Darby v. Arrowhead Hot Springs Hotel Co.

The Court.

The plaintiff, R. R. Darby, brought this action to recover a certain sum of money from the defendant, a hotel corporation, claimed by him to have been loaned to the corporation. The defendant denied all the allegations of the complaint, except that the defendant was a corporation; and for a further and separate defense alleged that before the commencement of this action the plaintiff had sold and transferred to other parties every indebtedness due by the defendant to the plaintiff, which included the present demand, and that at the time the action was brought the plaintiff was not the owner or holder of any demand against the defendant. The court below found all the allegations of the answer to be true, and rendered judgment in favor of defendant, for costs, etc. From that judgment, and from an order refusing a new trial, this appeal is taken.

The main ground assumed by the plaintiff and appellant for a reversal of the judgment and order is, that the court erred in the admission in evidence of a certain deed from the plaintiff to three other persons, who were stockholders in the hotel corporation. The objection made was, that the evidence proffered was irrelevant and immaterial, and not responsive to any of the pleadings in the case. If it sufficiently appears from the recitals of this instrument that the plaintiff's claim against the hotel corporation for loaned money was transferred and assigned to the three persons named in that instrument .as transferees, then, of course, the deed was relevant and material to the issues rais'ed in the pleading. To our minds, the recitals above adverted to, taken in connection with the circumstances of the transfer proved by the plaintiff himself, make it clear that it was intended by that instrument to sell and transfer to the three parties above named the demand against the hotel corporation, which is the basis of plaintiff’s action.

The language describing a part of the property, and which affects the matter in hand, runs thus: “And also all right, title, and interest, of whatsoever nature, in and to all property, real, personal, and mixed, in San Bernardino county, hitherto and now belonging to the Arrowhead Hot Springs Hotel Company, a corporation, including all furniture and. fixtures, insurance, papers, stock, books of account, bills receivable, accounts, claims, and advances, business, and good-will.’

The plaintiff had shown by evidence that he was a stockholder in the corporation, and that he had made to it loans and advances to the amount he sued for; that the other stockholders, four in number, had also made such loans; and that he had sold his stock and interest in the-hotel company property by instrument of writing to the three grantees in the deed. The instrument in question was certainly not one by the terms of which the transferees and purchasers were selling any stock or claims for the money they had loaned or advanced. The hotel corporation did not have, and could not have, belonging to it any shares of stock which it could sell or transfer, neither could such a corporation have any claims for money advanced or loaned. Therefore, it is very clear that the only other person or party to this instrument who had any stock or claim for advances which he transferred or could transfer was the plaintiff.

It does not appear from the language of the instrument, therefore, with absolute certainty, to whom the “ advances ” mentioned in the deed belonged; but taking the evidence of the plaintiff that he had made advances of money as a stockholder, and that of the transferees of the plaintiff's interest in the hotel company, it is plain that the advances intended to be transferred were those which formed the basis of this action.

The argument suggested by the appellant against this view of the matter is, that the language of the deed as affecting these “ advances ” is too plain to admit of any explanation whatever; that it is there distinctly asserted that these advances belonged to the hotel company, and therefore no explanation by parol could be admitted which could vary the meaning of that language. But, as we have seen, such a hotel corporation could not, according to the rules of law, advance money to any one, as a bank or commission merchant could; therefore, it appears on the face of the instrument itself that such advances made to some one could not belong to the corporation. “Courts cannot adopt a construction of any legal instrument which shall do violence to the use of language or the rules of law.” (2 Parsons on Contracts, 7th ed., 495.) This being so, it seems pertinent to show in this matter what advances were transferred by the deed, and, as it were, identify to whom they belonged when the instrument was executed, and thus to explain this language of the contract by reference to the circumstances under which it was made. (Code Civ. Proc., secs. 1647, 1856-1860; Brewster v. Lathrop, 15 Cal. 21; 2 Parsons on Contracts, 7th ed., 550.) It will be observed here, also, that the corporation against which this suit is brought is not a party to the instrument offered in evidence. The three stockholders to whom the transfer was made, and the fourth, who made it, are the sole parties. The fifth stockholder is not a party in privity with them in the matter. It ’would seem, therefore, that the strictness of the rule against the admission of parol evidence to explain this contract should be relaxed in a case like this. “ In such cases much of the reason which prohibits the introduction, of extrinsic evidence fails, and with it the prohibition fails.” (2 Parsons on Contracts, 7th ed., 687.)

We therefore think that the deed, and the evidence explanatory of it, were admissible. There being no prejudicial error shown by the record, the judgment and order are affirmed.