Wis. Marine & Fire Ins. Co. Bank v. Mann

• Decision Date: 11 October 1898
• Citation: 100 Wis. 596,76 N.W. 777
• Court: Wisconsin Supreme Court
• Parties: WISCONSIN MARINE & FIRE INS. CO. BANK v. MANN ET AL.

100 Wis. 596

76 N.W. 777

WISCONSIN MARINE & FIRE INS. CO. BANK

v.MANN ET AL.

Supreme Court of Wisconsin.

Oct. 11, 1898.

Appeal from superior court, Milwaukee county; George E. Sutherland, Judge.

Action by the Wisconsin Marine & Fire Insurance Company Bank against Henry Mann and Charles Munkwitz and others. There was a judgment for defendants, and plaintiff appeals. Affirmed.

An action was brought on a written agreement which is in the following words:

“Whereas, the Wilkin Manufacturing Company, of Milwaukee, is indebted to the Wisconsin Marine and Fire Insurance Company Bank, of Milwaukee, Wisconsin, in the sum of about $9,000 (nine thousand dollars);

And whereas, the said company may hereafter become indebted to said bank for additional amounts;

Now, therefore, in consideration of the premises, and of one dollar to each of us in hand paid, the receipt whereof is hereby acknowledged, we and each of us do hereby agree upon demand to pay, or cause to be paid, to said Wisconsin Marine & Fire Insurance Company Bank, all loans, drafts, overdrafts, indorsements, accounts, checks, notes, interest, demands, and liabilities, of every kind and description, now owing, or which may hereafter become due or owing, by said Wilkin Manufacturing Company to said Wisconsin Marine & Fire Insurance Company Bank.

It is understood that we each waive notice of demand and notice and protest of every kind, and agree that said bank may without notice grant extensions of time to said company, and may from time to time renew any obligations of said company. This is a continuing guaranty.

It is understood that we are to pay any sums which may accrue hereunder in the proportion which the amount of stock now held by each of us in said company bears in the whole amount of capital paid in by said company.”

The instrument was signed by all of the defendants, each of whom was a holder of paid-up stock except Wilkin and Morris. The principal issue on the trial was as to whether the contract was a joint and several obligation, or the liability of each signer was limited to such proportion of the indebtedness of the debtor corporation to the plaintiff as such signer's stock in such corporation bore to the whole amount of its paid-up capital stock. The trial court decided in favor of the limited liability. Plaintiff appealed from the judgment, which resulted in its reversal, the court holding that the true construction of the contract was that the signers incurred a joint and several liability. The cause was remanded with instructions to enter judgment in favor of the plaintiff in accordance with the opinion of the court, unless the court below, in its discretion, should determine to grant to the defendants Mann and Munkwitz leave to amend their answers so as to raise and present for trial the issue of a reformation of the contract on which the action is based. Upon the case again reaching the latter court, defendants Mann and Munkwitz applied for leave to amend their answers within the scope of the power granted as aforesaid to allow it. The application was granted. Issue was joined on the amended answer and a trial had which resulted in findings of fact and conclusions of law in substance as follows:

(1) The first agreement for a guaranty between the plaintiff bank and the representatives of the Wilkin Manufacturing Company was that a contract of guaranty should be given to the bank, signed by stockholders of the company, making each signer liable to the bank for such proportion of any indebtedness of the company to the bank, then existing or thereafter incurred, as the amount of stock held by him bore to the whole paidup stock of the corporation, and that agreement was reduced to writing by the cashier of the bank as follows:

“Whereas, the Wilkin Manufacturing Company, of Milwaukee, is indebted to the Wisconsin Marine and Fire Insurance Company Bank in the sum of four thousand dollars for money borrowed for the purpose of said company, and

Whereas, also it will be necessary for said company to borrow from said bank other sums of money in addition to the amount set forth.

Now, therefore, in consideration of the premises and of $1.00 to us in hand paid, we and each of us do severally promise and agree to and with said bank to pay said bank as the said sum may become due, such proportion of said indebtedness now owing or which may hereafter be owing by said company to said bank, whether the same be on notes, indorsements by said company or overdrafts from said bank, or any other form of indebtedness to said bank, as the amount of stock owned by us in the said company bears to the whole amount of capital paid up of said company.”

