J. R. Watkins Co. v. Clark

147 P.2d 348, 65 Idaho 504, 1944 Ida. LEXIS 75

• Court: Idaho Supreme Court
• Decided: March 17, 1944
• Docket: No. 7117.
• Status: Published

Opinions

GIVENS, J.

Respondent, a manufacturer and wholesaler of drugs, medicines, and sundries, entered into an agreement 1 with appellant Clark, August 31, 1938, whereby it agreed to sell and he agreed to purchase various merchandise which he was authorized thereby to retail in the locality where he was then engaged in business. The other appellants, as sureties or guarantors for appellant Clark, signed the appended agreement. 2

January 8, 1940, respondent terminated the contract. At that time Clark was indebted to respondent in the amount of $2000.75. Merchandise was returned in the amount of $870, for which Clark was credited, leaving a balance of $1130.75, for which this suit was instituted.

The agreement between respondent and appellant Clark recited that at the date of its execution his then indebtedness under a previous similar contract was $1502.39. Appellants contended and testified that figure was not in the contract when they signed the surety addenda but the space therefor was blank. Various officers of the respondent corporation testified the amount was typewritten in the contract before appellants signed. The court submitted this issue to the jury, which found in favor of respondent.

Appellants’ defenses are that this blank was not filled in and that being filled in by respondent constituted a material alteration to their detriment and voided their agreement; that after the date of the agreement respondent insisted upon appellant’s purchasing an unwarranted amount of goods and extended an unreasonable credit, and that the court committed prejudicial error in refusing to submit this issue to the jury, it being their contention they were liable for only a “reasonable” amount of credit.

Various other errors are assigned, but they are all substantially disposed of by consideration of two propositions.

The surety agreement provided that if the amount of indebtedness was blank it could be filled in, without specifying by whom. Appellants rely upon J. R. Watkins Co. v. Keeney, 52 N.Dak. 280, 201 N.W. 838, 37 A.L.R. 1389, as holding that a creditor may not so fill in the blank but only the principal for whom the sureties have signed. The court there arrived at the restrictive conclusion by saying that it was the party to whom the instrument was delivered who had the right to so fill in. Even upon that premise the conclusion was wrong because the party to whom the agreement was delivered in the legal sense would be the obligee, not the principal. (50 C.J., Principal and Surety, p. 42, sec. 67 [6], 38 C.J.S., Guaranty, p. 1160, sec. 21.) Delivery to the principal would be merely for transmittal to the obligee. Furthermore, no valid reason is given for the conclusion, and the comments in J. R. Watkins Co. v. Williams, 233 Ala. 135, 170 So. 194, rejecting the ruling announced in J. R. Watkins Co. v. Keeney, supra, are logical and compelling. Many cases are cited by appellants in support of their proposition that the obligee may not fill in such a blank. None of them, however, are under contracts containing this permissive clause, hence, are not in point.

For two reasons, therefore, we must take as conclusive that this amount was in the contract at the time it was signed or permissibly inserted thereafter — first, because the issue was submitted to the jury and found in favor of the respondent; second, because of the terms and provisions of the surety agreement. Therefore, the surety appellants guaranteed the payment absolutely and unqualifiedly of $1502.39.

Appellants contend, however, that because credit was thereafter given which in a total amount exceeded the amount specifically guaranteed, the issue of reasonableness thereof should have been submitted. The amount sued upon, however, was less than the amount positively guaranteed. They cannot be heard to say that the amount they positively guaranteed was not reasonable. The goods delivered and for which credit was given subsequently to the signing of the contract obviously could not aifect the indebtedness then existing; and the remittances made by appellant Clark, together with the returned goods, total $1852.10, which exceeded the merchandise received by him subsequent to the date of this contract by $371.64, which was applied on the indebtedness of $1502.39. Therefore, instead of being injured, appellants were benefited by this extension of credit, because the amount they had positively guaranteed, viz., $1502.39, was thereby reduced to the amount named herein, namely, $1130.75. The cases cited by appellants 3 as to the necessity of submitting the reasonableness of further credit to the jury did not consider a contract positively guarantying a definite, initial indebtedness, hence, are not in point.

