Scandinavian-American Bank v. Went-Worth Lumber Co.

BEAN, J. 1, 2. The defendants assign the overruling of the motion to strike, and the demurrer as errors. These assignments involve similar questions. Tersely stated, according to the allegation of the complaint, the plaintiff loaned the defendant, Wentworth [155] Lumber Company, $7,500, and this defendant and the ■other defendants by their promissory notes agreed to pay the same. The action is to recover the sum loaned with interest and attorneys’ fees. We incline do the belief that there is only one cause of action stated in the complaint, and that the same was not vulnerable to either the motion or demurrer. It is laid down as the law thát where a party executes his note to another for the purpose of having such other person deposit or discount it at a bank to raise money on his own note, the party executing the collateral note is a surety. There are authorities, however, holding to the contrary: 21E. C. L., p. 949, § 5; Gray v. Holland, 9 Or. 512; O’Connor v. Morse, 112 Cal. 31 (53 Am. St. Rep. 155, 44 Pac. 305). A principal and his sureties may be sued together: Bowen v. Clark, 25 Or. 592 (37 Pac. 74); Or. L., § 37. However this may be. the defendants by pleading over to the merits waived the motion and demurrer: Crane v. School Dist. No. 14, 95 Or. 644 (188 Pac. 712); Huffman v. McDaniel, 1 Or. 259; Wells v. Applegate, 12 Or. 208 (6 Pac. 770); Olds v. Cary, 13 Or. 362 (10 Pac. 786). The trial court found, among other things: “That ever since the twenty-seventh day of September, 1917, defendant, Wentworth Lumber Company, was and now is a corporation duly organized and existing- under and by virtue of the laws of the State of Oregon, with corporate powers to engage in the general lumber business, including the operating ■of sawmills, and the power of borrowing money, but that at the time of the execution of the $7,500 note, ;as hereinafter mentioned, defendant, Wentworth Lumber Company, had not been incorporated. That as soon as the defendant, Wentworth Lumber Company, was organized the said C. H. Leadbetter was elected its president and manager. “That heretofore, to wit, on the twenty-ninth day of August, 1917, defendants, John E. Westervelt, John [156] F. Worcester, Fred W. Skiff and Harland Went-worth, for the consideration hereinafter mentioned, dnly made and executed their respective promissory notes, for the sum of $3,750 each. [Setting out the notes.] “And then and there delivered the same to one certain C. H. Leadbetter, who then held himself ont to plaintiff to be the president and general manager of defendant, Wentworth Lumber Company, a corporation, for the purpose of making delivery to said Scandinavian-American Savings Bank of Astoria, Oregon, _ in the event a loan of $7,500 was secured from said Scandinavian-American Savings Bank of Astoria, Oregon, a corporation, to the defendant, Wentworth Lumber Company. “That heretofore, to wit, on the thirtieth day of August, 1917, said Scandinavian-American Savings Bank of Astoria, Oregon, believing that at that time said Wentworth Lumber Company was a corporation, loaned to said pretended Wentworth Lumber Company the sum of $7,500 gold coin of the United States of America, by placing said sum of money to the credit of the Wentworth Lumber Company, and that subsequently thereto, said money was withdrawn by checks by said Wentworth Lumber Company. That at the time said loan was made, said C. H. Leadbetter, professing and pretending to act as the president and general manager of said Wentworth Lumber Company, a corporation, made, executed and delivered to said Scandinavian-American Savings Bank of Astoria, Oregon, in consideration of said loan a certain promissory note bearing date of the thirtieth day of August, 1917, in words and figures as follows, to wit.” The court further found that the Wentworth Lumber Company paid the interest on the $7,500 note to December 30, 1918. The trial court concluded that while the Wentworth Lumber Company was not incorporated until after the execution of the note, by availing itself of the proceeds thereof and paying the interest thereon the [157] corporation adopted and ratified the promissory note, and is estopped from asserting that the note is not binding upon it. This holding is assigned as error for the reason that no issue of such ratification is made by the pleading. Defendants further urge that the sureties cannot be held upon a note void as to the principal. Plaintiff contends that it is not necessary to plead such ratification. 3, 4. There is no bill of exceptions contained in the record. Therefore it will be assumed that the proof amply supports the findings of fact. Such findings must be based upon proper issues or pleadings. The plaintiff having alleged that the corporation executed the promissory note, the question is whether it was necessary for the further averment that the Went-worth Lumber Company adopted and ratified the transaction. A corporation is bound by a contract made on its behalf by its promoters or agents before its incorporation, if after it is organized, and with full knowledge of all the facts, it assumes the contract and agrees to pay the consideration, or accepts and retains the benefits of the contract, provided the contract is one which the corporation itself might have made in the first instance: 10 Cyc. 262, 263; Schreyer v. Turner Flouring Co., 29 Or. 1 (43 Pac. 719). 5. The rule as to pleading is stated by Mr. Justice Burnett, in the case of Masters v. Walker, 89 Or. 526, at page 529 (174 Pac. 1164), thus: “It is good pleading to allege that an act was done by the defendant, and it is competent to prove that averment by showing that the act was really done by an agent of the defendant thereunto duly authorized, or that it was afterward ratified by the defendant”: Citing Kitchen v. Holmes, 42 Or. 252 (70 Pac. 830); Levy v. Nevada, C. & O. Ry., 81 Or. 673 (160 Pac. 808, L. R. A. 1917B, 564); and other authorities. [158] See, also, Mahon v. Rankin, 54 Or. 328 (102 Pac. 608, 103 Pac. 53); 16 Ency. Pl. & Pr. 904. The question thus raised is foreclosed by the opinions rendered by this court which are authority for the finding that the note of the Wentworth Lumber Company is a valid binding note against that corporation, and that the sureties agreeing to pay the same were also bound. Finding no error in the record, the judgment of the lower court is affirmed. Aeeibmed. Burnett, C. J., and Johns and Brown, JJ., concur.