Durant v. Snyder

151 P.2d 776, 65 Idaho 678, 1944 Ida. LEXIS 93

• Court: Idaho Supreme Court
• Decided: January 17, 1944
• Docket: No. 7111.
• Status: Published

Opinions

DUNLAP, J.

Respondents, husband and wife, brought this action against appellants and one Jim St. Clair, upon whom process in this action was not personally served, to collect the balance claimed to be due on a written contract evidencing the sale by respondents as vendors, to St. Clair as vendee, of a stock of general merchandise in respondents’ place of business at Weippe, Idaho. The agreement provides for payment of the merchandise at the inventoried price of $11,389.88 with a down payment of $2,000.00 (which was paid), and the balance, together with 6% interest, in semi-annual payments on June 1st and January 1st of each year.

By the agreement, the vendors also leased to the said St. Clair real property upon which the store containing the business was located and also other buildings used in connection with the business, together with the furniture and fixtures, and a residence house, at an agreed rental of $95.00 per month, beginning December, 1938. The lease was for a period of five years from its date, December 6, 1938.

The contract was not acknowledged by any of the parties, and it definitely appears the real property'agreed to be leased was acquired during the marriage relationship of respondents and was their community property. .

The complaint alleges a balance due and unpaid on the contract of $8377.06. It also alleges that in violation of the contract, St. Clair had made an assignment and transfer to his creditors, of the merchandise, without payment of thé balance due thereon, and after written notice, of delinquency and demand for the June 1st, 1941 payment served on St. Clair and appellants.

Other violations of the contract are also pleaded.

The original contract is signed by respondents, as parties of the first part, and by the said Jim St. Clair, as party of the second part, and annexed thereto is the following matter:

“It is understood and agreed that H. C. Snyder and J. W. Brierly are guarantors for the party of the second part and shall and do have the right to take over the contract and they assume the rights of the party of the second part in the event of the default of the party of the second part and that they shall be given notice of such default by the parties of the first part.

H. C. Snyder

J. W. Brierley

Guarantors

E. X. Durant

Nellie G. Durant

Parties of First Part.

Jim St. Clair

Party of Second Part.”

At the close of plaintiffs’ evidence (respondents here), appellants made a motion for nonsuit, which was denied. After appellants had presented their evidence, and at the close of the trial, appellants renewed their motion for non-suit, and it was again denied by the court. Whereupon, the respondents, having waived on the trial, all claim for rents, made a motion for a directed verdict and upon this motion, the court directed the jury to bring in a verdict in favor of respondents and against appellants in the sum of $190.20, the balance of the installment due on the contract for the merchandise as of June 1st, 1941, with interest at 6%.

After the verdict, according to the court’s instructions, judgment was entered thereon and pursuant thereto, and the appeal is from that judgment.

Appellants allege a number of assignments of error, among them being the assignment that the court erred in not granting the motion for nonsuit on the ground that the written contract was void ab initio because it was an indivisible and entire contract, containing as an inseparable and indivisible part thereof a lease of respondents’ community real property, combined with the sale of the mer chandise, and that said contract was not acknowledged by respondents, or either of them.

A lease of community real property for more than one year, not acknowledged by the husband and wife, is not enforcible as such. (Sec. 31-913,1. C. A.; Fargo v. Bennett, 35 Ida. 359, 206 P. 692; Burnham v. Henderson, 47 Ida. 687, 278 P. 221; Little v. Bergdahl Oil Co., 60 Ida. 662, 95 P. (2d) 833; Abbl v. Morrison, 64 Ida. 489, 134 P. (2d) 94.)

However, where a contract contains illegal provisions, also a separate legal agreement, the latter will be enforced if no necessity exists for reliance by the party seeking to enforce it upon any of the illegal provisions thereof. (Municipal Securities Corp. v. Buhl Highway District, 35 Ida. 377, 208 P. 233; Fox Film Corp. v. Tri-State Theaters, 51 Ida. 439, 6 P. (2d) 135; Edwards v. Mullin, 220 Cal. 379, 30 P. (2d) 997; Walker v. W. T. Rawleigh Co., 133 Okl. 75, 271 P. 166; Henshaw v. Smith, 102 Kan. 599, 171 P. 616; Mack v. Jastro, 126 Cal. 130, 58 P. 372; Walters Nat. Bank v. Bantock, 41 Okl. 153, 137 P. 717; Wayman Inv. Co. v. Wessinger & Wagner, 13 Cal. App. 108, 108 P. 1022.)

