Case Name: The Merchants' National Bank of Cincinnati v. Ryan et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1903-02-03
Citations: 67 Ohio St. 448
Docket Number: 
Parties: The Merchants' National Bank of Cincinnati v. Ryan et al.
Judges: Burket, C. J., Spear, Price and Davis, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 67
Pages: 448–455

Head Matter:
The Merchants' National Bank of Cincinnati v. Ryan et al.
Promissory note — Not without consideration as to surety— Though consideration was previous contract — To which surety was not party — haw of contracts — Surety.
A promissory note is not without consideration as to one who executes it as surety, although the consideration as between the principal and the payee is the doing of an act by the latter which a previous contract had bound him to do, if the surety was not a party to such previous contract and its performance was waived by the principal while it was yet executory.
(Decided February 3, 1903.)
Error to the Circuit Court of Hamilton county.
The bank brought suit against the obligors to recover the principal and interest upon a promissory note of which the following is a copy:
“4,500.00 Guelph, Ont., February 23, 1897.
“Four months after date I promise to pay to the order of The Merchants’ National Bank, Cincinnati, forty-five hundred dollars, at the Merchants’ National Bank, Cincinnati, with interest at six per cent, per annum. Value received.
“No.- Due- “Wm. Bell."
Said note is endorsed as follows: “J. Fred Woltz, Frank P. Higdon, John G. Brotherton, Michael Ryan.’’
The plaintiff alleged that the defendants Woltz, Higdon, Brotherton and Ryan indorsed the note at the time of its execution and prior to its delivery to the plaintiff, and that at its maturity the notevwas duly protested for non-payment, legal notice thereof being given to the defendants whose names were indorsed upon the note. Ryan answered separately, the other defendants making default. The cause was tried upon the issues tendered by the third defense interposed by him, a demurrer to that defense having been overruled, and the plaintiff having thereupon replied thereto by denying certain of its allegations. The third defense is as follows:
“Defendant, Michael Ryan, says that on or about the-day of June, 1896, plaintiff and the co-defendants, Woltz and Bell, entered into a written contract whereby it agreed to sell and transfer to said Woltz and Bell certain promissory notes made by the Elsmere Syndicate, aggregating $6,350, and said Woltz and Bell did agree to purchase and accept the same from the plaintiff, the sole consideration for said sale and transfer of said $6,350 notes to said Woltz and Bell being the execution and delivery by said Woltz and Bell to said bank of a promissory note of the said Woltz and his associate, the said Bell, in the sum of $4,500, payable four months after date with six per cent, interest, with right of renewal to not exceeding fifteen months, which promissory note the plaintiff, by said contract, agreed to accept as payment for said promissory notes; that said Woltz and Bell did, in compliance with said contract, cause to be delivered to said plaintiff, said $4,500 note made by them, and the said Woltz did authorize the defendant, Brotherton, to obtain from plaintiff in return therefor the syndicate notes aforesaid; that said Brotherton demanded the same from plaintiff, but plaintiff erroneously stated to said Brotherton that a written contract (meaning the written contract aforesaid) required other names on the said $4,500 note besides those of said Bell and Woltz, and said Brotherton, relying on said statement, and knowing, nothing to the contrary, or of said contract, took said $4,500 note from the bank, the names of said Woltz and Bell being then thereon, and applied to this defendant, Michael Ryan, to place his name upon the same, stating to him it was necessary in order to get some notes from the plaintiff, meaning the syndicate-notes aforesaid. Accordingly said Ryan, pursuant to-the request of said Brotherton, put his name on said note solely for the purpose aforesaid. The said note-was then returned by said Brotherton to the plaintiff and it delivered to him the syndicate notes aforesaid. Michael Ryan says he was then, and until after the execution and delivery of said note sued on, ignorant of the existence of said contract and of the above statement of the plaintiff; that he placed his name upon said note without any consideration therefor, and had no interest in said purchase of said syndicate notes, from plaintiff; that when said $4,500 note became due it was renewed for a period of four months by a like note only because the plaintiff was by said Bell and Woltz required under said contract to accept a renewal note; that when said last mentioned note, became due it was for the same reason again renewed for a like period by a note for the same amount, said last named note being the one now sued on; that said Michael Ryan placed his name on said renewal notes only because it was upon the said original note. He says that under the terms of said written contract between said Woltz and the plaintiff it was bound to transfer and deliver to said Wfftz the-said promissory notes of said Elsmere Syndicate upon receiving the promissory note for $4,500 of said Woltz and of said Bell, payable in four months with six per cent, inter est, without any other names thereon, and without any other security for the payment of said promissory note than that of such personal liability of the said Woltz and said Beil, as plaintiff well knew, and that the note sued on in this case so far as concerns this defendant, Michael Ryan, is for the above reasons, void.”
