Wyoming Trust Co. of Casper v. Montgomery

• Decision Date: 08 May 1928
• Docket Number: 1447
• Citation: 38 Wyo. 307,267 P. 77
• Parties: WYOMING TRUST CO. OF CASPER v. MONTGOMERY, ET AL. [*]
• Court: Wyoming Supreme Court

267 P. 77

38 Wyo. 307

WYOMING TRUST CO. OF CASPER v. MONTGOMERY, ET AL. ^[*]

No. 1447

Supreme Court of Wyoming

May 8, 1928

APPEAL from District Court, Big Horn County; VOLNEY J. TIDBALL Judge.

Action by the Wyoming Trust Company of Casper against J. H Montgomery and another. Judgment for plaintiff, and defendants appeal.

Affirmed.

Brome &amp Brome and Thomas M. McKinney, for appellants.

The demurrer admitted as true all facts pleaded in the defense, to which the demurrer was sustained. Excess loans are forbidden by law, 5146-5147 C. S.; the loans upon which plaintiff seeks to recover are excess loans. The directors' guaranty should include only notes that the bank may lawfully take, sell or discount, Bank v. Jameson, (Ia.) 157 N.W. 460. The bank that made the loan and the bank that discounted the loan are particeps criminis. The guarantor compelled to pay a guaranteed debt is subrogated to the creditor's right, Brandt (3d Ed.) Vol. 1, p. 324; 12 R. C. L. 1098. Payment of the principal discharges guarantor, 28 C. J. 1003, Schrader v. Bank, 133 U.S. 567. Defendants pleaded payment of the notes; plaintiff denied the averments; when the makers were discharged from liability, with the knowledge of the holder of the paper, guarantors were relieved from liability; the only possible liability of the guarantors would be upon the Waln note, which is not sued upon in this action.

A. M. Gee and C. A. Zaring, for respondent.

Recovery may be had upon the note representing an excess loan, Platte County Bank v. France, 30 Wyo. 323; Burns v. Bank, (Wyo.) 240 P. 683. This court's decisions are in accord with the great weight of authority on the question, 7 C. J. 713; Union Min. Co. v. Bank, 96 U.S. 640, 24 L.Ed. 648; Bank v. Bodicker, (Ia.) 45 L.R.A. 321; Bank v. Nelson, (Nebr.) 183 N.W. 100; Goldstein v. Bank, (Tex.) 213 S.W. 584; Schuber v. McDuffee, (Okla.) 169 P. 642; Bank v. Krag, (N. Y.) 6 N.E. 682; Murry Nelson Co. v. Leiter, (Ill.) 60 N.E. 851; Bank v. Hildebrand, (Kans.) 177 P. 6, 3 A. L. R. 54, and annotations. The question was considered in Bank v. Haun, 30 Wyo. 322, and McDonald v. Mulkey, 231 P. 662. Authorities cited by appellants differ on the facts from the case at bar. The guaranty was of a continuing nature, 28 C. J. 930; it was acted upon in good faith; Belloni v. Freeman, 63 N.Y. 383; it should be construed most strongly against the guarantor, Bridgeport Co. v. Cutlery Works, (Ia.) 107 N.W. 937, 28 C. J. 933. Payment of a note in the hands of a third person, without its surrender, is at the peril of the payer, Carlson v. Ainsworth, (Ark.) 107 S.W. 316; Koen v. Miller, (Ark.) 150 S.W. 411; Gemslow v. Link, (Ill.) 80 N.E. 47; Hunter v. Clark, (Ill.) 156 N.E. 297; Yenney v. Bank, (Nebr.) 62 N.W. 872. The Sproul note was given to renew the Waln note as shown by the pleadings and evidence; appellants confessed their liability as to the Emerson note, but take three different positions in so far as the Waln note is concerned, no one of which presents a meritorious defense. The judgment should be affirmed.

RINER, Justice. BLUME, C. J., and KIMBALL, J., concur.

OPINION

RINER, Justice.

This was an action on a written guaranty, signed by the appellants, J. H. Montgomery and James A. Quiner, and three others--all of whom were, at the time, officers and directors of the Manderson State Bank of Manderson, Wyoming. The guaranty was delivered to the National Bank of Commerce of Casper, Wyoming, and by it transferred to the plaintiff and respondent Wyoming Trust Company, also of the city last mentioned. The District Court of Big Horn County, sitting without a jury, rendered judgment against the appellants for the full amount of the guaranty, to-wit, $ 25,000. The cause is before us for review on direct appeal.

