108 P. 14 | Utah | 1910
Lead Opinion
The plaintiff brought this action against the Ogden Canyon Sanitarium Company, hereinafter styled “company,” and one O. D. Clark to foreclose a mortgage executed in the form of a trust deed in which said Clark was named trustee. The mortgage was delivered to plaintiff as collateral security, as will more fully appear hereafter. All of the other defendants intervened in the action as judgment creditors of
The court found: That the company aforesaid, in August, 1905, issued and delivered to one C. D. Clark, as trustee, fifty coupon bonds of one thousand dollars each, bearing six per cent interest, and that on said date, in connection with said bonds, and to secure their payment, said company also executed and delivered to said Clark, as trustee, a certain “deed of trust and mortgage” whereby said company conveyed to said trustee certain lands situated in Weber County, Utah; that said trust deed was duly filed for record, and, on October .13,- 1905, was duly recorded in the mortgage records of said Weber County;1 that said company at various times between December, 1905, and December, 1906, had duly executed and delivered to the Pin-gree National Bank of Ogden, Utah, certain promissory notes as evidences of loans made by said bank to said company, which together with interest, on August 30, 1906, amounted to the sum of $14,921.90; that said notes were given for money actually received from said bank, which money was used by said company in improving its property and to pay its debts; that said notes were also signed by certain individuals as makers who at the time were directors of said company, but no part of the money obtained as aforesaid was used by said individuals who signed the notes as aforesaid, but that said individuals, although apparently makers of said notes, were in fact sureties, and the debt in
Tbe note authorized by tbe foregoing resolution was duly executed and delivered. It was dated August 30, 1906, and was payable in six months from date. Tbe amount specified in tbe note is $16,341.44. Tbis was tbe amount, with accrued interest, that was due to tbe bank and to tbe estate of T. J. Kurtz at that date. In tbe note for said sum of $16,341.44, in referring to tbe security, namely, tbe bonds and mortgage or trust deed aforesaid, it is stated that they were “deposited as collateral security for tbe payment of tbis note and of any and all claims, demands or other indebtedness due or not due.” Tbe court found that tbe mat
Tbe estate of T. J. Kurtz was distributed to bis heirs, eight in number, including J. BE. Kurtz, tbe plaintiff, some time after tbe order aforesaid was made and before this action was commenced. In tbe decree of distribution tbe notes and mortgage upon wbicb this action is based were distributed to tbe plaintiff as trustee in trust for the other heirs, tbe amount coming to each being fixed by tbe court, and tbe right of plaintiff to maintain this action is based upon that decree. Tbe court further found that tbe property mentioned in tbe mortgage was, during tbe three years preceding tbe commencement of this action, occupied by said company as a health resort, and that tbe value of said property during said years was largely speculative; that when this action was commenced said company was insolvent; that prior thereto the “company was a going concern, but was embarrassed at all times to pay its debts for want of ready money, and that said company bad property ample to pay its debts, if tbe same could be converted into cash, and at all times prior to tbe commencement of this suit was engaged in carrying out tbe objects for which it was incorporated, and that there was no fraud nor intent to defraud any one connected with tbe loans of tbe plaintiff or the Pingree National Bank, but at tbe time of said transactions it was bona fide tbe intent and effort of all parties to continue tbe defendant company’s business and to extend tbe time of payment of their due obligations.” Tbe court also found that said company was indebted in tbe sum of $1500 upon a note executed and delivered to plaintiff December 22, 1906, and that $1500 was a reasonable attorney’s fee
The court ordered judgment for plaintiff as follows: (1) Nor $16,341.44 and interest on the note of August 30, 1906; (2) for $1500, with interest, on the note of December 22, 1906; and (3) for $1500 as attorney’s fee. All of these claims were declared prior and paramount to all other liens, and were to be- first paid out of the proceeds of the sale of the property. The court found all the affirmative allegations of .fraud and wrongdoing alleged by the interveners to be untrue, entered judgment in favor of them for the amounts of their judgments, but declared their liens subsequent and inferior to plaintiffs mortgage lien, and ordered that any surplus proceeds derived from the sale of the mortgaged premises, after paying plaintiff’s lien, be divided pro rata among the interveners, and in accordance with the amounts of their judgments. We remark that the plaintiff in his complaint prayed for the appointment of a receiver to take charge of the property and assets of the company. The court duly appointed a receiver, and it seems he is winding up the affairs of the company as an insolvent corporation.
