Opinion
No. 1799
September 29, 1933
APPEAL AND ERROR — TRIAL — GUARANTY — FORBEARANCE TO EXERCISE RIGHT — INDEMNITY BOND — CONTRACTS.
1. Alleged error in admitting and rejecting evidence held not prejudicial, where it could not change results flowing from competent, undisputed evidence. 2. Forbearance to exercise right without request is insufficient to make binding guaranty contract, but request may be inferred from surrounding circumstances, which is question of fact. 3. Facts held not to show that guarantor's forbearance to cancel depository bond with state was based upon request or promise by bank directors so as to entitle guarantor to recover from directors upon indemnity bond amount paid to state when bank became insolvent. 4. To establish legal contract to forbear enforcing rights plaintiff must allege and prove inducement of postponement by promise.
APPEAL from the District Court, Laramie County; SAM M. THOMPSON, Judge.
The cause was submitted for the plaintiff and appellant on the briefs of M.A. Kline, O.O. Natwick and A.D. Walton, of Cheyenne, Wyoming.
The court erred in permitting defendants to prove alleged conversations had with, or in the presence of defendant Mason on the theory that the knowledge of Mason was the knowledge of plaintiff. 2 C.J. 868; Andrews v. Coal Co. (Ind.) 168 N.E. 869; Herdan v. Hanson (Calif.) 189 P. 440; Booker v. Booker (Ill.) 70 N.E. 709. The interests of defendant Mason were antagonistic to the plaintiff. The court erred in the reception of testimony as to conversations had between defendants themselves and as to their intentions in signing the instrument sued on in plaintiff's second cause of action. The court erred in finding generally for the defendants Mason, Jones and Rouse and in rendering judgment in their favor. An agreement to indemnify another is an original agreement and therefore not within the statute of frauds. Smith on the Law of Fraud, Sec. 326; Minnick v. Huff (Nebr.) 59 N.W. 795; Boyer v. Soules (Mich.) 62 N.W. 1000; Hartley v. Sanford (N.J.) 48 A. 1009; Tighe v. Morrison (N.Y.) 22 N.E. 164; Kessler v. Frazier (Ind.) 21 N.E. 552; Hawes v. Murphy (Mass.) 78 N.E. 108; Rose v. Wollenberg (Ore.) 44 P. 382; Lerch v. Gallop (Calif.) 8 P. 322; Lingelbach v. Lukenbach (Wisc.) 170 N.W. 711; Resseter v. Waterman (Ill.) 37 N.E. 875; Burr v. Cross (Calif.) 86 P. 824. Defendants are bound by the terms of their written agreement and cannot be heard to allege a failure of consideration. 21 C.J. 1111; Stewart v. Metcalf, 68 Ill. 109; LePak v. Hedberg (Minn.) 213 N.W. 40; Red Wing Sewer Pipe Co. v. Donnelly (Minn.) 113 N.W. 1; New Prague Flour Mill Co. v. Grain Co. (Mich.) 196 N.W. 890; Moore v. Earl (Calif.) 27 P. 1087; Ettelsohn v. Kirkwood, 33 Ill. App. 103; Minneapolis v. Street Railway Co. (Minn.) 133 N.W. 80; Bank v. U.S.F. G. Co., 266 Fed. 495; Bank v. Trust Co. v. Bickford (Vt.) 122 A. 582. Defendants are bound by the terms and conditions of their bond which plaintiff accepted in good faith, without the knowledge of any conditions attached to its execution and delivery. Monona County v. Gray (Ia.) 206 N.W. 27; Pacific Mill Timber Co. v. Company (Calif.) 219 P. 972; Copeland v. Association, 48 S.W.2d 845; Watkins v. Brund, 294 P. 1024; Smither v. Wackins Co. (Ky.) 4 S.W.2d 207; Byers v. Gilmore (Colo.) 50 P. 370; Benton County Bank v. Boddicker (Ia.) 75 N.W. 632; Baker County v. Huntingdon (Ore.) 79 P. 187.
The case was submitted for defendants Ayers, Yoder and Jones upon the brief of Kinkead Pearson.
