Kissire v. Plunkett-Jarrell Grocer Company

• Decision Date: 18 March 1912
• Citation: 145 S.W. 567,103 Ark. 473
• Parties: KISSIRE v. PLUNKETT-JARRELL GROCER COMPANY
• Court: Arkansas Supreme Court

145 S.W. 567

103 Ark. 473

KISSIRE v. PLUNKETT-JARRELL GROCER COMPANY

Supreme Court of Arkansas

March 18, 1912

Appeal from Conway Chancery Court; Jeremiah G. Wallace, Chancellor affirmed.

Decree affirmed.

Sellers & Sellers, for appellant.

1. Appellant was entitled to indemnity to the extent of one-half of the mortgage security. 48 Ark. 442; 50 Ark. 234; 59 Ark 47; 34 Ark. 80; 60 Ark. 526.

Where different purchase money notes or different notes secured by a mortgage on land are owned by different parties, though maturing at different times, the amount realized, if not sufficient to pay all, will be prorated. 92 Ark. 291; 51 Ark 105; 13 Ark. 631; 2 Parsons on Contracts, (6 ed.) 633-4.

2. If appellant was liable at all, he should have been sued in the foreclosure suit. The costs, therefore, of this suit should be taxed against appellee. Kirby's Dig., § 4422.

3. The $ 1,000 collected on the insurance should have been applied on the note sued on. J. H. Kissire who procured the insurance requested that it be so applied, and he had the right to apply it as he wished.

That the property had only one thousand dollars' insurance on it at the time it was destroyed, whereas it was shown to be worth ten thousand dollars, appellee having the right to insure it, was such negligent failure as would release a surety. 43 Am. St. Rep. 354; 41 Am. Dec. 685.

4. The pleadings show no right of recovery. This is a guaranty contract, if anything. The complaint alleges that "defendant is indebted to it on a promissory note," and copies the note, signed by J. H. Kissire, followed by the words, "indorsed, G. W. Kissire." 64 Ark. 648; 20 Mass. 385; 74 Mass. 589.

5. It needs no citation of authorities to support the proposition that an extension of time assented to, and which binds the creditor, releases the surety where appellee sued J. H Kissire on the note and took a decree with a sixty days' stay, appellant not being a party, this released appellant as effectually as if a formal contract based upon a valuable consideration had been made.

6. No sufficient consideration is proved. An indorsement must be based on a consideration. 43 Ark. 21. To bind one who signs or indorses a note after it is executed and accepted, some new consideration must be shown. 24 S.W. 541; 90 S.W. 710; 13 Am. St. Rep. 46; 22 P. 72; 110 Mass. 389; 121 Mass. 117; 75 F. 926; 59 Me. 500; 45 Mo.App. 15; 10 Mo.App. 81.

W. L. Moose and L. E. Hinton, for appellee.

FRAUENTHAL J. HART and KIRBY, JJ., dissent.

OPINION

FRAUENTHAL, J.

This is a suit brought by the Plunkett-Jarrell Grocer Company to recover a balance alleged to be due upon a note indorsed by the defendant G. W. Kissire. The note was executed by one J. H. Kissire as maker for $ 1,250, and is credited with $ 658.15. Judgment was sought for the balance due thereon against said indorser. The defendant resisted recovery principally upon the following grounds: (1) that his indorsement of the note was made for accommodation only, and without consideration; (2) that at the time the maker executed the note in litigation he also executed to plaintiff four other notes which, with the note sued on, aggregated $ 5,000, and that to secure all said notes he executed a mortgage to plaintiff on certain land, upon which was located a house, which was insured, and later burned, and that plaintiff had collected the insurance money, amounting to $ 1,000, of which $ 658.15 only was credited on said note, whereas the entire amount thereof, it is contended, should have been credited thereon; that later the plaintiff had instituted a suit foreclosing said mortgage, which resulted in a decree ordering the sale of said land, which was made; and it is contended that a pro rata amount of the proceeds arising from the sale of said mortgaged land should be credited upon the note now sued on; and (3) that by the terms of said decree the time of payment of the note sued on was in effect extended without the defendant's consent, which resulted in his discharge therefrom.

Upon motion of the defendant, the case was transferred to the chancery court. At the hearing thereof in that court, the chancellor made findings and rendered judgment in favor of plaintiff for the amount sued for.

