Caldwell v. McKenna

• Decision Date: 01 June 1934
• Docket Number: 6088
• Citation: 33 P.2d 366,54 Idaho 552
• Parties: FRED G. CALDWELL, Appellant, v. EDWARD MCKENNA and H. S. WOODLAND, Respondents
• Court: Idaho Supreme Court

33 P.2d 366

54 Idaho 552

FRED G. CALDWELL, Appellant, v. EDWARD MCKENNA and H. S. WOODLAND, Respondents

No. 6088

Supreme Court of Idaho

June 1, 1934

LIMITATION OF ACTIONS-INDEMNITY CONTRACT-CONSIDERATION.

1. Where stockholder of bank gave note payable in one year to secure payment of bank's depositors by another bank limitation against enforcement of indemnity contract signed by other stockholders covering any amounts required to be paid under such note held to run from time of payment, not maturity date of note.

2. Renewals of note held not to release from liability persons bound under indemnity contract covering any amounts required to be paid under note, where payment was made within enforceable limits of original note, since extension for less period than that provided for in guaranty will not discharge guarantor.

3. Under indemnity contract, there is breach of covenant and indemnitee's right of recovery accrues as soon as he has suffered loss against which he was to be saved harmless, or liability against which he was to be protected has become fixed, and until such time there can be no recovery against indemnitor.

4. Consideration is presumed for written contract (I. C. A sec. 28-103).

5. Contract by other stockholders to indemnify stockholder giving note to secure payment of bank depositors by another bank for any amounts stockholder should be required to pay under such note held supported by consideration of mutual promises of signers each to the other and payment under contract.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Robert M. Terrell, Judge.

Appeal from judgment sustaining demurrer to plaintiff's second amended complaint, seeking to recover on a contract of indemnity. Reversed and remanded with instructions to reinstate the second amended complaint.

Reversed and remanded with instructions. Costs awarded to appellant.

Peterson Anderson & Bowen, for Appellant.

Where it is sought to recover for money paid or expended for the use or benefit or for another, the cause of action does not accrue until the money is actually paid, and where a note is given by the plaintiff, it must be paid before the cause of action accrues or the statute of limitations starts running. (Pleasant v. Samuels, 114 Cal. 34, 45 P. 998; Norton v. Hall, 41 Vt. 471; Lee v. Larkin, 125 A.D. 302, 109 N.Y.S. 480; Douglas v. Moody, 9 Mass. 548.)

Standrod & Standrod, for Respondents.

Plaintiff could have placed himself in a position at the end of one year after the date of the bank note to have made his claim against the defendants complete (if he had any claim under the terms of "Exhibit A") by paying the note. This was the only preliminary step for plaintiff to take. He had no right to take his own good time to pay this note and thereby toll the running of the statute of limitations as against these defendants. (1 R. C. L., pp. 755, 756; Steele v. Steele, 25 Pa. 154; Palmer v. Palmer, 36 Mich. 487, 24 Am. Rep. 605; Bennett v. Thorne, 36 Wash. 253, 78 P. 936, 68 L. R. A. 113; Bauserman v. Charlott, 46 Kan. 480, 26 P. 1051; 37 C. J., p. 953.)

GIVENS, J. Budge, C. J., and Morgan, Holden and Wernette, JJ., concur.

OPINION

GIVENS, J.

About October 16, 1920, the National Bank of Idaho agreed to take over and pay the depositors of the Stockgrowers Bank and Trust Company, and to secure such payments received from the latter, certain securities to be applied as collected, and in addition thereto a promissory note from appellant a stockholder in the Stockgrowers Bank and Trust Company.

