Citizens' State Bank of Rugby v. Lockwood

• Citation: 156 N.W. 47,32 N.D. 381
• Decision Date: 04 December 1915
• Docket Number: 1915
• Court: North Dakota Supreme Court

156 N.W. 47

32 N.D. 381

CITIZENS STATE BANK of Rugby, North Dakota, a Corporation and Harold Thorson, v. J. H. LOCKWOOD and A. M. Iverson

No. 1915

Supreme Court of North Dakota

December 4, 1915

On rehearing January 7, 1916.

Appeal from the District Court of Pierce County; Buttz, Special Judge.

Affirmed.

Albert E. Coger, for appellants.

Where there is no ambiguity in the language of the contract, the language itself must be alone consulted in ascertaining the intention. 20 Cyc. 1423, 1424; Manhattan Rolling Mill v Dellon, 113 N.Y.S. 571.

But where the court and the lawyers on both sides of the case fail to agree on what the contract means, under such circumstances oral testimony was admissible to throw light upon its meaning. Hazelton Boiler Co. v. Fargo Gas & Electric Co. 4 N.D. 376, 61 N.W. 151; Code, § 5351; Heidenheimer v. Cleveland, Tex. , 17 S.W. 524; Chicago v. Sheldon, 9 Wall. 50, 19 L. ed. 594; Topliff v. Topliff, 122 U.S. 121, 30 L. ed. 1110, 7 S.Ct. 1057; District of Columbia v. Gallaher, 124 U.S. 505 31 L. ed. 526, 5 S.Ct. 585, 19 Ct. Cl. 564; 9 Cyc. 591.

The only result of introducing extraneous matters would be confusion; the answer here discloses that such extraneous matters are pleaded with the design to contradict the written contract. 21 Am. & Eng. Enc. Law, 1109, 1110; 17 Cyc. 668; 11 Enc. Pl. & Pr. 686; 9 Enc. Pl. & Pr. 686, 687.

Before parol evidence to prove fraud can be introduced, it must be pleaded. 17 Cyc. 699; Western Mfg. Co. v. Rogers, 54 Neb. 456, 74 N.W. 849; Ellison v. Gray, 55 N.J.Eq 581, 37 A. 1018; Caudrey's Case, 5 Coke, 25.

Where a contract is in writing, and is susceptible of proper construction and interpretation according to the well-established rules, excepting in the case of fraud pleaded and proved, it cannot be contradicted by parol. Towner v. Lucas, 13 Gratt. 705; Thorne v Warfflein, 100 Pa. 527; Branan v. Warfield, 3 Ga.App. 586, 60 S.E. 325; Wigmore, Ev. § 2435.

In such cases the intention of the parties is to be gathered and determined from the contract itself. Code, §§ 5381-5383, 7316; Hennessy v. Griggs, 1 N.D. 52, 44 N.W. 1010; Northwestern Fuel Co. v. Bruns, 1 N.D. 137, 45 N.W. 699; National German American Bank v. Lang, 2 N.D. 66, 49 N.W. 414; Edwards & M. Lumber Co. v. Baker, 2 N.D. 292, 50 N.W. 718; Plano Mfg. Co. v. Root, 3 N.D. 165, 54 N.W. 924; Hutchinson v. Cleary, 3 N.D. 270, 55 N.W. 729; William Deering & Co. v. Russell, 5 N.D. 319, 65 N.W. 691; Fletcher Bros. v. Nelson, 6 N.D. 94, 69 N.W. 53; Foster v. Burlong, 8 N.D. 282, 78 N.W. 986; Reeves v. Bruening, 13 N.D. 157, 100 N.W. 241; Alsterberg v. Bennett, 14 N.D. 596, 106 N.W. 49; Rieck v. Daigle, 17 N.D. 365, 117 N.W. 346; American Nat. Bank v. Lundy, 21 N.D. 167, 129 N.W. 99; McCulloch v. Bauer, 24 N.D. 109, 139 N.W. 318; Cughan v. Larson, 13 N.D. 373, 100 N.W. 1088; Gilbert v. Moline Plough Co. 119 U.S. 492, 30 L. ed. 476, 7 S.Ct. 305.

If I agree to have a thing done, I agree to get it done by taking the proper steps or methods. I agree to accomplish it. I assume the obligation to do it or to have it done. I agree to bring about the result contemplated by the contract. Huck v. Gaylord, 50 Tex. 582; Com. v. Delamater, 13 Pa. Co. Ct. 155; True v. Harding, 12 Me. 193; Morris v. Bradley, 20 N.D. 646, 128 N.W. 118.

