Opinion
No. 32225.
April 27, 1936.
1. PRINCIPAL AND SURETY.
Gratuitous suretyship cannot be extended by implication, presumption, or construction to impose burdens on surety not clearly within terms of contract.
2. GUARANTY.
In determining whether guaranty is limited or continuing, that construction should be adopted which best accords with intention of parties, as manifested by terms of guaranty in connection with subject-matter and surrounding circumstances, neither enlarging the words beyond their natural import in favor of creditor nor restricting them in aid of surety.
3. GUARANTY.
In suit on instrument guaranteeing every dollar person named therein should buy for designated store, not exceeding fixed amount, evidence concerning facts and circumstances surrounding execution of instrument held admissible, in view of uncertainty and doubt as to proper construction of instrument.
4. TRIAL.
Objection, after judgment was directed for defendant, to admission of incompetent evidence concerning intention of defendant in signing guaranty, held not timely.
APPEAL from the circuit court of Leflore county. HON. S.F. DAVIS, Judge.
Osborn Lott, of Greenwood, for appellant.
The instrument executed by the appellee is a special, continuing, limited guaranty. It is a special guaranty because it is directed to one person, the appellant, as distinguished from a general guaranty which is directed to the public generally, or to a particular class of persons. It is a continuing guaranty because by its express terms it relates to sales of goods to be made after the execution of the guaranty, and does not relate to any past indebtedness that might have existed between the appellant and George Samaha. The instrument guarantees every dollar that "George Samaha buys for the George Mercantile Company at Tchula, Mississippi, not exceeding $500.00," which language indubitably relates to purchases to be made in the future, without limitation as to time.
12 R.C.L. 1055, Guaranty, sec. 3; 28 C.J. 897, Guaranty, sec. 13, page 960, sec. 110, and footnote 29, and 964, sec. 115, note 74; Lennos v. Murphy, 171 Mass. 370, 50 N.E. 644; Lean v. Geagan, 20 Cal.App. 260, 128 P. 792; Ely Walker Dry Goods Co. v. Powell, 155 Miss. 266, 124 So. 329.
The bankruptcy of Samaha did not affect appellee's liability upon the guaranty.
Richmond Paper Co. v. Bradley, 75 So. 381, 115 Miss. 307, 76 So. 544, 115 Miss. 534; Ely Walker Dry Goods Co. v. Powell, 155 Miss. 326, 124 So. 329.
It was not necessary that appellant give appellee notice of acceptance of the guaranty.
12 R.C.L. 1055 and 1067, Guaranty, sec. 17; 28 C.J. 904-906, Guaranty, sections 25, 26 and 27; Richmond Paper Co. v. Bradley, 115 Miss. 307, 75 So. 381.
It was not necessary that appellant notify appellee of the various shipments of goods to Samaha.
Davis Sewing Machine Co. v. Rosenbaum, 16 So. 340; 28 C.J. 962, 963, sec. 113; Ferst et al. v. Blackwell, 39 Fla. 621, 22 So. 892.
All conversations and parol agreements between the parties prior to a written agreement are so merged therein that they cannot be given in evidence for the purpose of changing the contract or showing an intention or understanding different from that expressed in the written agreement.
3 Jones Commentaries on Evidence, sec. 454, and page 2699, sec. 1484; Kerr v. Calvert, 1 Walker 15; Millsaps v. Bank of Greenville, 69 Miss. 918, 13 So. 837; Cox v. Reed, 113 Miss. 488, 74 So. 330, 11 A.L.R. 5; Wood v. Morath, 128 Miss. 143, 90 So. 714; Lowry v. Williams, 143 Miss. 611, 109 So. 670; Perrault v. White Sewing Machine Co., 157 Miss. 167, 127 So. 271; Welch v. Gant, 161 Miss. 867, 138 So. 585.
All of the circumstances surrounding the execution of the guaranty were admitted in evidence without objection by either party.
The guaranty being unambiguous, the rule is well settled that resort may not be had to parol testimony or surrounding circumstances in its interpretation.
28 C.J. 931, Guaranty, sec. 76.
If a guaranty is ambiguous, parol evidence and evidence of surrounding circumstances is admissible; if it is not ambiguous, such evidence is not admissible.