Mason was the sole agent of plaintiff in this transaction and knew how to carry out the instructions of plaintiff. Commercial Bank v. Hauf, 32 Wyoming 127. The evidence clearly shows that he received all of the correspondence and acted for plaintiff. Plaintiff always insisted that the directors should subscribe to the bond, which means that their names be attached to the foot thereof. When under such circumstances, the name of a party appears at any other place of the instrument than the foot thereof, it is always proper to inquire as to the purpose of the party who places his signature thereon at an irregular place. 29 Am. Eng. Ency. of Law, 856; Love v. Harris (N.C.) 72 S.E. 150; Wildcat Branch v. Bell, 45 Ind., 213. The statute of frauds requires signatures to be at the end of the instrument. Leask v. Horton, 79 N.Y. Supp. 148; Atty. v. Clark (R.I.) 59 A. 395; James v. Patten, 6 N.Y. 12; In re Seamans' Estate (Calif.) 80 P. 700; Longhren v. Brownwell (Ia.) 101 N.W. 287. The only exception to the rule is where the statute does not require a signature to be subscribed to an instrument. 9 C.J. 14; Kenck v. Parchen (Mont.) 57 P. 94; 9 C.J. 141; Elliott v. Bellevue (Kan.) 107 P. 794. The point was discussed in Laramie Land Co. v. Hoffman, 30 Wyo. 238. The instrument itself refers to the "undersigned." The concern of the court is to make the contract express the intention of the parties. Wolfe v. Morgan (Cal.) 273 P. 64; Grieve v. Grieve, 15 Wyo. 358; 23 R.C.L. 329; McClintock v. Ayers, 36 Wyo. 132; Chandler Lumber Co. v. Radke (Wisc.) 118 N.W. 185. At the close of plaintiff's evidence, each of the defendants moved for a judgment of dismissal on twelve different grounds. The offer of guaranty was never accepted. The offer was made through Mason to plaintiff which required acceptance and notice thereof to be given before it could become binding on defendants. It never became an enforcible contract. The petition did not allege acceptance of guaranty and notice thereof and is therefore defective. Lawson v. Towns, 2 Ala. 375; McCollum v. Cushing, 22 Ark. 542; Kincheolor v. Holmes, 45 Am. Dec. 45; Merchants' National Bank v. Ayers, 37 Wyo. 136; Davis Co. v. Richards, 115 U.S. 524. There was no consideration for the guaranty even though the holder did in fact forbear. Doorly v. Butte (Mont.) 230 P. 779. Contracts of guaranty are like other contracts requiring the minds of the guarantor and guarantee to meet upon the proposition in the same sense. Deering v. Mortell, 110 N.W. 86; Royal v. Newlin (Utah.) 239 P. 49; Continental Supply Company v. Smith (Okla.) 241 P. 770; Ochler v. Cowley (Okla.) 231 P. 539. Acceptance is not shown by the mere performance of acts in reliance upon the offer. 20 Cyc. 1404; Miama Bank v. Goldberg (Wis.) 113 N.W. 391; German Sav. Bank v. Company (Ia.) 83 N.W. 960. There is nothing in the record showing that plaintiff postponed notice of cancellation in reliance upon said guaranty; therefore plaintiff cannot prevail. Acme Mfg. Co. v. Reed (Pa.) 47 A. 205. The law is not in sympathy with a compensated surety. Scott v. Norton Hdw. Co. 54 F.2d 1047. Contracts of individual guarantors should be strictly construed, and all doubts resolved in their favor. T. T. Co. v. U.S.F. G. Co. (Ore.) 1 P.2d 1100.
The cause was submitted for defendant Charles Hirsig upon the brief of Matson Swainson and Carleton A. Lathrop of Cheyenne, Wyoming.
