Bell v. Mendenhall
| Decision Date | 15 November 1899 |
| Docket Number | 11,752 - (56) |
| Parties | DAVID C. BELL v. ABBY G. MENDENHALL and Others |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county by plaintiff as receiver of City Bank against Abby G. Mendenhall, R. J Mendenhall, and the Minneapolis Trust Company. Plaintiff's cause of action was predicated on a judgment for $4,021.90 against the Mendenhalls, and upon a trust agreement between the Trust Company and the Mendenhalls, in pursuance of which they had conveyed to it practically all their property and whereby the Trust Company agreed to pay their outstanding indebtedness. The allegations of the complaint are set forth in the opinion of the supreme court reported in 71 Minn. 331. The complaint prayed that all parties who desired to participate in the trust fund be required to appear and present their claims, that plaintiff have judgment against the Trust Company for the amount of his claim, and that if the fund proved insufficient plaintiff be allowed to share it with other creditors. In response to an order citing in the other creditors, Crane Company and Albert S. Webb, among others, appeared and filed complaints in intervention. The case was tried before McGee, J., who made findings of fact and conclusions of law, and ordered judgment in favor of plaintiff and other creditors for a certain percentage of their claims; and from a judgment entered pursuant to the order, defendant Trust Company appealed. Modified.
"Indebtedness."
"Indebtedness" is a word of large meaning, and is used to denote almost every kind of pecuniary obligation originating in contract. The word held to cover the debtor's joint as well as several liabilities, and also his liabilities contracted by indorsement, whether then due or to become due.
Payment of "Outstanding Indebtedness."
Where a contract provided for the payment by one of the parties of "all of the outstanding indebtedness" of the other parties, two in number, "not to exceed in the aggregate the sum of $130,000," the contract must speak for itself as to what debts are to be paid. A party, under the guise of showing what the real consideration was therefor, will not be permitted to cut down or vary his covenant to pay by proof of a parol agreement, antecedent or contemporaneous, that he should pay a part only of all of the indebtedness.
Payment within Reasonable Time.
The consideration for this promise to pay was, as stated in the contract, that the other parties whose indebtedness was to be paid should execute and deliver to the promisor, a trust company organized under G.S. 1894, § 2849 et seq., deeds of conveyance of certain specified real property, whereupon the $130,000 should be paid "within reasonable time thereafter, or as soon as under the circumstances shall be required." The court found as facts that the deeds in question were executed and delivered "during the year 1893," and that the trust company took possession of the property "after May 1, 1893." Held, under these findings, that no obligation to pay debts arose until the year 1893 expired (that is, not before January 1, 1894), and that the company could not be compelled to pay an amount, as interest or otherwise, in excess of $130,000, as of the date last mentioned.
Total Debt -- Interest.
January 1, 1894, the indebtedness exceeded the sum of $130,000. Held that, for the purpose of ascertaining what percentage of his claim each creditor should be paid, interest upon interest-bearing claims should be computed to that day, and the amounts added to the principal sums due, or thereafter to mature.
Interest on Payments.
The contract provided that the trust company should receive interest upon all payments made by it at the rate of 7 per cent. Held that, as between the company and the creditors the rate of interest to be paid by the former on the percentage is 7 per cent.
Interest on Balance Due.
Where there is an open, running, and unliquidated account, with items of debit and credit, the debtor's agreement to pay interest on a balance due from the time of the last item on the debit side is implied.
W. E Dodge and C. S. Albert, for appellant.
Extrinsic evidence was admissible to show the atmosphere surrounding the inception of the contract, to limit and define the consideration, and to explain the meaning of the words "outstanding indebtedness," which embrace the consideration and are susceptible of different interpretations. The case involves no element of estoppel. The liability of the Trust Company arose from an original and independent promise, and it became the principal debtor. Guderian v. Leland, 61 Minn. 67, 71. Extrinsic evidence is always admissible to show the real consideration, purpose and subject-matter of a contract. Baldwin v. Winslow, 2 Minn. 174 (213); Case v. Young, 3 Minn. 140 (209); Ames v. First Div. St. P. & P.R. Co., 12 Minn. 295 (412); Donnelly