Walley v. Deseret National Bank

• Citation: 47 P. 147,14 Utah 305
• Decision Date: 09 December 1896
• Docket Number: 741
• Court: Supreme Court of Utah
• Parties: T. A. WALLEY, RESPONDENT, v. THE DESERET NATIONAL BANK, APPELLANT

47 P. 147

14 Utah 305

T. A. WALLEY, RESPONDENT, v. THE DESERET NATIONAL BANK, APPELLANT

No. 741

Supreme Court of Utah

December 9, 1896

Appeal from the Third District Court, Salt Lake county. Hon. John A Street, Judge.

Action by T. A. Walley against the Deseret National Bank for the conversion of two promissory notes deposited as collateral security for a loan. From a judgment for plaintiff, defendant appeals.

Judgment of the district court set aside and reversed, with costs, and a new trial granted.

Young &amp Moyle and C. S. Varian, for appellant:

The mere payment of interest in advance is not of itself sufficient to extend the time of the payment of the principal of the note. Oxford Bank v. Lewis, 8 Pick. 457; Blackstone Bank v. Hill, 10 Pick. 129; Bank v Weller, 17 Pick. 150; Dow v. Tuttle, 4 Mass. 414; 3 Randolph Com. Paper, secs. 958, 961, 963; 10 Pet. 257; Vare v. Woodward, 29 O. St. 245; 78 Ill. 446; 17 Wend. 501; Bank v. Rawlins, 13 Me. 202; Chitty on Bills, 370, 371, 379; 14 Peters 202, 607; Davy v. Prendergrass, 5th Barn. & Ald. 187.

"Demand and refusal do not in themselves constitute conversion; but they are evidence of conversion at some previous period." Wood v. Carson River Wood Co., 13 Nev. 61; Whitman Co. v. Tritle, 4 Nev. 497; Earl v. Van Benson, 2 Halst. 244; Newsum v. Newsum, 1 Leigh 86, 101; Reford v. Montgomery, 7 Ver. 411; Hews v. McKinney, 3 Mo. 382; Cobb v. Wallace, 5 Cole (Tenn.) 538; Barker v. Lothrop, 155 Mass. 376; Donnahoe v. Williams, 24 Ark. 264; Perkins v. Barnes, 3 Nev. 557; State v. Patten, 49 Me. 383; Hardy v. Keeler, 15 Ill. 152; Galvin v. Smith, 2 Fairfield (Me.) 28; Hyde v. Noble, 13 N.H. 494; Freed v. Anderson, 10 Mich. 357; Soames v. Watts, 1 Carr & Paine 400; Yates v. Carnsew, 3 Carr & Paine 100; 1 Chitty on Pleadings, 157, 158; Woodbury v. Long, 8 Pick. 543; Tompkins v. Hale, 3 Wend. 406; Stanley v. Gaylord, 1 Cush. 536; Riley v. Boston, 11 Cush. 11-14; 2 Addison on Torts 395.

Where there is no allegation in the complaint of the value of said notes, the market value has to be determined in regard to the real damage done plaintiff. Galligher v. Jones, 129 U.S. 193; Baker v. Drake, 53 N.Y. 211; 66 N.Y. 518; Gruman v. Smith, 81 N.Y. 25; Colt v. Owen, 90 N.Y. 368; Wright v. Bank of Metropolis, 110 N.Y. 237; McEawan v. Morley, 60 Ill. 32; Kauntz v. Kirkpatrick, 72 Penn. St. 376; 2 Benj. on Sales, 1017; Id. 35.

The fact that execution has been returned nulla bona is proof of insolvency. Phillips v. Webster, 85 Ill. 146; Brown v. Brooks, 25 Pa. 210; Buttram v. Jackson, 32 Ga. 409; Rice, vol. 2, p. 220e and f; see 29 Kan. 689.

Jones & Schroeder, for respondent:

Payment and acceptance of interest constitutes of itself such an agreement for the extension of time until the expiration of the period for which interest is thus paid in advance. Warner v. Campbell, 26 Ill. 286; N. H. Savings Bank v. Fla, 11 N.H. 341; People's Bank v. Pearson, 30 Vt. 715; Lemon v. Whitman, 75 Ind. 325; Hollingsworth v. Tomlinson, 108 N.C. 245; Flynn v. Mudd, 27 Ill. 327; 30 Miss. 436; 37 Ga. 384; 6 Bush. (Ken.) 556; 43 Ind. 393; 50 Ind. 378; 20 S. E. (Ga.) 266; 10 Humph. (Tenn.) 447; 10 N.H. 322.

In Baker v. Drake (53 N.Y. 216), which is the recognized leading case on the measure of damages, in an action like this, the court says: "An amount sufficient to indemnify the party injured for the loss, which is the natural, reasonable, and proximate result of the wrongful act complained of, and which a proper degree of prudence on the part of the complainant would not have averted is the measure of damages." See 13 N.Y.S. 826, in cases. Green v. Boston R. R. Co., 35 Am. Rep. 371; Ripley v. Davis, 90 Am. Dec. 262.

