Commercial Nat. Bank of Salt Lake City v. Brinton

Utah Supreme Court
Commercial Nat. Bank of Salt Lake City v. Brinton, 45 Utah 265 (Utah 1914)
145 P. 42; 1914 Utah LEXIS 85
Frick, McCarty, Straup

Commercial Nat. Bank of Salt Lake City v. Brinton

Concurring Opinion

FRICK, J.

I concur. In view, however, of counsel’s insistence that our original conclusion is erroneous, I feel constrained to add a few words.

I have never entertained a doubt respecting the correctness of the conclusions reached in the original opinion, and that those conclusions strictly conform to both the law and the facts. In my judgment the following questions were the only ones involved in the case: (1) To what amount did the firm of Page & Brinton become obligated in the mortgage signed by Brinton and his wife? (2) Was said partnership dissolved, as contended by Mr. Brinton? (3) Was the $2,000 note, Exhibit E, paid, as contended by both Page and Brinton?

The first .question was perhaps one of mixed law and fact. In so far as it was a question of law, I never entertained any doubt with regard to what the construction of the mortgage should be, and that the construction placed thereon by the Chief Justice is the correct one. So far as it was a question of fact, the trial court found against the contention of the bank, and, in my judgment, correctly so. That the firm of Page & Brinton was dissolved, and that the bank knew of the dissolution, and also knew that Brinton, without his consent, express or implied, could not thereafter be held for any sum in excess of the amount stated in the mortgage, are established beyond a reasonable doubt.

The only question that remains, therefore, is whether the whole amount stated in the mortgage, and as evidenced by the note, Exhibit E, was paid. That question is so thoroughly disposed of by Mr. Justice STRAUP that I do not feel called on to argue the matter further, except to say that, when a creditor and holder of a note marks it “Paid” and surrenders the evidence .to his debtor, the former, in ease he wants to dispute the fact of payment, should be prepared to show by some clear and convincing proof why the evidence of payment he himself furnished, at a time when there was no dispute, nor likely to be one, concerning the fact, of payment should not be taken as true. In this case the *295bank has utterly failed to make such proof. All that are offered in that regard are certain inferences, which, in my judgment, are by no means conclusive in'favor of the bank’s contention, but may as readily be construed in favor of Mr. Brinton.'

The petition should therefore be denied.

Opinion of the Court

McCARTY, C. J.

(after stating the facts as above).

1 We think the contention made on behalf of the bank that the firm of Page & Brinton was not dissolved is against the undisputed evidence and admitted facts and is untenable. Page testified on this point, in part, as follows:

“About the 22d day of May, 1906, I went to the bank with respect to this dissolution of the partnership. * * * The business I did was with Mr. Clark, the cashier. I asked him what he thought about it. He said: ‘Buy Mr. Brinton out.’ He said he would advance the money through the Commercial National Bank to buy Mr. Brinton out. * * * I paid Mr. Brinton $5,000 on account of the partnership. I got $4,000 of this money from the Commercial National Bank.”

Brinton testified:

“The $4,000 was paid me by Page in his office in Salt Lake City. It was paid the same day the contract [referring to the contract of dissolution] was made, or perhaps the next day. * * * When I was in the bank after the 22d of May, I told Mr. Clark that I had sold out to Page, and he said that he and Page had talked about it. * * * He seemed to know all about it.”

Clark testified:

“Page came into' the bank and stated that Mr. Brinton was involved in his subcontracts upon the Cottonwood conduit, needed money to pay off his laborers, and that Page believed he could buy out Brinton’s interest in the Boise project on account of his embarrassment at that time. Subsequently he told me that he had bought Brinton’s interest in the profit of the contract.”

We think this evidence, considered in connection with Brinton’s failure to thereafter take any part in the management of the business or transactions entered into' by Page in the name of Page & Brinton, and Page’s ■ assumption of *272the entire control of all the assets of the firm and conduct and management of the business as his own, clearly establishes the dissolution of the partnership. 30 Cyc. 603, 604.

2, 3 The nest question presented is: Was the trust deed intended as security for the payment of only the specified $15,000 loan as represented by the five notes given at

the time it was executed, or was it intended to secure the payment of any and all loans or advances, not exceeding $15,000, the bank might make Page & Brinton, and to include any loan or advance made after the payment and cancellation of the five notes executed contemporaneously with the deed? It is vigorously contended on behalf of the bank that the note of $15,000 and the trust deed were, when executed, intended to1 be left on deposit with the bank as security for any loan Page & Brinton might thereafter obtain, or that might be obtained by either member of the partnership in the firm name, and that, when the five notes repre-' senting the loans for which they were given should be paid, other notes for additional advances should be given and deemed secured by the original note of $15,000 and the trust deed. On the other hand, it is contended that the note for $15,000 and the five notes evidenced but one and the same indebtedness, to secure which the trust deed was given, and that it was not intended and was not given to secure any other indebtedness. It is admitted the real indebtedness, to secure which the trust deed was given, was as evidenced by the five notes first placed to the credit of the account of Page & Brinton. The trust deed, so far as material here, provides that:
“David B. Brinton and Susan Brinton, his wife, * * * grantors, convey and warrant to H. P. Clark, trustee, * * * grantee, for the sum of one dollar and in further consideration of the debt hereinafter mentioned and the trusts hereinafter constituted and set forth, the following described tracts of land [describing the land]. * * * In trust, however, to said grantee and his- successors for the following purposes: Whereas, David B. Brinton and H. D. Page, as Page & Brinton, have borrowed of the Commercial National Bank of Salt Lake City, Utah, the sum of $15,000, *273payable on or before September 7, 1906, * * * said indebtedness being evidenced by one promissory note in tbe sum of $15,000. * * * Said note being executed by said David B. Brinton, Susan Brinton, Page & Brinton, H. D. Page, and bearing even date herewith, and being payable to the order of said * * * bank. * ® * Now, if the said note and interest be well and truly paid as the same becomes due according to the terms of said note, ® * * then this deed shall be void and the property hereinbefore conveyed shall be released at the cost of said grantors.”

