Prior v. Kiso , 81 Mo. 241 ( 1883 )

Philips, C.—In

September, 1872, the plaintiff leased to John and. Herman Kiso, for a term of five years, certain premises in Osage county, consisting of a grist and sawmill, a farm appurtenant, with blacksmith shop and ferry over the Gasconade river. Plaintiff’ was to put the lessees in possession on October 1st, following. Plaintiff was to make certain repairs, and was to pay the defendants for the same in case he neglected it, etc. Defendants were to pay a rental of $2,000 a year, payable quarterly, beginning on the first day of January, 1873.

On the same day the defendants, on another paper, executed the following instrument of writing: “We, the undersigned as principal and sureties, do bind ourselves in the sum of $20,000, recoverable by George W. Prior, for the rent of his mills and farm, as designated between George W. Prior and Herman and John Kiso, in an article designated by both parties; the object of this is to secure the rent and delivery of the mills and farm in good order and condition.” This surety contract was executed pursuant to a stipulation providing therefor in said contract of lease. Both the lease and collateral undertaking, were under seal. The petition filed herein by Prior, sets out said lease and the undertaking of defendants as sureties or guarantors, and alleges that the Kisos took possession of the leased premises at the time designated in the contract, and continued therein for fifteen months, making certain repairs, which discharged the rents for that time, except the sqm of $20, which they paid in cash. That at the end of fifreen months, he and the Kisos had a full settlement of all matters between them touching. said lease, which was final and conclusive; that in the month of June, 1875, Herman Kiso died intestate, after which time John and the administrator of said Herman, continued to hold the premises, until the 1st of December, 1875, but failed to pay said rent, as stipulated in the contract, leaving a balance due plaintiff of $8,625. This action is brought against the defendants on said guaranty to recover said balance and interest.

The defendant John Kiso, filed separate answer, charging: “1. That plaintiff failed to comply with the conditions of his contract, and refused and failed to deliver full and complete possession of the premises, farm and mill to defendant and Herman Kiso, but kept for himself and family, full and exclusive possession of the dwelling house and part of the mill and buildings, to the great damage and annoyance of defendant and Herman Kiso.

“2. That at the time of making the lease, John and H. Kiso had formed a partnership for the purpose of running the mill and farm mentioned in the lease, as the plaintiff at the time well knew, and that said lease was really made to said John and H. Kiso as partners, and that they so ran the mill and farm as partners from the beginning of said lease, until February 2nd, 1874; that by reason of plaintiff’s failure to deliver full possession of the premises, the defendants refused to keep the same under the lease, and refused to remain in said partnership, and that on February 2nd, 1874, said partnership was wholly dissolved by mutual consent, and the defendant (John Kiso) then and there for valuable consideration, sold and conveyed all his rights and interest in the lease to H. Kiso, with full knowledge and consent of plaintiff", and from said last date, H. Kiso had, and held the exclusive possession of all the leased premises, except as heretofore stated, and from that time until the delivery of said premises on December 1st, 1875, (was) solely responsible to said plaintiff, and (was), by plaintiff, held as solely and exclusively responsible; and said partnership was fully dissolved and defendant released from all liabilities created by said lease on February 2nd, 1874, with full knowledge and consent of the plaintiff.

“ 8. Admits that said H. Kiso, after his death, by his representatives, continued in possession of the premises till December 1st, 1875, but denies that the defendant from and after February 2nd, 1874, was ever in possession of the leased premises, but that after the last date, and that of the' dissolution of the partnership, H. Kiso had the sole possession, and was solely liable for the rent, and this defendant denies that there was a failure to pay rent quarterly, or at any other time, but says, that all rent due plaintiff, has been fully paid and discharged, and that nothing is due plaintiff therefor, by this defendant or any one else.”

