Farmers' Co-Op. Creamery Co. of Saranac v. Huhn
| Decision Date | 01 December 1927 |
| Docket Number | No. 40.,40. |
| Parties | FARMERS' CO-OP. CREAMERY CO. OF SARANAC v. HUHN et al. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Error to Circuit Court, Ionia County; Joseph Barton, Judge.
Action by the Farmers' Co-operative Creamery Company of Saranac, against Charles E. Huhn, administrator of the estate of Albert C. Reed, deceased, and another. To review a judgment in favor of plaintiff, defendants bring error. Affirmed.
Argued before the Entire Bench.
Watt & Colwell, of Ionia, for appellants.
F. C. Miller and George E. Nichols, both of Ionia, for appellee.
The plaintiff is a corporation engaged in buying and selling dairy products at Saranac, Mich. In December, 1910, William H. Proctor, William Gunn, and Frank J. Gifford were copartners engaged in the banking business at Saranac, Mich., under the assumed name of the Farmers' & Merchants' Bank. The plaintiff opened an account with this bank, but, before doing so, required a bond in the penal sum of $3,000 to secure it from loss by reason of the money which it might deposit ‘from time to time.’ Such a bond was furnished April 23, 1917, by the bank, with Albert C. Reed and Norman J. Ogilvie as sureties. The bank failed on April 13, 1923, at which time it owed the plaintiff on account of deposits the sum of $4,049. Mr. Reed died in January, 1925. This suit is an action on the bond against his estate and Norman J. Ogilvie as sureties. Findings of fact and law were filed, and judgment was entered for the plaintiff in the sum of $3,000. The defendants have brought error.
They urge two defenses to the action. It is first contended that the bond on which the suit is based is not a continuing bond, that it was not intended to remain effective for a longer period than six months, and that, as the loss sustained by the plaintiff was on deposits made after that time, there is no liability on the part of the sureties.
The bond, which is in the penal sum of $3,000, contains the following applicable recitals:
‘Whereas, the said principal, the said Farmers' & Merchants' Bank, of Saranac, Mich., is engaged in a general banking business in the village of Saranac aforesaid and as such receive from time to time for deposit in said bank moneys belonging to said Farmers' Co-operative Creamery; and
Co-operative Creamery against any loss which it might sustain by reason of the deposit of said moneys in said bank as aforesaid:
‘Therefore, the condition of this obligation is such that, if the said principal, the said Farmers' & Merchants' Bank, shall at all times faithfully and truly account to the said Farmers' Co-operative Creamery for any and all moneys which the said creamery may from time to time deposit in said bank and shall at all times save the said Farmers' Co-operative Creamery harmless by reason of the depositing of the said moneys with said principal as aforesaid, then this obligation is to be void and of no effect; otherwise to remain in full force and effect.’
The language of the bond is plain and unambiguous. It is not necessary to go beyond it to ascertain the intention of the parties. It recites that the principal, the Farmers' & Merchants' Bank of Saranac, receives deposits of money ‘from time to time’ from the plaintiff, and that its purpose in giving the bond is to secure the plaintiff to the extent of $3,000 from loss by reason of such deposits which it may make ‘from time to time.’ The words ‘from time to time’ clearly indicate a continuing guaranty. They have been so construed. In 28 C. J. p. 962, it is said:
‘Thus, where the instrument of guaranty states that the guaranty is for goods to be furnished or advances to be made from ‘time to time,’ the guaranty will be construed to be a continuing one.'
In support of this text, many cases are cited, including Crittenden Fiske, 46 Mich. 70, 8 N. W. 714,41 Am. Rep. 146.
It will be observed that in the bond in question the amount of the guaranty is limited to $3,000, but the specific time during which it shall continue is not stated. In Mathews v. Phelps et al., 61 Mich. 327, 28 N. W. 108,1 Am. St. Rep. 581, this court says:
‘The general rule arising from the implication of the language used is that, when the amount of the liability is limited, and the time is not, the contract should be construed as a continuing guaranty.’
On the trial in the court below, the defendants undertook to show by extrinsic evidence that the parties intended to limit the time of liability to six months. This testimony was not competent, and the court properly refused to consider it. The intention of the parties is easily ascertainable from the language of the instrument. Parol proof was not admissible to show a different intention from that which the language used clearly imports. If it were the intention of the defendants to limit the time of the guaranty to six months, they should have seen to it that such a limitation was put in their contract.
It is our conclusion on...
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