Title: Liberty National Bank and Trust Co. v. Dvorak

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

199 N.W.2d 414 (1972) LIBERTY NATIONAL BANK AND TRUST CO., a corporation, Plaintiff and Respondent, v. Anton J. DVORAK, Defendant and Appellant. Civ. No. 8802. Supreme Court of North Dakota. May 31, 1972. Rehearing Denied July 27, 1972. Greenwood, Moench & Heth, Dickinson, for defendant and appellant. *415 Mackoff, Kellogg, Kirby & Kloster, Dickinson, for plaintiff and respondent. PAULSON, Judge. This is an appeal from a judgment of the District Court of Stark County. The facts were stipulated to the district court and the case was tried without a jury. The court awarded judgment in the amount of $3,643.62 plus interest to the plaintiff, Liberty National Bank & Trust Company. The facts stipulated by the parties are as follows: The first promissory note provided for monthly payments of $214.73 from August of 1969 to January of 1972. The note was signed by Edwin Dvorak. Anton J. Dvorak endorsed this note as guarantor. The second promissory note provided for monthly payments of $275.23 from July of 1970 to December of 1972. It is stipulated that Edwin Dvorak and Bonnie J. Dvorak did make, execute, and deliver this promissory note to Liberty National Bank and Trust Company. The district court found that the note of June 26, 1970, was a renewal of the note of July 7, 1969, and that Anton J. Dvorak had agreed to a renewal by signing the first note. The principal amount of the judgment ($3,643.62) was determined by subtracting the $50.00 salvage value of the Kenworth truck from the amount owed on the first note ($3,693.62) at the time the second note was executed. The two notes were executed on similar standard forms which provided: There is no doubt that Anton J. Dvorak, by the renewal clause contained in the note, consented to the renewal of the first note which was dated July 7, 1969. We cannot agree, however, with the finding of the district court that the note of June 26, 1970, was a renewal of the July 7, 1969, note. In the case of Douglas County State Bank v. Sutherland, 52 N.D. 617, 204 N.W. 683 (1925), in paragraph 4 of the syllabus, this court defined "renewed" as follows: Clearly the second note in the case at bar did not evidence the same obligation as the first note because, under the terms of the second note, there was a substantial increase in the principal debt and increased monthly payments extended over a longer period of time. The purpose of a renewal note is to extend the time the debtor has within which to pay his obligation. This purpose is enunciated in the following language from 11 Am.Jur.2d, Bills and Notes § 307, at page 332: It is understandable that the elder Mr. Dvorak would agree to a renewal of the July 7, 1969, note since such renewal would give his son more time to pay the original note and would make it less likely that the guarantor would be required to pay off the debt evidenced by such note. Having determined that the note of June 26, 1970, was not a renewal of the earlier note, we must examine the applicable law, namely, § 22-01-15 of the North Dakota Century Code to determine the effect of the second note: It is our view that the substitution of a second note "alters" the first note within the purview of § 22-01-15, N.D.C.C. Our analysis of § 22-01-15 leads us to the conclusion that the execution of the June 26, 1970, note exonerated and discharged Anton J. Dvorak from any further liability under the note of July 7, 1969. For cases from other jurisdictions which support this decision, see: Spears v. El Dorado Foundry, Machine & Supply Co., 242 Ark. 590, 414 S.W.2d 622 (1967); Jackson v. First National Bank of Greeley, 28 Colo.App. 415, 474 P.2d 640 (1970); Miami National Bank v. Fink, 174 So. 2d 38 (Fla.Dist.Ct.App.1965); Lutz v. Frick Company, 242 Ind. 599, 181 N.E.2d 14 (1962); George E. Failing Co. v. Cardwell Investment Co., 190 Kan. 509, 376 P.2d 892 (1962); Pacific Nat. Agr. Credit Corporation v. Hagerman, 39 N.M. 549, 51 P.2d 857, 101 A.L.R. 1301 (1935); Coburn Corporation of America v. Orr, 60 Misc.2d 912, 304 N.Y.S.2d 345 (1969); Shepherd v. Eric Schuster Corporation, 424 S.W.2d 693 (Tex.Civ.App.1968) (writ of error refused). The question was raised during the oral arguments as to whether Anton J. Dvorak was injured or damaged by the substitution of the second note, the import of the question being that if he was not damaged by the second note, he should be liable for the remaining balance on the first note at the time of the execution of the second note. The evidence reveals that Anton J. Dvorak was damaged by the substitution of the second note. However, it is not necessary to discuss this issue. The reason it need *418 not be considered is best stated in the following language from the case of Atlas Assurance Co., Limited of London, England v. Lawrence, 34 F.2d 401, 405 (8th Cir. 1929): For the reasons stated, the judgment is reversed. STRUTZ, C. J., and ERICKSTAD, TEIGEN and KNUDSON, JJ., concur.