Missouri Finance Corp. v. Roos

Decision Date08 March 1932
Citation47 S.W.2d 142,226 Mo.App. 869
CourtMissouri Court of Appeals

Appeal from the Circuit Court of St. Louis County.--Hon. Jerry Mulloy, Judge.


Dceased reversed.

Stern & Burnett, Samuel H. Liberman and Robert L. Aronson for appellant.

(1) The demurrers to the evidence should have been sustained because appellant's decedent had been discharged from liability under his guaranty. (a) A change in the contract guaranteed by agreement between the creditor and the principal will discharge the guarantor. Fisher v. Cutter, 20 Mo 296; W. T. Raleigh Medical Co. v. Modde, 209 S.W 958; W. T. Raleigh Medical Co. v. Woodward, 230 S.W 647; W. T. Raleigh Medical Co. v. Abernathy, 196 S.W. 1042; W. T. Raleigh Medical Co. v. Herzog, 299 S.W. 1113; Furst v. Scally, 256 S.W. 158; Matthews v. Hill, 287 S.W. 789; Higgins v. Deering Harvester Co., 181 Mo. 300; Burley v. Hitt, 54 Mo.App. 272; Bowman v. Globe Steam Heating Co., 80 Mo.App. 628; John A. Tolman Co. v. Hunter, 113 Mo.App. 671; Citizens Bank v. Evans, 176 Mo.App. 704; Schuster v. Weiss, 114 Mo. 158; Security State Bank v. Gray, 25 S.W.2d 512; Reissaus v. Whites, 128 Mo.App. 135; Atlas Assur. Co. v. Lawrence, 34 F.2d 401; Evans v. Lawton, 34 F. 233; Stearns on Suretyship (3 Ed.), 98 ff.; 1 Brandt on Suretyship & Guaranty, 812; Spencer on Suretyship, 294. (b) A contract of guaranty is to be strictly construed and not to be extended or altered without the guarantor's consent. Cases under 1 (a). (c) A guarantor is discharged by a change in the contract, regardless of whether it is beneficial or detrimental. Cases under 1 (a). (d) The change and variance from the terms of the contract of April 9, 1927, by the agreement between respondent and the Bird Manufacturing Co. was material. Cases under 1 (a); Stearns on Suretyship (3 Ed.) 98. (e) The guarantor was released and discharged from his obligation by the act of the creditor in relinquishing security. Cases under 1 (a). (f) The guarantor was released and discharged from his obligation by the act of the creditor in extending time for payment. Bishop Press Co. v. Lowe, 209 S.W. 962, 201 Mo.App. 68; Security State Bank v. Gray, 25 S.W.2d 512; Cases under 1 (a). (g) The exaction from the principal by respondent of extra interest discharges the guarantor. Cases under 1 (a). (h) Knowledge of, is not consent to, a modification of a contract on the part of a guarantor. 28 C. J. 995, 999. (2) Respondent could not recover because one contract was alleged in its petition and a modified and substituted contract was disclosed by the proof. Lanitz v. King, 93 Mo. 513; Taussig v. Southern Mill & Land Co., 124 Mo.App. 209; George Gifford Co. v. Willman, 173 S.W. 53, 187 Mo.App. 29; Ostrander v. Messmer, 223 S.W. 438; Koons v. St. Louis Car Co., 203 Mo. 227, 101 S.W. 49; Mount Vernon etc. Co. v. Hirsch etc. Co., 285 Mo. 669, 227 S.W. 67; Ross-Saskatoon Lbr. Co. v. Turner etc. Co., 253 S.W. 119. (3) Instruction No. 1 given for the respondent was erroneous because it failed to exclude and negative pleaded defenses. W. T. Raleigh Medical Co. v. Abernathy, 196 S.W. 1042; Franklin Bank v. St. Louis Car Co., 9 S.W.2d 901; Crews v. Lackland, 67 Mo. 619; Aronson v. Maryland Casualty Co., 280 S.W. 724; Thomas v. American Central Ins. Co., 297 S.W. 982; Charles H. Fuller Co. v. St. Louis Wholesale Drug Co., 282 S.W. 535, 219 Mo.App. 519. (4) Appellant's first offered instruction (No. 5) should have been given. (a) As a matter of law the court should have declared that the contract and dealings between respondent and the Bird Manufacturing Company did not constitute a sale of accounts receivable, but a loan secured by an assignment of accounts receivable. Home Bond Co. v. McChesney, 239 U.S. 568; Same, 206 F. 309, and 210 F. 893; National Trust & Credit Co. v. F. H. Orcutt & Son Co., 259 F. 830; Bierley v. Commercial Credit Co., 43 F.2d 724, 730; In re Gotham Can Co., 48 F.2d 540; In re Grand Union Co., 219 F. 353; Petition of National Discount Co., 272 F. 570; La Sueur v. Manufacturers Finance Co., 285 F. 490; Root v. Republic Acceptance Corp., 123 A. 650 (Pa.); Mercantile Trust Co. v. Kastor, 273 Ill. 332, 112 N.E. 988; Dorothy v. Commonwealth Co., 278 Ill. 629, 116 N.E. 143; Continental Credit Co. v. Ely, 100 A. 434, 91 Conn. 553; Barker Piano Co. v. Commercial Security Co., 105 A. 328, 93 Conn. 129; Tennessee Finance Co. v. Thompson, 278 F. 597; Sponge Exchange Bank v. Commercial Credit Co., 263 F. 20; Commercial Security Co. v. Holcombe, 262 F. 657. (b) Courts will disregard the form and look at the substance of a transaction to determine if there is usury. Puryear-Meyer Gro. Co. v. Cardwell Bank, 4 S.W.2d 489; Hyman v. Semmes, 26 F.2d 10; General Motors Accept. Corp. v. Weinrich, 262 S.W. 425, 218 Mo.App. 68; Wilson v. Wilson, 115 Mo.App. 641; Allen v. Newton, 266 S.W. 327, 219 Mo.App. 74; Tobin v. Newman, 271 S.W. 842; Securities Inv. Co. v. Rottweiler, 7 S.W.2d 484; Kreibohm v. Yancey, 154 Mo. 67. (c) The rate of interest paid for the loan by the Bird Manufacturing Company was usurious. R. S. 1929, sec. 2844. (d) A guarantor is entitled to the defense of usury. Osborne v. Fridrich, 134 Mo.App. 449, 114 S.W. 1045. (5) The second refused instruction was a proper and accurate statement of the law under the pleadings. Cases under 1 (a).

