Gate City National Bank v. Chick
| Decision Date | 05 May 1913 |
| Parties | GATE CITY NATIONAL BANK, Appellant, v. J. S. CHICK, JR., HOWARD VANDERSLICE and JOHN H. LYNDS, Respondents |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. Jas. E. Goodrich, Judge.
Judgment affirmed.
McCune Harding, Brown & Murphy for appellant.
(1) The contract having been made for the benefit of plaintiff judgment should have been for it. Crone v. Stinde, 156 Mo. 262; Porter v. Woods, 138 Mo. 539; Beattie v. Gerardi, 166 Mo. 142. (2) The provision in paragraph 6 of the contract, that defendants should "release" Lyons means that they should discharge Lyons from the obligation, either by payment or its equivalent. Baker v. Baker, 29 N. J. Law 13; Field v. Columbet, 9 Fed. Cas. 4764; 34 Cyc. 1042; 3; Swain v. McMillan, 30 Mont. 433; Parker v. U.S. 22 Court of Claims, 100; Amherst College v. Ritch, 151 N.Y. 282; Standard Dictionary. (3) The recital, in paragraph 6 of the contract, that defendants would "eventually pay" means that payment should be made by them within a reasonable time. Rowsey v. Lynch, 61 Mo. 560; Newman v. Lynch, 29 Mo.App. 657; Compton v. Johnson, 19 Mo.App. 88; Bank v. Bobbett, 71 Vt. 182; Ramot v. Schotenfels, 15 Ia. 457; Brannin v. Henderson, 51 Ky. (12 Monroe) 61; Page v. Cook, 164 Mass. 116; Black v. Bachelder, 120 Mass. 171; Lewis v. Tipton, 10 Ohio St. 88. (4) Defendants having written the contract, in case of a doubtful construction the doubt must be resolved in favor of plaintiff. Hurley v. Fidelity & Deposit Co., 95 Mo. App 88. (5) The court erred by admitting verbal evidence to add to, construe and contradict the written contract. Morgan v. Porter, 103 Mo. 140; Mossman v. Hoecher, 49 Mo. 88; Borden v. Peay, 20 Ark. 304.
Lathrop, Morrow, Fox & Moore for respondents.
(1) The agreement between respondents and Mr. Lyons was not made for the benefit of appellant. Parker v. U.S. 22 Court of Claims, 200; 34 Cyc. 1022; Hausman v. Water Co., 119 Mo. 304; Markel v. Telegraph Co., 19 Mo.App. 80; Sayward v. Dexter, Horton & Co., 72 F. 758; Montgomery v. Spencer, 50 P. 623; Banks v. Railroad, 76 F. 130; State v. Railroad, 125 Mo. 596; Hill v. Railroad, 82 Mo.App. 188; State ex rel. v. Loomis, 88 Mo.App. 500; Scheele v. Bank, 120 Mo.App. 611; Bank v. Commission Co., 139 Mo.App. 110. (2) Where a contract is not clear and unequivocal evidence may be offered to show the real intention of the parties. All provisions of a contract must be given force if possible. The intention of the parties must govern, and the court cannot make a contract for them. Barlow v. Elliott, 56 Mo.App. 377; Nelson v. Cultivator Co., 118 F. 620; Brewing Co. v. Water Works Co., 34 Mo.App. 49; Carney v. Water & Light Co., 76 Mo.App. 532; Ireland v. Spickard, 95 Mo.App. 53; Pietri v. Seguenot, 96 Mo.App. 258; Lighting Co. v. Hobart, 98 Mo.App. 227; Inlow v. Bybee, 122 Mo.App. 475; Eaton v. Coal Co., 125 Mo.App. 194; Grocer Co. v. Canning Co., 129 Mo.App. 325; Bernero v. Real Estate Co., 134 Mo.App. 290; Carter v. Arnold, 134 Mo. 195; Williams v. Railroad, 153 Mo. 487; Nordyke v. Kehlor, 155 Mo. 643; Construction Co. v. Tie Co., 185 Mo. 25; Tetley v. McElmurry, 201 Mo. 382.
--This is an action to enforce a contract plaintiff alleges was made by defendants for its benefit. A trial of the issues raised by the pleadings resulted in a judgment for defendants and plaintiff appealed. The W. F. Lyons Ice & Power Company, a corporation, was indebted to plaintiff, a bank doing business in Kansas City, in the sum of $ 9,000, and plaintiff held its negotiable promissory note for that sum which was dated September 10, 1909, and was payable on demand. The note was signed by the Ice Company and by W. F. Lyons, who, so far as the face of the instrument disclosed, was a co-maker.
