THE VALLEY NATIONAL BANK, a National Banking Association, Appellant,
SALT RIVER VALLEY WATER USERS' ASSOCIATION, WILLIAM V. BOYLE, ALMA BOYLE, J. L. ALONSO, HERMINE H. ALONSO, W. W. TAYLOR, GAIL DANA, NEDRA D. DANA and W. L. RICE, Appellees
APPEAL from a judgment of the Superior Court of the County of Maricopa. Howard C. Speakman, Judge. Judgment reversed.
Messrs. Gust, Rosenfeld, Divelbess, Robinette & Coolidge, for Appellant.
Messrs. Sloan, Scott & Green, Mr. Chas. A. Lambie, Mr. W. L. Barnum and Mr. R. M. Brumback, for Appellees.
[54 Ariz. 200] LOCKWOOD, J.
Valley National Bank, a corporation, hereinafter called plaintiff, brought suit against Salt River Valley Water Users' Association, hereinafter called the association, to recover certain money to which plaintiff claimed it was entitled. By order of the court, William V. Boyle, Alma Boyle, J. L. Alonso, Hermine H. Alonso, W. W. Taylor, Gail Dana, Nedra D. Dana, and W. L. Rice, were brought in as parties defendant. The case was tried to the court without a jury, and judgment was rendered that plaintiff take nothing by its action, but that the named defendants recover from the association certain amounts set forth in the judgment, and plaintiff appealed.
There is very little dispute as to the facts necessary for a determination of the appeal, and they may be stated as follows: In the year 1932, the association was indebted to various parties in a total of about eight hundred and eighty thousand dollars, which it was necessary to refinance. After looking over the situation, the board of
governors of the association decided to do this in a manner which, stripped of all legal form and verbiage, was substantially as follows: A special assessment of five dollars was levied against each share of the stock of the association, the assessment thus amounting to something like a million dollars. The holders of the stock were given the option of either paying their assessments in cash, or executing [54 Ariz. 201] promissory notes for the amount of the assessment. These notes were endorsed by the association and used as collateral security for borrowing the money necessary to refinance the liabilities of the association as above. It was further provided that if the shareholders did not either pay cash or furnish their notes as aforesaid, all delivery of water would be cut off. As a result of this action, nearly all of the shareholders executed notes of the character referred to above, but a few of them, of whom plaintiff was one, voluntarily paid in cash the five dollars per share assessment.
It was contemplated, and hoped, at the time this arrangement was made that the entire amount borrowed for refinancing the association would eventually be paid by it out of its regular revenues, and that the makers of the notes would never be called upon to pay them. Most, if not all, of the shareholders who paid cash anticipated that the notes would not be paid, and that, therefore, when the association had fully repaid the money which it was about to borrow, a refund would necessarily be made to those who had paid cash, to put them on an equal basis with the other shareholders who had merely given notes. With this in view, the plaintiff, when it transmitted its cash payment to the association, inserted in its letter of transmittal the following provision:
"Payment is made with the understanding that if and when all or any portion of the amount is due to be refunded, the amount of refund will be made to us, irrespective of the ownership of the land at the time the refund is made. Kindly issue us your receipt for the amount, stating that any refunds in connection with the same will be made to us."
And the several receipts issued by the association to plaintiff had endorsed thereon this quotation from the letter of transmittal.
[54 Ariz. 202] The money was borrowed by the association, and as time went on, it made repayment of the loan. These payments were made out of the general fund of the association, which fund was composed, among other things, of regular annual assessments levied on the shareholders of the association in proportion to the amount of stock held by them, and which were paid by them in the usual course of business. All of the shareholders who had paid cash, as well as those who had given their notes as aforesaid, paid these regular assessments annually over a period of approximately five years. During this period, plaintiff sold a certain portion of the land held by it to various parties, among them being the defendants in the present case. These sales were not made at the same time, but at varying periods, so that some of the regular assessments made during the five years in which the loan was being repaid were paid by plaintiff and some by the defendants after their purchase of these lands.
On April 5, 1937, the loan having been fully repaid, the association passed a resolution which, after various recitals as to the transaction in question and the fact that the loan had been repaid, resolved as follows:
"THEREFORE, BE IT RESOLVED, that said special assessment of $5.00 per share levied by the Board of Governors with the approval of the Council on the 25th day of August, 1932, be, and the same is hereby cancelled and the lien thereof against the shares of the capital stock appurtenant to the lands of the shareholders of ...