Mechanics' American Nat. Bank v. Rowell

• Decision Date: 09 February 1916
• Docket Number: No. 17578.,No. 17581.,17581.,17578.
• Citation: 182 S.W. 989
• Parties: MECHANICS' AMERICAN NAT. BANK OF ST. LOUIS v. ROWELL.
• Court: Missouri Supreme Court

182 S.W. 989

MECHANICS' AMERICAN NAT. BANK OF ST. LOUIS v. ROWELL.

No. 17581.

No. 17578.

Supreme Court of Missouri.

February 9, 1916.

In Banc. Cross-Appeals from St. Louis Circuit Court; W. B. Homer, Judge.

Action by the Mechanics' American National Bank of St. Louis against Carleton F. Rowell, administrator de bonis non with will annexed of Ellen S. Crane, deceased. From a judgment for defendant, plaintiff appeals. Affirmed.

Leahy, Saunders & Barth, of St. Louis, for appellant. Campbell Allison, of St. Louis, for respondent.

BOND, J.

In February, 1903, the J. H. Crane Furniture Company was incorporated for $50,000, to take over the business of J. H. Crane, deceased. His widow, Ellen S. Crane, was allotted shares of stock of the par value of $15,000. His son-in-law, A. K. Bonham, was president of the corporation, and J. H. Wilder was secretary and treasurer. In the fall of 1904, the Mechanics' National Bank took over the deposit account of the corporation from the trust company where it had been previously kept, and agreed, in consideration of the transfer, to extend a line of credit in the sum of $25,000 upon the following guaranty, signed by Mrs. Crane:

"Whereas, the J. H. Crane Furniture Company may apply to the Mechanics' National Bank, St. Louis, Mo., for discounts: Now, for value received, and in consideration of one dollar paid to each of the undersigned, the receipt of which is hereby acknowledged, and other valuable considerations to them moving, I, Ellen S. Crane, jointly and severally for themselves, their executors and administrators, hereby guaranty to said bank, its successors and assigns, the prompt payment as they severally may mature, of all loans made or which may be made to said J. H. Crane Furniture Company by said bank, and of all notes, acceptances and other paper, which have been or may be discounted for the said J. H. Crane Furniture Co. to amount of fifteen thousand dollars ($15,000) by said bank, whether the same be made, drawn, accepted or indorsed by said Ellen S. Crane, as well as any renewals thereof; and this is intended to be a continuing guaranty and shall apply to and cover all loans and discounts and renewals so made by said bank prior to notice in writing given to the cashier of said bank, that the undersigned will not be liable upon any such loans or discounts made by said bank after the receipt of such written notice.

"Whenever any such loans or paper, or any renewals thereof, shall become due and remain unpaid, the undersigned will, on demand, and without further notice of dishonor or protest, and without any notice having been given to the undersigned guarantors, previous to such demand, of the acceptance by said bank of this guaranty, and without any notice having been given to the undersigned guarantors, previous to such demand, of the making or renewing of any such loans or discounts, pay the amount due thereon to said bank, its successors and assigns, and it shall not be necessary for said bank, in order to enforce such payment, to first institute suit or exhaust its remedies against said J. H. Crane Furniture Co., or other parties liable on such loans or paper; and notice to the undersigned of the acceptance of this guaranty and of the making or renewing of such loans or paper, and any of them is hereby expressly waived by the undersigned.

"But all paper discounted for said Crane Furniture Company and all loans made to said Crane Furniture Co., when paid, shall be deemed to have been paid by said Crane Furniture Company, unless express notice in writing is given to said bank at the time, by said guarantors, that it has been paid by them.

                  "Executed this 14th day of February, 1905
                    "Accepted.             Ellen S. Crane
                "Witness: John R. Myers."
                

