Commercial Nat. Bank of Salt Lake City v. Brinton

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 — 272 — the 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, — 273 — payable 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 — 274 — notes 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 — 275 — out 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 — 276 — ship, 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.” — 277 — In 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 — 278 — there 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.