Shores-Mueller Co. v. Palmer

• Decision Date: 01 December 1919
• Docket Number: 25
• Citation: 216 S.W. 295,141 Ark. 64
• Parties: SHORES-MUELLER COMPANY v. PALMER
• Court: Arkansas Supreme Court

216 S.W. 295

141 Ark. 64

SHORES-MUELLER COMPANY v. PALMER

No. 25

Supreme Court of Arkansas

December 1, 1919

Appeal from Phillips Circuit Court; J. M. Jackson, Judge; reversed in part and affirmed in part.

Judgment reversed and cause remanded.

R. B Campbell and Sam Latkin, for appellant.

1. It is obvious that both the agreements between Kindel and appellant and appellees had appellant were made and to be executed in Iowa, and the laws of that State, and not Arkansas, should govern this case. 134 Ark. 495. The law of the place governs, as interpreted by the courts of that State. Ib.; 44 Ark. 230; Ib. 213; 47 Id. 54; 126 Id. 14; 13 C. J. 250 and note 24; 110 Pa. 478; 1 A 532. The obligation and effect of a guaranty executed in a State must be construed by the laws of that State. 3 Ark. 96; 6 Id. 442; 47 Id. 54.

2. Insanity of the principal debtor is no defense to sureties or guarantors. 62 Ark. 387; 22 Id. 375; 17 Iowa 393; 106 Id. 542; 69 Tex. 34; 17 Ann. Cases 556.

3. Appellant was not engaged in intrastate business and not obliged to comply with our laws as to foreign corporations doing business in this State. 98 Ark. 605.

4. The insanity of W. G. Kindel is no defense to his liability. 67 P. 506; 54 Am. Dec. 614; 38 N.E. 42. See note to 34 Ann. Cases 867.

Moore & Vineyard, P. R. Andrews and J. G. Burke, for appellees.

1. Kirby's Digest, sections 7921-2, are applicable here. They are the lex fori and govern. 6 Ark. 317-355; 15 Ark 132. Sureties for the payment of money will be exonerated if the obligee fails to sue the principal within the time provided by statute of Arkansas. 48 Ark. 254. The fact that the parties are called "guarantors" does not make the statute inapplicable. 126 Ark. 535.

2. The lex fori controls as to all matters pertaining to remedial rights. 6 N.E. 622; 7 Ark. 231; 26 Id. 356; 18 Id. 384; 134 Id. 495. See 110 Pa. 178. Even though the Iowa statute is not applicable, Tenant v Tenant, 1 A. 532, is not binding on this court because it is in direct conflict with our decisions cited in appellee's brief.

Appellees can not maintain this cause of action because they have not complied with the laws of Arkansas. There is no error in the judgment of the Phillips Circuit Court in dismissing appellant's action for failure to comply with Kirby's Digest, sections 7921-2, and 3064-5 of Iowa statutes.

STATEMENT OF FACTS.

Shores-Mueller Company, an Iowa corporation, brought this suit against W. J. Palmer, John Palmer, W. B. Jarrett, Walter G. Kindel and L. E. Kindel, guardian of Walter G. Kindel, to recover the price of certain merchandise. On the 4th day of March, 1913, the Shores-Mueller Company, an Iowa corporation, entered into a written contract with W. G. Kindel of Marvell, Arkansas, to sell him certain toilet goods, household medicines, veterinary remedies, and other goods manufactured by said company. The company agreed to sell the goods to Kindel at wholesale prices and the latter agreed to pay his account in monthly installments. The company agreed to furnish him, free of charge, on board the cars at its factory in Iowa, a reasonable amount of advertising matter, report and order blanks and to give him, free of charge, instructions and advice through letters and bulletins as to the best methods of selling its products to customers. Throughout the contract Kindel is called the salesman. The contract was accepted by the company at its home office in Cedar Rapids, Iowa. W. J. Palmer, John Palmer, and W. B. Jarrett signed the following, which was attached to the contract and became a part of it.

