Sherwood v. Lowell

The action is on a promissory note executed March 30, 1908, to plaintiff, by J. W. Lowell, brother of defendant, and payable one year after date. It is alleged in the complaint that, in consideration of the maker of the note transferring to defendant “certain property and business,” defendant agreed to pay said note; that, “on March 30, 1909, the thirtieth day of March, 1912, and the thirtieth day of March, 1913, pursuant to said agreement, defendant did on said dates pay to plaintiff the interest due on said promissory note”; that, “thereafter on May 5, 1913, at the said town of Westport, defendant agreed in writing to and with plaintiff to pay said promissory note and did then and there, in writing, make a payment on said promissory note to said plaintiff in the sum of eighty dollars.” Judgment is prayed for the sum of one thousand dollars and interest from March 30, 1913.

Defendant, in his answer, denied entering into the alleged agreement and denied that any such agreement was made; denied the alleged transfer of property by J. W. Lowell to defendant, and denied the alleged payment of money as interest or otherwise; denied the alleged agreement of May 5, 1913, and denied, on information and belief, that the said sum of one thousand dollars or any other sum is due or unpaid on said note. For further answer defendant pleaded sections 337, 339, and 343 of the Code of Civil Procedure in bar of the action.

The cause was tried by the court without a jury and plaintiff had judgment as prayed for in the complaint. Defendant moved the court to set aside the judgment and enter a new and different judgment in favor of defendant and against plaintiff. The case is here on appeal from the judgment and the order denying said motion.

The execution of the note by J. W. Lowell is not denied. The court made the following findings:

“II. That it is true that thereafter and on the 30th day of March, 1911, at the town of Westport, county of Mendocino, state of California, the said J. W. Lowell and said de

fendant A. J. Lowell, with the consent of the said plaintiff (did) represent to said plaintiff that he, the said J. W. Lowell would transfer all of his property and said business to the defendant, and the defendant A. J. Lowell then and there did agree to and with the said plaintiff to pay and discharge the payment of said promissory note and interest due thereon, and that may become due thereon, but that the said J. W. Lowell, instead of transferring said property and business to the said defendant A. J. Lowell, transferred the same to the Westport Mercantile Company, of which the defendant A. J. Lowell is the largest stockholder, and that the said J. W. Lowell and the defendant A. J. Lowell did represent to the said plaintiff that he, the said A. J. Lowell, was and is the owner of said property and business, but that said agreement by said A. J. Lowell to pay said note was not in writing but was oral.

“III. That it is true, that pursuant to said agreement, the said A. J. Lowell did assume and agree to pay said promissory note and interest thereon, and that on the 30th day of March, 1911, the said A. J. Lowell did pay the interest on said promissory note, which payment is evidenced by a memorandum in writing, on the back of said promissory note in the handwriting of said defendant, A. J. Lowell, which said memoranda is as follows: ‘Reed to Mar. 30th, 1911.’ But that the name of A. J. Lowell does not appear on said memorandum or in connection with it.

“IV. That it is true, that on the 5th day of May, 1913, at the town of Westport, county of Mendocino, state of California, the said defendant, A. J. Lowell, did pay to plaintiff on account of interest on said promissory note the sum of eighty dollars, which payment is evidenced by a written memorandum in the handwriting of said defendant, A. J. Lowell on the billhead of the Westport Mercantile Company, and that the said defendant A. J. Lowell represented to the said plaintiff that he, the said A. J. Lowell was the West-port Mercantile Company, and that the payment so made, was made by the said defendant, A. J. Lowell, personally; that the said written memorandum of said payment is as follows: ‘by interest $140’; that the said written memorandum is not nor is the said statement on the billhead of the West-port Mercantile Company signed or subscribed by the said

