*1 840 (1973);
203, 104, Basin N.W.2d Cooperative, Inc. v. Cut
Electric Power 218, 798, ler, N.W.2d Best,
(1974); State v. (1975); Buckley v. Freder (S.D.1980).
icks, 291 N.W.2d police officer contention expert as an qualification speak
lacked
in the is without merit. The field involved skill, knowledge, training, edu-
officer’s experience in law enforcement
cation and the re-
relative to DWI arrests fulfilled
quirements 19-15-2. under SDCL Based record, therefore,
upon the we hold that qualify laid to
sufficient foundation was opinion officer’s that Edmundson was such,
intoxicated. As the trial court did his permitting
not err the officer opinion, instructing jury nor in
expert expert witnesses. accordingly affirm the trial court.
We
All the concur. Justices
WUEST, Judge, Acting as a Circuit Su- Justice,
preme participating. Court
INTERNATIONAL MULTIFOODS COR PORATION, Appellee, Plaintiff and
Carlyle MARDIAN, Raymond F. S. Gru
by, Joyce Gruby, Wagner, Robert J. Wagner,
Paulette M. Defendants
Appellants.
Nos. 14878.
Supreme of South Dakota. Court on Briefs Oct. 1985.
Considered Dec.
Decided 1985. *2 corporation Delaware and is involved in
the business of producing and manufactur- ing animal feeds. Defendants-appellants are Carlyle Mardian, F. Raymond Gruby, S. Joyce Gruby, Wagner, Robert J. and Pau- Wagner lette M. (defendants). Defendants are the officers and sole stockholders of Farms, W.M.G. Pork (W.M.G.). Inc. W.M.G. is a South corporation Dakota en- gaged in the production business of swine near Roslyn, Day County, South Dakota. Wagner Robert J. (Wagner) presi- dent of W.M.G. manages operations its daily on a basis.
FACTS In July Multifoods, through its agent sales and local dealer at the Roslyn Elevator, Wagner convinced to switch from the swine feed concentrate W.M.G. was then using, to Multifoods’ swine feed con- centrate. The Multifoods swine feeder con- represented centrate was by Multifoods to complete be a supplement swine which re- quired no 20, 1981, additives. July On W.M.G. executed a Applica- Finance Credit Agreement tion and with Roslyn Eleva- gave tor which W.M.G. maximum credit $9,000. line of September On W.M.G., Board of Directors of by resolu- tion, authorized itself to from borrow Mul- tifoods and mortgages, the latter such security agreements, or other documents Richardson, Charles B. Kommann of Also, required. September 15, as were on Groseclose, Kornmann, Wyly, Wise & individually the defendants executed Klinkel, Aberdeen, plaintiff for appel- documents “Guaranty.” entitled These lee. provided, documents inter alia: Harvey Joseph C. Jewett and P. Barnett In consideration of to be credit extend- Siegel, Schütz, Aberdeen, Barnett & by ed ... to WMG Pork [Multifoods] appellants. defendants and (“Debtor”) Farms Inc. undersigned jointly guarantee and severally to [Mul- HENDERSON, Justice. prompt payment at maturi- tifoods] ty, without any deduction claim ACTION/PARTIES or counterclaim Debtor or loss setoff appeal arising This is an from a summa- of contribution any guaran- from other ry judgment granted plaintiff in, to a es- tors, indebtedness, the full amount of all sentially, promissory collection lawsuit on indirect, contingent, direct or absolute or hog notes for feed sold and delivered—and unsecured, secured or now or thereafter by hogs. consumed defendants’ owing hereafter exist or be from Debtor pertinent The law of is most [Multifoods], including interest there- appeal. We affirm. expenses of collection there- Plaintiff-appellee of, including International Multi- attorneys’ court costs and Corporation (Multifoods). foods Multifoods fees. asserted, alia, absolute, fendants’ counterclaim inter