It will be noticed that there is nothing in the deed of trust from which it can be inferred that it was given or intended to secure any indebtedness other than the specific $15,000 loan therein mentioned. It contains no language which indicates any other intention, nor is there any evidence dehors the deed showing or tending h> show, or from which it can be inferred, that the parties intended the trust deed to secure any indebtedness other than the one specific $15,000 loan. The evidence affirmatively shows that Page had m> authority from the Brintons, or either of them, to enter into any agreement or contract with the bank to modify or extend in any particular any term or provision of the trust deed; nor did he, after the dissolution of the partnership, have any authority to bind Brinton by making or renewing notes in the firm name. It is a well-recognized rule of law:

“That, after a dissolution of a partnership, neither of the parties has implied authority to bind the firm or his copartners by making, renewing, or indorsing negotiable paper in the firm name, and this is true even though the obligation be given for a firm debt.” 30 Cyc. 668.

As we have pointed out in the foregoing statement of the facts, four of these notes, amounting to $13,000, were paid by charging the amount to the account of Page & Brinton; and the undisputed evidence shows. that the notes were stamped paid by the bank and delivered to Page. The notes were not paid by the execution of “renewal notes” representing the same indebtedness. It was more than two months after the four notes were paid before Page executed the three notes which the bank claims were given as renewal *274notes for the indebtedness, as evidenced by the four canceled notes. And, as we have stated, the four notes secured by the deed of trust were paid (the indebtedness discharged) with money Page had to his credit in the name of Page & Brinton in the bank. Moreover, we think it clearly appears from the evidence that, at the time the trust deed and the notes secured thereby were delivered to the bank, Page and Brinton expected that the remittances they would receive from the Government on their work in the form of United States treasury drafts during the mónths of June, July, and August, 1906, would be sufficient to pay the notes and to carry on the construction work, and that there would be no necessity to continue the loan for the full length of time for which it was made. On this point Brinton testified, in part, as follows:

“At the time these five notes were signed, it was understood that treasury drafts would commence to come in in June, July, and August, and that would give us time to get the money to pay the notes.”

Page testified:

“At the time Mr. Brinton signed the first note for $15,000, and those other notes, we requested to have those notes taken up and canceled. * * * No, not at that particular date, but whenever there was a surplus over and above the amount I required at different times.”

On cross examination he testified:

“Q. It was understood Mr. Brinton would allow you to use the $15,000 capital that you had put into the business, wasn’t it? A. Yes, sir. Q. And that was to give you money to carry on your transactions as you might need, it until the surplus came in from the transaction with the Government, which would enable you to pay them off? This is correct, isn’t it? A. Up to that date. Q. Up to September 4th? A. Yes. That seems to be the limit of the note.”

True, .Clark testified that:

“There was never any understanding that these notes should be paid and canceled as obligations of Page & Brinton *275out of the first money that came from the United States. There was never any statement made as to the limit of time or the period of time during which they would need this accommodation by way of loan from the bank. The understanding was that they depended upon the. progress of the work. ’ ’

If there was no express or tacit understanding as to the time limit of the loan other than that fixed by the notes, then the time specified in the documents must control. The bank, however, by direction of Clark, and without consulting either Page or Brinton, canceled four of the notes more than two months before they matured, and charged the amount to the account of Page & Brinton. After these notes were paid, the Page & Brinton account showed a credit of $2,619.58. Tt therefore seems that Clark understood that the notes were to be paid when there was sufficient funds to the credit of Page & Brinton to cover the indebtedness. The court, therefore, did not err in finding that the indebtedness of $13,000, evidenced by the four notes that were stamped by the bank August 28, 1906, was paid and extinguished.

We think, however, that the court erred in holding that the indebtedness evidenced by the other note for $2,000, secured by the trust deed, which was stamped paid February 14, 1907, and surrendered by the bank to Page, had not been paid. The evidence of Clark clearly shows that the indebtedness represented by it was paid and extinguished. On this point he testified as follows:

“Q. Mr. Clark, calling your attention to the date of Page & Brinton’s account on February, what was the credit balance on that date, 1907? A. The credit balance was $3,-115.35. Q. And calling your attention to plaintiff’s Exhibit E (the note in question), I will ask you jkhen was that note paid off? A. February 14, 1907. Q. After the payment of that note, what was the credit balance? 'A. $555.81.”

