Walton v. First Nat. Bank

• Decision Date: 11 October 1889
• Citation: 13 Colo. 265,22 P. 440
• Parties: WALTON v. FIRST NAT. BANK.
• Court: Colorado Supreme Court

22 P. 440

13 Colo. 265

WALTON v. FIRST NAT. BANK.

Supreme Court of Colorado

October 11, 1889

Commissioners' decision. Appeal from district court, San Juan county.

By the complaint in this cause it is alleged that plaintiff, on March 25, 1884, was a creditor of H. P. Walton, in the sum of $4,040, evidenced by a promissory note dated December 1 1883. That on March 25, 1884, judgment was obtained and execution issued, and levy made upon certain chattel property. That a long time prior to March 25, 1884, H. P Walton was insolvent. That on said day, apprehending that appellee would sue and attach his property, he, with intent to cheat, hinder, delay, and defraud his creditors, confessed a judgment of the sum of $8,182.50 in favor of E. T. Walton his brother, and thereby gave undue preference to him; and E T. Walton sued out an execution on said day, and levied on the same property levied upon by the plaintiff, but prior to the levy of plaintiff's execution. That H. P. Walton had no other property subject to execution. That this judgment so confessed is fraudulent and void as to plaintiff and other bona fide creditors, because H. P. Walton, on June 1, 1883, was insolvent, and that E. T. Walton knew that fact. That on June 1, 1883, an agreement was made between H. P. Walton and E. T. Walton to the effect that H. P. Walton would protect E. T. Walton at all hazards; and for the purpose of carrying out this agreement it was to be kept secret from all parties except the attorney E. T. Walton. H. P. Walton, on June 19, 1883, gave a confession of judgment in favor of E. T. Walton for the sum of $11,180, covering moneys advanced and notes indorsed by E. T. Walton. This confession of judgment, it was agreed between them, should be kept secret, and should not be filed in court. That it was to be held and acted upon in case an emergency should arise. That the purpose of this was to give H. P. Walton a false and fictitious credit and commercial standing which he was not entitled to, and could not have obtained if these facts had been known. That afterwards the confession of judgment on June 19, 1883, became inoperative by reason of further advances made by E. T. Walton, and in order to carry out the agreement of June 1, 1883, the confession of judgment of March 25, 1884, was executed. That, when H. P. Walton obtained the loan from the bank, he represented that his indebtedness to E. T. Walton was a book-account, and for the sum of $6,000, and that E. T. Walton had no security for it, and under no circumstances would press him or enforce the collection. That, relying upon these representations, the loan was made. Prays that the proceeds of the sale of the chattels levied upon be subject to the execution of appellee. The averments of the complaint are specifically denied by E. T. Walton. The cause was tried to the court. By the deposition of E. T. Walton it appears that he obtained the judgment of March 25, 1884; that in June, 1883, his brother was indebted to him for moneys advanced and paper indorsed, which aggregated the sum of $11,180; and that his brother had agreed to secure him at all hazards for these loans and indorsements, but no time was fixed when this indebtedness should become due. He says: 'I wrote to him to see N.E. Slaymaker, and have him act as counsel, and see that I was secured. I suggested a judgment bond, but he objected to having a bond entered of record, saying that a judgment, or anything so public, would affect his credit. So I agreed to hold it until such time as it would be necessary to enter it to protect my interests. This I agreed to with the distinct understanding with Howard that he was to keep Mr. Slaymaker advised of the condition of his business affairs in order that I might be protected. June 19, 1883, I received a letter from Mr. Slaymaker advising me that he had obtained a confession of judgment. I approved of his action, and frequently advised my brother to keep him fully advised of the condition of his affairs in my behalf. I afterwards let Howard have $1,500, and as the additional loan rendered the confession of judgment, which I had, inaccurate as to amount, I let him have it with the distinct understanding that he should keep Mr. Slaymaker advised of his affairs in order that he might institute proceedings, or take such steps for securing the protection of my interests as might be required. It was in pursuance of this understanding that my brother gave the confession of judgment of March 25, 1884. I repeatedly urged him to keep the matter before Mr. Slaymaker, so that I might have a judgment confessed whenever it was necessary for my protection.' J. H. Werkheiser testified that he is cashier of the First National Bank of