Farmers & Merchants National Bank v. Stowell

WOODWARD, J., pro tem. This is an appeal by the defendants, N. W. Stowell and Mary J. Stowell, husband and wife, from a judgment and decree of foreclosure wherein the indebtedness of said defendants to plaintiff was determined by the trial court to be the sum of $514,787.15, and costs. The real property affected by the decree may be generally referred to as the Stowell Hotel, situated on Spring Street, between Fourth and Fifth Streets, in the city of Los Angeles.

[375]Before stating the comparatively simple legal questions involved, we will briefly examine the factual background of the controversy. At all times herein mentioned N. W. Stowell was president of the Whitlock Manufacturing Company, a corporation. On or about December 7, 1929, Stowell, jointly and severally, with E. D. Reiter, H. G. Haffer and II. P. Usher executed a guaranty to respondent bank covering existing and future loans to said Whit-lock Manufacturing Company up to the aggregate sum of $350,000. Thereafter the corporation, from time to time, borrowed various amounts from respondent, totaling $438,000. During the same period, it seems that Stowell negotiated a number of personal loans from respondent bank, aggregating approximately $305,000, of which amount there remained unpaid at the time of the trial the sum of $27,603.12. On or about April 7, 1930, appellants executed and delivered to the bank a deed to the property involved in this controversy. As to the purpose for which this deed was delivered, the evidence is conflicting, although all parties concede that the instrument was intended as a mortgage. Respondent contended that in March, 1930, the Whitlock Manufacturing Company had exhausted its credit and that said deed was executed and delivered with the understanding and for the explicit purpose of securing existing and future loans, both to said corporation and to appellant Stowell individually. Appellant Stowell, on the other hand, urged that the deed was given solely to secure his personal loans, and had no reference whatsoever to the obligations, present or future, of said corporation.

The trial court found that said grant deed was delivered to respondent “as security for the then existing personal indebtedness of said N. W. Stowell to the said Farmers & Merchants National Bank of Los Angeles, and security for the then existing obligations of said N. W. Stowell as guarantor of the indebtedness of Whitlock Manufacturing Company, a corporation, to plaintiff, as security for all future personal indebtedness of said N. W. Stowell to said plaintiff, and as security for all future obligations of said N. W. Stowell, as guarantor of any future obligations or indebtedness of Whitlock Manufacturing Company, a corporation; the Farmers & Merchants National Bank of Los Angeles, requested said deed from defendant N. W. Stowell for the