The note having been finally paid, canceled, and surrendered to Page by the hank, and the debt evidenced by it extinguished, the question of whether the bank could, under the circumstances and after the dissolution of the partner*276ship, extend the time of «payment without the consent or knowledge of Brinton becomes, so far as this case is concerned, unimportant. Counsel for the bank, in support of their contention that the trust deed was intended and was given to secure any advances that the bank might make in the shape of loans to Page & Brinton during the progress of the construction work under the Page & Brinton contract with the Government, cite and rely on the following cases: Lawrence v. Tucker, 23 How. 14; 16 L. Ed. 474; Commercial Bank v. Cunningham, 24 Pick. (Mass.) 270; 35 Am. Dec. 322; Jones v. Guaranty & Indemnity Co., 101 U. S. 622; 25 L. Ed. 1030; Schuelenburg v. Martin (C. C.), 2 Fed. 747; Courier-Journal, etc., v. Schaefer-Meyer Brew. Co., 101 Fed. 699; 41 C. C. A. 614; Ripley v. Harris, 3 Biss. 199, Fed. Cas. No. 11,853. It will be seen, by an examination of these eases, that the instrument sought to be foreclosed in each of them expressly provided for the payment of not only a certain specified sum or sums of money, but for future loans or advances.

In Lawrence v. Tucker the mortgage was given “to' secure a note * * * for $5,500, and such advances of money as there had been or might be made within two years, * * * not to exceed in all an indebtedness of $6,000,” in addition to the sum for which the note was given.

In Commercial Bank v. Cunningham the mortgage was given, quoting the language of the court, “to secure the payment of large debts due to the demandants, and also to secure any future demands * * # against the Edgartons, so long as they should be under, any liabilities of any sort to the demandants.”

In Jones v. Guaranty & Ind. Co., quoting from the statement of facts made by the court:

“The mortgage was conditioned for the payment * * * of the amount that might he due upon the instrument [a bond] secured by it. The bond is set out at length in the record. It states that it was given to cover any advances then made or thereafter to be made by the guaranty company to Cozxins to the amount of ?100,000 or less.”

*277In Schuelenburg v. Martin, the court, in stating the facts, said:

“The plaintiffs, who are dealers in lumber at St. Louis, Mo., agreed to furnish to said .Kullak, who was engaged in the same business, * * * such quantities of lumber as he might order for a period of one year, on a credit of sixty days, provided no order for more than $5,000 worth of lumber should he made at any one time, and the indebtedness at no time during said year to exceed said sum of $5,000. To secure the payment of all hills or accounts for lumber ordered and delivered under this arrangement, the mortgage sued on was executed.”

In Courier-Journal, etc., v. Schaefer-Meyer Brew. Co., the mortgage contained the following provision:

“The condition of this conveyance and transfer is such that should said party of the first part well and truly pay off and discharge all claims, debts, and liabilities on which said parties of the second part, or any or more of them, may be bound as sureties as aforesaid or may 'become hereafter bound as sureties as aforesaid, to the amount of $25,000, within four years from the date hereof.” (Italics ours.)

In Ripley v. Harris, the mortgage was given to secure the payment of a bond, which provided, among other things:

“For the payment to the said Van Slyke, or assigns, of all money due on any note or notes, drafts or acceptances, or other evidence of debt, that did or might thereafter exist against John Reynolds.” (Italics ours.)

It will be noticed that each of the foregoing cases is clearly distinguishable from the ease at bar. In each of those cases the mortgage expressly provided for the payment of future loans or advances up to a specified sum and within a specified limit of time, whereas in the case at bar the trust deed was executed to secure the payment of the specific $15,000, evidenced by the five notes mentioned. These notes were made payable five months from the time they were deposited and left with the bank. It was understood by and between the parties to the transaction that the partnership should be given credit at the bank for the several sums represented by the notes as the money should be needed by it in the prosecution of the construction work under the contract with the Government. There was, however, a time limit to the loan. This was fixed and made certain in the notes, and *278there is nothing in the record that shows, or tends to show, that the trust deed was executed or was intended to secure the payment of any loan made by the bank to the partnership other than the five notes that were left with the bank at the time of the execution of the trust deed. Reference is made to certain statements made by Page and transactions entered into' by him with the bank after the bank had notice of the dissolution of the partnership. It is argued on behalf of the bank that these statements and transactions tend to show that the trust deed was intended by the Brintons to secure the payment of any loan, not exceeding $15,000, that the bank might thereafter make to Page & Brinton. ' Page could not, after the bank received notice of the dissolution of the partnership, enter into any contract of incur any obligation with the bank that would be binding on Brinton, unless he had, authority from Brinton to do so. That he had m> such authority is clearly shown by the record. Page testified on this point as follows: “I had no authority to obligate Mr. Brinton.” Brinton testified, and his testimony is not disputed: “I will state that the Commercial National Bank never consulted me, either orally or in writing, at any time with respect to- the signing of any of those notes, nor with respect' to the affairs of the concern of Page & Brinton at any time after the 22d of May, 1906; nor did they consult my wife. ”

It is ordered that the cause be remanded, with directions to the trial court, to set aside the judgment and to so modify its findings and conclusions to conform with the views herein expressed, and to render judgment as prayed for by the defendants. Costs to' the defendants.

STRAUP and FRICK, JJ., concur.

070rehearing

ON APPLICATION POR REHEARING.

McCARTY, C. J.

