Corn Exch. Nat. Bank & Trust Co. of Philadelphia v. Taubel

• Decision Date: 05 October 1934
• Docket Number: No. 67.,67.
• Citation: 175 A. 55
• Parties: CORN EXCHANGE NAT. BANK & TRUST CO. OF PHILADELPHIA v. TAUBEL.
• Court: New Jersey Supreme Court

175 A. 55

CORN EXCHANGE NAT. BANK & TRUST CO. OF PHILADELPHIA

v. TAUBEL.

No. 67.

Court of Errors and Appeals of New Jersey.

Oct. 5, 1934.

Appeal from Supreme Court.

Action by the Corn Exchange National Bank & Trust Company of Philadelphia against William F. Taubel. Judgment for plaintiff, and defendant appeals.

Affirmed.

Merritt Lane, of Newark, and Harry Cassman, of Atlantic City, for appellant.

Louis B. Le Duc, of Camden, for respondent.

HEHER, Justice.

Defendant challenges a judgment entered upon a jury verdict rendered at the Atlantic Circuit in favor of plaintiff in this action upon a promissory note in the sum of $248,225, made by Clarence H. Taubel to plaintiff's order, and indorsed by defendant, his father, bearing date December 28, 1931, and payable three months thereafter. The defense interposed was that defendant had become an accommodation indorser of the note at plaintiff's request, and in consideration of its promise, made in writing on October 2, 1930, not to seek enforcement of the obligation for a period of two years after September 26, 1930, and that, consequently, the debt had not matured and the action was premature. The note in suit was the last of a series of renewals of an original note indorsed by defendant, also made by Clarence, bearing date September 26, 1930, but not indorsed by defendant until the foregoing promise of October 2d was made. The lastmentioned note was a renewal of a note made by Clarence, the last of a series of single-name time notes given by Clarence to evidence and secure (by collateral pledge) his indebtedness to plaintiff growing out of the discount of his negotiable paper.

The bank, while conceding an obligation in the premises, maintained that the extent of its undertaking was to renew from time to time during the two years period, by like negotiable paper, the note thus indorsed by defendant; that it was incumbent upon him to tender at maturity a renewal of the note in suit; that he failed in the fulfillment of this duty; and that, in the circumstances, defendant's obligation upon the matured note was then enforceable. The trial judge determined that this was the full extent of the bank's contractual obligation, and that the duty rested upon defendant and the maker of the note "to present to the plaintiff bank renewal notes * * * made by Clarence and indorsed by his father, during this period of two years." The evidence relating to the fulfillment by the parties of their respective obligations was in conflict, and the issue was submitted to the jury for determination.

The first insistence of appellant is that there was error in the denial of his motion for the direction of a verdict in his favor. This is predicated upon the contentions: (1) That he was not obliged "to tender a renewal note indorsed by him," and that, even so, the bank, in this instance, assumed the duty of preparing, and tendering to him for signature, a renewal note, and tender by him was consequently excused; and (2) that he was not required to sign a renewal note "if tendered to him for signature by the bank," and at all events not in the form submitted by the bank, for thereby "his relationship to the transaction would have been changed," and his obligation altered to his detriment. One of the grounds urged at the trial, in support of this motion, was that the bankruptcy of the maker "accelerated the obligation of the maker and also the indorser," and as well "accelerated the liability of the indorser as measured by the collateral contract"; but this point is not advanced here, and need not be considered.

Therefore, the primary question is the ascertainment of the contractual rights and correlative duties of the respective parties. The bank did not regard the loan as amply secured. It demanded payment or additional security. The negotiations between its officers and Clarence resulted in the forwarding of a communication by the bank to appellant, under date of September 26, 1930, advising him that if he would indorse "this obligation (there was a prior reference to the note made by Clarence which matured on that day), we would be perfectly willing to carry it along for eighteen months." On October 2d following, the bank, acquiescing in a counter proposal by appellant that the term be fixed at two years, by letter addressed to him, expressed a willingness "to carry this loan along for a period of two years," if he would "indorse this note." And in this missive also there was previous mention of the overdue note made by Clarence. Thereupon appellant indorsed a renewal note made by Clarence.