In the court of common pleas the verdict and judgment were for the defendant Ryan, and the judgment was affirmed by the circuit court. Among the numerous assignments of error it is alleged that the court of common pleas erred in overruling the demurrer to the third defense, and that the circuit court erred in affirming its judgment. Other assignments of error are omitted from the statement of the case for reasons given in the opinion.
Messrs. Herron, Gatch & Herron and Mr. W. C. Herron, for plaintiff in error, cited and commented, upon the following authorities:
Dalrymple, Admr., v. Wyker, Admr., 60 Ohio St., 108; Bigelow on Bills and Notes (2 ed.), 184; Randolph on Com. Paper, section 472; Ewan v. Brooks-Waterfield Co., 55 Ohio St., 596; Moies v. Bird, 11 Mass., 436; Steers v. Holmes, 79 Mich., 430; Pauly v. Murray, 110 Cal., 13; McNaught v. McClaughry, 42 N. Y., 22; Harrington v. Brown, 77 N. Y., 72; Robertson v. Rowell, 158 Mass., 94; Roxborough v. Messick, 6 Ohio St., 448; Pitts v. Foglesong, 37 Ohio St., 676; Lord v. Bank, 20 Pa. St., 384; Bank v. Penfield, 69 N. Y., 502; Bramhall v. Beckett, 31 Me., 205; Sherwin v. Brigham, 39 Ohio St., 137; Withers v. Ewing, 40 Ohio St., 400; Irwin v. University, 56 Ohio St., 20; Grasseli v. Lowden, 11 Ohio St., 349; Thurston v. Ludwig, 6 Ohio St., 1; Munroe v. Perkins, 9 Pick., 298; Rawson v. Taylor, 30 Ohio St., 400; Mehurin v. Stone, 37 Ohio St., 57; Abbott v. Doane, 163 Mass., 433; Hawes v. Land Co., 98 Ala., 461; Wilhelm v. Voss, 76 N. W. Rep., 308; Day v. Gardner, 42 N. J. E., 199; Reed v. Bank, 23 Col., 380.
Messrs. Harmon, Colston, Goldsmith & Hoadly and Mr. Dennis F. Cash, for defendants in error, cited and commented upon the following authorities:
Bishop on Contracts, section 48; Chitty on Contracts, 60; Smith on Contracts (ed. 1869), star page 138; 6 Am. & Eng. Ency. of Law (2 ed.), 750; Jackson v. Jackson, 7 Ala., 791; Sherwin v. Brigham, 39 Ohio St., 137; Withers v. Ewing, 40 Ohio St., 400; Vanderbilt v. Schreyer, 91 N. Y., 392; Smith v. Bartholomew, 1 Metc., 276; King v. Railway Co., 61 Minn., 482; Ayres v. Railroad Co., 52 Ia., 478; McCarty v. Assn., 61 Ia., 287; Lingenfelder v. Brewing Co., 103 Mo., 578; Reynolds v. Nugent, 25 Ind., 328; Wimer v. Worth Tp., 104 Pa. St., 317; Monroe v. Perkins, 9 Pick., 305; Bryant v. Lord, 19 Minn., 396; Moore v. Locomotive Works, 14 Mich., 266; Goebel v. Linn, 47 Mich., 489; Rogers v. Rogers, 139 Mass., 440; Davenport v. First Cong. Society, 33 Wis., 387; Johnson’s Admr. v. Sellers’ Admr., 33 Ala., 265; Gordon v. Gordon, 56 N. H., 173; Arend v. Smith, 151 N. Y., 502; Robinson v. Jewett, 116 N. Y., 53; Carpenter v. Taylor, 164 N. Y., 176; Wallace v. Jewell, 21 Ohio St., 163; Thorner v. Field, 1 Bulst. (pt. 1), 120; Jones v. Waite, 7 Scott, 317; Wendover v. Baker, 121 Mo., 273; Andrews v. Campbell, 36 Ohio St., 369; Kulenkamp v. Groff, 71 Mich., 675; Leverone v. Hildreth, 80 Cal., 139; City of Cleveland v. Lenze, 27 Ohio St., 383; Stage v. Olds, 12 Ohio, 167; Bright v. Carpenter, 9 Ohio, 141; Leonard v. Sweetzer, 16 Ohio, 1; Gale v. Van Arman, 18 Ohio, 337; Seymour & Co. v. Mickey, 15 Ohio St., 515; Ewan v. The Brooks-Waterfield Co., 55 Ohio St., 606; Philpot v. Gruninger, 14 Wall., 577; Insurance Association v. Wickham, 141 U. S., 579; Kilpatrick v. Muirhead, 16 Pa. St., 126; Ellis v. Clark, 110 Mass., 389

Opinion:
Shauok, J.
