Baird v. Stephan

• Decision Date: 05 May 1925
• Docket Number: No. 4785.,4785.
• Citation: 52 N.D. 568,204 N.W. 188
• Parties: BAIRD v. STEPHAN et al.
• Court: North Dakota Supreme Court

52 N.D. 568

204 N.W. 188

BAIRD

v.STEPHAN et al.

No. 4785.

Supreme Court of North Dakota.

May 5, 1925.

Syllabus by the Court.

A guaranty, like any other written contract, is not binding on the party who executed the same until it is delivered.

A party who executes a written guaranty and delivers the same conditionally may, by his subsequent conduct, become estopped to assert such conditional delivery.

Where there is no dispute about the facts and only one inference can reasonably be drawn therefrom, it is a question of law whether the facts proved constituted an estoppel. But under all other circumstances the question whether an estoppel exists is for the determination of the jury under proper instructions from the court.

In the instant case it is held, for reasons stated in the opinion, that the defendants are estopped, as to matter of law, from asserting that a certain guaranty was delivered conditionally.

Additional Syllabus by Editorial Staff.

“Equitable estoppel” is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, of contract, or of remedy, as against another person who has in good faith relied upon such conduct and has been led thereby to change position for the worse, and who on his part acquires some corresponding right, either of property, contract, or remedy.

Estoppel by silence arises where a person, who by force of circumstances is under duty to another to speak, but refrains from doing so, and thereby leads the other to believe the existence of a state of acts, in reliance upon which he acts to his prejudice.

Appeal from District Court, Barnes County; Berry, Special Judge.

Action by L. R. Baird, as receiver of the Bank of Sanborn, against Fred E. Stephan and others. From a judgment for defendants, and from an order denying plaintiff's motion for judgment nothwithstanding verdict, plaintiff appeals. Reversed and remanded, with directions.A. P. Paulson and D. S. Ritchie, both of Valley City, for appellant.

Combs & Ritchie, of Valley City, and Divet, Holt & Frame & Thorp, of Fargo, for respondents.

CHRISTIANSON, C. J.

On February 26, 1921, the Bank of Sanborn was closed. Thereupon the state examiner took charge, and one of his deputies made an examination of the bank. After such examination, the state examiner advised the stockholders and directors that the bank would be permitted to reopen on the following conditions: (1) Each and all of the depositors therein must sign an agreement to leave their moneys then on deposit in the bank for a certain stated period of time; (2) the cash reserve required by law must be supplied; and (3) certain bills receivable (consisting of notes, and of certificates of deposit issued by other banks) must either be paid or guaranteed. The first and second conditions were complied with, and the above-named four defendants executed and delivered to the state examiner a written guaranty of the bills receivable. The bank was reopened on August 1, 1921. This action is brought upon the written guaranty. As a defense the defendants asserted that the guaranty was delivered on the condition that all the bills receivable covered by the guaranty should be delivered to Fred E. Stephan or Phillip Stephan for collection, and that their receipt for such bills receivable should be attached to the written guaranty; that this condition was not complied with, and hence that there was no delivery of the written instrument, and it never became effective. The plaintiff claims that there was no condition attached to the delivery of the instrument; that the alleged condition is not one relating to the delivery, but is one relating to the terms, of the agreement, and that the evidence adduced by the defendants tending to establish the same was inadmissible on the ground that it tended to contradict or vary the terms of a written contract. The plaintiff further contends that, even though the instrument was delivered on the condition defendants assert, they subsequently waived the same, and by reason of their conduct have become estopped to assert that the instrument was delivered conditionally. These issues were the only ones raised upon the trial. There was a verdict in favor of the defendants, and the plaintiff has appealed from the judgment entered upon the verdict and from the order denying a motion for judgment notwithstanding the verdict.

The sole question presented on this appeal is whether the plaintiff is entitled to judgment notwithstanding the verdict. In other words, the question presented for determination is whether, upon the whole record, it clearly appears that the plaintiff is entitled to judgment on the merits as a matter of law. First State Bank v. Kelly, 30 N. D. 84, 152 N. W. 125, Ann. Cas. 1917D, 1044.