The agreement here was to have the notes renewed and secured, or paid. It is in the alternative. The party obligating himself so to act and do has the right of selection as to which course he will pursue. But he must give notice of his selection before the time of performance arrives, or such right passes to the other party. Code, §§ 5222, 5223, 5361, 6075; Acme Harvester Co. v. Axtell, 5 N.D. 315, 65 N.W. 680; 20 Cyc. 1397, 1398; Nading v. McGregor, 121 Ind. 465, 6 L.R.A. 686, 23 N.E. 283; Kent v. Silver, 47 C. C. A. 404, 108 F. 365; Merritt v. Haas, 106 Minn. 275, 21 L.R.A.(N.S.) 153, 118 N.W. 1023, 119 N.W. 247.

A stipulation in a contract will be held to be a condition precedent only when the contract clearly requires such construction. The contract in question was not such. Walker v. Stimmel, 15 N.D. 484, 107 N.W. 1081; Roberts, T. & Co. v. Laughlin, 4 N.D. 167, 59 N.W. 967; Foster County State Bank v. Kester, 18 N.D. 135, 119 N.W. 1044; Smith v. Snow, 16 N.D. 306, 112 N.W. 1062; Woody v. Haworth, 24 Ind.App. 634, 57 N.E. 272; McCague Bros. v. Irey, 73 Neb. 602, 103 N.W. 281; Swindells v. Dupont, 88 Minn. 9, 92 N.W. 468; Oneida Steel Pulley Co. v. New York Leather Belting Co. 120 A.D. 625, 105 N.Y.S. 534; Winchell v. Doty, 15 Hun, 1; Tuton v. Thayer, 47 How. Pr. 187; Kahn v. Eisenberg, 97 N.Y.S. 959; Bossert v. Striker, 142 A.D. 5, 126 N.Y.S. 726; Pierce v. Merrill, 128 Cal. 464, 79 Am. St. Rep. 56, 61 P. 64; Klien v. Kern, 94 Tenn. 34, 28 S.W. 295; Avery v. Moore, 87 Kan. 337, 124 P. 173; Ralph v. Eldridge, 137 N.Y. 525, 33 N.E. 559; Jackson v. Swart, 182 N.Y. 373, 75 N.E. 226.

The guarantee was not required to bring action or take any steps, before looking to his guarantor to meet the contract. 20 Cyc. 1449, 1450, note 91; Donley v. Bush, 44 Tex. 1; Grannis v. Miller, 1 Ala. 471; Douthitt v. Hudson, 4 Ala. 110.

The liability of the guarantor of a note, if the guaranty is made before maturity, accrues at maturity, if made after maturity, within a reasonable time thereafter. Yeates v. Walker, 1 Duv. 84; Crocker v. Gilbert, 9 Cush. 131; Read v. Cutts, 7 Me. 186, 22 Am. Dec. 184; Lane v. Levillian, 4 Ark. 76, 37 Am. Dec. 769; Wills v. Ross, 77 Ind. 1, 40 Am. Rep. 279; Foster v. Tolleson, 13 Rich. L. 31; Munro v. Hill, 25 S.C. 476; 1 Brandt, Suretyship, 3d ed. § 222.

A demand for anything is never necessary, when it conclusively appears that it would have been unavailing for any purpose, that it would be futile. 1 Cyc. 699; Myrick v. Bill, 3 Dak. 284, 17 N.W. 268; Thompson v. Thompson, 11 N.D. 211, 91 N.W. 44; More v. Burger, 15 N.D. 345, 107 N.W. 200.

The measure of damages is prima facie the par value of the notes. Page, Contr. § 1594; Barron v. Mullin, 21 Minn. 374; Browne v. St. Paul Plow Works, 62 Minn. 90, 64 N.W. 66; Lathrop v. Atwood, 21 Conn. 117; Furnas v. Durgin, 119 Mass. 500, 20 Am. Rep. 341; Thompson v. Richards, 14 Mich. 172; Sturgess v. Crum, 29 Mo.App. 644; Richards v. Whittle, 16 N.H. 259; Sedgw. Damages, 9th ed. §§ 618, 622a, 622b.

Under a contract to procure the notes to be paid, the rule of damages can only be the amount due on the notes for principal and interest. Robinson v. Gilman, 43 N.H. 485.

