Anderson v. Reed
| Decision Date | 24 April 1928 |
| Docket Number | 18336. |
| Parties | ANDERSON v. REED et al. |
| Court | Oklahoma Supreme Court |
Rehearing Denied Oct. 9, 1928.
Syllabus by the Court.
Section 5177, C. O. S. 1921, relating to indemnity against liability provides that the indemnitee is entitled to recover upon becoming liable, and there is no requirement that liability be judicially determined as a prerequisite to an action upon an indemnifying contract, but, where liability is clear and defense to a suit to declare the same would be unavailing the indemnitee may discharge a claim or demand against him and institute action upon indemnity without adjudication as a condition precedent.
One claiming that a contract modified a prior contract must show that the latter contract is definite and certain as to the terms of modification, and the modification extends only so far as the terms are definite and certain and intentional.
The surety is entitled to be subrogated to all the rights the creditor held against the debtor for such part of the indebtedness as the surety pays and satisfies pursuant to the contract of suretyship.
Only those contracts are against public policy which tend clearly to injure public health, morals, or confidence in the administration of law, or to undermine security of individual rights, whether of personal liability or private property.
Section 5173, C. O. S. 1921, provides and permits an agreement to indemnify a person against an act already done, even though the act was known to be wrongful when such act did not amount to a felony.
Where an unlawful act has been done, a subsequent independent contract in reference thereto, founded on a new consideration, is not avoided by the prior illegal act.
Under section 5046, C. O. S. 1921, a contract must receive such an interpretation as will make it lawful, operative, definite reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.
Appeal from District Court, Rogers County; J. J. Smith, Judge.
Action by F. A. Anderson against A. F. Reed and another. From a judgment sustaining a demurrer to plaintiff's evidence plaintiff appeals. Reversed and remanded.
Holtzendorff & Holtzendorff, of Claremore, and Archibald Bonds, of Muskogee, for plaintiff in error.
Robson & Moreland, of Claremore, for defendants in error.
The plaintiff in error commenced this action below against the defendants in error upon two cause of action; First, to recover a balance due on a promissory note executed by defendants; and, second, to recover on an indemnity contract executed by defendants and given the plaintiff as a part of the transaction indemnifying plaintiff from loss. The record discloses:
In March, 1922, the plaintiff was owner of certain stock in the First National Bank of Claremore which defendants desired to purchase for a consideration of $1,000. At that time the plaintiff and defendant Flippin were directors in the First National Bank. Prior to January, 1922, there were two banking institutions in Claremore; namely, the Farmers' Bank & Trust Company, of which Flippin was director and cashier, and the First National Bank, of which plaintiff was a director. On January 1, 1922, the two banking institutions were consolidated under the name of the First National Bank. The plaintiff was continued as director, and the defendant Flippin was elected director and made chairman of the board. Such was the situation of the institution and the parties when the plaintiff sold his stock to defendant. A contract was entered into between the parties, based upon a sale of plaintiff's stock, and payment was made therefor in this manner: $200 cash, and a note for $800, upon which there was thereafter paid $300, leaving a balance due of $500. There was an additional basis for the sale, that was a written contractual indemnity on the part of defendants protecting plaintiff from loss by reason by any illegal or excessive loans which had been brought into the consolidated institution by reason of the merger, in view of plaintiff having been a director at the time of consolidation and his consequent personal liability in acquisition of such securities.
It subsequently developed that the consolidated institution had acquired from the Farmers' Bank & Trust Company certain notes and securities, the securities based on incumbered real estate such as were not lawful for a national bank to acquire, and in the sum of $42,520.30. On August 25, 1922, the consolidated institution was closed by federal authority, but was reorganized in December, 1922. While closed and before reorganization, the federal authorities required the directors to pay into the institution $42,520.30, represented by the illegal and excessive loans. The plaintiff and defendant Flippin each paid $8,997.88, representing their respective pro rata share of the amount for which the directors were personally liable. The plaintiff paid his share on December 16, 1922.
Upon conclusion of plaintiff's evidence, a demurrer by defendant was sustained, and by the appeal the question is whether the evidence so offered, with inferences and conclusions to be reasonably and logically drawn therefrom, sustains the judgment so rendered. Singer v. Citizens' Bank of Headrick, 79 Okl. 267, 193 P. 41.
