Case Name: ELIZABETH A. MORRISON v. THE EQUITABLE NATIONAL BANK
Court: Cincinnati Superior Court
Jurisdiction: Ohio
Decision Date: 1898
Citations: 6 Ohio N.P. 7
Docket Number: No. 3185
Parties: ELIZABETH A. MORRISON v. THE EQUITABLE NATIONAL BANK.
Judges: Davis, J., concurs; Jackson, J., dissents.
Reporter: Ohio nisi prius and general term reports
Volume: 6
Pages: 7–15

Head Matter:
(Superior Court of Cincinnati.)
General Term.
No. 3185.
ELIZABETH A. MORRISON v. THE EQUITABLE NATIONAL BANK.
(1.) In order that a surety may avail himself of the , provisions of sec. 5833 Rev. Stat., it is necessary that his liability as surety be evidenced by the same written instrument which evidences the liability of the principal debtor.
(2.) A contract is to be distinguished from the instrument of writing which evidences it; hence, while a contract maybe deduced from several writings which are or may bo properly connected together or related to each other, or which were •executed by the same parties at the same time in reference to the same subject matter, yet such several writings do not become integral parts of each other, so as to constitute a single instrument of writing, unless an intention so to constitute them is manifested by apt words incorporating one writing into the other and as a part thereof.
(3.) Exclusive of sec. 5833, the rule that a failure on the part of the creditor to proceed within a reasonable time against the principal debtor, after notice so to do by the surety, followed by said principal debtor’s insolvency, will release the surety, is not law in the state of Ohio.

Opinion:
DEMPSEY, T.
The action below was brought by the defendant in error against the plaintiff in error, and was founded upon a written instrument in the nature of a guaranty, and of which the following' is an exact copy:
"In consideration of the sum of one dollar and of other valuable considerations paid to me by the Equitable National Bank, of Cincinnati, Ohio, the receipt whereof is hereby acknowledged, 1 do hereby guarantee the payment of any note or notes which said The Equitable National JBanir may discount for and on behalf of The Lytle Safe & Look Company within the next two years from the date hereof. This guarantee however, is not to apply to any sum exceeding five •thousand dollars, but need not necessarily apply to any sum the payment of which is already guaranteed to said nank by Mrs. Florida A. Price or any other person; it being my intention herein to guarantee the payment of any notes of the said Lytle Safe & Lr>ck Company not exceeding in amount the sum of five thous- and dollars which said bank may discount, the selection of the notes hereby guaranteed to be entirely at the option of said bank, and it is not to be understood that the validity of this guaranty is •dependent upon condition that said bank shall not discount notes exceeding the amount of five thousand dollars, but may discount the notes of said company in any amount they see fit, and this guarantee is entirely without reference to any •other guarantee which said bank may hold as to any notes discounted for said The Lytle Safe & Lock Company. And I do hereby waive demand and notice of •protest of any of the notes hereby guar.anteed.
'Witness my hand this 23d day of December, 1893.
(Signed) "Elizabeth A. Morrison."
The bank claimed that relying on this guaranty, and under its terms, and within the two years time covered by said guaranty, it did discount for and on behalf of said Safe & Lock Company a note, ot which the following is a copy:
"•$5,000.00 Cincinnati, Ohio,"
"April 26th, 1894."
"Four months after date we promise to pay to the order of Equitable National Bank five thousand — —dollars at Equitable National Bank. Value received.
"The Lytle Safe & Lock Co."
"Harley J. Morrison, Prea't. — G. W. Evans Sec'y. & Treas."