The evidence of defendants shows that as between the Ice Company and Lyons the former was the principal obligor and the latter a surety. The payment of the note was secured by bonds of the Ice Company of the par value of $ 12,500, which were the property of Lyons and were deposited by him with plaintiff as collateral to the note. Lyons was the president of the Ice Company, was a heavy stockholder and owned over one-third of its bonds. The capital stock of the corporation was $ 150,000, the bonded indebtedness $ 100,000, and the floating indebtedness, which included the note to plaintiff was heavy. The assets were large but at the time of the principal event in controversy were not sufficient to pay the debts of the concern and the stock had no intrinsic value. These facts were not known to defendants. The corporation was a going concern and was doing a large and apparently profitable business. Lyons was surety on other notes the company had given for borrowed money and had pledged all of the bonds he owned to secure such notes as well as to secure the payment of debts he owed individually. His pecuniary obligations consisted of debts of the company for which he had become liable in the manner stated and of his own personal liabilities.
In February, 1910, while the affairs of the Ice Company and of Lyons were in the condition described, Lyons entered into a written contract with defendants Chick, Vanderslice and Lynds by the terms of which he sold to them his holdings in the company and put them in charge of the assets and business of the corporation. We do not find it necessary to set out that contract or to refer to any other portion than the paragraph relating to a part of the consideration defendants agreed to give for the property and rights conveyed to them by Lyons. That paragraph provided that defendants "should in due time release W. F. Lyons from all of the obligations of W. F. Lyons Ice & Power Company scheduled in this paragraph on which he is indorser and should also eventually pay, or cause to be paid, all of the present obligations of W. F. Lyons to which any of the bonds of the W. F. Lyons Ice & Power Company are collateral, according to the following schedule." Then followed a list of such debts, including the note held by plaintiff. Part of the debts in the schedule were notes which Lyons had signed apparently as co-maker with the Ice Company for money borrowed by the company and the remainder were notes given by Lyons on his own account. Each note in the schedule was secured by bonds belonging to Lyons which were included in the property that was the subject of the sale. The note held by plaintiff was not paid and plaintiff foreclosed the lien on the bonds. The proceeds realized fell short of discharging the note in full and plaintiff recovered judgment against Lyons for the deficiency. That judgment remains unsatisfied and the object of this suit is to recover the amount of the deficiency from defendants on the theory that the paragraph of the contract we have quoted required defendants to pay the note and that plaintiff is entitled to have that contract enforced as one made by defendants for its benefit.
In the judicial interpretation of written contracts the most important rule is that which requires the court to give effect to the mutual intention of the parties as expressed in the instrument. In ascertaining the true intention, the contract should be read in the light of the circumstances of the parties at the time of its execution. The court cannot give heed to prior or contemporaneous oral agreements that tend to contradict or vary the terms of the written contract but evidence that merely tends to throw light upon and disclose the nature of the subject matter of the contract is admissible and important in instances where it serves to explain and give certainty to terms or words in the instrument which, if unexplained, would be ambiguous or uncertain.
The paragraph of the contract, on the correct interpretation of which depends the proper solution of this controversy, shows quite clearly that defendants were to assume obligations with respect to two classes of debts owed by Lyons for which he had pledged his bonds as security; the first class consisting of notes on which his liability was that of an indorser for the Ice Company, the principal obligor, and the second composed of obligations on which he was primarily liable. The contract does not show on its face to which class the note held by plaintiff belonged and we think the learned trial judge did not err in receiving evidence relating to the fact of whether the liability of Lyons on the note in question was that of an indorser of a note of the Ice Company or that of a principal obligor. Such evidence could not have the effect of contradicting or varying the terms of the written contract, for they are silent on that subject, and we do not understand how the issue of the classification of the note could be solved intelligently without resort to extrinsic evidence. The position on the face of the note of the signature of Lyons indicated that he was a co-maker with the Ice Company and, as such, was liable to the payee as a maker, but it was competent for defendants to adduce evidence to the effect that his relation to the Ice Company was not that of a co-maker but of a surety.
There is a pronounced technical distinction between a surety and an indorser (Keys v. Keys, 217 Mo. 48, 116 S.W. 537) and if the parties to the contract intended that the term "indorser for the Ice Company" as used in describing the obligations assigned to the first class should be understood in its strict legal sense, proof that Lyons, in fact, signed the note as surety would be insufficient, of itself, to place the note in that class. We think the language of the...
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