Gardner, Denman Everett, of Greenwood, for appellee.
The guaranty should be interpreted as limited.
The position which the appellee takes in this case with reference to the interpretation of the guaranty is, first, that the guaranty in question indicates on its face that it was a limited guaranty. Second, if the first contention be incorrect, then there is such a lack of clarity as to what purchases were guaranteed by the letter written by Mrs. Naaman that evidence of the circumstances surrounding execution of the guaranty are admissible in order that the court may have the benefit of these facts in gathering the true intent of the parties as expressed by the language of the instrument.
It is evident from the language of the guaranty that the guaranty is limited and should be so construed, regardless of the surrounding circumstances. Mrs. Naaman, in this case, is a gratuitous surety, assuming for the sake of argument that a valid contract was ever completed.
A gratuitous surety is a favorite of the law, and the contract must be strictly construed to impose upon the surety only the burdens clearly within the terms of the contract so that it cannot be extended by implication, presumption, or construction.
50 C.J. 78, 79; 21 R.C.L. 975, 976; Raleigh v. Rotenberry, 164 So. 5; Blythe v. Pinkerton, 57 L.R.A. 468.
In trials before the chancellor, or before the circuit judge, without a jury, the practice of reserving rulings on objections to evidence is permissible because the judge, trained in such matters and skilled in legal discrimination, is able upon final decision to put out of his mind that part of the testimony which he has heard, but which upon a mature examination of the legal questions in respect thereto is found to be inadmissible as evidence; but an untrained jury cannot so well do this. Therefore, the proper practice in jury trials is that the judge shall rule positively one way or the other when the evidence is offered and the objection thereto is made.
64 C.J. 220; 2 R.C.L. 222, sec. 186.
There seems to be no general rule for determining whether a guaranty is continuing, each must be construed according to its terms and surrounding circumstances, to show which parol evidence is admissible.
12 R.C.L. 1061; 28 C.J. 961.
Where the language of a written instrument is in itself contradictory, or when the language used is capable of one of two reasonable interpretations, and the instrument is not so clear as to indicate its meaning conclusively, then parol evidence of the surrounding circumstances may be admitted.
14 Am. Eng. Ency. of Law 1138; Wheelright v. Pure Milk Assn., 240 N.W. 769; Huddleston v. Huddleston, 11 S.W.2d 1065; Goldman v. Dangerfield, 281 Pa. 400; 1 Words Phrases, 4th series.
A limited guaranty contemplates only one particular transaction or a limited number of transactions; so the test in this case is whether a succession of liability is contemplated or whether the guaranty is limited to a particular transaction.
Cocke v. Blackbourn, 57 Miss. 691; Campbell v. Davis, 94 Miss. 164; Sunflower v. Pitts, 108 Miss. 388.
This was a limited and not a continuing guaranty.
Hessig-Ellis Drug Co. v. Parks, 150 Miss. 322.
The contract of guaranty was not completed because of appellant's failure to accept it.
157 A. 421; 5 Elliott on Contracts, pages 4 and 11; 28 C.J. 898; Deering v. Mortell, 16 L.R.A. (N.S.) 356; 1 Brandt on Suretyship, sec. 205; Ellis v. Jones, 70 Miss. 60; 5 S. M. 347; 43 Miss. 486; Davis v. Wells, 26 U.S. 686; 14 Am. Eng. Ency. of Law, 1146; 12 R.C.L. 1068; 96 Miss. 308; Sumrall v. Kitselman Bros., 101 Miss. 783, 58 So. 594; Gulfport Miss. Coast Traction Co. v. Faulk, 118 Miss. 894, 80 So. 340; Becker Co. v. Clardy, 96 Miss. 301, 51 So. 211; 123 Miss. 455; 130 Miss. 36; 154 Miss. 399.
No contract of guaranty ever came into existence, because of the failure of appellant shoe company to bind the contract with an acceptance communicated from them to Mrs. Naaman, informing her that they accepted the guaranty and were extending the credit in reliance upon the said guaranty.
Argued orally by Frank Everett, for appellee.
In the county court of Leflore county the appellant sued the appellee on a guaranty reading as follows:
"Greenwood, Miss. August 27, 1928.
