Craig v. Stacy

• Decision Date: 27 May 1932
• Docket Number: No. 30113.,30113.
• Citation: 50 S.W.2d 104
• Parties: J.W. CRAIG, Appellant, v. HENLEY STACY, G.L. HALL, S.L. MILLER, J.W. SHOEMAKER, J.E. DOUGLAS, W.F. REYNOLDS, J.O. REYNOLDS and WILLIAM HINTON.
• Court: Missouri Supreme Court

50 S.W.2d 104

J.W. CRAIG, Appellant, v. HENLEY STACY, G.L. HALL, S.L. MILLER, J.W. SHOEMAKER, J.E. DOUGLAS, W.F. REYNOLDS, J.O. REYNOLDS and WILLIAM HINTON.

No. 30113.

Supreme Court of Missouri.

Division One, May 27, 1932.

Appeal from Henry Circuit Court. — Hon. W.L.P. Burney, Judge.

AFFIRMED.

Barnett & Hayes, C.A. Calvird, Jr., Roy D. Williams and Watson, Gage, Ess, Groner & Barnett for appellant.

(1) Although the petition shows that no count of the petition prays for the recovery of more than $7,500, yet the total amount sought to be recovered under all the counts is $38,633.70. This is sufficient to confer jurisdiction on this court. Kitchen v. City of Clinton, 8 S.W. (2d) 602; Gilman v. Am. Producers, etc. Co., 180 Mass. 319; Hawley v. Fairbanks, 108 U.S. 543; Com. v. Chesapeake Railroad Co., 128 Ky. 542; Phoenix Hotel Co. v. Com., 153 Ky. 507; Fink v. Denny, 75 Va. 633; Priest v. Deaver, 21 Mo. App. 209; Washington Sav. Bank v. Butchers, etc., Bank, 61 Mo. App. 448; Correctness recognized by retaining jurisdiction 130 Mo. 155. (2) Plaintiff has legal capacity to sue. (a) The bond sued upon was made for the benefit of third persons. The guaranty of "all the liabilities of whatsoever nature ... owing by said bank," and "if necessary, to pay all the obligations of the above bank," was a contract for the benefit of creditors. Therefore, a creditor might sue in his own name, as the real party in interest. Sec. 698, R.S. 1929; Binswanger v. Employers, etc., Co., 28 S.W. (2d) 454; Wiss v. Indemnity Co., 282 S.W. 164; Howsman v. Trenton Water Co., 119 Mo. 304; Rogers v. Gosnell, 51 Mo. 469; Zellers v. Natl. Surety Co., 210 Mo. 86; State ex rel. Blair v. Pitman, 111 S.W. 14, 131 Mo. App. 299; Wilson Co. v. Insurance Co., 300 Mo. 1. The beneficiary of a guaranty, or the assignee of the debt guaranteed, may sue upon the guaranty in his own name. 29 C.J. 1011; 28 C.J. 942, 1010; Lowery v. Fuller, 281 S.W. 968; Jobes v. Miller, 209 S.W. 549. (b) In one count plaintiff sued to recover the debt originally due him from the bank. In all other counts he sued as assignee of an obligation which had become complete. Under our statute the assignee of a matured obligation may sue in his own name. Lowery v. Fuller, 281 S.W. 972; Jobes v. Miller, 209 S.W. 549; Security State Bank v. Gray, 25 S.W. (2d) 512; McGowan v. Wells, 184 Ky. 772. (3) The petition states a cause of action. (a) and (c). The contract was not void even though no express statutory authority to take the guaranty was conferred. The instrument was good as a common law bond. State v. Cochran, 264 Mo. 581; LaCrosse Lbr. Co. v. Schwartz, 163 Mo. App. 659; C.A. Burton Mach. Co. v. Ruth, 196 Mo. App. 459; Nations v. Beard, 216 Mo. App. 33; State ex rel. LaFayette County v. O'Gorman, 75 Mo. 370; Williams v. Coleman, 49 Mo. 325. The statute contemplates that the Commissioner of Finance shall cause the bank to "make good the deficiency" in the financial strength of the bank, without directing how he shall require this to be done. Therefore, if requiring the guaranty in question was, in his opinion, an appropriate way to accomplish his purpose of substituting good commercial paper for bad or doubtful paper, he was acting within the scope of his authority. Sec. 5310, R.S. 1929. The provision seeking to protect the Commissioner of Finance was both nugatory and severable. 13 C.J. 512; Peltz v. Eichele, 62 Mo. 171; Trabue v. Ins. Co., 121 Mo. 75; Presbury v. Fisher, 18 Mo. 50; Sexton v. N. Mo. Cent. Railroad Co., 194 S.W. 1082; Schibi v. Miller, 268 S.W. 434. The petition alleges that the bank was allowed to remain open after the bond was accepted. The defendants may not receive all the benefits of the bond and thereafter repudiate its obligations. After the notes were guaranteed, the cause for closing the bank no longer existed. The Commissioner could not waive the right to close the bank thereafter if it should become impaired. (b) The agreement is not against public policy. Harris v. Briggs, 264 Fed. 726; First Natl. Bank v. Henry, 202 S.W. 281; State ex rel. Gordon v. Trimble, 318 Mo. 346; Brodrick v. Brown, 69 Fed. 497; Bidwell v. Railroad Co., 6 Atl. 729; Trust & Banking Co. v. Irwin, 138 La. 335. The public policy is indicated by our statute which provides that whenever the Bank Commissioner shall have reason to believe that the capital stock of the bank is reduced, by impairment or otherwise, below the amount required by law, "he shall issue an order that such a corporation or private banker make good the deficiency forthwith or within a time specified in such order." Also, that whenever it shall appear to the Commissioner that either the total reserves or reserves on hand required to maintain such reserves are below the amount required by law to be maintained, or that the bank is