The questions raised upon the trial by exceptions to the rulings of the trial judge respecting the competency of evidence and the instructions which should be given to the jury are not important in view of that presented by the demurrer to Ryan's third defense. The evidence tended to establish the facts alleged in that defense, and throughout the trial and in overruling the motion for a new trial the court obviously adhered to the view of the law which it entertained when it overruled the demurrer.
A fact of first importance is impliedly admitted in the answer and affirmatively shown by the evidence: The bank never accepted the note signed by Woltz and Bell Avithout sureties, nor did it deliver the syndicate notes until it received the original note signed by the fire defendants, of which that counted on by the plaintiff is a renewal. Counsel for the plaintiff therefore insists that the sureties having signed the note before its acceptance by the payee and before the consideration Avas delivered by the payee to the principals, the principals and the sureties are, in accordance with familiar doctrine, bound by the same consideration. Counsel for the defendant admits the general rule thus stated, but denies its application to the facts alleged by Ryan, in view of the prior agreement of the bank to deliver .to Woltz and Bell the syndicate notes for a note signed by them. The argument is, that when the bank delivered the syndicate notes for that signed by the principals and the sureties, it did no more than the previous contract had bound it to do, and that as to the sureties the note counted upon was without consideration. That such was the obligation of the bank in view of the prior contract may be admitted, but does it follow that the undertaking of the sureties is without consideration? The proposition necessary to connect the premise and the conclusion is suppressed in the argument. It should be stated in order that it may be tested. It is, that although Woltz and Bell, whose right it was to insist that the bank should perform the obligation imposed upon it by the prior contract, waived such performance by complying with the demand of the bank for a note with sureties, the surety may annul the waiver and insist upon the prior obligation. To the contract so annulled by those who had executed it Ryan was neither party nor privy. As to him it neither imposed an obligation nor conferred a right. While it was yet executory those who alone were affected by its stipulations waived the obligations which it imposed and substituted for the arrangement which it contemplated the arrangement which was finally executed.
We need have no concern as to the authority of the agent of Woltz and Bell to consent to a rescission of the prior contract, for the principals have ratified what he did in that respect, even to the renewal of the note which was then executed. Nor need we be concerned about the motives which induced Woltz and Bell to waive performance of the prior contract. It is sufficient that they chose to comply with the demand of the bank for a note with sureties rather than to incur whatever trouble and expense might have been involved in insisting upon the performance by the bank of the prior contract. The prior contract is, therefore, without any significance whatever in the present controversy and it should pass wholly from view, leaving the rights of the parties to be determined by familiar principles with respect to which counsel do not entertain different' opinions.
Judgments of the circuit and common pleas courts reversed, and cause remanded to the court of common pleas for further proceedings.
Burket, C. J., Spear, Price and Davis, JJ., concur.