Shine's Adm'r v. Cent. Sav. Bank

• Decision Date: 31 October 1879
• Citation: 70 Mo. 524
• Parties: SHINE'S ADMINISTRATOR, Appellant, v. THE CENTRAL SAVINGS BANK.
• Court: Missouri Supreme Court

70 Mo. 524

SHINE'S ADMINISTRATOR, Appellant,

v.THE CENTRAL SAVINGS BANK.

Supreme Court of Missouri.

October Term, 1879.

Appeal from St. Louis Court of Appeals.

REVERSED.

The third, fourth and fifth instructions given for the defendant, are as follows:

3. The court declares the law to be that if the defendant agreed to loan to O'Neil & Co. the $15,000 on the faith of the guaranty mentioned in the answer, and said collateral, without any conditions, and thereunder O'Neil & Co. were permitted to draw and obtain the money when and as they chose, and they drew $10,000 thereof and applied it to the payment of a note made by them and then due and payable by them to defendant for that amount, and they afterwards obtained and drew the further sum of $5,000, mentioned in the answer, making the $15,000, then this constitutes a loan of said money to them under said guaranty, and the application by them of $10,000 thereof, or any part thereof, to the payment of such note of said firm, did not discharge said Shine from liability on his said guaranty, unless the court finds that the taking up of said note of O'Neil & Co. was a condition of the loan.

4. If Peter A. O'Neil and Francis Doyle were partners, carrying on business in the firm name of O'Neil & Co., and the firm had its bank account with defendant, kept under the name of Peter A. O'Neil, and procured loans and discounts from the defendant, made deposits of money with defendant, and made its checks and drew out its money from such loans, discounts and deposits, in the name of Peter A. O'Neil, and the defendant in fact loaned to O'Neil & Co. the $15,000, under and on the faith of said guaranty and collateral, then, neither the fact that such account of the firm was kept under the name of Peter A. O'Neil, and such loan was entered in said account, nor that said notes signed by Peter A. O'Neil were taken when said loan was made, released said Shine from liabilities under said guaranty--provided the court is satisfied from the evidence that said Shine was made acquainted with the manner in which said loan was made, and said accounts kept, and assented to and approved the same.

5. If the court finds that the guaranty set out in the answer, and given in evidence, was received by the defendant on the 30th day of March, 1868, and the defendant accepted the proposition therein contained, and then loaned to O'Neil & Co. $10,000, and agreed and was ready and willing to loan said firm the balance of the sum called for in said guaranty, and so notified said firm-- and the defendant, on the 9th day of April, 1868, when required by O'Neil & Co., loaned them $5,000, the balance called for in said guaranty--and that afterwards, to-wit, on or about the 20th day of May, 1868, said Shine examined the books of O'Neil & Co., and thus and otherwise became informed of said loan having been made, and the form and manner in which it was done--and with full knowledge thereof he approved thereof, and of what defendant had done in the premises, and assented thereto--the court, sitting as a jury, may infer therefrom that the loan in question was made in compliance with and in conformity to the terms of said guaranty, in which event the said Shine would be bound thereby.

Thomas T. Gantt for appellant.

The letter must be looked at for the ascertainment of the intention of the parties. In arriving at that intention the contract made by the guarantor is to be interpreted, if there be room for doubt, by the application of the rule verba fortius accipiuntur contra proferentem. When the intention is once ascertained, there can be no judicial enlargement of the contract. It is a canon of decision that a surety is not to be charged beyond the precise terms of his engagement. What these terms are is first to be defined, and in making this definition the guarantor or surety is to be treated precisely as any other person, whether stipulating for himself or others. But when these limits are once fixed, they are not to be extended by one hair's breadth. Taylor v. McClung, 2 Houston (Del.) 24; Taylor v. Wetmore, 10 Ohio 490; Smith v. Montgomery, 3 Texas 199; Straton v. Rastall, 2 T. R. 366, 370; Bacon v. Chesney, 1 Starkie's N. P. Rep. 192; Walrath v. Thompson, 6 Hill 540; Bigelow v. Benton, 14 Barb. 123; Dobbins v. Bradley, 17 Wend. 422; Gates v. McKee, 13 N. Y. 232; McCluskey v. Cromwell, 11 N. Y. 593; Wright v. Russell, 2 Wm. Blackstone 934; Pearsall v. Summersett, 4 Taunt. 593; Myers v. Edge, 7 D. & E. 254; Bellairs v. Ebsworth, 3 Camp. 52; Weston v. Barton, 4 Taunt. 673; Allison v. Rutledge, 5 Yerg. 193; Grant v. Naylor, 4 Cranch 224; Cremer v. Higginson, 1 Mason 323; Russell v. Perkins, 1 Mason 368; Miller v. Stewart. 9 Wheat. 680; DeGolyar on Merc. Guaranties, 387.