A. J. Lowell; that the name of the. Westport Mercantile Company does not appear thereon except in printing.”

The uncontradicted evidence shows: That the Westport Mercantile Company is, and has been since its organization on June 29, 1907, a corporation, duly established as such under the laws of the state of California; that its principal place of business was and is at the town of Westport, in Mendocino County, and that at said town it has carried on during the whole of the period of its existence a general merchandise business and the business of purchasing and selling timber, for which specific purposes, among others, as declared in its articles of incorporation, it was organized; that the stockholders of said corporation were and are the defendant, A. J. Lowell, F. C. Hunter, and C. E. Gordon, the defendant being the owner of three-fifths of the stock therein; that the plaintiff did business with said corporation. It is likewise further shown that the corporation had, prior to the particular transaction giving rise to this action, borrowed the sum of one thousand dollars from the plaintiff and that the latter held its promissory note therefor, which note had been paid.at the time of the trial of this action; that, on March 30, 1908, one J. W. Lowell borrowed the sum of one thousand dollars from the plaintiff and executed and delivered to the latter his promissory note for said sum, made payable one year after date, and, as security for the payment of said note, executed and delivered to the plaintiff a mortgage on a certain piece of land situated in Mendocino County and upon which there was then standing a two story building.

The parties to the action stipulated that these facts were true: That J. W. Lowell, at the time of the making of the note last referred to and the execution of the mortgage to secure the payment of said note, was the owner .of the land so mortgaged; that, after the said land was so mortgaged, J. W. Lowell conveyed the same to his wife, Mrs. E. J. Lowell; that, on the eighth day of August, 1910, Mrs. Lowell conveyed the land, by a grant, bargain, and sale deed, to the Westport Mercantile Company. While this deed was, as was, of course, the deed to Mrs. Lowell, subject to the mortgage, it, like the latter deed, contained no agreement that the grantee would assume the mortgage debt. And, at the time of the conveyance by Mrs. Lowell to the corporation, the note and mortgage were still subsisting obligations—that is, the

“Statement Westport Mercantile Co. Westport, Cal...... 191.. Sold to......” The date, “May 5,” and the figure “3” after the figure “191” and all items after the words “Sold to” were in the defendant’s handwriting, but his own name nowhere appears therein.

It is upon this writing that the plaintiff relies for a recovery against the defendant, his claim being that said “memorandum” created a new promise, within the intent of section 360 of the Code of Civil Procedure, against which the'statute has not run, since the action founded upon the promise so created was brought within four years after the date of the “memorandum.” It is argued, in purported support of this position, that, although the defendant’s name is nowhere attached to said “memorandum,” the document is, nevertheless, within the meaning of said section 360, an “aeknowledg

ment” from which a new promise is implied and created, and that “a printed name is sufficient to satisfy the statute where the paper is delivered under circumstances showing an intention to regard the printed name as a person’s own, and so in effect to adopt it as his signature.”

Thus it-will be observed that, since, coneededly, the note was barred by the statute of limitations after March 30, 1913, the right to maintain this action must depend upon whether the finding of a new promise to assume and pay the indebtedness evidenced by the note in question is supported by the evidence.

Section 360 of the Code of Civil Procedure, supra, provides: “No acknowledgment or promise is sufficient evidence of a new or continuing contract, by which to take the case out of the operation of this title, unless the same is contained in some writing, signed by the party to be charged thereby. ’ ’

The defendant contends that the “written memorandum” referred to is not such a writing as will take the case out of the operation of the above section; that it is insufficient under the terms of the statute of frauds to charge either the defendant or the corporation with liability for payment of the debt; that in no event can either the defendant or the corporation be held liable to the plaintiff, since the uncontroverted evidence shows that there was no privity of contract between either and the plaintiff.

In the first place, we express the opinion that the evidence, as it is presented by the record here, is wholly insufficient" to sustain that part of finding No. 2 which reads as follows: “That it is true that thereafter and on the 30th day of March, 1911, at the town of Westport, . . . the said J. W. Lowell" and said defendant, A. J. Lowell, with the consent of the said plaintiff, (did) represent to said plaintiff that he, the said J. W. Lowell, would transfer all of his property and said business to the defendant, and the defendant, A. J. Lowell, then and there did agree to and with the said plaintiff to pay and discharge the payment of said promissory note and interest due thereon, and that may become due thereon.”