"In consideration of Shores-Mueller Company extending credit to the above named person we hereby guarantee to it, jointly and severally, the honest and faithful performance of the said contract by him, waiving notice of acceptance and all notices, including notice of salesman's default, and agree that any extension of time or change of territory shall not release us from liability hereon."

On the 30th day of March, 1916, the probate court of Phillips County, Arkansas, adjudged Walter G. Kindel to be an insane person and committed him to the State Hospital for Nervous Diseases where he has since been confined. L. E. Kindel was appointed his guardian and duly qualified as such. On the 12th day of September, 1916, W. J. Palmer, John Palmer and W. B. Jarrett gave the Shores-Mueller Company notice in writing to require it to commence suit against Walter G. Kindel at once. The said company failed to comply with this notice within thirty days after it was served upon it.

The circuit court dismissed the suit against the defendants, W. J. Palmer, John Palmer, and W. B. Jarrett on the ground of plaintiff's failure to comply with sections 7921 and 7922 of Kirby's Digest. The circuit court dismissed the suit against L. E. Kindel, as guardian of Walter G. Kindel, on the ground that the subject-matter of the suit was business transacted in this State by the plaintiff and that it had failed to comply with the laws of the State with regard to foreign corporations doing business here. The case is here on appeal.

OPINION

HART, J., (after stating the facts).

The court was right in dismissing the suit as to W. J. Palmer, John Palmer and W. B. Jarrett and wrong as to dismissing it against L. E. Kindel, as guardian of Walter G. Kindel, an insane person. In the first place it may be stated that appellant could sue appellees in one action and that the contract signed by W. J. Palmer, John Palmer and W. B. Jarrett was a contract of guaranty. Fluhart v. W. T. Rawleigh Co., 126 Ark. 307, 190 S.W. 118. These parties gave appellant notice in writing to bring suit at once against the principal debtor under sections 7921 and 7922 of Kirby's Digest. The sections read as follows:

"Section 7921. Any person bound as surety for another in any bond, bill or note, for the payment of money, or delivery of property, may, at any time after the action hath accrued thereon, by notice in writing require the person having such right of action forthwith to commence suit against the principal debtor and other party liable.

"Section 7922. If such suit be not commenced within thirty days after the service of such notice, and proceeded in with due diligence, in the ordinary course of law, to judgment and execution, such surety shall be exonerated from liability to the person notified."

This brings us to the consideration of the question of whether or not a guarantor under a contract like the present one is a surety within the meaning of the statute. It is true that there is a difference between the contract of a surety and that of a guarantor in this, that the contract of a surety starts with the agreement and that the liability of a guarantor is established for the first time with the default of the principal debtor. At the same time a breach of a guaranty contract is generally regarded as a breach of suretyship and the effect of the reasoning in the case of Hall v. Equitable Surety Co., 126 Ark. 535, 191 S.W. 32, is to hold that a guarantor is a surety within the meaning of sections 7921 and 7922 of Kirby's Digest. In that case the court held that the sureties on a bond in an indemnity contract did not come within the statute, but treated guaranty contracts as coming within the provisions of the statute.

It is the contention of counsel for appellant that the contract sued on is an Iowa contract and that the notice to sue must be given in accordance with the laws of that State and that the court erred in dismissing the cause of action because appellant did not bring suit within thirty days after notice given under the statute of Arkansas. The record shows that the contract sued on is an Iowa contract and this court has held that matters bearing upon the interpretation, execution and validity of a contract are to be determined by the law of the place where the contract is made. J. R. Watkins Medical Co. v. Johnson, 129 Ark. 384, 196 S.W. 465, and cases cited. The authorities on the question of giving notice are divided. In Tenant v. Tenant, 110 Pa. 478, the court held that the right of a surety to discharge his obligation by a disregarded notice to the creditor to pursue the principal...