J. R. Watkins Medical Co. v. Miller ( 1918 )

SMITH, J.

The J.'R. Watkins- Medical Company, appellant, is -a Minnesota corporation having its principal -place of 'business at Winlona. It is- engaged in manufacturing' and selling medicines, extracts, and other articles-. Tire defendant Miller had been engaged for several years in selling merchandise furnished- 'by such corporation under written guaranteed contracts, prior to the -contract upon which this action is founded. At the time this contract was entered into Miller was indebted to the corporation for merchandise furnished under previous contracts in the sum of $1,559.29. The last contract, the one in question- here, was dated December 1, 1914, and terminated March 1, 1916. It -obligated the -corporation ito furnish Miller merchandise at the usual and customary wholesale prices, to an amount which he might reasonably require- for sale -within certain designated territory, and obligated Miller to malee personal canvas with team anld wagon fbir the • sale--of such merchandise at least three times a year, and to- pay wholesale prices 'at (times specified and required such merchandise be paid for or returned to the company as prescribed in the -contract. The contract in a -clause near th-e end of the printed' part -contained the following’ provision:

“The indebe-dness 'due on the date icff this- agreement from, the party of the second -part to the party of the first part for goods and' other articles sold and' delivered to him under a prior agreement is hereby mutually agreed to be the sum of $1,559.29, which said sum and indebtedness the second' party hereby promises and agrees to pay -during, the term of -this agreement, and payment of which -is hereby sia extended.”

The -defendants Christianson, and Johnson at '.the solicitation of Miller -became -guarantors of this contract at the time of its execution. Miller- hi-m-se-lf obtained the signatures of these guarantors and" forwarded .the contract and guaranty Ito plaintiff. The manner of the.-execution of the -contract was found satisfactory by th-e -corporation, and the -guarantors -were formally notified of their acceptance -as such. 'At the termination of this contract Miller was indebted to plaintiff in the sum of $487.83 as a ibalan-ce 'due for merchandise furnished during the -period of the -contract. This indebtedness, together with the $1,559.29 prior indebtedness, aggregated $2,047.02, flor which sum this action -was- brought against the guarantors and Miller. Miller made no defense, and' no- question is raised as' to a misjoinder of causes of action. The amount of Miller’s indebtedness to tire corporation is conceded. The guaranty appended to the contract and signed !by Christian and Jfclmson is as follows:

“In consideration of one dollar in 'hand paid by (the J. R. Watkins Medical 'Company, the receipt whereof is- ‘hereby acknowledged, and the execution of the foregoing- agreement by said company, and the sale and delivery by it to the party of the second part of its medicines, extracts, and other articles, and the extension of the time of payment of the indebtedness due from him to- said company as therein- provided-, we, the undersigned sureties -do hereby jointly and severally promise and guarantee the full and' complete -payment of the said s-um1 and indebtedness- and for said medicines, extracts, and -other articles, and of the prepaid freight and express charges thereon, -at the time and p-lace and- in the manner in said agreement provided.”

[I] The answers of Christianson and Johnson admit the execution of the contract of guaranty, but deny that -the contract of Miller which- they guaranteed contained the words and figures “fifteen hundred and fifty-nine and 29-100 dollars ($1,559.29)” at the tim-e they signed the guaranty. Th-e answers also allege as a 'defense the failure of the corporation to require Miller to- make reports of sales 'and remittances of money required by certain provisions- of his contract. We deem it unnecessary to- -consider the effect of the provisions last refered to, further than to '.observe that they in no way affect th-e liability upon- the guaranty of the previous indebtedness of $1,559.29, -if it was absolute and -unqualified'. We are of the view, however, that any material departure by plaintiff from the terms -of the -contract or in the -manner loif its execution would release th-e guarantors from liability for -merchandise furnished under this Contract. J. R. Watkins Medical Co. v. McCall, 116 Minn. 389, 133 N. W. 966. But such release would go no further than to affect the indebtedness for merchandise furnished under the particular -contract. J. R. Watkins Medical Co. v. McCall, supra. If the guaranty of payment of the previous indebtedness be considered as absolute and unqualified, it w-as in no way affected by the failure o-f the corporation to require a -compliance -on- the part of 'Miller, with provisions 'off the -contract as to current transactions under it. At the close o-f the trial -plaintiff and defendant each moved' for a directed 'verdiclt. The trial court directed a verdict for.defendant-who is respondent -here. In -this case the trial cou-rt in its order directing a verdict expressly- “finds as a matter of fact that the instrument which was signed (guaranteed) !by these defendants -Christianson and Johnson did- not contain the words' ‘fifteen hundred fifty-nine dollars and twenty-nine cents’ or figures expressing the same amount at -the top thereof, and the court .further finds1, that the said contract has been materially 'altered, since they signed the same by the insertion -in the contract of said words without their knowledge -and without their consent, and that being so, it -becomes the duty of the court to direct a verdict for each defendant upon all the issues.”

[2] The findings-of the trial court upon such motion- are -conclusive of the facts, regardless of the weight, of contradictory evidence, if -such finding is supported -by substantial evidence, which would sustain a similar verdict by a jury: Sundling v. Willey, 19 S. D. 293, 103 N. W. 38, 9 Ann. Cas. 644; McComb v. Baskerville, 20 S. D. 353, 106 N. W. 300; Farmen, v. U. S. Express Co., 25 S. D. 96, 125 N. W. 575; Share v. Coats, 29 S. D. 603, 137 N. W. 402; see, also, McCormick v. Nat. City Bank, 142 Fed. 132, 73 C. C. A. 350 6 Ann. Cas. 544, and monograph note. Nor -is this rule affected by the f-adt that the evidence is -conflicting. Gitty v. Allen, 62 App. Div. 622, 71 N. Y. Supp. 88.

