Security Building & Loan Ass'n v. Seibert

EDMONDS, J., pro tem. Durex System, Ltd., a corporation, appeals from a judgment rendered against it in an action brought on its alleged guarantees of three promissory notes. Appellant contends that the evidence is insufficient to sustain the findings and judgment that the guarantees were executed by it.

During the time of the transactions in controversy the controlling capital stock interest in the plaintiff corporation [55]was owned by Metropolitan Capital Corporation, formerly known as Metropolitan Guaranty Corporation, and some of its officers under an executory contract for the purchase of capital stock. Furthermore, by contract the Metropolitan corporation had the controlling interest in the capital stock of the Durex corporation, which, however, although subscribed for, was never actually issued. At all times material herein C. T. Owen was president of the plaintiff corporation, vice-president of the Metropolitan corporation and vice-president of the Durex corporation, and M. M. Hurford was vice-president of the plaintiff corporation, an officer and director of the Metropolitan corporation and secretary of the Durex corporation.

The notes in controversy were made by Anna L. Seibert to the order of the Durex corporation and each of them bears the following: “Los Angeles, Cal. Sept. 4, 1930. For Value Received we hereby assign and transfer to the Metropolitan Capital Corporation the within trust deed note together with all rights accrued or to accrue by virtue of deed of trust securing said note and do hereby guarantee payment of principal and interest and waive demand protest and notice of protest covering said note. DUREX SYSTEM, LTD., C. T. Owen, Vice-President, M. M. Hurford, Secretary. (Seal) ” The notes were thereafter transferred by the Metropolitan corporation to the plaintiff, which has sued upon these contracts of guaranty.

Mr. Hurford’s remembrance of the execution of the guarantees was exceedingly hazy. He remembered having signed them at Mr. Owen’s request. He was the secretary of the Durex corporation and was charged with responsibility for the seal, but Mr. Owen kept it. He had no recollection of affixing the corporate seal to the notes but expected Mr. Owen to affix the seal to any papers where it was necessary. He did not know of any consideration received by the Durex corporation for the assignments or the guarantees nor the purpose of the transfers, and he never heard the subject of the notes discussed. The minute-book of the Durex corporation contains no resolution authorizing or ratifying the assignments or guarantees or any mention of them whatever.