Cowan v. Browne

HONORABLE H. H. EWING, Judge of the Eighth Judicial District,

sitting in place of MR. JUSTICE REYNOLDS, disqualified, delivered the opinion of the court.

This cause of action is stated in three counts. In the first, the plaintiffs allege that they are copartners, and the Havre National Bank, defendant, is a corporation; that on the twenty-ninth day of September, 1917, Ever Nielsen was indebted to the plaintiffs in the sum of $1,833.27; that immediately prior to the twenty-ninth day of September, 1917, Ever Nielsen had made arrangements with the defendant, hereinafter referred to as the bank, whereby the bank was to take charge, supervision, and control of all the real and personal property of Nielsen for the purpose of selling and disposing of the same and of applying a part of the proceeds to the payment of the indebtedness of Nielsen to the bank, and of applying sufficient of the balance to the payment of the indebtedness of Nielsen to the plaintiffs, and the bank, in pursuance of this agreement and arrangement, on or .shortly after the twenty-ninth day of September, 1917, sold Nielsen’s property and received the proceeds thereof, amounting to the sum in excess of $32,000; that Nielsen made and executed an order in writing in favor of the plaintiffs, directed to the bank,-requiring it to pay the plaintiffs the sum due them from Nielsen; that said order was thereupon presented by plaintiffs to the bank, and it promised and agreed with plaintiffs that, after the payment of the indebtedness of Nielsen to the bank, it would pay from the proceeds of the sale of Nielsen’s property the obligations of Nielsen to the plaintiffs; that on September 29, 1917, the indebtedness of Nielsen to the bank did not exceed $7,500, leaving a large sum of money over and above the amount necessary and required to pay the indebtedness of Nielsen to the bank and to the plaintiffs; that, notwithstanding the promises of the bank to pay plaintiffs their indebtedness from the proceeds, it refused, and does now refuse, to pay the plaintiffs their indebtedness, or any part thereof; and that the whole sum is due and payable.

The second count sets forth the same facts as the first, except that in this count the bank is alleged to be a trustee, as follows: “That by reason of the action of the bank in accepting the real and personal property of Nielsen, and the sale thereof and the receipt of the proceeds under the conditions that the bank should use sufficient of the proceeds to pay the indebtedness of Nielsen to the bank and to the plaintiffs, the bank became, was, and is a trustee for the use and benefit of these plaintiffs in applying sufficient of the proceeds of the sale to pay the indebtedness of Nielsen to the plaintiffs,” and that the bank has failed to execute the trust.

In the third count plaintiffs set forth the same facts as in the first, except that they rely upon an oral agreement made by the bank to pay their demand against Nielsen. They allege that the balance of Nielsen’s property was advertised to be sold on September 29, 1917; that “on that date, and prior to the sale, the plaintiffs informed the bank that, unless it would guarantee the payment of Nielsen’s indebtedness to them, they would forthwith, and prior to the sale of the property by the bank, cause to be filed in court an action against Nielsen, and a writ of attachment to be issued in the action, and cause sufficient of the property of Nielsen which the bank intended to sell to be levied upon and garnished to satisfy the claim of the plaintiffs; that thereupon the bank stated and represented to the plaintiffs that, if they would forbear the collection and enforcement of their indebtedness against Nielsen at that time, and would refrain from filing the complaint and would desist from having the property of Nielsen seized under a writ of attachment, the bank .would pay the plaintiffs the amount of the indebtedness of Nielsen to them from the proceeds of the sale of the real and personal property of Nielsen which the bank proposed to make shortly thereafter; that the bank further represented to the plaintiffs that the property of Nielsen would sell for a sum largely in excess of the amount necessary to pay the indebtedness of Nielsen to the bank, and that a sufficient surplus would remain after paying the indebtedness of Nielsen to the bank to pay the indebtedness of Nielsen to the plaintiffs, and that the bank promised and represented that it would pay from the balance to plaintiffs Nielsen’s in' debtedness to them as hereinbefore stated; that, by reason of the promises and representations of the bank to the plaintiffs, they refrained from filing their action against Nielsen and from causing his property to be levied upon to satisfy their indebtedness against him, and that the plaintiffs relied upon and believed all the representations and promises of the bank made to them and acted thereon; that the bank at the time knew that the plaintiffs would and did rely upon the promises and agreements of the bank and refrained from filing the action against Nielsen and attaching his property by reason of such promises and representations and not otherwise.

The answer is, in effect, a general denial. By stipulation the cause was tried by the court without a jury. Plaintiffs prevailed in the district court. The bank appealed from the judgment and from, an order denying its motion for a new trial.

