Citizens Bank of Winona v. Evans
| Decision Date | 16 July 1913 |
| Citation | 159 S.W. 765,176 Mo.App. 704 |
| Parties | CITIZENS BANK OF WINONA, Appellant, v. EUGENE E. EVANS et al., Respondents |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. George H. Shields Judge.
AFFIRMED.
Judgment affirmed.
R. P. & C. B. Williams for appellant.
(1) The guaranty in this case is absolute, and the liability of the guarantors is commensurate with that of principal debtor, and no demand and notice of nonpayment was necessary to bind the guarantors; nor was it necessary for the creditor, the plaintiff, to use any diligence to enforce payment from the principal debtor. Printing Company v. Belcher, 127 Mo.App. 140; Wright v. Dyer, 48 Mo. 525; Barker v. Scudder, 56 Mo. 272; Singer Mfg. Co. v Hester, 71 Mo. 91; Machine Co. v. Jones, 61 Mo 409; Airey v. Pearson, 37 Mo. 424; Hill v. Combs, 92 Mo.App. 252; Globe v. Bickley, 73 Mo.App. 499; Osborn v. Lawson, 26 Mo.App. 549; Warder v. Johnson, 114 Mo.App. 574; English v. Siebert, 49 Mo.App. 563; Baskin v. Cruse, 66 Mo.App. 22; Miller v. Mellier, 59 Mo. 388; Kroneg v. Bramlett, 20 Mo.App. 636; 14 Am. & Eng. Ency. of Law (2 Ed.), pp. 1141, 1149, 1154; 20 Cyc. 1459; Brant on Suretyship, secs. 217, 218. (2) The law is well established in this State that before the guarantors or surety can be released by an extension of time, there must be a binding contract between the debtor and the creditor upon sufficient consideration granting such extension. Barrett v. Davis, 104 Mo. 558; Commercial v. Brinkerhoff, 110 Mo.App. 438; Real Estate Co. v. Clark, 84 Mo.App. 167; Johnson v. Franklin Bank, 173 Mo. 171; White v. Middleworth, 42 Mo.App. 368; Owens v. McKenzie, 133 Mo. 323; Kingman v. McMasters, 118 Mo.App. 217; Brown v. Profit, 53 Miss. 549; Moore v. Redding, 69 Miss. 842. (3) A mere promise of indulgence, though upon sufficient consideration, if for no certain time, does not tie up the hands of the creditor for a day, or for any time whatever, and for this reason does not release the surety. Commercial v. Brinkerhoff, 110 Mo.App. 438; Barrett v. Davis, 104 Mo. 558; Johnson v. Franklin, 173 Mo. 171. (4) The rule is well established that the mere taking of a new note for an original debt to be used as collateral will not release the guarantor in the absence of a special agreement granting an extension. Bank v. Rogers, 123 Mo.App. 571; Rucker v. Robinson, 38 Mo. 154; Bank v. Johnson, 24 Mo.App. 316; Bank v. Leavitt, 65 Mo. 562; Globe v. Carson, 31 Mo. 218; Kingman v. McMasters, 118 Mo.App. 217; Henlee v. Jones, 43 Mo. 235; Noll v. Oberhellman, 20 Mo.App. 336; Buckingham v. Walker, 48 Miss. 619; Penny v. Crane Bros., 80 Ill. 244; Bank v. Wolsey, 31 A.D. 61; Belting Co. v. Parker, 21 A.D. 160; Shipman v. Kelly, 16 Misc. (N. Y.) 673; Parmalee v. Thompson, 45 N.Y. 58; Graham v. Megus, 55 Hunn. 448; Foster v. Hester, 119 N.W. 1044; Brant on Suretyship and Guaranty (3 Ed.), sec. 453; Austin v. Curtis, 31 Vt. 64. (5) The receipt of interest in advance for a debt does not furnish any evidence of a binding contract for an extension of time of payment so as to operate to release the guarantors. Bank v. Rogers, 143 Mo.App. 571; Hozea v. Towney, 57 Mo. 357; Citizens Bank v. Moorman, 38 Mo.App. 486; Russell v. Brown, 21 Mo. App 57; Stilwell v. Aaron, 69 Mo. 539; Jos. Fire v. Hauck, 71 Mo. 465. (6) The evidence is undisputed that the note in suit was always in the possession of the plaintiff bank. It is therefore impossible that it was ever pledged, because actual delivery to the pledgee is essential to constitute a valid pledge. Staple v. Simpson, 60 Mo.App. 75; Vastone v. Goodwin, 42 Mo.App. 39; Christian v. Atlantic, 133 U.S. (33 L. Ed.) 589. (7) Even if the note in suit had been pledged, this could not affect the liability of the guarantors, because the guaranty is absolute and the liability is primary and not secondary. Printing Co. v. Belcher, 127 Mo.App. 140; Wright v. Dyer, 48 Mo. 525; Baker v. Kelly, 41 Miss. 696.
Lyon & Swarts for respondents.