[3, 4] We have carefully considered the evidence in the record, and, without attempting to review it, we are satisfied there is sufficient evidence to sustain the findings of the trial court u-pon the motion. But appellant further contends- that, even though the facts be as found by the trial -court, the court erred in directing a verdict for -defendants for the reason that it is undisputed and conceded,. and so státed by -Christianson and Johnson in their evidence, that the contract, among- its printed pro-vis,ions which were not altered or changed, contained a complete agreement to pay the indebtedness of' Miller to: the corporation “due -on the date of this agreement,” and that the insertion of the -amount of su-ch indebtedness in the blank space left therefor in the contract was mot a material -alteration, and for the further reason that the execution of the guaranty by defendants, Jeavi-ng vacant space- in the-contract for filling in the true amount o-f Miller’s- previous indebtedness, -carried: with it the implied assent of the guarantors that the true amount miigh-t be inserted1. There is-no contention here that either of the defendants -was-indu-ced to become -a guarantor by any trick or artifice, -and it is conceded that they each read .the -contract before signing the guaranty. . it is conceded, "that the contract -was n-ot changed in any respect -after the guaranty was sighed, save by the insertion of- the true -amount -of 'Miller’s indebtedness. We are of the view after a careful 'consideration of the language used that the provision of the contract which is quoted above did not amount to- a contract or- agreement to pay an indefinite or undetermined amount -of indebtedness dhe from Miller to the -corporation, but that the insertion in the -contract of the specific amount of such indebtedness was essential to give -it any binding force whatever. Reading- th'e contract with the blank space ’unfilled, ilt does- not even amount to a -declaration- that there is any s'u-ch indebtedness. If this view is correct, the filling in of the blank space -changed the contract from one which 'did1 not -guaranlt-ee payment ,olf an existing indebtedness into one ¡which did guarantee such payment.

[5] But, assuming appellant’s contention that the -guaranty with'the .blanks unfilled should be -construed as a contract to- pay Miller’s existing indebtedness, we are of the view that the 'filling in such blank space in the contract -without the assent, actual or implied, of -the ’guarantors, would constátate a material 'alteration, for the reason that the -insertion- of the amount of 'such indebtedness would change- th-e evidentiary effect-of the instrument, ; and though the amount- inserted be -concedledly ’correct, -such alteration would render the instrument itself competent evidence of the amount -of such indebtedness, and Would- thus relieve plaintiff - of the burden of proving it by other • evidence. Low v. Argrove, 30 Ga. 129; Schmidt v. Quinzel, 55 N. J. Eq. 792, 38 Atl. 665. Craighead v. McLoney, 99 Pa. 211. As to sureties, see Miller v. Stark, 148 Pa. 164, 23 Atl. 1058; Moss v. Maddux, 108 Tenn. 405, 67 S. W. 855. It -is shown by the undisputed evidence, and necessarily implied from- the- findings of the trial -court, that th-e guarantors had no knowledge, -at least -of th-e amount, of Miller’s -past indebtedness to the corporation, at the time they signed ithe guaranty, or at -any time -until demand o-f- .payment by plaintiff.

[6] Appellant, however, contends that it is presumed as a matter of law that the plaintiff was authorized to insert the correct -amount of such- indebtedness in> the blank space left in- the contract. We cannot agree with that view. Appellant cites numerous decisions which are claimed to sustain his contention. An examination of these 'decisions and others discloses' that they may be resolved into two classes-: First, those ini which the obligor has directly assented to andl authorized1' the filling in of such blank spaces, or where from; 'the circumstanc-es of the transaction such assient and authority must be inferred; and, second, those in which the obliger, by reason of his own acts, is held estopped to deny that he assented toi and1 authorized the filling of such blank spaces-. In the latter class are Ormsby v. Johnson, 24 S. D. 494, 124 N. W. 436; Palacios v. Brasher, 18 Colo. 593, 34 Pac. 251, 36 Am. St. Rep. 305; Rollins v. Ebbs, 138 N. C. 140, 50 S. E. 577; McCormick v. Bay City, 23 Mich. 457.

[7] The insertion of the amount of the indebtedness being- a material alteration not assented to by respondents -either in, fact or by necessary implication, only ithe question of estoppel remains to be considered. We are of the view that appellant cannot, by its own unauthorized and material alteration of the cdntract, create an estoppel as- against respondents; It is -suggested that there is nothing ini the record to show that the alteration was- in fact marie by appellant, and, if -made -by a third person, that it 'would not avoid the contract. But, so fair as the record discloses-, the contract after the guaranty was signed was never in the custody or possession of any person other than Miller, and appellant’s own officers and employes. And if the amount of indebtedness was inserted -by Miller after respondents signed and before he delivered the instrument, his act must be held binding on appellant, at -whose direction the signatures of the guarantors were procured. 'Certainly 'Miller was not a stranger to the transaction within 'the rule suggested. We have examined the assignments relating to the admission and exclusion of evidence, but are of the view that none of them are prejudicial, and that they -db not require a separate -review.

The order and judgment of the trial' co-urt are affirme-cl.