We find support for the thought that respondent is entitled to recover the amount specified herein regardless of future credit, since it did not exceed the amount they guaranteed, in Bank of America Nat. Trust & Savings Ass’n v. Sage, 13 Cal. App. (2d) 171, 56 P. (2d) 565.

Conceding that the surety agreement is to be construed most strongly in favor of the guarantors, the pertinent language in Cargill Commission Co. v. Swartwood, 159 Minn. 1, 198 N.W. 536, at 540, on rehearing, leaves no room for construction or interpretation other than that without equivocation the amount of the indebtedness existing at the time the credit was made was accepted and guaranteed by appellant sureties. The refusal to submit the issue of reasonableness of additional credit, therefore, was correct. An instructed verdict in favor of respondent for $1130.75 should have been ordered. Consequently, the asserted errors in connection with the introduction of evidence concerning the second phase of the controversy need not be discussed.

Judgment affirmed, and costs awarded to respondent.

Holden, C.J., and Dunlap, J., concur.

1 “IAO $1502.39 2187

“THIS AGREEMENT, Made at Winona, Minnesota, this 31st day of August, 1938 between THE J. R. WATKINS COMPANY, a corporation, hereinafter called ‘the Company,’ and Ernest M. Clark of Shoshone, Idaho, hereinafter called ‘the Purchaser,’ witnesseth.

“1. That in consideration of the promises and Agreements of the Purchaser hereinafter contained, to be kept and performed by him, the Company agrees, unless prevented by fire, strikes, or other cause, to sell and deliver to the Purchaser, at its current wholesale prices, free on board cars at Winona, Minnesota, or at its option, at any of its other regular places of shipment, such goods and other articles manufactured or sold by it, as the Purchaser may reasonably require for sale, from the date hereof, until the first day of December, 1939, in the locality in which he is now engaged, or intends to engage, in business, a description of which locality he agrees to furnish and deliver to the Company in writing prior to its acceptance of this agreement; but the furnishing of such description may be waived by the Company at its election, without notice to the Purchaser or the sureties hereon.

“2. And in consideration thereof, the Purchaser agrees to buy from the Company the goods reasonably required by him as aforesaid; and agrees to furnish to it complete, regular, weekly, written reports, showing separately the amounts of his cash sales, time sales, and collections; which reports, however, or any of them, may be waived by the Company without notice to the sureties hereon, and he also agrees to furnish a complete financial statement when requested to do so.

“3. The Purchaser further agrees to pay the Company its current wholesale prices for the goods and other articles sold to him, as herein provided, and also the prepaid transportation charges thereon, if any, by remitting to the Company each week at least sixty per cent (60%) of the amount received by him from his cash sales, and from his collections on sales previously made, at the time and in the manner and in accordance with the provisions of the weekly report blanks of the Company to be furnished to him; and, at the expiration or termination of this Agreement, to pay the whole amount therefor then remaining unpaid; or the Purchaser may pay for such goods in cash, less the usual cash discount allowed for such payments; but such payments, or any of them, may be waived or extended by the Company without notice to the sureties hereon, and without prejudice to the rights or interests of the Company.

“4. If the Purchaser shall not pay cash for said goods and other articles so sold and delivered to him, and the payments at the time and in the manner hereinbefore provided are insufficient to pay therefor, or if the Purchaser shall fail to pay on the indebtedness expressed herein, amounts satisfactory to the Company, from time to time during said term, the Company may, in its discretion, thereafter either limit the sales herein agreed to be made, or from time to time suspend the same, or require cash with each order, or cash upon delivery, until such indebtedness is, or such indebtednesses are, paid, or reduced, as the Company may require.

