Court Opinion

ID: 3840938
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:10:10.591357+00
Date Added: 2024-06-11T07:40:33.484778
License: Public Domain

Former opinion adhered to on rehearing January 31, 1933                              ON REHEARING                              (18 P.2d 599)
IN BANC.
On rehearing.
FORMER OPINION ADHERED TO AND DECREE OF LOWER COURT REVERSED.
This is a rehearing of an interpleader suit to determine the ownership of the fund of $4,851.02, with accumulated interest, in the possession of plaintiff. For an extended statement of the case see former opinion.
Among a large number of notes and assets turned over by R.N. Stanfield to the Portland Cattle Loan Company and to a trustee was one of John Densley in the amount of $20,988.70. This note was secured by a mortgage on the sheep. It was listed in Exhibit A to the agreement between the cattle company and Stanfield and the Columbia Basin Wool Warehouse Company. Pursuant to the agreement and understanding Densley's mortgaged property, the same as a large number of other growers, was appraised by parties appointed by agreement for that purpose. The Densley sheep were appraised at $15,379 for which, with some interest added aggregating $16,154.44, a mortgage on Densley's sheep was executed and turned over to the Portland Cattle Loan Company. This left a balance due on the Densley mortgage. There was a deficit to make up, that is, the difference between the appraised value of the sheep and the $20,988.70. The trustee J.T. Updike and his clerks and Miss Kivett, the secretary and manager for R.N. Stanfield, worked together from April 7 until the middle of June to ascertain the amounts of credit that should be allowed upon the different claims and the exact amount that was due from Densley over and above the appraised value of the sheep which were sold and which satisfied the mortgage thereon. The difference between the appraised value of the mortgaged property and the amount due from Densley was, with the other matters in like condition, called a "Stanfield equity." Some *Page 543 
wool and lambs had been sold by Densley in September and October, 1921, and wool in the spring of 1922 and the proceeds turned over to the Columbia Basin Wool Warehouse Company, but had not been formally credited to Densley until the matter of the adjustment was taken up after the agreement transferring the Stanfield assets which was made April 7, 1922.
The main contention of Mack is, and Stanfield makes a similar contention on his behalf, that there was no deficit that Densley owed over and above the appraised value of the sheep. To begin with, the time of the taking of the note by the trustee from Densley is in dispute, and respondent contends that the note was taken as late as February, 1923. That evidently was the time that a second mortgage was taken to secure the note, but the record shows that the note in question and a large number of other deficit or "Stanfield equity" notes were transferred and endorsed mostly without recourse by Stanfield about July, 1922, when Senator Stanfield came from Washington and endorsed all of these notes at one time. He states: "There was quite a mass of these notes. I believe it was in July — I forget the time I came to Weiser from Washington; I came out for that purpose; * * *" It would seem to us that Stanfield would know about the time of the transaction and it indicates that it was arranged when the matter was reasonably fresh in the minds of the interested parties. It is plain from the record that if the Densley sheep had been appraised at a sum sufficient to pay the $20,988.70, that amount then and there would have been paid to the Portland Cattle Loan Company for itself and the Columbia Basin Wool Warehouse Company, about which they had an agreement. The amount of the appraisal of *Page 544 
the sheep was not sufficient to satisfy that note and there was a deficit. This claim is based upon the contention that the lambs and wool of 1921 should be credited to Densley and if credited to Densley would reduce the amount below the appraised value of the sheep.
In our former opinion we assumed that it cost something to run the sheep during the time the lambs and wool were produced. We did not give the figure. The last time that Densley had renewed his obligations to Stanfield, prior to the agreement and turning over of the collateral, which turnover was dated June 1, 1922, was April 20, 1921. Between that time and June 1, 1922, when the transfers were dated, although the actual transfer might have been made at another date, as we find on page 176 of the transcript of testimony, from April 20, 1921, to June 1, 1922, at the date the statement closed, running expenses, advances and interest, as taken from a statement given by Miss Kivett for Stanfield, amounted to $22,501.03, which would more than offset the proceeds of the sale of the lambs and wool. Soon after the first Densley sheep were sold the trustee sold Densley a large number of other sheep and the Portland Cattle Loan Company financed him in running the same.
It is simply impossible to figure from the record that the Densley sheep, which were appraised, satisfied the Densley note and mortgage of $20,988.70.
