Case Title: Donato v. Fishburn

Citation: 367 P.2d 245, 90 Ariz. 210

Docket Number: 

State: arizona

Court: Arizona Supreme Court

Date: 1961-12-29T00:00:00Z

Document:
90 Ariz. 210 (1961) 367 P.2d 245 M.T. DONATO and Iris E. Donato, his wife, Appellants, v. Kenneth Harold FISHBURN, d/b/a City Sheet Metal, Appellee. No. 7142. Supreme Court of Arizona, In Division. December 29, 1961. *211 Botsford & Turner, Scottsdale, for appellants. Wilson & Books, Phoenix, for appellee. McFATE, Judge of the Superior Court. This is an appeal from a judgment of the trial court sitting without a jury, declaring that a certain promissory note signed by M.T. Donato was the community obligation of the maker and his wife, Iris E. Donato, and entering judgment accordingly. The appellants contend that the note was the sole and separate obligation of M.T. Donato. The facts in the case are as follows: Prior to executing the note referred to, Mr. Donato was president and owned 60% of the capital stock of Period Homes, a California corporation. He and two other individuals had organized this corporation for the purpose of constructing homes for sale. The stock was held by the Donatos as their community property. At the time the note was executed the corporation was in serious financial difficulty. It had *212 constructed 32 homes which it was unable to sell and it was indebted to the extent of approximately $30,000.00 to various construction firms. One of these creditors was the appellee Fishburn, d/b/a City Sheet Metal, who was entitled to enforce a mechanic's lien against the houses. The filing of such a lien would have forced the corporation into bankruptcy, according to Mr. Donato, inasmuch as the company was unable to pay its debts. In consideration of appellee's agreement not to file his mechanic's lien against the property of the corporation, Donato made, executed and delivered to him the promissory note which is the subject of this litigation, in the principal amount of $2,711.00, payable 90 days after date with interest at 6% per annum. Other motivating factors which led Donato to enter into the agreement were as follows: Up until the time the corporation commenced to have financial trouble he personally had a good credit rating and he did not want that credit rating or feeling of trust in him destroyed; what he hoped to do eventually was to get his money back which he had invested in the corporation and he wanted the opportunity and time to make the attempt. It also appears that if he could have retrieved the situation he would have benefited financially by way of salary and further remuneration from the corporation. On re-direct examination Donato testified as follows: Finally, it should be noted that the corporation did not become bankrupt and is still in existence. Appellants present one assignment of error which in effect attacks the legal sufficiency of the evidence to support the judgment. They rely on the following grounds for reversal: 1. That the obligee on the note knew and agreed that the note was intended to be Donato's sole and separate obligation and to give him judgment against the community *213 in contravention of this manifest intention would be to award him more than he bargained for. 2. That there was sufficient evidence in this case to overcome the presumption that a debt contracted during coverture is a community debt, inasmuch as the undisputed testimony shows that the note in question was given purely as an accommodation, without intention to benefit and without actual benefit to the community. Hence, say appellants, the rule applies that an accommodation note signed by the husband alone, which does not benefit the community estate is his separate debt. It is, of course, well settled that a debt incurred by a married man during coverture is presumed to be a community obligation, and that the burden is on one attempting to overcome the presumption to prove his contention. Cosper v. Valley Bank, 28 Ariz. 373; 237 P. 175; McFadden v. Watson, 51 Ariz. 110, 74 P.2d 1181; Morgan v. Bruce, 76 Ariz. 121, 259 P.2d 558. It is also well settled that if any reasonable evidence supports the judgment of the trial court, it will be sustained. With respect to appellants' contention that the circumstances surrounding the execution of the note show an agreement between the debtor and the creditor that the debt would be the separate obligation of the maker only, we believe that appellant reads more into the testimony than is actually present. Assuming that one of the men at City Sheet Metal wanted Mrs. Donato to sign the note and that Mr. Donato would not secure her signature, and that the creditor accepted the note without her signature, these circumstances in themselves do not necessarily constitute an agreement on the part of the creditor that the debt was the separate obligation of the maker only, nor does it amount to a waiver of the creditor's rights against the community. The controlling question to be determined from the evidence was whether the transaction was intended by Donato to benefit the community consisting of himself and his wife. If it was, and if the creditor did not agree to accept the sole obligation of Mr. Donato and did not waive his rights against the community, then he is entitled to proceed against the community. We are of the opinion that there was sufficient evidence upon which the court could find and did find that the note was a community obligation. The maker was interested in protecting the community interest in the corporation. The community benefited by acquiring additional time to work out the financial affairs of the corporation in an effort to retrieve something of value for the financial benefit of the community. *214 The case of I.E. Dupont de Nemours & Co. v. Garrison, 13 Wash. 2d 170, 124 P.2d 939, 943, sets forth the rule as to the liability of the community for a note given by a married man for the benefit of a corporation in which he is a stockholder, the stock being the property of the community. We quote from that decision: This court has approved the principle that a husband is the manager of the community business, City of Phoenix v. State of Arizona, 60 Ariz. 369, 137 P.2d 783, 146 A.L.R. 1255, and where his acts are in respect to and in furtherance of the community affairs, the obligations created thereby are those of the community irrespective *215 of whether any pecuniary benefit was realized. For example, in McFadden v. Watson, 51 Ariz. 110, 74 P.2d 1181, we held that if the act which gives rise to the obligation, even though tortious in nature, was done with the bona fide intention of protecting the interest of the community, it becomes a community debt even though no benefit actually resulted. There being ample evidence to sustain the trial court's judgment, it is affirmed. STRUCKMEYER, C.J., and BERNSTEIN, V.C.J., concur.