The issues in the trial court were made up thus: Plaintiff's petition, in its first paragraph, after alleging its corporate existence under Wyoming laws, and that the National Bank of Commerce of Casper was organized as a national bank under the laws of the United States--both institutions doing business in Casper, Wyoming--set out that the latter suspended operations June 10, 1924; that the Manderson State Bank, also incorporated in Wyoming, transacted its business at Manderson in that state, having one Fred C. Sproul as its cashier, and ceased to function about May, 1924, being in liquidation since then. The second paragraph of the pleading alleges, that on January 11, 1922, to enable the Manderson State Bank and its officers, or either of them, to obtain credit from the National Bank of Commerce, and to sell, discount and transfer to said bank the notes of the former, and in consideration of the National Bank of Commerce extending credit to the Manderson State Bank and its officers by purchasing from it and its officers, bills, notes and other evidences of indebtedness, the defendants, with others, entered into an agreement with the National Bank of Commerce, the terms of which are set out verbatim. Therein it is recited, after mention of the payment of a consideration "of One Dollar and other good and valuable considerations" paid by the National Bank of Commerce, designated in the agreement as vendee, to the signers thereof, receipt of which they acknowledge, that, at the vendee's request and to enable the Manderson State Bank, referred to as the vendor, or its officers, to sell, discount and transfer, from time to time, to the vendee, notes and other written evidences of indebtedness owned by the vendor or in whose sale, discount or transfer the vendor or its officers had an interest, without recourse on the vendor, the signers--

"jointly and severally guarantee the full and prompt payment to the said Vendee at maturity and at all times thereafter of any and all such notes and written evidences of indebtedness as said Vendee may have heretofore purchased or rediscounted from said Vendor, or may rediscount or purchase or acquire at the request of the said Vendor, whether endorsed by the Vendor with or without recourse, or purchased as aforesaid without endorsement by the Vendor, and any and all indebtedness of any and every kind which the Vendor may incur to the Vendee, together with interest at the rate as agreed per annum from date taken until paid; and we jointly and severally agree to pay, in addition thereto, all costs, expenses and reasonable attorney's fees at any time paid or incurred in collecting or endeavoring to collect any of said notes or other evidences of indebtedness, or any part thereof, or in or about enforcing the same, it being understood that the total recovery in any suit under this guarantee shall not exceed the sum of Twenty-Five Thousand Dollars."

The agreement then recites that the liability thereunder--

"shall not in any way be affected or impaired by any renewal, extension, sale, pledge, surrender or compromise of any of such notes or written evidences of indebtedness, nor by the acceptance by the said Vendee of any security for any of the indebtedness represented thereby, or by reason of any failure, neglect or omission on the part of said Vendee to realize upon any of said obligations."

Its signers jointly and severally waived "any and all notice concerning any matters arising under this guaranty," as well as all diligence in collection, presentment for payment, demand, protest and notice of dishonor, default or non-payment as to any of the obligations covered by the guaranty. Provisions were made in the agreement that should govern situations caused by the death of any of the signers, that the guaranty should be construed according to the laws of Wyoming, and that it should "inure to the benefit of the successors, legal representatives and assigns of said Vendee."

The petition then alleges, substantially, the acceptance of the guaranty by the National Bank of Commerce, and the liability of the signers as outlined in the pleaded agreement; that, after the execution of the guaranty and in reliance thereon, the National Bank of Commerce "purchased, discounted and acquired," from the Manderson State Bank and from its officer, Fred C. Sproul, three promissory notes, which are set out verbatim. The first note was dated Manderson, Wyo., May 6, 1924, was for $ 2050, payable to the order of Fred C. Sproul, due in 180 days after date with ten per cent annual interest until paid, and was signed by F. C. Emerson. The note bore the endorsement of Fred C. Sproul in blank. The second note was dated Manderson, Wyo., October 13, 1923, was for $ 4500, payable to the order of Fred C. Sproul, was due in 180 days after date with ten per cent annual interest until paid, and was signed by Richard Mott and Grace Mott. This note likewise carried the endorsement of Fred C. Sproul in blank. The third note was dated Casper, Wyo., December 18, 1923, was for $ 13,000, payable to the order of the National Bank of Commerce of Casper, Wyoming, due six months after date with eight per cent annual interest until paid. A clause of this note recited that its signer had deposited with the National Bank of Commerce as collateral security for its payment the note of Claude Waln, dated December 20, 1922, for $ 13,000, payable to Fred C. Sproul, and power was by this clause vested in the National Bank of Commerce at its discretion to sell said note to pay the principal obligation. This third note was signed by Fred C. Sproul.

Plaintiff's pleading also avers that during the time mentioned by it and at the time these notes were acquired by the Manderson State Bank and sold to the National Bank of Commerce, Fred C Sproul was the cashier and managing agent of the Manderson State Bank; that all these notes were in fact the property of the bank last mentioned; that all moneys paid by the National Bank of...