Waugh v. Lennard

• Decision Date: 21 November 1949
• Docket Number: 5130
• Parties: WAUGH v. LENNARD
• Court: Arizona Supreme Court

211 P.2d 806

69 Ariz. 214

WAUGH v. LENNARD

No. 5130

Supreme Court of Arizona

November 21, 1949

The judgment is reversed with directions to reinstate the complaint.

Laney &amp Laney, of Phoenix, for appellant.

R. C Stanford, Jr., of Phoenix, for appellee.

Udall Justice. La Prade, C. J., and Stanford, Phelps, and De Concini, JJ., concurring.

OPINION

Udall Justice.

This is an appeal by Margaret B. Waugh, plaintiff in the court below, from an order of the superior court of Maricopa County, sustaining defendant's motion to dismiss her amended complaint, and from the judgment entered pursuant thereto. Defendant in the case was Anna S. Lennard, as executrix of the estate of A. W. Lennard, deceased. We shall hereafter call the parties plaintiff and defendant respectively.

To determine this appeal it is necessary that we set forth in some detail the allegations of the amended complaint. In substance it is alleged as follows:

That on July 19, 1932, decedent, A. W. Lennard, being justly indebted to one Evelyn M. Morehouse and R. J. Morehouse, her husband, gave his promissory note in favor of Evelyn H. Morehouse in the principal amount of $ 2,590.76, payable one day after date; that on March 4, 1937, said Lennard, being further justly indebted to said Morehouses, gave his promissory note to them in the principal sum of $ 500, payable on demand; that no part of either the principal or interest of either of said two promissory notes has been paid; that neither of said promissory notes is barred by any statute of limitations; and that the defendant is estopped to plead or claim that they are so barred, because of the following facts and circumstances.

That about the year 1925, A. W. Lennard, who was an attorney at law practicing in Phoenix, entered into a joint adventure agreement with said Evelyn H. Morehouse and R. J. Morehouse, her husband, by the terms of which the Morehouses were to advance their funds to Lennard from time to time, and Lennard was to use said funds, together with funds of his own, in the business of purchasing and dealing in notes, mortgages, and real properties for profit, and he was to give said Morehouses a share of the profits arising from said business; that during the years 1925 to 1937, pursuant to said joint adventure agreement, the Morehouses advanced their funds from time to time to Lennard, and the latter used the same, together with funds contributed by himself, in a large number of transactions of purchasing and dealing in notes, mortgages, and real properties, from which business large profits were made; that from time to time Lennard gave Evelyn H. Morehouse, for herself and her husband, his promissory notes evidencing what he claimed to be their share of the profits of said joint adventure; that during all of said times and up to the time of the death of Lennard on December 12, 1946, there was a relation of trust and confidence between the Morehouses and Lennard, and the Morehouses had no accurate knowledge and kept no accounts of what was due them from Lennard, but trusted the latter to keep such accounts and to pay them; that to facilitate the use by Lennard of the funds of the Morehouses, Mrs. Morehouse, at the suggestion and pursuant to the request of Lennard, made out, signed in blank, and placed in her safety deposit box in Phoenix, a number of withdrawal receipts or checks upon her savings accounts in Phoenix banks, and gave Lennard a key to said safety deposit box and authority to enter the same at his will; and that thereupon Lennard filled out and used such withdrawal receipts from time to time whenever he wanted to use funds belonging to the Morehouses.

It is further alleged that from time to time during the progress of the joint adventure, Lennard reported to the Morehouses that substantial profits had been made by the use of their said funds, together with his own funds, but stated to them that he was short of money and that he would prefer to give his promissory notes evidencing his indebtedness to the Morehouses; whereupon Evelyn H. Morehouse, acting for herself and her husband, agreed to accept such promissory notes and pursuant to such agreement in the years 1926, 1927, and 1929, Lennard gave to Mrs. Morehouse as evidence of the amounts so owing by him to the Morehouses a number of promissory notes; and that he did not pay said promissory notes, but later cancelled the same and gave in lieu of the principal and interest due thereon a promissory note in the principal amount of $ 2,590.76, and later as evidence of his further indebtedness arising out of the said joint adventure agreement and his borrowings from the Morehouses, gave another promissory note in the principal amount of $ 500.

