Farmers' State Bank v. Northern Trust Co.,

• Citation: 39 Wyo. 46,270 P. 163
• Decision Date: 11 September 1928
• Docket Number: 1465
• Parties: FARMERS' STATE BANK v. NORTHERN TRUST CO., ET AL. [*]
• Court: United States State Supreme Court of Wyoming

270 P. 163

39 Wyo. 46

FARMERS' STATE BANK v. NORTHERN TRUST CO., ET AL. ^[*]

No. 1465

Supreme Court of Wyoming

September 11, 1928

APPEAL from District Court, Fremont County; VOLNEY J. TIDBALL Judge.

Action by the Farmers' State Bank of Riverton and others against the Northern Trust Company and others. From a judgment of dismissal, plaintiffs appeal.

Affirmed.

A. C Allen and O. N. Gibson, for appellants.

Every contract is prima facie, permanent and irrevocable, unless containing language to the contrary, 13 C. J. 604; Hospital v. Co., (Minn.) 70 N.W. 1126; the duration of a contract is governed by the language employed, 13 C. J 599; Robson v. Co., 43 F. 364; intent is to be gathered from all parts of the contract, McKell v. Ry. Co., 175 F. 321; Henderson v. Stratton, (Colo.) 98 P. 14; Printing Co. v. Co., (Mo.) 130 S.W. 836; where partly oral and partly written, such portions are to be construed together, 13 C. J. 528; Mercantile Exchange v. Blunt, (Me.) 66 A. 212; Banewur v. Lovenson, (Mass.) 50 N.E. 10; reasonable time is a question of law for the court when it depends on the construction of the written instrument, 13 C. J. 792; 6 R. C. L. 896; performance of a contract is not excused by subsequent inability to perform, 13 C. J. 635; abandonment by one party entitled the other to rescind, 13 C. J. 615; Gray v. Bloomington Ry., 120 Ill.App. 159; admission dispenses with necessity of proof of facts admitted, 22 C. J. 421; the general rule, is that a partial failure of consideration would justify rescission if the contract is entire and consideration not apportionable, 1 Black On Resc. & Canc. Sec. 159; Williams v. Butler, (Ind.) 105 N.E. 387; Parham v. Randolph, (Miss.) 4 How. 4435, 35 Am. Dec. 403; Johnson v. Ryan, (Wash.) 112 P. 114; 13 C. J. 525. The institution of suit and procuring judgment against guaranty corporation without the consent of the majority of the guarantors, more than 18 months before the expiration of the time to which the guaranty indebtedness was extended, was such a violation of the guaranty as discharged the non-consenting guarantors and entitled them to cancellation of it; the guarantor may stand upon the express terms of his contract and is discharged by a deviation to which he does not assent, 28 C. J. 999; Iron Co. v. Tassi, 107 N.Y.S. 580.

Corthell, McCullough & Corthell, and H. C. Brome, for respondents.

If the parol agreement for extension of credit was for three years, alleged in the pleadings, it was obnoxious to the statute of frauds, 4719 C. S.; the judgment is based on circumstantial evidence and is not reversible under the general rule; Oil Co. v. Sullivan, 33 Wyo. 223; Perko v. Co., (Wyo.) 259 P. 520; the inferences which the trial court was justified in drawing from the circumstances, are as much a part of the general finding in favor of defendants as though expressed, Carter Oil Co. v. Gibson, 34 Wyo. 53; findings on all essential points in the controversy were not essential, State v. Court, (Wyo.) 260 P. 174; there was no breach of the obligation of the Trust Company, but merely a correction of abuses resulting from the custom of handling "purchase paper" offered without recourse, and an insistence upon a direct obligation of the Bank with endorsements, of Luikart and Nicholson; the Bank was not offering illegal paper; the court was justified in determining the intent of the parties as to the duration of the guaranty agreement, Tatterson v. Co., 106 Mass. 56; Carter Oil Co. v. Gibson, supra; a construction conferring a right in perpetuity will be avoided unless compelled by the unequivocal language of the contract, 13 C. J. 605; the remedy of cancellation is not an ordinary remedy but exceptional relief granted in peculiar cases where other remedies are not available, 9 C. J. 1161; it will not be granted for a mere breach, 9 C. J. 1181, and requires the restoration of defendant's position existing prior to the transaction, insofar as possible, 9 C. J. 1207. Equity will not grant rescission unless the position of the parties may be restored, 9 C. J. 1208; Marsh v. Curtis, 150 F. 121; the rule of part performance would preclude the plaintiffs from the remedy of cancellation, 2 Williston Contracts 843; plaintiffs have chosen a remedy which is not applicable to the transaction involved; cancellation is not an absolute right, but discretionary and exceptional, and awarded only upon strong and convincing proof in analogy to the rule in case of fraud, mistake or accident, Kahn v. Co., 4 Wyo. 419; Stoll v. Nagle, 15 Wyo. 95; Wallis v. Skinner, 15 Wyo. 253; McFadden v. French, 29 Wyo. 401.