Hirsig did not sign the bond and his statement of intention in placing his signature to a property statement on the back thereof was admissible. 22 C.J. 1630; Humphrey v. Company (Okla.) 75 P. 528; U.S.F. G. Co. v. Siegmann, (Minn.) 91 N.W. 473; Jones v. Coulter (Cal.) 243 P. 487; Barton Co. v. Taylor (Ark.) 94 S.W. 714; City of Butte v. Cook (Mont.) 74 P. 69; Hendry v. Cartwright (N.M.) 89 P. 312; Ware v. Allen, 128 U.S. 590. The manner in which an obligor places his signature to a bond is immaterial, if it appears that he made it for the purpose of binding himself. State v. Wallis, (Ark.) 20 S.W. 811. It was a question for the jury whether Hirsig, not having signed at the foot of the bond, meant to be bound by it as it stood, or whether he left it unsigned because he refused to sign the bond. Willtrout v. Sprague, 40 Wyo. 215; Christensen v. McCann, 41 Wyo. 101; Mulhern v. Mahs, 41 Wyo. 214; Hitshew v. Rosson, 41 Wyo. 509; Lincoln Land Co. v. Irrigation District, 42 Wyo. 229; Yellowstone Sheep Company v. Stock Company, 43 Wyo. 15; North Laramie Land Co. v. Hoffman, 30 Wyo. 238. Appellant's first cause of action was unsupported by evidence. A party cannot object for the first time on appeal that a certain allegation of the petition was admitted if the trial proceeded on the theory that it was traversed. Davis v. Minnesota Baptist Convention (Wyo.) 16 P.2d 48; Briggs v. Kansas City Bank (Mo.) 40 S.W.2d 682; Degge v. Co. (Colo.) 140 P. 478; Roberts v. Company (Wash.) 53 P. 664; Weidenmueller v. Co. (Cal.) 61 P. 374; Wyoming Stockmen's Loan Company v. Johnston, 33 Wyo. 457; Hoffman v. Ass'n (Wash.) 102 P. 1045; Sweeney v. Railway Co. (Ariz.) 29 P. 15. This defendant concurs in and adopts the statements and arguments filed by other defendants where applicable to his situation.
The cause was submitted for defendant Charles R. Mason on the brief of Chiles P. Plummer of Cheyenne, Wyoming.
Defendant Mason and wife were partners in the insurance business under the name of "Mason Fire Insurance Agency," in Wheatland, Wyoming. He was a stockholder and director of the bank. He appears in a dual capacity, as agent for the plaintiff in selling a guaranty bond to the bank, but he had no technical knowledge of the bonding business. The correspondence indicates that plaintiff desired to retain the premium, at the same time hoping to get something signed that would be in the nature of an indemnifying bond; but there is nothing in the record showing instructions to Mason by plaintiff as to what they required in the way of an indemnifying bond. The bond was signed by some officers of the bank on the front page, as officers with no personal obligation, as they believed, while others signed a financial statement on the back thereof, intending it to be only a financial statement. The record considered as a whole shows that the bond was never completed and never accepted. The court found generally for the defendants and against the plaintiff. The fourth ground of defendant's joint and several motions to dismiss should have been sustained. In order to avoid an unnecessary extension of this brief, defendant Mason concurs in and adopts the statements, briefs and arguments filed by other defendants in so far as applicable to his situation.
M.A. Kline for appellant in reply.
The record will show that Mr. Hirsig testified that he would not sign a bond but would sign a statement. He said nothing about a property statement. Counsel for defendants cite the case of Bank v. Hauf, 32 Wyo. 127 to establish that plaintiff is chargeable with knowledge of facts known to the defendant Charles R. Mason. The case is not in point. The case here turns upon the facts. Mason was not the sole agent of plaintiff. The correspondence was conducted by Mrs. Mason. It is obvious that if Mason or anyone else had advised plaintiff that Yoder, Ayers and Hirsig refused to sign an indemnity agreement there would never have been any occasion for this law suit. Counsel for defendants assume that a contract of indemnity is nothing more than a contract of guaranty. The courts do not agree with their premises, and so, of course, cannot agree with their conclusions. 28 C.J. 892. If the contract involved here was one of guaranty, even then the authorities cited by appellant would not be in point. Hibernia Bank v. Cancienne (La.) L.R.A. 1917 D. 402; Lester Piano Co. v. Romney (Utah) 126 P. 325; Stauffer v. Koch (Mass.) 114 N.E. 750; Miller v. Oil Well Supply Co., (Okla.) 191 P. 1094; Bank v. Ezzard, (Okla.) 159 P. 267; Davis Co. v. Richards, 115 U.S. 524. The contract here in question was an indemnity agreement, and the law is well settled that the doctrine of notice of acceptance is not applicable to bonds of indemnity, or to any form of instrument which is an original undertaking. (See cases cited in original brief.) The cases cited in support of defendant Hirsig are not in point.
A party cannot object for the first time on appeal that a certain allegation of the petition was admitted, if the trial proceeded on the theory that it was traversed. The decision in Davis v. Baptist Convention, 16 Pac. (2nd) 48, cited by defendants, in fact supports the position of plaintiff and appellant. The brief filed on behalf of Charles R. Mason adds nothing new to the briefs that were filed by other defendants.
