167 Iowa 627 | Iowa | 1914
I. In July, 1907, the plaintiff became the owner by purchase of fifty shares of the preferred stock of the Dodd Motor Company, a corporation organized under the laws of this state for the purpose of manufacturing gasoline engines. The stock was purchased at its par value, $100 per share, and certificate was issued to him. By the terms of the certificate the stock was entitled to preferred cumulative dividends up to 7 per cent., and was subject to retirement at par and accrued dividends after one year from date of issue. The defendants were the organizers and officers of the corporation. They were in need of money to enlarge their business, and sought assistance from the plaintiff. He offered to make them a loan of $5,000. They desired him to take preferred stock. This he declined to do, but told them that if Mr. Dodd would guarantee the stock or guarantee the dividends he would take preferred stock. As a result of this conversation, which preceded the issuance of the certificate, there was indorsed on the back of the certificate when issued the following:
Des Moines, Iowa, July 5, 1907.
For good, valuable and sufficient consideration the receipt of which is hereby acknowledged,' the undersigned hereby guarantee that the Dodd Motor Company will pay seven per cent, interest on the stock which this certificate represents until said stock has been retired.
West Dodd,
W. R. Lane,
W. D. Batsholt.
This action is for the recovery of interest due on the contract of guaranty from June 3, 1909, up to which time it is averred that interest had been paid. The preferred stock represented by the certificate has not been retired, and it is pleaded that the corporation has been insolvent since June 3, 1909. The answer admits the purchase of the stock by plaintiff. Affirmatively it pleads that since March 17, 1908, the corporation has been insolvent and has ceased to exist as a corporation under its charter; that since that date it has held
II. The ease presents no difficulty as to the facts, which are without dispute and which substantially support the pleadings. The questions which go to the legal rights of the parties were fully raised in the lower court and are definitely presented by the assignment of errors.
An “absolute guaranty” is one by which the guarantor is bound immediately upon the principal failing to perform his contract without further condition to be performed. 20 Cyc. 1398.
We conclude that the judgment of the trial court was correct. — Affirmed.