Gemmer v. Anthony Wayne Bank

• Decision Date: 18 July 1979
• Docket Number: No. 2-1276A482,2-1276A482
• Citation: 181 Ind.App. 379,391 N.E.2d 1185
• Parties: , 27 UCC Rep.Serv. 168 Arthur H. GEMMER, Appellant (Defendant Below), v. The ANTHONY WAYNE BANK, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1185

391 N.E.2d 1185

181 Ind.App. 379, 27 UCC Rep.Serv. 168

Arthur H. GEMMER, Appellant (Defendant Below), v. The ANTHONY WAYNE BANK, Appellee (Plaintiff Below).

No. 2-1276A482.

Court of Appeals of Indiana, Fourth District.

July 18, 1979.

Rehearing Denied Aug. 27, 1979.

See 393 N.E.2d 784.

Frank E. Spencer, Arthur H. Gemmer, Indianapolis, Strutz, Philips & Miller, Donald F. Strutz, Fort Wayne, for appellant (defendant below).

Malcolm C. Mallette, Indianapolis, for appellee (plaintiff below).

YOUNG, Judge.

This is an appeal from an action on a guaranty of a negotiable promissory note. The note was payable to the order of the Anthony Wayne Bank, and is signed "Suburban Services, Inc., by Arthur H. Gemmer, President." On the reverse side appears a guaranty stating

(T)he undersigned, . . . hereby unconditionally guarantee(s) the payment of the within Note and all costs, expenses and attorneys' fees incurred in the collection thereof and the enforcement hereof, and waive(s) presentment, demand, protest and notice of dishonor and of any renewal or extension of said Note and consent(s) to any such renewal or extension and to the disposition of any security therefor.

The guaranty is signed "Arthur H. Gemmer." Upon trial by jury, Gemmer was found liable to the Bank as Guarantor for the amount of the note remaining unpaid, interest, and attorneys' fees.

We have been put to some pains in determining what issues the appellant would have us decide and whether he has properly preserved them for our review. The general form of Gemmer's brief has been held to substantially comply with Ind. Rules of Procedure, A.R. 8.3(A). Indiana & Mich. Elec. Co. v. Stevenson, (1977) Ind.App., 363 N.E.2d 1254. However, we wish that Gemmer had chosen to set out the specific errors he claimed in his statement of issues rather than merely repeating his summary of argument. We will limit our review to those specifications of error which we discovered in Gemmer's argument section, and which have been properly preserved. Gaddis v. State, (1977) Ind., 368 N.E.2d 244; Pieper v. State, (1975) 262 Ind. 580, 321 N.E.2d 196.

Gemmer's first argument is that the Bank was required to demand payment of the principal obligor before resorting to the surety. On this basis he claims that the court erred in refusing his tendered instructions to that effect, and in failing to grant him a directed verdict because the Bank failed to prove such demand. We note that the evidence at this trial included a letter addressed to Gemmer demanding payment. Gemmer would have us hold that this letter was addressed to him in his personal capacity, not as the relevant agent of the principal obligor, and therefore could not constitute a demand on the principal obligor. We do not agree that Gemmer could be at the same time aware and ignorant of a fact in the eyes of the law because he is acting in two capacities. We could not seriously require Two written demands differing only in that one addresses him as president of the principal obligor. Cf. Loudermilk v. Feld Truck Leasing Co. of Indiana, (1976) Ind.App., 358 N.E.2d 160 (guarantor received duplicate of notice of default sent to principal obligor). There being no failure of proof regarding a demand, it cannot serve Gemmer as a basis for a directed verdict.

However, Gemmer argues that the trial court erred in refusing his tendered instructions which directed the jury to find for the defendant if the plaintiff Bank failed to prove a demand. ¹ It appears that until now Gemmer's theory was that a surety, being secondarily liable, could not be charged until the creditor had exhausted all means of collecting from the principal obligor. On this basis, the trial court properly refused Gemmer's tendered instructions. The Uniform Commercial Code clearly provides that where, as here, a surety guarantees payment of a note, the holder need not resort first to the principal obligor for payment when the note is due. IC 1976, 26-1-3-416(1); Hartung v. Architects, Hartung, Odle, Burk, Inc., (1973) 157 Ind.App. 546, 301 N.E.2d 240. Thus, no demand on the principal obligor is necessary. IC 1976, 26-1-3-416(5). Further the language of the guaranty in question expressly waives demand. IC 1976, 26-1-3-511(2)(a).