Silverton, and that he had a conversation with Howard P. Walton about December 1, 1883, when he renewed and made the note of $4,000, and that Howard stated that his brother, E. T. Walton, would not press him for the $6,000 that he owed him, and had agreed or promised to let him pay the $6,000 out of his business, as he could pay it; that it was simply a book-account, and that his brother had no security or evidence of security; that on these terms he renewed the note. The court found that the judgment of March 25, 1884, in favor of E. T. Walton, was obtained under the following circumstances: On the 1st day of June, 1883, the defendant H. P. Walton then being insolvent, which fact the defendant E. T. Walton well knew, entered into an agreement between them, to the effect that H. P. Walton should protect the said E. T. Walton at all hazards for certain advances which he had previously made to H. P. Walton, and that, pursuant to this agreement, a confession of judgment in favor of E. T. Walton for the sum of $11,180 was prepared, which confession of judgment was executed and delivered to E. T. Walton, and that it was distinctly agreed between them that it should not be filed with the clerk of the court until it should become necessary to do so for the purpose of protecting E. T. Walton; that the same should be kept secret; that no judgment should be entered upon it; and that this agreement was for the express purpose of sustaining the credit of H. P. Walton, and to enable him to obtain a credit to which he was not entitled, and which he could not have obtained if these facts had not been so suppressed; that this judgment was a renewal of a confession of judgment of June 19, 1883, and that the last-mentioned judgment was made in pursuance of the original contract, by the terms of which E. T. Walton was to be protected at all hazards; that on the 1st day of December, 1883, Howard P. Walton, for the purpose of obtaining credit from the plaintiff, falsely and fraudulently represented to the agent of the plaintiff that the indebtedness due his brother was $6,000; that it was due upon book-accounts, and that E. T. Walton had no security therefor, and would not press for the payment of the same, or enforce the collection thereof; that the representation was believed by the agent to be true, and thereby Howard P. Walton obtained from the plaintiff credit, evidenced by the note sued on. There were no objections to the other findings of the court, and therefore it is not necessary to recite them. Upon the findings it was ordered, adjudged, and decreed that the judgment of date March 25, 1884, in favor of E. T. Walton, for the sum of $8,182.50, and upon which execution was issued, be, and the same is, declared void as against plaintiff; that the property seized and taken upon said execution, and that all of the proceeds thereof now in the hands of the sheriff, shall be first subjected to the execution issued upon the judgment in the action of the plaintiff against the defendant Howard P. Walton, rendered and entered on the 25th day of March, 1884, save and except $35 of costs, to which said judgment and decision of the court the defendant E. T. Walton then and there excepted.injure the debtor's credit, and that he should keep his brother's attorney informed of his affairs, so that any movement by the other creditors to seize the property might be anticipated. With this understanding the debtor borrowed from his brother $1,500 more. He also obtained credit from plaintiff by representing that his brother had no security, and would not press him. On the day the debtor confessed judgment the last time plaintiff sued in attachment, but the writ was levied subsequently to the levy of an execution to satisfy the confessed judgment. Held, that a finding by the court that the judgment was void as against plaintiff would not be disturbed.

Hudson & Slaymaker, for appellants.

Chas. E Gast, for appellee.

RICHMOND C., ( after stating the facts as above.)

Assignments of error are to the admitting of evidence over the objections of defendant of John H. Werkheiser, to conversations had by him with defendant Howard P. Walton, to the effect that the indebtedness due his brother was only $6,000 on book-account, for which his brother held no security, and would not press him, and that the judgment of the court is at variance with the evidence in the case and contrary to law. The basis of the objections to the testimony of Werkheiser is that there was no privity existing between Howard P. Walton and E. T. Walton, as agent, personally or otherwise. By the complaint and answer, the representations of Howard P. Walton were directly put in issue. In the complaint it is averred that he stated that E. T Walton's claim against him amounted to $6,000, but that he had no security for the same, and would not press it. E. T. Walton, in his answer, denies that the...