Burrill v. Robert Marsh & Co.

HAHN, J., pro tem. Two cases involving the same questions are before us on appeal, one brought by A. W. Burrill, as trustee in bankruptcy of the Estate of United Finance Company, a corporation, and the other by Herman C. Smith [Smith v. Robert Marsh & Co., (Mem.) (31 Pac. (2d) 826)]. Robert Marsh & Company, Inc., and Robert Marsh were named defendants in each action. In the Smith case A. W. Burrill, as trustee in bankruptcy, appeared as intervener.

In the discussion that follows reference will be made to the one case wherein Burrill, as trustee, is plaintiff.

The controversy arises over a contract of guaranty made a part of each of twenty-five promissory notes executed by the Utah Land & Cattle Company, which guaranty, signed by Robert Marsh & Company and Robert Marsh, reads as follows: “For value received, we severally guarantee the payment of the within note at maturity, or any time thereafter, and hereby waive presentment, protest, demand and notice of demand, and nonpayment, and suit, against the maker, and consent that the payment of this note may be extended from time to time without affecting our liability, [103]and hereby waive diligence on the part of any holder hereof in collecting the said note and any defense arising out of lack of diligence in enforcing the collection thereof.” The notes in question were each dated April 1, 1925, for the principal sum of $3,200, with semi-annual interest coupons attached, and by their terms were payable April 1, 1930.

From judgments in favor of plaintiff Burrill, as trustee in bankruptcy, in one action, and in his favor as plaintiff in intervention in the other, defendants have appealed.

It appears from the record that for some weeks prior to July 6, 1925, one J. H. Scales was engaged in promoting the Blodgett Finance Company, which corporation, when organized, was to acquire the business of several going concerns engaged in financing automobile loans and issuing automobile insurance. During this period Scales had several conferences with Robert Marsh concerning these promotion plans and a proposal that Marsh acquire a block of stock of the Blodgett Finance Company. Marsh, who through his company owned 48 mortgage notes of the Utah Land & Cattle Company, each for the principal sum of $3,200, finally agreed on or about July 6, 1925, that he and his company would exchange the notes in question, guaranteed by them, for 1286 shares of the capital stock of the Blodgett Finance Company and the promissory notes of the Blodgett Finance Company for the principal sum of $25,000. The 25 notes here involved, being a portion of the 48 notes transferred by defendants to the Blodgett Finance Company, passed into the possession of the United Finance Company some time prior to November 4, 1927, on which date the United Finance Company was adjudged a bankrupt and A. W. Burrill appointed trustee of the bankrupt estate. Having come into possession of these notes as such trustee, and the interest coupons due and payable on October 1, 1927, and April 1, 1928, not having been paid, on July 17, 1928, plaintiff filed suit against defendants on their contracts of guaranty to enforce payment of the principal and accrued interest on the notes.