First State Bank of Holland v. Landwehr (In re Landwehr's Estate)

• Decision Date: 21 December 1938
• Docket Number: No. 94.,94.
• Citation: 282 N.W. 873,286 Mich. 698
• Parties: In re LANDWEHR'S ESTATE. FIRST STATE BANK OF HOLLAND v. LANDWEHR.
• Court: Michigan Supreme Court

286 Mich. 698

282 N.W. 873

In re LANDWEHR'S ESTATE.FIRST STATE BANK OF HOLLAND

v.LANDWEHR.

No. 94.

Supreme Court of Michigan.

Dec. 21, 1938.

Proceeding wherein the trustees of the segregated assets of the First State Bank of Holland filed a claim in the probate court against August H. Landwehr, mental incompetent, upon a written guaranty, and wherein, after the death of August H. Landwehr, the action was continued against Louise Landwehr, as executrix of the estate of August H. Landwehr, deceased. From a judgment of no cause of action, the claimants appeal.

Judgment reversed with directions.

Appeal from Circuit Court, Ottawa County; Fred T. Miles, judge.

Argued before the Entire Bench, except BUTZEL, J.

Gillard & Gillard, of Grand Rapids, for appellants.

Alexander, McCaslin & Cholette, of Grand Rapids, for appellee.

SHARPE, Justice.

Plaintiffs, trustees of the segregated assets of the First State Bank of Holland, filed a claim in probate court against August H. Landwehr, mental incompetent, based upon a written guaranty for the sum of $15,000. After a hearing in that court, the probate judge entered an order disallowing the claim. There was an appeal to the circuit court and the parties stipulated that the case should be heard by the circuit court on the record made in the probate court. The circuit court filed an opinionand entered judgment of no cause of action. Claimants appeal. During the proceedings, August H. Landwehr died and the action was continued against the executrix of his estate.

The issues involved in this case grew out of the following facts: The DePree Company was a manufacturing concern in the city of Holland, Michigan, and did most of its banking business with the First State Bank of Holland. On January 22, 1921, the board of directors of the bank gave a line of credit to the DePree Company in the amount of $25,000 and about that time the DePree Company executed and delivered a note to the bank for that amount. This line of credit was continued from year to year and at the expiration of each six months the note was renewed until sometime after January 11, 1928.

On July 15, 1924, the following instrument was executed by August H. Landwehr and others:

‘The First State Bank of Holland, Michigan, is hereby requested to give and continue to the DePree Company additional credit as it may desire from time to time, and in consideration of any and all such additional credit the undersigned jointly and severally guarantee the payment of any such indebtedness hereafter owing to said bank by said DePree Company and agree to indemnify said bank against any loss thereon, but said bank shall in no event collect from the undersigned a greater sum than $15,000.00; and do hereby waive notice of the acceptance of this guaranty and of any and all indebtedness at any time covered by the same. This guaranty shall continue as to each of the undersigned until the bank shall receive written notice from him of the discontinuance thereof as to him, and the death of one or more of the signers, or notice of discontinuance thereof from one or more shall not operate as a discontinuance as to the others. Dated, July 15, 1924.

‘Gerrit J. Diekema

‘Con DePree

‘Daniel Ten Cate

‘A. H. Landwehr

‘Jacob DePree’

Following the execution of the above bond, two six-months notes of $7,500 each were exeucted by the DePree Company which were renewed each six months until January 11, 1928, at which time the bank records show that both of these notes were surrendered to the DePree Company under the following circumstances. For a number of years the DePree Company's property was covered by a $2,500 mortgage, then held by the First State Bank of Holland. On January 11, 1928, the DePree Company executed a mortgage covering all its property, in the amount of $150,000 to the First State Bank of Holland, as trustee, to secure various notes then given, among them being a note for $30,000 to the First State Bank of Holland which amount was placed to the credit of the DePree Company. The DePree Company thereupon drew its various checks to cover and pay the $2,500 mortgage above referred to, with interest; both of the notes for $7,500 each, which were renewals of the notes given in July, and August, 1924; and the balance was to the credit of the DePree Company. The two notes in question were marked ‘paid’ and surrendered to the DePree Company, and the $2,500 mortgage was discharged.

When the cause came on for trial, the circuit judge found as a fact that the bond applied only to the $15,000 loan of 1924; and that this loan had been subsequently paid. Appellants contend that the guaranty is not limited to past, present, or future indebtedness of the DePree Company, but covers all of the indebtedness of the DePree Company to the First State Bank of Holland thereafter owing which includes the $25,000 line of credit granted in January of each year thereafter; and that the renewal or absorption of the two $7,500 notes by $15,000 of notes of the same debtor, the DePree Company, secured by a mortgage on the company's property did not pay the debt of $15,000 or destroy the obligation contained in the guaranty.

The rule as to the construction to be placed on a guaranty is well stated in First National Bank v. Chevrolet Co., 270 Mich. 116, 258 N.W. 221, where we said [page 223]: ‘In Griffin Mfg. Co. v. Mitshkun, 233 Mich. 640, 642 this court said:

“In construing a contract of guaranty the intention of the parties should govern. Where the language of the writing is not ambiguous the constriction is a question of law for the court, on a consideration of the entire instrument.'

‘And in Morris & Co. v. Lucker, 158 Mich. 518, 123 N.W. 21, we said:

“Contracts of guaranty are to be construed like other contracts, and the intent of the parties as collected from the whole instrument and the subject-matter to which it applies is to govern.”

See, also, Home Savings Bank v. Hosie, 119 Mich. 116, 77 N.W. 625;Mathews v. Phelps, 61 Mich. 327, 28 N.W. 108,1 Am.St.Rep. 581.

Another rule in the construction of such instruments may be found in Re Kelley's Estate, 173 Mich. 492, 499, 139 N.W. 250, 252, Ann.Cas.1914D, 848, where we said: ‘It is undoubtedly the law that evidence is competent to show the relations of parties and attending circumstances as an aid in interpreting, or construing, a written instrument which is uncertain and ambiguous. * * * But this cannot be extended to contradicting its plain provisions.’

Under the rules of construction above noted, it was the intent of the parties that the guaranty should apply only to credit to the extent of $15,000 over and above any credit already given. At the time the guaranty was given there was an existing line of credit to the DePree Company to the extent of $25,000. This guaranty speaks of ‘additional credit’ and by its terms guarantees the payment of any such ...