Appellees contend the demurrer to the evidence was correctly sustained, for (1) there was no adjudication of liability against the plaintiff, the indemnitee; (2) plaintiff waived his right to sue by subsequent contract; (3) the contract sued upon was violative of public policy and void.
Considering the adjudication of liability as a prerequisite for indemnitee's action, we observe that the same was not raised in the pleadings, unless it can be said that the second paragraph of the prayer contained in the answer raised it, wherein it was prayed:
"Or, if it be adjudged that defendants are liable under the contract for and on account of the notes complained of in plaintiff's petition, then and in that event let it be adjudged that said amount is not ascertainable, and that this law suit is prematurely brought."
The prayer relates back to a pleading wherein it was alleged that Flippin was adjusting and collecting excessive loans constituting the basis of the liability, and that the net loss is not yet ascertainable. So we find that adjudication of liability was not raised by the pleadings.
Section 5177, C. O. S. 1921, provides:
"Upon an indemnity against liability, expressly, or in other equivalent terms, the person indemnified is entitled to recover upon becoming liable."
There is no requirement that liability be judicially determined prior to suit. 31 C.J. 438, states the rule that the indemnitee may recover upon the contract, "as soon as his liability has become fixed and established," and "the measure of damages is the loss sustained or the amount actually paid." 31 C.J. 434, § 28. 31 C.J. § 36, p. 440, in part, states:
"But, where his liability is clear and a defense to the suit would be unavailing, indemnitee may discharge a claim or demand against him and bring his suit for indemnity without waiting for its legality or validity to be ascertained by legal proceedings."
The text cited and authorities thereunder are in harmony with our statute (section 5177, supra), and adjudication is not indispensable. At the direction of the Comptroller of Currency, the indemnitee herein paid $8,997.88, in liquidation of asserted liability against him said to have been incurred by reason of the excessive loans acquired by the First National Bank on January 1, 1922, he being at that time a director of the bank, and the record shows that defendant Flippin, also a director, paid a like amount. At least, then, payment by plaintiff of his liability was made with notice to the indemnitor Flippin, and at least it may be deducted as reasonable that both considered adjudication of liability as well as adjudication of the amount futile. There was nothing in the contract of indemnity requiring adjudication of liability. First Nat. Bank of Chandler v. Cleveland, 127 Okl. 176, 260 P. 80.
It may be mentioned that the making of such excessive loans as here considered upon incumbered real estate does not of itself render the loans void. National Bank of Genesee v. Whitney, 103 U.S. 99, 26 L.Ed. 443. The debtor cannot raise the invalidity of such loan. Here the loans were not declared void, but prohibited. Kerfoot v. Bank, 218 U.S. 281, 31 S.Ct. 14, 54 L.Ed. 1042; Union Nat. Bank v. Matthews, 98 U.S. 629, 25 L.Ed. 190; Swope v. Leffingwell, 105 U.S. 3, 26 L.Ed. 939; Reynolds v. Crawfordsville Bank, 112 U.S. 413, 5 S.Ct. 213, 28 L.Ed. 736.
The United States statute (section 5239, U.S. R. S., volume 6, F. Stat. Ann. 873 [12 USCA § 93]), relative to such excessive loans, provides for (a) forfeiture of the bank's charter; (b) personal liability of every director participating or assenting. Yet we see no necessity of adjudication of liability when the same is apparent.
3 R. C. L. 467, expresses the view that liability may be enforced in advance and independent of forfeiture of the bank's charter, and:
"Before the dissolution of the bank and while it is open and carrying on its usual business, a loss caused by the wrongful act of the directors in making an excessive loan is an asset of the bank, and the bank has the right to bring an action against them for such damages. * * *"
See Corsicana Nat. Bank v. Johnson, 251 U.S. 68, 40 S.Ct. 82, 64 L.Ed. 153; Stephens v. Overstolz (C C.) 43 F. 771; Nat. Bank v. Wade (C. C.) 84 F. 10; Cockrill v. Cooper, 86 F. 7, 29 C. C. A. 529. See, also, Bowerman v. Hamner, 250 U.S. 504, 39 S.Ct. 549, 63 L.Ed. 1113, as to common-law...
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