Counsel for respondents have filed a petition for rehearing, in ■ which they vigorously assail the conclusions arrived at in the foregoing opinion respecting the note for $2,000 which was stamped “Paid August 28, 1906.” While counsel do *279not directly assail that part of tbe opinion in which the judgment of the lower court as to the four notes that were paid August 28, 1906, is upheld, they nevertheless, in their discussion of the points presented by their petition, in effect challenge the correctness of that part of the opinion. We shall therefore briefly review the facts bearing- upon the questions discussed and referred- to by counsel in their brief. Counsel say:

“This court in its opinion proceeds upon the assumption that it was the agreement and understanding that when the. five notes referred to in the findings were made by Page & Brinton they should be retired whenever the Government paid to Page & Brinton sufficient to cover the face and interest, and that since at one time prior to February, 1907, when this note No. 3649 was canceled by the giving of a new one, there was in the open account of Page & Brinton at the Commercial National Bank a credit in excess of $2,000, it should be regarded as paid, and that the fact that it was canceled in February, 1907, is in some manner evidence of the fact that the $2,000 was no- longer secured by the original $15,000 note. This assumption is contrary to the only evidence upon the subject there is in the record, evidence which cannot be contradicted.”

And they further say that for this court to attempt— “to give effect to a supposed oral agreement between the bank and Page & Brinton, made at the time the notes in question were executed in May, 1906, * * * would be .to vary the terms of the promissory note as- to its date of maturity by an oral agreement.”

On this point Mr. Brinton testified:

“At the time these five notes were signed it was' understood that the treasury drafts would' commence to- come in June, July, and August, and that would give us time to get the money to pay the notes.”

Four of these notes were payable November 4, 1906, and the other note was made payable November 19th. On August 28th, three months after the dissolution of the partnership, and more than two months before the maturity of the notes, four of the notes, aggregating $13,000, were by the bank *280canceled and the amount charged against the account of EL D. Page, doing business as Page & Brinton. On this point Mr. Clark, cashier, testified:

“In the month of August, 1906, $13,000 of the notes, * * * ‘Exhibits C, D, F, and G,’ were — by my direction, I think — charged into the account of Page & Brinton.”

4 During the trial of the cause respondents introduced page upon page of oral testimony endeavoring to show that the mortgage in question was not only executed by the Brintons to secure the notes mentioned, but was also intended (contrary to its terms) to secure the payment of any future advancements that the bank might make to Page & Brinton as needed by them in the prosecution of the work under the contract with the Government. The oral and printed arguments of respondents’ counsel in their first discussion of the ease in this court were mainly devoted to this phase of. the controversy. It was vigorously contended that the obligation represented by the notes and mortgage was never paid, but was continued in force by the execution of “renewal” notes; that is, as the notes, representing the obligation became due they were canceled, and new notes executed in lieu of the canceled notes., and that thereby the obligation became merged into, the renewal notes. Then, as now, counsel contended that the evidence, without conflict, showed that the debt which the mortgage was given to secure was carried along in this way, and never was in fact paid. The undisputed facts referred to in our former opinion, and the testimony there quoted, convinces us that counsel have misconceived the evidence. The testimony of Brinton and the voluntary act of the bank in canceling four of the notes more than two months before maturity were not referred to for the purpose of varying the terms of the notes as to their dates of maturity, as counsel seem to. imply, but for the purpose of inviting attention to the circumstances and conditions under which the notes were paid. We think this clearly appears from the opinion. As stated, the four notes referred to, Exhibits C, D, F, and G, were canceled by the bank, and the amount ($13,000) charged to the open account of Page, doing business as Page & Er[nton, more *281than two months before maturity. True, it appears from the record that on September 10, 1906, Page wrote to> the bank,. and, among other things, said:

“You will find, by looking up my account, that Mr. Brin-ton and myself signed notes for $15,000. Four thousand dollars, note of which I have since taken up, but the $11,000 should remain to my credit.”

The bank, however, did not, on receipt of the letter, transfer the $11,000, or any part thereof, from the debit to the credit side of Page’s account, but left the account in that regard as it was when the $13,000 was charged against it. The evidence shows that from the 1st of August, 1906; to the latter part of May, 1907, Page deposited, in cash and United States treasury drafts, over $90,000 to the credit of his account with the bank. Clark, the cashier, testified that of this amount $27,285.13 was deposited in August. Referring to Exhibits C, D, F, and G, he further testified:

“Exhibit C was paid on August 10th, the amount of the note, together with interest, $4,073.77, was charged to the a'ecount of Page & Brinton. It was charged out of the funds then at the bank to their credit. Exhibits D, F, and G, amounting to $9,000, were paid August 28, 1906, together with interest, and were paid out of the credit balance to their credit at that time. After the payment of these accounts on that date, the balance to the credit of Page & Brinton was $2,619.58.”

Moreover, the undisputed evidence — the respondents’ evidence — shows that no notes were executed by Page to the bank, either in his own name or in the name of Page & Brinton, after the dissolution of the partnership (May 22, 1906), until nearly three months after the four notes referred to were paid and two weeks after their due date. Clark testified that on November 19, 1906, Page had overdrawn his account at the bank $12,455.63, that on November 20th he executed notes to the bank for $13,000, which amount was placed to the credit of his account, and when the bank closed for the day Page’s account showed a balance to his credit of $497.21. He also- testified as follows:

“The fact is that in some cases notes were given and the *282proceeds went into tbe account of Page & Brinton, and in other cases notes were given in direct renewal of notes theretofore existing without going from their account to the books. Some of these notes may have been taken to cover an overdraft, in which case they had already, drawn the money, and the note would be taken and the amount credited to cover the overdraft.”

