Levinson v. Elbow

HOUSER, J.

The judgment from which the appeal herein is presented to this court was rendered in an action brought for the purpose of enjoining the enforcement of a deed of trust on certain real property, as well as for having it declared that the deed of trust had been satisfied and paid.

From the findings of fact made by the trial court, as well as from evidence adduced at the trial, it appears that the plaintiffs and defendant Elbow were the owners of the entire outstanding stock of Fashion Hat Company, a corporation (hereinafter styled the corporation), of which stock plaintiffs owned seventy-one shares and defendant Elbow

[27]

owned fifteen

shares;

that one of the plaintiffs was the president and that defendant Elbow was the secretary of the corporation; that the corporation borrowed from the defendant Continental National Bank (hereinafter termed the bank) the sum of $4,000, evidenced by the promissory note of the corporation, attested by its said president and its said secretary, and as security therefor the seventy-one shares of stock owned by plaintiffs, an assignment to the bank of “accounts receivable” of said corporation amounting to approximately $5,000, and the trust deed of plaintiffs on certain real property were deposited with the defendant bank; and that the said deposit of securities' was also made security for a prior indebtedness of $750 owing by the corporation to the bank. It further appeared that the corporation was also indebted to the defendant Elbow in the sum of $3,000, evidenced by a promissory note in her favor; also, that at the time the $4,000 loan was made by the bank to the corporation both the plaintiffs and the defendant Elbow personally guaranteed the payment thereof; and as security for her said guaranty defendant Elbow deposited with the bank a certified check-in her favor for the sum of $4,000, which cheek was immediately cashed by the bank and its own cashier’s check for the same amount in favor of said defendant Elbow was issued, but which cheek the bank retained in its possession. The record further discloses the facts that after the sum of $2,097.14 had been collected by the bank from the “accounts receivable” of the corporation and applied by the bank toward the discharge of the indebtedness owing by the corporation to the bank, for a consideration of the sum of $2,652.86, which was the total amount then owing to the bank, both on the $4,000 note and the $750 note of the corporation, the bank sold and assigned to an agent representing defendant Elbow the two promissory notes of the corporation to the bank and delivered to such agent all the securities which had been deposited by the corporation with the bank on account of said total indebtedness—the cashier’s check for the sum of $4,000 deposited with the bank by defendant Elbow as security for her guarantee of the payment of the loan to the corporation at the same time being delivered to defendant Elbow. Within a few days following such sale and assignment, the said agent of defendant Elbow, acting within his assumed