Court Opinion

ID: 6964498
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:51:23.82183+00
Date Added: 2024-06-11T16:08:33.071718
License: Public Domain

Mr. Justice Baker delivered the opinion of the Court: One principal contention of appellant is, that the agreement dated August 10, 1882, became and constituted an original and direct engagement or undertaking by Waterman and his associates signing such paper, as distinguished from a guaranty or collateral engagement to an owner for the debt of another. We will assume the correctness of this claim of appellant; but we do not understand such concession to be_ decisive of the case. It is evident that the agreement was not intended or understood to work a cancellation or discontinuance of the indebtedness of the Sycamore Marsh Harvester Manufacturing Company to the bank, and that it in fact had no such effect. It makes reference to the payment, on or before March 1 after its date, of the “company’s debt,” and makes express provision for “any extension thereof made in the meantime,”' thus indicating that it was contemplated that the debt of the company to the bank should continue to exist, notwithstanding the proposed arrangement should be entered into. The notes executed by the harvester company which the bank held for its debt were not surrendered or cancelled, nor was any credit placed thereon at the time the agreement was made, but said notes were retained by the bank, and were from time to time, for a period of nearly two years, replaced by renewal notes executed by the company, thus indicating that the company was, notwithstanding the agreement of August 10, 1882, regarded and treated as a debtor of the bank for the full amount of its original indebtedness remaining unpaid. Assuming the transaction of August 10,1882, to have been a direct and original promise by Waterman and his associates to pay the debt, yet it does not follow that .the makers of that promise were not securities for the harvester company, and were not released by the subsequent extensions of time given to that company. It is manifest that, notwithstanding that promise, the debt, as between the company and the signers of the writing, continued to be the 'debt of the company, and that had such signers paid the debt to the bank, they would have had recourse for the amount so paid, upon the company. A corporation and its stockholders are not one and the same. In Hansen v. Donkersley, 37 Mich. 134, it was said: “A corporation is, in law, a different person from any of its members. A promise by a stockholder to pay a corporation debt is in every sense a promise to pay the debt of another.” (See, also, Browne on the Statute of Frauds, sec. 164.) It is also plain that the bank had full notice and knowledge of the relation which existed between said signers and the company, and that the company was the ultimate debtor. Even if we assume, for the purposes of the decision, that the agieement contemplated renewals of the notes of the harvester company, and extensions of the time for the payment of the same, and that the necessity of procuring further consent of Waterman for the making of such renewals and extensions was thereby obviated, yet it is manifest that his death revoked all authority given by him in that behalf,—and the record shows that several renewals of the notes were made after his decease. The rule is too well settled to require the citation of authorities, that if a creditor, by a valid and binding agreement, without the assent of a surety, gives further time for payment to the principal debtor, the surety will be discharged. We understand the doctrine to be, that where two persons are bound for the same debt, and there is an obligation on the part of one to exonerate the other, in the event of payment being enforced against such other, and this is known to the creditor, then the creditor can not extend the time of payment to the party ultimately liable without discharging the other debtor, even though such other debtpr occupies the position of a principal debtor to the creditor. Millard v. Thorn, 56 N. Y. 402; Colgrove v. Tollman, 67 id. 95; Walton v. Beauregard, 1 Rob. 301; Gray v. Blanchard, 32 La. Ann. 503; 1 Jones on Mortgages, (2d ed.) secs. 741, 742. It is also claimed that Waterman and his associates were indemnified, and therefore can not avail themselves of an extension of time for payment given to the corporation. The doctrine of Smith v. Steel, 25 Vt. 427, and other cases cited by appellant in that behalf, is, that a surety who is fully secured by property in his hands, is estopped from objecting to any enlargement of the time of payment made by agreement between the creditor and the principal, and is not discharged by such enlargement. But we do not understand that the signers of the agreement of August 10, 1882, either were or-are indemnified against loss in respect to either all or any portion of the present claim of appellant. The $21,116.71' in farmers’ notes were delivered to the corporation, and used by it for corporate purposes, and said signers received no benefit therefrom, except such as they may have received indirectly, as stockholders. In June, 1884, harvesters and binders of the estimated value of $10,650, in the hands of agents in Dakota and Nebraska, were transferred by the harvester company to the bank, for the purpose of securing said signers, and a bill of sale therefor was delivered to the bank, and in the same month the harvester company transferred and delivered to the bank four packages of farmers’ notes, amounting in the aggregate to $10,450.08. Afterwards, under an arrangement concurred in by the bank and said signers, the harvesters and binders were disposed of, and the proceeds realized therefrom paid to the bank, and credited upon the ■indebtedness of the harvester company to it. The four packages of notes seem to have consisted, at least in part, of overdue paper, and the notes, by similar agreement between the bank and the signers of the agreement of August 10, 1882, were sent by the bank to the Capital National Bank of Lincoln for collection, and the collections made on said notes were remitted to appellant, and applied by it on the indebtedness due to it from the harvester company. It also appears that the harvester company was indebted to one C. W. Moshier, of Lincoln, Nebraska, in the sum of about $57,000, for advances made on some $200,000 of over-due farmers’ notes, which said Moshier held and upon which he had a lien, and that in the summer of 1884 a contract was made, whereby said Moshier agreed, that after the payment of said $57,000, with interest, and all expenses of collection, he would apply the proceeds of said notes, first to the payment of $26,000 to one John W. Ela, and after payment of said $26,000 to Ela, to the payment to Charles Kellum of not exceeding $10,000, to be applied on the debt of the harvester company to appellant, for the benefit of Kellum and his associates in the agreement of August 10, 1882, etc. The evidence tends to show that said Moshier has as yet been unable to collect upon said notes sufficient to pay the amount of his prior lien thereon, and probably never will be. The trial court properly held, in the propositions óf law submitted to it, that the burden rested upon appellant to show that the estate of Waterman was actually indemnified in respect to all or a portion of the indebtedness of the harvester company charged against said estate. The court must necessarily have found, as matter of fact, that the evidence failed to show that the provision made for that purpose had actual value, and that finding having been affirmed in the Appellate Court, is conclusive. The rulings of the court upon the several written propositions of law submitted to it at the trial, were in substantial' conformity with the views herein expressed. We find no error in the record. The judgment is affirmed. Judgment affirmed. Mr. Justice Magbudee, dissenting.