Henry v. Safford

• Decision Date: 22 May 1922
• Docket Number: No. 14378.,14378.
• Citation: 241 S.W. 951,211 Mo. App. 308
• Parties: HENRY v. SAFFORD.
• Court: Missouri Court of Appeals

241 S.W. 951

211 Mo. App. 308

HENRY v. SAFFORD.

No. 14378.

Kansas City Court of Appeals. Missouri.

May 22, 1922.

Rehearing Denied June 12, 1922.

Appeal from Circuit Court, Jackson County; O. A. Lucas, Judge.

Action by Robert Henry against O. G. Safford. Judgment for plaintiff on directed verdict, and defendant appeals. Affirmed.

Erasmus C. Hall and Orendorff & Hall, all of Kansas City, for appellant.

Stanton, Hardaway & Wagner, a Kansas City, for respondent.

BLAND, J.

This is a suit in two counts against the guarantor of two promissory notes. The first count is on a note for $500, and the second on one for $1,000. Both of the notes are dated at Kansas City, Mo., December 15, 1915. The first note was due one year after date, and the second two years after date, and both were signed as maker by Clarence G. Brayton. Each note has indorsed on the back thereof the words:

"I guarantee the payment of this note at the maturity thereof. C. G. Safford."

At the close of all the evidence the court gave a peremptory instruction to find for plaintiff on both counts, resulting in a verdict in favor of plaintiff in the sum of $1,885.75, and defendant has appealed.

These notes were guaranteed by defendant in compliance with a contract entered into between plaintiff, defendant, and one Brayton on November 24, 1915. This contract provides that plaintiff agrees to sell "the buyer" certain improved real estate in Kansas City, Mo.; that the balance of the purchase price of the property, $5,000, was to be paid by the execution of three notes, one for $500, due in one year from date thereof, one for $1,000, due in two years, and one for $3,500, due in five years, all to be secured by a deed of trust "containing usual provisions" to be given on the property; that—

"In consideration of Charles G. Safford indorsing and guaranteeing the paying of the first two notes, one for $500 and one for $1,000, and guaranteeing that the property be repaired, * * * and that all of the labor and material bills will be paid, so that there can be no lien filed against the property by reason of the repairs, * * * that if Safford elects the said deed above referred to shall be delivered to him, upon his causing the notes above referred to to be executed and the deed of trust executed, by another party, and the property then conveyed to him or to his order."

It was further agreed that plaintiff would deposit a deed with the name of the grantee left in blank with the Pioneer Trust Company with authority to said company to insert the name of such grantee as should be designated by defendant who should execute the notes and deed of trust. A writ of attachment had been levied upon the property, and it was agreed that the deed to be deposited was to be held by the trust company for the buyer or defendant, and should be delivered when the attachment was released, and upon delivery to the trust company of the notes and deed of trust mentioned supra.

The deed was executed by plaintiff and forwarded to his agent McMechan in Kansas City, Mo. Brayton executed the notes and deed of trust, and delivered them to McMechan; but the latter failed to deposit them with the trust company, but had the warranty deed and deed of trust recorded and sent the notes to plaintiff. Upon default in the payment of the $500 note the deed of trust was foreclosed. The property at the foreclosure sale brought $4,000. The trustee, McMechan, applied the proceeds of the sale to paying, first, the cost of the foreclosure, and, second, the $3,500 note, leaving a small balance, which was applied toward the payment of the $500 note. The deed of trust provided that—

"Should the first parties fail or refuse to pay the said debt, or the said interest or any part thereof, when the same or any part thereof shall become due and payable, according to the true tenor, date, and effect of said notes, then the whole shall become due and payable."

Defendant insists that the court erred in giving plaintiff's peremptory instruction and in refusing to give his. It is first insisted that the petition fails to state a cause of action in that it is claimed that neither count of the petition alleged that "defendant signed his name as guarantor or did any act by which he might be bound"; that "no promise is alleged in either count." Each count pleads in hæc verbs the note signed by Brayton and that on the back of each note was indorsed:

"I guarantee the payment of this note at the maturity thereof. C. G. Safford."

Count 1 alleges that—

"By reason of said note * * * said C. G. Safford guaranteed the payment of said note at the maturity thereof, which he has not done."

This count also alleges that the note was presented at its maturity to Safford, and demand upon him was made for its payment, but that he has not paid, "although defendant, by his said indorsement on the back of said note, guaranteed the payment thereof at its maturity." The second count pleads the demand upon Safford to pay and his refusal to pay, and contains the same allegation as that last quoted in reference to count 1. The answer admits that defendant was the guarantor upon both notes.

We think there is no question, but that, in view of the fact that the attack is made on the petition after verdict, the allegations in the petition in reference to the matter referred to by the defendant in connection with this point state a good cause of action. The necessary inference from the allegations is that defendant executed the guaranty by signing his name thereto as guarantor, guaranteeing the payment of notes at their maturity. Pleading a writing in hæc verbs is not subject to objection, if defendant answers. Gilsey v. Gilsey, 195 Mo. App. 407, 193 S. W. 858.

It is contended that the trustee should have applied the money received at the trustee's sale upon the notes as they matured, and that as enough money was realized at the sale, above the expenses, to discharge the notes sued upon in this case which matured before the $3,500 note, it is to be considered that those two notes have been paid, and that defendant was entitled to a peremptory instruction. In this connection defendant cites Mitchell v. Ladew, 36 Mo. 526, 88 Am. Dec. 156, and cases following that case, which hold that in suits between contending creditors the notes must be paid from the proceeds of the mortgaged property in the order of their maturity, even though the deed of trust provides that the whole of the indebtedness represented by two or more notes shall become due on nonpayment of any of the notes or any part of the interest. However, those cases have no application to the case at bar, because this case is not a suit between contending creditors, and defendant is not to be classed as such a creditor although he attempts to so classify himself.

Here the trustee was right in applying the proceeds of the sale to the debt the security of which was the more precarious, to wit, the $3,500 note, which was secured by the deed of trust only. It is stated in Lyons v. Carter, 84 Mo. App. 483, 489:

"The rule is that, where a creditor holds several claims against his debtor, and the latter makes a payment without giving directions as to its application, the creditor may make the application; if neither the creditor nor debtor makes the application, the law will apply it to the debt which first accrues, unless justice and equity demand a different application. Beck v. Haas, 111 Mo. loc. cit. 268. And the law in such circumstances will apply the payment to the debt whose security is most precarious. Poulson v. Collier, 18 Mo. App. loc. cit. 608. Or, where one is secured and the other unsecured, the law will apply the payment to the unsecured debt." (Italics ours.)

In Threshing Machine Co. v. Matthews, 188 Mo. App. 429, 434, 174 S. W. 198,...