Leftkovitz v. First National Bank of Gadsden , 152 Ala. 521 ( 1907 )

HARALSON, J.

This is an action upon a contract whereby the appellant, with certain other creditors of Wohl Bros., guaranteed the past-due indebtedness of the said Wohl Bros, to the First National Bank of Gadsden, the plaintiff and appellee in this case, and also guaranteed such future advances as the plaintiff might thereafter make to the said Wohl Bros., not to exceed a total sum of $8,0G0. The agreement provided for a guaranty to plaintiff of the payment in full on or before the 1st day of January, 1906, of said indebtedness, the same in all respects as if said debts or obligations were those cl the guarantors or obligors.

The third and seventh counts of the complaint to which there were demurrers, are the only counts forming a basis of an assignment of error. Each of these counts claims of the defendant the sum of |500, the amount he agreed to guarantee in and by the contract above mentioned, under and by virtue of said agreement which is set out in full in said counts. The third count then avers a compliance on the part of the complainant Avith all of the terms and conditions of said agreement, and each of said counts further avers that on the 1st day of January, 1906, the firm of Wohl Bros. AAras indebted to the plaintiff in the sum of, to-wit, $8,000, which at that time Avas due and unpaid. The complaint also avers a request upon the defendant to pay the said sum, and his failure and refusal to do so.

The demurrers directed to these counts g're leased largely upon the idea that the contract or agreement set forth in baec verba in said counts, constitutes a conditional contract of guaranty. If such were the case, the complaint Avould not be sufficient, at least, unless made so by some Code form. — Nesbit v. Bradford, 6 Ala. 746; Adams v. McMillan, 8 Port. 445.

We do not think, hoAvever, that this construction of the contract is correct, but on the contrary, it is clear ( bat the contract is what is called an absolute guaranty, avhereby' the guarantor is bound immediately upon the failure of his principal to perform the contract, without any further steps being taken by any one, or Avithout the performance of any further condition. This construction is rendered imperative by the language of the agreement itself, that payment is guaranteed just the same as if the debt were the debt of the guarantor himself. Instruments by Avhich the maker guarantees the payment of a specified sum of money at the end of a stated period, are usually held to be absolute contracts of guaranty. In such cases, no demand is necessary upon the principal debtor, and nothing of a preliminary nature on the part of the creditor is required by. law to perfect bis rights. It becomes the duty of the guarantor, in such cases, to see that bis principal pays the debt at the time stimpulated. — Donley v. Camp. 22 Ala. 659, 58 Am. Dec. 274; 20 Cyc. pp. 1459, 1460, and authorities cited in notes.

It is also objected to the third count, by Avay of demurrer, that it does, not shoAV that there was any consideration for the contract sued upon. In this case, the contract purports on its face to have been made for a valuable consideration, as Avill hereafter appear, and the sanie being set out in full in said count constitutes a sufficient averment of consideration. — 9 Cyc. 718, and authorities cited.

The complaint, then, setting out the contract in full, alleging the existence of a certain indebtedness which was due and’ unpaid on the 1st day of January, 1906, and averring a request upon the defendant to pay according io bis promise, and bis failure to do so, sufficiently aA crs the existence of a valid contract and a breach 1 hereof by the defendant. — Foy v. Dawkins, 138 Ala. 232, 35 South. 41.

Tbe defendant filed a number of special pleas from 3 to 9 inclusive to each of which tbe demurrers of tbe plaintiff Avere sustained. Tbe third plea alleges in substance, that tbe contract sued on was signed upon tbe agreement between plaintiff and defendant that in tbe event one of the alleged parties to said contract failed to ratify the signing of said contract by his agent, then the contract should not be bindng on the defendant, and ' that said party did fail to ratify said contract. This plea was bad, because it undertakes to vary the terms of the written agreement. There are authorities which hold that the delivery of an agreement in escrow with the understanding that it shall not be binding unless duly signed by some other party, does not constitute a valid and binding contract unless signed according to the agreement, hut this does not apply to the case at bar. Here, the contract was not delivered in escrow subject to any condition, but was delivered to the obligee, and the condition sought to be set up in the third plea is in the nature of a conditon subsequent rather than a condition precedent. Besides, it is settled law in this state that there can be no delivery in escrow to the ob-ligee himself.- — Guice v. Thornton, 76 Ala. 466.

