Schultz v. Howard
| Decision Date | 13 December 1895 |
| Docket Number | 9672-9673-9674-9675--(151-152-153-154) |
| Citation | 65 N.W. 363,63 Minn. 196 |
| Parties | JAMES M. SCHULTZ and Another v. JOHN C. HOWARD and Others. SAME v. WORLD'S FAIR MASONIC HOTEL COMPANY and Others |
| Court | Minnesota Supreme Court |
Separate appeals in each of the above cases by defendants Howard, Nash, Brackett and Stone and by defendant Lynn respectively, from orders of the district court for Hennepin county, Russell, J., respectively sustaining demurrers of plaintiffs to parts of the separate answers of defendants Howard, Nash, Brackett and Stone and to parts of the separate answer of defendant Lynn. Affirmed.
The first action was brought upon two promissory notes, the terms of which are stated in the opinion. The second action was brought upon three promissory notes of like tenor, except as to the amounts and times of payment. The indorsements on all the notes were the same, except that on the notes sued upon in the second action the indorsement of defendant Lynn was in the same form as the indorsements of the other defendants and not in the form of a guaranty of collection as in the first case. In the second action, but not in the first, World's Fair Masonic Hotel Company was also joined as defendant.
The result is that in all of the actions between these parties the orders appealed from are affirmed.
Louis A. Reed, for appellants.
The obligation of the hotel company and appellants reads "We promise to pay", and without use of the word "we", the obligation of these parties to pay would be joint, or the act of all, and not of one. Stein v Passmore, 25 Minn. 256; Dennis v. Jackson, 57 Minn. 286, 59 N.W. 198; 2 Black, Judg. § 770; Brady v. Reynolds, 13 Cal. 31; Bliss, Code Pl. § 91, and cases cited; 1 Pomeroy, Eq. Jur. § 383 and cases cited; McMillan v. Ames, 33 Minn. 257, 22 N.W. 612; Lamprey v. Lamprey, 29 Minn. 151, 12 N.W. 514. When a maker of a joint note, or a joint acceptor, or a joint indorser, is discharged by a release, or otherwise, all others jointly bound with him are discharged; for no separate suit against each, or joint suit against all, can be maintained. 2 Daniel, Neg. Inst. § 1294; Nicolson v. Revell, 6 N. & M. 192; Robertson v. Smith, 18 Johns. 459; Crawford v. Roberts, 8 Ore. 324; Goodnow v. Smith, 18 Pick. 414; 24 Am. & Eng. Enc. Law, 845; Lynch v. Reynolds, 16 Johns. 41; Brown v. Williams, 4 Wend. 360; Anthony v. Capel, 53 Miss. 350; Ames v. Maday, 14 Iowa 281; Miller v. Gaskins, S. & M. Ch. 524; Dickason v. Bell, 13 La. An. 249; Beall v. Cochran, 18 Ga. 38; Bank of State v. Robinson, 13 Ark. 214; Farmers' & Mech. Bank v. Kingsley, 2 Doug. (Mich.) 379; Bridges v. Phillips, 17 Tex. 128; Blackburn v. Beall, 21 Md. 208; United States v. Mattoon, 5 Mack. 565; Martin v. Taylor, 8 Bush, 384; Woolley v. Louisville Banking Co., 81 Ky. 527. If the holder of a joint obligation sues one of the joint obligors alone, and recovers, and afterwards sues another joint obligor, the latter may plead the judgment against a co-obligor and bar the action against him. Freeman, Judg. § 231; 2 Black, Judg. § 770; Bowen v. Hastings 47 Wis. 232, 2 N.W. 301; Combs v. Steele, 80 Ill. 101; Jansen v. Grimshaw, 125 Ill. 468, 17 N.E. 850; Sessions v. Johnson, 95 U.S. 347; Cowley v. Patch, 120 Mass. 137; Clinton Bank v. Hart, 5 Oh. St. 33; Smith v. Black, 9 S. & R. 142; Brady v. Reynolds, supra; Robinson v. Snyder, 74 Ind. 110; Wilson v. Buell, 117 Ind. 315, 20 N.E. 231. Where one of the several sureties for the same debt is released and the contract is materially altered, all the other sureties are entirely released from liability. 24 Am. & Eng. Enc. Law, 856. A release or discharge of one surety by the creditor will operate as a discharge of all the other sureties, even though it may be founded on a mere mistake of law. 1 Story, Eq. Jur. §§ 112, 498a; Nicolson v. Revell, supra; 1 Pomeroy, Eq. Jur. § 384. In an action against several defendants upon a joint contract, not joint and several, plaintiff must recover against all or none, and the rule is not changed by statute. Fetz v. Clark, 7 Minn. 159 (217); s. c. 8 Minn. 61 (86); Whitney v. Reese, 11 Minn. 87 (138).
Defendant Lynn was released by the judgment against the hotel company. His relation to the plaintiffs and to the other defendants is that of surety to the other defendants, who are sureties to plaintiffs. One who guaranties payment of a debt is in every respect essentially a surety. Hammel v. Beardsley, 31 Minn. 314, 17 N.W. 858; Brady v. Reynolds, supra. And he would only be liable in the event that plaintiff respondents could not enforce the debt against the hotel company and the other indorsers. A guarantor for collection, as well as payment, of a debt, is a surety and a guarantor for collection, and is liable contingently upon the inability to collect from the principal. 1 Edwards, Bills & N. § 331; Conner v. Howe, 35 Minn. 518, 29 N.W. 314. Where a guaranty of collection is written on the back of an indorsed note, plaintiff must show a diligent attempt to collect both as against the indorser and maker, or he cannot recover. 1 Edwards, Bills & N. § 331; Loveland v. Shepard, 2 Hill, 139. The transfer of such an instrument would carry the indorsement as an incident, and a release of the maker would discharge the indorser, and so the guaranty of the collection of the instrument has reference to it as an indorsed note. 1 Edwards, Bills & N. § 331; Moakley v. Riggs, 19 Johns. 69.