It is therefore conclusively shown by respondents’ evidence that notes were given to meet the overdraft, and were not intended as renewals of the'four notes that were paid August 28th. It is idle for counsel to- contend, in the face of the foregoing facts, none of which are disputed, that the four notes which were canceled August 28th and surrendered by the bank were paid by Page executing “renewal” notes.

5 We shall now consider counsel’s discussion of what they claim were the circumstances and conditions' under which the note' for $2,000, referred to' in the bill of exceptions as “Exhibit E,” was canceled, and briefly review the evidence bearing on this phase of the controversy. Counsel, in their brief, say:

“The testimony * ® * shows without possibility of contradiction that the note of $2,000 ran on * * * and no request of Page to charge it against the open account was ever made. * * * It is * * * perfectly apparent that there was no money at any time which was applicable to the payment of * * * the note, excepting as above stated by the renewal of February, 1907. * * * We contend * * * that there is not a particle of evidence in the record, and nothing in the entire ease, which tends to contradict the finding upon the subject.”

When this note, Exhibit E, became due, November % 1906, which was more than five months after the dissolution of partnership, time of payment was extended until February 2, 1907. This was done without the consent or knowledge of either Brinton or Mrs. Brinton. When the note came, due it was by the bank canceled and the amount charged against Page’s open account. This counsel for respondents seem to deny. Clark testified unequivocally that the note was paid by the bank charging it against the open account. *283His evidence on this point is set forth in the foregoing opinion, to which we invite attention. True, Clark testified that the bank, at the time this note was taken up, held other notes executed by Page, the proceeds of which were credited to the open account, and that if these notes had been charged into the open account at the time Exhibit E was .paid it would have created an overdraft in the account of several thousand dollars. This, however, in no way affected the transaction by which the note was charged against the open account. Neither is the question of whether Exhibit E was charged against the open account at the request of Page or whether the bank did it of its own volition important. The fact remains, as shown by the undisputed evidence adduced by respondents, that the note was charged against Page’s open account. And there is not a scintilla of evidence in the record that shows, or tends to show, that the note was paid by the giving of a renewal note. When the note was canceled — -stamped “Paid” — and surrendered to Page, and the amount thereof charged to the open account, the obligation, in so far 'as it affected the Brintons, was discharged. The only note executed by Page in February, 1907, was a note for $5,000. This note bore date of February 6th, and was payable April 7, 1907. This is the note referred to by counsel in their brief filed in support of the petition for a rehearing. It was executed by Page in the name of Page & Brinton. It was, however, his personal 'obligation. The Brintons were strangers to the .transaction. The note, which is in evidence, shows that it was canceled — stamped “Paid” —April 7, 1907. The word “Paid” was also written across the face of the note in red ink.

Counsel contend that the obligation represented by Exhibit E was merged in this note for $5,000; that is, that the note, to the extent of $2,000, is a renewal note. This, however, is only an inference of counsel, which' is unsupported by evidence. Moreover, we think it may be fairly inferred that if the bank had intended to continue to hold the Brin-tons liable for the payment of the debt represented by this particular note (Exhibit E) it would either have extended the time of payment with their consent or have had them *284and Page execute a new note for the amount. Instead of pursuing either of these courses it charged the amount of the note against Page’s open account. If this does not constitute payment of-a note, it would be difficult to' conceive of a transaction that would.

We have examined the record in this case with more than ordinary care, and we are clearly of the opinion that the decision of the lower court, wherein it is held that Exhibit E was not paid, is unsupported by evidence, and that the evidence without conflict shows that it was paid.

The petition for a rehearing is denied.

STRAUP, J.

On a further re-examination of the record I, too, think the petition should be denied. The ease, as I view it, is this:

Page & Brinton, partners, to carry on their construction work in Idaho, made arrangements with the bank to borrow $15,000. A note for that amount was executed by them on May 8, 1906, payable on or before four months after date. To secure that, a trust deed was given by Brinton and his wife. No moneys were then paid, nor credit given,. because of the understanding that none was to be paid or given until needed by Page & Brinton. To better facilitate that, the $15,000 note was split by Page & Brinton giving five other notes — one for $4,000, due November 19th, spoken of as Exhibit C; one for $5,000, due November 4th, Exhibit D; one for $2,000, due November 4th, Exhibit E; one for $2,000, due November 4th, Exhibit F; and one for $2,000, due November 4th, Exhibit G. It is conceded by both parties that the five notes, aggregating $15,000, were for the same indebtedness and purpose for which the first note was given.

Now, at the threshold, a controversy arises as to the purpose for which the notes were given. By the- bank it is contended that they were given for any and all advances, not exceeding $15,000, which the bank might make to Page & Brinton, or to either of them, in carrying on the construction work; that is, if say $15,000 had been advanced in 1906, and subsequently repaid, and thereafter other advances, not exceeding $15,000, had been made, etc., the notes, and the trust *285deed given to secure them, evidence such transactions and secured sucb advances, as well as a single and specific loan of $15,000. That is disputed by the defendants, who contend that the note and trust deed were given for but a specific and single loan of $15,000, and.none other, and as evidenced by, and as appears on the face of, the notes and the deed themselves. That issue, upon all the evidence adduced, was found by the trial court in favor of the defendants and against the plaintiff. I think the finding is sufficiently supported, and is such as, on the record, ought to have been made.

