J. R. Watkins Co. v. Poag

• Decision Date: 20 May 1929
• Docket Number: 27924
• Citation: 154 Miss. 222,122 So. 473
• Court: Mississippi Supreme Court
• Parties: J. R. WATKINS CO. v. POAG et al

122 So. 473

154 Miss. 222

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

No. 27924

Supreme Court of Mississippi

May 20, 1929

(Division B.)

1. PRINCIPAL AND SURETY. Seller was not bound by buyer's representation to sureties to effect that bond would be liable only for future purchases.

Where a contract was made between a seller and a buyer, by which the buyer was to buy goods upon credit and give sureties, or a surety bond, for the payment of such amount as he then owed the seller, and such amount as he might afterward purchase from the seller, and the buyer procures persons to sign the surety bond and represents to them that he does not owe the company anything and that the bond will only be liable for future purchases, the buyer is not the agent of the seller and the seller is not bound by such representation.

2. ALTERATION OF INSTRUMENTS. Inserting amount of existing indebtedness in bond furnished by buyer in accordance with stipulation was not alteration of contract.

Where in a surety bond signed by sureties, the buyer agreed to pay such amounts as the buyer may then owe, and for future purchases, and the contract provides that if the amount is not written in the contract of suretyship then, "We hereby expressly authorize the amount of said indebtedness to be written therein," such stipulation authorizes the seller to write into the bond the amount then due, and doing so is not an alteration of the contract.

3 EVIDENCE. Parol evidence is not admissible to show agreement not written in contract providing that it contained all agreements between parties.

Where a contract provides that it contains all agreements between the parties and that no change can be made therein binding upon the opposite party without the consent of such parties, the contract is governed by its terms, and previous negotiations are merged therein, and parol evidence is not admissible to show other agreements not written in the contract.

Division B

APPEAL from circuit court of Tate county.

HON. GREEK L. RICE, Judge.

Suit by the J. R. Watkins Company against W. M. Poag and others. Judgment for defendants, and plaintiff appeals. Reversed and rendered.

Judgment reversed.

H. Holmes, of Senatobia, and Barbour & Henry, of Yazoo City, for appellant.

It is immaterial whether the words were in the bond when the parties signed, for the reason that printed words in the last paragraph show "In consideration of one dollar, etc. . . . and the execution of the foregoing agreement, which we have read or heard read and hereby agree and assent to, . . . we, the undersigned sureties, . . . guarantee the full and complete payment of said indebtedness, the amount of which is now written in the said agreement, or if not, we hereby expressly authorize the amount of said indebtedness to be written therein." As this was direct authority from the sureties to make the insertion of the amount, the change, if any was made, did not constitute an illegal alteration of the instrument.

Seller's right to recover not affected by any fraudulent acts or representations of the Buyer to sureties.

The contract in the case at bar is one of sale, not of agency.

Watkins Co. v. Coleman, 110 So. 449; Cresap v. Furst & Thomas, 141 Miss. 30; Watkins Medicine Co. v. Hargett et al., 209 Ala. 165, 95 So. 811; Brenard v. Sumrall, 104 So. 160; Colt v. Odom, 101 So. 853.

Notice to an agent whose interest is antagonistic to his principal is not notice to the principal. Cooper v. Robertson, 117 Miss. 108; Sims v. Kline, 139 Miss. 246.

The burden is on one, asserting authority of an agent to bind his principal, to prove the extent of such authority.

J. B. Colt v. Block, 110 So. 442.

E. D. Dinkins, of Senatobia, for appellees.

Fraudulent inducement to execute this contract vitiates the contract.

Dr. Koch Medical Tea Co. v. Poitras (N. D.), 161 N.W. 727; Rawleigh Co. v. Warren (S. D.), 198 N.W. 555; J. R. Watkins Co. v. Keeney (N. D.), 201 N.W. 833; 37 A. L. R. 1389; Henry v. Rawleigh, 120, So. 188.

Subsequent material alteration of a contract vitiates the contract.

Watkins v. Fornea, 135 Miss. 690; Watkins v. Payne (N. D.), 180 N.W. 968.

Creekmore & Creekmore, of Jackson, for appellees.

There is no consideration for agreement of the sureties as to the payment of the preexisting indebtedness of the principal.

It is a well-settled rule of course that all contracts in order to be binding, must be based upon a legal consideration, and the rule in case of guaranty and suretyship is stricter than in other contracts.

28 C. J. Guaranty, page 915.

In suretyship as in other contracts, a consideration is essential.

Stearns on Suretyship (3 Ed.), page 1516; Crowder v. Dick & Co., 24 Miss. 39; Stanley v. Miles, 36 Miss. 434; Clopton v. Hall, 51 Miss. 482.

The contract was materially altered and the sureties discharged from liability.

It is almost the universal rule that authority is not conferred in a contract, guaranteeing another debt, to fill out blanks, by leaving a space for the amount of the indebtedness unfilled.

Watkins Co. v. Fornea, 135 Miss. 690; McConnon & Co. v. Mench et al., 48 A. L. R. 737; Stearnes on Suretyship (3 Ed.), p. 21.

Neither the principal nor the creditors can act as agent of the promisor and bind the latter in a suretyship relation.

Sec. 3325, Hemingway's Code 1927; Gulfport Cotton Oil Co. v. Reneau, 94 Miss. 904; Bent v. Cobb, 9 Gray (Mass.) 397.

The contract of suretyship must be express and can never be by inference or implication.

Where an undertaking is that a principal shall perform all conditions of a contract regarding the sale of implements to be furnished him in the future, the surety is not liable for default of the principal respecting implements already on hand.

Weir Plow Co. v. Walmsly, 11 N.E. 232; State v. Medary, 17 Ohio 565; McConnor & Co. v. Prine et al., 128 Miss. 192.

OPINION

ETHRIDGE, P. J.

The J. R. Watkins Company filed suit in the circuit court against W. M. Poag, S. A. Jones, and M. H. Thompson, sureties on a contract made between J. R. Watkins Company and J. C. King, by the terms of which King was to buy certain preparations manufactured by the J. R. Watkins Company to be delivered to said King f. o. b. cars Winona, Minn., or at such other point as the company might establish as the place for delivery. The contract provided that the seller would have no rights in the goods and preparations sold, but that such goods would actually belong to the purchaser absolutely, and said contract also provided for sureties to sign the same, guaranteeing the payment of all accounts during the life of the contract by King, and the payment by King to the J. R. Watkins Company of six hundred sixty dollars and sixteen cents. One clause of said contract reads as follows:

"And it is mutually agreed between the parties hereto that the party of the second part shall pay all transportation charges on goods he so purchases and all expenses and obligations incurred in connection with the sale of said goods, and shall have no power or authority to make any statement or representation or to incur any debt obligation or liability of any kind whatsoever, in the name of, or for, or on account of said Company, and that said Company shall in no way contribute to the expense of, nor share in the profits or losses on the sales of said goods by said second party; nor have any interest in the accounts due for goods sold by the said second party; and no printed, advertising or other matter of said Company, sent to or distributed by said second party, shall be construed to direct or control the sale or other disposition of said goods, or to change or modify the terms of this agreement; and that this is the complete, entire and only agreement between the said parties, and that it shall not be varied, changed or modified in any respect except in writing executed by the parties hereto. The party of the second part hereby promises to pay said Company at Winona, Minnesota, from time to time, during the term of this agreement, in amounts satisfactory to said Company the indebtedness now due for goods and other articles heretofore sold...