Trego WaKeeney State Bank v. Maier, 47161

• Decision Date: 02 March 1974
• Docket Number: No. 47161,47161
• Citation: 214 Kan. 169,519 P.2d 743
• Parties: TREGO WaKEENEY STATE BANK, Appellee, v. Donald MAIER and Daniel D. Maier, Appellants.
• Court: Kansas Supreme Court

Page 743

519 P.2d 743

214 Kan. 169

TREGO WaKEENEY STATE BANK, Appellee, v. Donald MAIER and Daniel D. Maier, Appellants.

No. 47161.

Supreme Court of Kansas.

March 2, 1974.

Rehearing Denied April 10, 1974.

Syllabus by the Court

1. In an action by the bank to recover upon a contract of guaranty it is held a father's guaranty to the bank, covering his son's obligations to the bank, does not impose liability upon the father for a debt created by the son's guaranty of credit for another party at the same bank.

2. A guaranty is a contract between two or more persons, founded upon consideration, by which one person promises to answer to another for the debt, default or miscarriage of a third person, and, in a legal sense, has relation to some other contract or obligation with reference to which it is collaterial undertaking.

3. A contract of guaranty is to be construed, as other contracts, according to the intention of the parties as determined by a reasonable interpretation of the language used, in the light of the attendant circumstances. After the intention of the parties or the scope of the guarantor's undertaking has been determined by application of general rules of construction, the obligation is strictly construed and may not be extended by construction or implication.

4. The rule of ejusdem generis is a well known maxim of construction to aid in ascertaining the meaning of a statute or other written instrument which is ambiguous. Under the maxim, where enumeration of specific things is followed by a more general word or phrase, such general word or phrase is held to refer to things of the same kind, or things that fall within the classification of the specific terms.

Thomas C. Boone, Hays, argued the cause and was on the brief for appellants.

William Wagner, WaKeeney, argued the cause, and Ernest J. Deines, WaKeeney, was with him on the brief for appellee.

SCHROEDER, Justice:

The question presented for our determination on appeal is whether a father's guaranty to a bank, covering his son's obligations to the bank, imposes liability upon the father for a debt created by the son's guaranty for another party at the same bank. The trial court found the guaranty of the father guaranteed the guaranty of the son and imposed liability. Appeal has been duly perfected.

The facts have been agreed upon by the parties and stipulated.

During the early part of June 1969, Donald Maier (defendant) personally borrowed from the Trego Wakeeney State Bank (plaintiff-Appellee) a definite sum of money (not disclosed by the record) evidenced by a note which he gave to the bank. The sum of money personally due and owing by Donald Maier to the bank fluctuated from time to time. At the time of suit his personal indebtedness was evidenced by a renewal note of the original indebtedness in the amount of $4,500 with interest at 8 1/2%. The renewal note was June 21, 1971, and was payable December 18, 1971. Shortly after the original loan was made to Donald by the bank, on June 23, 1969, Daniel Maier (defendant-appellant), the father of Donald, executed a guaranty to the bank in consideration for the extension of credit by the bank to Donald.

On the 18th day of November, 1970, Challenger Motors, Inc., a Kansas corporation, in which Donald Maier was a stockholder and also secretary-treasurer, executed its note to the Trego WaKeeney State Bank in the sum of $48,000. Daniel Maier had no business contact with the motor company, no stock ownership in the company and his only connection with it was that he was the father of Donald Maier, the co-defendant.

On the 6th day of March, 1971, Donald Maier executed a guaranty to the Trego WaKeeney State Bank guaranteeing the Challenger note of November 18, 1970. Joe Spresser, also an officer and stockholder of Challenger of Motors, on the same date, signed an identical guaranty to the bank guaranteeing the Challenger note. Spresser was not made a party defendant to this action.

The business of Challenger Motors, Inc., failed and its note at the bank was in default. Donald Maier, being without funds, defaulted on his personal note to the bank, and he was financially incapable of making good on his guaranty on the Challenger Motors note. The financial statement filed with the bank by Daniel disclosed his net worth to be $115,270 as of June 25, 1970. The bank sought to collect from Daniel on both notes, Donald's, personal note and the Challenger Motors' note.

On the 15th day of November, 1971, Daniel Maier, after retaining legal counsel attempted to pay off the Donald Maier note which he had guaranteed. A letter from counsel covering this attempt was introduced in evidence, but the bank refused to accept the tender on the ground that Daniel was obligated on both Donald's personal note and on the Challenger Motors note which Donald had guaranteed.