The further question, then, is as to whether these notes were paid. Upon that issue the trial court found that all of them had been paid but one, the $2,000 note, Exhibit E, and accordingly granted foreclosure of the trust deed as to that note only. Upon a review of the record we held all the notes had been paid, and that the finding of the court of nonpayment of the $2,000 note, Exhibit E, was wrong. This holding particularly the bank by its petition has challenged, and contends is against the undisputed evidence. If the bank is right as to its first contention, that the notes were given for any and all future advances, not exceeding $15,000, that it might make to- Page and Brinton, or to either of them, then is it right as to this. For then it would be m> defense that the first or prior advances had been paid; the evidence indisputably showing that, when the transactions between the bank and Page closed, he, for advances made to him by the bank, owed it much more than $15,000. But, as already observed, the court found, and I think the finding justified, that the notes were not given for that purpose, but for a specific and single loan or indebtedness. Hence, from that viewpoint do I now consider the question of payment.

Page & Brinton were partners when these notes were given on the 8th of May, 1906. But that partnership was dissolved on the 22d of May of that year. True, there is a controversy as to that. I think, however, the evidence clearly shows the dissolution, and that the bank had full knowledge of it. The court made no finding as to that issue, evidently regarding it as immaterial. I think it material, and further *286think that, on the evidence, there is as to that bnt one finding justifiable, and that is a finding of dissolution, and that the bank at the time had full knowledge of all the terms and conditions of the agreement of dissolution. By that dissolution Page alone acquired and succeeded to the whole of the partnership property and business and to all of the proceeds derived therefrom. "What he did thereafter was, hence, not as a partner, but for himself, in his individual capacity. It was agreed, however, that he might continue the business in the name of Page & Brinton, and, further, that “this agreement shall not in any way affect the loan heretofore secured from the Commercial National Bank of Salt Lake City,” the plaintiff. The agreement of dissolution was in writing, and at the time of its execution was exhibited to the bank. Of course, the dissolution could not, and did not, affect the prior obligations assumed or incurred by the partnership, and did not affect the loan the bank theretofore had made to Page & Brinton. The dissolution, however, is material as it concerns the future dealings between the bank and Page. And that is material as bearing upon the question of payment of the notes.

Between May and July, 1906, the whole amount of the five notes, $15,000, was placed to the credit of Page & Brin-ton at the bank subject to check. Page, in August of that year, from moneys received by him from the Government, also deposited to’ his credit, in the name of Page & Brinton, over $27,000, of which over $8,300 were deposited on the 10th, over $15,300 on the 24th, and $3,600 on the 29th, of August. So, on the 10th of that month, the $4,000 note, Exhibit C, was charged against the account, the note by the bank stamped “Paid August 10, 1906,” and then surrendered and delivered to Page. On August 28th the $2,000 note, Exhibit G-, the $5,000 note, Exhibit D, and the $2,000 note, Exhibit F, were likewise charged against the account, the notes by the bank marked and stamped “Paid August 28, 1906,” and then surrendered -and delivered to Page. That was a total of $13,000 of the $15,000 loan. After thus charging that amount against the account, there still remained a balance credit, on the 29th of that month, of about $2,400. It will *287be observed that these notes were not then due— one of them not until November 19th, the others not until November 4, 1906. The bank’s officer having charge of the1 matter himself testified that those notes, Exhibits O, D, F, and G, were, under his direction, charged against the account on the dates indicated. Page, when he learned that, claimed that only the $4,000 note, Exhibit C, should SO' have been charged, and that the remaining $11,000 should have remained to his credit. But I do not find anything to show that the bank acquiesced in that, or in any particular modified the charge which theretofore was made under the direction of the bank’s officer.

The remaining note of $2,000, Exhibit E, was not then paid. It also was due November 4th. Payment of it without the knowledge or consent of Brinton was extended until February 2, 1907. On February 14, 1907, it also was, by the bank, marked and stamped “Paid February 14, 1907,” and then also was surrendered and delivered to Page. Now, the claim made is that it in fact was not paid, but was merely renewed by the giving of another note, or included in other notes, given by Page. As to that but two witnesses testified— Page for the defendants, and the bank’s officer for the plaintiff. Page testified:

“The note, Exhibit E, for $2,000, was paid, but I do not remember just how it was paid. I presume it was charged to my account. I don’t know that it was paid by giving a new note, but I don’t think so. I was getting money from the United States Government every month. The bank was getting money from my treasury drafts, and I don’t just know how they applied it.”

The bank’s officer, who had conducted all the business between the bank and Page and Page & Brinton, testified:

“On February 15, 1907, the account (Page & Brinton) showed a credit balance of $3,115.35. The plaintiff’s Exhibit E was paid, and on February 14, 1907, and after the payment of that note, there was a credit balance of $555.81.”