BLUME, Chief Justice. KIMBALL and RINER, JJ., concur.

OPINION

BLUME, Chief Justice.

This is an action to cancel a certain guaranty agreement signed by E. H. Luikart and Oscar W. Nicholson, and to declare their rights and those of plaintiff bank arising out of that transaction and related ones. The court refused plaintiffs any relief and dismissed the petition. From this judgment an appeal has been taken to this court. The only point argued is the failure of the court to cancel the guaranty agreement hereinafter mentioned. The Farmers State Bank of Riverton, one of plaintiffs in the court below, will be referred to herein as the "Bank;" the Northern Trust Company, defendant, as the "Trust Company;" the Investors Guaranty Corporation, defendant, as the "Guaranty Corporation." Only the salient facts will be set forth.

The Guaranty Company is an investment company and at one time owned the Bank, a banking institution at Riverton, Wyoming, but was separated from the latter in June, 1921, at which time the plaintiff Nicholson bought all of the capital stock of the Bank, later, in September, 1921, transferring half of it to the plaintiff Luikart. When this sale of the capital stock to Nicholson was made, certain notes then held by the Bank were guaranteed by the Guaranty Company, as mentioned more fully in the case of Farmers' State Bank v. Haun, et al., 30 Wyo. 322, 222 P. 45; 31 Wyo. 201, 224 P. 856. In the spring and summer of 1922 suits were instituted by the Bank against the Guaranty Corporation upon this guaranty. The suits were aided by attachment levied upon the lands of the Guaranty Corporation in Fremont County, Wyoming. Among the lands levied on were about 1000 acres, known as the Earle-Glennie ranch, which will be again referred to later. These suits involved close to $ 100,000. Judgments were duly recovered therein, in about the amount just stated.

Prior to June, 1921, the Guaranty Corporation had made a loan of about $ 55,000 to one Souter, secured by a mortgage on livestock and real estate in Fremont County, Wyoming. This loan was negotiated and sold to the Trust Company, a banking institution in Chicago, Illinois, the payment of the loan being guaranteed by the Guaranty Corporation. The Bank also held a further loan made to the same Souter in the sum of about $ 10,000. Neither of these loans were adequately secured. The Trust Company further held a note of the Guaranty Corporation for $ 17,400. Becoming dissatisfied with the condition of the Souter loan held by it, and of the Guaranty Corporation note above mentioned, the Trust Company sought to strengthen its security and through the defendand Cuscaden, its vice president, arranged for a conference, to be held in Cheyenne, Wyoming, with the principal stock-holders of the Guaranty Corporation and other interested parties. The conference met in the latter part of May, 1922. Cuscaden represented the Trust Company; McNish and one Kingery represented the Guaranty Corporation, the former also speaking for defendants Keating and Rohlff; Luikart and Nicholson represented themselves and the Bank. The latter was interested only indirectly and merely because the Trust Company was its correspondent in Chicago and had borrowed money from it from time to time upon negotiable paper. Nor were Nicholson or Luikart, or for that matter, the other persons, legally responsible for the notes held by the Trust Company. But Cuscaden desired all of the persons mentioned, excepting himself, to guaranty this indebtedness, because of their connection, past or present, with the Guaranty Corporation, proposing to extend the time of payment for three years. Kingery refused to sign such guaranty. The outcome of the conference was that McNish, Keating, Rohlff, Luikart and Nicholson agreed to sign the guaranty, which they subsequently did. As part of the transaction it was agreed that the Bank should release its lien upon the Earle-Glennie ranch; that the same should be conveyed to Cuscaden, to be held by him, or his successor, in trust for the benefit of the individuals signing the guaranty-agreement; that the Trust Company should take over from the Bank the Souter loan of about $ 10,000 held by it, and to make a loan of about $ 4,000 to the Guaranty Corporation for the purpose of paying taxes on the lands, and, perhaps, for other purposes. These matters were carried out. The guaranty was evidenced in writing, recites the amounts just mentioned, namely the two Souter loans, the note of the Guaranty Corporation of $ 17,400, and the additional loan of $ 4,000, and then continues:

"Now therefore, in consideration of the premises and in further consideration of One ($ 1) dollar in hand paid, the receipt of which is hereby acknowledged, the undersigned, each to the extent of one-fifth of the entire amount involved guarantee to The Northern Trust Company that all of the above indebtedness, together with interest thereon, will be fully paid within three years from this date and if any of such indebtedness is not paid within such time then each of the undersigned agree to pay to said The Northern Trust Company one-fifth of the balance thereof. During said period of...