Upon the delivery to it of the above agreement, the Mechanics' National Bank gave credit to the amount of $25,000 to the J. H. Crane Furniture Company by discounting its three notes aggregating that sum. In May, 1905, the Mechanics' National Bank delivered the above guaranty and said notes to the Mechanics' American National Bank of St. Louis, which was incorporated on that date, and which sold its stock in exchange for a "large part of the assets" of the Mechanics' National Bank and another institution, viz., the American Exchange Bank. The Mechanics' National Bank did not surrender its charter, and was not disincorporated as a consequence of this transaction, but has not since engaged in ordinary or general banking business other than to liquidate its unsold assets. These notes of the furniture company were included in the portion of its assets sold to the Mechanics' American Bank, and were partially secured by the above guaranty, and have been paid. The Mechanics' American National Bank, after its organization, took over the account of the J. H. Crane Furniture Company, and extended credit to it for several years in a fluctuating amount, ranging as high as $43,000, and in so doing, relied upon said guaranty as a partial security. During this course of business, it also received notes indorsed by Mrs. Ellen S. Crane, one of which has not been fully paid. On the 6th day of April, 1907, the J. H. Crane Furniture Company was adjudged bankrupt. In that proceeding the Mechanics' American National Bank presented the notes held by it against said corporation for payment, accompanied by the affidavit of its cashier that it had no security therefor, except the indorsements thereon. After the deduction of dividends received from the trustee of the bankrupt, there remained due the Mechanics' American National Bank, on five notes executed to it by the bankrupt, the sum of $13,644.67, on December 31, 1909. None of these notes were indorsed by Mrs. Ellen S. Crane. There also remained due to said bank a balance on a note for $2,500, which was indorsed by Mrs. Crane. The present action was brought by the Mechanics' American Bank against Mrs. Ellen S. Crane in two counts. The first count was based upon the aggregate amount of the five notes of the J. H. Crane Furniture Company which were not indorsed by Mrs. Crane, upon the theory that they were partially secured by the terms of the guaranty which had been assigned to plaintiff, and relied upon by it when making the loans evidenced by said notes. The above guaranty was made an exhibit of this count of the petition. The second count of the petition prayed judgment for the balance due on the note for $2,500, upon which Mrs. Crane was one of the indorsers. The defendant, Mrs. Ellen S. Crane, after a general denial, in her answer set out therein totidem verbis the written guaranty executed by her, and alleged that it did not cover or secure any loan made by the plaintiff bank. Plaintiff demurred to that defense, and its demurrer was overruled. To the second count of the petition, Mrs. Crane answered, admitting the indorsement of the note; averring that it was a demand note which was matured by plaintiff on a certain date, and that she did not receive any notice of its dishonor; and averring, also, that without her knowledge or consent, plaintiff had extended time for payment of said note, wherefore she was released from any liability thereon. The reply denied the new matter alleged in the answer. The court on its own motion referred the cause to a referee to try all the issues, who thereafter reported the facts and his conclusions of law, and recommended judgment for defendant on the first count of petition, and for plaintiff on the second count of the petition. Cross-appeals were duly taken to this court.

II. It is insisted, in support of plaintiff's appeal, that the guaranty given by Mrs. Crane to the Mechanics' National Bank, on February 14, 1905, per force its terms ran to the Mechanics' American National Bank when subsequently delivered to it. That view is untenable. The ingenious argument made in its support leaves out of view the clear and unequivocal words of the instrument, and seeks to alter their significance by the application of rules of construction which can never be employed where the contract is expressed in terms free from any ambiguity or uncertainty of sense and meaning. This contract discloses no basis for any misapprehension of its import. It was given to a particular banking corporation to secure it to a fixed amount, against loss or damage for loans and discounts to a furniture company, whose deposit account was thereafter to be placed with said bank. To accomplish that end, the obligation of the guarantor to answer for such loans was created in favor of the bank to whom the guaranty was given, and "its successors or assigns." And if any part of the credit which was given by the Mechanics' National Bank (the contractee) was not paid when that instrument was transferred by delivery to the plaintiff, the guarantor would have been liable for such unpaid amount to the transferee, just the same as she would have been liable to the bank with whom the contract was originally made. But the record discloses that the three notes totaling $25,000, which expressed the credit given by the Mechanics' National Bank when the guaranty was made to it, had been paid when the present suit was brought. It is elementary that the liability of Mrs. Ellen S. Crane on the contract of guaranty made by her with the Mechanics' National Bank cannot be extended beyond the language of that instrument, and must be measured by its terms when taken in their ordinary and usual sense. Kansas City, to Use, v. Youmans, 213 Mo. loc. cit. 165, 112 S. W. 225. Thus interpreted, they imposed no obligation on her to be responsible for any loans or discounts or renewals thereof, made by any other corporation than the particular bank to whom she gave the guaranty. We therefore conclude that there is no merit in the contention that the guaranty in question inured by its terms to the benefit of the present plaintiff.

III. It is next insisted that the parties to the suit placed such a...