Bank of Jordan Valley v. Oliver

MoBRIDE, O. J. While, from a moral point of view, there is good reason to say that the bank ought to pay for the hay fed to the sheep in which the bank had an interest as mortgagee, we cannot, in view of Oliver’s testimony, hold the bank as anything but a collateral promisor. It is true that this works a hardship on the defendant, Oliver; but, in spite of the attempt of ingenious counsel to build up a con [609] tract to pay for the hay, the fact will appear that the real contract was that Oliver was to let Zavala have the hay and take his note for the price of it, and that the bank would pay the note out of the proceeds of the sale of the wool, sheep and lambs,— a perfectly good contract if it had been in writing but void under our statute. We reproduce the statements of Oliver as to the contract but italicize those statements as to the method of payment: “A. Well, he [Looney, the cashier] told me to let him [Zavala] have the hay. They had the mortgage on the sheep and the sheep had to be fed, and he started a note [from Zavala to Oliver] I think to take out for Zavala to sign, and then it can be brought back to the bank and they can loan me money until he [Zavala] paid off on the note. * * “Q. Was there anything said about a sale of the sheep or the wool at that time? “A. Yes, when they sold the sheep and the wool and the lambs why they would pay for it. “Q. The bank would pay for the hay? “A. Pay the note.” And further: “A. When Mr. Zavala wanted the hay I told him I had to see the bank because he told me they had a mortgage. I went in and saw Mr. Looney. He told me it would be all right, they had to feed the sheep, and for me to take this note and the bank would pay it.” Taking Oliver’s testimony as true, as we must after verdict, although it is flatly contradicted by the cashier, with whom the transaction was had, and disputed in some respects by the president of the bank, the state of the case is as follows: The bank had [610] a chattel mortgage on some 3,000 head of sheep owned by Zavala. It was midwinter and it was necessary for the preservation of the sheep that Zavala should get hay from somebody with which to feed them. Oliver had the hay and Zavala desired to purchase it, but when the hay was tentatively measured and the price agreed upon he stated that he had no money, that the sheep were mortgaged to the bank, and that the bank could loan him no more money; the fact being that he had borrowed all that the bank was permitted to loan to any one person. Oliver refused to credit Zavala for the hay and said that he must first see the bank, which he did, where an arrangement was made whereby Oliver was to let Zavala have the hay and take his note for it, the bank orally agreeing to pay the note from the proceeds of the sale of wool, sheep and lambs the succeeding summer. Oliver suggested that if he gave such long credit he, himself, would be short of money, and was told by the cashier that he could bring the Zavala note to the bank and deposit it as collateral, and that the bank would loan him upon it such amount as he might require. Oliver took the note partly prepared by the cashier of the bank and delivered the hay to Zavala or his employees, and filled up the blanks in the note, which Zavala" then signed. Oliver took this note to the bank and deposited it there, without indorsement, which probably in. his ignorance he did not know was necessary, and from time to time borrowed money from the bank, giving his notes for the same, and afterwards renewed them. The amount sued for here is the balance due on these renewed notes, after deducting $3,000 paid out of the sum secured upon the sale of sheep, lambs and wool. [611] We cannot, under the authorities and the testimony, construe this as anything but a collateral, oral agreement on the part of the bank to pay Zavala’s note. That is what Oliver says that they agreed to do. It is to be observed that the most of the statements quoted were not drawn from the witness by adroit cross-examination, tending to confuse him, but were, for the most part, given on his direct testimony, and were made with a naturalness which indicates that they convey his exact understanding of what took place at the time. That his ignorance might have been taken advantage of, or his confidence in the cashier’s words been misplaced, is unfortunate, but such is frequently the case in those instances where the word of a man is taken where the statute of frauds has provided that an agreement to answer for the debt of another shall be in writing. This case does not differ in principle from Masters v. Bidler, 101 Or. 322, 331 (198 Pac. 912, 199 Pac. 920), and cases there cited. In this case it is true that the plaintiff had an incidental interest in having the sheep • fed, but such benefit was not sufficient to constitute in itself a consideration for an original promise to pay Zavala’s note, or to create an obligation to pay for hay fed to Zavala’s sheep, and here the extent of the promise is to pay a note given by Zavala in payment for hay. In this respect the case is similar to Condon Nat. Bank v. Cameron (Or.), 216 Pac. 558. The judgment will be reversed and a new trial directed. Reversed. Burnett, J., not sitting.