Case Name: Frank RIGGLE and Geneva H. Riggle, his wife, Plaintiffs and Respondents, v. DAINES MANUFACTURING COMPANY, Defendant and Appellant
Court: Utah Supreme Court
Jurisdiction: Utah
Decision Date: 1968-03-20
Citations: 20 Utah 2d 391
Docket Number: No. 10948
Parties: Frank RIGGLE and Geneva H. Riggle, his wife, Plaintiffs and Respondents, v. DAINES MANUFACTURING COMPANY, Defendant and Appellant.
Judges: HENRIOD and ELLETT, JJ., concur.
Reporter: Utah Reports, Second Series
Volume: 20
Pages: 391–395

Head Matter:
438 P.2d 808
Frank RIGGLE and Geneva H. Riggle, his wife, Plaintiffs and Respondents, v. DAINES MANUFACTURING COMPANY, Defendant and Appellant.
No. 10948.
Supreme Court of Utah.
March 20, 1968.
J. Grant Iverson, of Moffat, Iverson & Taylor, Salt Lake City, for appellant.
Irving H. Biele, and W. Jeffery Fillmore, of Biele, Jones & Murphy, Salt Lake City, for respondents.

Opinion:
TUCKETT, Justice:
The trial court, pursuant to a motion by the plaintiffs, granted a summary judgment against the defendant on a promissory note.
Prior to the incorporation of the defendant corporation on January 18, 1955, R. D. Dairies,,R. M. Dailies and J. Norman Dailies were doing business as a partnership in the manufacture and sale of store appliances. The partnership borrowed $10,000 from the plaintiffs for which the partnership gave a promissory note in the amount of $10,000, which note provided for interest at the rate of 6% per annum. As an additional compensation for the loan the defendant states that the partnership entered into an employment contract with the plaintiff, Frank Riggle, under the terms of which Riggle was to be employed by the partnership for a period of five years at a salary of $1800 per annum. The terms of the employment contract obligated Riggle to perform services as a business and engineering consultant for the partnership. Defendant claims Riggle lacked qualifications to render such services. In January of 1955, the members of the partnership organized the defendant corporation for the purpose of carrying on the business. After its incorporation the defendant assumed the obligations of the partnership, including the note and the employment contract.
The defendant corporation by its affidavit filed in opposition to the motion of the plaintiffs for a summary judgment sets out that the employment contract was entered into as an inducement to the plaintiffs to make the loan and that it was not intended that Frank Riggle perform any services for the partnership, and that Riggle did not in fact render any services for the partnership or the corporation after it came into existence. Defendant further claims by its pleading and affidavit that the employment contract was simply a device to avoid the usury laws.
After the defendant corporation was organized it was discovered that the employment contract had been lost. A new contract was entered into between Frank Riggle and the corporation which obligated the corporation to make the same salary payments as were provided for by the first contract. After the corporation became delinquent in the payment of salary under the contract, it delivered to the plaintiffs its note in the amount of the delinquency. It is the latter note which is the subject of this action. The defendant urges that it is entitled to make its defense of lack or failure of consideration inasmuch as the facts will show that it was not intended that Frank Riggle would perform services for the corporation, or its predecessor, the partnership, and that in fact no services have been rendered pursuant to the contract. It is further claimed by the defendant that the obligation herein sued upon is illegal, as it arose out of the first loan made by the plaintiffs to the partnership which was usurious and that the subsequent agreement and note were tainted with usury and illegality.
We are of the opinion that the defenses of lack of consideration and illegality of the obligation herein sued upon are genuine issues of fact which the defendant is entitled to a trial thereon. The decision of the court below is reversed and the matter is remanded to that court for further proceedings. Costs to the defendant.
HENRIOD and ELLETT, JJ., concur.
. Fidelity Security Corp. v. Brugman, 137 Or. 38, 1 P.2d 131, 75 A.B.R. 1333.