Neither the deceased nor any any of his heirs at any time resided in Utah. The principal estate left by the deceased consisted of one-half of the capital stock of Noble & Bragg, a Wyoming corporation engaged in the cattle, sheep and ranching business in Wyoming; and an undivided one-half interest in business property known as the Eagle Block in Salt Lake City, Utah. By will the deceased devised and bequeathed all of his property, real and personal, including the real estate in Salt Lake City and the capital stock of Noble & Bragg, equally to his four children, subject, however, to a life estate of his widow, such life estate to terminate on her remarriage or death. She was 48 years of age and had a life expectancy of 23 years. So it is averred in the complaint of plaintiff. The property in Wyoming was distributed in accordance with the will by the Wyoming court and the real estate in Salt Lake City by the Utah court. Thus the two minors each succeeded to an undivided one-eighth interest in and to the capital stock of Noble & Bragg and to an undivided one-eighth interest in and to the real estate in Salt Lake City, all subject to their mother's life estate. The mother, by the Utah court, was appointed guardian of the minors' estate in Utah which alone consisted of their interest in the real estate in Salt Lake City. No direct evidence was given as to the value of such real estate or of the capital stock of Noble & Bragg; nor as to the value of any of the property of the deceased at the time of his death; nor as to the value of his assets; nor as to the amount of his liabilities. However, there are some indirect averments concerning the financial condition and ability of Noble & Bragg which presently will be noticed.

In May, 1920, Noble & Bragg, in Wyoming, purchased from one Arnold a band of sheep consisting of 7,194 ewes, 345 lambs, and 277 bucks for $ 144, 470, or at an average purchase price per head of nearly $ 19; $ 50,000 were paid in cash, and four promissory notes, one for $ 19,470 and three for $ 25,000 each, with interest at 10 per cent, per annum, payable on November 1, 1920, were given by Noble & Bragg for the unpaid purchase price amounting to $ 94,470. The notes were executed by Noble & Bragg by Laura I. Bragg, president of the company, and by William F. Bragg, the assistant secretary. The notes were also personally indorsed by Laura I. Bragg and William F. Bragg. To secure the payment of the notes, Noble & Bragg gave a chattel mortgage on the sheep so purchased by it. When the notes matured, there had been paid on the principal the sum of $ 10,727 and interest amounting to $ 4,931. The company was financially unable to pay more. It then had no funds or credit with which to carry on the business or to run or care for the sheep. It then was in failing circumstances if not insolvent. It is alleged in the complaint of plaintiff that it was insolvent. Arnold thereupon agreed to extend the time of payment of the notes 11 months, provided Mrs. Bragg and her children, including the minors, would give him a mortgage on all their interest in the Eagle Block in Salt Lake City to secure the payment of the notes. In accordance therewith, and as security for such purpose, Mrs. Bragg and William F. and Robert R. Bragg, the two adult children, December 27, 1920, executed a mortgage conveying to Arnold all their right, title, and interest in and to the Salt Lake real estate as security for the payment of such notes. On the same day Mrs. Bragg, as guardian of the minor's estate in Utah, petitioned the district court of Salt Lake county for authority to mortgage for the same purpose all the right, title, and interest of the minors in and to the Salt Lake real estate. Such order was granted on the 14th day of January, 1921, and, on the same day, she, as guardian, executed a mortgage conveying to Arnold all the right, title, and interest of the minors in and to such real estate to secure the full payment of such notes of Noble & Bragg. On the same day Arnold entered into an agreement with the Continental National Bank of Salt Lake City, who also had a mortgage on about an equal number of sheep of Noble & Bragg other than those covered by Arnold's chattel mortgage, to share equally in caring for and running both herds; Arnold agreeing to secure the services of an experienced and competent man for such purpose at a salary not to exceed $ 200 a month, and on the same day Noble & Bragg agreed with Arnold and the bank that all such expenses incurred and sums advanced in caring for and running the sheep should be a first charge and lien on the sheep, and to be secured by the chattel mortgages held by the bank and Arnold, and to be first paid out of any income derived from sales of wool, lambs, or sheep. It was stipulated between the parties that, when such contract was made and the mortgage of the minors of their interest in the Salt Lake real estate executed, Noble & Bragg was without funds or credit to run and care for the sheep, and that the bank and Arnold entered into such arrangement to so advance moneys to protect their mortgaged property and to save it from depreciation and loss, and that the costs and expenses in running the sheep covered by Arnold's chattel mortgage were about equal to the costs and expenses of running the sheep covered by the bank's mortgage.

The court found that, when the mortgage of the minors' interests in the Salt Lake real estate was executed and the contract entered into between Arnold, the bank, and Noble & Bragg, Arnold took possession of the sheep and between that time and December 3, 1921, paid one-half of the costs and expenses in running and caring for both herds, amounting to $ 11,431.68. On December 3, 1921, the sheep covered by Arnold's chattel mortgage were sold on foreclosure proceedings. The gross amount realized on the sale was $ 28,662. After deducting from that amount the expenses incurred in running the sheep paid out by Arnold and the costs of foreclosure and applying the remainder on the notes, there was left due and unpaid on the notes, principal and interest, the sum of $ 67,293, for which amount foreclosure was decreed and $ 3,000 attorney's fee, and all the right, title, and interest of the mother and of the children, including the minors, in and to the Salt Lake real estate was ordered sold in payment thereof; first, the interests of the mother and of the adult children and then of the minors. Just prior to the commencement of the action, Arnold assigned and transferred the notes and mortgages to plaintiff. It admittedly is not a due course holder.

No point is made as to the appointment of Mrs. Bragg, a nonresident of Utah, as guardian of the estate of the minors in Utah, who were also nonresidents of Utah. She, however, was not, by the Utah court, appointed guardian of the person of the minors, only of their estate in Utah.

A verified petition was filed by her in the Utah court for authority to mortgage the real estate for and on behalf of the minors. That petition was not put in evidence, and therefore is not before us. However, the order authorizing and directing her to execute the mortgage is before us. It recites that a verified petition was filed; that "due notice given" and no protest made, and that "from the petition and legal evidence adduced" all the matters and things set forth in the petition were true, "and that it is for the best interests of said minors and of their estate to grant the prayer of said petition." The order further recites that the minors each had an undivided one-fourth interest in and to an undivided one-half interest in and to the real estate, fully described, subject, however, to the life estate of the mother who was the guardian; that the deceased died in January, 1917, "leaving a large...