This is an unlimited way shall in no that W.M.G.’s claims Multifoods hereunder be them; extensions, assigned that Multi- by or diminished re- had been affected modifications, product newals, compromises negligently produced a swine foods A; Multifoods releases made of the in- deficient Vitamin [Multifoods] *3 prod- implied warranty in or its that its debtedness whole in and breached [Mul- obliged complete product which con- shall not be no- uct was a tifoods] undersigned thereof to and foodstuffs for tice tained all the nutrients proceed against swine; healthy nor to first Debtor and fertile that Multifoods against any guarantors against express warranty other its its breached given security collateral as for product complete supplement a was (Emphasis sup- additives; of the indebtedness. required no that Multifoods was plied.) strictly producing for an unfit and liable product containing insufficient defective 1982, Wagner In the Fall of noticed that inadequate warnings A and Vitamin and breeding expe- was W.M.G.’s herd of sows instructions; and that of the defec- because riencing breeding problems. Sows were warranties, there tive feed and breached becoming pregnant. un- not Litters were a of contract and failure of has been breach healthy many pigs smaller in size and and Multifoods from consideration which bans shortly died at birth or thereafter. These recovering for the swine concentrate deliv- at until the increased W.M.G. problems guaranteed by ered to W.M.G. and defend- 2,1983, February Between Spring of 1983. ants. 20, 1983, April received and W.M.G. $8,868.40 of swine feeder concentrate partial Multifoods moved for summary credit from Multifoods under the terms of judgment alleged as to the matters in its Application Agree- the Finance Credit and complaint. granted The trial court Multi- by ment. These deliveries are evidenced partial summary judgment, foods denied by promissory *4 principal’s the defense of failure of consid- creditor, thus, guarantor the and the is eration principal where the corpora- was a liable in the event and to the extent guarantor tion and the president was its principal that the debtor is liable. Richter and sole stockholder who was also involved Co., Inc., v. Industrial Finance 88 S.D. negotiations. bar, in all In the case at the 466, 474-75, (1974). 221 36 See guarantors five defendants —are the —the also, Broadcasting Midcontinent Co. v. officers and sole princi- stockholders of the Corp., (S.D. AVA 329 N.W.2d 381 pal debtor W.M.G. Under these circum- 1983), and 38 Guaranty Am.Jur.2d 51 §§ stances, any absent infirmities hereinafter (1968). and discussed, this very Court could well hold W.M.G., Defendants contend that the defendants, guarantors, as there- debtor, is not liable to Multifoods fore principal’s raise their defenses to lia- provided because Multifoods defective bility. swine concentrate and implied breached contentions, As for Multifoods’ an warranties; express therefore, and the de- guaranty guaranty absolute pay they fendants maintain are not liable as and is not default conditioned on occur the Defendants, sum, guarantors. in are as- rence or any non-occurrence of other event. serting guarantors, they may that as raise Guaranty 38 Am.Jur.2d Un their debtor’s defenses in order to event, precedent less conditioned on some guaranty liability. defeat guaranties all are absolute. SDCL 56-1- Multifoods advocates that defendants not, guaranties facto, 15. ipso Absolute do (1) cannot raise W.M.G.’s defenses because liability create strict under all circumstanc absolute; guaranties (2) the guar- were the es. guaranties anties were not but were in- stead letters of credit which defendants accept We do not Multifoods’ con liable; (3) defendants, primarily are and the question tention that documents in the here through language guaranties, the of the guar constitute letters credit instead of right ability the waived and to assert the primary anties. A letter of credit creates a principal’s par- defenses. We address the creates while a second ties’ contentions seriatim. Petroleum, ary liability. Western resolving N.W.2d at 777. When such a If princi the contract between the contention, parties the intent of the to cre unlawful, pal guaran and the creditor is origianl obligation ate an collateral is tor is not liable. SDCL 56-1-19. How controlling usage by parties and of the ever, notwithstanding any personal mere “guarantee” “guaranty” term is not con disability principal, under SDCL 56- clusive of an intent to assume a mere col 1-19, though is liable even obligation. Petroleum, lateral Western disability is such so as to make the id.; against Savings Miners & Merchants Bank v. principal. void As for 1, 3-4, Comer, princi whether a can raise the pal’s (1966). Here, warranty question defenses of in breach the documents “Guaranty”; consideration;
