Reversed and remanded.
Moore & Moore, of Phoenix, for appellant.
Stephen B. Rayburn and Morris L. Gerst, of Phoenix, for appellees.
Stanford, Justice. Udall, C. J., and Phelps, De Concini and La Prade, JJ., concurring.
[71 Ariz. 397] Action was brought in the superior court by plaintiff J. D. Kinnison, the appellant herein, on a check allegedly negotiated to him in the course of his business as a real estate broker in the city of Phoenix, Arizona.
Defendant Sauls, one of the appellees herein had been negotiating with the plaintiff and his agent, Driggers, for the purchase of certain real property belonging to one Cecil Williams. Upon consummation of a contract for the purchase of the property, defendant Hulett, the other appellee herein, made a check, drawn on the Citizens Bank of Jonesboro in Jonesboro, Arkansas, in the sum of $ 525.00, payable to the order of defendant Sauls, and thereupon delivered the same to Sauls apparently for the purpose of allowing Sauls to make a partial down-payment on the purchase price of the above mentioned property,
totalling some $ 5,000.00. Defendant Sauls thereupon endorsed the check in blank and delivered it to Driggers, the above mentioned agent of the plaintiff, together with instructions that he deliver said check to Williams.
Testimony given at the trial indicates that Driggers promptly delivered the check to Williams who thereupon handed it to the appellant-plaintiff, instructing him to handle the collection thereof, take out any commission due him as a result of the sale and return the balance to Williams.
Plaintiff presented the check to the Valley National Bank in Phoenix and it was thereupon forwarded to Jonesboro, Arkansas, for collection. The Citizens Bank in Arkansas immediately notified the Valley National Bank in Phoenix that defendant Hulett, maker of the said check, had previously stopped payment thereon. Notification of the dishonor was thereafter sent both defendants, Sauls and Hulett.
Complaint was filed by plaintiff setting out only the essentials concerning the making, endorsing, and the various transfers of the check, whereupon defendants each filed a separate answer, admitting all the material allegations contained in the complaint, except: (1) negotiation of the check to plaintiff, and (2) actual dishonor of said check by the Arkansas bank (alleging lack of knowledge of the same), but admitting receipt of notice of dishonor. In addition each answer set out details allegedly surrounding [71 Ariz. 398] the sale of the above mentioned property, contention being made therein that plaintiff and his agent, as well as Williams, had represented the said property as being free from all liens and encumbrances when in fact there was a mortgage outstanding against the property at the time the contract of sale was made. Further contention was made in both answers that defendant Sauls thereafter learned of the existence of said mortgage whereupon he made the same known to Williams who then mutually agreed with Sauls that the contract of sale be, and the same was thereupon rescinded, notice of said rescission being promptly given plaintiff together with demand for return of said check. It is also alleged in the answers that plaintiff refused to return the check and thereafter sent the same for collection.
In addition to the foregoing, defendant Sauls also filed a counterclaim against plaintiff together with a cross-claim naming as third party defendants, the Fidelity and Deposit Company of Maryland, surety on plaintiff's brokerage bond, and the above mentioned Driggers, agent of the plaintiff. Both counterclaim and ...