First National Bank of Lewiston v. Williams

• Citation: 2 Idaho 670,23 P. 552
• Parties: FIRST NATIONAL BANK OF LEWISTON v. WILLIAMS
• Decision Date: 24 February 1890
• Court: United States State Supreme Court of Idaho

23 P. 552

2 Idaho 670

FIRST NATIONAL BANK OF LEWISTON v. WILLIAMS

Supreme Court of Idaho

February 24, 1890

ACTION ON PROMISSORY NOTE-MORTGAGE TO SECURE NOTE-SURETY-AGREEMENT.-One Leland and appellant Williams made their joint and several promissory note payable to the order of one Shaw, and delivered the same to him, Williams being a surety, although that did not appear on the face of the note. As an inducement to Williams to sign the note Leland agreed and did execute a first mortgage on real estate to secure the note. Shaw, after the note and mortgage became due, assigned both to one Vollmer, who assigned them to the respondent bank. The respondent now claims the mortgage invalid, as it was not sealed; held, that by statute in force at time of giving the mortgage a seal was not necessary, hence, the mortgage was valid, and an action should have been brought to foreclose the same, and not upon the note alone, as was done as the security was not valueless.

APPEAL from District Court, Nez Perces County.

On the thirtieth day of October, 1884, Alonzo Leland and the appellant, M. M. Williams, duly made their joint and several promissory note, payable to the order of one A. J. Shaw, six months after date, and thereafter delivered the same to the payee. The note was given for the debt of Leland, and Williams joined in it at the request of Leland, as surety only, though the fact that he was surety did not appear on the face of the note. To induce Williams to join in the making of the note, it was agreed between Leland and Williams that Leland should give to Shaw, the payee, a first mortgage on real estate to secure the note, so that he (Williams), in case Leland did not pay the note, "would only have the balance to pay that the property did not bring"; which agreement was known to Shaw, and was assented to by him at the time. A mortgage was made, on the 1st day of November 1884, by Leland to Shaw, acknowledged on the sixth day of the same month, and recorded by said Shaw, in said county, on the next day, the 7th of November, covering one hundred and sixty acres of land therein described, the property of the mortgagor, setting out the note in full, and stating upon its face that it was "intended as a mortgage to secure payment of" this note so set out, and containing the usual power of sale. Whether the mortgage was delivered at the time of delivery of the note does not appear. On receipt of the mortgage, Shaw reported to Williams that it had been given to him by Leland. A little over three months after the note and mortgage fell due, in Shaw's hands, the latter assigned both note and mortgage to one Vollmer, the president of the plaintiff, who, on the same day, assigned them to his bank, this plaintiff. That, at the time he received the note and mortgage from Shaw, Vollmer discovered that the mortgage was unsealed. The plaintiff brought his action against both the makers upon the note alone, by filing his complaint against both, but did not proceed further against Leland and did proceed to a final judgment against Williams only. The answer, beside stating, in substance, the foregoing facts (all of which appear either in the complaint, or were proven at the trial), contains the following clause: "That after the mortgages, to secure the note had been recorded two mortgages, still valid and existing, have been executed and delivered by said Leland--the first to said Vollmer, and the second to the plaintiff itself--both amounting to $ 1,600, covering the same land described in the said mortgage to secure the note, and were recorded before the commencement of this action; that said two subsequent mortgages are for the full value of said lands, and that said Leland has no personal property not exempt; and that, unless the note in suit be paid from such real estate, this defendant will sustain damage." This clause in the answer was by the court, on motion, stricken out before trial, the appellant excepting to such order. The answer further demands that in case the defendant is held to pay the note in suit, said Williams be subrogated by judgment to the original rights in said mortgage of this plaintiff, and, of course, of said Shaw.

Reversed, and new trial ordered.

Hawley & Reeves, for Appellant.