are they entitled W.M.G. denom- of hold we nevertheless “debtor”; inated defendants are denom- right ability have to as waived their “guarantors”; inated W.M.G. to in- sert in those defenses an action Construing cur the indebtedness. these them, guarantors. creditor documents to “that effect which shall way Our conclusion in no violates par- best accord with the intentions of the strong public policy nor does it contravene ties, by the as manifested terms of the provides SDCL 56-1-18 which [documents], taken connection with the guarantor’s obligation larger cannot be subject-matter relates[,]” it to which Birk- amount nor more burdensome than that of 600, 605, Tapper, en v. N.W. principal. 56-1-18 applies SDCL to the (1922)(citation 24 A.L.R. ordinary should guaranty and not be inter omitted), cognizant of the fact that preted preventing parties freely printed these documents are forms of Mul- obligation assume more of an than that tifoods, presumed “which must be to un- imposed ordinary Here, circumstances. derstand the between difference a direct language guaranties leads to the guarantor, of a and that and to conclusion that defendants waived their carefully printed have its prepared forms in ability right assert possi W.M.G.’s light understanding,” of that we deem liability. ble Language defenses to of a guaranties. these be documents to Miners greater liability can indeed create Savings Comer, & Merchants Bank v. guarantor, on the see Federal *5 at S.D. at 393. Deposit Corp. University Anclote, Ins. contention, Multifoods’ final which we (11th Cir.1985); 764 F.2d Victory determinative, find to is be that the defend- Highway Weaver, Village, Inc. v. ants, strong language guar- via the F.Supp. (D.Minn.1979), 75-76 aff'd, 634 anties, right prin- waived the to assert their (8th Cir.1980); F.2d 1099 38 C.J.S. Guaran cipal’s defenses. Here, ty language the waived guaranties, part, provid- in relevant any possible might defenses the defendants ed: have been able to assert on behalf of the In of credit to consideration be extend- principal. Summary judgment was there by ed ... WMG Pork [Multifoods] properly fore as a awarded matter of law. (“Debtor”) Farms Inc. undersigned the jointly severally guarantee to [Mul- II. prompt payment at maturi- tifoods] ty, without deduction claim of IS ENTITLED MULTIFOODS TO AN or counterclaim Debtor ... setoff of AWARD OF ATTORNEY FEES FROM indebtedness, full amount of all direct or DEFENDANTS WHERE THE GUAR- indirect, contingent, absolute or se- NO, ANTY SO PROVIDES? STATE unsecured, cured or may which now or STATUTE PRECLUDES IT. owing hereafter exist or be from Debtor provides, [Multifoods]_ (Emphasis SDCL 15-17-7 inter supplied.) alia: attorneys’ “The court allow fees as course, is, It of axiomatic that the against any party costs for or to an action parties to a are free to construct specifically if provid the cases it agreement understanding their they by ed In statute....” Lowe v. Steele except see those contracts which fit— Co., (S.D. Constr. public policy. violate the law or The un 1985), recently acknowledged: this Court equivocal language of guaranties, these “In the a absence of statute or rule of quoted above, emphasized prompts this agreement court or expressly some autho defendants, Court to conclude that even rizing taxing attorney’s though of fees in addition under these facts are one in the costs, debtor, ordinary statutory such an item same as the of and can thus (Citations expense assert as a of is not allowable.” omit principal’s matter law the ted.) warranty defenses of breach of and failure situation,
Multifoods contends that
because
the statutory limitation of
guaranties expressly allowed it to recover SDCL 56-1-18
clearly
would
apply.
collection,
expenses
including
of
attor-
Bank,
Miners & Merchants
In
supra,
fees,
neys’
it should have been allowed to
the undertaking
was en-
agree
recover such fees. We
with
trial
dorsed on the
promisso-
reverse side of the
court which denied Multifoods such a re-
note,
ry
reading as follows: “For value
covery.
