Court Opinion

ID: 3840939
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:10:10.600163+00
Date Added: 2024-06-11T07:40:33.487122
License: Public Domain

As the writer views this case, the question to be determined is which defendant, the Portland Cattle Loan Company, hereinafter referred to as the Portland Company, or H.H. Mack, has the right to recover upon an admitted obligation originally due from John Densley to R.N. Stanfield.
This obligation is part of an indebtedness supposed to have been in the sum of $13,698.64, but later determined to be $12,698.64, which Densley owed to Stanfield. Three notes were executed by Densley therefor, one for $4,000, another for $5,000, and the third for $4,698.64. The one for $4,000 was discounted by the Bank of Stanfield, the one for $5,000 by the Bank of Echo, and the one for $4,698.64 was pledged to Mack as collateral security for a loan of $5,000. These three notes were duplicated. That is to say, Mr. Densley executed duplicates of each one of them. One set of these duplicates came into the possession of the trustee for the Portland Company. The Portland Company and Mack each claim to be entitled to recover on a renewal of the one of these three notes originally executed in the sum of $4,698.64. *Page 552 
There are at least six reasons why the writer thinks that Mack has the better right to a recovery:
Upon request of Miss Kivette, the Portland Company, through its trustee, returned to her two of the three purported notes held by it, namely, the one in the sum of $4,000, and the one for $5,000. The writer thinks that, if the Portland Company was entitled to one of them, it must have been entitled to all three, and that the converse is likewise true.
It is here that, basically, the views of the writer diverge from those reflected in the opinion of the court. The writer thinks that Mr. Stanfield was the owner of the obligations of growers which he took with the understanding that he would not accept mortgage security therefor until sometime after the execution and recording of mortgages securing the obligations discounted by and hypothecated with the Columbia Basin Wool Warehouse Company and the Portland Company. The writer thinks that there was no impropriety in discounting or hypothecating these obligations, for the payment of which the mortgages, if any were taken, were to be subject and subordinate to those taken by the two companies named, for funds procured by Mr. Stanfield from sources other than said two companies. Holding these views, the writer thinks that Mack, as well as the Bank of Echo and the Bank of Stanfield, acquired the right to insist upon payment by Mr. Densley.
No renewal of the purported note for $4,698.64, held by the Portland Company, was requested until the Densley interests were incorporated.
On October 3, 1923, a statement of Densley's account with the Portland Company was made by the trustee of the Portland Company and no reference whatever is made therein to the Densley note. *Page 553 
The report of the appraisers, under the trust agreement, discloses that on July 9, 1921, proceeds from a sale of Densley's lambs were received by the Portland Company in the sum of $4,333.98. On October 11, 1921, proceeds from a similar source were received in the sum of $1,154.86, and on January 23, 1922, proceeds from the sale of 1921 wool were received in the sum of $2,381.80. In June, 1922, The Stanfield Feeder Company purchased all the Densley sheep, and accounted to the Portland Company for the proceeds therefrom in the sum of $16,772. This reflects total credits to which Densley is entitled in the sum of $24,642.64. These credits, which should be given Densley, are in excess of the $20,988.70 claim in the sum of $3,653.94.
Although, upon the trial, Miss Kivette testified concerning these credits, which were not given Densley, no testimony was offered by the Portland Company refuting or explaining them. It is argued that there must have been advances and that these advances offset the credits; but no testimony was offered as to the amount of any advances to Densley not charged to him, for which the Portland Company is entitled to such or any offset.
Miss Kivette testified that the Columbia Basin Wool Warehouse Company made advances to Mr. Densley in the aggregate sum of $3,718.02. If the Portland Company be given such an offset, then there would be a balance due it from Densley of only $64.08.
The explanation, in behalf of the Portland Company, to the effect that the $4,698.64 Densley note held by it represents the difference between the first mortgage executed by Densley to the Portland Company in July, 1922, for $16,154.44 and the item in the sum of *Page 554 
$20,988.70 appearing in the schedule attached to Exhibit E of the Portland Company is not convincing.
To the writer, Miss Kivette's explanation thereof makes the stronger appeal. She testified:
"That item of $20,988.70 was a note dated April 20, 1921 signed by John W. Densley secured by a first mortgage to R.N. Stanfield and this mortgage was rediscounted to the Columbia Basin Wool Warehouse Company on or about April 20, 1921 and from April 20, 1921 until June 1, 1922 John Densley did not renew his first mortgage on his sheep. The Columbia Basin Wool Warehouse Company kept that old note and during the year 1921, John (Densley) sold the sheep and sold the wool and turned the proceeds of this mortgaged property into the Columbia Basin Wool Warehouse Company, and the Columbia Basin Wool Warehouse Company instead of crediting the proceeds as turned in by John (Densley) they threw this money into an account they called the R.N. Stanfield Proceeds Account and credited Stanfield personally with the money and not John Densley."
Mack presents the record of the Densley account with Stanfield when he took the Densley note as collateral for the payment of money loaned to Stanfield and procured from a bank by Mack as shown by the records of the bank. There are no unexplained credits. The two notes executed by Densley contemporaneously with the one received by Mack and pledged by Miss Kivette for Stanfield have not been returned, but those two notes and the one Mack obtained were successively renewed, and two of them have been paid by Mr. Densley.
The writer thinks that the purported Densley note procured by the Portland Company came to that company by reason of a mistake or rather a series of mistakes. The taking of a mortgage by the trustee to *Page 555 
secure it is an incident which tends to convince the writer that the trustee had no actual knowledge of the Densley account because the mortgage was taken upon the Densley sheep which had been sold before the mortgage was executed.
A point is sought to be made because of a statement in the agreement, by the terms of which, the fund in suit was deposited with plaintiff, to the effect that the Eagle Valley Sheep Company was indebted to the Portland Company. Mack was not a party to this agreement and its recitals are not binding upon him. The Eagle Valley Sheep Company was a corporate alter ego of Densley, a fact of which the Portland Company was apprised when its note was substituted for the purported Densley note. In saying this, no reflection upon Mr. Densley is intended; but the substitution mentioned, in the opinion of the writer, created no superior equity in the Portland Company.
The writer thinks that the judgment and decree of the circuit court should be affirmed. *Page 556