All of the appellants join in the assignments of error. The errors assigned are very numerous, but counsel for the interveners have condensed the grounds upon which they claim either a reversal or a modification of the judgment. The grounds stated by them are, in substance, as follows: That the action should be dismissed (1) because plaintiff is not the real party in interest and has not legal capacity to sue; (2) because the complaint fails to state a cause of action. The grounds upon which it is urged the judgment should be reversed are: (1) Because several causes of action are improperly joined and commingled in one cause of action; (2) because the court erred both in overruling and sustaining certain objections to certain evidence. That
Passing now to a consideration of tbe alleged errors, we shall refer to tbe demurrers first. Tbe company demurred to tbe complaint upon tbe grounds that “plaintiff has not legal capacity to sue” and “that tbe complaint does not state facts sufficient to constitute a cause of action.” Tbe demurrer was overruled. Tbe defendant Clark demurred upon tbe grounds just stated, ■ and upon tbe further ground “that several causes of action have been improperly united in one cause of action.” Tbe interveners attempted to raise tbe same objections at tbe trial by objecting to tbe introduction of any evidence in support of tbe allegations of tbe complaint. Tbe first three grounds before stated are based upon tbe demurrers and tbe objections of tbe interveners. Tbe contention that tbe plaintiff bad not legal capacity to sue is clearly untenable. Every natural person of lawful age has legal capacity to sue and nothing to tbe eon-
The objection that “several causes of action have been improperly united in one cause of action” cannot be sustained. In section 2962, Comp. Laws 1901, it is provided that a party may demur upon the ground “that several causes of action have been improperly united.” This provision applies in case a pleader sets forth several causes of action in his complaint which cannot be properly joined in the same action. The demurrer in the case at bar
Tbe contention that tbe court erred in overruling appel-lasnts’ objection to the testimony relating to tbe attorney’s fee is untenable. Under our statute (section 3505), tbe matter of allowing attorney’s fees in foreclosure cases is, to a large extent, left to tbe discretion of tbe court. Tbe court has a right to fix tbe fee at a lesser sum
Tbe assertion that tbe court erred in allowing any attorney’s fee is without merit. Tbe note for $16,341.44 expressly provided for an attorney’s fee of ten per cent. We can see no more reason for denying an attorney’s fee in this case than in any other of foreclosure. This objection must be overruled.
Nor can tbe assignment that tbe court erred in excluding tbe statement of a certain witness for tbe interveners of what was said at a particular meeting of tbe board of directors with respect to what was intended by tbe board be sustained. Under tbe issues and in tbe face of tbe written evidence before tbe court, oral evidence upon tbe subject referred to in tbe statement of tbe witness
Tbe contention that tbe court erred in allowing tbe claim for tbe $1500 represented by tbe note of December 22, 1906, and in rendering judgment for tbe plaintiff and against tbe company thereon cannot be sustained. But tbe contention that tbe court erred in its findings, conclusions, and judgment that said sum of $1500 was secured by tbe mortgage or trust deed, and hence was prior in right to tbe judgment liens'of tbe interveners, in our opinion, in view
Tb contention that tbe court erred in not deducting tbe amount of tbe note for $256.34 from tbe larger sum of $16,341.44 cannot be sustained. This amount was clearly included within tbe resolutions as a debt owing from tbe company and no good reason is made to appear why said sum should be excluded.