This is clearly an integrated contract. Appellant's indorsement of the note, immediately upon receipt of the letter of October 2d, was an unqualified acquiescence in the proposal therein contained; it was a manifestation of assent to the writing as a definite and complete expression of the contract. This constituted an integration of the agreement. The writing, even though informal in character, was adopted by the parties as a statement of their bargain. They assented to the words used as binding upon them. American Law Institute Restatement, Contracts, vol. 1, § 228; Williston on Contracts, § 606. The cardinal rule, in the interpretation of contracts, is to ascertain and give effect to the common intention of the parties, so far as it may be effectuated without infringing legal principles. Basic Iron Ore Co. v. Dahlke, 103 N. J. Law, 635, 137 A. 423; Dixon v. Smyth Sales Corp., 110 N. J. Law 459, 166 A. 103; Westville Land Co. v. Handle, 112 N. J. Law, 447, 171 A. 520. But where, as here, the parties have made a memorial of their bargain, or a writing is required by law, their actual intent unless expressed in some way in the writing is ineffective, except when it may, in accordance with established principles, afford the basis for a reformation of the writing. While the intention of the parties is sought, it can be found only in their expression in the writing. In effect, it is not the real intent but the intent expressed or apparent in the writing that controls. The obligation of a contractor depends upon his expressed, not his actual, intention. Williston on Contracts, §§ 608, 610, 629. The parties are bound by the language used regardless of their intent. The terms of the writing are exclusive, and, therefore a contract may have a meaning different from that which either party supposed it to have. American Law Institute Restatement, Contracts, vol. 1, § 230. Otherwise, there would be a disregard of the well-settled rule forbidding the introduction of parol evidence to contradict the terms of a written contract. In fine, the ascertainment and effectuation of the intention of the parties, as manifested by the language employed and the object to be accomplished, are the ends to be served in the interpretation of written agreements.

The standard of interpretation of an integrated agreement, supported by the weight of modern authority, is the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the writing, other than oral statements by the parties of what they intended it to mean, except where it produces an ambiguous result, or is excluded by rule of law establishing a definite meaning. American Law Institute Restatement, Contracts, vol. 1, § 230. This has been termed a primary rule of interpretation which is always applicable, whether the writing seems clear or ambiguous. Williston on Contracts, §§ 617, 618. The underlying theory is that as all language will bear "some different meanings," evidence of surroundings is always admissible in the interpretation of integrated agreements, but not for the purpose of giving effect to an intent at variance with any meaning that can be attached to the words. American Law Institute Restatement, Contracts, vol. 1, § 235, p. 324. But however this may be, the propriety of admitting evidence of extrinsic facts, where the meaning of the instrument is not clearly apparent, cannot be gainsaid. Where, as here, general or indefinite terms are employed in the agreement, the court may look into the attending circumstances, and avail itself of such light as they may afford in ascertaining the true meaning of the language so used. Basic Iron Ore Co. v. Dahlke, supra; Fletcher v. Interstate Chemical Co., 94 N. J. Law, 332, 110 A. 709; American Law Institute Restatement, Contracts, vol. 1, § 235. In such a situation the court must regard the relation of the parties and the circumstances under which the contract was made, and the objects which the parties were thereby striving to accomplish. Such an inquiry is not for the purpose of changing the writing, but to secure light by which to ascertain its actual significance. Walker v. Brown, 165 U. S. 654, 17 S. Ct. 453, 41 L. Ed. 865. It must always be kept in mind that, in an action on the contract, such evidence is admissible only for the purpose of interpreting the writing—not for the purpose of modifying or enlarging or curtailing its terms, but to aid in determining the meaning to be given to the instrument. So far as the evidence tends to show, not the meaning of the writing, but an intention wholly unexpressed in the writing, it is irrelevant. Williston on Contracts, § 629; American Law Institute Restatement, Contracts, vol. 1, § 235.

The words employed in the instant contract are obviously general and indefinite, and of doubtful and uncertain meaning, and require clarification by the application of the established standards of interpretation. What was contemplated by the operative clause "carry this loan along"? Appellant insists that his obligation was that of a mere "guarantor upon an obligation past due," and that it was therefore not requisite that there be successive renewals of the overdue note during the contract period. We are unable to subscribe...