not keeping these reserves on hand as required, "he may issue an order directing that such a corporation or banker make good such reserves forthwith or within a time specified in such order, or that it keep its reserves on hand as required by this chapter." Sec. 5310, R.S. 1929. The bond was not calculated to impair but rather to protect the rights of creditors. It is the spirit of the Missouri statutory law that the rights of the creditors of banks shall be protected. Section 5310, R.S. 1929. (d) There was a sufficient consideration for the guaranty. The petition alleges that it was given for the purpose of preventing the closing of the bank at the time and for the purpose of obtaining the permission of the Commissioner of Finance to permit said bank to remain open for business temporarily in order to perfect a re-organization and to collect or secure uncertain and doubtful assets and adjust unsatisfactory conditions. It is not necessary that the consideration for a guaranty move directly to the guarantors. It is sufficient if a consideration moves to their principal. 28 C.J. 921; Adams v. Huggins, 78 Mo. App. 219; Hill v. Coombs, 93 Mo. App. 264; DeLassus v. Russell, 296 S.W. 225; General Motors Acc. Corp. v. Holland, 30 S.W. (2d) 1087. (e) The agreement was a continuing guaranty. In determining the nature and purpose of the guaranty, the courts will put themselves in the position of the contracting parties and consider the circumstances under which the guaranty was executed and will not defeat the purpose of the contract by construction. Kansas City to use v. Youmans, 213 Mo. 151; St. Joseph v. Stone Co., 26 S.W. (2d) 1018; Gimbel Bros. v. Mitchell, 219 S.W. 676; Kansas City to use v. So. Surety Co., 219 S.W. 727; Smith v. Van Wyck, 40 Mo. App. 525; Bauman Jewelry Co. v. Bertig, 81 Mo. App. 393; Saginaw Medical Co. v. Dykes, 238 S.W. 556; Sitron Co. v. Friedberg, 195 S.W. 69; Boehne v. Murphy, 46 Mo. 57; Shine's Admr. v. Central Sav. Bank, 70 Mo. 524; Hurley v. Fidelity & Dep. Co., 95 Mo. App. 88. In this case the agreement purports to guarantee all the obligations of the bank so that it might be solvent and thus be a proper institution to continue business. It is common knowledge that the creditors of the bank are in large part depositors who withdraw their deposits on demand and who make further deposits daily. If this was not intended to be a continuing guaranty, then it was the intention of the parties that the bank could hold itself out to be a solvent concern and thus procure new deposits wherewith to pay off the old deposits, and thus discharge the obligation of the guarantors but defeat the beneficial purpose of the guaranty. A construction of a contract which would render it nugatory will be rejected. 13 C. J 539, 540. While a guaranty will be strictly construed so as not to extend the liability by implication beyond its terms, yet this does not preclude the courts from applying to the guaranty contract the rules and tests applied to other contracts in endeavoring to ascertain the real meaning of the language used. Kansas City to use v. F.C. Youmans, 213 Mo. 151. In determining whether the contract is a continuing guaranty or for a single dealing, the true principle is to give the contract the sense in which the person making the promise believed the other party to have accepted it, and if the language is fairly susceptible of two interpretations, either of which is in the spirit of the guaranty, the guarantor is not at liberty to say that the person to whom it was given is not justified in acting upon either or that he should have acted upon one rather than the other. Kansas City to use v. Youmans, 213 Mo. 151. (f) It was not necessary that the guaranty be signed by anyone other than the guarantors. The Statute of Frauds only requires that an instrument be signed by the party to be bound. The Statute of Frauds provides that: "No action shall be brought ... to charge any person upon any special promise to answer for the debt, default or miscarriage of another person ... unless the agreement upon which the action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith." Sec. 2967, R.S. 1929. Under this statute the contract need be signed only by the party to be charged. Mastin v. Grimes, 88 Mo. 478; Cunningham v. Williams, 43 Mo. App. 629; Ivory v. Murphy, 36 Mo. 534; Moore v. Thompson, 93 Mo. App. 336; Mastin v. Grimes, 88 Mo. 478. (g) The petition sufficiently alleges that the agreement was accepted by the Commissioner of Finance. The petition alleges that: "The defendants entered into a written obligation by which they did agree to, and did, guarantee all the assets and all the liabilities ... owing by said bank, and did guarantee the payment and agreed, if necessary, to pay all the obligations of the above bank." It is also alleged that: "Said Commissioner of Finance relied thereon and thereby was led to believe, and did believe, that said bank was thereby rendered solvent, and he was induced to permit, and he did permit, said bank to remain open for business." Also: "Said guaranty and contract was...