The other defendants answered jointly. The material averments of their answer are as follows:

“ 2. That they executed the instrument sued on as securities for Ií. and J. Kiso, then being partners, and leased said property in partnership and for the purpose of carrying on the partnership business of milling, farming, etc., as co-partners, which was at the time known to the plaintiff; that the undertaking of defendants was that of securities for the rent reserved in the contract of lease of plaintiff" to the Kisos, but that said contract was never complied with by plaintiff; that plaintiff" refused to deliver up all the premises so leased to the Kisos, and that the latter never entered on the premises under the terms of the lease; that afterward the Kisos, by agreement with plaintiff, entered into a part of said premises, and plaintiff kept possession of a part thereof, and that by said action of plaintiff and the Kisos, the contract was materially altered and changed, in that the Kisos accepted of and from plaintiff a smaller portion of said premises, all of which was without the knowledge and consent of these defendants, by which action they were released from any liability on the writing signed by them.

“ 3. That after the execution of the instrument sued on, and on February 2nd, 1874, the partnership between the Eisos was dissolved, and by the terms of the dissolution H. Kiso kept and retained all the property theretofore held by them and belonging to plaintiff, and H. Kiso agreed to pay all the partnership debts, including rent of said property; that plaintiff knew of the dissolution and the terms of the contract between the Kisos, and approved, consented and acquiesced therein, and afterward kept and did all business and things pertaining to said leased property, and treated and dealt with Herman Kiso as the sole owner of said lease, and whereby plaintiff then and there released said John Kiso, and that by this act in releasing him, these defendants, as securities for the said Kisos, are released and discharged from all liability created by the writing sued on for any debt after the dissolution

“ 4. That the plaintiff voluntarily released James Mc-Cannan and J. H. Kidd from all liability as co-partners on the instrument sued on, by which defendants were discharged from any liability to the extent of two-tenths of any supposed interest therein.

“ 6. That after the death of H. Kiso his representatives continued in possession of the premises and retained sole control thereof to December 1st, 1875, at which date, pursuant to an agreement made between plaintiff, the defendant, John Kiso, and the legal representatives of H. Kiso, the said legal representatives of H. Kiso released to said plaintiff the possession of the leased premises prior to the expiration of the term for which the same were leased, and plaintiff then and there agreed to look to said defendant, John Kiso, alone for the payment of the rent due, and to release'H. Kiso’s estate from any liability for the same, by which said action of said parties to the original contract of lease and their legal representatives, the said original contract was entirely abrogated, and the defendants released from any and all liability incurred from and in pursuance thereof/’

Evidence was introduced by both parties tending to sustain the respective issues. A great number of instructions were asked and given on both sides, many of them as usual in such trials, wholly unnecessary and repetitions of each other. They will be noticed, so far as needful, in the course of this opinion. The jury found the issues for the defendants, and the plaintiff has brought the case here .on appeal.

I. We will dispose of the objection at the outset, interposed by appellant, that the contract of lease being under seal, could not be changed or so modified by the parties thereto, as to operate a discharge of the sureties or the lessee, unless the substituted arrangement was in writing and under seal. The case of McAllister v. JDennin, 27 Mo. 40, is cited in support of this proposition. This applies to technical releases of one joint obligor to discharge his co-obligor. It has no application to the issue here involved. A lease under seal may be surrendered or changed by subsequent contract by parol, or wi’iting, under seal or without seal. Randall v. Rich, 11 Mass. 493; Matthews v. Tobener, 39 Mo. 115; Hutchinson v. Jones, 79 Mo. 496. “What will amount to a surrender is often a question which may be presumed from facts. An actual and continued change of possession, by the mutual consent of the parties, will be taken as a surrender, by operation of law, whether the possession is delivered to the landlord himself or to another.” It would be grossly inequitable for the lessor, after he has consented for the lessee to quit and look to another for the rents, to return to his compact, when he should afterward fail to collect from him whom he accepted as tenant instead. Especially does the doctrine apply to the case of the sureties whose security is lessened by the act of the lessor in permitting the principal to go out. . He would be estopped from holding them to the letter of a contract which he had assented might be waived, without their consent.