The testimony of these witnesses, together with the presumption of payment from the bank itself marking and stamping the note “Paid” and surrendering and delivering *288it back, is good proof that it was in fact paid. Not only is it good, but also of such, weight, coming as it does from those who transacted the business, and hence knew what the fact in such respect was, as to require something equally clear and strong to overcome it. I find no direct evidence against it. I therefore look to. see what, if any, indirect evidence there is bearing on the question. From the 1st of September to the 29th, the account was continually overdrawn. The overdrafts gradually .increased until the 27th, when the overdraft was $8,497.01; but on that day a deposit was made of $10,296.41, leaving a credit balance of $441.95. That, however, the nest day was checked out, and the account again overdrawn, until the 25th’of October, when the overdraft was $6,767.58. On the nest day, the 26th, a further deposit was made of $7,925.16, and on the close of that day there was a credit balance of $1,102.82; but on the next day sufficient checks were drawn on the account’to create another overdraft of $3,071.16. And so. the overdraft continued and increased until the 19th of November, 1906, when it was $12,-455.63. In the meantime, and on November 3, 1906, Page gave the bank three notes, all payable April 3, 1907 — one for $3,000, one for $5,000, and another for $5,000; in all, $13,000. These were signed by Page alone, by signing, “H. D. Page, Page & Brinton.” No claim is made that they were signed or delivered with the knowledge or consent of Brinton, or that Page had any authority to sign Brinton’s name, or the firm name of Page & Brinton, except such as Page had in virtue of the partnership existing at the beginning, but which on May 22d, with full knowledge of the bank, was dissolved, and Page after that authorized to. use the name of Page & Briton as and for only his own and individual purpose. The amount of these notes, so executed by Page alone, was, on the 20th of November, placed to his account, which he also continued to carry in the name of Page & Brinton, and was given credit therefor, which thus extinguished his overdraft and gave him a credit balance of $497.21. He, however, continued to overdraw his account until the 3d of December, 1906, when his overdraft again was $8,389.17. In addition to that, there was still the $2,000 note, Exhibit E, *289and the $13,000 notes, which Page gave in November, outstanding and unpaid.- And so the account goes on until the 14th of February, 1907, when it, with further deposits made in the meantime, showed, as testified to by the bank’s officer himself, a credit balance, in Page’s favor, of $3,115.35. That, of course, and also as testified to by the officer, included on the credit side the $13,000 notes executed by Page and the $2,000 note, Exhibit E, of Page &' Brinton, given in May, 1906. That is to'say, on that day the bank, as to the state of the 'account, was debtor to the amount of $3,115.35, and as against this was creditor to the amount of the $2,000 note, Exhibit E, and the $13,000 notes given by Page. So, on that day, the bank, as I read the record and the testimony of its officer, deducted from that credit balance of $3,115.35 the $2,000 note, Exhibit E, and marked and stamped the note “Paid,” and surrendered and delivered it to Page. Now the argument is that that was not payment, because, when the amount of 'the outstanding notes is considered and compared with the credit balance, Page, or Page & Brinton, were debtors to the amount of nearly $12,000, and not creditors. That is true. Still the bank then could have applied that credit balance to the $13,000 notes, or could have held it subject to checks, or could have applied it, as I think it did, to the $2,000 note, Exhibit E, which then was canceled, and surrendered.

In this connection it is also' to- be noticed that on February 6, 1907, Page, as Page & Brinton, executed still another note for $5,000, due one month thereafter. Then, on April 3, 1907, he, as Page & Brinton, executed another note for $3,000, one for $5,000, and another for $5,000, all due July 2d; on April 4th, one for $2,000, due July 3d; on April 6th, one for $5,000, due July 5th; on the same day another, for $5,000, due July 5th; still another on the .same day, for $5,000, due July 5th; and on April 25th, one for $1,000, due June 25th— a total of $31,000. No claim is made that any of these notes were executed with the knowledge or consent of Brinton, or with his authority, except such as is claimed Page had in virtue of the original partnership. The $13,000 notes executed by Page in November, 1906, and the $5,000 note Feb*290ruary 6, 1907, were, by the bank, also marked and stamped “Paid April 11, 1907,” and were then surrendered and delivered to Page. Page continued to' do business with the bank, and between August, 1907, and February 8, 1908, as Page & Brinton, executed nineteen other notes, aggregating $83,000. These, as the others, were also executed without the knowledge, consent, or authority of Brinton. The notes executed in April of that year, aggregating $31,000, were by the bank marked and stamped “Paid,” some “May 28, 1907,” some “July 2, 1907,” the rest “July 5, 1907,” and all surrendered and delivered to Page. Between February 24 and March 28, 1908, Page, still continuing business with the bank as Page & Brinton, executed eight other notes, aggregating $43,000. These also were executed without the knowledge, consent or authority of Brinton. The notes, aggregating $83,000, executed between August, 1907, and February 8, 1908, were all, by the bank, marked and stamped “Paid” on various dates from November 27, 1907, to- March 23, 1908, and all surrendered and delivered to Page. The notes aggregating $43,000 were not paid; that is, the amount the bank claims it had advanced the firm of Page & Brinton, and which remained unpaid.

