Friedlander v. Bank of California

California Supreme Court Nov 23, 1897 No. S. F. No. 819Published

Before: Garoutte

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Holding. The court held that the transaction between the bank and Chapman was intended solely to release Chapman from his personal liability and did not constitute an accord and satisfaction of Friedlander's separate indebtedness. Consequently, the land conveyed by Friedlander remained subject to the original trust.

Issues

Whether the transaction between the bank and Chapman discharged the indebtedness of both Chapman and Friedlander.
Whether the trial court's findings of fact regarding the scope of the release were supported by the evidence.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The bank finally released him from his debts and his obligations, and took the acres of land which he had given as security. The negotiations had nothing to do with Friedlander.”

“If this evidence be taken as true, then certainly no accord and satisfaction of Friedlander’s debts took place, but the contract was simply a release of Chapman from liability upon the notes.”

Synopsis

Trust—Sale of Lards fob Indebtedness to Bank—Joint Debtors—Separate Settlements—Release of One Debtor Except as to Lands— Settlement with Godbbtor—Surrender of Notes—Action by Administrator for Accounting as to Lands.—Where each of two debtors gave his notes to a bank' with the other as indorser, and transferred lands and other securities to the bank to secure his indebtedness, upon an express trust to sell the lands to pay the indebtedness, and the bank, for a valuable consideration, surrendered his personal securities to one of the debtors, and released him from liability upon the notes except as to the lands transferred by him to the bank in .trust, the settlement in no way touching upon or affecting the rights and liabilities of his codebtor, with whom a separate settlement was subsequently had, involving an absolute conveyance of his lands to the bank, and a release of his indebtedness, and surrender of all the notes to him, such settlement in no way touching upon or referring to the other debtor with whom the first settlement was made, the burden of indebtedness remaining upon the lands under the first settlement was not removed or discharged or in any way affected by the second settlement with the codebtor, and such lands, being still held upon the original trust, formed no part of the estate of the deceased trustor, and upon subsequent sale thereof by the bank and application of the proceeds in part payment of the original indebtedness of the deceased trustor to the bank, his administrator cannot maintain an action against the bank for an accounting upon the theory that the entire indebtedness of both debtors was discharged by the surrender of the notes, and that the lands of the deceased debtor were thereby released from the trust, and reverted to the estate.

Id.—Conflicting Evidence as to Nature of Second Settlement—Admission of Bank—Closing of Note Account—Findings—Sufficiency of Evidence.—Where there is evidence of circumstances tending to show that the second separate settlement was simply a release of the liability of the debtor with whom it was made, and that the other debtor who had been before released except as to his lands was a stranger to the second transaction, and that it had nothing to do with the charge of his indebtedness upon his lands, or any release thereof, the fact that the bank, in an answer filed in another action, admitted that the entire indebtedness of both debtors was satisfied and discharged by the deed given at the second settlement, and the further fact that all the notes were given up at the time of that settlement, and the note account upon the books was then balanced and closed, cannot be held conclusive that the liability of the other debtor charged upon his lands was then discharged, but served only to create a conflict of evidence, the weight of which was matter for the trial court, and its findings against such discharge will not be disturbed for want of evidence to sustain them.

GAROUTTE, J. Friedlander owed the Bank of California about five hundred thousand dollars, and Chapman owed the bank about two hundred thousand dollars. Each gave his notes to the bank for the amount of his indebtedness, with the other as an indorser. To secure the payment of all these notes Chapman conveyed to the bank about seventy-four thousand acres of land'and certain collateral securities. Friedlander conveyed to the bank as security for the notes twenty-four thousand eight hundred and eighty acres of land, and also certain collaterals. These transfers to the bank were made upon an express trust to the effect that the bank should sell the land and apply the proceeds to the payment of this indebtedness. Some months after these transactions Friedlander’s financial affairs became desperately involved, and thereupon another agreement was made. By this agreement, for valuable considerations received, the bank returned to Friedlander all his personal securities, and released and discharged him from any liability upon the aforesaid notes other than as to the lands transferred by him to the bank under the original trust contract made at the time the notes were given. This agreement in no way touched upon or affected the rights and liabilities of Chapman. Thereafter, the bank, without objection, entered into the possession of these lands, but the trust at that time had in no part been executed. Subsequently,. Friedlander died, and prior to the commencement of the present action the land conveyed to the bank by him in no way entered into the administration of his estate. In August, 1879, about three years after these notes were given, none of the lands held by the bank under the aforesaid trust having been sold, Chapman made overtures to the bank to be released from his indebtedness. These overtures resulted in an absolute deed from him to the bank of the land originally conveyed by. him as security. This deed was accompanied by a surrender to him, upon the part of the bank, of all the notes given by him and Friedlander under the original transaction. By this absolute deed of Chapman’s lands and the delivery of all these notes by the bank to him, it is claimed upon the part of the Friedlander estate that the entire seven hundred thousand dollars of indebtedness was paid and discharged, and that thereby Friedlander’s lands became released from the trust and re[96]verted to the estate. It is upon this theory that the estate, by its administrator, brought the present action for an accounting, the land having been sold in the mean time by the bank. Upon the other side, the bank insists that by the transfer of Chapman’s land to it, and a delivery of the notes to Chapman, he alone was released and discharged of liability upon the notes, and that Friedlander’s land is still held subject to the original trust. Whether Chapman’s indebtedness alone to the, bank was discharged by his transaction, whereby the bank took title in fee' to Chapman’s lands, or whether the liabilities of both Chapman and Friedlander upon the notes were discharged by the transaction, is the question in this case.

Friedlander v. Bank of California

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