In regard to this deficit note, Densley, as a witness for defendant Portland Cattle Loan Company, referring to the amount of the note in question, states: "It (the note) is made out to R.N. Stanfield. Well, I suppose it was for money that the upper office claimed; that was the money for which the sheep lacked *Page 545 
bringing when I sold them in 1922, I cleaned up in 1922." This statement, although not perfectly phrased, indicates plainly that Densley understood that the proceeds of the appraised sheep did not pay the note of $20,988.70. That note, as has been stated, was listed in Exhibit A to the trustee's agreement between the Portland Cattle Loan Company and Senator Stanfield. In that agreement, as well as relating to general matters, Mr. Stanfield states as follows: "My liability to the holders of said notes (referring to the notes in Exhibits A and B to said agreement) for the R.N.S. face amounts thereof is not questioned." And yet Mr. Stanfield, in the interest of respondent Mack is now basing the claim principally upon the fact that that note was not all due to the Portland Cattle Company or to the Columbia Basin Wool Warehouse Company.
The deposit agreement under which the funds in question were deposited reads in part as follows:
"Contract made this 22d day of October, 1925, between Eagle Valley Sheep Company, a corporation, herein referred to as the Sheep Company, as first party, Portland Cattle Loan Company, Inc., a corporation, herein referred to as the Portland Company, as second party, and R.N. Stanfield, as third party;
"The Sheep Company is indebted to the Portland Company in the sum of $24,363.05, said indebtedness being secured by a first mortgage on certain sheep, and is also indebted to the Portland Company in the sum of $4,819.16, said last named amount being secured by a second mortgage on said sheep. The said Stanfield claims that said last named indebtedness, $4,819.16, is payableto him for his account or for the account of certain otherpersons or corporations; and an agreement has been made for the deposit of said sum, pending an agreement or judicial determination of the rights of the parties." (Italics ours.) *Page 546 
This statement not only shows that the sheep company, which was successor of J.W. Densley, was indebted to the Portland Cattle Loan Company for the amount of the first mortgage of $24,363.05 but also in the sum of $4,819.16, secured by a second mortgage, being the amount in controversy.
We again suggest that nowhere in this deposit agreement does Senator Stanfield mention or refer in any way to any claim of defendant Mack. It is very suggestive that Senator Stanfield, relying upon memory, had the idea that the appraised value of the Densley sheep was sufficient to liquidate the balance of the Columbia Basin Wool Warehouse Company note of $20,988.70, but this claim is not borne out by the record.
According to the claim of Mack and Stanfield, it would appear that Densley had executed more notes to Stanfield than he was owing, or, rather, more than he was owing after the proper credits had been given, and Stanfield had hypothecated the notes.
In order for defendant Mack to prevail and have his note satisfied by the proceeds which the Portland Cattle Loan Company have been instrumental in producing by assisting Densley, it is incumbent on Mack to show that his note is superior in right to that of the Portland Cattle Loan Company. This he has not done. As we view it, Miss Kivett had no right to take or hold the so-called duplicate Mack note in the interest of Stanfield or Mack.
This is an equity suit, and it is for the court to determine with which party the equities are.
The testimony of Miss Kivett, page 104, shows that the schedule indicated the Columbia Basin Wool Warehouse Company received the proceeds of the sale of *Page 547 
the 1921 wool, which sum of money was credited to R.N. Stanfield and not credited to the growers on their paper at the time of the signing of the April 7 agreement. The Proceeds Account shows that John Densley on July 9, 1921, or three months after the signing of the $20,988.70 note, sold 1,099 lambs that netted $4,333.98; also on October 11, 1921, he sold 261 lambs, for a net of $1,154.86; that the Densley 1921 wool sale on January 23, 1922, amounted to $2,381.80, making a total of $7,870.64 that the Columbia Basin Wool Warehouse Company received to be credited to the John Densley note, that they did not credit at the time of the signing of the April 7 agreement, claiming that Densley's account at the time the trustee took it over, after allowing Densley these proper credits, was a little in excess of $13,000. Nevertheless, the statement of Miss Kivett, and the other testimony, shows that Miss Kivett and the bookkeepers for the trustee worked together from April 7 until the middle of June, checking up and ascertaining the credits to be given to different growers, among them J.W. Densley.
Referring now to pages 175 and 176, the testimony shows that in arriving at the balance of $13,698.64, due from Densley, the proceeds of the lambs and wool were credited to him. These figures are given by A.W. Douglas, referring to Miss Kivett's statement with corrections as to some errors and expenses, and as we understood the record the figures and the balance are unquestioned. Further than that, the record shows that from April 20, 1921, to June 1, 1922, the time the accounts were balanced, the running expenses for the Densley sheep were $12,946.80, together with advances and interest, making a total of $22,501.03. *Page 548 
In order for counsel for respondent to maintain the claim that the indebtedness due the Portland Cattle Company of $20,988.70 was reduced to the amount of the appraised value of the sheep, it would be necessary to credit Densley with the amount of the sales of lambs and wool, and say nothing about the running expenses, advances and interest. In other words, the calculation made by Miss Kivett and Mr. Douglas and the other clerk in the trustee's office was unquestioned at the time.