It is first contended by the bank that the third count, the one upon which the plaintiffs relied in the district court, does not state facts sufficient to constitute a cause of action, for the reason that it is not alleged that there was any agreement on the part of the plaintiffs to forbear to sue and attach. We have examined this count carefully, and do not believe the poinf is well taken. There is recited therein the promise on the part of the bank through Hitt, its cashier, that the plaintiffs’ claim would be paid out of the proceeds of the sale after the obligation of Nielsen to the bank was satisfied, if the plaintiffs would forbear the filing of suit, attaching the property and stopping the sale. It is further alleged that plaintiffs did, by reason of the representations made to them by the bank, forbear to sue Nielsen and attach his property, and that the bank at the time knew that plaintiffs would and did rely upon the promises and agreements of the bank and refrained from filing their action against Nielsen and attaching his property by reason of the promises and representations of the bank, and not otherwise.

Mere forbearance to sue, without an agreement to that effect, is not a sufficient consideration for a promise of another to pay the debt of the person liable; but such agreement may be either express or implied. “It is well settled that forbearance to sue is a sufficient consideration to support a promise. However, a mere forbearance to sue is not enough in the absence of circumstances from which an agreement to forbear may be inferred. But an actual forbearance to sue may often, in connection with other circumstances, sometimes slight, be evidence of an implied agreement to forbear and thus form a consideration for a promise.” (Sellars v. Jones, 164 Ky. 458, 175 S. W. 1002.) To the same effect are the following: Manter v. Churchill, 127 Mass. 31; In re Rohrig’s Appeal, 176 Mich. 407, 142 N. W. 561; Cobb v. Page, 17 Pa. 469; In re All Star Feature Corp. (D. C.), 232 Fed. 1004; Edgerton v. Weaver, 105 Ill. 43; Saunders v. Mecklenburg Bank, 112 Va. 443, Ann. Cas. 1913B, 982, 71 S. E. 714.

While an express agreement to forbear to sue is not alleged, and the pleading is not a model, yet we hold that sufficient is set forth in this count to show an implied agreement to that effect.

It is next insisted that plaintiffs should have offered evidence to show that there was a balance from the proceeds of the sale after paying the indebtedness of Nielsen to the Bank, and that, having failed to do so, the motion for nonsuit should have been granted. The evidence on behalf of plaintiffs showed that after the auction sale, Mr. Ritt, the cashier of the defendant bank, and Mr. Nielsen were in the bank, "and there Mr. Ritt, with a list of all the bills that Mr. Nielsen owed and knowing the amount for which Nielsen’s property sold, made a computation, evidently with the view of determining how near the proceeds of the sale of Nielsen’s property would come to liquidating his obligations, and remarked to Nielsen: “Well, there is about $4,500 that would not be touched. You will have that much.” It is a well-settled rule that on a motion for a nonsuit everything is deemed proved which the evidence tends to prove. (Herbert v. King, 1 Mont. 475; Cain v. Gold Mt. Min. Co., 27 Mont. 529, 71 Pac. 1004; McCabe v. Montana Cent. Ry. Co., 30 Mont. 323, 76 Pac. 701; Stewart v. Stone & Webster Eng. Corp., 44 Mont. 160, 119 Pac. 568; Morelli v. Twohy Bros. Co., 54 Mont. 366, 170 Pac. 757.) The evidence produced by plaintiffs at least tended to show that funds were available to pay plaintiffs’ claim against Nielsen, and that the motion for nonsuit was properly denied.

Nielsen’s property sold for the following-amounts: Real estate, $36,000; sheep, $6,970; other personal property, $4,684.75. To refute plaintiff’s evidence that there was a balance after paying the bank, defendant offered to prove that there were not sufficient available funds to satisfy its claims against Nielsen, to which evidence plaintiffs interposed an objection which was by the court sustained. The bank then made the following offer of proof: “We will offer to show that the contract for sale to William Williamson was for the sum of $36,000 and as a part of the purchase price he was to assume two mortgages, one for $10,000 and one for $5,000. That was the contract with William Williamson, provided that we should furnish him with the title free and clear of all encumbrances except these two amounts; that ■at the time of sale to' Mr. Williamson there were the following encumbrances against the land: # * * The sum of $1,726.93, payable to J. B. Cox on a contract for purchase of land which was still due from Nielsen and covering the land included in the sale made to Mr. Williamson; the sum of $560.26 due to the Iowa Land Company on a mortgage given by Mr. Nielsen on land included in the land purchased by Mr. Williamson; the sum of $411.75, the amount of a judgment in favor of the St. Anthony & Dakota Lumber Company against Ever Nielsen, which item was a lien upon the land conveyed to Mr. Williamson; the sum of $1,338.23, the amount of a judgment in favor of the Monticello State Bank against Ever Nielsen, which judgment was a lien upon the land covered by the conveyance to Mr. Williamson; the sum of $8,000 which was paid to Mr. J. H. Schmedeke in settlement of a mortgage of $10,000 and interest, given by Mr. Nielsen to Mr. Schmedeke and covering the land included in the conveyance to Mr. Williamson; also the sum of $91.10 paid to Mr. Fred Schick on a judgment in favor of Fred Schick against Ever Nielsen which was a lien upon the land in question at the time of sale to Mr. Williamson. * * * We wish further to show that it was agreed upon the sale to Mr. Williamson that all interest on the mortgages for $10,000 and $5,000 which was due to the Merchants’ Trust & Savings Bank of St. Paul was to be paid by Mr. Nielsen up to and including the first day of July, 1917; that there was due in interest the sum of $305.10 on the second mortgage of $5,000, and the sum of $1,200 on the first mortgage of $10,000. * * * We wish further to show that included in the .gross receipts of the auction sale was the sum of $181.85 for two horses to John Illin. We wish further to show in connection with the sale of sheep that at the time of the sale of the sheep there was a chattel mortgage on these sheep running to the Stockmen’s National Bank, and, in order to make the sale, it was necessary to pay off this mortgage, and that the mortgage was paid and amounted at the time of its payment to the sum of $5,186.51.”

