Bay Oil Co. v. Vilas

• Decision Date: 20 May 1941
• Parties: BAY OIL CO., Inc., v. VILAS.
• Court: Wisconsin Supreme Court

237 Wis. 603

296 N.W. 595

BAY OIL CO., Inc.,

v.VILAS.

Supreme Court of Wisconsin.

March 11, 1941.

Rehearing Denied May 20, 1941.

Appeal from a judgment of the County Court, of Walworth County, Roscoe R. Luce, County Judge.

Action by the Bay Oil Company, Inc., against Logan A. Vilas on a contract of guaranty. From a summary judgment for plaintiff, defendant appeals and plaintiff moves for review.-[By Editorial Staff.]

On defendant's appeal, judgment affirmed, and on plaintiff's motion to review, judgment reversed and cause remanded, with directions.

The action was commenced on September 14, 1939, by Bay Oil Company, Inc., a corporation, plaintiff, against Logan A. Vilas, defendant, to recover the sum of $1,608.72, upon a contract of guaranty. Defendant set up as a defense alteration of the contract of guaranty in that credit was extended by plaintiff in excess of the $1,000 limitation contained in the guaranty. Plaintiff moved the court for a summary judgment, and the trial court held that no defense was stated by the answer, but that defendant's liability was limited to $1,000. A summary judgment for that sum was accordingly entered on March 4, 1940. Defendant appeals.Moran & O'Brien, of Delavan, for appellant.

Sheldon & Freytag, of Elkhorn, for respondent.

WICKHEM, Justice.

The facts are substantially without dispute. In 1935, Lee Clayton, son-in-law of defendant, was about to engage in a garage business at Williams Bay, Wisconsin. Plaintiff owned certain tools and equipment and desired to sell them to Clayton and to establish him as retail dealer in its products, gasoline, motor oil and other items pertaining to the automotive trade. On June 1, 1935, Clayton and plaintiff entered into a contract which contained the following provision:

“The company agrees that it will extend to Clayton the same credit terms by it extended to its resellers, as provided by the National Petroleum Code, so-called, such credit not to exceed, however, the sum of One Thousand ($1,000.00) Dollars, provided, however, that credit to such amount shall be extended only upon condition that said Clayton shall secure a guarantor of payment of his accounts and liabilities to the company satisfactory to the company.”

At or prior to the date of the execution of this contract, defendant executed a guaranty, the material parts of which read as follows:

“I do hereby undertake and guarantee that the said Lee L. Clayton will pay when due all lawful charges for merchandise to him sold and delivered by Bay Oil Company, Inc. and will keep and perform all other provisions of said articles of agreement with said Bay Oil Company, Inc., by him to be performed, all upon the terms and provisions of said articles of agreement.”

Plaintiff subsequently extended credit in excess of $1,000 to Clayton and from July 17, 1935, to September 22, 1937, the unpaid balances on the account exceeded the $1,000 limitation by several hundred dollars. On one occasion the balance against Clayton amounted to $4,300.

Two questions are in this case, one upon defendant's appeal, the other upon plaintiff's motion to review. Defendant contends that the extension of credit in excess of $1,000 discharged the guarantor, while plaintiff contends that the trial court erroneously limited plaintiff's recovery on the guaranty to $1,000.

1. Upon defendant's appeal.

[1] Defendant contends that he was completely discharged by the allowance of credit in excess of $1,000 to his principal. He claims that the two contracts are to be construed together for purposes of interpretation and that so construed the guaranty is subject to the condition that the credit shall not exceed the sum of $1,000. His warrant for this method of construction is W. W. Kimball Co. v. Baker, 62 Wis. 526, 22 N.W. 730. Conceding that the two instruments are to be construed together for purposes of interpretation defendant's conclusion does not follow. The contract between creditor and principal is not ambiguous. The parties agreed that the creditor would be obliged to extend credit only in the amount of $1,000, and that this limited obligation would exist only if the principal's obligations under the contract were fully secured. This limitation was not for the benefit of the contemplated guarantor but...