Whether a contract is severable or indivisible must be determined from the subject matter of the agreement and the language used therein controls. (Shaw Supply Co., Inc. v. Morgan, 48 Ida. 412, 282 P. 492; 13 C. J. pg. 561; 17 C. J. S. p. 785, sec. 331; Pacific Wharf & Storage Co. v. Standard American Dredging Co., 184 Cal. 21, 192 P. 847; Waybright v. Meek, 90 Cal. App. 13, 265 P. 370; Read v. Gibson & Johnson, Tex. Civ. App., 12 S. W. (2d) 620; Dorsey v. Clarke, 223 Ky. 619, 4 S. W. (2d) 748; Page on Contracts, 2d Ed., Vol. 4., Sec. 2085, p. 3609.)

Appellants argue the contract and evidence, show it was intended by respondents, that St. Clair was to carry on the business on the leased premises, and relies upon Orenstein v. Kahn, 13 Del. C. H. 376, 119 Atl., 444; Harshbarger v. Rankin, 50 Ida. 24-30, 293 P. 327; Spokane Cattle Loan Co. v. Crane Creek Sheep Co., 39 Ida. 801-806, 230 P. 772.

In the Orenstein case, where the facts were similar to the facts here, the Court held the contract to be entire and not divisible, and relied upon a provision therein providing for a deposit on the contract for the sale of real estate and merchandise, where a deposit at time of contract was made, and wherein the contract provided, “in case title is not clear, deposit to be returned,” and the Court said “the evident purpose of this clause, was that the whole contract was to be void if the title to the real estate should prove to be defective.”

In the Harshbarger case, the contract provided “that each and all of its parts and the consideration shall be common each to the other and inter-dependent.”

In Spokane Cattle Loan Co., v. Crane Creek Sheep Co., supra, the contract covered the sale of sheep, horses and other personal property. A separate and stated, price was agreed upon for the sheep, and as a part of the consideration to be paid therefor, title to the horses and other personal property was to be passed. This Court held “It is obvious from the terms of the contract itself, and from the evidence as to the circumstances under which the contract was made, that a part of the consideration for the agreement of respondent to pay the specified purchase price for the sheep was the agreement by appellant to deliver without further consideration the horses and other personal property, and that in that respect the consideration for the contract is entire, and the contract is not severable in the sense contended for by appellant.”

We do not find like conditions in the contract here. Furthermore, there is nothing in the contract to prohibit St. Clair or the appellants from removing the merchandise and the operation of the business from the real property if they so desire, and no provision for a breach of the contract for such removal.

Neither do we find that the evidence sustains the contention St. Clair was to carry on the business on the leased premises.

Moreover, the rule is that where a contract is capable of two constructions, the one making it valid, and the other void, the first ought to be accepted. (Pacific Wharf & Storage Co. v. Standard American Dredging Co., 184 Cal. 21, 192 P. 847; Edwards v. Mullin, 220 Cal. 379, 30 P. (2d) 997; McVicker v. McKenzie, 136 Cal. 656, 69 P. 495; 12 Am. Jur., pg. 793, Sec. 251; 17 C. J. S., pg. 735, Sec. 318.)

The contract here pertains to two major propositions, namely, sale of the merchandise for the inventoried and stated price of $11,389.88 and a lease of the real property and the business furniture and fixtures at the stated and agreed rental of $95.00 per month.

It is a settled rule of law, that where several things are to be done under a contract, if the money consideration to be paid is apportioned to each of the items to be performed, the covenants are ordinarily regarded as severable and independent. (Shaw Supply Co., Inc. v. Morgan, 48 Ida. 412, 282 P. 492; 17 C. J. S., pg. 790, sec. 384; 12 Am. Jur., pg. 872, sec. 317; Armstrong v. Illinois Bankers Life Assoc., 217 Ind. 601, 29 N. E. (2d) 953, 131 A. L. R. 769; Pacific Wharf & Storage Co. v. Standard American Dredging Co., 184 Cal. 21, 192 P. 847; Grunbaum Bros. Furniture Co., Inc. v. Humphrey Inv. Corp., 144 Wash. 620, 258 P. 517; Loveland v. Warner, 103 Ore. 638, 204 P. 622, 206 P. 298; Page on Contracts, pg 3611, sec. 2088; Hayden v. Collins, 90 Utah 238, 63 P. (2d) 223; McVicker v. McKenzie, 136 Cal. 656, 69 P. 495; Minnesota Sandstone Co. v. Clark, 35 Wash. 466, 77 P. 803; Barlow Mfg. Co. v. Stone, 200 Mass. 158, 86 N. E. 306; Regent Waist Co. v. O. J. Morrison Dept. Store Co., 88 W. Va. 303, 106 S. E. 712; Weil v. Stone, 33 Ind. A. 112, 69 N. E. 698.)

