Thompson v. Dubois

SHENK, J.

This is an appeal by the defendants Galtier and Vergnes from a judgment against them in an action

[578]

on two promissory notes made by the defendant Dubois and indorsed by the appealing defendants, the latter being referred to herein as the defendants.

Said defendants had been the owners of the furniture, furnishings and tenant’s leasehold interest in the Benedict Apartments, located at 1678 Sacramento Street, San Francisco. They were partners in the apartment house business. About one month prior to the execution of the notes involved herein they sold the Benedict Apartments to the defendant Dubois and received as a part of the purchase price a promissory note in the sum of $11,775 secured by a chattel mortgage on the property sold. On September 14, 1927, this note was canceled, the mortgage satisfied of record and in lieu thereof two notes were executed by the defendant Dubois to Galtier and Vergnes in the sum of $7,500 and $4,275, respectively, each secured by a chattel mortgage on the property sold. The plaintiff had been the owner of the furniture, furnishings and tenant’s leasehold interest in the Marian Apartments, located at 2159 Mission Street, San Francisco. On September 15, 1927, the plaintiff and the defendants consummated a transaction whereby the plaintiff sold to the defendants the Marian Apartments for the consideration of $4,100 cash, a note executed by the defendants in the sum of $4,125, secured by a chattel mortgage on the Marian Apartments, and the two Dubois notes of $7,500 and $4,275, respectively, secured as above stated by a chattel mortgage on the Benedict Apartments, making a total consideration to the plaintiff for his Marian Apartment-house property of $20,000. The securities on the Benedict Apartments were thereupon transferred to the plaintiff by an assignment of the chattel mortgage to him by the defendants and by a transfer of the two Dubois notes to the plaintiff accompanied by an unqualified indorsement thereof by Galtier and Vergnes. These notes were payable in installments of $65 per month on the larger note and $35 per month on the smaller one, with interest, etc. Each note contained the usual acceleration clause. Interest was paid until September, 1928, but none of the installments of principal was ever paid. On June 25, 1928, the plaintiff notified the defendants by letter that Mrs. Dubois had failed to pay any of the installments of principal. On July 12, August 13, September 13 and October 13, 1928,