No. 14387 INTHE SUPREME COURT OF THE STATE OF MONTANA 1979

OTTO STENSVAD, Plaintiff and Respondent,

MINERS & MERCHANTS BANK OF ROUNDUP, MONTANA, Defendant and Appellant.

Appeal from: DistrictCourt of the Fourteenth Judicial District, Honorable Robert D. McPhillips, Judge presiding. Counsel of Record: For Appellant: Towe, Ball, Enright & Mackey, Billings, Montana Gerald Neely argued, Billings, Montana For Respondent: Moses, Tolliver and Wright, Billings, Montana Kenneth Tolliver argued, Billings, Montana

Submitted: June 13, 1979 ~ecided&U& 

# 1 193Mr. Justice John C: Sheehy delivered the Opinion of the Court. Appeal isby the Miners & Merchants Bank of Roundup, Montana (Bank)from an order of the District Court, 14th Judicial District, Musselshell County,dated May 11, 1978, dissolving a writ of attachment levied againstproperty of Otto Stensvad. The order is appealable under Rule l(b),

Thematter comes to us on an agreed record on appeal. It appears therefrom that on two occasions Otto Stensvad executed two instruments denominated "guaranty". One instrument was dated January 2, 1970and related to borrowings made from the Bank by Agri-Services, Inc. The second instrument dated September 16, 1971 related to borrowings made by M-V Enterprises, Inc., M & 

### S Cattle Feeders, L. D. Stensvad Cattle Company,and L. D. Stensvad as an individual. Each instrument contains the following pertinent language:

ItGUARANTY "Theundersigned hereby requests the Miners & Merchants Bank, Roundup, Montana (herein called the "Bank")to give and continue to give (hereincalled the Borrower) credit,as the Borrowermay desire and the Bank may grant, from time to time,

# ... and in consideration of any credit given, the undersigned [OttoStensvad] hereby absolutely and unconditionally guaranties prompt payment when due and at all times thereafter of any and all existing and future indebtedness. 

# . . from the Borrower to the Bank. 

# . . The undersigned [Otto Stensvad] hereby waives presentment, protest, notice,demand or action on delinquency in respect of any such indebtednessor liability, including any right to require the Bank to sue or otherwise enforcepayment thereof. 

# ".

.. It is agreed that the undersigned's liability hereunder is several and is inde2endent of any other guarantees at any time in effectwith respect to all or any part of the Borrower's indebtedness to the Bank, andthatthe undersigned's liability hereunder may be enforced regardless of the existence of any such other guaranties."Each guaranty is limited to $200,000although the aggregate amount of guaranty isdisputed by Stensvad. Stensvad commenced the action in the District Court

onNovember 16, 1971,by his complaint seeking exoneration from the said written guaranties. By answer and amended counterclaim, the Bank seeks judgment against Stensvad in the total sum of $400,000 plus attorney fees on the ground that the nbtes and loans of the Bank to the borrowers have all become due and delinquent or have become accelerated, due, and delinquent. On January 31, 1972,a writ of attachment was issued by the District Court in the action and levied upon sropertiesof Otto Stensvad. On March 3, 1978, Otto Stensvadmoved to vacate the writ of attachment on the ground, among others,that the attachmentwas not based upon a contract for the direct payment of a sum certain of money. On May 11, 1978, the District Court issued its order dissolving,- releasing and discharging the attachment as to all properties upon which the levy had been made. Appeal was taken by the Bank and the matter comes to us in the usual course. We ordered the appeal to be submitted to us on briefs without oral argument,and the cause is now ready for decision. We affirm the order of the District Court dissolving the writ of attachment. The sole issue presented to us is whether the guaranties involved here are contracts for the direct payment of money so as to entitle the Bank to a writ of attachment under the Montana statutes. A guaranty, under Montana law, is clearly not a contract for the direct payment of money.Section 27-18-101 MCA, says that: 

### " (1)Propertymay be attached in: (a)an action upon a contract, express or implied, for the direct payment of money. 

# .."Section 28-11-101MCA, defines a guaranty: 

### "Aguaranty is a promise to answer for the debt, default, ormiscarriage of another person.

### " It is firmly established in Montana law that an instrument of guaranty will not support the issuance of a writ of attachment. In General Finance Co. v. Powell (1941), 112 Mont. 535, 540, 118 P.2d 751, 753-754, this Court said: "Theattachment law ispurely of statutory origin and while, like other statutes, it must be liberally construed to effect its objects (sec. 4, Rev. Codes), the courts have not the right under the guise of liberal construction to read into the statute any meaning which itswords, construed according to the statutory rules, do not convey. To construe a statute is to ascertain the intent of the legislature