In connection with the above transaction certain other stockholders including respondents herein (Edward McKenna and H. S. Woodland being the only ones now interested in or affected by this litigation) made an agreement with appellant, the material parts thereof being as follows:

". . . . That Whereas, on the 13th day of October, 1920, the first parties hereto, for the purpose of assuring the payment of all deposits of the said Stockgrowers Bank and Trust Company to the depositors, entered into an agreement with the National Bank of Idaho, by the terms of which, the said last mentioned bank agreed to take over and assume and pay when and as necessary, all depositors of said Bank and by the terms of which agreement, the assets of said Stockgrowers Bank and Trust Company were assigned to said The National Bank of Idaho as collateral to said obligation, and to further secure the said The National Bank of Idaho, said above mentioned stockholders gave to said The National Bank of Idaho, their certain promissory notes, bearing date of October 13, 1920, due one year after date thereof, and to bear interest at the rate of ten per cent per annum after maturity, interest to be paid quarterly after maturity, copies of said notes being as follows: . . . ."

"And said notes to be paid in the event said assets so assigned to said THE NATIONAL BANK OF IDAHO be not collected within one year sufficient to discharge said obligation so assumed by said The National Bank of Idaho and according to the terms and conditions of that certain contract and agreement entered into on said 13th day of October, 1920, with the said The National Bank of Idaho, which agreement is hereby referred to and made a part hereof. It is, therefore, mutually agreed and understood in consideration of the premises, that the second parties hereto shall reimburse and repay to said first parties for and on account of any monies or things of value that said first parties may be required to pay from said notes in proportion as the amount of the stock in the name of said second parties shall bear to the total issued stock of said Stockgrowers Bank and Trust Company, according to a statement thereof, which is hereto attached and marked 'Exhibit A,' and made a part of this agreement, it being the purpose of this agreement that all stockholders in said Bank, according to said statement, shall bear their just and true proportion of any amounts that may be required to be paid by said first parties for or on account of the making of said notes; . . . ."

Thereafter this suit was instituted by appellant to compel proportionate contribution by the other parties to the agreement.

The complaint alleges that on or about December 10, 1924, appellant paid the note given by him which amounted principal and interest, to $ 14,967.20, alleging renewals of the original note and that the collections made by the National Bank of Idaho on the securities assigned to it by the Stockgrowers Bank and Trust Company were insufficient in excess of $ 15,000, to cover the depositors paid by the National Bank of Idaho.

Respondents' demurrer was sustained by the trial court on the theory that the cause of action accrued in favor of appellant October 13, 1921, and this suit not having been instituted until May 2, 1929, was too late because of section 5-216, I. C. A., being five years on a written contract, and that there was no consideration.

The sequence of events necessary for a proper consideration of the matter is as follows: Appellant's note was made on October 13, 1920; it was due on October 13, 1921, the statutory period of limitations on the obligation of this note was five years ending October 13, 1926; the note was paid December 10, 1924, within such five-year period; suit was brought herein May 2, 1929, within five years after payment was made by appellant on his note, such five-year period ending December 10, 1929.

Respondents urge that the period of limitations as to respondents' contract was coincident with the period of limitations on appellant's note. This overlooks the terms of the contract which define respondents' liability, the essential part being as follows:

". . . . it being the purpose of this agreement that all stockholders in said Bank, according to said statement, (stockholders and respective holdings) shall bear their just and true proportion of any amounts that may be required to be paid by said first parties for or on account of the making of said notes; . . . ." (Italics ours.)

Appellant might have been required legally to pay the note any time within five years after October 13, 1921, because it is apparent from the portion of the second amended complaint above noted that sufficient was not collected within one year after October 13, 1920, to pay the depositors whose accounts had been assumed by the National Bank of Idaho.

Respondents urge that appellant could not by failure to pay sooner, extend the period of limitations.

The condition precedent to appellant being required to pay the note given by him was that sufficient money would not be collected during the year indicated to reimburse the National Bank of Idaho, but as to respondents there was the added prerequisite that appellant be required to pay. (Italics ours.)

The complaint alleges and the demurrer admits the happening of both conditions precedent. Respondents' obligation then was to pay appellant their proportionate share of any amount he might be required to pay. The complaint alleges and the demurrer admits that he was not only required to pay, but did pay a specified sum within a time when he was under legal compulsion to so pay.

Respondents rely strongly upon 37 C. J. 953, which evidently influenced the trial court, the text being as follows:

"Where plaintiff's right of action depends upon some act to be performed by him preliminary to commencing suit,...