Stauffer v. Ti Hang Lung & Co.

TUTTLE, J.,

pro tem.

Judgment for $3,000 was recovered against appellants, based upon their liability as indorsers on a promissory note, and they now appeal from such judgment.

The complaint contains the usual allegations in such actions. The answer sets up a number of defenses, all of which were found by the trial court to have been untrue. While a number of points are discussed separately by appellants, they are all tied into the question of whether or not the indorsement in the name of appellants was solely for the purpose of accommodation. The trial court found against appellants on this issue, and it is contended that such finding lacks evidentiary support in the record. Whether or not appellants were accommodation indorsers was a question of fact for the fact-finder

(Western H. Lumber Co.

v.

Superior F. Mfrs.,

18 Cal. App. (2d) 287 [63 Pac. (2d) 828]), and if the finding attacked has substantial support in the record, our inquiry on that subject is at an end.

The following facts appear without substantial conflict: The appellant Ti Hang Lung & Co. consists of some thirty-five partners, seven of whom live in San Francisco. Their business is importing general merchandise, mainly rice. Jay Yue was at all times a member of the partnership, and up to two weeks before the execution of the note in question was the managing partner in San Francisco. The China Rice Importing Co. was organized about March, 1935, for the purpose of selling rice in packages, by Wm. M. Mogan, Jay Yue and Jay Chapman (also assistant managing partner of the partnership, since deceased). Mogan had a third interest therein, appellant partnership a third, and Jay Yue and Chapman a third. On June 18, 1935, Mogan went to the Pacific National Bank (plaintiff’s assignor) and on behalf of

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his corporation requested a loan of $3,000, which the bank declined to make because of the insecure financial standing of the corporation. The next day Mogan and Jay Yue went to the bank and asked if the bank would accept the note of Ti Hang Lung & Co. (appellant) and after looking over the financial statement of appellant, the bank consented to make the loan to appellant. Jay Yue executed a promissory note in appellant’s name, and appellant’s account was credited with the $3,000, which was the next day paid over to the corporation by a check. The day before the note matured, on September 16, 1935, Mogan and Jay Yue requested a renewal of the note, this time with the corporation as maker and the partnership as indorser, which was done. On December 16, 1935, Mogan and Jay Yue again requested a renewal of the note, and an additional $1,000, which was again executed (in the sum of $4,000) in the corporation’s name with the partnership as indorser. The last note transaction took place on March 17, 1936, at which time Mogan paid $1,000 on the previous note and a renewal note was executed for $3,000, again signed by the corporation as maker with the partnership as indorser. On March 2, 1936, two weeks prior to the execution of this note, Jay Yue and another partner requested that the signature card of the partnership be changed because Jay Yue was no longer the manager—the other partner had been made manager. On April 11, 1936, the bank wrote to the partnership advising them that they were holding the note, which was the first knowledge obtained by the partnership of the existence of the note. The cancelled note dated December 16, 1935, was thereupon turned over to the partnership’s attorney to ascertain the facts surrounding its execution and the renewal note.