The parties will be referred to as plaintiff and defendants. From the finding and judgment in favor of defendants, the plaintiff has appealed to this court.
This action was brought in Laramie County District Court, plaintiff praying judgment against seven defendants in the sum of $10,039.45 claimed by plaintiff to be due it under the terms of an indemnity bond. A copy of the indemnity bond is attached to plaintiff's petition, is identified in the record as Exhibit "C" and is the basis of the plaintiff's second cause of action. The record makes it unnecessary for us to consider plaintiff's first cause of action.
The Platte County State Bank of Wheatland, Wyoming, was organized under the banking laws of Wyoming and was a duly designated depository for state funds. Some time prior to the year 1922 the plaintiff became surety on two bonds in the sum of $5,600.00 each, executed by the bank as principal and the plaintiff as surety, conditioned that the bank would pay to the State of Wyoming on demand any funds deposited in the bank by the State. Under the terms and conditions of the depository bonds, the plaintiff had the right to terminate its obligation under said bonds and to cancel the same by giving thirty days notice in writing of its intention so to do to the Governor and State Treasurer of the State of Wyoming.
In the month of March, 1922, the plaintiff, through its department located at Denver, Colorado, opened correspondence with its local representative or agent, the Mason Fire Insurance Agency at Wheatland, with the object of securing an indemnity bond or agreement from the directors of the bank to indemnify it in case of loss on its depository bonds covering State deposits in the Platte County State Bank. This correspondence continued periodicaly until about the 13th or 14th of July, 1922. During this period two or possibly three proposed bonds were sent in, to plaintiff's Denver office, by the Mason Fire Insurance Agency. One bond sent in was signed at the bottom of the front page, "Platte County State Bank, Otto E. Rouse," and on the reverse side was a property statement signed by all the defendants, who were at the time directors of the Platte County State Bank. On April 11th, 1922, this bond was returned to the Mason Fire Insurance Agency from the plaintiff's Denver office. The letter of transmittal contains the following language:
"We have yours of the 6th inst., inclosing indemnity bond signed by the officer of the bank in his official capacity. We are returning same herewith with advice that we want the indemnity bond signed by the individual Directors of the bank and not in their official capacity. These signatures should be affixed on the lines check-marked and acknowledged before a Notary Public and on the reverse side property statements furnished."
All the correspondence carries the demand of plaintiff for a bond executed by all the directors of the bank. On May 16th, 1922, the plaintiff writes to the Mason Fire Insurance Agency at Wheatland, Wyoming, in part as follows:
"We are returning the indemnity bond signed by the bank as it is of no value to us. * * * Have one signed by each of the directors, and as the wealthier directors live away from Wheatland, we would thank you to send the new form to them for their signatures."
After Exhibit "C" as originally executed was returned to the Mason Fire Insurance Agency the name of the Platte County State Bank was erased from the bottom of the front page of the bond and the signatures of defendants Mason, Jones and Rouse were substituted. This document was on July 13th, 1922, forwarded to plaintiff by the Mason Fire Insurance Agency and the negotiations seem to have come to an end, though the document did not comply with the demand of the plaintiff. There is no evidence in the record that plaintiff served the notice of cancellation provided for its depository bonds, nor is there any direct evidence that plaintiff would serve the notice of cancellation if an indemnity bond was not furnished. There is no direct evidence that any of the defendants requested plaintiff to continue as surety on the depository bonds, while there is evidence by defendants that they did not make such a request.
Plaintiff remained surety on the depository bonds until February 17th, 1923, when the Platte County Bank closed its doors, and the plaintiff was compelled to pay to the State of Wyoming the sum claimed in its petition. We deem the foregoing statement sufficient so that our decision may be understood.
There are sixty-nine specifications of error relied upon by plaintiff, and we have given consideration to each of them, but we will not discuss them all because the view we have taken makes it unnecessary. If error occurred in the admission or rejection of evidence, it was without prejudice to plaintiff because it could not change the results which necessarily and naturally flow from the competent, undisputed evidence.
Under the foregoing facts the question arises was there a meeting of the minds of the contracting parties so that Exhibit "C" ever actually became a contract binding upon the parties. If this question is answered in the negative it then becomes unnecessary to consider the separate defenses interposed by the several defendants.