The agreement so drawn was dated December 22, 1887, was signed by the defendants, and delivered to the plaintiff.

(2) At the date aforesaid, defendants Fink, Mann, Diederichs and Vogel, each owned 44 shares of paid-up stock, defendant Munkwitz 20 shares, and defendant Trumpff 24 shares, and defendant Wilkin was a subscriber for 200 shares.

(3) After the occurrences before stated, plaintiff submitted to defendants the draft of another contract for signatures, to which they objected because it failed to limit the liability of each signer as in the original agreement.

(4) Therefore it was agreed that the new agreement should be modified so as to conform to the original agreement; that plaintiff's cashier should see that such alteration was properly made, and intending to do so, he caused to be inserted in the new draft the following: “It is understood that we are to pay any sums which may accrue hereunder in the proportion which the amounts of stock now held by each of us in said company bears in the whole amount of capital paid in by said company.”

(5) Such alteration was made intending to limit the liability of each signer thereof as in the original contract of guaranty, and the failure to carry out such intention is due primarily to the mistake of plaintiff's cashier, but that all parties to the agreement participated in such mistake.

(6) All loans and advances made by plaintiff to the manufacturing company were made under the belief that the guaranty bound the signers only in the proportion which their several holdings of stock bore to the total paid-up stock of the corporation.

(7) Defendants Mann and Munkwitz have paid to plaintiff the full amount for which they are liable under the guaranty.

(8) January 9, 1898, the stock of the corporation was held as before stated.

Upon such findings of fact the court concluded that defendants Mann and Munkwitz were entitled to have the contract of guaranty reformed so as to limit the liability of each to such proportion of the indebtedness incurred by the corporation to plaintiff, as the amount of stock held by him at the date of the contract bore to the whole paid-up capital of the corporation, and to a judgment accordingly, and dismissing the complaint as to them, with costs.

Judgment was so entered, from which this appeal was taken, exceptions having been seasonably filed to raise the questions discussed in the opinion.

Miller, Noyes, Miller & Wahl and Fish & Cary, for appellant.

Winkler, Flanders, Smith, Bottum & Vilas and Stark & Hansen, for respondents.

MARSHALL, J. (after stating the facts).

In the decision on the first appeal in this case, reported in 95 Wis. 111, 69 N. W. 354, well-established principles of law there clearly stated, led to a construction of the contract of guaranty as then contended for by the present appellant, without determining precisely the intention of the parties in making it. Applying the principle that contracts are to be construed so as to bring them as near the actual meaning of the parties as the words they saw fit to employ, when properly construed and rules of law will permit, we held the principal clause of the agreement to contain a joint and several, unlimited obligation, and the added clause, in regard to liability in proportion to the holdings of stock owned by the several signers as merely prescribing a rule of contribution between such owners. No other result could have been reached. The added clause was plainly repugnant to the principal clause which preceded it; so, under the rule that a stipulation restricting what is previously distinctly stated in a contract, and which forms the principal inducement to it, when the whole instrument is so prepared that the latter clause cannot be reasonably construed as incorporated in the first, must be rejected, we were compelled to treat the contract, as between plaintiff and defendants, the same as if the limitation clause had not been added at all. If the intention were otherwise, the parties misunderstood the legal effect of the limitation clause under the circumstances, and that could not be corrected by judicial construction. The lower court, on the second trial, found that the limitation clause was added with the intention, as to all parties, to create a several, limited obligation, and that the failure to do so was such a mistake as equity could relieve the injured parties from and gave judgment accordingly. The appeal from that judgment, now before us, presents several questions which will be considered in their natural order.

It is first contended on the part of appellant, that the trial court had no right to grant a new trial and permit the amendment; that the power to grant new trials in cases appealed to this court is lodged here and cannot be delegated to the lower court. Such contention is made through a misapprehension of the effect of the judgment pronounced in the mandate. That, in effect, granted a new trial, conditionally, on the equitable issue as to whether there was a mistake of the parties in reducing their agreement to writing. The condition was that the trial court should, in its discretion, permit an amendment to the answer interposed by Mann and Munkwitz, so as to properly present the equitable issue to the trial court for determination. That this...