Wier Plow Co. v. Walmsley

• Decision Date: 01 April 1887
• Citation: 110 Ind. 242,11 N.E. 232
• Parties: Wier Plow Co. v. Walmsley and another.
• Court: Indiana Supreme Court

110 Ind. 242

11 N.E. 232

Wier Plow Co.

v.Walmsley and another.

Supreme Court of Indiana.

April 1, 1887.

Appeal from superior court, Vigo county.

Eggleston & Reid, for appellant. Pierce & Harper, for appellees.

ZOLLARS, J.

Appellant bases its action upon a written contract. Although signed by appellant and the appellees Walmsley and Carithers, the contract upon the face shows that the real contracting parties were appellant and Walmsley. The terms of the contract, so far as they need to be here set out, are that appellant agreed “to manufacture and furnish” farming implements to Walmsley, to be sold by him on commission; the kind of implements, the price of the same, and the commission to be allowed to Walmsley being stated; “said goods to be delivered on board cars at Indianapolis on or about when ordered, 1881.” The undertakings on the part of Walmsley were that he would receive, pay freight, store in good order, sell as far as possible for cash at the price-list, and, when sales could not be made for cash, in no case to extend the time of payment of notes beyond the first day of October, 1881, and to deliver no goods until settled for; that he would take and turn over to appellant interest-bearing notes payable to it, upon blanks furnished by it, and require a property statement on the back of the notes by the purchasers that they were worth $2,000 above debt; that he should remit to appellant the full proceeds of cash sales and notes on Monday of each week, first indorsing each and every note, using the following form: “For the value received, we hereby guaranty the payment of this note at maturity, or any time thereafter, waiving protest, demand, and notice of non-payment thereof;” that final settlement should be made with appellant on the first day of July, 1881, or at such other time as it might require; that, if any notes should remain unpaid for 90 days after maturity, they should be taken up and paid by Walmsley; that the contract itself should be a full guaranty on his part of the payment of the notes turned over to appellant, and that a failure to indorse the notes should not affect such guaranty; that Walmsley should use all proper diligence to sell the implements ordered; and that, in case of failure or neglect to sell all of such implements by the first day of July, 1881, he should settle for those remaining unsold by giving “their” notes payable to appellant, or order, on the first day of October, 1881. By other stipulations in the contract,appellant granted to Walmsley the right to sell said implements in Vigo county, Indiana, during the spring trade, and he agreed to sell those implements in preference to others of a similar kind.

After stating the terms of the contract, it is alleged in the complaint that, prior to making the contract, Walmsley had been acting as agent of appellant, and as such had on hand a large amount of agricultural implements, which by agreement were turned over to him by appellant, and were included in the contract; that appellant has complied with all the terms of the contract; that appellees have not complied with the terms of the contract on their part, in that they have received from time to time from appellant, since the execution of the contract, until the latter part of the year 1881, large amounts of agricultural implements, and sold a large part of such implements to divers persons, partly for cash and partly on time, and taken and turned over notes payable to appellant; that appellees failed to indorse said notes, or take them up and pay them, and that they have been due for more than 90 days; that Walmsley failed to remit to appellant the cash received on sales of the implements in accordance with the terms of the contract, but, on the contrary, converted to his own use $1,500 of the money so received on cash sales. Judgment is asked for the amount of the money so converted, and for the amount of the unpaid notes, a list of which is given in the complaint. Walmsley made default. Carithers filed an answer in three paragraphs, and a cross-complaint. A demurrer by appellant to the cross-complaint and to the third paragraph of the answer was overruled by the court below. Those rulings are assigned as error.

So far as material here, it is averred in the third paragraph of the answer that Carithers, with the knowledge of appellant, executed the contract filed with the complaint as a surety for Walmsley, and in no other capacity; that, prior to the execution of the contract, Walmsley had purchased from appellant a thousand dollars' worth of farming implements of the kind and quality mentioned in the contract, which were in his possession at the time the contract was made, of which fact Carithers was ignorant at the time he executed the contract; that subsequent to the execution of the contract, and without the knowledge or consent of Carithers, appellant and Walmsley agreed that the said implements so in his possession should be taken and received by him, under the contract, as the implements to be manufactured and furnished on board the cars at Indianapolis as stated in the contract, and that they were so taken and sold by Walmsley; that, for the purpose of making the contract cover and include such implements so had on hand by Walmsley, they wrongfully inserted in said contract the following: “All goods specified in this contract, and in said price-list attached, have been delivered to the party of the second part, [Walmsley,] and are hereby acknowledged as being in the possession of said party of the second part;” that, in pursuance of said arrangement, Walmsley received said implements, and sold them under the contract, without the knowledge of Carithers.

“Nothing,” says Judge Story, “can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended beyond the terms of his contract. To the extent, and in the manner, and under the circumstances pointed out in his obligation, he is bound, and no further. It is not sufficient that he may sustain no injury by a change in the contract, or that it may even be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal.” Miller v. Stewart, 9 Wheat. 680. Such has always been the doctrine of this court. Judah v. Zimmerman, 22 Ind. 388;Markland Min. & Manuf'g Co. v. Kimmel, 87 Ind. 560;City of Lafayette v. James, 92 Ind. 240;Weed S. M. Co. v. Winchel, 107 Ind. 260, 7 N. E. Rep. 881. It is also a rule well settled that the contract of the surety must be given a reasonable interpretation, in accordance with the establishedrules of construction. Irwin v. Kilburn, 104 Ind. 113, 3 N. E. Rep. 650.

As will be noticed from the abstract of the complaint above given, appellant seeks to recover a judgment against appellees for an amount of money which it is alleged Walmsley collected upon cash sales of implements, and failed to remit, and for the amount of notes which he had taken upon the sales of such implements, and turned over to appellant, and which were not paid by the makers. Against these demands appellee Carithers interposes the defense, as will also be observed from the abstract of the answer above given, that, at the time he executed the contract as surety for Walmsley, he (Walmsley) had on hand a thousand dollars' worth of implements of the kind and quality mentioned in the contract, which he had prior to that time purchased of appellant; that he (Walmsley) was not aware of that fact at the time he executed the contract; and that subsequent to the execution of the contract, and without his consent or knowledge, the implements so purchased and in the possession of Walmsley were, by an agreement between him and appellant, sold by Walmsley as implements furnished under the contract. These averments in the answer are by the demurrer admitted to be true.

The contract in suit manifestly had reference to implements to be furnished by appellant to Walmsley in the future, to be sold by him on commission. The undertaking on the part of Carithers was that, as to such implements, Walmsley should perform the conditions of the contract, by remitting the cash received upon sales, by turning over the notes received on such sales, by paying them, if not paid by the makers within the fixed time, and by settling by note for implements unsold on the first day of July, 1881. According to the answer, the contract was subsequently extended by appellant and Walmsley so as to cover a thousand dollars' worth of implements which Walmsley had previously purchased from appellant. To hold Carithers liable upon the contract as thus extended would enable appellant to get security for a debt which Walmsley owed it at the time the contract was made, and to hold Carithers as security for that debt. It would be to hold Carithers liable as surety, not only for what implements might be furnished by appellant to Walmsley subsequent to the execution of the contract, but also for implements which had been sold to him by appellant prior to the time. That was not Carithers' contract. According to the answer, therefore, appellant is seeking to hold Carithers upon transactions which grew out of a contract...