“5. The Purchaser may, within thirty days after the expiration or termination of this Agreement, return, by prepaid freight, to the Company, at Winona,.Minnesota, Memphis, Tennessee, Newark, New Jersey, or Oakland, California, in as good condition as when delivered to him at point of shipment, any goods purchased by him from the Company, which he may then have on hand; and the Company agrees to repurchase such goods, if in such condition when received by it, and pay or credit'the Purchaser therefor at the then prevailing wholesale prices. And, if any goods returned by the Purchaser are not in a salable condition when received by the Company at any of the places above named, the Company will restore them to such condition, if that can reasonably be done, and make a reasonable charge therefor, and deduct such charge from the value of such goods, and pay or credit the Purchaser with the balance. But the Purchaser shall not ■return, nor the Company pay or allow any credit for, any advertising matter of any kind, or for any goods or articles which have been used, or for any goods which cannot reasonably be restored to a salable condition.

“6. The Purchaser shall have no power or authority to make any statement or representation, or to incur any debt, obligation, or liability of any kind whatsoever, in the name of, or for, or on account of the Company.

“7. The Company shall have no interest in the accounts due for goods sold by the Purchaser; and no printed, advertising or other matter of the Company, sent to, or distributed by the Purchaser, shall be construed to direct or control the sale or other disposition of said goods, or to change or modify the terms of this Agreement.

“8. It is also mutually agreed that this is the complete, entire and only Agreement between the parties, and that it shall not be varied, changed, or modified in any respect except in writing executed by the Purchaser and by an officer of the Company, and that either of the parties hereto may terminate this Agreement at any time, if desired, by giving the other party notice thereof in writing by mail.

“9. The Purchaser promises to pay the Company at Winona, Minnesota, from time to time, after thirty days from the date of acceptance of this Agreement, in amounts satisfactory to the Company, the indebtedness he now owes the Company, and agrees, at the expiration or termination of this Agreement, to pay any balance thereof then remaining unpaid, payment of which indebtedness is hereby so extended.

“10. The Purchaser and the Company, for the purpose of settling and determining the amount of the indebtedness now owing from the Purchaser to the Company, hereby mutually agree that the said

indebtedness is the sum of Fifteen hundred two and 39/100 Dollars, which sum the Purchaser agrees to pay, and the Company agrees to receive, and payment of which is extended as above provided.

“IN WITNESS WHEREOF, The Company has caused these presents to be executed in its corporate name by its proper officer, and the Purchaser has hereunto set his hand the day and year first above written.

THE J. R. WATKINS COMPANY

By Ralph G. Boalt

V. President.

Purchaser sign

here with Ink Ernest Melbern Clark

Full Name, Not Initials”

2 “In consideration of the execution of the foregoing Agreement by The J. R. Watkins Company, which we have read, or heard read, and hereby agree and assent to, and its promise to sell, and the sale and delivery by it, to the Purchaser, as vendee of goods and other articles, and the extension of the time of payment of the indebtedness owing by him to said Company, as therein provided, we, the undersigned sureties, do hereby waive notice of the acceptance of this Agreement, notice of default or nonpayment and waive action required, upon notice, by any statute, against the Purchaser; and we jointly, severally and unconditionally promise, agree and guarantee to pay said indebtedness, the amount of which is now written in said Agreement, or if not written therein, we hereby authorize the amount of said indebtedness to be written therein; and we jointly, severally and unconditionally promise to pay for said goods and other articles, and the prepaid transportation charges thereon, at the time and place, and in the manner in said Agreement provided. And we further severally agree that, in case of the death of one or more of us, the undersigned sureties, before the expiration or termination of this Agreement, the liability of the surviving surety, or sureties, shall continue until notice of the death of the deceased surety, or sureties, is given to the Company, at Winona, Minnesota, by registered mail.

SURETIES SIGN HERE IN INK

Name Occupation Address

Christ H. Frees Farmer Dietrich, Idaho

Gustaf Larson Farmer Dietrich, Idaho

Charlie E. Jones Farmer Shoshone, Idaho”

3 J. R. Watkins Co. v. Jennings, 131 Okl. 295, 269 P. 265; Lehigh Coal & Iron Co. v. Scallen, 61 Minn. 63, 63 N.W. 245; Taney v. Hodson, 170 Minn. 230, 212 N.W. 196.