II. The appellant treats the action as if founded on both the contract of lease and that of the sureties. The contract of tlie sureties is evidenced by a separate instrument, and is collateral to the contract of lease. By its express terms, its object “ is, to secure the rent and delivery of mills and farm in good condition.” Its purpose is limited by its own terms, and the sureties would not be liable to any action for any other incident of the contract of lease. The general doctrine is, that the contract of the guarantor, being independent of and auxiliary to that of the principal, he cannot be joined in the same action against the principal. Cent. Sav. Bank v. Shine, 48 Mo. 463, 464; Graham v. Ringo, 67 Mo. 324; Parmerlee v. Williams, 71 Mo. 410. John Kiso, being a party to both the contract of lease and surety, was well joined in the action on the latter undertaking. This ■ complication renders it difficult to determine whether the undertaking of defendants be strictly one of guarantors or sureties. But treating them as mere sureties, (a view more favorable to the appellant) obligated by a collateral contract, will not affect the principles involved in the decision of the case. As sureties, the defendants, other than John Kiso, had certain rights and privileges under the law, which it was not in the power of the parties to the contract of lease to abridge or imperil. They are very justly the favorites of the law.

As C. J. Kent, in Ludlow v. Simond, 2 Caines Cases in Error, p. 57, says: “ It is a well settled rule, both at law and in equity, that a surety is not to be held beyond the precise terms of his contract, and except in certain cases of accident, mistake or fraud, a court of equity will never lend its aid to fix a surety beyond what he is fairly bound at law. This rule is founded upon the most cogent and sulutary principles of public policy and justice. In the complicated transactions of civil life, the aid of one friend to another, in the character of surety or bail, becomes requisite at every step. 'Without these acts of mutual kindness and assistance, the course of business and commerce would be prodigiously impeded and disturbed. It then becomes excessively important to have the rule established, that a surety is never to he implicated, beyond his specific engagement. Calculating upon the exact extent of that engagement, and having no interest or concern in the subject matter for which he is surety, he is not to be supposed to bestow his attention to the transaction, and is only to be prepared to meet the contingency, when it shall arise, in the time and mode prescribed in the contract. The creditor has no right to increase his risks without bis consent ; and cannot, therefore, vary the original contract, for that might vary the risk.”

“ To charge him beyond the terms, or to permit it to be altered without his consent, would be, not to enforce the contract made by him, but to make another for him.” Brandt on Suretyship, § 79, 80. It is not for the creditor, or the principal to say the change or modification made, will probably enure to the benefit of the surety, or add to his protection. He has a right to say, when called on by the creditor: In hoc foedere non veni, I come not to this compact. State ex rel. v. Boon, 44 Mo. 262. Whatever act of the creditor, done without the assent of the surety, which tends to enlarge or diminish the terms of the contract, to increase the surety’s liability, or the hazard of his risk, in any material particular, will discharge him.

The undertaking of the sureties here, was to answer for the debt and act of two parties jointly as lessees. It was not for one alone. The law presumes that the inducement of the surety to stand for the rent was based upon the character and husbandry of both parties; and that the obligation would not have been executed for one alone. If without the consent of the sureties, Prior consented for .John Kiso to quit the premises, and for Herman to continue, looking to Herman for the rent, that discharged the sureties. State ex rel. v. Boon, supra; Blair v. Perpet. Ins. Co., 10 Mo. 566.

There was evidence, both direct and circumstantial, to show that John Kiso did retire from the premises with the knowledge and assent of Prior, and that he treated with Herman Kiso and his administrator afterward, as if they were the sole parties in interest. This issue, we think, was fairly and with sufficient clearness, submitted to the jury in the instructions. There was some conflict of testimony as to the detention by Prior from the lessees of certain portions of the demised premises, and as to whether the parts retained were material. "We may concede to the appellant that, unless the portion thus withheld had some practical value, and bore uj>on the responsibility of the sureties as affecting the character and extent of their security, the maxim might be applied; de minimis lex non curat. And some of the instructions given in behalf of the defendants did not, perhaps, sufficiently present to the jury the consideration of the matei'iality of all the portions of the property so withheld. But, we are relieved from the necessity of going into details, because it appears from the evidence introduced by the plaintiff, and uncontradicted, that “ Prior put a fence over on the Kiso side, on the northwest corner; this was accounted for in the settlement had between Prior and the Kisos the 1st of January, 1874. The field next the ferry, which Prior kept, was sold back to him by H. Kiso.” So it affirmatively appears from the plaintiff’s side, undenied or uncontradicted by the other, that after the contract assumed by the defendant sureties, Prior, by arrangement between him and the Kisos, or one of them, bought back from the lessees a material portion of the demised premises. It was material, confessedly by his own act, in buying it back. Thus was a part of the land leased, which was a part of the security the sureties had when they executed the collateral undertaking, returned to the lessor. There was no evidence of their assent, hut on the contrary, they testified it was unauthorized by them. The injustice of this arrangement becomes patent in view of the fact, that the lessor after taking back a part of the premises, is now suing the sureties for the full rent of the whole, as expressed in the original lease. It is no answer to say that he paid the Kisos for the land taken back. The money in their pocket was no security to the guarantors, as the land itself was. Penn v. Collins, 5 Rob. (La.) 213; Bethune v. Dozier, 10 Ga. 235; Brandt on Suretyship, §§ 338, 345.