It is our judgment after a careful reading of the contract involved here, that the two provisions above referred to are separable, and that the agreement to lease being unenforcible because of lack of acknowledgment, does not so taint the agreement for the purchase of the merchandise, as to prevent recovery therefor, or avoid the liability of the appellants under the agreement signed by them.

It is contended this agreement which is set out above, is not sufficient to hold appellants as guarantors; that it in fact does not constitute a contract of guaranty, but constitutes only an option in appellants to take over St. Clair’s interest in the business in case of his default; that the word “guarantor,” as used in the contract, is ambiguous and meaningless; that to charge one person with the debt of another, the undertaking must be clear and explicit (24 Am. Jur. 876) and that the liability of a guarantor is limited to the exact letter of his contract. (W. T. Rawleigh Medical Co. v. Woodward, (Mo.), 230 S. W. 647-649.)

The principal contract is signed only by respondents and St. Clair. However, there are several references to guarantors therein; illustrative clauses, are, in effect, as follows ; — St. Clair is prohibited from extending credit to customers unless agreeable to his guarantors or the amount is secured; St. Clair is barred from transferring his equity, without consent of respondents, other than the right to turn the contract to his guarantors. It appears the so-called guaranty contract was signed by appellants before respondents affixed their signatures to the original agreement.

We understand appellants’ position here to be that they signed the agreement, under the apprehension they were accepting liability only for the repayment of $2000.00, the down payment which St. Clair borrowed and paid to respondents at the time of the contract; that they had arranged a credit at the bank for St. Clair for this purpose, and that in signing the so-called guaranty, it was their intent as well as the intent of all the parties, that it was to protect them until their liability for the credit arranged, or until the borrowed money had been repaid by St. Clair and they had been relieved from liability; that as security they were granted the option to take an assignment from St. Clair under his contract to purchase, at any time he might default therein; that it was never their intent, or the intent of any of the parties by the clause attached to the agreement to guarantee performance thereof by St. Clair.

The intent of the parties to a written agreement, is, if possible, to be ascertained by the language as contained therein. (12 Am. Jur. pg. 745, sec. 227.) If the Court is unable to determine the meaning of the contract, however, from its terms, then evidence should be received to determine the meaning and intention. (Molyneux v. Twin Falls Canal Co., 54 Ida. 619, 35 P. (2d) 651; Johansen v. Looney, 30 Ida. 123, 163 P. 303.) And in construing a written instrument, where the language used is clear, certain and unambiguous the Court will give effect to the language employed according to its ordinary meaning. (Messinger v. Cox, 33 Ida. 363, 194 P. 473; Cottingham v. Smith, 28 Cal. App. (2d) 345, 82 P. (2d) 479; Moon Motor Car Co. v. State, 149 Okl. 190, 1 P. (2d) 358; People v. Hinderlider, 98 Colo. 505, 57 P. (2d) 894; Nunner v. Erickson, 151 Ore. 575, 51 P. (2d) 839.) The contract is to be given effect according to its terms and the Court can neither substitute nor write a new contract. (Weed v. Idaho Copper Co., 51 Ida. 737, 10 P. (2d) 613; Sorenson v. Larue, 43 Ida. 292, 252 P. 494; Machold v. Farnan, 14 Ida. 258, 94 P. 170.)

In the case of First National Bank of Idaho v. Reins, 42 Ida. 720, 248 P. 9, this Court speaking through Mr. Justice Budge said:

“It has been well settled, in this state and elsewhere, that several instruments made at one and the same time, and having relation to the same subject matter, must be taken to be parts of one transaction and construed together for the purpose of showing the true contract between the parties.”

A guarantor is a person bound by the contract of guaranty, and such a contract is an undertaking or promise on the part of the guarantor, which is collateral to a primary or principal obligation on the part of another, and which binds the obligor to performance in event of nonperformance by the other. (24 Am. Jur., pg. 873, sec. 2.) No particular form of expression is necessary to create a guaranty. (28 C. J. 911, sec. 42; 24 Am. Jur., 899, sec. 38; Sherman Clay & Co. v. Turner, 164 Wash. 257, 2 P. (2d) 688; Simpson v. First Nat. Bank, 94 Ore. 147, 185 P. 913.)