The claim of Stanfield is a mere afterthought. It is not supported by the record. There is no question of the amount due from J.W. Densley on the note of $4,819.16. The only controversy is in regard to the duplicate notes having been taken for this amount. As we mentioned in our former opinion, according to the general arrangement shown by the agreement of April 7, 1922, the Portland Cattle Loan Company financed Densley to continue the sheep business. After deducting the sale of the sheep which were appraised in June, 1922, together with some interest, amounting to $16,154.44, there was a balance due on the $20,988.70 note held by the Portland Cattle Loan Company, with interest to that time, of approximately $3,819.16. By virtue of the Portland Cattle Loan Company selling sheep to Densley and financing him to run them, it enabled him to pay his indebtedness, including the unsecured indebtedness. That evidently was their object. Stanfield made no objections. Mack had nothing to do with that transaction. Stanfield, by making the claim that the amount was due to him in the interests of some corporation, or person, and afterwards putting forward Mack as a claimant, is simply attempting to reap where he nor Mack has not sown. It would be inequitable *Page 549 
to allow Mack the benefit derived from the conducting of this business from June, 1922, until 1925, even if his duplicate note were otherwise on an equal basis with the note of the Portland Cattle Loan Company in question. Evidently, as the difference between the appraised value of Densley's sheep and the amount of Densley's note transferred to the Portland Cattle Loan Company was termed a "Stanfield equity," Miss Kivett conceived the idea that such indebtedness belonged to Stanfield. After carefully reading the record, the briefs and figuring the amounts as carefully as possible therefrom, we are unable to reach such a conclusion. We fail to see how it is possible for counsel for respondent to claim that the sheep, lambs and wool were not credited to Densley. It is rendered easy to remember in regard to the figuring of the sheep as that was where Miss Kivett made an error of $1,000 in computing 1,540 sheep at $6,700 instead of $7,700, making the balance due from Densley $1,000 too large. While this error was called attention to by the clerk of the trustee and corrected without question, still it plainly shows that they were figuring the balance due from Densley and that he obtained proper credits. Moreover, the question of the extinguishment of the old indebtedness by the sale of the wool and lambs, so that the amount of Densley's indebtedness was reduced to less than the amount of the appraised value of the sheep, was not made an issue in this case by any of the pleadings or otherwise.
The trustee Mr. Updike and his clerks A.W. Douglas and E.F. Roy, appear to be competent business men, as well as his clerks being accurate accountants. We give their testimony fair credit. *Page 550 
It appears that defendant Mack took a second mortgage on the Densley sheep, but he seems to have paid no particular attention to it and has never attempted to enforce the mortgage.
The Cattle Loan Company is criticized by respondent for the reason that the bookkeeper of the trustee on October 3, 1923, made a statement of Densley's account in which the note of June 1, 1922, for $4,698.64 was not mentioned. The fact that a bookkeeper may not have made a full statement of the indebtedness would not pay that note. Necessarily they changed bookkeepers occasionally and there was a vast amount of detail for them to cope with. The money in question was undoubtedly due from J.W. Densley and the note representing the same was turned over to the cattle company as collateral security for the indebtedness of R.N. Stanfield. Thus Densley would receive credit for what he paid and Stanfield would receive credit upon the amount due the Portland Cattle Loan Company from him on the payment to the Portland Cattle Loan Company of the amount of the note in question.
It should perhaps be stated that about June, 1925, Densley incorporated the Eagle Valley Sheep Company and did business through that corporation. This company succeeded to Densley's sheep business. The Eagle Valley Sheep Company assumed and agreed to pay this Densley note. The note was executed for a valuable consideration and endorsed by R.N. Stanfield to the Portland Cattle Loan Company for a valuable consideration. The Portland Cattle Loan Company is a holder in due course of the Eagle Valley Sheep Company note.
Whatever claim defendant Mack may have he should look to R.N. Stanfield for satisfaction thereof. *Page 551 
The matter is rather lengthy to be described in all its details and to take up every phase referred to that might seem at first to be plausible. We have scrutinized the record and carefully read the testimony.
We adhere to our former opinion, and the decree of the circuit court is reversed and one will be entered in accordance herewith.
BAILEY, J., did not sit in this case.