On this proof, made by the plaintiff', the defendant sureties were entitled to an instruction directing the jury to find for them. Instead of this, however, the court instructed the jury, “that the fact that John and Herman Kiso sold to the plaintiff a portion of the land leased to them, is no defense for any of the defendants in this action.” This was error committed against the surety defendants. Superadded to which is the further undisputed fact, that when the lease, under the terms of the contract, had more than a year thereafter to run, the plaintiff' took back the whole promises, and held them thereafter. There was no evideuce that the sureties consented to this. That fact released them also.

The judgment should be affirmed, if there was no error committed by the court in the instructions given affecting the right of recovery against the defendant, John Kiso, who was a principal in the contract. Among the instructions given on the behalf of the defendants, are the following :

“ If the jury believe from the evidence that John C. Kiso and Herman Kiso jointly leased the mills and farm of the plaintiff, as stated in plaintiff’s petition, and that plaintiff failed to deliver all the lands and tenements, as agreed in his contract of lease, to the said John Kiso and Herman Kiso; and you further find from the evidence that the defendant, John C. Kiso, by reason of such non-compliance with the terms of the contract by the plaintiff, left said mill and premises and refused to keep the part of the lands and premises delivered, and that Herman Kiso then kept sole possession of said premises, or any part thereof, then the jury must find for the defendants.”

“ If the jury believe from the evidence that the plaintiff retained the possession, use and occupation of any part of the premises leased to Herman Kiso and John Kiso, without the consent of John Kiso, and that by reason of said detention John Kiso severed his connection with the business conducted under that lease, and gave up all interest therein, then the defendants in this action are released, and the jury will find for the defendants.”

It is manifest that under these instruction, particularly the last, the jury were authorized to find for Kiso, if any part of the demised premises were withheld without his consent at the time, during the tenacy. In the first part of his answer he admitted, among other things, that “ he and Herman entered into possession under the contract of lease with plaintiff * * and that under said contract they entered into the possession of said premises, mill and farm, except as afterward in the answer stated, did the work and labor, and paid the rent for fifteen months, as alleged in the petition.” The complaint in the succeeding part of the answer is, that he did not get possession of the entire property, and quit on account thereof, and by consent of plaintiff. Now, this is an admission, in legal effect, that he accepted the possession of a part of the premises, at least, and held them with Herman for fifteen months when the settlement was made. Having accepted less than what he was entitled to demand under his contract, and held the part for fifteen months, was sufficient to have authorized the jury to find that he had waived full performanee on the part of the lessor. And if, in fact, he only obtained a part, without assenting to the withholding of the residue, the plaintiff’ could only recover from him pro tanto, for the portion he took. This is the law and equity of the jnatter. If Prior agreed to let him off’ after the settlement pt the end of the fifteen months, as alleged, that, of course, ymuld authorize a verdict for him. Whether such was the fact, was for the jury to determine from all the facts and circumstances in evidence.

The judgment of the circuit court is, therefore, reversed, and the cause remanded, for further proceeding in. conformity with this opinion.

Martin, C., concurs; Ewing, C., not sitting, having been of counsel. Sherwood and Norton, JJ., absent.