The record shows that at the time the bank was closed and for a number of years prior thereto the defendant Fred E. Stephan was vice president and active managing officer of the bank. The defendant Phillip Stephan is Fred E. Stephan's father. The defendants Myrtle E. Stephan and Minnie Stephan are, respectively, the wife and mother of Fred E. Stephan. The Stephans were the owners of a large amount of the capital stock of the bank. After the state examiner had made known the conditions on which he would permit the bank to be reopened, a meeting of stockholders was held on May 14, 1921, at which the following proceedings were had:

“Moved and seconded that the proposal of Fred E. Stephan to furnish to the bank a written guaranty, to save the bank harmless of any loss for the foreign and local paper, which was disapproved by the bank examiner, be submitted to a committee of the stockholders for approval, be accepted. Carried.

Moved, seconded and carried that ten stockholders be appointed as a committee, such committee to be appointed by the chair, to pass on guaranty by Fred E. Stephan as stated in preceding motion.

The chair appointed the following. * * *

Moved, seconded and carried that a committee of three be appointed by the chairman to raise funds to build up the cash reserve of the bank.”

Both Fred E. Stephan and Phillip Stephan were present at and participated in this meeting.

On June 11, 1921, Lofthus, the state examiner, came down to Sanborn, and at that time the following guaranty was executed by the defendants, to wit:

“Guaranty.

For and in consideration of the sum of one dollar ($1.00) to me in hand paid by the Bank of Sanborn, Sanborn, North Dakota, a banking corporation, organized and existing under and by virtue of the laws of the state of North Dakota, the receipt whereof is hereby acknowledged, and the said Bank of Sanborn, being at this time in charge of the state examiner of the state of North Dakota, in further consideration of the said bank being permitted to reopen. I do hereby undertake, promise and agree to hold the said Bank of Sanborn harmless from loss or damage through, by reason of, or on account of those certain notes, loans and certificates of deposit which are listed in the attached list marked Exhibit A and is hereby and thereby made a part hereof, and I do hereby guarantee the payment, as when the same shall become due or if the same be past due, and whether the same shall be renewed, of all of the said loans and notes and certificates of deposit so set forth in said Exhibit A, as and when payment thereof shall be demanded of me, and further that all of said notes, loans and certificates of deposit so listed in the said Exhibit A shall either be paid or removed from the said bank and that if removed, that either cash or the certificates of deposit issued therefor shall be paid to or returned to the said bank, to the end that the said bank shall suffer no loss thereby and shall in all things be saved harmless.

I do further guarantee the payment of all notes, loans or other evidence of indebtedness, made or taken by the said bank through Fred E. Stephan, its managing officer, and do hereby agree to save the bank harmless from loss thereunder, which said loans, notes or other evidence of indebtedness were made or taken to aid or permit the makers thereof in the purchase of insurance, be the same fire or life insurance, or where such item goes to make up a part of any loan, note or evidence of indebtedness.

I do further agree that any note the payment whereof is hereby guaranteed may be by the said bank renewed without notice to the maker of this guaranty, and that this guaranty shall cover as to the said renewed note with the same force and effect as though the same had not been renewed.

I do hereby in all things waive notice of protest and of demand, and do hereby waive notice of acceptance of this guaranty.

I do further agree that this guaranty shall be in full force and effect from and after the date hereof, and that the same shall in all things apply to loans made and paper now held by the Bank of Sanborn, and that the purpose of this guaranty is to guarantee the payment of the notes, discounts and certificates of deposit now held in or by said bank as hereinbefore set forth.

I do further agree that this agreement shall be binding upon my heirs, executors and administrators.

It is further understood and agreed that time of payment under this guaranty shall be as and when each separate note, loan, discount or certificate of deposit shall become due as shown by the terms of the instrument itself.

Dated at Sanborn, North Dakota, this 10th day of June, A. D., 1921.

+----------------------------------+
                ¦Witness:        ¦Fred E. Stephan  ¦
                +----------------+-----------------¦
                ¦B. A. Dierdorff.¦Myrtle E. Stephan¦
                +----------------+-----------------¦
                ¦O. E. Lofthus.  ¦Phillip Stephan  ¦
                +----------------+-----------------¦
                ¦                ¦Minnie Stephan.” ¦
                +----------------------------------+
                

As has already been indicated, the undisputed evidence shows that the state examiner, as a...