The amended complaint further alleges that on March 5, 1937, for the purpose of inducing the Morehouses to refrain from enforcing collection of said $ 2,590.76 note and said $ 500 note until after his death Lennard wrote out in his own handwriting and signed and delivered to Mrs. Morehouse a writing worded as follows:

"Phoenix, Ariz.

"Mch. 5, 1937

"This is to show that the statute of limitations is not to bar any of the notes I have given to Evelyn H. Morehouse or R. J. Morehouse

"A. W. Lennard."

It is further alleged that after delivering this written statement, and on numerous occasions before the expiration of six years after the due date of either of said notes, Lennard, for the purpose of inducing the Morehouses to refrain from collecting the notes until after his death, stated and represented to the Morehouses that he had arranged his affairs in such manner that neither of the promissory notes would be barred by the statute of limitations, but would be collectible out of his estate after his decease; and further stated and represented to the Morehouses that the aforesaid writing signed by him would in itself prevent the notes from being barred by limitation, and would enable the holders thereof to collect the same from his estate upon his death, regardless of how long thereafter such death might occur.

Then it is alleged that Lennard at the time of making said representations was an attorney at law of many years experience, and represented to the Morehouses that he was, and that in truth he was, skilled in and possessed of special knowledge of the law, including the law relative to the statute of limitations; that said Morehouses then had no skill in or knowledge of the questions of law involved; that they believed said statements and representations to be true, and acting in reliance thereon refrained from enforcing either of the notes until after the death of Lennard; that the Morehouses had no knowledge of the falsity of said statements and representations and owing to the relation of trust and confidence between them and Lennard had the right to rely upon said statements and representations, and were deceived thereby. It is further alleged that besides being engaged in such joint adventure with the Morehouses, Lennard was acting as their business agent and legal advisor in the premises, and that they had great confidence in him.

It is further alleged on information and belief that the statements and representations made by said Lennard to the Morehouses were false and untrue in that the writing of March 5, 1937, did not in and of itself have the legal effect of preventing the running of the statute of limitations against said notes; and it is alleged that Lennard in making said statements and representations, either knew them to be false and untrue and intended to deceive the Morehouses thereby, or else made the same recklessly and without knowing them to be true; and that by virtue of all of the premises, Lennard in his lifetime and his executrix after his demise, were and are estopped to claim that either of the promissory notes is barred by any statute of limitations.

Next it is alleged that neither of the promissory notes in question fell due until after the death of Lennard, in that after the making thereof and before the running of the statute of limitations Lennard and Evelyn H. Morehouse, acting for herself and her husband, agreed for a valuable and sufficient consideration to extend the time for payment of the principal and interest of both notes until after the death of Lennard and until the notes could be paid in due course of the administration of his estate, and further agreed that meanwhile the Morehouses would not enforce collection of either of the notes, and that upon the death of Lennard the notes, with the interest therein provided, would be paid in the due course of the administration of his estate. Plaintiff has admitted in her brief that the only written memorandum concerning the extension of the due dates of the notes in question was decedent's written statement of March 5, 1937, heretofore set forth haec verba.

Then it is alleged that A. W. Lennard died testate on December 12, 1946, in Maricopa County, and was a resident thereof; that on January 8, 1947, Anna S. Lennard, his surviving widow, was appointed as executrix of his estate; that said executrix caused due notice to creditors to be published; that within the time for presenting claims Evelyn H. Morehouse presented her claim upon the two promissory notes in question, which claim was rejected by the executrix; and that thereafter and within the time for presenting claims, Evelyn H. Morehouse and R. J. Morehouse, her husband, duly presented their amended claim for the indebtedness evidenced by the two promissory notes, which said amended claim was thereupon rejected by the executrix.

Then it is alleged that twelve days after such final rejection, said Evelyn H. Morehouse and R. J. Morehouse, her husband, by an instrument in writing, duly assigned to plaintiff Margaret B Waugh...