Tbe assignment that tbe court should have disallowed tbe entire claim of plaintiff, or, at least, should have declared tbe mortgage and trust deed as of no effect as against tbe judgment liens of tbe interveners is, in our opinion, not well founded. Tbe contention that in securing plaintiff’s claim tbe company while insolvent’ preferred tbe claim of an officer or director to tbe prejudice of tbe general creditors, in view of tbe record in this case, cannot be sustained. There is not a scintilla of evidence of actual fraud
This also answers tbe objection that the action was premature because no demand was made as provided in the bonds. Tbe bonds never became of any effect whatever because never negotiated for any purpose.
Nor is tbe contenten that since tbe trust deed and bonds were delivered as collateral security they should have been sold as such security is usually sold of any force. Under the facts and circumstances of this case it is useless to discuss such a contention. Tbe trust deed was in fact delivered to secure plaintiff’s debt. Tbe plaintiff bad no right to negotiate tbe bonds of tbe company, and if be bad it would have been a useless ceremony to offer tbe paper of an insolvent concern. Plaintiff did tbe only thing be could do, wbicb was to bring an action in equity to foreclose tbe mortgage.
Nor can we see wherein tbe facts of this case bring it within tbe doctrine that insolvent corporations may not prefer tbe claims of officers or directors. We are of tbe opinion that tbe facts of this case bring it clearly within tbe rule laid down by this court in tbe cases of Wells Fargo & Co. v. Geo. M. Scott & Co., 18 Utah, 127, 55 Pac. 81, and National Bank of the Republic v. Geo. M. Scott & Co., 18 Utah, 400, 55 Pac. 374.
Nor is tbe contention that tbe company was in fact in
The contention by the trustee, C. D. Clark, that he was the only proper person to bring suit because he was appointed trustee in the trust deed and bonds, if not already answered by us, is determined adversely to his contention in the case of Stevens,, etc., Co. v. Implement Co., 20 Utah, 267, 58 Pac. 843. If there is any distinction between the case at bar and the Stevens Case, supra, it is this, that in this case there is much stronger reason for holding that said C. D. Clark was not a necessary party to the action because in this case the instruments in which he was
The judgment of the district court is affirmed with the exception of that part which declares the claim of $1500 evidenced by the note of December 22, 1906, a prior and paramount lien against the property mentioned in the trust deed or mortgage. Por the purpose of correcting the error in that regard the ease is remanded to the district court of Weber County with directions to modify the conclusions of law and the judgment to the effect that'said sum of $1500 is not a prior and paramount lien against the mortgaged premises, but that such claim should be classed among the general claims against said corporation, and in winding up
Rehearing
ON APPLICATION POE. REHEARING.
Counsel for all of the appellants join in a petition for a rehearing in which they strenously insist that we, in legal effect, have made a contract for the parties different from the one they themselves made, and that after making such a contract for them we have permitted one of the parties to pursue a remedy not contemplated by the contract as made. If counsel’s assertion were correct, or if in our judgment there were any reasonable ground even upon which to base it, we should not hesitate to grant a rehearing. The whole contention is, however, based upon the resolution adopted by the board of directors of the company upon which respondent based his right to foreclose the mortgage referred to in the opinion. Counsel, in substance, now contend that the mortgage was originally given to secure certain bonds to the amount of $50,000, due in ten years from August, 1905; that the mortgage was delivered to respondent as collateral security only to secure the payment of the sums of $14,921.90 and $1,419.54, aggregating the sum of $16,341.-44, which became due and payable in six months from August 30, 1906; that neither by the terms of said bonds, nor of the mortgage, nor by reason of any other breach, any cause of action had accrued to respondent when this action was commenced, and hence that this action to foreclose was premature. In making this contention counsel entirely ignore the legal purport and effect of the resolution of the board of directors which authorized the execution of the note and delivery of the mortgage upon which this action is grounded. So
It is also contended that we erred in apportioning costs. As we view the case, no other apportionment would reflect justice. There being no cause shown why a rehearing should be granted, the application should be, and it accordingly is, denied.