FISH et al.
VALLEY NAT. BANK OF PHOENIX
Appeal from Superior Court, Navajo County; W. E. Ferguson, Judge.
Dodd L. Greer, of Holbrook, for appellants.
William C. Eliot, of Phoenix, for appellee.
Morgan, Judge. Stanford, C. J., and LaPrade, J., concurring.
[64 Ariz. 167] This action was instituted by H. D. Lore, trustee, doing business as Lakeside Light & Power Company, against the defendants who appear here as appellants. During the pendency of the appeal, Lore died, and his executor, Valley National Bank of Phoenix has been substituted as appellee. R. S. Lewis is merely a nominal party. Minnie A. Fish is a party by reason of her marital relationship. For convenience the parties will be styled as plaintiff and defendant.
The facts may be stated briefly as follows: During the year 1938 plaintiff was engaged in the business of buying and selling machinery and equipment in Arizona. The defendant owned a light and power business at Lakeside, in Navajo County, which was in need of rehabilitation. On September 22, 1938 plaintiff and defendant entered into a written agreement, whereby defendant agreed to transfer to plaintiff, as trustee for Lakeside Light & Power Company (a trade name), all interest in the electric utility owned and operated by defendant. Under this agreement, plaintiff was to finance the reconditioning of the various transmission lines and installations to properly supply the town of Lakeside and vicinity. He was to collect and retain all income from the sale of electric energy, and apply the proceeds to the liquidation of the indebtedness required to recondition the plant, to the expense of the operation, and the proper maintenance of the service. It was estimated that equipment required for installations could be paid for within three years, by monthly payments out of the proceeds of operation. The balance of proceeds, after the expenses and maintenance charges were paid, was to be placed to the credit of Lakeside Light & Power Company. The plaintiff was to receive no compensation for his services, and when the indebtedness was fully paid, the property was to be reconveyed to defendant. It was estimated that $ 6,000 would be required for installations, and the parties secured an order from the corporation commission authorizing the utility to incur debts to that amount. Before anything could be done under this agreement, the plant was destroyed by fire.
Plaintiff and defendant then orally agreed to build a plant adequate to service the vicinity. This agreement followed the terms of the written one of September 22. Plaintiff agreed to furnish the machinery and install it, with the provision that when the plant was in operation, defendant would purchase it from plaintiff. The plaintiff complied with the terms of this agreement, furnishing and installing the necessary machinery and equipment, including poles and lines, and the new plant began operation in December, 1938. Defendant was unable to comply with his oral agreement to purchase, and the parties then agreed the property should be held by plaintiff as provided in the agreement of September [64 Ariz. 168] 22, 1938, and that all gross income would be used to defray the expenses of operation
and maintenance, and for payment of the machinery, equipment, and other installations supplied by plaintiff.
In October, 1939 an accounting was had of funds received and expended by plaintiff. A conditional sales contract was entered into, whereby plaintiff sold and defendant agreed to purchase all equipment for the sum of $ 17,782.45. Defendant was unable to take over the property, and plaintiff continued to operate the plant pursuant to the agreements mentioned. The business was so operated until 1943, at which time it became evident that the gross revenues were insufficient to pay the expense of operation, maintenance, and for plaintiff's equipment. Plaintiff at that time had expended beyond revenues approximately the sum of $ 20,000. The machinery and equipment were being depreciated by use, and there was no prospect that payment could be made therefor out of the proceeds of the business. Plaintiff then brought suit for a rescission of the contracts, on the ground there was a failure of consideration, offering to make an ...