172 A. 296 | Pa. | 1934
Argued March 28, 1934. This is a suit for the balance claimed on a written agreement, dated July 6, 1922, whereby the defendants, who are all but two of the directors of the Navy Smokeless Coal Company, a corporation, became sureties* for *61 the payment of obligations issued or assumed by the corporation and at that time held by the plaintiff bank. In the agreement, the subscribing directors, defendants, "jointly and severally agree that they, the parties of the first part, and each and every of them will, when and as requested so to do, make payment of and discharge and satisfy the following notes and trade acceptances and the renewals of all or part thereof, viz:
Name Amount Endorser
W. C. Krug .................... $5,000.00 Navy Smoke. Coal Co. Navy Smoke. Coal Co. .......... 2,500.00 F. B. Custer Navy Smoke. Coal Co. .......... 1,877.85 John H. Cooney H. J. Bennett ................. 5,000.00 H. F. Dorr H. F. Dorr .................... 5,000.00 H. J. Bennett W. C. Shiffer ................. 5,000.00 H. J. VanDusen H. J. VanDusen ................ 5,000.00 W. C. Shiffer $5,000.00 Temporary Certificates
Navy Smokeless Coal Co. to Cambria Car Foundry Co. ............................................. 3,855.30
Navy Smokeless Coal Co. to Cambria Car Foundry Co. ............................................. 3,855.30"
The amounts specifically alleged to remain due and unpaid (with interest) are $5,000.00 temporary certificates, the corporation's note for $1,877.85, and a balance of $465.90, due on the trade acceptances mentioned, and put into the form of a note of the corporation, dated July 16, 1923.
The defendants joined in an amended affidavit of defense. They admit the execution of the contract, demand for payment and refusal to pay. The principal element of defense was that they were not to be liable, unless and until all of the directors of their corporation executed the agreement, and that two of them had not done so. At the trial, the evidence on the subject was submitted to the jury, whose verdict for the plaintiff determined *62 that fact in accord with its contention. But the trial judge instructed the jury that there could be no recovery on the $5,000.00 of certificates and on the note for $465.90, submitting to them only defendants' liability on the $1,877.85 note. Plaintiff then moved for judgment n. o. v. The motion was refused and plaintiff appealed. The learned court below misinterpreted the contract in suit.
In July, 1922, a national bank examiner reported the First National Bank of East Conemaugh, plaintiff, in unsatisfactory condition and particularly required that the line of credit extended to Navy Smokeless Coal Company be materially strengthened. To remedy the condition, a meeting was held in which the defendants, directors of Navy Smokeless Coal Company, three of them also trustees for incorporators of the company,* participated. The result of the negotiations was the agreement in suit. The circumstances in which it came into existence and the fact that it was prepared by counsel for the defendants are undisputed. It dealt with two classes of obligations: "the following notes and trade acceptances and the renewals of all or part thereof."
The court below held, and the defendants here contend, that the $5,000 certificates are neither notes nor trade acceptances and that, therefore, plaintiff cannot recover for them, notwithstanding that, in the contract drawn by their own counsel, they included the certificates as an obligation of their corporation, the amount of which they agreed to pay on demand.
The certificates were not notes in the ordinary sense, but if, in their agreement, defendants chose to include *63
them in the class of notes for the purpose of identifying the obligations to be assumed, they were at liberty to do so, and are bound by their classification. Not only must their own words be construed strictly against them (West v. MacMillan,
The record shows that the note for $465.90 represented a balance due on the obligations mentioned in the contract. Defendants, in their brief, contend that, by surrendering the trade acceptances and accepting the note of the corporation for the balance due without their consent, the bank released the sureties. If defendants had been gratuitous sureties (American Trust Co. v. Louderback,
Plaintiff's motion for judgment should have been granted. We sustain the first and sixth assignments of error, and, on the theory on which the appeal was presented, remit the record with instructions to enter judgment for the plaintiff for the full amount of the claim with interest.