The only testimony that we have been able to find in the record from which a possible inference might arise that the agreement referred to in said finding was made, other than the written statement of account rendered to the plaintiff by the corporation and above described, is the following given

On redirect examination, the plaintiff testified that, near the time at which J. W. Lowell and his wife accepted the award made by the arbitrators who had been selected to adjust and settle their respective rights in their community property, A. J. Lowell told him that J. W. Lowell had assigned the mortgaged premises to him and that he (A. J.) had received said property.

It will be observed that in the above testimony the plaintiff does not say that A. J. and J. W. Lowell entered into the agreement referred to in finding No. 2. Nor is there to be found anywhere in the record any testimony that A. J. and J. W. Lowell entered into any such agreement. The most that can be said of the above testimony of the plaintiff or the effect thereof is that A. J. Lowell, whether for himself or for J. W. Lowell or for the corporation is not made to appear therefrom, paid, as it accrued, the interest on the note on three several occasions, ánd that the plaintiff had looked to A.

Nor is there any proof to sustain the remaining vital portion of said finding, viz.: “That the said J. W. Lowell, instead of transferring said property and business to the said defendant, A. J. Lowell, transferred the same to the Westport Mercantile Company, of which the defendant, A. J. Lowell, is the largest stockholder, and that the said J. W. Lowell and the defendant, A. J. Lowell, did represent to the said plaintiff that he, the said A. J. Lowell, was and is the owner of said property and business,” etc.

The uncontradicted evidence is, as has heretofore been shown, that it was not J. W. Lowell, but his wife, E. J. Lowell, who, having previously been awarded the mortgaged premises as her share of the community property in the settlement by the arbitrators of the community rights of herself and husband, transferred and conveyed the said premises to the West-port Company.

The only other finding which is of a fact material or vital to the judgment is the finding that the payment of the interest on the note in the sum of eighty dollars, on May 5, 1913, is “evidenced by a written memorandum, in the handwriting of the defendant ... on the billhead of the Westport Mercantile Company,” and that the “said written memorandum of said payment is as follows: ‘by interest, $140’; that the said written memorandum is not nor is the said statement on the billhead of the Westport Mercantile Company signed or subscribed by the said A. J. Lowell; that the name of the West-port Mercantile Company does not appear thereon except in printing”; and that “the said defendant represented to the said plaintiff that he, the said A. J. Lowell, was the Westport Mercantile Company, and that the payment so made was made by the said defendant, A. J. Lowell, personally.”

There is no evidence in the record which sustains or warrants the finding that A. J. Lowell represented to the plaintiff that he (the said Lowell) “was the Westport Mercantile Company.” As to the fact so found, the only testimony disclosed by the record which might be said to have any bearing whatever thereon is that of the plaintiff, who merely stated, referring to the corporation, that, as he understood it, A.

Even conceding that the evidence shows that the defendant, on the thirtieth day of March, 1911, promised to pay the note, which we hold is not so, the promise so found to have been made, not having been made under or upon any of the conditions specified in subdivisions 1, 2, and 3 of section 2794 of the Civil Code, is wholly void because not in-writing. (Civ. Code, sec. 1624, subd. 2.) The uncontradicted evidence shows and the court finds, as has been already pointed out, that the mortgaged premises were conveyed to the corporation and not to the defendant, and that such conveyance was made some seven months prior to the making of the alleged promise. Nor is there any evidence or even pretense that the defendant received any other property of J. W. Lowell to be devoted to any of the purposes mentioned in section 2794 of the Civil Code. Hence, furthermore, there was no consideration moving to the defendant for the agreement. If made at all, it was a mere nudum, pactiom. It follows, of course, that the finding that such a promise was made by the defendant, at the time mentioned in the findings, is without any force in the determination of this appeal, and there is therefore no necessity for further consideration of it. But the basis of the present action is not the alleged agreement of March 30, 1911, which was made, if at all, before the plaintiff’s right of action on the note or original obligation had been lost by lapse of the time limited by the statute within which he might have sued on said note. His action is, as seen, founded entirely on the alleged written memorandum mentioned in finding 4, which was made after the statute had barred his right to sue on the note. It is upon this alleged new promise that the plaintiff relies for a recovery. But it is clear to us that the alleged memorandum is wholly insufficient, under the terms of the second subdivision of section 1624 of the Civil Code and those of section 360 of the Code of Civil Procedure, either to charge the defendant with liability for the payment of the debt or to take the case out of the