L. N. Torson and, Torson & Wenzel and, Engerud, Holt, & Frame, for respondents.

The essence of a contract of guaranty is that the guarantor shall do the very act which another person has promised to do. Comp. Laws 1913, § 6651; Gridley v. Capen, 72 Ill. 11.

"A collateral undertaking to pay a debt owing by a third person, in case the latter does not pay." Dole v. Young, 24 Pick. 250; Buckingham v. Murray, 7 Houst. (Del.) 176, 30 A. 779; Northern State Bank v. Bellamy, 19 N.D. 509, 31 L.R.A.(N.S.) 149, 125 N.W. 888; Starr v. Millikin, 180 Ill. 458, 54 N.E. 328.

The contract here before the court is analogous to a guaranty of collection. Foster County State Bank v. Hester, 18 N.D. 135, 119 N.W. 1044; Hazelton Boiler Co. v. Fargo Gas & Electric Co. 4 N.D. 365, 61 N.W. 151; Young v. Metcalf Land Co. 18 N.D. 441, 122 N.W. 1101; Locke v. McVean, 33 Mich. 473; Curtis v. Hubbard, 6 Met. 186; Home Sav. Bank v. Hosie, 119 Mich. 116, 77 N.W. 625; Belloni v. Freeborn, 63 N.Y. 383; Stewart v. Marvel, 101 N.Y. 357, 4 N.E. 743.

The appellant drew the contract himself, and he is therefore in no position to ask the court to give it a meaning and effect which its words and provisions do not warrant. Comp. Laws 1913, § 5914.

The contract was and is in substance and effect an assurance, a warranty, that the makers of the notes have the cash or resources with which to pay them; in short that they are solvent it is therefore a mere guaranty of collection. Carter v. McGehee, 61 N. C. (Phill. L.) 431; Curtis v. Smallman, 14 Wend. 231; Cowles v. Pick, 55 Conn. 251, 3 Am. St. Rep. 44, 10 A. 569; Walker v. Forbes, 25 Ala. 139, 60 Am. Dec. 498; Dewey v. W. B. Clark Invest. Co. 48 Minn. 130, 31 Am. St. Rep. 623, 50 N.W. 1032; Burton v. Dewey, 4 Kan.App. 589, 46 P. 325; Crane v. Wheeler, 48 Minn. 207, 50 N.W. 1033; Union Nat. Bank v. First Nat. Bank, 45 Ohio St. 236, 13 N.E. 884; Comp. Laws 1913, § 6658; Roberts, T. & Co. v. Laughlin, 4 N.D. 167, 59 N.W. 967.

It is a mere promise to make good to the holder of the notes what he himself cannot collect from the makers. Mosher v. Hotchkiss, 2 Keyes, 589; 1 Brandt, Suretyship, § 111; Tuton v. Thayer, 47 How. Pr. 187; Coolidge v. Brigham, 5 Met. 68; Burton v. Dewey, 4 Kan.App. 589, 46 P. 325.

It is well settled that before the promisee in a guaranty of collection can sue the promisor, he must exhaust his legal remedies against the makers of the notes, and thereby established the measure and extent of his loss. Smith v. Snow, 16 N.D. 306, 112 N.W. 1062; Roberts, T. & Co. v. Laughlin, 4 N.D. 167, 59 N.W. 967; Bosman v. Akeley, 39 Mich. 710, 33 Am. Rep. 447; Cowles v. Pick, 55 Conn. 251, 3 Am. St. Rep. 44, 10 A. 569; Burton v. Dewey, 4 Kan.App. 589, 46 P. 325; Central Invest. Co. v. Miles, 56 Neb. 272, 71 Am. St. Rep. 681, 76 N.W. 566; McMurray v. Noyes, 72 N.Y. 523, 28 Am. Rep. 180; Peck v. Frink, 10 Iowa 193, 74 Am. Dec. 384; Comp. Laws 1913, § 7146; Mosher v. Hotchkiss, 2 Keyes, 589; Coolidge v. Brigham, 5 Met. 68; Lehneis v. Egg Harbor Commercial Bank, N.J.Eq. , 26 A. 797; Anderson v. First Nat. Bank, 6 N.D. 497, 72 N.W. 916; Roberts, T. & Co. v. Laughlin, 4 N.D. 176, 59 N.W. 967; Cosand v. Bunker, 2 S.D. 294, 50 N.W. 84; Booth v. Powers, 56 N.Y. 22; Thayer v. Manley, 73 N.Y. 305; Young v. Metcalf Land Co. 18 N.D. 441, 122 N.W. 1101.

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