(1) Whether the new notes given in October, 1905, and in May, 1906, satisfied, paid and discharged the note in suit, or whether at those times the appellant and the maker entered into binding contracts, for sufficient consideration, granting extensions of time, were questions of fact duly submitted to the trial court. The findings by the trial court are equivalent to a verdict by a jury and are conclusive where the findings are supported by substantial evidence, and no citation of authorities on that point is necessary. (2) The new notes given in October, 1905, and in May, 1906, discharged the guarantors, whether the new notes be considered as payment or agreements for extension of credit. Bank v. Wood, 56 Mo.App. 214; Owen v. Bray, 80 Mo.App. 526; Donovan Co. v. Clark, 84 Mo.App. 169; Jackson v. Bowles, 67 Mo. 609; Bank v. Freund, 80 Mo.App. 657; Keyser v. Hinkle, 127 Mo.App. 75; Appleton v. Kennon, 19 Mo. 637; Savings Ass'n v. Helmerick, 57 Mo. 100; Bank v. Leavitt, 65 Mo. 652; Stillwell v. Aaron, 69 Mo. 539; Johnson v. Bank, 173 Mo. 171; White v. Smith, 174 Mo. 186; Green v. Skinner, 75 Miss. 254; Fellows v. Prentiss, 3 Denio 517; Ogden on Negotiable Instruments, sec. 227; Daniel on Negotiable Instruments, sec. 1789. (3) Appellant, both in October, 1905, and May, 1906, tied its hands respecting the note in suit, because it obtained money from its correspondents on pledging, as collateral, the new notes of the Flake & Neilson Company, which company had in turn pledged the note in suit as collateral thereto. As between the appellant and its correspondents, the note in suit was pledged although it remained in appellant's possession. Bank v. Trust Co., 135 Mo.App. 379; Bank v. Freund, 80 Mo.App. 666; Bank v. Wood, 56 Mo.App. 218; Keyser v. Hinkle, 127 Mo.App. 75. (4) Notice to respondents of nonpayment was withheld by agreement between the appellant and the maker for a period of almost five years; and the respondents lost their rights and remedies against the maker and their coguarantors, and were thereby discharged Grube v. Stille, 61 Mo. 475; Bank v. Leavitt, 65 Mo. 562; 2 Parsons on Bills & Notes, 241; Thrasher v. Ely, 2 Sm. & M. (Miss.) 139. (5) Appellant voluntarily released to the maker collateral pledged by the maker to the note in suit, sufficient to have paid the note, and thereby released respondents. English v. Seibert, 49 Mo.App. 567; Ogden on Negotiable Instruments, sec. 227. (6) Appellant's failure to return to the maker, or to account for the two notes given in May, 1906, operates as a complete bar to maintaining any action on the note in suit. Jackson v. Bowles, 67 Mo. 609; Appleton v. Kennon, 19 Mo. 637; Keyser v. Hinkle, 127 Mo.App. 75; Graham v. Negus, 55 Hun, 443. (7) The contract of guaranty must be construed as any other mercantile contract, not strictly or technically, but in the light of what may be fairly presumed to have been the intention and understanding of the parties. The four guarantors of the note in suit, as between themselves contracted with the appellant to pay the note at maturity in April, 1903, or at any reasonable time thereafter. Kansas City v. Youmans, 213 Mo. 166; Merrill v. Baker, 186 F. 314; Douglas v. Reynolds, 7 Pet. 126; Johnson v. Norton Co., 159 F. 364; Kearnes v. Montgomery, 4 W.Va. 40; Harvey v. Bank, 56 Neb. 320.
This is a suit against the guarantors on a promissory note. A jury was waived and a trial had before the court. The finding and judgment were for defendant and plaintiff prosecutes the appeal.
It appears that the Flake & Neilson Company, incorporated, was engaged in a mercantile business in Winona, Mississippi. On December 4, 1902, this concern, the Flake & Neilson Company, executed its promissory note to the plaintiff bank, whereby it promised to pay, for money borrowed from the bank, $ 5000 four months after date. The two defendants, E. E. Evans and J. J. Jacobs, both residents of St. Louis, Missouri, by a proper indorsement on the back of the note, made at the time, guaranteed its payment. By such indorsement, the defendant guarantors waived notice and protest and guaranteed the payment of the note "at maturity or at any time thereafter." Interest at eight per cent from date is stipulated for in the note. It appears that the principal--that is, the Flake & Neilson Company--paid the interest on the note from time to time during the several years, but the note itself remained unpaid on October 1, 1905. On that date, the principal obligor, the Flake & Neilson Company, paid the interest then accrued, and there appears a credit on the back of the note therefor, as of date October 1, 1905, to the amount of $ 1,134.45. After having thus settled the matter of accrued interest, the plaintiff bank and the principal debtor, the Flake & Neilson Company, through its president, Mr. Flake, drew up two new notes, both of date October 1, 1905, the first for $ 2550 and the second for $ 2566.66. By their terms the first note was payable on the 15th day of January, 1906 and the second note on the first day of February, 1906. These notes included the interest on the principal amount until the time of payment prescribed. It is conceded that they represented the identical principal indebtedness as that for which the original $ 5000 note was given on December 4, 1902.
Both of these notes were indorsed by Mr. Flake, the president, and Mr. Kelso, a stockholder of the Flake & Neilson Company. But these defendants--that is, Evans and Jacobs, the guarantors on the original note--were in nowise apprised of the transaction and did not consent thereto. Thereafter, on May 12, 1906, the principal debtor, the Flake & Neilson Company through its president, Mr. Flake, took up the two notes last...
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