Hansen v. Hansen & Johnson, Contractors, Inc.

KNIGHT, J.

Plaintiff appeals from a judgment rendered in favor of defendants as executors of the last will of Peter H. Johnson, deceased, in an action to recover $2,000 claimed to be due as a result of a real estate transaction had between plaintiff and Johnson. Respondents urged as defenses a denial of liability and the statute of limitations, and they also set forth two counterclaims. The trial court found against appellant on the merits of his action and held that the same was barred by the statute of limitations, and found against respondents on the merits of their counterclaims.

The controversy grew out of the following facts, which are without substantial dispute: Johnson, the deceased, and Hansen, were engaged in the contracting business under the corporate name of Hansen & Johnson, Contractors, Inc., and during their operations acquired considerable encumbered property. Hansen became indebted to Johnson on account of advances made by the latter from time to time in order to carry on the business, and the parties eventually decided to adjust their financial affairs and divide up the property. Accordingly, on February 25, 1915, pursuant to the terms of a written agreement which they entered into, a parcel of land on Filbert Street, San Francisco, carrying a mortgage of $12,000 in favor of one Crim, and another parcel not here involved, were conveyed to appellant, and all of his corporate stock was transferred to Johnson; and in addition appellant and his wife executed a promissory note in favor of Johnson for the sum of $9,000 secured by a second mortgage on the Filbert Street property. The note bore interest at' six per cent, payable quarterly, and the principal matured in annual installments of $1,000 each. Said agreement also provided that appellant should assume and pay the indebtedness to Crim, including interest, and protect

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and save Johnson harmless from any loss or payment on account thereof. On July 24, 1916, in accordance with an arrangement made between appellant and Johnson, appellant sold the Filbert Street property to one Smith, and as part payment of the purchase price Smith and his wife executed and delivered to Johnson their promissory note for the sum of $11,000, payable three years after date with interest at seven per cent, secured by a trust deed which was made subject to the first mortgage of $12,000 to Grim; whereupon and on the same day, July 24th, another and separate written agreement was entered into between appellant and Johnson substituting the Smith note of $11,000 for appellant’s note of $9,000, and in consideration of the delivery to Johnson of the Smith note Johnson promised and agreed “that after there shall have been paid to him on account of the said principal the sum of $9,000, together with the interest on said $9,000, he will pay to the said Carsten Hansen all moneys received on account of the principal of said promissory note and that upon the payment to him of the interest accruing on the said $9,000 as the same becomes due, he will then pay to Carsten Hansen all interest received by him on account of the balance of $2,000 of said note belonging to Carsten Hansen,” and Hansen agreed to accept payment of the $2,000 and interest as in said agreement provided. Simultaneously with the execution of this latter agreement a resolution was passed by said corporation which had the effect of ratifying and confirming said agreement, and- provided, accordingly, that the Smith note should be made payable to Johnson and that the trust deed given as security therefor “be made to trustees designated by him (Johnson) for his benefit and that the said promissory note and trust deed shall be delivered to said Peter H. Johnson to be owned and held hy him.” In conformity with said agreement and resolution Hansen was released from liability on the $9,000 note to Johnson and the Smiths’ note for $11,000 was made out directly to Johnson and the deed of trust securing the same was made out directly to trustees for Johnson, thus giving Johnson complete control over the collection of the $11,000.