received, hereby guaranty
I
payment
of
specifically provides
No statute
for the
the within
maturity
note at
or at any time
recovery
attorneys’
present
of
fees in the
thereafter, and hereby agree and consent
contrary,
case. On
SDCL 15-17-10
stipulations
to all
contained therein.” The
provides:
whether,
decision
by
turned on
reason of
Any provision
note,
in any
contained
pleaded
guarantor,
facts
by the
it was dis-
bond, mortgage, or other evidence of
charged
whether,
claimed,
as Bank
it
debt for the
any attorney
fee
original
was an
independent
undertak-
in payment
pro-
case
default
or of
ing, not entitled to exoneration as a mere
ceedings
note, bond,
had to collect such
guarantor. We are not advised on what
or evidence of debt or to foreclose such
fact the trial court based its decision of
mortgage
hereby
declared to be
exoneration,
clearly
writing signed
but
against public policy and void.
(Em-
by
way compara-
was in no
phasis supplied.)
ble
executed
this case.
Broadcasting
Midcontinent
v.Co. AVA
In Midcontinent Broadcasting Co. v.
Corp., 329 N.W.2d at
this Court held
Corp.,
AVA
(S.D.1983),
The dissents 678, (1970). Co., Inc., Industrial Finance 465 P.2d 681 88 S.D. (1974) and Miners Mer-&
221 N.W.2d 31 guarantor’s promise perform The is to if Comer, not_ chants Bank v. 82 S.D. 140 principal princi- the does If the (1966), N.W.2d 390 which I find to be clear- pal perform does not and the other condi- distinguishable. ly precedent liability tions to are satisfied excused, promise guarantor or of the the Richter, supra, guarantor In the became law; becomes absolute.... The conditions by operation signed such of he certain precedent liability guarantee in a con- promissory notes as such. There no was separate guaranty. guaran- written contract of To for tract are the benefit
846 e.g., a payment, principal obligation.
tor: demand for ... and the (Emphasis add- against ed.) exhaustion the of recourse the However, principal. these conditions Co., In Richter v. Industrial Finance agreement bemay eliminated in the it- Inc., 466, 474-75, 36 byor subsequent agreement self ... ... (1974), said merely: we SDCL 56-1-18 is party or waived the for benefit whose codification of the in common law [A] condition the exists. respect. Generally, liability the of a (citations omitted).
Id. at
guarantor
liability
cannot exceed the
of
debtor,
principal
guaranty
all
majority opinion,
noted in the
As
are
with,
upon
contracts
conditioned
the un-
guaranty may be coextensive
or
derlying obligation between the credi-
than,
principal
or
broader
narrower
tor and the
38 Am.
debtor.
contract. 38 C.J.S.
Guaranty §
Jur.2d, Guaranty,
and 77.
order
liability
§§
nature
“The
and extent of the
of a
plaintiff
underlying
a
enforce an
guarantor depends on the terms of the
obligation
guarantor,
plain-
a
of
if
guaranty,
the terms
...
guaranty
tiff must show that the
debt
state,
guarantor may
of the contract so
him, and,
is due
greater
assume
that of the
than
if
the principal
reason
debtor
not
principal.” Paul Revere Protective Life
to make payment
bound
creditor
Weis,
(E.D.
P.Supp.
Ins. Co.
plaintiff,
not
plaintiff may
hold
Pa.1981) (citation omitted).
Am.Jur.2d,
liable. 38
language
agreement
The
Guaranty,
77; Merchants National
clearly waived the
defenses
Bank,
Bank v. Citizens’
State
Iowa
guarantors
seek to
herein and I
assert
650, 61
[(1895)].
N.W. 1065
The rule is
agree
summary
judgment was there-
that a
in
liable
properly
fore
awarded as
a matter
law.
event and
the extent that his
fully
I
disposition
concur
of Issue II.
is liable.
reason for
The
the rule is
As
obvious.
WUEST, Acting
(concurring
Justice
stated in Miners & Merchants Bank v.
part, dissenting
part).