Now it is contended that the original $2,000 note, Exhibit E, was in fact not paid, but was either included in the $5,000 note executed by Page February 6, 1907, or was the $2,000 note executed by him April 4th, or was included in some of the other notes executed by him in April, 1907; this principally because Page at that time, and at all times prior thereto and after he had opened the account with the bank, was its debtor greatly in excess of that amount. There is no doubt that the notes executed by Page in April, 1907, aggregating $31,000, were in part renewals of other notes executed prior thereto, as were also the notes executed thereafter in part renewals of notes prior to that time. But I am unable to ascertain, on the record, that this particular note was so renewed, or carried, or paid. The bank’s officer, who, better than any one else, knew what the fact in such respect was, did not testify that that note was paid by another or others. Pie testified that some notes were paid that way; but as some *291were paid, stamped, and returned, by charging them against the account and deposits of moneys and drafts Page obtained from the Government as the work progressed, and others marked “Paid” and returned because of other notes given in lieu of them, he was unable to identify or segregate the one from the other. Still, as to this particular note, his testimony was, not that it was paid by giving another note, but that on February 15, 1907, Page had a credit balance of over $3,000, and the Exhibit E was paid (not renewed) February 14, 1907, and after the payment (not renewal) of that note “there was a credit balance of only $555.81.” Nowhere by his testimony did he qualify the words “paid” and “payment,” nor is it otherwise shown that he, by the use of them, meant paid by a renewal or the giving of another note. That is left to argument and to inference. Nor did he undertake to explain, or point out, in what manner, or by what note, Exhibit E was merely renewed, and not paid. That again is left to argument and inference. If the bank’s officer, and if not he another familiar with the transactions and the account, was not able to explain and point out with reasonable certainty in what manner and by what note Exhibit E was merely renewed or carried in one or more of the several batches of notes given thereafter by Page, and was still embraced or included in the last batch aggregating $43,000, it is hardly to be expected that we can do that. At least, in view of the bank’s stamp of unqualified payment, its surrender of the note, and of the testimony of its officer that it was paid, the duty is east on counsel to point out, and show, on the record, what in such particular is claimed by them. This has not been done to my satisfaction. Pointing out that Page, during all the time of his account with the bank, was its debtor greatly in excess of the amount of the note does not suffice, for, manifestly, between the time the $83,000 notes were given and the time the $43,000 notes wrere given his notes from his drafts and deposits were reduced nearly one-half; that is, about half of them were paid and about half renewed. Whether the $2,000 note, Exhibit E, if not paid prior thereto-, was included in the one or the *292other, cannot be ascertained. The bank’s officer seemingly was not able to tell, nor am I.

I know I may be in error as to that, and should hesitate, as I do, to overthrow the finding of non-payment- of the trial court. But this is a case in equity, and an appeal on questions of both law and fact. On such an appeal, with proper assignments, as here, the litigants are entitled to a review of the record, and to our judgment, not only as to mere questions of law, but of fact as well. Asi to the latter, our power and duty in a law case are restricted to a mere review and consideration of whether there is any sufficient evidence to support a. verdict or findings assailed. But in equity they are broader than that. Our views as to this are stated in the case of Campbell v. Gowans, 85 Utah 268; 100 Pac. 397; 23 L. R. A. (N. S.) 414; 19 Ann. Cas. 660. If here there were a conflict in the testimony respecting the question of whether Exhibit E had or had not been paid, and what.the truth was concerning it depended upon 'the credibility of witnesses or the weight to be given to their testimony, I should not hesitate to approve the finding. I, however, do not find any substantial evidence to support it, and what I do find requires a contrary finding.

The proposition may he looked at from still another view. As already observed, I think it clearly shown that the partnership of Page & Brinton was dissolved May 22, 1906, and that Page thereafter carried on the business in his individual capacity — while under the firm name, still with the bank’s full knowledge as to that. That was shown, not only hy the testimony of Page and Brinton, hut also by the bank’s officer. The bank thus knew that Page had no authority after that, either as a partner or otherwise, to execute notes binding Brinton for advances made to Page in carrying on the business in his individual capacity. Because of that knowledge of the hank, the fact that Page, after the dissolution, signed the notes “Page & Brinton,’’ added nothing whatever to his individual liability. If, now, it be true that the $2,000 note, Exhibit E, a partnership note, was paid and surrendered by Page giving his own note for it, then why is not that, as to Brinton, who did not authorize the giving of the new note, *293payment of Exhibit E ? Certainly, one note may be paid by another, if the parties so intend it, and if given for suoh purpose. The bank could have surrendered the partnership note, Exhibit E, for Page’s individual note and obligation. It is not the question whether it would naturally do- that, or whether it was wise to do it. The question is, if Exhibit E, as claimed by the bank, was paid by the giving and the acceptance of another note, was not that just what the bank did? It of course contends that Exhibit E was paid by the giving and the acceptance of another note on the theory of a continuing existence of the partnership, and hence all the notes, partnership notes and all, to.the extent of $15,000, secured by the deed. But if it is wrong as to its. two- main contentions, the purpose for which the original notes and the deed were given and the continuing existence of the partnership, then is there nothing left to- its claim that Exhibit E was paid by the giving and acceptance of another note. For, if those propositions are found against it, then does it follow that the notes given by Page after the dissolution were his individual notes, and nothing more; and if Exhibit E was paid by the giving o-f another note, then does it further follow that it was paid by the individual note of Page. And thus, with both of those propositions found against it, if Exhibit E was not paid in manner testified to by Page and the bank’s officer, I do not see how the bank’s position is bettered by the claim that Exhibit E was paid by the giving and acceptance of another note, fo-r that, as is seen, but leads to the conclusion that it was paid by the giving and the acceptance of Page’s individual note. If the bank is right as to its two main contentions, then is it entitled to a foreclosure for the full amount of the original $15,000 notes; if wrong, then to none.

I see no room for any middle ground, by claiming that Exhibits C, D, F and G were paid, but that E was not. Either aU. were paid, or none was paid; and as to that, and for the reasons stated, I think the record requires a finding that all were paid.

Reference

Full Case Name
COMMERCIAL NAT. BANK OF SALT LAKE CITY v. BRINTON
Status
Published