Ireland v. Shukert ( 1943 )

ON REHEARING. After carefully considering this case we have concluded that the opinion of CAVE, Judge, rendered upon the original submission, should be, and hereby is, adopted; but deem it proper to make the following observations, in view of the matters suggested in plaintiff's brief on rehearing.

It is claimed that defendant was the equitable owner of the ninety-nine year lease and, having received benefits by virtue of the execution of the guaranty, should be bound by the latter.

We are of the opinion that the fact, if it be a fact, that defendant had an equitable interest in the lease, should make no difference in the disposition of the case. Plaintiff, and the other noteholders, did not accept the guaranty and at no time gave up their rights in the matter of having the deed of trust foreclosed. The so-called guaranty, never having become effective, it cannot be said that defendant received any benefits under it. Benefits, in legal contemplation, cannot be based upon a contract nonexistent. The same answer is to be made to the contention that there was a consideration for the guaranty because, as it is claimed, Frederick H. McDonald received a benefit from it.

However, it is stated that plaintiff ratified the act of Van Evera in causing the guaranty to be written. That ratification is shown by the acquiescence and affirmative action on the part of plaintiff. In this connection plaintiff says that there was evidence that he knew of the guaranty as early as 1931. Van Evera testified: "Q. When did Mr. Ireland first see that document marked Exhibit 1? A. I could not answer that. Q. Well, would you say it was after — cannot you give us any idea of the time? A. I dare say — now, this is conjectural — I dare say it was during the year 1931 when he was doubtless informed of this, as other of the bondholders were, that Mr. Shukert had kindly given his personal guarantee that he would in lieu of these waivers of taxes, principal and interest, et cetera, guarantee."

If this testimony can be said to amount to substantial evidence that plaintiff knew of the guaranty in 1931, it is contradicted by the testimony of plaintiff, himself, that it was first brought to his attention in 1937 by his attorney. Plaintiff is bound by his personal testimony. [McCoy v. Home Oil Gas Co., 60 S.W.2d 715.] Plaintiff's wife, now deceased, owned one of the notes now held by him but there is no evidence that Van Evera notified her of the guaranty.

However that may be, the doctrine of ratification, as used in the connection with which plaintiff attempts to use it, is applied in cases where the principal is sought to be bound because he has ratified the acts of his agent done without the scope of the latter's authority. We do not hold that theprincipal, himself, cannot, in any case, rely upon his own conduct as well as formal acts to show that he had adopted the acts of his agent and thereby entered into a contract with the third party. However, that is not this case. In the first place, while, Van Evera had no authority to negotiate with defendant for a guaranty he did not attempt to enter into an unconditional contract of guaranty with the defendant. It was understood that the guarany would not be effective unless the noteholders accepted it. It was not to become a contract until this condition was fulfilled. Therefore, it was not, strictly speaking, a question of the noteholders accepting or repudiating the action of Van Evera. If they refused to accept it there would have been no question of repudiation of Van Evera's action involved, as Van Evera's understanding with defendant contemplated that there might be a refusal of the bondholders to accept. The bondholders were not put in the position of being obliged to accept or repudiate the action of Van Evera. Under the terms of the agreement with Van Evera and the defendant they could accept or refuse to accept the proposed guaranty. We do not say that they could not have indicated their desires in the matter by conduct as well as formally but the mere silence of plaintiff, for the time involved, furnishes no evidence of acceptance under the circumstances.

"Where the offerer, instead of offering to do something if the other party will perform, thus leaving the latter free to perform or not as he pleases, requires a reciprocal promise from the offeree, the latter must communicate his acceptance of the offer and thereby bind himself by an engagement from which he cannot recede or there will be no agreement; even a compliance with the terms of the offer will not suffice. Communication ofacceptance in such a case is not only necessary to bind theofferer, but also to bind the offeree, and the offerer cannot, by a stipulation to that effect in the offer, make silence on the offeree's part an acceptance." [13 C.J., p. 285.] (Italics ours.)

"A binding contract can only occur when the offer made is met by an acceptance which corresponds with the offer made in every particular. There is no contract until acceptance of the offer by the party receiving it, is in some way actually orconstructively communicated to the party making the offer. [Hebb's case, Law Rep., 4 Eq. Cas. 9.] And it must be communicated to the other partywithout unreasonable delay. [Bruner v. Wheaton,46 Mo. App. 366.] And ``express notice of acceptance can only be dispensed with when apparently not contemplated and some other act of acceptance is equally clear and unequivocal.' [Lungstrass v. German Ins. Co., 48 Mo. 201.]" [Robinson v. The St. Louis, K.C. Northern Ry. Co., 75 Mo. 494, 498. See, also, Cangas v. Rumsey Mfg. Co., 37 Mo. App. 297; Lancaster v. Elliott, 28 Mo. App. 86.] (Italics ours.)

There was neither any communication of acceptance of the guaranty or, in fact, any action taken by plaintiff or any of the noteholders within a reasonable time. It is true that, on January 16, 1940, plaintiff's attorney wrote defendant demanding payment under the guaranty and saying "you will recall that sometime ago, I called you in reference to the payment of two notes dated November 1, 1929." If this letter can be said to constitute an attempt to accept the guaranty by plaintiff it does not comply with the requirement that the acceptance "must be communicated to the other party without unreasonable delay". [Shockley v. Fischer, 21 Mo. App. 551.] While the letter states, in effect, that the writer had attempted to collect the two notes "sometime ago" when that time was is not disclosed.

The judgment is reversed. Cave, J., concurs; Shain, P.J., not sitting.