Wm. F. Broadhead and Broadhead, Slayback & Haeussler for respondent.

Even if Shine did not ratify the transaction, there is really no substantial departure from the terms of the contract. It is admitted that the terms of a contract of guaranty are to be strictly construed. But like all other contracts it must receive the construction which is most probable and natural under the circumstances. Decatur Bank v. St. Louis Bank, 21 Wall. 298; Dobbins v. Bradley, 17 Wend. 422; Fisher v. Cutter, 20 Mo. 208; Farmers Bank v. Bayless, 35 Mo. 439; such was the construction of the letter given by the circuit court.

NORTON, J.

In this case the petition set forth that Eugene Shine, in his lifetime, before 1868, deposited for collection with defendant the note of Isaac Walker for $15,000, secured by deed of trust, maturing in 1870, with interest notes at six per cent. per annum, payable semi-annually; that the bank collected and appropriated to its own use the amount of said note with $450 interest paid in January, 1869; $450 paid in July, 1869; $450 paid in January, 1870, and $450 paid in July, 1870, together with the principal; making a total of $16,800 with interest from July, 1870, when payment was refused.

The answer of defendant admitted the deposit of the notes of Walker, but set up that after they were so deposited, Shine being in Cork, Ireland, executed an instrument in writing, as follows: “88 Patrick street, Cork, 13th March, 1868. Hon. Jos. O'Neil, President of Central Savings Bank, St. Louis, Mo. Hearing from P. O'Neil and Mr. Doyle, that they could use advantageously some additional cash over and above the amount already had of your bank, and being desirous to promote their interests, and enable them to carry on their business efficiently, I will thank you to submit to your bank that, if they will lend O'Neil & Co. $15,000, I will hold myself responsible for that amount, and will leave with you as collateral security the note and mortgage of Isaac Walker, which is at present in your vault for a like sum, say $15,000. If the Central cannot convemently make this advance, I will feel obliged to assist them in procuring it elsewhere.” That this paper was on 30th of March, 1868, delivered to defendant; that by it Shine promised and agreed with defendant that if it would lend $15,000 to O'Neil & Co. he would hold himself responsible therefor, and would give Walker's notes as collateral; that defendant accepted said agreement, and on or about 30th of March, 1868, upon the faith of said written agreement, lent $15,000 to O'Neil & Co., $10,000 thereof being lent on 30th of March, 1868, and $5,000 on 9th of April, 1868, of all of which Shine had due notice and approved thereof; that O'Neil & Co. failed to repay the said loan, and thereupon defendant applied the proceeds of Walker's notes to satisfy the said loan to O'Neil & Co.

Defendant also claimed that the liability of Shine to it on account of said guaranty, should be set off against plaintiff's demand.

Plaintiff in the replication to said answer denied that by the letter of 13th of March, 1868, Shine had promised defendant that if it would lend to O'Neil & Co. $15,000, he, Shine, would hold himself responsible therefor; but that Shine did by said letter propose to defendant that if it would advance to O'Neil & Co. $15,000 of additional cash over and above what the said O'Neil & Co. had already borrowed of defendant, that he, Shine, would be responsible therefor; that defendant did at no time advance to O'Neil & Co. $15,000 of such additional cash or any other sum, but that O'Neil & Co. had, prior to January, 1868, been a customer of defendant, and had an account in the name of said firm with said defendant which was well known to Eugene Shine; that about 20th of January, 1868, the account of O'Neil & Co. with defendant was closed, and a new account opened with defendant in the name of Peter A. O'Neil alone, to which were transferred all the money, credits and effects which were of O'Neil & Co. and of Peter A. O'Neil, and from and after the opening of said new account the said Francis Doyle could not, and only Peter A. O'Neil could draw any money from said new account, and no money could be drawn therefrom by the checks of O'Neil & Co., or by their authority, but only by the checks or by authority of Peter A. O'Neil; and the firm of O'Neil & Co. was thereby discredited and damaged, and particularly Francis Doyle, son-in-law of Shine, was thereby discredited; and Shine had no knowledge of this change in the mode of keeping the account when he wrote the said letter of 13th of March, 1868, nor until he came to St. Louis in the latter part of May, 1868; that Peter A. O'Neil procured a discount on the 27th of January, 1868, by executing on that day a note for $10,000 at sixty days, to the order of James O'Neil, which note was discounted by defendant for the said Peter A. O'Neil, and defendant held said note when Shine's letter of 13th of March, 1868, was laid before it; that this letter had been sent by Shine to Peter A. O'Neil to be used according to its tenor for the use and behoof of O'Neil & Co., composed of Peter A. O'Neil and Francis Doyle, as defendant well knew; that Peter A. O'Neil, when the...