The statute plainly contemplates that, to charge a third party with liability for the debt of another, the writing so relied upon must not only contain a direct and unequivocal assumption of the obligation, but it must be subscribed by the party to be charged. As seen, the only feature of the memorandum here which relates in any way to the note in suit or the indebtedness evidenced thereby is the item of credit for

Nor is the writing sufficient to take the case out of the operation of the statute of limitations. While it is true that in an early case, Barron v. Kennedy, 17 Cal. 574 , 577, it was held that “part payment has always been held sufficient to take the debt, on which it is made, out of the statute,” the language so used must be considered in the light of the situation presented to the court—that is to say, the language quoted states the rule correctly where it is considered in connection with the fact, if it be a fact, that there is a writing, signed by the party to be charged, showing an acknowledgment of or an express promise to pay the debt. If there be no such writing of any kind or character, then part payment is insufficient to take the debt out of the statute. If the rule were otherwise, then to section 360 of the Code of Civil Procedure would be added a qualification which it does not contain and which is not within the fair and reasonable import of its language.

As we have shown, and as is obvious, there is no direct and distinct promise to pay the debt contained in the memorandum, and an acknowledgment of a debt from which a promise to pay may be implied must be a direct, distinct, unqualified, and unconditional admission of a previous subsisting debt which the party is liable and willing to pay, “If

• The foregoing views and the conclusion necessarily following therefrom are decisive of this case; but, while not necessary to do so, we will, nevertheless, consider, briefly, another proposition advanced by the appellant in impeachment of the

We think, assuming that an agreement either by the defendant or the corporation to assume the mortgage debt was made, this case comes clearly within the doctrine of those cases.

But a further proposition, which is supported by the record and must be sustained, may briefly be considered, viz.: That, since the conveyance of the property to Mrs. Lowell by her husband occurred after the premises had been mortgaged to the plaintiff without an agreement by her contained in the deed or otherwise that she would assume or pay the mortgage debt, and she under these circumstances later transferred the property to the corporation, the appellant, conceding that he is or then was the Westport Mercantile Company, and personally bound by its acts, is not bound or liable at all to the respondent for the reason that there is no privity of contract between them. Nor (for the same reason) would the corporation be so bound. In other words, if it be true that a purchaser of an equity of redemption or the mortgaged premises may bind himself to pay the mortgage. debt as a part of the consideration of the transfer, still in this case neither the defendant nor the corporation would

In Biddel v. Brizzolara, 64 Cal. 354 , 361, [ 30 Pac. 609 , 612], it is said: “Even where the rule has been established that the purchaser is bound by his promise as a promise made for the benefit of the mortgagee, it is still necessary that the grantor should be personally liable upon the mortgage in order to render the grantee liable upon his covenant to the holder of the mortgage assumed.” (See, also, Ward v. De Oca, 120 Cal. 102 , [ 52 Pac. 130 ].)

In King v. Whitely, 10 Paige (N. Y.), 465, the grantor of an equity of redemption in mortgaged premises, neither legally nor equitably interested in the payment of the bond or mortgage, except so far as the same were a charge upon his lands, conveyed the mortgaged property subject to the mortgage, and the conveyance recited that the grantees therein assumed the mortgage and agreed to pay the same as a part of the consideration for the conveyance. It was held that, “as the grantor in that conveyance was not personally liable to the holder of the mortgage, the grantees were not liable to the holder of the mortgage to pay the same.” That case was approved in the year 1877 in Vrooman v. Turner, 69 N. Y. 280 , [ 25 Am. Rep. 195 ], and later in the cases of Biddel v. Brizzolara, supra, and Ward v. De Oca, supra.

At all events, since the case for the plaintiff derives its only support from the writing or statement in writing of May 5, 1913, and, as we hold it insufficient to bind the defendant or legally charge him with the debt sued for and is, furthermore, insufficient to take the debt out of the operation of the statute of limitations, the judgment and the order appealed from must be reversed, and it is so ordered.

Chipman, P. J., and Burnett, J., concurred.