(sec. 10520,Rev. Codes), and not to substitute the court's discretion for that of the legislature (sec. 10519,Rev. Codes). Consequently our duty is to decide the meaning of the legislature'swords, construed ordinarily according to the context and the approved usage of the language (sec. 15,Rev. Codes). The question is sirn~ly this: Is a guaranty of 'thefull payment of said contract and prompt payment of all sums due thereunder' a contract for the direct payment of money? "Aspointed out by this Court inAncient Order of Hibernians v. Sparrow, 29 Mont. 132, 74 P. 197, 64L.R.A. 128, 101 Am.St.Rep. 563, 1Ann.Cas. 144, the word

'direct' first appeared in our attachment statute in 1866 and again as the statutewas re-enacted in 1867 after the congressional invalidation of the 1866 legislation (14Stat. 427) was omitted in 1869,and reinserted in 1895. Therefore there can be no doubt that the legislature attached some substantial meaning to the word. 'Direct' is defined by Webster's New International Dictionary (Webster-Merriam 2d Ed.) as denoting 'theabsence of any intervening medium or influence'; asmeaning 'markedby the absence of an intervening agency or influence.' Obviously defendant's guaranty of the purchaser's performance of the conditional sales contract is not a contract for the direct payment of money, since defendant's liability is conditioned entirely upon an intervening medium, agency or influence--namely, upon the purchaser's default, which as to eventuality, time and amount wasentirely problematical. If it is to be construed as a contract for the direct payment ofmoney, it is hard to imagine any contract for the payment ofmoney which is not for its direct payment. "Thiscourt has long held that the term meant an unconditional and absolute obligation to pay money (AncientOrder of Hibernians v. Sparrow, supra; Heffron v. Thomas, supra;Wall v. Brookman, 72 Mont. 228, 232 

### P. 774), and not a collateral agreement dependent or contingent upon some other agreement. Square Butte State Bank v. Ballard, 64Mont. 554, 210 

### P. 889;Gilna v. Barker, 78Mont. 343, 254 

### P. 169. In the SquareButte Bank Case [64 Mont. 554, 210 

### P. 8901 suitwas brought upon defendant's contract of guaranty that 'forvalue received, I hereby guarantee the collection and payment of the within note,' and itwas held that the guaranty, being dependent upon the contingency of the debtor's breach of another contract,was not a contract for the direct payment ofmoney. In Wall v. Brookman, supra, this court went so far as to suggest that the eliminationof theword 'direct' from the statutewould be beneficial,but as the legislature has not seen fit to eliminate it, theCDU~-tsmay not overrule the legislature in order to do so.

### " See alsoWall v. Brookman (1925), 72Mont. 228, 232 P. 774; Square Butte State Bank v. Ballard (1922)) 64Mont. 555, 210 P. 889;Butte Machinery Co. v. Carbonate Hill Mining Co. (1926), 75Flont. 167, 242 P. 956;Muri v. Young (1926), 75Mont. 213, 245 P. 956. The Bank however contends that the instruments involved here are not instrumentsof guaranty, but rather of surety, and as such Otto Stensvad is bound with the principals

as an original promissor on the borrowings. We cannot interpret the instrumentsbefore us as contractsof surety. Each is denominated by the Bank as a "guaranty";each is a promise by Otto Stensvad to answer for the debt, default,or miscarriage of another person or entity. As such,each instrument is a guaranty instrument,and not a surety instrument,

### even though each provides that Stensvad's liability is "several" and that Stensvadwaived all right to require enforcement of payment from the borrower. The Bank cannot escape the effect of the instrumentwith respect to Stensvad, that his liability is conditioned entirely upon an intervening event, that is the borrower's default. General Finance Co. v. Powell, supra. As early as 1900, in ColeMfg. Co. 

### v. Morton (1900), 24 Mont. 58, 60P. 587, this Court distinguished between a surety and a guaranty, pointing out that a surety isbound as
an original obligor,while a guarantor is bound on a collateral promise. A surety makes himself responsible for the performance of his principal, a guarantor only agrees to answer for the debt, default or miscarriaqe of another. These distinctions

are preserved in our statutes. Compare section 28-11-401MCA defining surety, with section 28-11-101 MCA defining guarantor. When all the smoke clears in this appeal, a single fact stands out: Otto Stensvad isnot liable under the instrumentshe executed for the Bank unless the borrowers defaulted to the Bank. Therefore the District Courtwas correct in ordering the writ of attachment dissolved. Affirmed.

Justice We concur:



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