Plaintiff alleges in its petition that it "agreed with the defendants to continue as surety upon said depository bonds of said The Platte County State Bank and not to terminate its obligation under the terms and conditions of said bond." The only evidence we find in the record tending to support this allegation is the fact that plaintiff did not serve the notice cancelling its obligation on the depository bonds. From that fact must it be implied that plaintiff promised or agreed not to withdraw from the depository bonds, or that its failure to withdraw was pursuant to a request? We think not.
All the cases agree that mere forbearance without request is insufficient. Williston on Contracts, Sec. 136. Plaintiff alleges and contends that there was a request by defendants that plaintiff forbear from serving the notice of withdrawal from the depository bonds. There is no direct evidence of a request to forbear. The request to forbear need not be expressed but may be inferred from the surrounding circumstances, and, whether the surrounding circumstances show a request is a question of fact. The trial court found this fact against plaintiff and we think the evidence justified the trial court in so finding. To establish a legal contract to forbear, forbearance being a delay in enforcing rights, plaintiff must allege and prove the inducement of postponement by a promise. There must be proof of a request to forbear, and of a promise to forbear, or that the forbearance was pursuant to a request. No promise on the part of plaintiff ever was a barrier to serving the notice of cancellation. Had the plaintiff at any time subsequent to July 14, 1922, served the notice of withdrawal from the depository bond, defendants could not have successfully claimed that by reason of Exhibit "C" plaintiff had agreed to forbear or forego its rights to withdraw from the bonds.
At the time Rouse, Mason and Jones signed Exhibit "C" they knew that plaintiff was insisting that an indemnity bond be properly executed by all the defendants and whether you give effect to the evidence of the three defendants that they signed under the agreement and upon the condition that it would not become binding or operative as to them until signed by all the other directors, or that they signed knowing that the other defendants would refuse or had refused to sign, but believing from the previous correspondence with the plaintiff that, signed only by three of the directors, it would not be acceptable to plaintiff, makes little if any difference, the plaintiff never having notified them that the bond, which admittedly was not executed by the parties requested, was acceptable or accepted by plaintiff. In either case, there was not a meeting of the minds of the parties.
The points involved in a decision of the case at bar have been passed upon by this court in the case of Albany National Bank of Laramie v. Dodge, 41 Wyo. 286, 306, 285 P. 790, 796, where this court uses the following language:
"If the forbearance is neither pursuant to a promise nor upon a request it is not bargained for and given in exchange for the promise of the guarantor. The request to forbear, however, need not be expressed, but may be inferred from the surrounding circumstances. Fullerton v. Provincial Bank, (1903) A.C. 309; Miles v. New Zealand etc. Co., 32 Ch. Div. 266, 290; Edgerton v. Weaver, 105 Ill. 43; In re All Star Feature Corp., 232 Fed. 1004; McDonald Bros. Co. v. Koltes, 155 Minn. 24, 192 N.W. 109. Whether the surrounding circumstances show a request is a question of fact."
In the foregoing case this court reviews the authorities at length. We are satisfied with the decision arrived at and feel that it is decisive of the case at bar. We find no reversible error in the record.
The judgment of the trial court is accordingly, affirmed.
KIMBALL, Ch. J., and BLUME, J., concur.
In this case there was no express promise to forbear. Hence, in order that there may be said to be a consideration for the bond signed by Rouse, Mason and Jones, it must appear that the forbearance in this case was pursuant to a request on the part of the signers of the bond. Albany National Bank v. Dodge, 41 Wyo. 286, 306, 285 P. 790. Assuming, without deciding, that a request on the part of these three defendants might be implied from the fact that the bond was signed by them and forwarded to the plaintiff, there is nothing in the record that would require the trial court to find that the forbearance was in pursuance thereto. There was in any event, no outward circumstance to indicate that to be true. It may be that the forbearance was in pursuance of something else. Perhaps the plaintiff preferred to stay on the bond so as not to be required to return any unearned premium, or, as is not at all unlikely, the matter was simply delayed until plaintiff should have a better opportunity of obtaining a more complete compliance with its request to have on the bond the signatures of the main stockholders of the bank. Plaintiff, under the circumstances, undoubtedly had the burden to show that it forbore pursuant to a request, and when it, after receiving the bond, which was not in the form requested by it, remained absolutely silent, retaining the right to get off the bond at any time, the trial court was not, I think, bound to find that the forbearance was pursuant to any implied request.
KIMBALL, Ch. J., and MURANE, District J., concur.