James O. Pierce, for respondents.
The obligation of anomalous indorsers is joint and several. The decisions in this state are not opposed to this rule. Pierse v. Irvine, 1 Minn. 272 (369); Rey v. Simpson, 1 Minn. 282 (380); Winslow v. Boyden, 1 Minn. 285 (383); McComb v. Thompson, 2 Minn. 114 (139); Marienthal v. Taylor, 1 Minn. 123 (147); Levering v. Washington, 3 Minn. 227 (323); Robinson v. Bartlett, 11 Minn. 302 (410); Priedman v. Johnson, 21 Minn. 12; Stein v. Passmore, 25 Minn. 256; Dennis v. Jackson, 57 Minn. 286, 59 N.W. 198. See Story, Promissory Notes, § 58; Union Bank v. Willis, 8 Metc. (Mass.) 504; Carpenter v. McLaughlin, 12 R. I. 270; Good v. Martin, 95 U.S. 90; Cook v. Southwick, 9 Tex. 615; 2 Parsons, Notes & B. (2d Ed.) 125; Hunt v. Adams, 6 Mass. 519; s. c. 5 Mass. 365, 7 Mass. 518; Parks v. Brinkerhoff, 2 Hill, 663; Nelson v. Dubois, 13 Johns. 175; Campbell v. Butler, 14 Johns. 349; Brown v. Butler, 99 Mass. 179; Allen v. Brown, 124 Mass. 77; Childs v. Wyman, 44 Me. 433; Schneider v. Schiffman, 20 Mo. 571; Rothschild v. Grix, 31 Mich. 150; Barr v. Mitchell, 7 Ore. 346; Gorman v. Ketchum, 33 Wis. 427; Way v. Butterworth, 108 Mass. 509; McGuire v. Bosworth, 1 La. An. 248; Moies v. Bird, 11 Mass. 436; Flint v. Day, 9 Vt. 345; Houghton v. Ely, 26 Wis. 181; Orrick v. Colston, 7 Gratt. 189, 199; Moore v. Cross, 19 N.Y. 227; Riley v. Gerrish, 9 Cush. 104; People's Bank v. Rockwood, 59 Minn. 420, 61 N.W. 457; Wolford v. Bowen, 57 Minn. 267, 59 N.W. 195; Brady v. Reynolds, 13 Cal. 31; Gist v. Drakely, 2 Gill, 330; D'Wolf v. Rabaud, 1 Pet. 475, 500. The present suit is in conformity with G. S. 1894, § 5166. Folsom v. Carli, 5 Minn. 264 (333); Hammel v. Beardsley, 31 Minn. 314, 17 N.W. 858; Lucy v. Wilkins, 33 Minn. 21, 21 N.W. 849; Steffes v. Lemke, 40 Minn. 27, 41 N.W. 302; Wolford v. Bowen, supra. In order to hold a guarantor for collection, it is necessary, either to attempt to collect the note from the maker, by due course of law, or else to prove that the maker was at the maturity of the note, and still continues, so utterly insolvent that an action against him would be fruitless. Osborne v. Thompson, 36 Minn. 528, 33 N.W. 1; Brackett v. Rich, 23 Minn. 485; Conner v. Howe, 35 Minn. 518, 29 N.W. 314; Nichols v. Allen, 22 Minn. 283. See Hungerford v. O'Brien, 37 Minn. 306, 34 N.W. 161. Where the allegations of the pleadings show unquestionably that to refuse a separate suit would be to refuse justice, it will be held that the exceptional circumstances authorize the suit and sustain a recovery against a part of those bound. Fetz v. Clark, 7 Minn. 159 (217). Neither is it correct to assume that the language of the notes, "We promise to pay," was intended to include the indorsers, and that thereby the obligation of all was joint. 1 Randolph Com. Paper, § 143; Latham v. Houston Flour Mills, 68 Tex. 127, 3 S.W. 462; Atkins v. Brown, 59 Me. 90; Castle v. Belfast Foundry Co., 72 Me. 167; Draper v. Massachusetts Heating Co., 5 Allen, 338; Means v. Swormstedt, 32 Ind. 87; Gist v. Drakely, supra.
This was an action on two promissory notes, upon which defendant Lynn was guarantor, and the other defendants makers. The case comes here on appeal from an order sustaining a demurrer to defendants' second defense, by which they claim that they were released by reason of the plaintiffs having previously obtained judgment upon the notes against another maker alone, who is not a party to this action.
The principle sought to be invoked is that joint contractors must all be sued together; that, if one is omitted, the nonjoinder may be pleaded in abatement. Hence, if the cause of action against one of the joint contractors is merged in a judgment, the others are released, because it is then impossible to maintain a joint action against all. We nowhere find in the pleadings anything to show that the notes sued on were in form joint, and not joint and several; and on that ground alone the order appealed from might be affirmed. But both sides have argued the case on the assumption that the notes are of the following tenor:
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