When the note became due and payable, demand was made of the maker for payment, but it wholly failed and refused to pay the same, nor has it ever paid the same or any part thereof. Payment of said note was then demanded from said Elizabeth Morrison, but she has refused and failed to pay the same, and a judgment for $5,000.00 is prayed against her. Mrs. Morrison answered to the claim of the bank, with three defenses, the second of which is the only material one to be considered by us here. She claims that she is not liable for the payment of the note in whole or in part because, on the 20th day of June, 1894, she was notified by the bank that it had discounted for the Safe & Lock Company a note for $5,000.00, and that the same was covered by the guaranty mentioned in the petition, and that said note would fall due on August 29th, 1894, and the bank would look to her for payment of the same under said guaranty if it were not paid by the makers at maturity, which note she claims is the one the bank bases its claim on. She further says that on September 1st, 1894, said note having matured on the preceding August 29th, she required the bank by notice in writing to commence an action on said note forthwith against said Safe & Lock Company, which, she claims, was the principal debtor, but that the bank did not commence said action forthwith or at all. She further claims that by reason of failure to bring this suit, she is relieved from liability for rhe payment of said note. In a reply to this second defense, the bank admits that the note for $5,000.00, payment of which they seek against Mrs. Morrison, is the same $5,000.00 note referred to in said second defense, but denies that any notice to sue on the note was given by Elizabeth A. Morrison, and then avers that the obligation of Mrs. Morrison to pay said note is based upon the written guaranty which was an independent contract binding her as a guarantor for the payment of the amount due on the note, and that such obligation and liability was not discharged by reason of any of the matters set out in said second defense. On the trial below there was a finding of facts and judgment in favor of the oank. Er ror is prosecuted here, a bill of exceptions having been also taken incorporating all of the evidence, on the grounds, that (1). The court erred in rendering judgment in favor of the defendant in error and against the plaintiff in error; and (2). The judgment should have been in favor of the plaintiff in error and against defendant in error. The facts of the case as disclosed by the pleadings, findingsjof facts and bill of exceptions are substantially as follows: In 1893, and for some time prior thereto, the Lytle Safe & Lock Co., which was a Kentucky corporation, had been a customer of and borrower from the Equitable National Bank. On September 23d, 1893, the Safe .&Lock Company, in order to secure a loan from the bank, procured from Elizabeth A. Morrison the guaranty hereinbefore set out, and delivered the same on that date to the bank, and thereupon, on that same day, and on the faith of that guaranty, the bank discounted for the Safe & Lock Company a note for 810,000.00 payable in four months, that is, on April 26th, 1894. This note for $10,000 was not paid on April 26th, 1894, but instead was renewed, by being split up into two notes for $5,000.00 each, payable respectively in three and four months from their date. The four months note was attached to the guaranty by the bank, and the guaranty was by the bank selected to cover it. The three months note we have nothing to do with. The copy of the note hereinbefore given is a copy of this four months note; it matured August 29th, 1894, and was not paid, and on that same day the following notice was sent to Mrs. Morrison by the bank, Mr. Blair being the cashier:
"Cincinnati, August 29th 1894.
"Mrs. E. A. Morrison,
"Owen Cottage,
"Catawba Island, Ohio.
"Dear Madam:
"The note of the Lytle Safe & Lock Company for $5,000.00 due this day has not been paid, and unless you are wil • ling to renew your guarantee, we shall be obliged to look to you for payment under guarantee now held by us. Please advise us as to your wish in this matter, and oblige,
"Yours Respectfully,
"J. M. Blair."
Thereupon, on September 1st, 1894, Mrs. Morrison caused the following notice to be sent to the bank:
"Cincinnati, Sept. 1st, 1894.
"To George Fisher', President, J. M. Blair, Cashier, nad The Board of Directors of the Equitable National Bank of Cincinnati, Ohio.
"Gentlemen:
"You are hereby notified to commence an action forthwith against The Lytle Safe & Lock Company, of Cincinnati, on a certain note for 85,000.00, due August 26-29, 1894, made by said company and discounted for said company by your bank, and on which you have alleged Mrs. Elizabeth A. Morrison to be liable as surety.
"Very Truly Yours,
"Elizabeth A. Morrison,
"By Wm. P. Morrison, her agent in this behalf. "
Some question was made in the bank's reply and in the evidence as to Wm. P. Morrison's authority to act for Mrs. Morrison, and also as to the validity of a notice of this kind given by_ agent, but these questions are not material here just now.
At any rate, the bank did not bring any suit as requested by the notice, and on September 30th, 1894, the Safe & Lock Company went into the hands of a receiver under the orders of this court. The Safe & Lock Company was actually insolvent at the time Mrs. Morrison's request to sue was given. The receiver of the Safe & Lock Company paid to the bank $900.00 which was by it credited upon the $5,000.00 note, and the suit below was for the balance due with interest on the same.
