Kent v. Kent

FRICKE, J.,

pro tem.

Action to enforce the statutory liability of stockholders of the Ethyl Oil Company arising out of a loan of $50,000 made to that corporation by Bank of America and evidenced by a promissory note.

Appellants challenge the right of plaintiff to bring this action. It appears that the note sued upon was guaranteed by C. F. Whittier and J. M. Kent, president and vice-president of the borrower, and, the note not being paid, the bank sued the corporation and the guarantors and attached certain property which plaintiff here, Lillian D. Kent, claimed as her sole and separate property. Lillian D. Kent and J. M. Kent then entered into an agreement with the bank whereby, in consideration of the release of the attachment, they agreed to join as trustors in the execution of

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trust deeds upon the attached property as security to the extent of $25,000 upon the $50,000 note and to the extent of $25,000 against a separate obligation of J. M. Kent to the bank. In addition to releasing the attachment the bank agreed that as soon as the obligation of Ethyl Oil Company had been reduced to $50,000 or less the bank would deliver the note of the oil company to Lillian D. Kent for such action as she might care to take, with the understanding that any money she might collect on the note should be paid to the bank for credit toward satisfaction of the trust deed obligations.

Before the commencement of this action the bank endorsed upon the note an assignment thereof to Lillian D. Kent “for the purpose of collection only”, pursuant to the above mentioned agreement. The note remained in the possession of the bank, subject to the right of the assignee to obtain it at any time she desired, and was obtained by her shortly before the trial and introduced in evidence. The bank further executed and delivered to plaintiff a separate assignment transferring to her the “debt, obligation and/or liability in its favor and against the stockholders of Ethyl Oil Company” for the moneys advanced by the bank and which debt was evidenced by the promissory note, the assignment providing that any moneys collected thereunder be paid to the bank to apply under the above mentioned agreement with Lillian D. Kent and J. M. Kent.