Allen v. Cent. Savings-Bank

• Decision Date: 15 May 1877
• Citation: 4 Mo.App. 66
• Parties: GERARD B. ALLEN, ADMINISTRATOR OF EUGENE SHINE, Plaintiff in Error, v. CENTRAL SAVINGS-BANK, Defendant in Error.
• Court: Missouri Court of Appeals

4 Mo.App. 66

GERARD B. ALLEN, ADMINISTRATOR OF EUGENE SHINE, Plaintiff in Error,

v.CENTRAL SAVINGS-BANK, Defendant in Error.

St. Louis Court of Appeals, Missouri.

May 15, 1877.

1. A contract of guaranty must be strictly construed, yet must be so construed as to carry into effect the evident intention of the parties, as it is to be gathered from the instrument itself.

2. A., a bank, had discounted the note of B. for $10,000. C. had deposited with A. for collection a note for $15,000, secured by deed of trust. C. subsequently wrote to the president of A. that, having heard that B. “could use advantageously some additional cash over and above the amount already had of your bank,” etc., “if your bank will lend to B. $15,000, I shall hold myself responsible for that amount, and will leave with you, as collateral security, the note and mortgage” * * * “at present in your vault.” The proposal contained in this letter was accepted, of which C. had due notice, and B. drew his check on A. for $10,000, and took up his note for $10,000, maturing on that day. A. subsequently discounted the note of B. for $5,000. Held, that $15,000 was the amount which C. guaranteed to pay, and not $15,000 in addition to what B. had before received of A.; that the fact that the money was had of A., to whom B. owed a note of $10,000, and that he paid this note out of the $15,000 so advanced, made no difference in this case; and that the terms of the guarantee were complied with by A.

ERROR to St. Louis Circuit Court.

Affirmed.

THOMAS T. GANTT and SAMUEL REBER, for plaintiff in error: A contract of guaranty must be strictly construed. A surety cannot be charged beyond the precise terms of his contract.-- Taylor v. McClung, 2 Houst. 24; Taylor v. Wetmore, 10 Ohio, 490; Smith v. Montgomery, 3 Texas, 199; Stratton v. Rastall, 2 Term Rep. 366; Bacon v. Chesney, 1 Stark. N. P. 192; Walrath v. Thompson, 6 Hill, 540; Bigelow v. Benton, 14 Barb. 123; Dobbins v. Bradley, 17 Wend. 422; Gates v. McKee, 13 N. Y. 232; Miller v. Stewart, 9 Wheat. 680.

BROADHEAD, OVERALL & BROADHEAD, for defendant in error: A contract of guaranty must receive the construction which is most probable and natural under the circumstances.-- Decatur Bank v. St. Louis Bank, 21 Wall. 298; Dobbins v. Bradley, 17 Wend. 422; Farmers' Bank v. Bayless et al., 35 Mo. 439, and 41 Mo. 287; Lessing v. Sulzbacher et al., 35 Mo. 446; Coll. on Part. 426.

BAKEWELL, J., delivered the opinion of the court.

It appears from the pleadings and evidence in this case that Eugene Shine deposited with defendant a note made by Isaac Walker, maturing in 1870, with interest at six per cent, payable semi-annually. The note was secured by deed of trust upon real estate, and was for $15,000.

In the spring of 1868, and for some time prior thereto, one Peter O'Neil, and a son-in-law of Shine, named Doyle, were copartners in the pork business, in St. Louis, under the name of O'Neil & Co. The bank account of the firm was kept with defendant, under the name of O'Neil alone. On January 27, 1868, defendant discounted for O'Neil & Co. a sixty-day note of that date for $10,000, endorsed by the father of Peter O'Neil. This note was held by defendant, and matured on March 30th. On the morning of that day O'Neil & Co., through Peter O'Neil, delivered to the president of defendant, to be submitted to its directors, the following letter from Eugene Shine, written by him in Ireland, and which had been received in an enclosure directed to Peter O'Neil, of the firm of O'Neil & Co.:

“88 PATRICK STREET, CORK, 13th March, 1868.

Hon. Jos. O'Neil, President of Central Savings-Bank, St. Louis, Mo.:

Hearing from P. O'Neil and Mr. Doyle that they could use advantageously some additional cash over and above the amount already had of your bank, and being desirous to promote their interests, and enable them to carry on their business efficiently, I will thank you to submit to your bank that if they will lend O'Neil & Co. fifteen thousand dollars I will hold myself responsible for that amount, and will leave with you as collateral security the note and mortgage of Isaac Walker, which is at present in your vault for a like sum, say $15,000. If the Central cannot conveniently make this advance, I will feel obliged to assist them in procuring it elsewhere.”

The proposition contained in this letter was favorably entertained by defendant, and the proposal was accepted. At that date the account of Peter O'Neil with defendant showed $2,910.16 to the credit of O'Neil & Co. (The account, though kept in his name, being really, as has been said, the firm account). O'Neil then made and delivered to the bank his note, at sixty days, for $10,000, which was discounted, and the proceeds credited to the Peter O'Neil account. He then gave his check for $10,000, and received the note maturing that day. O'Neil also drew two other checks against the same account on the same day, for $70 and $567.74 respectively, leaving a balance to the credit of the account of $2,094.62. Afterwards, on April 9th, the bank discounted another note of O'Neil for $5,000, the proceeds of which likewise went to the credit of the firm account kept in O'Neil's name, and were used in the business of the firm. It was admitted on the trial that Shine received due notice of the acceptance of his proposal contained in the letter of March 13, 1868, and of the discount of $15,000, made in consequence of it.

Eugene Shine arrived in St. Louis on May 20, 1868, and proceeded at once to the store of O'Niel & Co., where he opened the safe, took out and inspected the books and papers, and was informed by Peter O'Neil as to the condition of the firm, the manner in which the accounts, including the bank account, were kept, the presentation of his letter to defendant, and its acceptance of his proposal, the consequent discount of the two notes of O'Neil for the firm; with all this he expressed himself satisfied. He was intimate with the officers of the bank, and made the banking-house of defendant his stopping-place from his arrival until June 11th. He inspected the bank account of O'Neil & Co., thanked the bank for its accommodation to them, and gave directions to the cashier and O'Neil for a renewal of the two notes of $10,000 and $5,000, which were renewed, at his request, on June 1st and 11th respectively, and were never paid. Pork was declining about June 11th, and continued to fall till June 24th, when Shine left St. Louis for Ireland. After June 11th he expressed dissatisfaction for the first time.

The only witnesses examined were Peter O'Neil and Tracy, the cashier of defendant. They state that the loan was made by the bank on the faith of Shine's letter, without conditions as to how the proceeds of the discounts should be applied, or when they should be drawn out; that the note maturing March 30th was not mentioned in connection with the application. Tracy says that when the letter of Shine was submitted to the discount board it was suggested that if the bank did not loan the money to O'Neil & Co. they would go elsewhere to get it, and that he was prepared to give the Walker note to O'Neil & Co. for that purpose, had Shine's proposition not been accepted.

This suit is commenced by the executor of Shine, to recover from the bank the amount of the Walker note and two years' interest upon it, collected by the defendant. The cause was submitted to the court sitting as a jury, and there was a verdict for defendant.

The plaintiff asked many declarations of law, which were all refused except the following:

“That the letter of Eugene Shine, dated 13th March, 1868, was a proposal...