Kennedy v. Falde

• Decision Date: 06 October 1886
• Parties: KENNEDY v. FALDE et al
• Court: North Dakota Supreme Court

29 N.W. 667

4 Dakota 319

KENNEDY v. FALDE et al

Supreme Court of North Dakota

October 6, 1886

Appeal from the district court of Lincoln county.

The facts appear in the opinion.

Judgment reversed.

Kennedy Bros., for plaintiff and appellant.

Delay does not exonerate a surety. Civil Code Sec. 1668 Oral evidence was competent to explain the circumstances un der which the letters were written. Greenleaf Ev. Sec. 297 Civil Code Sec. 938; Pearson v. Post, 2 Dak. 220.

The alleged notice by the surety to the creditor was insufficient. Wilson v. Tebbetts, 29 Ark. 579; Ranturns v Lacy, 17 Mo. 299; Dane v. Corduan, 24 Cal. 157, Herrick v Boost, 4 Hill 657; Hays v. Joseph, 26 Cal. 543: 32 Cal. 577; 34 Cal. 281; 42 Cal. 500; Smith v. Freyler, 1 P. 219.

O. S Gifford, (A. H. Barton and Frank R. Aikens of counsel,) for respondents.

The exception to the ruling of the court in refusing to give appellant's request and the exception to the charge of the court are not specific and are too general to be reviewed on appeal. St. Croix Lumber Co. v. Pennington, 2 Dak. 274; Lincoln v. Chaplin, 7 Wall. 132; Bowers v. U. P. R. R. Co. 7 P. 254; Smith v. Harper, 5 Cal. 330; Jones v. Osgood, 7 N.Y. 233.

There can be no doubt as the meaning of the words employed by Martin and Cuppett relative to Kennedy's collecting from Falde. Kennedy was obliged to use good faith toward the sureties. Story Eq. Jur. Sec. 324; U. S. v. Etting, 11 Wheat. 69.

He cannot shield himself by claiming that the sureties did not in so many words require him to institute suit to collect the notes from Falde. It was sufficient if he could understand clearly their intention, and that it was for Kennedy to bring suit. Franklin v. Franklin, 12 C. L. J. 333; Singer v. Troutman, 49 Barb. 182; Stickler v. Burkholder, 47 Pa.St. 476; Remsen v. Beekman, 25 N.Y. 552; Northern Ins. Co. v. Wright, 76 N.Y. 450; Iole v. Adee, 84 N.Y. 238; Colgrove v. Tallman, 67 N.Y. 95; Manchester Iron Co. v. Sweeting, 10 Wend. 397; Hoffman v. Hulbert, 12 Wend. 377.

We are aware that there are dicta of one or two judges condemning the rule as unsound in cases where its application is not necessary to these decisions, and where indeed the facts did not justify their application. Warner v. Beardslee, 8 Wend 198, per WALWORTH, Chancellor; Herrick v. Borst, 4 Hill 650, per COWAN, J.

OPINION

PALMER, J.

The plaintiff and appellant instituted this action in the district court to recover the balance due upon two promissory notes bearing date July 7, 1877, --one for $ 165 and the other for $ 150. Upon the $ 165 note interest was payable at the rate of 12 per cent per annum, and upon the $ 150 note interest at 10 per cent. per annum. Upon the $ 165 note were two indorsements, one for $ 20 May 5, 1878, and one for $ 50 December 5, 1879. Upon the $ 150 note various payments have been made, so that from the plaintiff's complaint there appeared to be due upon the $ 165 note the sum of $ 157.72, and upon the $ 150 note the sum of $ 17 with the interest.

The defendants Martin and Cuppett only made answer. They admit the execution and delivery of the notes, and for defense present the following issues. First. That they signed as sureties for Falde, and never received any of the consideration for said notes, and that the plaintiff so understood at the time of their execution. Second. That after the notes became due the defendants Cuppett and Martin requested the plaintiff to collect the same from defendant Falde; that defendant Falde was then amply able to pay, and had sufficient property subject to execution; that the plaintiff neglected and refused so to do; and that Falde had become insolvent. Third. That, after the maturity of said notes, the plaintiff, without the knowledge or consent of Cuppett and Martin, by agreement with defendant Falde, and upon various occasions, extended the time of payment of said notes, and upon one occasion, upon the fifth day of December, 1879, the plaintiff, at the solicitation of defendant Falde, in consideration that defendant Falde would execute to plaintiff a note of $ 50 secured by a chattel mortgage, extended the time of payment upon said notes; that the plaintiff accepted said security and $ 50 note, and indorsed the $ 50 upon one of the notes described in the complaint; said $ 50 note was payable five months after its date, and bore interest at the rate of 12 per cent.; that said extensions were granted to defendant Falde till such time as he became entirely insolvent, and unable to pay any portion of his debts. Tried by jury, and verdict and judgment for the defendants Martin and Cuppett. Exceptions allowed and the case comes to this court for review.