The surety is only bound to fulfill the promise in the sense in which the promisee knew at the time the promisor intended it; and it matters not in what way the knowledge of the meaning is brought to the mind of the promisee. (De Colyar on Guaranties, 7, 8, and authorities cited; Miller v. Stewart, 9 Wheat. 680.) A surety is always discharged by the laches of the creditor; and, should the creditor fail to do anything which he is bound or agreed to do for the protection of the surety, then the surety is discharged. (De Colyar on Guaranties. 432 et seq.; Story's Equity Jurisprudence, sec. 324; King v. Baldwin, 2 Johns. Ch. 554; Watts v. Shuttleworth, 7 Hurl. & N. 353.) A want of diligence in taking security, or a security worthless by reason of the laches of the creditor, discharges the surety. (King v. Baldwin, 17 Johns. 384, 8 Am. Dec. 415; Ex parte Mure, 2 Cox, 63.) Any material variation of the original contract will discharge the surety. (Meiswinkle v. Jung, 30 Wis. 361, 11 Am. Rep. 572; McWilliams v. Mason, 31 N.Y. 294; Ham v. Greve, 34 Ind. 18; Mellendy v. Austin, 69 Ill. 15.) Parol evidence may be offered to show the signer of a note is in reality a surety. (Weston v. Chamberlin, 7 Cush. 404; Holt v. Bodey, 18 Pa. St. 207; Lime Rock Bank v. Mallett, 34 Me. 547, 56 Am. Dec. 673; Core v. Wilson, 40 Ind. 204; Hubbard v. Gurney, 64 N.Y. 457; McMillan v. Parkell, 64 Mo. 286.)

T. D. Cahalan and Brumback & Lamb, for Respondent.

If illegal evidence is admitted on the trial, it is not error for the court to refuse to find a fact proven by such evidence. (Hutchings v. Castle, 48 Cal. 152; Campbell v. Buckman, 49 Cal. 362; Glascock v. Ashman, 52 Cal. 420.) Where there is no issue tendered in the pleading upon a material matter, the court or jury will not be presumed to have found on such matter. (Gifford v. Carvill, 29 Cal. 589; Bernal v. Gleim, 33 Cal. 668; Bosquett v. Crane, 51 Cal. 505; Dilla v. Bohall, 53 Cal. 709; Watson v. Cornell, 52 Cal. 91.) The true test of the sufficiency of findings is this: Would they answer if presented by a jury in the form of a special verdict? (Breeze v. Doyle, 19 Cal. 101.) A surety on a note cannot require the security to be exhausted before an action can be maintained against him. (Allen v. Woodard, 125 Mass. 400, 28 Am. Rep. 250; United States v. Hodge, 6 How. 279; 2 Daniel on Negotiable Instruments, sec. 1328.) Parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument. (Campbell v. Robbins, 29 Ind. 271; Crocker v. Getchell, 23 Me. 392; Prescott Bank v. Caverly, 7 Gray, 217, 66 Am. Dec. 473; Kern v. Von Puhl, 7 Minn. 426 (Gill. 341), 82 Am. Dec. 105; Bank v. Smith, 27 Barb. 489; Buckley v. Bentley, 48 Barb. 283; Mason v. Graff, 35 Pa. St. 448.)

BERRY J.

OPINION

BERRY, J.

(After Stating the Facts.)--The alleged grounds of error, mostly occurring on the trial in the findings of the court, in refusing a new trial, and in the judgment, will more fully hereafter appear. The case was tried by the court without a jury. The evidence received upon the trial was introduced and given without objection. Being so given, the question of its admissibility, if objected to, does not arise. The complaint shows the note to have been past due when transferred by Shaw, the payee, to the president of the plaintiff; that on the same day he transferred it to his bank; and that both transfers were by "assignment." Whatever equities existed in favor of the appellant against the note, or the right to sue upon the note in the hands of the original payee, continued to exist against it in the hands of this plaintiff. It is proper, then, in the outset, to inquire as to the rights of the appellant, as against the original payee of the note. The obligations of Shaw will be considered as equally the obligations of the plaintiff. On the trail, when the plaintiff had rested his case, the appellant, the defendant below, called John P. Vollmer, who testified that he had been president of the plaintiff corporation "ever since the bank was organized"; identified the note; and on being shown another paper, said: "That is a mortgage executed by defendant Leland to A. J. Shaw, the payee named in this note. I notice there is no seal of party executing it on this mortgage. It is in the same condition, as to execution and acknowledgement, as when I received it from Mr. Shaw. It may have been at the time I had transaction with Mr. Shaw that I noticed lack of seal. I never mentioned or said anything to Williams about there being any defect in the mortgage." Mortgage introduced in evidence by appellant. Alonzo Leland testified: "This is the note executed by me to A. J. Shaw. This is my signature. The other signature is that of Williams. I am principal debtor on the note. Williams signed it as surety only; and it was signed by him on condition that I should execute, to secure the payment of the note, a valid first mortgage upon real property. That was a condition of his signing the note. That condition was known also by Mr. Shaw, the payee of that note, and the agreement was assented to by him at the time. It was on those conditions, and under that agreement, that defendant Williams signed the note. That is my signature, and I executed that document, and supposed it to be a mortgage upon the land." M. M. Williams, the appellant, testified: "I am defendant sued in this action. I signed this note as surety only. I signed it on condition and under the agreement that Leland should secure the payment...