174 F. 22 | 8th Cir. | 1909
(after stating the facts as above). We think Rockefeller did not become liable for the $45,000 loan of January 9, 1901, by the terms of the guaranty afterwards signed by him. It is a rule of very general application that all guaranties are prospective and not retrospective in operation, unless the contrary appears by express words or by necessary implication. Brandt on Suretyship and Guaranty (3d Ed.) § 108; People v. Lee, 104 N. Y. 441, 449, 10 N. E. 884; Pritchett, Baugh & Co. v. Wilson, 39 Pa. 421. A most critical reading of the guaranty in question discloses no purpose, either express or implied, to give it any retrospective operation. It is couched in plain and simple language, and is an agreement on the part of the signers to guarantee all debts which the commission company may from time to time contract or may become liable for to the hank. These words, in our opinion, clearly look to the future and not to the past. Did either one or both of the renewal notes given for $14,000 of the original $15,000 loan, after the execution of the guaranty, amount to the contracting or becoming liable for a debt within the meaning of the written guaranty? We think not. There is nothing in this record showing that the renewal notes were intended to be given or received in actual payment of the original debt. They were clearly intended, not as payment or discharge of that debt, but as extensions of time for or postponement of its payment. The debt had already been contracted. The evidence of it only was changed. 2 Daniel on Neg. Inst. 1260; McLaughlin v. Bank of Potomac, 7 How. 220, 228, 12 L. Ed. 675: Jones v. Guarantee & Indemnity Co., 101 U. S. 622, 630, 25 L. Ed. 1030; Lee v. Hollister (D. C.) 5 Fed. 752, 757; Case v. Fant, 3 C. C. A. 418, 53 Fed. 41; Patterson v. Wade, 53 C. C. A. 1, 115 Fed. 770; Deseret National Bank v. Dinwoodey, 17 Utah, 43, 53 Pac. 215; National Bank v. Cramer, 78 Mo. App. 476, 484.
Was the original loan of $45,000 made pursuant to an oral agreement by Rockefeller to guarantee its payment or to execute a general
This language is too vague and indefinite to constitute a present engagement of the importance now claimed for it. Moreover, the actual execution of the guaranty in writing soon thereafter elucidates the meaning of the alleged conversation. The giving of it was an act quite in harmony with Rockefeller’s general purpose, foreshadowed only in the prior tentative conversation, and not at all in harmony with the present contention that he had already legally bound himself. This writing must be taken as the last and only expression of the intention of the parties, and in the absence of fraud, accident, or mistake must be conclusively presumed to express their whole engagement. It merged all former conversations and negotiations on the subject, and conclusive^ settled the rights of the parties ,to it. Bast v. Bank, 101 U. S. 93, 96, 25 L. Ed. 794; Union Selling Co. v. Jones, 63 C. C. A. 224, 128 Fed. 672; Connecticut Fire Ins. Co. v. Buchanan, 73 C. C. A. 111, 141 Fed. 877, 4 L. R. A. (N. S.) 758; Omaha Cooperage Co. v. Armour & Co. (C. C. A.) 170 Fed. 292. Assuming,"then, that a parol promise to give a written guaranty would have rendered Rockefeller liable for a debt contracted thereafter, we conclude that such a promise is not established by the proof in this case.
It is further contended by the bank that the $36,000 note was given in settlement and adjustment of differences between the bank and Rockefeller, and that a consideration is thereby afforded for the whole
The hill predicates complainant’s equitable right to the cancellation of the $:’>(>,000 note upon three grounds: (1) That the hank secured the execution of it by falsely representing to Rockefeller that the $5!),-000 note executed by the commission company to the hank, in settlement of which the note in question was given by Rockefeller, represented and embraced only loans which had been made to the commission company by the hank after the execution of the guaranty; (2) that the bank secured its execution by concealing the fact that the note for Sat).000 actually embraced a part of the original $45,000 loan;* and ('<>) that the note was without consideration, except as to the sum of about $10,000, which was paid by Rockefeller just before this suit was brought.
We cannot say, after a careful consideration of the proof, that there was any direct and intentional false representation or concealment by the hank, such as was charged in the bill-; but, when it is considered that the hank had actual knowledge of the constituent loans that went to make up the $5¡),000 note, and necessarily- knew that the unpaid portion of the original loan of $-1."),000 was included in it, and, with that knowledge, took the face of the $59.000 note, less what had been collected on the pledged collateral, as the measure of Rockefeller’s liability on his guaranty, and presented to him, on the occasion of his going to Kansas City to settle that liability, a claim for the difference, amounting to $! 5,<S52.(>0. as the amount due from him on the guaranty, it, in effect, assured Rockefeller that the claim as presented was for money advanced on the strength of his guaranty. All parties agreed that Rockefeller's sole, purpose in the interviews with the hank officials on this subject was to settle that liability. This misrepresentation may have been made under the mistaken belief that the guaranty in law covered the original loan of $15,000, as is now ably contended; but, however inspired, it constituted a substantial misrepresentation and concealment of facts which were within the knowledge of the bank, and not shown to have been within the knowledge of Rockefeller.