MINER, J. ZANE, C. J., and BARTCH, J., concur.

OPINION

MINER, J.:

On the 18th day of December, 1893, plaintiff filed his complaint for the alleged conversion by the defendant of two certain promissory notes, made by John Beck, one for $ 5,000, and one for $ 1,000, both dated April 1, 1892, payable April 1, 1893, and alleged that on the 16th day of December, 1893, he was the owner of said notes, and on that day defendant unlawfully disposed of and converted the same to its own use. The defendant answered, denying plaintiff's ownership of the notes, or its conversion of the same, and alleged that on September 6, 1892, plaintiff gave his note to defendant for $ 1,000, with interest at 1 per cent. per month, and secured the payment of the same by pledging the notes of Beck; that the note provides that, in case of default in payment, the defendant should sell said pledged notes at public or private sale, with or without notice, in payment of the $ 1,000 note; that said principal note fell due on April 1, 1893, and was not paid, and that on the 16th day of June, 1893, defendant sold said pledged notes to James T. Little, he being the highest bidder, for the sum of $ 1,000, which was credited upon plaintiff's note, and that afterwards Little tendered said notes to plaintiff on payment of the principal note; that the price for which the notes were sold on June 16, 1893, was all that they were worth in that year. The case was tried before the court without a jury, whereupon the court made its findings of fact and conclusions of law; and also special findings, and rendered judgment in favor of the plaintiff in the sum of $ 5,381.67, with interest thereon at 8 per cent. from December 16, 1893, amounting to the total sum of $ 6,376.37. From this judgment defendant appeals to this court.

In the course of argument, and in the briefs of counsel, the question as to the effect of the sale of the Beck notes to James T. Little, as an officer of the bank, is discussed to a considerable extent; but, upon an examination, we discover no finding that Little was an officer of the bank, or in any way connected with it at the time, and therefore refrain from passing upon the questions involved in that subject. The judgment must find its support in the actual state of facts ascertained and reported by the judge, or fail. No aid can be derived from facts not embodied in the findings. Brown v. McHugh, 36 Mich. 433.

The note of $ 1,000, given by plaintiff to the bank, September 6, 1892, due April 1, 1893, for which the Beck notes were pledged as security, gave the defendant the full authority to sell said Beck notes, at public or private sale, upon non-performance of the promise to pay at maturity and without notice. The interest was paid upon the note to the 6th day of April, 1893. On April 27, 1893, plaintiff paid $ 10, and on June 3, 1893, $ 10, and both payments were made and indorsed as interest. On June 10, 1893, plaintiff paid $ 10 to defendant. The court found that the last payment paid the interest for the month of June, 1893, and that the time for the payment of the principal note was extended beyond the 16th day of June, 1893. On the 16th day of June, 1893, defendant sold or exchanged the Beck notes to Little for $ 1,000, and applied the same to the payment of plaintiff's note, and at once notified the plaintiff of the sale, and at the same time returned to the plaintiff $ 7 overpaid, which plaintiff refused to accept. On December 16, 1893, plaintiff made tender of the amount due on the principal note, and made demand for the Beck notes. The court found that the plaintiff was insolvent. This suit was brought on the 18th day of December, 1893. There is a conflict in the evidence as to the purpose of the last payment of $ 10. The court found that it was paid as interest, and that the note was therefore extended beyond the time when the bank sold the note to Little because of the non-payment of the principal note when due. The plaintiff testified, in substance, that he went to the bank on June 10, 1893, when he made the last payment of $ 10. The president, Mr. Hills, said "he wanted my note paid as soon as I could. Nothing was said about the extension of time when I made this payment. I had previously paid $ 10 at different times each month. At the last payment I said, 'Here is the interest, Mr. Hills,' and he said, 'All right,' and took the money." Mr. Hills testified that, when the plaintiff made the last payment of $ 10, he told him he would endorse the payment, but would not extend the time. When the last payment was made, he says, "I told the plaintiff we would have to have the whole note paid or sell the collateral. Plaintiff replied that he was not prepared to pay the note then. I did not agree to extend the time of payment at any time. It was not the custom of the bank to extend payments without making an entry showing it." The court found that the time for payment of the plaintiff's note was extended beyond June 16, 1893. The only evidence to support this finding is that the payment of interest on June 10th was made in advance, which covered the period when the bank sold the collateral notes to Little, and that the interest so paid was at the rate of 1 per cent. per month, as borne by the plaintiff's note, before the same was due; plaintiff claiming that the note only drew 8 per cent. after it was due, and that the extra interest was a consideration for the extension. The decided weight of authority, and, it seems, the better reason, is that the payment of interest in advance on a debt by the principal to the creditor is of itself, without more, sufficient prima facie evidence of an agreement to extend the time of payment for the period for which the interest is paid. The payment in advance pre-supposes that delay of the payment of the principal is to be given for that time. The consideration for an agreement for delay in payment is implied from the transaction, if not sufficiently expressed. But this presumption may be overcome by evidence of a refusal to extend, demand of payment, or any other...