In view of these well settled rules we must hold appellants became guarantors of the principal contract here. The guaranty clause was executed contemporaneously with the principal contract, and prior to the signatures of respondents thereto, and very obviously induced those signatures after and not before its execution. Respondents transferred possession of valuable property to St. Clair, the purchaser, evidently in reliance of the guarantee of appellants that the purchase price would be paid. (See First Nat. Bank of Chandler v. Cleveland, 127 Ore. 176, 260 P. 80; Lamm & Co. v. Colcord, 22 Okla. 493, 98 P. 355; Lean v. Geagan, 20 Cal. App. 260, 128 P. 792.)

However, in the instrument here, both in the original contract and in the appended clause, which was signed by appellants, the language fixing their liability appears clear, certain and unambiguous. It clearly imparts and conveys the idea of assurance and guarantee of payment on the part of the appellants. Both instruments impart the idea that the obligation to respondents there assumed by St. Clair was the one which he contracted in the original instrument.

In neither of these instruments is reference made to St. Clair’s obligation to appellants on account of their arrangement of credit on his behalf for the down payment and to so limit and construe either instrument would necessitate the insertion of words and the making by the court of a new contract for the parties. This we can not do.

To adopt appellants’ theory on this point would have the effect of reducing the guarantee from one of $11,389.88 to one for the sum of $2000.00, and in effect render respondents’ property as security to appellants until such time as they had been made whole for the credit arrangement.

We can not construe the guaranty instrument to be an option as contended by appellants, and to so hold would make it merely rather than obligatory, optional with appellants to assume the contract for payment contrary to what to us seems the plain intent and purpose thereof and of the parties thereto, as expressed in the instrument.

We have carefully examined the case of Harper v. Independence Development Co., 13 Ariz. 176, 108 P. 701, relied upon by appellants to sustain their contention that the instrument here created an option only, and we do not consider that decision as authority under the circumstances here because of the marked difference in the wording, as it clearly appears that the expression intention there was to create an option.

The complaint in this action was filed October 1, 1941; the demurrer was filed on October 23, 1941 and overruled on April 8, 1942, and appellants given until May 1, 1942, to answer. The answer was filed April 30, 1942. After the case had been set for trial and a jury called, and on December 7, 1942, some twelve days before trial, a proposed amended answer was served upon the attorney for respondents, at which time the notice of motion to file same was likewise served, and set for hearing as of December 9,1942. The motion was resisted by respondents. A supplemental hearing was had on the motion December 16, 1942. The trial court denied the motion to amend upon the grounds of insufficient showing, and this ruling is also assigned as error.

An application to amend a pleading, is directed to the discretion of the Court. (Sec. 5-905, I. C. A., Craven v. Boss, 38 Ida. 722, 225 P. 136; Farmers and Mechanics’ Bank v. Gallaher Investment Co., 43 Ida. 496, 253 P. 383; Palmer v. Utah and Northern Ry. Co., 2 Ida. 382, 16 P. 553.)

The ruling of the Court upon an application for the filing of an amendment will not be disturbed unless it affirmatively shows that the court has abused its discretion. (Idaho Trust Co. v. Eastman, 43 Ida. 142, 249 P. 890; Todd v. City of Hailey, 45 Ida. 175, 260 P. 1092; Marysville Development Co. v. Marotz, 44 Ida. 469, 258 P. 180; Hoy v. Anderson, 39 Ida. 430, 227 P. 1058; Swanson v. Olsen, 38 Ida. 24, 220 P. 407; Rankin v. Caldwell, 15 Ida. 625, 99 P. 108.)

It is necessary that proper showing be made and that the application is made within a reasonable time before denial of the application for amendment becomes an abuse of discretion. (Dunbar v. Griffiths, 14 Ida. 120, 93 P. 654; Granger v. Erie, 101 Mont. 170, 53 P. (2d) 443; Schamoni v. Semler, 147 Ore. 353, 31 P. (2d) 776; St. George v. Boucher, 84 Mont. 158, 274 P. 489.)

We have carefully reviewed and considered the record in connection with appellants’ showing, with the filing of the amended answer, and are unable to conclude that the trial court abused its discretion in denying the same.

From what has been said it appears that we must and do hold that appellants’ other assignments of error, including assignment No. Three to effect that the Court erred in sustaining respondents’ objections to appellants’ proof and offers of proof, are without merit.

Judgment affirmed.

Costs to respondents.

Holden; C. J., and Ailshie, J., concur. Budge, and Givens, JJ., dissent.