The third ground for equitable relief however is clear. It results,
We now pass to a consideration of the errors assigned to that part of the decree directing "the bank to assign and deliver to Rockefeller 10 certain promissory notes which had been pledged by the commission company, payee therein, as security for the payment of the two $30,000 notes, and subsequently carried forward in the pledge to secure the payment of the consolidated note of $59,000. These notes constituted all the collateral security which had been pledged for the payment of those two notes which remained uncollected at the time the decree was entered in this case. If these notes had been pledged as collateral security for the payment of those two notes only,- the right of Rockefeller, upon pajdng them, to be subrogated to the rights of the pledgee, would seem to be unquestionable. But such is not the fact. The two notes each read as follows:
“Thirty days after date, for value received, we promise to pay to the order of the National Bank of Commerce of Kansas City, Mo., thirty thousand dollars, at the National .Bank of Commerce, Kansas City, Mo., with interest from maturity until paid at the rate of eight per cent, per annum. To secure the payment of tills note and of any and all other indebtedness which ' we now owe to said bank or may owe it any time before the payment of this note, wé have hereto attached, as collateral security, the following notes: [describing them], all secured by chattel mortgages, and hereby authorize W. A. Buie [who was the cashier of the bank], or in ease of his death, absence, or refusal to act, the then acting cashier of the said bank, on default in payment of this note, or any interest thereon, to sell said collateral or any part thereof, with or without notice, at public or private sale.
“[Signed] Siegel-Sanders láve S. Com. Co.,
“K. D. Swain, Treas.”
We think the fair meaning of this pledge, giving force and effect to all its terms and provisions, is that the notes were pledged by the commission company primarily to secure the payment of the two $30,000 notes, and secondarily, but no less effectually, to secure the payment of any other indebtedness which the commission company might owe the bank at the maturity of those notes. This, we understand, is the way the parties in interest treated the pledges, and we also understand that financial institutions generally employ substantially the same language in their collateral notes, and apply the proceeds of the sale of the collateral first in satisfaction of the debt primarily secured, and the surplus, if any, in satisfaction of any other indebtedness then due. Inasmuch as it appears that there is other unpaid indebtedness of the commission company to the bank, we are of opinion that the learned trial court erred in holding that Rockefeller was sub-rogated to the rights of the bank with respect to the ten notes in question. We do not find anything in the stipulation of the parties, called to our attention by complainant’s counsel, or elsewhere, which stands in the way of our recognition of the hank’s right to these notes.
There are several valid reasons why this contention cannot be sustained. Fn the first place, it is foreign to the pleadings in the case. Defendant in its answer justified its retention of the $36,000 note because the original $45,000 note or its renewal, a part of which was embraced in the $36,000 note, was a debt of the commission company which was guaranteed by Rockefeller. The battle below was waged exclusively on this issue and on the groun/ls which have already been considered. Neither the pleadings nor the assignments of error remotely suggest that any part or portion of the consideration of the $36,000 note rested in the guaranty of Rockefeller of the guaranty made by the commission company of the payment of the collateral pledged to secure the payment of the $45,000 note. Moreover, the only proof found in the record justifying the contention were two unauthenticated exhibits, purporting to be copies of notes which are found, by tracing them back, to have been pledged for the payment of one of the $30,000 notes executed after the date of Rockefeller’s guaranty, and not to have been pledged for the payment of the original $45,000 debt, or any part of it, and what purports to be a guaranty of their payment by the commission company indorsed upon them. Whether these two notes ever became an enforceable obligation or a debt of the commission company does not appear. From the proof it would be impossible to find facts requisite to support the defendant’s present contention.
Moreover, the contention that Rockefeller’s contract of guaranty is elastic, and comprehensive enough to cover the commission company’s guaranty of the payment of notes which it pledged as collateral for the payment of, a debt which was not covered by his guaranty is too subtle to be sound. The parties to this plain and simple contract never could have reasonably contemplated any liability brought about by this circuitous process. Rockefeller’s guaranty was for the payment of debts which the commission company might contract or become liable for. The commission company’s guaranty of the col
It results that the decree of the Circuit Court requiring the bank to surrender and deliver to Rockefeller the 10 notes described therein, with the chattel mortgages securing their payment, was erroneous, that the decree should be modified by eliminating that requirement, and that in all other respects it should be affirmed. The cause is therefore remanded to the Circuit Court, with directions to make the required modification, and, as so modified, the judgment will stand affirmed. The costs of this -appeal should be equally divided between the parties.