Harry Gleick, Simon Fisher and Harold D. Carey for respondent.

(1) A change or alteration in a principal contract to release a guarantor must be a valid and legal change supported by a consideration; it must be valid and binding, not void and inoperative. A mere indulgence of a principal would not extinguish the liability of a guarantor. 28 C. J. 996; Western National Bank v. Wittman, 31 Cal.App. 615; Slaughter v. Moore, 17 Tex. Civ. App. 233, 42 S.W. 372; 28 C. J. 1001; 12 R. C. L. 1085; Ford v. Beard, 31 Mo. 459; Peoples Bank v. Smith, 263 S.W. 475 (Mo.); Citizens Bank v. Hilkemeyer, 12 S.W.2d 516 (Mo. App.); Johnson v. Franklin Bank, 73 S.W. l. c. 193 (Mo.); Dickherber v. Turnball, 31 S.W.2d 234 (Mo. App.); First Bank of Hamilton v. Fulton, 28 S.W.2d, l. c. 371 (Mo. App.); Rucker v. Robinson, 38 Mo., l. c. 158; West v. Brison, 13 S.W. 95, 99 Mo. 684; Steel v. Johnson, 96 Mo.App. 147; Nicholas v. Douglass, 8 Mo. 49; Marks v. Bank of Missouri, 8 Mo. 316; Newcomb v. Blakely, 1 Mo.App. 289; Brown v. Kirk, 20 Mo.App. 524; Aultman & Taylor v. Smith, 52 Mo.App. 351; Harburg v. Kumpt, 52 S.W. 19 (Mo.). The decedent Friedman, as a matter of law, will be said to have had full knowledge and to have consented to the change in the method of operation under the contract involved in this litigation. (a) As an officer of the Bird Manufacturing Company, Friedman had full knowledge of the new arrangement made in June, 1927. 14-A C. J. 100; 46 C. J. 563; Scoville Mfg. Co. v. Cassidy, 195 Ill.App. 448. (b) The benefit an officer of a corporation receives from a contract is in itself sufficient consideration to sustain a contract of guaranty of that contract signed by him. Osborne v. Lawson, 26 Mo.App. 549; 28 C. J. 920; Gunderson v. Hasterlik, 100 Ill.App. 429. (c) Under the facts of this case, in view of Friedman's relation to the corporation and to the other parties, his consent may be inferred. Runnels v. Tarswell, 219 S.W. 980 (Mo. App.); Hartman v. Chicago, Burlington & Quincy Ry. Co., 192 Mo.App. 271; Palmer v. Welch, 171 Mo.App. 580; Davis v. Lea, 293 Mo. 660; Austin v. Burge, 156 Mo.App. 286. (3) A plaintiff is not required in his instructions to present the defendant's theories or defenses, and where an instruction is good as far as it goes, but does not cover the entire case, this amounts merely to nondirection, and it is the duty of the other party to properly present his own instructions. Lowry v. Fidelity-Phenix Fire Ins. Co., 272 S.W. 79 (Mo. App.); Turner v. Southwestern Mo. R. Co., 120 S.W. 128 (Mo. App.); Lawbough v. McDonald Mining Co., 202 S.W. 617 (Mo. App.); Tyrer v. Moore, 250 S.W. 920 (Mo. App.); Moore v. Railway Co., 136 Mo.App. 210, 116 S.W. 440; Hawkins v. St. Louis & San Francisco Ry., 189 Mo.App. 201. There is no duty on the part of the court to instruct on the defendant's theory unless specifically requested to do so by the defendant. Jenkins v. Clopton, 121 S.W. 759 (Mo. App.); Barber v. American Car & Foundry Co., 14 S.W.2d 478 (Mo. App.). A mere reference to other instructions, which other instructions were not in fact given, is not in itself erroneous, but ordinarily constitutes harmless error. Schroeder v. St. Louis Transit Co., 85 S.W. 968 (Mo. App.); Bennett v. Standard Accident Co., 264 S.W. 27 (Mo. App.). Accord: Arnowitz v. Arky, 219 S.W. 620 (Mo.); Bowling v. Hae, 55 Mo. 446; Williams v. Hyman Michaels Co., 277 S.W. 593 (Mo. App.); Hoover v. St. Louis Electric Terminal Ry. Co., 216 S.W. 984 (Mo. App.).

BECKER, J. Haid, P. J., and Nipper, J., concur.



This is an action upon a contract of guaranty. The suit was originally instituted against three defendants, two of whom remained in default throughout the case. The third defendant, Morris Friedman, died during the pendency of the suit and the cause was revived against Mrs. Emma Friedman, administratrix of his estate. The trial of the cause to the court and jury resulted in a judgment in favor of plaintiff and against the administratrix, and she in due course appeals.

The amended petition upon which the case was tried alleged in substance that on April 9, 1927, the plaintiff entered into a written agreement with the Bird Manufacturing Company, a Missouri corporation, whereby plaintiff agreed to purchase accounts receivable of...

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