It is suggested by counsel for defendant that there is nothing in the plea to show that the agreement therein sought to be set forth was not in writing, and that the plea should have been allowed to stand until the proof showed that such agreement undertook to vary the terms of the written contract. This contention overlooks the fact, that all pleading must be construed most strongly against the pleader, and so construing it, it must be held that such agreement was verbally entered into prior to the execution of the contract, but was not carried forward into the final memorial executed by the parties. Besides, the plea avers that at the time the contract was signed, it was thereupon agreed, and this shows upon its face, that it is an attempt to violate the rule that all agreements occurring at the time of or prior to the execution of a contract, are merged in the written instrument.

Pleas 5, 6, and 8, undertake to set up as a defense to the suit, the failure of certain considerations on the part of the plaintiff which are not mentioned in the contract sued on. This is an undertaking to vary the terms of the consideration expressed on the face of the instru-mnet itself. While there are authorities which state the broad proposition that the consideration of an instrument can always be inquired into by parol evidence, and that where a valuable consideration is expressed, it may be shoAvn to be different in amount from that expressed on the face of the instrument itself, though its kind cannot be varied, such cases we apprehend are those where the instrument constitutes a mere acknowledgment of receipt of a consideration and nothing‘more. Such expressions are proper as applied to the facts of such cases. However, we hold it to be the true rule upon the' subject, that where a consideration expressed in a contract is something more than a mere acknowledgment of receipt, and is of a contractual nature, and such consideration is made of the essence of the contract, in such event parol evidence is no more competent to vary the terms of the consideration as thus promised or undertaken than it can be received to vary any other term of the contract. — Bank of Mobile v. Mobile & Ohio R. R. Co., 69 Ala. 305; ;17 Cyc. 661, and authorities cited in note.

Plea 4 alleges in substance that a part of the consideration of the contract sued upon was that plaintiff agreed to extend a further credit of |4,000 to Wohl Bros., -which plaintiff failed to do. This plea was not subject to the demurrer interposed to it. It did not seek to vary the terms of the written contract, but properly set up a failure of consideration as expressed in the contract sued on.

Tlie seventh and ninth pleas were bad, and subject to the ground of demurrer, that the damages therein set up are too remote, speculative and contingent.

We think the contract sued on in this case is abundantly supported by a sufficient consideration. An agreement to forbear the institution of a suit, or any other means, for the collection of a debt is a sufficient consideration of itself to support a promise on the part of another to pay such debt. — Martin v. Black, 20 Ala. 309; s. c. 21 Ala. 729.

It is no objection to the validity of such promise that no particular time is specified for forbearance,since the law presumes that it will be for a reasonable time. —9 Cyc. 344.

Besides, the guaranty of the payment of a debt on a stated day in consideration of a forbearance by the creditor is construed as meaning a forbearance until the date of payment. — 9 Cyc. 344, and authorities cited.

But besides this, plaintiff in this case promised to make additional advances to the principal debtor, which is also a sufficient consideration to support the promise of payment by the guarantor.

Assignments of error Nos. ] 0 to 15 inclusive relate to questions propounded to the witness Davidson as to the time when plaintiff agreed to extend the debt of Wohl Bros., and as to whether or not anything was said about any such extension, and are all matters that became merged in the written instrument, and which could not be varied by parol testimony. Authorities cited above.

Defendant objected to the introduction of the written contract on the ground, solely, that its execution had not been sufficiently proven. There appear to be no subscribing witnesses to the contract, and the witnesses Davidson, Boykin and Brindley all testify that they were present at the execution of the contract,- and saw it signed by the appellant. To this testimony, there is no contradiction.

The question propounded to the witness, Sullivan, had a tendency to vary the terms of the written contract in accordance with the averments of plea No. 3, which, as above shown, cannot be done.

The assignment of error based upon the proposition that the plaintiff could recover only such • proportion as the sum of $500 bore to the total liability guaranteed is not well taken. The contract is absolute. It in express terms fixes a liability for a specified amount against the plaintiff in the event Wohl Bros, failed to pay their indebtedness to the bank.

Guarantors may bind themselves in different amounts for the same debt. As long as the debt guaranteed remains unpaid, each guarantor is liable to the extent of his promise, at least, for the unpaid balance.

This disposes of all the questions raised by the record, and for the error indicated, the judgment must be reversed and the cause remanded.

Reversed and remanded.

Tyson, C. J., and Dowdell and Denson, JJ., concur.