This is an action by the appellant against the appellees on a bond executed by the appellee, Sherman Rutan, as principal, and by the appellees, Smith and Showalter, as sureties. The bond was payable to appellant. The appellees demurred separately to the complaint. The court sustained these demurrers, to which rulings the appellant excepted, and, refusing to plead over, the court rendered judgment against the appellant. The errors assigned in this court are the sustaining of the demurrers to the complaint. The facts as disclosed by the complaint show that on the 15th day of May, 1890, the appellee, Sherman Rutan, and-Rutan, his wife, executed to the Guaranty Building and Loan Association, whose name was afterwards changed to Guaranty Savings and Loan Association, a certain mortgage deed on the north half of lot numbered two in Thomas’ addition to the city of Goshen, to secure the payment of a certain first mortgage bond, executed by said Rutan and wife to said association for the sum of five hundred dollars; that, at the time of the bringing of the suit, said bond, according to the terms thereof, was due; that among the other conditions and provisions of said mortgage deed was the following: “And the said
It appears from the complaint that the title of appellee Sherman Rutan to the real estate has, not only failed, but that it never existed. The only question that arises is whether or not the last named bond, marked “ Exhibit A,” covers the failure of title. If it does the judgment below should be reversed, if not the judgment should be affirmed. Counsel for appellant contend that the indemnifying bond should be construed in connection with and in reference to the terms and conditions of the mortgage executed by Rutan and wife to appellant; that the mortgagors warranted and covenanted to defend the title to the realty against all lawful claiihs, and that, as the indemnifying bond expressly refers to such mortgage and the sum of money secured, it was the intention of the parties that the indemnifying bond should protect against a failure or want of title, as well as against the liens of mechanics and material men. It is well settled that where several instru
The primary object in the construction of contracts is to ascertain the intention of the contracting parties, at the moment their minds assented to the same proposition. In the absence of the averments of any extrinsic matter, courts are confined to the contract as written. Evansville, etc., R. R. Co. v. Meeds, 11 Ind. 273; Beard v. Lofton, 102 Ind. 408. But this rule does not preclude the court from considering the situation and relation of the contracting parties, the objects to be accomplished, and the motives they had in dealing with each other.
He who interprets should, as nearly as possible, put himself in the position of the parties at the time the contract was executed. He should consider the subject matter of the agreement and the knowledge of it which the parties possessed, the objects to be accomplished and the motives which they had in dealing with each other. The whole writing should be considered also in determining the meaning of any of its parts.
Going back to the time of the execution of the mortgage and the bonds, and surrounding ourselves with the attending circumstances, we have the appellee, Sherman Rutan, claiming to be the owner and entitled to the possession of the realty. He desires to borrow money, and to give his real estate as security. Appellant has money to loan; they meet and fix upon the terms of the loan. Rutan, at the time, is engaged in making improvements and betterments to the property, for the second bond recites that “ certain buildings are in progress of erection and repair, * * * for which labor or materials so furnished, the said premises are or may become subject to a mechanic’s or builder’s lien.” Such liens, it seems from this, had
It occurs to us that it was the intention of the appellant, in taking the indemnifying bond, to protect its mortgage against such claims. Another view that adds strength to this position is the use of the terms “shall pay” and “shall save” appellant “harmless,” indicating that the contract was made with reference- to a future, and not a present, liability. The appellant will hardly assert that, at the time it made the loan and took its mortgage to secure it, it was aware of the want of title in Rutan, and that the bond was to protect it from such failure of title. The loan was for five hundred dollars, the bond for five hundred, and the contingent liability on account of mechanic’s liens would then be unprovided for. Neither will it assert that it was in ignorance of the condition of the title, for a thing that lies in ignorance can not operate upon the mind in the making of a contract.
Counsel for appellant make an ingenious and plausible argument in support of their construction of the contract. It is, however, based upon the strict letter of the contract, without taking into consideration the surrounding circumstances of the parties, as the same appears from the contract itself. “Qui haeret in litera,ha¡ret in cortice.” “He who considers merely the letter of an instrument goes but skin deep into its meaning.” Broom’s Legal Maxims, 685. The recital in the bond of the existence of the appellant’s mortgage, it seems to us, is merely matter of inducement. The bond would hardly be intelligible unless it showed that the appellant had some interest in the real estate which it desired to protect. As we construe both instru
We are informed by the record that the learned judge who determined the case below rested his decision on the maxims: “Nosdtur a soeiis,” “ the meaning of a word may be ascertained by reference to the meaning of words associated with it,” and “ Verba generalia restringuntur ad habilitatem rei vel personam,” “general words may be aptly restrained according to the subject matter or persons to which they relate.” Broom’s Legal Maxims, pp. 589 and 648. The demurrers were properly sustained.
Judgment affirmed, at appellant’s costs.