"Wingo-Ellett Crump Shoe Co. Richmond, Va.
"Dear Sir: I hereby guarantee every dollar George Samaha buys for the George Merc. Co. at Tchula, Miss. not exceeding $500.00.
"Sincerely [Signed] Mrs. A. Naaman
"P.S. Ship to George Mer. Co., Tchula, Miss."
The county court rendered a judgment against the appellee for the sum named in this guaranty, from which she appealed to the circuit court. In the circuit court the judgment of the county court was reversed and a trial de novo awarded. On the trial in the circuit court, by agreement, the cause was submitted to the court, without a jury, on the transcript of the evidence offered in the county court, and a judgment was entered in favor of appellee, from which this appeal was prosecuted.
The record discloses that after the execution of the said guaranty, and prior to his bankruptcy in December, 1931, George Samaha purchased from appellant more than nine thousand dollars worth of shoes and paid thereon more than eight thousand dollars, leaving a balance of eight hundred sixty dollars and sixty-three cents due, upon which the appellant received one hundred thirty dollars and seventy-eight cents out of the settlement of the bankruptcy proceedings, which was applied on the account.
The appellant offered the appellee as a witness in its behalf, and, without objection, she testified, in substance, that she had been a customer of appellant for many years prior to August, 1928, at which time George Samaha, her son-in-law, opened a business in Tchula, Mississippi, that at the time the guaranty was executed the said George Samaha desired to purchase goods from the appellant, and that she executed the guaranty at the request of the agent of the appellant. She offered to testify as to the circumstances and situation of the parties and the statements of appellant's agent at the time of the execution of the guaranty; and, upon objection, this testimony was taken in the absence of the jury. The county court held that the guaranty was unambiguous, and, consequently, that this testimony was inadmissible.
While the judgment of the circuit court reversing the judgment of the county court does not so recite, it is conceded by counsel for both parties that the reversal was based upon alleged error in excluding this testimony; and it is likewise conceded that on the trial de novo the argument was directed exclusively to the question of the admissibility of this testimony. After the circuit court had announced its decision of the cause in favor of the appellee, counsel moved that all the testimony of appellee given in the absence of the jury in the county court, and particularly her testimony as to conversations between her and appellant's salesman, and as to her intentions in executing the guaranty, be excluded. The court overruled this motion on the ground that it was made after argument had been heard and the court had announced its ruling directing a judgment for appellee.
A gratuitous suretyship cannot be extended by implication, presumption, or construction to impose burdens on the surety not clearly within the terms of the contract, Raleigh v. Rotenberry et al. (Miss.), 164 So. 5; and, in determining whether the guaranty is limited or continuing, that construction should be adopted which "best accords with the intention of the parties, as manifested by the terms of the guaranty, in connection with the subject matter and surrounding circumstances, neither enlarging the words beyond their natural import in favor of the creditor nor restricting them in aid of the surety." 12 R.C.L. 1061.
It is a close question as to whether or not the language of the guaranty here involved should be construed as a limited one, but, conceding for the purpose of this decision that such construction is not warranted, it must be held that its proper construction is at least so uncertain and doubtful as to render admissible evidence in reference to the facts and circumstances accompanying the execution of the instrument. The testimony of the appellee as to the circumstances and conditions under which the guaranty was executed, in connection with its terms, was sufficient to warrant the finding of the court below that the guaranty was limited; and, in directing a judgment in favor of the appellee, the court, in effect, overruled the objection to such testimony.
The testimony of the appellee as to her intention in signing the guaranty was incompetent, but on the state of this record it will be unnecessary to decide whether the admission of this evidence would justify or require a reversal if proper objection had been made thereto. The only objection that was interposed to the testimony of this witness was a general one to all of her testimony bearing upon the circumstances surrounding the execution of the guaranty. With the exception of the testimony as to her intentions and some immaterial details, this testimony was admissible, and the general objection thereto was therefore properly overruled. The only specific objection to that part of the testimony bearing upon the intentions of appellee in signing the guaranty was made after the court had announced its ruling directing a judgment for appellee, and consequently came too late.
The judgment of the court below will be affirmed.
Affirmed.