Title: Union Trust and Savings Bank v. State Bank
Citation: 188 N.W.2d 300
Docket Number: 54634
State: Iowa
Issuer: Iowa Supreme Court
Date: June 17, 1971

188 N.W.2d 300 (1971) UNION TRUST AND SAVINGS BANK, Fort Dodge, Iowa, Appellant, v. The STATE BANK, Fort Dodge, Iowa, Conservator of Bonnie Semprini, Appellee. No. 54634. Supreme Court of Iowa. June 17, 1971. *301 Johnson, Burnquist &amp; Erb, Fort Dodge, for appellant. Alan Loth, Fort Dodge, for appellee. RAWLINGS, Justice. This appeal stems from plaintiff's second action at law against defendant conservator of Bonnie Semprini to recover on a written guaranty agreement. Trial to the court resulted in judgment adverse to plaintiff and it appeals. Defendant cross-appeals. We affirm on plaintiff's appeal. The basic factual situation, fully set forth in Union Trust &amp; Savings Bank, Fort Dodge, Iowa v. State Bank, Fort Dodge, Iowa, Conservator of Bonnie Semprini, 170 N.W.2d 674 (Iowa), need not be here repeated. We there affirmed trial court's denial of recovery on plaintiff's first action because the five nondiscounted notes involved were not covered by the instant guaranty. September 16, 1969, procedendo accordingly issued. November 4, 1969, James Semprini, Bonnie's husband and original debtor, appeared at plaintiff bank in response to a request made by one of its officers. Semprini then owed $85,000, evidenced by the aforesaid five promissory instruments. A new note in that sum, due in thirty days, was then signed by Semprini, for which $84,433.33 was advanced, by draft, immediately endorsed by Semprini and retained by the bank, with credit accordingly given on the prior obligation. This second action is based upon the aforesaid November 4, 1969, allegedly "discounted" note. August 23, 1967, defendant conservator was appointed. October 3, 1967, plaintiff filed a claim in that conservatorship, on which the above mentioned prior action was premised. So it is apparent, plaintiff was aware of the conservatorship long before the subject note was taken. Errors asserted by plaintiff in support of a reversal are, essentially, trial court erred in holding, (1) appointment of a conservator terminated any right to act upon or accept the prior ward executed guaranty absent court approval; (2) the loan guaranty, in absence of specific reference to renewal obligations, did not cover the instant note. On cross-appeal defendant asserts trial court erroneously failed to hold the conservator's answer in plaintiff's prior action stood as a notice of revocation of the guaranty relative to any future transactions thereunder. *302 I. Prefatorily it is understood: II. The instrument upon which plaintiff now seeks to recover is not limited to a single transaction but rather contemplates a future course of dealing, for an indefinite period of time, in a fixed or limited amount, executed by the guarantor for benefit of her husband, and addressed to plaintiff as sole obligee. It thus appears we have at hand a continuing accommodation special guaranty. See West Branch State Bank v. Farmers Union Exchange, 221 Iowa 1382, 1385, 268 N.W. 155; Fisk &amp; Co. v. Rickel, 108 Iowa 370, 371, 79 N.W. 120; 38 C.J.S. Guaranty §§ 7, 54; 38 Am.Jur.2d, Guaranty, §§ 23, 29. It may also be generally characterized as an aleatory contract. 3A Corbin on Contracts, §§ 728, 732. III. Such an instrument remains effective until revoked by the guarantor, or some rule of law, except as to any past transactions, which have served to create a contractual relationship between guarantor and guarantee. See 1 Corbin on Contracts, §§ 38-41, 76; 38 Am.Jur.2d, Guaranty, § 63. In other words it is a revocable offer of guaranty, effective only on a legally valid acceptance thereof prior to any revocation. IV. The vital question now posed is whether appointment of a conservator for the guarantor served to effectively revoke this guaranty, then totally unaccepted by the obligee. Plaintiff concedes a continuing guaranty is usually terminated, in futuro, by death of the obligor. See Gay v. Ward, 67 Conn. 147, 34 A. 1025, 1026-1027; American Oil Company v. Wigley's Estate, 251 Miss. 275, 169 So. 2d 454, 459-462; Restatement, Security, § 87; 38 Am.Jur.2d, Guaranty, §§ 65-68. See also Stearns Law of Suretyship, Elder's Rev., Fifth Ed., § 4.20; 1 Corbin on Contracts, § 54. It is vigorously contended, however, the foregoing rule does not apply in event a conservatorship is established on behalf of a mentally competent guarantor. In support thereof plaintiff inceptionally argues the revocation by death rule is foundationed upon the need to protect a deceased person's estate, which does not exist when a living competent party is placed under conservatorship since the conservator has power to revoke a continuing guaranty. We perceive no