Southern School Book Depository v. Holmes
| Decision Date | 21 April 1913 |
| Docket Number | 16,027 |
| Citation | 104 Miss. 736,61 So. 698 |
| Court | Mississippi Supreme Court |
| Parties | SOUTHERN SCHOOL BOOK DEPOSITORY v. T. C. HOLMES ET AL |
APPEAL from the circuit court of Washington county, HON. J. M CASHIN, Judge.
Suit by Southern School Book Depository against T. C. Holmes and others. From a judgment for defendant, plaintiff appeals.
Davidson & Wardlaw, a partnership, composed of E. O. Davidson and S.W Wardlaw, were engaged in the business of handling and distributing the school books used in the public schools in Mississippi. The business was conducted in Jackson, and they had a large number of dealers in various parts of the state to whom they sold books for distribution in territory prescribed. In July, 1906, Davidson & Wardlaw sold their business to the Southern School Book Depository, a partnership composed of Victor and Burgess Smith. Shortly before the sale was made, Davidson & Wardlaw had made a verbal agreement with the Steger-Holmes Company, a corporation, by which said company was to handle the school books in Greenville, and had made a shipment of books to said company. After the sale of the business to the Steger-Holmes Company, to wit, September 17, 1906, a contract was entered into by and between said Davidson & Wardlaw and Steger-Holmes Company, and the latter executed bond, payable to Davidson & Wardlaw, with T. C. Holmes and T. C. West as sureties. Business dealings between the Sterger-Holmes Company and the Southern School Book Depository continued until October 1908, when the Steger-Holmes Company was adjudged a bankrupt. At the time of the adjudication the bankrupt was indebted to the Southern School Book Depository, and the latter filed a suit in the circuit court for the amount of the indebtedness against the sureties.
The contention of the plaintiff was that the business of Davidson & Wardlaw merged with that of the School Book Depository, and that the latter assumed the obligations and took over the assets of the former, and that the Sterger-Holmes Company knew at the time of the execution of the contract and bond that the business had been sold, but was being conducted under the old name temporarily for convenience, and that in reality the contract was made with the Southern School Book Depository, and the bond, while in terms it was payable to Davidson & Wardlaw, in reality protected the plaintiff.
The defendant contended that the bond was a special guaranty, and its benefits flowed only to the beneficiaries named therein to wit, Davidson & Wardlaw; that oral evidence was not admissible to show that plaintiffs were the real beneficiaries; that a guaranty is not assignable until after breach.
Affirmed.
F. M. West, for appellants.
The court below granted the peremptory instruction to find for the defendants upon the idea that the bond of guaranty being in the name of Davidson & Wardlaw, only they could maintain this suit; and upon the further idea that parol testimony was not admissable to show that the appellants here were the real obligees in the said bond.
If the appellees were strangers to the transactions herein presented to this court, there might be tenable ground for such a contention; but the record clearly shows that at the time the contract and bond were executed the sureties, or guarantors, appellees here, were fully cognizant of the true situation; and they knew that, while the said contract and bond were nominally entered into with Davidson & Wardlaw, yet, as a matter of fact, they were entered into with the appellants here; and their business relations continued from the date of the said contract and bond, Sept. 17th, 1906, until the principal of the appellee became a bankrupt in Oct. 1908, a period of more than two years; during all of which time no complaint was made as to the application of the payments made to the appellants, nor to the contract, bond, or any other matter concerning the business relations of the parties hereto.
The record shows that school books to an amount of more than $ 1600.00 were sold to the Steger-Holmes Co., and the sureties upon its bond, the appellees here, were in active, and actual charge of the business of said company, and knew all about its affairs, and knew that the bond was actually payable to the appellants, though nominally payable to Davidson & Wardlaw; and we respectfully submit that the appellees are now estopped to set up the defense that the wrong parties have brought this suit, or that they have been prejudiced in any way by reason of the manner of the execution of the said contract and bond.
They are not in such a situation as that they can take advantage of the rule announced in 37 Cyc. 177 as to what things will release a surety from his guaranty; for that rule applies where a change in the relation of the parties is brought about by some change in the contract, after it has been entered into.
In the instant case the situation was thoroughly understood at the time of the execution of the said contract and bond, and no new matter was injected into the relations between the parties after that time; the situation remained the same. If such a rule as contended for here is to deny these appellants their rights in this court, might we not say with equal force that if the bond had been payable to the Southern School Book Depository, that Victor R. Smith and Burgess Smith, the actual owners of the business could not show that they were the actual owners of the business and entitled to sue upon the contract in their own name? Such a position is utterly untenable and ought not to prevail.
It was permissible to prove by parol that the appellants here were the actual obligees in the bond and contract. We refer the court to the following authorities in support of our contentions and respectfully suggest that this case ought to be reversed and remanded: Grubbs v. Wiley, 9 S. & M. 29; Drummond v. Prestman, 12 Wheat. U. S. 515, 6 L.Ed. 712; Pollock v. Helm, 54 Miss. 1, 28 Am. Rep. 342; Cox v. Sewing Machine Co., 57 Miss. 350; Standley v. Miles & Adams, 36 Miss. 452; Bell v. Bruen, 1 How. (U. S. ) 183, 11 L.Ed. 95; Heckscher v. Binney, 3 Wood & M. 341, F. C. 6316; Smith v. Montgomery, 3 Tex. 204; Nicholay v. Kay, 6 Ark. 59, 42 Am. Dec. 680 and cases cited in the notes; Kelley v. Ware, 22 Ark. 449; Lafferty v. Lafferty, 10 Ark. 268; Bank v. Tay, 4 L. R. A. 343 and notes; Coleman v. Fuller, 8 L. R. A. 280 and notes.
Watson & Jayne and Percy Bell, for appellees.
The assignment of error of appellants to the effect that the court erred in excluding appellant's evidence and giving the peremptory instruction is not well taken. This we say for the following reasons:
1. That the bond was a special guaranty and flowed only to the beneficiaries named therein,...
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