J. R. Watkins Co. v. Brund

• Decision Date: 05 January 1931
• Docket Number: 22750.
• Citation: 160 Wash. 183,294 P. 1024
• Parties: J. R. WATKINS CO. v. BRUND et al.
• Court: Washington Supreme Court

294 P. 1024

160 Wash. 183

J. R. WATKINS CO. v. BRUND et al.

No. 22750.

Supreme Court of Washington

January 5, 1931

Department 2.

Appeal from Superior Court, Pacific County; H. W. B. Hewen, Judge.

Action by the J. R. Watkins Company against James S. Brund and others. Judgment for plaintiff, and defendant Joseph Buerkli appeals.

Affirmed.

Fred M Bond, of South Bend, for appellant.

Welsh &amp Welsh, of Raymond, for respondents.

BEELER J.

The facts are unquestioned and undisputed. They may be summarized as follows: Plaintiff, a foreign corporation, with its principal office at Winona, Minn., was engaged in selling goods, wares, and merchandise, and during the year 1921 entered into a written contract with the defendant Brund whereby he was given the exclusive right to handle and sell plaintiff's wares in Pacific and Wahkiakum counties Wash., except within the incorporated municipalities therein located, which contract contained a guaranty clause signed by Charley Robinson and H. A. Kalb, as sureties; that some time prior to April 22, 1922, Robinson died, and thereupon the plaintiff insisted that Brund execute a new contract which should contain a guaranty clause executed by two sureties, and accordingly Brund interviewed the defendant Joseph Buerkli, a farmer, at his ranch in Pacific county, and assured him that he could procure the signature of Kalb as surety, and, if Kalb refused to sign, the instrument would not be delivered to the Watkins Company, and would not be used for any purpose. Relying thereon, Buerkli signed the guaranty clause of the contract. Brund did neither, but on the contrary, procured the signature of one George J. Heim, financially irresponsible, and delivered the instrument to plaintiff; that plaintiff was not a party to, and had no knowledge whatsoever of, the negotiations between Brund and Buerkli; that this new contract, dated April 22, 1922, determined and fixed the amount due and owing by Brund to plaintiff under the previous contract of 1921, being the sum of $988.54, and extended the time of payment until March 1, 1923, and the sureties, Buerkli and Heim, jointly and severally promised, agreed, and guaranteed the full payment thereof, and the full performance of the contract; that on June 27, 1922, plaintiff, from its headquarters at Winona, Minn., addressed a letter to the defendant Buerkli, stating:

'We are pleased to inform you that we have received and accepted the contract of James S. Brund which you signed as surety, contract dated April 22, 1922.'

Buerkli received this latter July 3, 1922. Plaintiff, acting on this contract, furnished goods to Brund, who continued to sell plaintiff's products until March 1, 1923, and, not having paid any part of the original indebtedness of $988.54, and having incurred an additional indebtedness of $42.18, suit was brought on two causes of action. In the first cause of action plaintiff sought to recover the sum of $988.54, and, in the second, the sum of $42.18. The defendants Brund and Heim defaulted. Only Buerkli appeared. In his answer he denied all of the material allegations of the complaint, and by way of an affirmative defense alleged that, at the time he signed the guaranty clause of the contract as surety, Brund promised and agreed to procure the signature of Kalb, and, if unsuccessful, the contract would not be delivered to the plaintiff, and would not be used for any purpose. He further set up the defense that the guaranty clause in the contract was not signed by Kalb, and that the plaintiff knew, or should have known, these facts. All these matters were denied by the plaintiff in its reply. The cause was tried to the court without a jury, resulting in a judgment against all of the defendants on both causes of action, including costs. Only the defendant Buerkli has appealed from the judgment.

Appellant Buerkli concedes the judgment of the lower court to be correct as to the second cause of action, but insists that the court erred in awarding judgment for respondent on the first cause of action, for the reason that Brund was indebted to respondent in the sum of $988.54 before he attached his signature as surety to the guaranty clause. This argument, while ingenious is unsound. Three new and valuable considerations were created by the contract and by the guaranty clause in the contract: First, Brund was given the exclusive right to sell the Watkins products in Pacific and Wahkiakum counties from April 22, 1922, to March 1, 1923; second, respondent forbore the collection of its past-due indebtedness of $988.54, and extended the time of payment from April 22, 1922, to March 1, 1923; and, third, the sureties Robinson and Kalb were released on the contract executed in 1921 by reason of extending the time of payment. This contract had as one of its provisions the following:

'The parties hereto for the purpose of settling and determining the amount now due, hereby mutually agree that the said indebtedness now due the said company (respondent) is the sum of $988.54, which sum the second party (Brund) agrees to pay and said company agrees to receive, and payment of which is extended to March 1, 1923.'

The guaranty clause of the contract signed by the sureties Buerkli and Heim, so far as relevant to this inquiry, provides:

'In consideration of One Dollar in hand paid by the J. R. Watkins Company, receipt whereof is hereby acknowledged, and the execution of the foregoing agreement, which we have read or heard read and hereby agree and assent to, and the sale and delivery by it to the party of the second part, as vendee, of goods, and other articles, and the extension of the time of payment of the indebtedness now due from him to the said company, as therein provided, we, the undersigned sureties, jointly and severally and unconditionally promise and agree and guarantee the full payment of such indebtedness, the amount of which is now written in said agreement, and jointly and severally and unconditionally promise to pay for said goods and other articles and to prepay freight, express or postal charges thereon at the time and place and in the manner in said agreement provided.'

The precise question is: Can Buerkli be held on the guaranty clause of the contract as cosurety because Brund had induced him to sign by positive assurances that he would procure the signature of Kalb as cosurety, otherwise the instrument would not be delivered to plaintiff, both of which conditions were breached by Brund.

The trial court found, which finding is supported by the record, that respondent knew nothing whatever of the understanding or agreement between Brund and Buerkli, and, furthermore, that it had no means of obtaining any knowledge concerning the negotiations between them. This is very obvious, because respondent, with its office at Winona, Minn., was distant some two thousand miles at the time Buerkli and Brund had their understanding or agreement on the latter's ranch at which time appellant signed the guaranty clause. It was wholly a secret understanding between appellant and Brund.

In the case of Smith v. Tukwila, 118 Wash. 266, 203 P. 369, 370, we said:

'A discussion of the cases which relieve persons signing the bond as surety, which has been delivered in such a way that the person receiving it must have been charged with constructive notice that it was not intended to operate except upon compliance with certain conditions, is unnecessary here because there is nothing in this record that would justify a finding that the appellant either had actual or constructive notice of any conditions alleged to exist in this regard. This rule is recognized and stated in 21 R. C. L. 968, as follows:

"Hence, the rule sustained by the great weight of authority is that the agreement of a surety with his principal that the latter shall not deliver a bond till the signature of another be procured as a cosurety will not relieve the surety of his liability on the bond, although the cosurety is not obtained, where there is nothing the face of the bond, or in the attending

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