119 N.W. 1044 | N.D. | 1909
This case was tried in the district court of Foster county by the court; a jury having been waived. Plaintiff’s cause of action is based upon the following written guaranty:
“Whereas, among the bills receivable in the Foster County State Bank of Carrington, North Dakota, there :are notes and obligations secured by certain chattel property and executed and delivered by George D. Corliss, amounting to the sum of $2,430.00; and
“Whereas, said bank is about to be transferred to T. F. McCue and other stock holders:
“Now therefore I, P. J. Plester, do hereby guarantee and agree to pay the difference between $1,430.00 and the.sum of $2,430.00 in the event that same cannot be realized out of the said personal security and the said George D'. Corliss, and I hereby waive protest, notice of protest, and presentment for payment upon this obligation, also time of the collection of the original indebtedness, with the exception that the said bank shall use ordinary means to recover the*138 debt out of said Corliss and the above-mentioned securities, otherwise this guaranty shall be absolute and payable to the said Foster State Bank, its successors or assigns.
“Dated this 16th day of November, A. D. 190'3.
P. J. Hester.”
The foregoing guaranty was executed and delivered by >said Hester to plaintiff bank as a part consideration for the sale by said Hester and the purchase by one MeCue and others of a majority of the capital stock of such bank. At the time of such sale and purchase the said George D. Corliss was indebted to the bank in the sum of $2,430', represented by certain notes secured by a chattel mortgage, and it is plaintiff’s contention that such security was of the estimated value of only $1,430.00, that the said Corliss w.as insolvent, and that the guaranty aforesaid was given by Hester with the intention and for the purpose of guaranteeing the payment or collection of such indebtedness over and above the estimated value of the security aforesaid, and this contention was sustained by the trial court. On the other hand, the appellant contends that such guaranty extends to no specific portion of such indebtedness, but only to the difference between $1,430.00 and $2,430.00, or $1,000, and that no liability exists on such guaranty for the reason that prior to the commencement of this action plaintiff realized on such indebtedness from the security and from payments made by Corliss a sum in excess of $1,000. It is also appellant’s contention that the plaintiff bank, without the knowledge or consent of defendant, entered into a valid contract with the said Corliss extending the time for the payment of such indebtedness, and that thereby defendant was released from such guaranty. At the conclusion of the trial the district court made findings of fact and conclusion^ or law, and judgment was ordered and entered in plaintiff’s favor for the amount prayed for. Thereafter a motion for a new trial, based upon a statement of the case duly settled, was made and denied, and this appeal is from the judgment and order aforesaid.
Plaintiff assigns error as follows: “(1) The court erred in denying the motion of defendant made at the close of all testimony, except that of the witness MeCue, that the action be dismissed upon the ground and for the reason that the guaranty relied upon by the plaintiff in express terms guarantees and agrees to pay only the difference between $1,430.00 and $2,430.00; it appearing from
In his printed argument appellant’s counsel considers his assignments of error numbered 1, 2, 6, and 7 together. These assignments involve a construction of the written guaranty above mentioned. As before stated, appellant contends that, whenever there was paid on the Corliss indebtedness or realized from the security a sum equal to or in excess of $1,000, defendant’s liability under such guaranty ceased. Such contention is, we think, clearly erroneous. The instrument sued upon is not a guaranty of payment, but amounts merely to a guaranty of collection of such portion of the indebtedness of $2,430' as cannot be collected out of the security or the principal debtor, not exceeding, however, the sum of $1,000.
In construing said instrument is is proper to take into consideration the circumstances surrounding the execution and delivery thereof. Appellant was selling and assigning his capital stock in said bank to MeCue and others, and among the assets of the bank were these bills receivable in the form of promissory notes executed •and delivered by Corliss and secured by chattel mortgage. Corliss was insolvent, and the chattel security was estimated at the value of only $1;400. The purchasers of this stock were unwilling to accept this paper without such guaranty, and it is manifest that the purpose in giving and receiving such guaranty was to supplement such chattel security. To the extent that this indebtedness was deemed sufficiently secured by the chattel mortgage, respondent or the vendeees of the capital stock thereof were not interested in procuring additional security; but they were vitally interested in having the collection of such paper guaranteed ias to sums due thereon in excess of the amount which could probably be realized thereon out of such chattel security. We hold that it was the intention of the parties that Hester should be liable under the guaranty to pay to respondent such sum, not exceeding $1,000, as plaintiff should be unable to collect by recourse to the security and to the principal debtor. By giving the instrument this construction we are enabled to give effect to the apparent intent of the parties.
In the light of the rule of construction thus adopted, we are next required to determine whether the evidence is sufficient to warrant the trial court’s finding to the effect that at the time of the commencement of the action there was still due plaintiff on such original indebtedness the sum of over $1,000. The record is somewhat meager regarding the exact amount realized by plaintiff on such indebtedness. This is occasioned by reason of the fact that Corliss was indebted to the plaintiff bank on other notes, and the record is silent regarding the application of certain payments made by him. The burden was on plaintiff to prove defendant’s liability under the guaranty. In other words, it was required to prove its inability, by the exercise of reasonable diligence, to collect either out of the security or from Corliss the entire original indebtedness, and also the specific sum, if less than $1,000, which it has thus been
Appellant’s next and only other contention is based upon his assignments of error numbered 3, 4. 7, and 8, which present the question whether his liability under the guaranty was extinguished by an extension of time for the payment of the indebtedness thus guaranteed. If .plaintiff bank, without appellant’s consent, entered into a valid agreement with Corliss, whereby the time for the payment of the indebtedness was extended, then, of course, the guarantor was thereby exonerated. Such in effect is the statute law of this state as well as the general rule. Section 6092, Rev. Codes 1905; 14 Am. & Eng. Encyc. of L. 1165; 20 Cyc. 1472, and cases cited.
Under the facts thus established, can it be said, as a matter of law, that appellant was exonerated from liability under his guaranty? We think not. But it is insisted by appellant’s counsel that the giving of the new notes, in the absence of an agreement to the contrary, operated per se to extend the time of payment of the original indebtedness, and he argues that no such agreement was entered into, even conceding the truth of Mc-Cue’s testimony. We see no merit in such contention. If McCue’s testimony is to :be believed, then
Our conclusion therefore is that the judgment of the district court is correct, and the same is accordingly affirmed.