Umpqua Valley Bank of Roseburg v. Wilson

• Citation: 252 P. 563,120 Or. 396
• Parties: UMPQUA VALLEY BANK OF ROSEBURG v. WILSON. [a1]
• Decision Date: 25 January 1927
• Court: Oregon Supreme Court

252 P. 563

120 Or. 396

UMPQUA VALLEY BANK OF ROSEBURG v. WILSON. ^[a1]

Supreme Court of Oregon

January 25, 1927

Department 2.

Appeal from Circuit Court, Douglas County; C. M. Thomas, Judge.

Action by the Umpqua Valley Bank of Roseburg against H. L. Wilson. Judgment for plaintiff, and defendant appeals. Affirmed.

This is an action by the Umpqua Valley Bank against H. L. Wilson to recover the sum of $3,793.05, with interest. The cause was tried to the court without the intervention of a jury. Findings of fact and conclusions of law were made and a judgment entered in favor of plaintiff. Defendant appeals.

The action is founded upon an oral promise of the defendant, H L. Wilson, to pay a series of promissory notes executed by Fir-Pine Lumber Company, a corporation, to the plaintiff, the Umpqua Valley Bank. Each note was guaranteed by F. F Williams. The first note was for $2,000, dated March 29 1918; the second note was for $2,000, dated April 19, 1918 the third note was for $1,000, dated May 6, 1918; the fourth note was for $3,000, dated October 16, 1918.

On January 16, 1922, acting under his agreement with Lystul and Lawson, defendant paid to the bank the sum of $2,007.11 on account of the Fir-Pine Lumber Company's note.

It is developed by the pleadings and evidence substantially as follows:

On January 1, 1922, the Fir-Pine Lumber Company, a corporation was indebted to the plaintiff bank in the sum of $5,536.48 and to J. O. Lystul and Thomas E. Lawson, partners doing business as Lystul and Lawson Lumber Company, about the sum of $22,000. It was further indebted to Topaz Land Company an amount secured by mortgage on a large part of the Fir-Pine Lumber Company's real property, the exact amount not being given. And in addition to the above amounts the Fir-Pine Lumber Company was also indebted in small amounts to other persons. The Fir-Pine Lumber Company was insolvent.

About January 11, 1922, defendant, H. L. Wilson, was a stockholder and officer of the Fir-Pine Lumber Company, and made an agreement with Lystul and Lawson whereby he would cause the Fir-Pine Lumber Company to sell and convey to Lystul and Lawson all of its property, real and personal, excepting outstanding accounts, notes, and bills receivable, in consideration of Lystul and Lawson canceling and satisfying all indebtedness of Fir-Pine Lumber Company to them, and in addition thereto Lystul and Lawson agreed to assume and pay certain obligations of Fir-Pine Lumber Company. The transfer of the Fir-Pine Lumber Company's property to Lystul and Lawson was to be made subject to a mortgage in favor of Topaz Land Company, which they assumed. In consideration of the transfer and the satisfaction of the most of the indebtedness of the Fir-Pine Lumber Company by Lystul and Lawson, the defendant agreed to and with Lystul and Lawson that he would personally pay the indebtedness of Fir-Pine Lumber Company to the plaintiff bank, in order to prevent plaintiff from proceeding against Fir-Pine Lumber Company for the collection of its indebtedness, and to further prevent it from filing a petition in bankruptcy against the Fir-Pine Lumber Company on account of the preference given Lystul and Lawson over plaintiff in transferring all of its property to Lystul and Lawson. As a further consideration for the transfer, Lystul and Lawson agreed to give the defendant an option to individually purchase all of the property transferred to Lystul and Lawson by the Fir-Pine Lumber Company for a price equal in amount to Lystul and Lawson's claim against the Fir-Pine Lumber Company plus the indebtedness assumed and agreed to be paid by Lystul and Lawson, such option to expire on the 1st day of February, 1923; that the defendant partly carried into effect his agreement with Lystul and Lawson by causing the Fir-Pine Lumber Company to convey all of its real and personal property to Lystul and Lawson, except accounts, notes, and bills receivable, but subject to the mortgage to the Topaz Land Company, the deed of conveyance being delivered and recorded some time during the month of February, 1922.

