W. W. Kimball Co. v. Baker , 62 Wis. 526 ( 1885 )

Cassoday, J.

The contract and bond were parts of the same transaction, and must be construed together as one instrument. Gillmann v. Henry, 53 Wis. 468. By the acceptance of the contract and bond the plaintiff took upon itself every duty and obligation implied in either. Construing the two instruments together, we think the plaintiff, by accepting the contract, and as obligee in the bond, impliedly agreed with the sureties that it would at no time fill orders to an amount exceeding the $600 before returns were made. So construed, that clause would seem to have been put in the contract for the protection of the sureties. The plaintiff could not be injured by receiving such excessive order. It might by filling it; but the filling of it would at all times be optional with the plaintiff, to whom the state of the account would necessarily be known. With the sureties it was different. They could not know that such excessive order would be made, nor, if made, that it would be filled by the plaintiff. They had the right to rely upon the plaintiff’s implied undertaking not to fill such excessive order if made. Confessedly, the plaintiff filled such orders to an amount exceeding $1,700. It is claimed on the part of the sureties that they were thereby entirely released. Whether this is so or not is the principal question to be determined.

It is elementary that sureties are favorites of the law, and have a right to stand upon the strict terms of their obligation when ascertained. Beyond the burdens thus taken upon themselves, they are not bound. Brandt on Suretyship, § 79. We must assume, from the record, that the undertaking upon the part of the sureties was gratuitous, and as sureties merely, without any interest in the subject matter of the contract, and without any counter security. This being so, they .are under no moral obligation to pay the debt of their principals. Their principals might be held upon an implied contract, but there can be no implied liability to charge the sureties. They are only bound to the extent of their agreement, and only by reason of their agreement. Such is the settled rule. Ludlow v. Simond, 2 Caines’ Cas. 29; Brandt on Suretyship, § 80; Smith v. Lockwood, 34 Wis. 17, 78; Jenkins v. Gunnison, 50 Wis. 393.

The question here presented was ably discussed on both sides, and numerous authorities cited. The seeming confusion among the authorities does not arise from any difficulty in ascertaining the rule, but in its application to a given state of facts. The intention of the parties, as ascertained from the writings creating the obligation, must, in all cases, prevail. When the only limitation is upon the extent of the surety’s liability, then there is no difficulty in holding the undertaking to be a continuing guaranty to the extent so limited. Mason v. Pritchard, 12 East, 227; Parker v. Wise, 6 Maule & S. 239; Hitchcock v. Humfrey, 6 Scott, N. R. 540; Seller v. Jones, 16 Mees. & W. 112; Gordon v. Rae, 8 El. & Bl. 1065. A casual reading of Parker v. Wise might leave the impression that the limitation there was not restricted to the extent of the surety’s liability, but extended to the advances to be made. A careful reading, however, especially of the condition of the bond, will, it is believed, reveal the fact as there held, that it was the intention to bind the surety absolutely for the prior indebtedness, and for any balance that might at any time be due on future advances, “ not exceeding in the whole ” the amount named. The learned lord chief justice, writing the opinion in that case, expressly adopted “to their full extent the positions” taken, “ that a surety ought not to be- bound beyond the scope of his engagement, and that this is to be sought out from the whole context taken together, and that . . . the condition shall be taken with reference to the recital, and majr be explained and restrained by it.”

Here, by the express language of the bond, the guaranty only extended to “goods consigned ... as per the terms of the written contract,” which, as we have seen, forbade any shipments in excess of a certain amount before returns of all previous shipments were made. Certainly there can be no liability for shipments made in violation of the contract thus imported into the bond by way of recitals. Sanger v. Baumberger, 51 Wis. 592; Grant v. Smith, 46 N. Y. 93; Fond du Lac v. Moore, 58 Wis. 170; Thomas v. Olney, 16 Ill. 53; Myers v. First Nat. Bank, 78 Ill. 257. The plaintiff having thus violated its engagement with the sureties, as recited in the bond, was no longer in a position to recover against them for any breach-, especially as the breach complained of might never have occurred had no such excessive shipment been made. Whenever it is found, from the whole instrument taken together, that it was the intention of the parties that the surety should not be bound at all if the advances to be made should exceed the amount named, and they do exceed that amount, then the courts necessarily hold that the surety was thereby released. Farmers’ & M. Bank v. Evans, 4 Barb. 487; Ryan v. Trustees, 14 Ill. 20; Finney v. Condon, 86 Ill. 78; Burt v. McFadden, 58 Ill. 479; Bragg v. Shain, 49 Cal. 131; Victor S. M. Co. v. Scheffler, 61 Cal. 530. The facts here bring the case within this rule. But the two classes of cases mentioned do not differ in principle. They turn on the intention of the parties as found from the writings in a given case. Brandt on Suretyship, § 103.

By the Cowrt.— The order of the circuit court is affirmed.