Mrs. Morrison claims to be released from liability for the amount of this note on two grounds: First, by virtue of the provisions of sec. 5833, Revised Statutes, and, second, if not under the statute, then under the general rules of law regulating the rights and liabilities of a surety and the creditor as dependent upon the creditor's conduct toward trie principal debtor. Other questions were made in the case and discussed on the hearing, but as the disposition of the question arising under the request to sue disposes of the whole case, we have not deemed it necessary to express any opinion on the other questions.
Section 5833, Revised Statutes, provides as follows: "A person bound as surety in a written instrument for the payment of money or other valuable thing, may, if a right of action accrue thereon, require his creditor, by notice in writing to commence an action on such instrument forthwith against the principal debtor; and unless the creditor commence such action within a reasonable time thereafter, and proceed with due diligence in the ordinary course of law to recover judgment against the principal debtor for the money or other valuable thing due thereby, and to make by execution the amount thereof, the creditor, or the assignee of such instrument, so failing to comply with the requisition of such surety, shall thereby forleit the right which he would otherwise have to demand and receive of such surety the amount due thoreon."
It was held by the court below that the provisions cf' this section will not bé available to a surety unless he appear upon the same instrument upon which the principal debtor is liable, and we concur in that holding. Counsel ior plaintiff in error do not seriously combat this construction; they do contend,' however, that the same instrument does not necessarily mean a single writing, but may consist of two or more writings if they be properly related to or connected with each other. In a general sense this proposition is true, but in the application of the proposition, it is well at the outset to have a clear conception of the meaning of terms used. The statute deals only with the instrument of writing, not with the contract, for a "contract is not to be confused with the instrument of writing which witnessesit." Erwin v. The Bank, 5 La., 4.
It is undoubtedly true that the terms of a contract may be ascertained from several writings even though executed at different times, and that such writings, when executed between the same parties about the same subject matter, will be held as one instrument and construed together in order to get at the contract. But that is not the question in this case. If any thing, it is the converse. We have two contracts in this case about neither of which is there any uncertainty or ambiguity; each of these contracts relates to the same subject matter, but the evidence of these contracts is by separate written instruments. The object sought by plaintiff in error is to combine those two instruments into one instrument, not to ascertain what the parties to both instruments meant, for that we already know, but in order that one party may avail himself of privileges accorded by the statute to debtors on a single instrument.
The case of Neil v. Trustees, 31 Ohio St., 15, does not aid in the solution of the question involved, for the surety or guarantor in that case expressly annexed to his own written contract, and made a part thereof, the written contract of the principal debtor, so that the principal debtor's written contract by the act of the surety was as much a constituent part of the surety's written obligation as if it were inserted in totidem verbis, and both surety and debtor had signed at the bottom. Nor will the rule which permits parol evidence to identify the subject matter of the contract in order to apply such contract to that subject matter benefit the plaintiff in error, for' that rule contemplates the subject matter of the contract as a fixed, definite thing or fact concerning which the contract is made or upon which it is to operate. Thus, in this case, the notes discounted, of necessity, would be uncortain as to time and amount, and parol evidence was admissible to identify -che particular noto which was discounted and for the payment of which Mrs. Morrison was liable under the guaranty. But the language of the note and the signature of the Safe & Lock Co. do not become an integral part of the written instrument, which Mrs. Morrison signed, any more than a particular house of A's would become a part of a written instrument which provided that B. should paint in'a certain time such houses of A's as A should designate, and A designated this particular house.
We know of no rule of law or of construction which, in the absence of express provision, will permit the combination or association together, as one single instrument, of two or more written instruments considered merely as instruments, and without reference to the contracts or obligations or rights or liabilities which they create or evidence. If the two instruments in this case were combined into one, they would still be evidence of two separate and distinct contracts, not of one contract, so that all rights and liabilities of the respective parties would be in no wise changed save as to the privileges granted by sec. 5833. That, joined even as they were in the Neil case, they still constitute two separate, several contracts is settled in the Deming case, 31 Ohio St., 41-49-50, which was a parallel case with the Neil case, and arose out of' the same transactions. But the statute itself, we think, furnishes the strongest argument against conjoining, Bxcept by express provision or direct reference, two- or more instruments as one instrument.