It appears from the testimony that the plaintiff is a mercantile corporation, located in the city of Little Rock, and that said J. H. Kissire, the maker of said note, was a merchant engaged in business at Morrilton. On January 19, 1906, said J. H. Kissire was indebted to plaintiff, and on that day it was agreed that plaintiff would furnish him additional money, and that he would secure the payment of the entire indebtedness. Thereupon the plaintiff furnished said money, which, with the past indebtedness amounted to $ 5,000, and therefor said J. H. Kissire signed five notes to plaintiff. Two of the notes were for $ 625 each, and due respectively on July 19, 1906, and 1907; three of the notes were for $ 1,250 each, and due respectively on January 19, 1908, 1909, and 1910. There is a conflict in the evidence relative to the agreement as to how these notes were to be secured at the time of their execution. On the part of the plaintiff, the testimony tended to prove that the notes were to be secured by the execution of a real estate mortgage and the guaranty of certain of the notes by the defendant as indorser. Thereafter J. H. Kissire signed the notes and executed a real estate mortgage to secure the same, and later the defendant indorsed three of the notes: the two notes for $ 625 each, and the note for $ 1,250, due January 19, 1908, which is the note now sued on. There was testimony tending to prove that the notes were retained by one J. H. Massey, the representative of plaintiff at Morrilton, until they were later indorsed by the defendant, and that the transaction was not completed and the notes finally accepted by the plaintiff until these three notes were so indorsed. There was also testimony given by said Massey which tended to prove that sufficient insurance upon the property located upon the mortgaged land could not be obtained in reliable insurance companies, and on this account the plaintiff demanded, and said Kissire agreed to give, additional security, and in pursuance of that agreement the defendant indorsed said three notes. In his testimony, said J. H. Kissire stated that the defendant indorsed these notes three or four months after the execution thereof and without consideration. But he also stated that the reason why he indorsed them was that plaintiff demanded additional security because the insurance on the property was insufficient. The defendant testified that he indorsed the notes without consideration, but gave no explanation why the notes were indorsed by him after their execution.

The defendant indorsed the note sued on either at the time of its final execution and delivery to the plaintiff, or at least prior to any transfer thereof and before it had been put in circulation. He was therefore a surety on the note, although he signed same on the back thereof, instead of below the name of the maker on the face. Killian v. Ashley, 24 Ark. 511; Nathan v. Sloan, 34 Ark. 524; Heise v. Bumpass, 40 Ark. 545; Jones v. Bank of Pine Bluff, 80 Ark. 285, 96 S.W. 1060; Lake v. Little Rock Trust Co., 77 Ark. 53, 90 S.W. 847; Porter v. Huie, 94 Ark. 333, 126 S.W. 1069.

It is well settled that the promise made by a surety, like any other contract, must be supported by a consideration. Platt v. Snipes, 43 Ark. 21; 32 Cyc. 56. But the consideration need not be an advantage received by the surety himself. It is a sufficient consideration for such promise of the surety that it is founded upon the consideration then received by the principal debtor, or that by such promise a disadvantage has resulted to the creditor. In Williams v. Perkins, 21 Ark. 18, the rule is thus stated: "If the debt or obligation of the principal debtor is already incurred previous to the undertaking of the surety, then there must be a new and distinct consideration to sustain the promise of the surety. But if the obligation of the principal debtor be founded upon a good consideration, and at the time it is incurred or before that time the promise of the surety is made and enters into the inducement for giving the credit, then the consideration for which the principal debt is contracted is regarded as a valid consideration also for the undertaking of the surety." Harrell v. Tenant, 30 Ark. 684.

In the case at bar, the testimony tended to prove that it was agreed by plaintiff and the maker of the note at the time the consideration passed to him that the note should be secured by the personal indorsement of the defendant before it would be accepted by the plaintiff and considered as finally executed. It was signed by the maker some time before it was actually signed by the defendant; but it was held by Mr. Massey awaiting the indorsement of it by defendant, and the transaction under which the note was accepted was not consummated until the note was indorsed by the defendant. This was in effect an indorsement of the note by the defendant at the same time that it was executed by the maker, and the consideration therefor flowing to the maker was sufficient to support the promise of its guaranty by the defendant.

We are also of the opinion that there was sufficient consideration to support the defendant's promise to guaranty the note if it was indorsed by him, for the reason that sufficient insurance could not be obtained upon the mortgaged property. By the terms of the mortgage it was provided that the mortgagor should keep the property insured for its full insurable value for the benefit of plaintiff, and, upon failure to provide and maintain such insurance thereon...