PIONEER FINANCE AND THRIFT COMPANY v. Powell , 21 Utah 2d 201 ( 1968 )

HENRIOD, Justice:

Appeal from a summary judgment for an unpaid balance due on a note and mortgage incident to a furniture purchase contract between defendants, buyers, and Stanley, seller. Affirmed with costs to plaintiff.

To the complaint, defendants answered, saying Pioneer was particeps in a fraudulent scheme of Stanley, wherein the latter in-’ duced defendants to endorse to him the check issued to defendants and Stanley, representing the loan amount, without delivery of the furniture, while offering a variety of excuses for not delivering the same. Stanley took out.bankruptcy shortly thereafter, listing defendants, along with about 500 others whom likewise he had duped in a sort of contract kiting operation.

Sole question is whether Pioneer participated in such fraudulent machination or reasonably should have been aware of it.

Under the discovery process, and on motion for summary judgment, the only evidence adduced was by affidavit of Pioneer’s manager and the depositions of the defendants, which substantially was as follows, and none of which was refuted by counter-affidavit or any other responsive pleading:¹

The affidavit asserted that defendants came to Pioneer seeking a loan to buy furniture from Stanley. They brought a financial statement. The loan was to be secured by the furniture. After examining the financial statement, the affiant manager independently ran a credit rating on defendants and concluded they were good risks up to $1750. Defendants signed a note and mortgage for $1300 and a check was delivered to them in that amount made payable to them and Stanley, the furniture dealer, which check cleared the bank with defendants’ and Stanley’s endorsements thereon; that plaintiff relied on defendants’ representation that they had the furniture at their residence; that defendants personally would make the monthly payments, and that plaintiff would not have made the loan had it been aware that it was the understanding between the defendants and Stanley that the latter would make the payments, or that the defendants did not already have the furniture in their possession; that plaintiff was not put on notice by anyone that this was other than a conventional loan, or that Stanley was perpetrating frauds in the sale of his furniture.

The depositions of defendants were to the effect that they had never met Stanley, but were told by a friend that they could get furniture from Stanley without paying for it, because Stanley would make the payments; that with such advice, defendants went to Stanley and selected certain items of furniture; that Stanley advised them they would have to go to any one of a list of loan companies which he displayed; that defendants expressed no choice, so Stanley suggested Pioneer, to whom they voluntarily went, without having had any prior dealings with this company; that when the first payment came due, defendants' went "-to Stanley, who gave them $73 cash, which defendants personally paid to Pioneer, Stanley cautioning them not to tell Pioneer of this strange arrangement; that Stanley also had told defendants to pick up the payments each month. Not having received the-furniture, defendants were concerned, and while riding around one day went to Stanley’s store and found a notice on the door announcing the bankruptcy. The defendants made no further payments on the note. Defendants had gone along with the deception of Stanley, largely on the strength of what their friend had told them, and at no time told Pioneer about their arrangement with Stanley, who had told them not to do so. They conceded that they did not know whether or not Pioneer was involved with Stanley’s modus operandi.

The pleading and proof reflected only the facts related above. Nothing was developed that reflected any fraud, particeps in fraud, or that Pioneer had any occasion to believe there was any fraud in the transaction. We believe that, under the developed facts related above, without any contradiction by way of counter-affidavit or other responsive pleading, the trial court had .little to do but grant the motion for summary judgment under the rules, there being no genuine issue of fact to present to a jury.

Having affirmed the trial court, which in substance and effect concluded that the facts exonerated plaintiff from any action which would subject it to any equitable defenses to its loan to defendants, 'it would seem that all of the defendants’ points urged on appeal must fail. These points were that plaintiff was not a holder in due dourse and therefore was vulnerable to anyone of the equitable defenses in fraud in the inducement, failure of a condition' precedent and failure of consideration.

Plaintiff asserts in its answer and counterclaim that defendants were estopped from setting up the defenses mentioned. This is moot under the decision of this case.

Plaintiff says that the actions of the defendants were fraudulent and that we should adjudge that they cannot discharge the judgment should they take bankruptcy. We do not deem it appropriate to anticipate what defendants might or might not do in the future, and do not decide this point, particularly since it has nothing to do with the subject of the instant action.

Finally, plaintiff wants us to assess attorney’s fees for this appeal under the provisions of the note and mortgage. This court does not receive evidence, and this phase of plaintiff’s contention will have to be determined elsewhere.

"Counsel for defendant filed a lengthy memorandum of the law incident to the motion for summary judgment, setting out the history of Stanley’s operations and authorities pertinent to his liability to the defendants which latter observations are not pertinent to the plaintiff here. The memorandum was simply a brief having no probative weight in this case, so that no purpose wóüld be served to canvass its contents.

■ CROCKETT, C. J., and CALLISTER-' and TUCKETT, JJ., concur.

1 . See Dupler v. Yates, 10 Utah 2d 251, 351 P.2d 624 (1960).