L.A. Nat'l Bank v. Wallace

Temple, C.— Babcock and one Collins owned some nursery stock, which included a large number of orange trees. Wallace was an experienced horticulturist.

The three purchased from Baldwin three hundred acres of land, believed to be well adapted to the growth of oranges. Nothing was paid on account of the purchase of the land, but it was conveyed to Babcock and Wallace, who gave a mortgage upon it to secure the pur[479]chase money. Collins was a banker, and did not wish to be known in the transaction, therefore every thing was in the name of Babcock and Wallace. Babcock and Collins were to put into the enterprise their nursery stock. The orange trees for planting the land purchased were to come from it, and the balance of stock to be sold, and the proceeds applied to the enterprise. Collins was to advance further money to pay expenses to the extent of thirty-five thousand dollars. Wallace was to manage the properties, and to receive a salary of sixty dollars per month. It was thought that it would take six years or perhaps longer to realize sufficient profit from the orchard to pay the purchase money, sixty thousand dollars, to repay Collins the advances made by him, and to pay Babcock and Collins for the nursery stock. Payments were to be made in the order above recited.

As Collins did not wish to be known in the transaction it was arranged that the money to be advanced by him should be obtained in this way: Wallace was to draw upon Babcock, payable as convenient; Collins would then cause the bills to be guaranteed, and, when due, paid by the California National Bank of San Diego, of which he was an officer.

When the land had been paid for and the advances made by Collins refunded, and the value of the nursery stock paid, the orange orchard was to be equally divided between the three parties.

On the seventh day of September, 1891, Wallace drew two bills upon Babcock, payable on December 1st to the plaintiff. They were duly represented to Babcock for acceptance, were accepted, and payment guaranteed by the San Diego Bank.

Some three weeks before the maturity of the bills it was understood that Collins and the bank which had guaranteed the bills were both insolvent, and Wallace informed plaintiff's cashier that he did not think Babcock had any means, or would be able to pay, but that he, Wallace, had means and would pay the bills.