Comer,
terclaim or defense is
cipal guar- and therefore to the unavailable
antor, but that is not the situation herein. Corporation,
See
v.
Walcutt
Clevite
N.Y.2d
241 N.Y.S.2d
191 N.E.2d
Dakota,
STATE of South
Plaintiff
(1963),
modified as to award of costs
Appellee,
at 13 N.Y.2d
243 N.Y.S.2d
to the defenses of failure of Appellant. contract, warranty breach of breach No. 14884. and I would reverse and remand for trial. Supreme Court of South Dakota. FOSHEIM, (dissenting). Chief Justice Considered on Briefs Nov. 1985. I dissent. Under SDCL 56-1-18 “[t]he Decided Jan. 1986. of a be neither must larger in amount nor ... more burdensome ” principal,.... [Emphasis than that of the concludes, however, majority
added.] guarantor may protec waive the Upon reviewing
tions of SDCL 56-1-18. cited, agree I
the authorities am unable to
with this broad conclusion since neither contemplates
case the effect of a statute
similar SDCL 56-1-18 on the extent of a
guarantor’s Moreover, obligation. both
cases concern of deficiencies un foreclosures, mortgage
der not waiver
of defenses available to a stand
ing principal. in the shoes of the See cases by majority, Deposit
cited Federal Insur Anclote, Inc., Corp. University
ance v. (11th Cir.1985); Victory
764 F.2d Weaver,
Highway Village,
Inc.
invoices and secured
notes
fees,
request
attorney
Multifoods’
$8,868.40
sum of
executed W.M.G. Said
pro-
ordered that defendants be allowed to
paid
subject
has not been
and is the
upon
ceed
their counterclaim. Multifoods
present action.
thereafter
moved
be relieved from that
expert
In the Summer of
after
con- portion permitting
proceed
defendants to
sultation, Wagner began adding
A
Vitamin
upon their counterclaim. An action had
to Multifoods’' swine concentrate and the
Day County,
been instituted in
South Dako-
breeding problems thereafter ceased.
ta, by
Roslyn
against
Elevator
W.M.G.
(Petersen),
Lyle
October
Petersen
a
in
asserting
which the latter was
its claims
specialist employed by
feed and nutrition
A against
third-party
Multifoods as
defend-
Laboratories,
Agricultural
L& Mid West
granted
ant. The trial court
Multifoods’
Inc., Omaha, Nebraska,
samples
tested
motion to be relieved and the counterclaim
supplied
of Multifoods’ swine concentrate
Appeal
is not
us.
summary
before
from
conclusion,
by Wagner.
Petersen’s
judgment is taken.
testing,
from the
that the feed
reached
was
samples
A,
in
“were deficient Vitamin
DECISION
excessively
in
A
so
deficient Vitamin
clearly
the feed is
defective
below the
I.
required
A
standard Vitamin
levels
industry.”
swine feed
GUARANTORS,
ARE
SUED INDIVID-
UALLY, ENTITLED TO RAISE THE
8, 1983,
filed
On November
Multifoods
PRINCIPAL DEBTOR’S DEFENSES
individually,
suit
the defendants
ARISING OUT OF THE UNDERLYING
Guaranty
under the terms of the
doc-
CONTRACT? CIRCUMSTANCES
15, 1981,
OF
September
uments executed on
THIS CASE DO NOT
$8,868.40
SO WARRANT.
for the
of swine concentrate de-
promise
“A
livered to W.M.G. Defendants answered
answer for
debt, default,
$88,000.00.
miscarriage
De-
of another
counterclaimed
person.”
consideration,
SDCL 56-1-1. A
cre
failure
some courts have
secondary liability
or responsibility
ates
guarantor cannot,
held the
see 38 C.J.S.
only if
pay
another does not.
Western Guaranty
(1943),
at 1261
and some
Aberdeen,
Petroleum
Co.
First Bank
courts have held the
can. See
(S.D.1985).
776-77
Under Deep
Services,
Wade,
South
Inc. v.
248 Ga.
56-1-18,
guarantor’s obligation
SDCL