such instantly persuasive distinction. An executor and a conservator have like powers in that regard. See The Code 1966, Sections 633.646, 633.647, 633.649. V. Moreover, there is to us no basis, to the extent here relevant, upon which to differentiate between what was once identified, *303 in this jurisdiction, as a guardian of property and a present day conservator. See Bar Committee Comment, 47 Iowa Code Annotated, page 385; 3 McCarty, Iowa Probate, Second Ed., § 2737; cf. Editorial Comment, 9 A.L.R.3d 777-778. In light thereof we look first to Anderson v. Schwitzer, 236 Iowa 765, 771, 20 N.W.2d 67, where this court held, it is not accurate to say a guardian of property is "a mere" trustee or agent. Dealing with the same basic subject in Morse v. Slocum, 192 Iowa 1080, 1092, 186 N.W. 22, we said: To the same effect is this statement in the factually dissimilar case of Reeves v. Hunter, 185 Iowa 958, 966, 171 N.W. 567, 570: See Olshen v. Kaufman, 235 Or. 423, 385 P.2d 161, 164-168. More recently this court stated: See 44 C.J.S. Insane Persons § 85a. It is thus evident all of Bonnie Semprini's property, upon appointment of a conservator, was in custodia legis, subject to order of the court. See The Code 1966, Section 633.639; In re Guardianship of Brice, 233 Iowa 183, 188, 8 N.W.2d 576; 39 C.J.S. Guardian and Ward § 74; 39 Am.Jur.2d, Guardian and Ward, § 73. VI. Furthermore, Restatement, Contracts, § 48, provides: "A revocable offer is terminated by the offeror's death or such insanity as deprives him of legal capacity to enter into the proposed contract." That view has since been broadened by Restatement, Second, Contracts, Tentative Draft No. 1, § 18Ac, which states: Then § 35 of the same Draft provides: Additionally § 48 thereof states: VII. On the other hand plaintiff insists Dean v. Estate of Atwood, 221 Iowa 1388, 212 N.W. 371, holds a mentally competent person is not contractually incapacitated by being made a guardianship ward. The cited case involved an application in probate to enforce a ward's contract, created shortly after establishment of a prestatutory, self-initiated guardianship. Distinguishably that contract was for necessaries. Later, in Anderson v. Schwitzer, 236 Iowa 765, 20 N.W.2d 67, the case of Dean v. Estate of Atwood, supra was relied on to sustain the argument that one seeking appointment of a guardian for himself must be sane, so is free to subsequently act pro se, despite existence of the resultant guardianship. We rejected this claim and, as aforesaid, cast aside the "mere trustee or agent" view, at the same time holding a ward stands equally protected under any guardianship, be it of the person or property. To like effect is In re Guardianship of Kappel, 242 Iowa 1021, 1027, 47 N.W.2d 825, and Neidermyer v. Neidermyer, 237 Iowa 685, 687, 22 N.W.2d 346. Resultantly little, if anything, said in Dean v. Estate of Atwood, supra, now lends any persuasive support to plaintiff's stance in the instant case. Finally, on this subject, The Code 1966, Section 633.637, significantly provides: Cf. 3 McCarty, Iowa Probate, Second Ed., § 2739. See also The Code 1966, Sections 633.638, 633.647. VIII. It is to us apparent, (1) Bonnie Semprini executed and delivered to plaintiff, as sole obligee, a continuing accommodation guaranty limited only as to amount and nature of any debt to be thereby secured; (2) defendant was appointed conservator for said guarantor; (3) plaintiff had not then accepted the guaranty by any loan effected within the terms thereof; (4) plaintiff became aware of the aforesaid active conservatorship; and (5) subsequently attempted to effectuate a guaranty covered loan by a note renewal scheme never approved or ratified by the conservator or any court of competent jurisdiction. We are satisfied and now hold the appointment of a conservator for Bonnie Semprini, guarantor known to defendant bank, served to revoke the then unaccepted guaranty, making it thereafter and at all times here concerned of no legal force. *305 And it is of no consequence that the instrument here sued upon provides, in part, it shall "be a continuing guaranty * * * until revoked by me in writing and a copy of such revocation delivered to the Bank." See Restatement, Second, Contracts, Tentative Draft No. 1, § 46; Stearns Law of Suretyship, Elder's Rev., Fifth Ed., § 7.24; 38 C.J.S. Guaranty § 37; 38 Am.Jur.2d, Guaranty, §§ 65-68; Annots. 81 A.L.R. 795, 42 A.L.R. 926. Under existing circumstances, trial court's holding in accord herewith is amply supported by substantial evidence and justified as a matter of law. Having thus disposed of this appeal there is no need to consider plaintiff's remaining assigned error, or that asserted by defendant. Affirmed. All Justices concur, except REYNOLDSON, J., who takes no part.