Defendant offered in evidence its Exhibits “A,” “B,” and “D,” representing the indebtedness of Ever Nielsen to the bank, to which evidence plaintiffs interposed an objection, which was sustained. It then made an offer of proof. Exhibit “A” is a promissory note dated December 13, 1916, made, executed, and delivered by Ever Nielsen to the bank for the principal sum of $7,094.34, payable on demand with interest at the rate of eight per cent per annum from date thereof. Exhibit “B” is a promissory note dated October 5, 1916, made, executed, and delivered by Ever Nielsen to the defendant bank for the sum of $6,200, payable on demand, with interest at the rate of twelve per cent per annum from date thereof. Exhibit “D” is a promissory note, dated August 25, 1917, made, executed, and delivered by Ever Nielsen to the defendant bank for the sum of $1,578.25, payable on demand with interest at the rate of twelve per cent per annum.

We think the evidence included in both offers should have admitted, the first to show the amount of proceeds from the sale of Nielsen’s property available to apply on the bank’s claim against Nielsen, and the second to show the amount of Nielsen’s indebtedness to the bank, for there is an allegation in each count of the complaint that the bank’s claim was to be paid before the plaintiffs were to receive any of the proceeds of the sale. From the evidence offered, it is apparent that, after deducting from the proceeds of the sale, the amount of the liens upon the property, there remained an amount insufficient to pay the bank.

Plaintiffs contend, however, that the bank’s promise to pay their claim against Nielsen from the proceeds of the sale was unconditional, and therefore the offered evidence was immaterial. There was evidence admitted on behalf of plaintiffs, over the objection of defendant bank that its promise of payment was unconditional, but there is no allegation in the complaint that would permit such evidence and the same should have been excluded.

Plaintiffs also contend that, when the bank promised to pay them from the proceeds of the sale, it meant “gross proceeds,” and that therefore the first offer of proof was immaterial. There are cases holding that the word “proceeds,” when used in connection with the sale of property, means “gross proceeds,” and there are others holding that it means “net proceeds”; but we believe that the general rule, and the one supported by the weight of authority, is to the effect that the word is one of equivocal import, and its construction depends very much upon the context and the subject matter to which it applies. Applying this rule to the evidence in this ease, what did the parties mean by the word “proceeds”? At this time Nielsen’s property, both real and personal, was mortgaged. There were judgments against him. These were matters of record, and the parties hereto were charged with knowledge of the same. All these claims were superior to the bank’s claim to the proceeds of the sale. We then hold that, under the facts and circumstances in this case, the word “proceeds” means the sum for which the property sold after deducting the amount of the mortgages and judgments.

Plaintiffs further contend that the offered proof was not admissible under the pleadings. This evidence tends directly to contradict plaintiffs’ allegation that there was a balance due from the proceeds of the sale after the bank was paid, and is admissible under the denial in this case. (Maulding v. Ball, 5 Mont. 96, 1 Pac. 409; Chealey v. Purdy, 54 Mont. 489, 171 Pac. 926; 13 C. J. 874, and cases cited.)

The court erred in excluding the evidence included in the offers of proof and also in admitting evidence of an unconditional promise by the bank to pay plaintiffs. The judgment and order are therefore reversed, and the cause is remanded to the district court, with directions to grant defendant’s motion for a new trial.

Reversed and remanded.

Mr. Chief Justice Brantdy and Associate ' Justices Cooper and Holloway concur.