It also appears that defendant, Wilson, in further carrying out his agreement with Lystul and Lawson, notified the plaintiff bank of the agreement made with them, and on January 16, 1922, paid the bank $2,007.11, the amount of the principal and interest due on the first note described, and agreed to pay the remainder of the indebtedness within six months from that date; that Lystul and Lawson fully performed their part of the agreement, satisfied their indebtedness against the Fir-Pine Lumber Company, paid other obligations of that company, and gave the defendant, Wilson, individually a written option on the property transferred to them; that the notes, accounts, and bills receivable, retained by the Fir-Pine Lumber Company, were not of sufficient value to pay the indebtedness of the Fir-Pine Lumber Company to the plaintiff bank, and the act of transferring all of its property to Lystul and Lawson constituted a preference and act of bankruptcy; but the plaintiff was prevented from filing any petition in bankruptcy or taking any steps to defeat said preference by reason of its reliance upon the agreement made between Lystul and Lawson and the defendant wherein defendant assumed and agreed to pay the indebtedness of the Fir-Pine Lumber Company to the plaintiff, and upon the further reliance on the part performance of the agreement by the defendant; that the defendant has failed to pay the remaining indebtedness to plaintiff in accordance with his agreement.

The trial court made findings of fact in substance as above stated. The defendant filed exceptions to each of the findings of fact and conclusions of law made by the trial court and offered findings of fact and conclusions of law in his favor which the court declined to sign.

It appears that prior to the time of the transfer of the property to Lystul and Lawson and the agreement of defendant to pay the notes of the Fir-Pine Lumber Company to the plaintiff bank, the management of the Fir-Pine Lumber Company had been almost exclusively in the hands of F. F. Williams, its president. About December 22, 1921, F. F. Williams met with an accident causing his death. Thereafter the defendant, who was a stockholder and had been an officer in the company, took charge of its affairs and discovered that the corporation had been dissolved for nonpayment of its state license fee and was in fact insolvent. He thereupon opened negotiations with Lystul and Lawson for the sale and transfer to them of all the corporate property of the company, and an agreement was reached by which Lystul and Lawson agreed to take over all of the corporate property of the Fir-Pine Lumber Company, subject to the mortgage of Topaz Land Company on the real property which they assumed. They agreed to satisfy their indebtedness of about $22,000 against the company, to pay the amount of its indebtedness of $1,600 to the Glendale State Bank and certain other small claims, and gave the defendant Wilson an option to run for a period of one year for the purchase by Wilson of said corporate properties so taken over by them for an amount equal to the indebtedness of the Fir-Pine Lumber Company assumed and paid by them. It was known at the time of these negotiations by Lystul and Lawson and Wilson that the Fir-Pine Lumber Company was indebted to the plaintiff bank for the amount of such indebtedness, and Wilson, in consideration of Lystul and Lawson taking over the property of the corporation and paying and assuming all of its debts, excepting that to the plaintiff bank, and giving him the option referred to above, agreed with Lystul and Lawson to pay the amount to the bank, Lystul and Lawson refusing to enter into such a contract until the bank's indebtedness was provided for, knowing they would be responsible therefor unless provision was made for taking care of it.

The agreement between Wilson and Lystul and Lawson was fully executed; Wilson procured the reinstatement of his corporation and caused it to transfer all of its property to Lystul and Lawson in pursuance of the foregoing agreement. Lystul and Lawson satisfied the indebtedness of the Fir-Pine Lumber Company to them and to the Glendale State Bank and the other small claims they agreed to assume, and executed and delivered to Williams the option agreed upon. At the time the negotiations were being carried on between the defendant, Wilson, and Lystul and Lawson, the defendant, with Mr. Lystul, went to the plaintiff bank and told its officers of the agreement they had made, which was satisfactory to the bank. Relying thereon the plaintiff bank took no steps to prevent the deal being consummated and did not attempt to recover the amount due it from the property taken over by Lystul and Lawson.

Plaintiff brings this action to recover the balance of the amount from the defendant on the strength of his contract with Lystul and Lawson; the agreement between the defendant and Lystul and Lawson being partly for the benefit of this plaintiff.

A. C. Hough, of Grants Pass (J. O. Watson, of Roseburg, on the brief), for appellant.

Dexter Rice, of Roseburg (Rice & Orcutt, of Roseburg, on the brief), for respondent.

BEAN, J. (after stating the facts as above).

The principal errors...