Gemmer now argues that a demand on the principal obligor is necessary in this case because payment is not due until such a demand has been made. Normally, a demand note is considered due upon execution. However, it has been held that where it is apparent on the face of the note that the parties contemplated an actual demand, such demand is necessary to mature the note. See Annot. 71 A.L.R.2d 284 (1960). Our search of the record does not disclose any point when this theory was offered to the trial court. The trial court instructed the jury that the plaintiff Bank had the burden of proving that the note was due and unpaid, and that Gemmer unconditionally guaranteed payment. A further instruction set out the relevant portion of IC 1976, 26-1-3-416(1), mentioned above. The record does not disclose, nor does Gemmer's brief on appeal set out, any objection to these instructions on this or any basis, nor did Gemmer tender any instruction purporting to explain the meaning of the word "due." Yet Gemmer's claimed error in refusing his tendered instructions is now predicated on the deficiency of the trial court's instructions in this regard.

Trial Rule 51(C) of our rules of procedure provides that "(n)o party may claim as error the giving of an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection." No like requirement is imposed where the claimed error is a refusal to give a tendered instruction. We find ourselves in the position discussed in State Farm Mut. Auto. Ins. Co. v. Shuman, (1977) Ind.App., 370 N.E.2d 941, 956:

We are faced here with a situation in which a party's assertion of error regarding the refusal of a tendered instruction is predicated on a challenge to the court's instructions as erroneous. Under these circumstances, the complaining party should be required to make a specific objection to those instructions given by the court which disagree with or contradict the requested charge. A party may not sit by and allow error to be committed and then attempt to take advantage of that error. LeClerc v. Dover (1975), (163) Ind.App., (87,) 332 N.E.2d 101.

In the case at bar State Farm offered no objection at the time the preliminary instructions were given or later when the final instructions were read. See Cochrane v. Lovett (1975), Ind.App., 337 N.E.2d 565. Having failed to make a timely objection to the giving of instructions which contradicted its requested instruction on burden of proof, State Farm cannot now complain that the request should have been given to correct deficiencies in the court's charge. Cf., LeClerc v. Dover, supra.

Where the argument, on appeal, of error in refusing a tendered instruction is based on an alleged inadequacy of the instructions actually given, to which inadequacy no objection was made, we are tempted to think that either the theory was an afterthought or the error was hoped to be taken advantage of. We will not allow Trial Rule 51(C) to be circumvented by permitting a party to preserve error by merely tendering a contradictory instruction instead of making a specific objection to a given instruction, and arguing later any theory that comes to mind.

Gemmer next argues that the evidence at trial established as a matter of law that the guaranty was signed after the promissory note was executed, and that therefore new consideration was necessary to bind him. He argues that the court erred in refusing his tendered instruction on that subject and that the court should have granted him a directed verdict. He further contends that the court "(e)rred in permitting initially, or in not striking subsequently, all testimony contrary to the undisputed and uncontroverted testimony of defendant's witness Arthur H. Gemmer that (i) the guarantee (sic) was not signed on the same day as the note was executed but on some subsequent date; (ii) that no new consideration was given for said guarantee (sic) . . . ." Regarding this last contention, we find, without reaching the substantive question, that this is insufficient to preserve error in the trial court's evidence rulings. Topper v. Dunn, (1961) 132 Ind.App. 306, 177 N.E.2d 382, 388. Regarding the first two contentions, we disagree with Gemmer's basic premise.

IC 1976, 26-1-3-408 provides:

Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (Section 3-305), except that No consideration is necessary for an instrument or Obligation thereon Given in payment of or As security for an antecedent obligation of any kind. (Emphasis added)

The Indiana Comment explains:

Under prior law the pre-existing obligation of another person, alone, was not sufficient consideration to support the obligation of a party upon a negotiable instrument. E. g., Hilgemeier v. Bower Mfg. Co., 81 Ind.App. 191, 139 N.E. 691 (1923) (indorsement subsequent to execution); Favorite v. Stidham, 84 Ind. 423 (1882). . . . This section of the Code eliminates these technical requirements by holding a party bound without the necessity of consideration where the instrument is given for an antecedent obligation of any kind (which included an antecedent obligation of any person).

The same result is mentioned in connection with IC 1976, 26-1-3-415(2). Indiana Comment 2 states:

This subsection provides that a party is bound to a person taking the instrument for value even though the latter knows of the accommodation. Since the prior obligation of the principal is now made both value and consideration, prior Indiana law is clarified and probably is changed. Thus if M executes a note to E, and after M is bound...