For the purpose of showing an extension of time to Falde, Cuppett and Martin offered in evidence various letters written to Falde by Plaintiff, Kennedy, during the period intervening between the time the notes matured and the commencement of this action, one of which is as follows:

DECEMBER 12, 1878.

Mr. Falde: I wrote you a few days ago about some matters, and also stated that I could not make another extension without some money. * * * Respectfully, BEN KENNEDY."

This and other letters of similar import were offered and admitted in evidence against the plaintiff's objection.

What object the respondents had in offering them is not apparent, unless it was as evidence at least tending to establish the issue of extension granted by the creditor to the principal without notice to the sureties. The letters having been admitted in evidence by the trial court, the plaintiff, in rebuttal, offered to show by oral proof and by the plaintiff himself, that a long course of similar dealings had been carried on between plaintiff and defendant, and extending over a number of years, and that the notes and extensions referred to in these letters related to other transactions and other notes than those in litigation in this action. As nothing appears in the letters themselves which would enable a court or jury to determine conclusively that reference was made to the notes in suit as distinguished from other like evidences of debt which might then have been outstanding, it does not readily appear why the explanation offered was not admitted by the court below. The proposition is elementary that letters competent as evidence in support of an issue, but written in a manner ambiguous or uncertain, and capable of different construction, or unintelligible without the aid of extrinsic circumstances, their meaning becomes a question of fact for the jury; and parol evidence of such extrinsic facts is admissible. This evidence being directed to the most important question presented in the case, viz., extension of time to the principal, it was important that the jury should have had all the evidence upon this subject to which, under the rules of evidence, they were entitled. Its exclusion was error, and for this reason the judgment must be reversed, and a new trial granted.

As this conclusion disposes of the case, nothing further need be said. Another question, however, is presented and earnestly urged by the learned counsel for respondents, and, as it is fairly presented in the case, it is thought advisable by the court to express our views upon it.

About 14 months after one of the notes matured, and two months after the last became due, Martin, in response to notice from Kennedy that the notes were past due and unpaid, wrote a letter to the plaintiff and used this language: "You had better collect the same from Falde, the principal. I don't know how he is fixed now to pay, but he has been considered solvent until postoffice matters came up, which I presume you have heard all about ere this." About the same time, Cuppett says in response to the question: "You never gave him notice to see Falde, did you? Answer. Only in the letter after he wrote me in 1878, I told him Falde had some property here; that he should have collected it from him. I told him he had better get it from Falde if he wanted anything." And the question presented is, was that such a notice to the holder of the note to proceed against the principal that, upon refusal or neglect of the creditor to act, would affect or release the sureties?

The most advanced doctrine in this direction to be found in this country has been enunciated by the courts of New York, Pennsylvania, Alabama, Arkansas, and perhaps Ohio; and it may be conceded that, so far as these courts are concerned, the rule seems settled that it is the surety's right and a part of his equity, to see that the creditor makes a prompt use of the remedies in his hands, and that nothing should be lost by reason of the creditor's supineness or negligence; and those courts may be said to have established the rule that equity will compel the creditor to sue at the request of the surety, and will hold the surety discharged if the request be not complied with, subject to two very important qualifications. To invoke this rule even in equity, it must be shown--First, that such failure to proceed has resulted in actual injury to the surety, which must be shown by proving that the principal was solvent when the request was made, and became insolvent subsequently; and, second, that accompanying the request there be an explicit notice that, in case the creditor should fail to sue, the surety will thereupon hold himself discharged. Bish. Eq. § 339. It may be questioned, however, if this, as an equity rule even, is not doubted as unsound by most of the courts of this country.

Giving then, the utmost weight to the language of the sureties in this case, its weakness and insufficiency is apparent, even when tested by rules applicable in a court of equity. The authorities substantially agree that, in the absence of a statute,...