v. Simonton, 13 Minn. 278 (301); Kelly v. Bronson, 26 Minn. 359; Harrington v. Samples, 36 Minn. 200; King v. Merriman, 38 Minn. 47; Sayre v. Burdick, 47 Minn. 367; Rugland v. Thompson, 48 Minn. 539; Beyerstedt v. Winona Mill Co., 49 Minn. 1; Ham v. Johnson, 51 Minn. 105, 107; Staples v. Edwards & McCulloch L. Co., 56 Minn. 16; Longfellow v. McGregor, 56 Minn. 312; Engel v. Scott & Holston L. Co., 60 Minn. 39; Pfeifer v. National Live S. Ins. Co., 62 Minn. 536; Board of Trustees of Ripon College v. Brown, 66 Minn. 179; Waldheim v. Miller, 97 Wis. 300; Swedish-American Nat. Bank v. Germania Bank, 76 Minn. 409; Reed v. Insurance Co., 95 U.S. 23; Peugh v. Davis, 96 U.S. 332, 336; Chicago v. Sheldon, 9 Wall. 50; Thomas v. Railroad Co., 101 U.S. 71, 86; Topliff v. Topliff, 122 U.S. 121; Lowry v. Adams, 22 Vt. 160; Noyes v. Canfield, 27 Vt. 79; Winn v. Chamberlin, 32 Vt. 318; Redfield v. Gleason, 61 Vt. 220; Herring v. Boston, 1 Gray, 134, 138; Sargent v. Adams, 3 Gray, 72, 78; Pike v. Fay, 101 Mass. 134; Swett v. Shumway, 102 Mass. 365; Stoops v. Smith, 100 Mass. 63; Atwater v. Clancy, 107 Mass. 369; Lovejoy v. Lovett, 124 Mass. 270; Agawam v. Strever, 18 N.Y. 502; Filkins v. Whyland, 24 N.Y. 338, 344; Whites v. Myles, 73 N.Y. 335; Juilliard v. Chaffee, 92 N.Y. 529; Burditt v. Hunt, 25 Me. 419; Coquillard v. Hovey, 23 Neb. 622; Hersom v. Henderson, 21 N.H. 224; Vinton v. Baldwin, 95 Ind. 433; Lyles v. Lescher, 108 Ind. 382; Louisville v. Reynolds, 118 Ind. 170; Barrett v. Stow, 15 Ill. 423; Vermont v. Brose, 104 Ill. 206; McNulta v. Corn, 164 Ill. 427, 451; Ganson v. Madigan, 15 Wis. 158; Janesville v. Ford, 82 Wis. 416; Nilson v. Morse, 52 Wis. 240; Hosmer v. McDonald, 80 Wis. 54; Beason v. Kurz, 66 Wis. 448; Quarry v. Clements, 38 Oh. St. 587; Patterson v. Camden, 25 Mo. 13; St. Louis v. City, 46 Mo. 121; Tufts v. Greenewald, 66 Miss. 360; Giddings v. Day, 84 Tex. 605; Kingston v. Pickins, 46 Tex. 99, 101; Wilson v. Smith, 50 Tex. 365, 369; D'Aquin v. Barbour, 4 La. An. 441; Wendlinger v. Smith, 75 Va. 309; Peisch v. Dickson, 1 Mason, 9, 11; Browne, Par. Ev. 118; Colpoys v. Colpoys, Jacob, 451; Greenleaf, Ev. (13th Ed.) § 298; Knight v. New England, 2 Cush. 271, 283; Bainbridge v. Wade (1850) 20 L.J.Q.B. 7; Roots v. Snelling, 48 L.T. (N.S.) 216; Barry v. Bennett, 7 Metc. (Mass.) 354.
The contract as interpreted by plaintiff was ultra vires. Field, Ultra Vires, 57-59; Trustees of Dartmouth College v. Woodward, 4 Wheat. 518; Hood v. New York, 22 Conn. 1, 502; Franklin v. Lewiston, 68 Me. 43; Bissell v. Michigan, 22 N.Y. 258. A contract of guaranty, not within the express powers of a corporation, is ultra vires and void. Koehler v. Reinheimer, 20 Misc. (N.Y.) 62; Morawetz, Corp. § 423; Tod v. Kentucky Union L. Co., 57 F. 47; Davis v. Old Colony, 131 Mass. 258; Madison v. Watertown, 7 Wis. 53; AEtna v. Charter, 50 Conn. 167; Louisville, N.A. & C.R. Co. v. Ohio Valley Imp. & C. Co., 69 F. 431; National v. German-American, 116 N.Y. 281, 292; Central v. Empire, 26 Barb. 23; Morford v. Farmers, 26 Barb. 568; Monument v. Globe, 101 Mass. 57; Culver v. Reno, 91 Pa. St. 367; Hall v. Auburn, 27 Cal. 256; Colman v. Eastern, 10 Beav. 1.
The court erred in allowing interest on the claims of Crane Company and Webb. Interest is not chargeable on open accounts which have not been liquidated, and a balance expressly agreed upon. Forgay v. Hamlin, 3 La. An. 697; Clark v. Clark, 46 Conn. 586, 589. Interest is not recoverable on an unliquidated book account till a balance is agreed on and demand made. Broom v. Henman, 1 Root (Conn.) 248; Temple v. Belding, 1 Root (Conn.) 314; Skirving v. Executors, 2 Bay (So. C.) 233. See also Sibley v. County of Pine, 31 Minn. 201; Perine v. Grand Lodge A.O.U.W., 51 Minn. 224; Wood v. Hickok, 2 Wend. 501; Walden v. Sherburne, 15 Johns. 409; Patterson v. Choate, 7 Wend. 441; Reid v. President, 3 Cow. 393; McKnight v. Dunlop, 4 Barb. 36; Doyle v. St. James, 7 Wend. 178; Beers v. Reynolds, 12 Barb. 288; Tucker v. Ives, 6 Cow. 193; 11 Am. & Eng. Enc. 384; Mason Craig v. Callender, Flint & Co., 2 Minn. 302 (350); Leyde v. Martin, 16 Minn. 24 (38); Cooper $ Lavely v. Reaney, 4 Minn. 413 (528).
Harlan P. Roberts, for plaintiff respondent.
Though parol evidence may be introduced to show that the real consideration was different from that which appears on the face of the deed or agreement, this rule is subject to the limitation that such evidence is not admissible to defeat or vary the terms of a written contract. Sayre v Burdick, 47 Minn. 367; Bruns v. Schreiber, 43 Minn. 468; Minneapolis, St. P. & S. Ste. M. Ry. Co. v. Home Ins. Co., 55 Minn. 236; Lawton v. St. Paul Permanent L. Co., 56 Minn. 353. Where a corporation has received the fruits of a contract, it will not be heard to set up the defense of ultra vires, when the other party sues for the price. 28 Am. Law Rev. 376; Field,...
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