McKee v. Harwood Auto. Co., 26268.

• Decision Date: 20 December 1932
• Docket Number: No. 26268.,26268.
• Citation: 183 N.E. 646,204 Ind. 233
• Parties: McKEE et al. v. HARWOOD AUTOMOTIVE CO.
• Court: Indiana Supreme Court

204 Ind. 233

183 N.E. 646

McKEE et al.

v.HARWOOD AUTOMOTIVE CO.

No. 26268.

Supreme Court of Indiana.

Dec. 20, 1932.

Appeal from Grant Circuit Court; J. F. Charles, Judge.

Action by Clement B. McKee and another against the Harwood Automotive Company, which filed a cross-complaint against Clement B. McKee, Clyde B. McKee, and Laura McKee.From adverse judgment, Clement B. McKee and Laura McKee appeal.

Affirmed.

David M. Bell, and John A. Kersey, both of Marion, for appellants.

Condo & Batton, of Marion, for appellee.

MARTIN, J.

Clyde B. McKee, by next friend, sued the Harwood Automotive Company alleging that he was 19 years old; that the company induced him to sign a contract for the purchase of a used automobile for the price of $576; that he paid $203 on such contract; and that he later rescinded said contract, returned the automobile, and demanded the return of his money.To this complaint the Harwood Company, appellee herein, filed an answer in general denial.

Appellee also filed a cross-complaint against Clyde B. McKee, Clement B. McKee, and Laura McKee, alleging that said cross-defendants were indebted to it in the sum of $450 in principal and interest and $100 attorney's fees on a $570 lease note.No answer was filed to this cross-complaint by Clyde B. McKee, but Clement B. and Laura McKee answered in two paragraphs (1) that they executed the note as sureties for Clyde B. McKee, who alone received the entire consideration for the note, and praying that they be adjudged sureties, etc.; (2) that they executed the lease note on conditional sale, that the title of the automobile was retained by cross-complainant, and that Clyde B. McKee, who was an infant, on February 26, 1926, returned the automobile to cross-complainant and praying that the note be canceled.

The cause was submitted to the court upon an agreed statement of facts which, briefly summarized, are:

(1)Clyde McKee on July 15, 1925, purchased of Harwood Automotive Company a 1924 Ford sedan, paid $11.40 in cash, and bound himself to pay $570 at $11.40 per week.

(2) To evidence the contract and indebtedness, Clyde McKee together with Clement B. and Laura McKee executed a lease note.Clyde McKee was under the age of 21 years.The lease note provided for the payments as set out above, for interest at the rate of 1 per cent. per month, that “title ownership and possession” of the automobile should remain in the seller until the note is paid in full, and that, if “this note or any portion of the same shall become due and remain unpaid” the seller might “take possession” and consider all payments made as compensation for the “use of said goods.”

(3)Clyde McKee received the entire consideration for the contract, and Clement B. McKee and Laura McKee signed only as sureties.

(4)Clyde McKee paid the Harwood Company a total of $197, and thereafter on February 26, 1926, disaffirmed his contract and returned the automobile.That the Harwood Company refused to accept the automobile in discharge of the contract and refused to return the $197 to him.

(5) On March 1, 1926, the Harwood Company mailed a letter to Clyde McKee telling him that they would hold the automobile until he called for it, and that his storage rate would be 50 cents per day.

(6)The Harwood Company still has the automobile in storage subject to the order of the cross-defendants.

(7) An agreement concerning the amount of attorney fees.

The court found for the plaintiffClyde B. McKee and rendered judgment in his favor for $205.86.It found that the cross-complainant, Harwood Automotive Company, was entitled to recover on its note from the cross-defendantsClement B. McKee and Laura McKee, and rendered judgment against them for $694.20 ($90 of which was the allowance for attorney fees).Clyde B. McKee is not a party to this appeal, and his judgment is not in question here.Clement B. and Laura McKee appeal and assign as error the overruling of their motion for a new trial wherein they allege that the judgment against them is not sustained by sufficient evidence and is contrary to law.

No evidence was presented of any facts which would serve to make the infant, Clyde B. McKee, liable on his contract of purchase or of lease of an automobile (such as that the automobile was a necessary, or that he used it in gaining a livelihood), and it follows that his rescission of the contract extinguished his liability on the note.

The general rule is that a surety is discharged when the liability of his principal is extinguished.This rule is subject to an exception in the case of a surety for a minor or other person incapable of contracting, and the extinction of the contract and discharge of the principal by operation of law, because of the principal's legal incapacity, does not release the surety.50 C. J. § 311, p. 188;Kirby v. Cannon(1857)...