Frank & Co. v. Nathan , 159 Ga. 202 ( 1924 )

Beck, P. J.

(After stating the foregoing facts.)

We are of the opinion that the court properly sustained the general demurrer to the petition in this ease. We have set forth at some length, in the statement of facts, the allegations made in the petition as to the contention of petitioners in regard to what they insist was the actual agreement or contract contained in the guaranty. An examination of those allegations will show that there is no distinct allegation of an agreement or contract entered into before the guaranty was signed. The doctrine that the allegations shall be most strongly construed against the pleader has a real meaning, and is to be given effect in cases like tlie present one. If an agreement ivas actually made as to the terms of the guaranty before the same was signed, it could have been alleged, but the pleader contents himself with alleging that “shortly thereafter [that is, after they had informed Marcus that they would not extend him any further credit unless he should procure some one to become guarantor for him], the defendant offered to petitioners to become guarantor to them for such new indebtedness,” etc. The expression “shortly thereafter” might well cover the time subsequent to the actual signing of the guaranty, which was signed by the defendant and delivered to the plaintiffs. And it is equally clear that the allegation in the petition, that “on or about the date that the said guaranty was executed by the said defendant, he talked with E. M. Frank, one of your petitioners, who had charge of this matter, . . and in said conversation it was agreed between the defendant and petitioner that the defendant’s guaranty was to cover only new purchases,” etc., might as well have been after the signing of the guaranty as before. It is argued that the expression, “was to cover,” necessarily related to the future; but the full expression is, “it was agreed between the defendant and your petitioner that the defendant’s guaranty was to cover only new purchases,” etc., and that agreement might refer to their construction of the guaranty, or might be putting additional terms to the same. At any rate, it is not plain that this conversation and agreement took place before the signing of the guaranty, and it is not a necessary inference that it took place before the signing of the guaranty; and we do not feel authorized to make inferences in favor of the pleader. We do not think, therefore, in the absence of distinct and definite allegations that an agreement or contract had been made before the signing of the guaranty, that a court of equity would be authorized to reform the instrument so as to include terms which it is not shown were in the original agreement or intended to be in it, or which it was the intention of the parties to insert in the agreement •expressed or manifested before the agreement was signed. Where it clearly appears that the contract does not show the intention of both parties, a court of equity may reform the contract to conform to their intentions. It is well settled that a written contract which misstates the terms of an oral agreement on which it is founded may be reformed. Niagara, Fire Ins. Co. v. Jordan, 134 Ga. 667 (68 S. E. 611, 20 Ann. Cas. 363). “In all cases of mistake of fact material to the contract, or other matter affected by it, if the party complaining applies within a reasonable time, equity will relieve.” Civil Code, § 4580. But a bill of complaint in a suit to reform a written instrument must clearly and distinctly state what was the contract or agreement between the parties, and show what part of the contract was omitted when it was reduced to writing, or what portion of the contract as it was expressed in the writing was not embraced in the original contract. “If mistake is relied on, it must be distinctly charged and stated with precision, the particular mistake being shown and how it occurred. In other words, the pleader should state why the terms of the actual contract happened to be left out, or how terms not agreed on came to be inserted.” 23 R. C. L. 361. It seems clear that before the petitioner could avail himself of the allegation that material words of an oTal agreement or contract were omitted from a written contract, he should show that the oral agreement was made before the writing was signed; and this he fails to do. And it follows from what we have said above, that the court did not err in dismissing the petition upon the ground taken in the.demurrer, that the petition did not set out a cause of action for reform.

Moreover, we are of the opinion that if the written guaranty had been reformed so as to speak thé contract'as the plaintiffs insist it was and should have been written, the plaintiffs would not have been entitled to recover a judgment for any amount. In the guaranty which the plaintiffs seek .to have the court by its decree to establish as the true contract between the parties, is the following: “and it is hereby agreed that this guaranty shall, be cancelled and surrendered to me whenever M. Marcus shall have paid to Frank & Co. the indebtedness which he now owes to them growing out of the business conducted by him at Reidsville, Georgia.” That indebtedness, as appears from the petition, -was the sum of $5700, and subsequently to the signing of the guaranty the plaintiffs received $3705.00, which amount was paid prior to the bringing of this suit and after the execution of the guaranty. - This last sum was 65 per cent, of the old indebtedness, and “was accepted by plaintiffs in full compromise settlement and satisfaction of the old indebtedness, in accordance with a general compromise agreement reached between Marcus and all of his creditors whose indebtedness arose out of the business previously conducted at Reidsville.” It is also alleged that among the class of creditors referred to was the copartnership of I. Nathan & Son, composed, of the defendant in this case and his son, and this copartnership accepted a settlement of 65 per cent.; and thereupon it is alleged that the defendant knew of and acquiesced in such compromise settlement. And we are of the opinion that when the plaintiffs in this case accepted 65 per cent, of the indebtedness of Marcus in full and complete satisfaction of their claim, that debt was paid and discharged in the sense in which the word “paid” is used in the guaranty which plaintiffs insist was the true contract between them and the defendant. We do not think that the facts alleged show that Nathan acquiesced in the settlement between Frank & Co. and M. Marcus in such a manner that the settlement and compromise would not amount to a complete satisfaction'of the debt. The allegation of acquiescence on ,the part of Nathan in the compromise settlement between Frank & Company and Marcus is based upon the fact that Nathan’s firm accepted 65 per cent, of its claim, the same per cent, that was paid Frank & Company, in settlement of the former’s claim. “As a general rule the payment or other satisfaction or extinguishment of the principal debt or'obligation by the principal or by any one for hina discharges the guarantor.” 28 C. J. 1003, § 164, and cases cited. See also Brown v. Ayer, 24 Ga. 288; Tarver v. Rankin, 3 Ga. 210.

We are, consequently, of the opinion that the court did not err in sustaining the other ground of the general demurrer, wherein it is insisted that even if a reformation should be had establishing the written guaranty which the plaintiffs insist contains the true agreement between the parties, they would not be entitled to a judgment against the defendant.

Judgment affirmed.

All the Justices concur.