On the 28th day of March, 1972, suit was commenced on both notes by the bank against Daniel Maier and his son Donald Maier. Both Daniel and his son employed the same attorney and filed their answer. Daniel admitted that his guaranty of June 23, 1969, covered the personal note, and in his answer Daniel confessed judgment thereon, which judgment has been paid as ordered by the trial court without prejudice to Daniel and his right of appeal. In his answer Daniel denied that his guaranty of June 23, 1969, covered the guaranty of Donald dated March 6, 1971, for reasons set forth in his answer.

When this action was filed the balance due on the Challenger note was $39,402.28 plus interest from March 17, 1972, at 9% per annum. The trial court after hearing the matter and considering argument of counsel held that Daniel Maier, by his guaranty, clearly guaranteed payment to the bank of all liabilities owing to it by Donald Maier, including the personal obligation of Donald Maier arising from his guaranty of the balance due on the note of Challenger Motors, Inc., and rendered judgment for the bank against both Donald and Daniel for $42,553.64 with interest at 9% per annum from March 22, 1973.

The trial court, in announcing its decision, made the following comment:

'. . . Since the Court found no Kansas decisions directly in point and counsel cited none, the Court is following the general rule of other jurisdictions set out in the annotation beginning at page 1183 of 85 A.L.R.2d, although there are some decisions to the contrary.'

The guaranty agreements executed by both Daniel and Donald and delivered to the Trego WaKeeney State Bank are identical in form. The instrument in titled 'GUARANTY' and is addressed, 'TO TREGO WaKEENEY STATE BANK, WaKEENEY, KANSAS:' The first three paragraphs of the guaranty agreement signed by Daniel Maier read as follows:

'The undersigned hereby request you to give, and continue to give, Donald Maier (hereinafter styled the 'borrower') from time to time as you may see fit, financial accommodations and credit, and in consideration thereof, whether the same had been heretofore given or may hereafter be given by you to said borrower, the undersigned hereby guarantee and promise and agree to make prompt payment to you, as they severally mature, (1) of all overdrafts of said borrower, (2) of all loans made, or which may be made by you to said borrower, (3) of all moneys paid by you for the use or account of said borrower, and (4) of all notes, acceptances and other paper which have been or may be discounted for, or at the request of, said borrower, whether made drawn, accepted, endorsed or not endorsed by said porrower, and whether endorsed with or without recourse, and (5) of any and all other obligations, of every kind and character, now due or which may hereafter become due from said borrower to you, howsoever created, arising or evidenced, and also of any and all renewals or extensions of any of the foregoing (all hereinafter called 'Liabilities') regardless of other collateral now held by you, or which you may hereafter acquire, as additional security to any or all of the Liabilities of said borrower.

'It is understood that extensions of time of payment, or renewals of any of the Liabilities shall not in any way impair the liability of the undersigned hereunder, and that the undersigned will keep posted as to all matters pertaining to this guaranty without notice from you.

'When any of the Liabilities shall become and remain due and unpaid, the undersigned will, upon demand, pay the amount due thereon.' (Emphasis added.)

The numerals in brackets and the emphasis in the guaranty quoted above have been added to facilitate further discussion of the guaranty agreement in this opinion.

The appellee argues that a written promise to pay any debt of another, without specifying the nature or limitation of such debt, renders the maker of such an instrument liable for payment of the principal's debt even though the principal is only secondarily liable (Citing, K.S.A. 84-3-416(3)).

The appellee contends Daniel by reason of his guaranty agreed to pay any indebtedness due the bank from Donald, and Donald by reason of his guaranty given to the bank was personally liable to the bank for payment of the amount due on the Challenger Motors note. In advancing this argument the appellee relies upon the provision immediately preceding clause (1) wherein the guarantor promises to make payment to the bank, as they severally mature, of the obligations of the borrower enumerated thereafter. Among these obligations is clause (5) upon which the bank relies.

The trial court relied upon Fannin State Bank v. Grossman, 30 Ill.App.2d 484, 175 N.E.2d 268, 85 A.L.R.2d 1178 (1961), for its decision. There an action was brought on a guaranty given to a bank to recover on the principal debtor's personal endorsement of a note given to the bank by a corporation of which he was president. The court held a guaranty given to a bank on hehalf of an individual covering any credit granted 'to him alone or to him and others' and guaranteeing 'all indebtedness...