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Valley Nat. Bank of Phoenix v. Fulton

Supreme Court of Arizona

February 8, 1954

VALLEY NAT. BANK OF PHOENIX
v.
FULTON.

[77 Ariz. 12] Rawlins, Davis, Christy, Kleinman & Burrus, Phoenix, for appellant.

Lewis, Roca & Scoville, Phoenix, Walter Cheifetz, Phoenix, for appellee.

UDALL, Justice.

This is an appeal under Section 21-1702(6) A.C.A.1939, from an order of the court below quashing an order for the examination of judgment debtor Margaret M. Fulton.

The facts are as follows: On February 17, 1947, Southwest Quick Frozen Foods Corporation made, executed and delivered to J. C. Fulton and Margaret McKee Fulton, husband and wife domiciled in this state, its promissory note in the principal sum of $9,000, due six months after date. That same day, J. C. Fulton and Margaret McKee Fulton each endorsed said promissory note in blank and delivered it to the Valley National Bank of Phoenix in consideration of the sum of $9,000 paid to

Page 398

them by the bank. Thereafter, Phoenix Savings Bank & Trust Company brought suit against Southwest Quick Frozen Foods Corporation and J. C. Fulton and Margaret M. Fulton upon another note, in which action the Valley National Bank was made a party-defendant. The Valley National Bank filed a cross-complaint against its [77 Ariz. 13] co-defendants, Southwest Quick Frozen Foods and the Fultons, to recover on the $9,000 note.

On the 17th day of October, 1949, judgment was entered, which reads in part as follows:

'That said cross-plaintiff, the Valley National Bank of Phoenix have judgment against the cross-defendants, Southwest Quick Frozen Foods Corporation, J. C. Fulton and Margaret McKee Fulton, and each of them, for the sum of $8,200.00, together with interest thereon at the rate of six percent (6%) per annum from the 17th day of February, 1947, until paid; together with the further sum of $820.00 as and for said cross-plaintiff's attorneys' fees in this action.' (Emphasis supplied.)

No appeal was ever taken from this judgment by the Fultons, and it must be regarded as a final adjudication of their joint and several liability to the Valley National Bank, to satisfy which their individual and community estate may be subjected to execution. Hirales v. Boegen, 61 Ariz. 210, 146 P.2d 352.

Special execution issued against certain personal property mortgaged by Southwest Frozen Foods Corporation to secure payment of the note, but after sale of the property there still remains upon the judgment an unpaid balance of $8,934.64.

James C. Fulton was adjudicated bankrupt by order of the United States District Court in and for the District of Arizona on December 12, 1949, and he was thereafter discharged from the obligation of his debts, including this judgment. Margaret M. Fulton did not join in the bankruptcy proceedings. On December 22, 1952, it was suggested to the court below that the judgment remained unpaid, that special execution did not bring sufficient funds to satisfy it, that a general execution had been returned wholly unsatisfied, and that James Fulton had secured a discharge in bankruptcy. On January 7, 1953, the Valley National Bank secured an order requiring the examination of the judgment debtor Margaret M. Fulton, to ascertain what property she might have subject to execution.

At the time set for hearing on the order, Margaret M. Fulton appeared by her attorney, Paul Roca, and moved to quash the order for the reason that her husband, J. C. Fulton, had secured a discharge in bankruptcy and that the debt represented by the judgment, and the judgment, were at all times community obligations, and the effect of the discharge in bankruptcy was to discharge this community debt.

Mr. Roca suggested that a stipulation might be in order to avoid the necessity of calling James C. Fulton. It was stated that Mr. Fulton's testimony would be that he and Margaret McKee Fulton were married in 1934 and lived in Phoenix since January, [77 Ariz. 14] 1942, and that the obligation upon which the judgment was founded was a community obligation incurred in the course of Mr. Fulton's handling of the community.

The following colloquy occurred:

Mr. Rawlins, representing the Valley Bank, ...


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