197 Iowa 17 | Iowa | 1924
One phase of this appeal presents a legal question; the other, primarily a question of fact. At the outset, it is quite important to have in mind the nature of the action and the salient facts disclosed by the proofs. Plaintiff, as payee, instituted action against Murray, as obligor on a certain promissory note “jointly and severally” payable, in the. sum of $7,500, executed by the Iowa Oil & Gas Company, a Delaware corporation, with its principal place of business at Eldora, Iowa. On the back of the note these words are found:
“For value received I, or we, hereby guarantee the payment of the within note at maturity or at any time thereafter together with a legal attorney’s fee if suit be instituted thereon, waiving demand, notice of nonpayment and protest.”
This contract of indorsement was signed seriatim by Joe Fagg, 0. M. Haas, B. T. Oldham, W. J. Murray, and Pc. W. Haas. These men were the directors of the Iowa Oil & Gas Company, but all signed as individuals, except the defendant Murray, whose signature was followed by the words, “Director. Iowa Oil & Gas Co.” Upon default of payment of the note, this action was commenced against Murray alone, who answered, and also filed a cross-petition against the other four directors of said corporation for indemnity in the event that he was compelled to pay the note.
Briefly stated, Murray contends that, as against plaintiff Kessel, he is not personally liable on the note and indorsement, and as against the other indorsers, who are made joint defendants on his cross-petition, that there was an express oral agreement between them that no personal liability should be created in the signing of said note, “but that such writing was to be in such manner and form that no personal liability should be created against him on account thereof,” and that thereupon, said note was indorsed by him as shown on the back thereof. In effect, Murray pleads as to the other obligors a contract of indemnity.
About the 15th day of February, 1920, the Iowa Oil & Gas Company purchased an 8-acre tract of land in a Texas oil district for $30,000, and made the initial payment of $10,000. The balance of the purchase price was to be paid by February 26, 1920. The company agent in Texas drew a sight draft on the company for the balance, and wired the secretary to this effect. On the 27th, a meeting of the board of directors was called at the secretary’s office, which was attended by the five directors whose names appear on the contract of indorsement. At this meeting it was arranged by them to borrow $7,500 from Mr. Murray, who volunteered to get $5,000 more from George P. Keir of San Diego, California, which was subsequently secured. This left a balance of $7,500, and it was suggested that this might be obtained from Dr. Kessel, of Cresco, Iowa. Thereupon, the board directed B. W. Haas to telephone him. At this meeting it is fairly shown that all the directors agreed that they would sign the note to Dr. Kessel for $7,500. Murray denies he ever agreed to sign the note, but states that he knew he was expected to sign it, and admits that he did sign it in the form that the note now bears. ■ Telephone communication was had with Dr. Kessel, and he was informed by Mr. Haas that there had beén a meeting of the board of directors, and that the company had to raise the money to meet the sight draft, and if the company could raise the $7,500 at Cresco, the directors would indorse the note. Nothing was said to Kessel in that conversation about Murray, and this was the only conversation prior to the execution of the note and the delivery of the draft
“When the corporate name of Pendleton Window Glass Company had been subscribed to the note in suit, by ‘B. F. Aiman, President,’ such signature bound the corporation, and the signing of the names of the appellants, as directors, added no force or effect to it. Under the circumstances, we must regard the word ‘Directors,’ opposite the names of the appellants, as merely descriptio personae
This ease was approved in Flick v. Jordan, 74 Ind. App. 314 (129 N. E. 42), and in the opinion it is’said:
“We can see no purpose in having the directors of the company join in the indorsement in the manner in which they did; for, if they only indorsed in a representative capacity, they*22 added nothing whatever to the indorsement of the note, it being sufficiently indorsed to bind the company by its president. * * * The corporate signature was complete without the signature of any director./’
See, also, Hately v. Pike, 162 Ill. 241 (44 N. E. 441).
When Murray signed, he was presumed to know the law, and was presumed to know that he could not. sign as a director in a representative capacity; and, having signed in the manner in which he did, he incurred a personal obligation. Incidentally it may be stated that he prayed for a reformation of his contract; but there are neither equities nor proofs that would justify a reformation. It would simply result in a cancellation. There was no fraud. If a mistake was made, it was not mutual. The indorsement was understood by the payee to mean but one thing, and this was predicated on information given by the parties with whom he was dealing, and to whom he made the loan. The agreement is unequivocal and unambiguous, and does not call for rules of interpretation and construction. Murray’s contention, reduced to simplest terms, is that he did not sign in a way to make him personally liable, and therefore his signature meant nothing. We cannot accept this viewpoint. Murray was not ratifying anything. There was nothing to ratify. His signature as director was of no consequence. Savings Bank v. Central Market Co., 122 Cal. 28 (54 Pac. 273). The court did not err in holding the defendant Murray personally liable to .the plaintiff.
II. What is the liability, if any, of the joint obligors of Murray to reimburse him? Upon what theory is defendant Murray entitled to indemnity, under the pleadings and record in this case? Is he entitled to more than contribution? Before making answer, it is well to clarify the legal atmosphere surrounding this case. It is immaterial what terminology is used in describing the contract which Murray signed. It was a contract expressing a joint and several obligation, and we prefer to call the signers joint indorsers. Furthermore, the order in which their names appear under the contract of indorsement is immaterial, and does not determine the order of liability inter se. Indorsers are liable in the order of their signatures, unless they have
What is the basis for indemnity which is, in legal effect, the prayer of defendant Murray? Indemnity rests on a contract. Contribution is an equitable right, growing out of the relation of the parties, and is not dependent upon any contract. It arises from the circumstances of the case and the legal situation of the parties. The co-indorsers of Murray could not be liable to him on contract without their consent, knowledge, or intent. Murray well knew the arrangement that was made with respect to the borrowing of the money from Kessel; and pursuant to that arrangement, three of the directors had signed, prior to the time of Murray’s signature. The directors knew that the money could not be secured from the Eldora bank or from Kessel without the individual guaranty of the directors. The corporation was financially embarrassed. They all knew that the oil ship was about to sink, and stood ready “to kiss her burial.” True, when Murray signed the contract of indorsement, he informed the secretary, who presented the note to him for signature, that he did not intend to be personally bound by