It is said that the statute must be liberally construed because it is remedial,, and because our code, of which it is a part,, so provides.
Liberality of construction means generally that the spirit and not the letter of a statute is to be looked to; that we must consider the substance of transactions, and not the form. But the very thing this statute deals with is the form of the transaction of suretyship. If the question in dispute were 'suretyship as cmtra-distinguished from guaranty, it might well be said that this statute was intended to embrace every indemnitor whose obligation parcook ot the nature of a suretyship so that it might well include-absolute and unconditional guarantors. But as we have read the statute it does not include all sureties, but instead all. such sureties as sign with their principal debtor on the same instrument of indebted nesss. Hence, the form of the surety-ship becomes very material under the statute, in view of the rights and privileges conferred upon the surety; the principal creditor lias rights under his contract also, which are nor. to be lightly dealt with by construction; debtors and sureties are supposed to know the statutes and to contract with reference to them: and especially ought this to be so when special privileges are conferred because of the form of the contract. The rule in Neil v. Trustees, supra, has gone to the very limit of judicial construction, as is evident from the comments in Deming v. Trustees, supra, by the same judge who- 'delivered-the opinion in the Neil case, and who refers at page 51 to the dissenting opinion of Hitchcock, C. J., in Gale v. Van Arman, 18 Ohio, 336, upon which cease and some few preceding cases the decisions in Neil and Dealing v. Trustees 'seem to be based, although on examination of all of those eases, it will be found 'that the surety or guarantor signed on the same piece of paper with his principal. Having in view all of these considerations, we do not feel that we can go beyond the rule in the Neil case, supra, and hence there being no express provision in either of the writings of Mrs. Morrison or the Safe & Lock Co., incorporating into or annexing to it the other writing, we must hold that Mrs. Morrison's guaranty was a separate and distinct instrument from the Safe & Lock Co. note, and hence that she is not entitled to the benefits of this statute.
Edward Colston, for Plaintiff in Error.
Jno. R. Sayler, contra.
The plaintiff in error, however, contends that under the general doctrines of law regulating- the liability of sureties, Mrs. Morrison is entitled to be released because of the neglect of the bank to sue, and the subsequent insolvency of the S. & L. Co. It is very doubtful whether this doctrine of the law of suretyship ever prevailed in Ohio, and, if it did, it is more than doubtful whether it was not impliedly repealed by the enactment of this very sec. 5833, and its predecessors.
Counting sec. 5833, as the enactment of •a new statute, we have had three statutes in Ohio, all practically alike, regulating this requirement to sue and the effect thereof. The first statute was passed February 22, 1820, and can be found in 29 O. L., p. 461, and in Swan's Statutes, p. 877; this act was repealed March 11, 1853; in 1864, February 29th, the second act was passed, Swan & Sayler, 741, and this act was carried into the Revised Statutes, as sec. 5833.
In Jenkins v. Clarkson, 7 Ohio, pt. 1, p. 72, this identical question was raised under the statute of 1820, and the court, at p. 74, say "Since this statute was passed, the common law rule has not been in force in this state; and it is unnecessary to imagine what its provisions are, for it has given place to the statute, and is repealed by it," etc.
It is true the question arose on the form of the notice, which in that case was verbal while the statute required a written notice; but to obviate that discrepancy, counsel, as in this case, relied on the alleged general doctrine of release in case of insolvency after notice to sue, and in answer to that the court gave expression to the above statement. But be that as it may, we have examined the authorities cited by the trial judge on this question and his conclusions as to the weight of authority and the precedents we ought to follow, as also, his conclusions as to the time when the S. & L. Co. became actually insolvent, and we are satisfied with the correctness of all his conclusions on those questions. See 5 N. P., 290.
We' have not examined at any length into the questions made upon the right to contradict in toto the consideration clause of Mrs. M's guaranty, nor upon the construction of that instrument as to whether she was surety or guarantor. Por the purposes of this opinion we have conceded as true the contentions of counsel for plaintiff in error.
A majority of the court think that the judgment of the court below ought to be affirmed, and it; will be so ordered.
Davis, J., concurs; Jackson, J., dissents.