McGeever v. Terre Haute Brewing Co.

On Motion. The submission includes a motion by appellee to strike all assignments referable alone to the erstwhile judgment rendered by the circuit court of Jefferson in this cause on February 14, 1916, which judgment preceded the former appeal and decision of reversal made in this cause as reported in 73 So. 889.¹ The second, present, appeal is from the judgment rendered, after previous reversal, by the court on May 15, 1917, and in this judgment entry no ruling is recited as having been made in the circuit court with respect to the subject-matter of the assignments of error to be enumerated. The motion is well taken under the apt authority of Ala. City Ry. Co. v. Bates, 155 Ala. 347,46 So. 776; Sellers v. Dickert, 194 Ala. 661, 69 So. 604. The effect of the motion to strike assignments of error is to eliminate the assignments numbered 1, 2, 3, 4, 5, 9, 10, 11, 12, 13, 14, 15, 16, and 17. The motion is sustained, and the indicated assignments are therefore stricken. On the Merits. The appellee, an Indiana corporation, brought this suit against the appellants as sureties on a bond of guaranty. The instrument declared on purports to have been executed by the appellants and to guarantee the performance of a certain contract between Abe Siegel and the brewing company for the purchase in Indiana of beer by Siegel. A more ample statement of the case may be found in 73 So. 889.¹ The complaint contained amended count 1, whereby the legal effect of the contract was undertaken to be averred, concluding with allegations of breach; and count 2, wherein is set out the bond and the contract, the performance of which the bond purported to guarantee, together with allegations of breach. The defenses were constituted of issues tendered by the general traverse of the complaint, and plea 1, which, as amended, reads:

"For answer to the complaint and to each count thereof defendants say that the bond on which the action was founded was not executed by them, nor either of them, nor by any one authorized by them, or either one of them in the premises."

Aside from the above-enumerated assignments of error which the motion eliminates, those remaining are predicated of rulings on pleas, of excerpts from the oral charge of the court, of the action in giving and refusing, respectively, special request for instructions, and of the overruling of the motion for new trial. The fifth assignment complains of the action of the court in sustaining demurrer to "plea 8," noted as being at transcript pages 21, 22. In the judgment of May 15, 1917, there is recited such a ruling as to "plea 8." On pages 21, 22, of the transcript there is a pleading designated "plea A" opposite its caption; but opposite the title, "Plea and Answer to the Complaint," this appears in dim typewriting: "#8." In the judgment entry of May 15, 1917, preceding the stated ruling on "plea 8," it is recited that plea A was "withdrawn." This recital undoubtedly referred to "plea A" above mentioned. That is the only "plea A" we can discover in the record. The dim characters, "#8" cannot be accepted as designating "plea A" as plea 8. So there is no "plea 8" in the transcript to which the fifth assignment can be referred. The appellee's brief, at page 12, correctly notes the absence of any "plea 8" in the transcript.

The report of the appeal will contain pleas 9, 10 as amended, and 11. There is argument in the brief for appellant based upon a ruling sustaining demurrer to plea 10 (before its amendment); but there is no assignment of error presenting for review that claim of error.

Plea 9 was subject to the demurrer. In general theory it sought to bar a recovery on the bond on the ground that the contract, the performance of which the bond assured, was abrogated by the principals as the necessary consequence from particular acts averred, without the knowledge and consent of the sureties, the defendants or any of them. It is to be observed that the plea does not charge, unqualifiedly, the abrogation of the contract by the principals. It would invoke the legal deduction of abrogation of the contract, by the principals thereto, from the particular facts recited in the plea. These facts the pleader characterizes as a conspiracy to violate the then existing prohibition laws of the state of Alabama. The fifth, sixth, and seventh grounds of the demurrer were due to be sustained under the authority afforded by the doctrine of the opinion delivered on the former appeal. 73 So. 889, 891.² It was there held that in order to operate to constitute a conspiracy to violate Alabama's prohibitory statutes, that would defeat a recovery on this bond, the contract, of which the bond undertook to assure faithful performance, must have had either a consideration tainted with the asserted unlawful purpose of these principals, or such unlawful design must have induced the formation of the contract declared on. While the demurrer was well sustained on the grounds indicated, it is by no means clear that the plea was sufficient with respect to the facts upon which the pleader's conclusion was rested. Indeed, it does not appear from any affirmation of fact made in the plea that the then existing laws of this state were in fact offended, or that they forbade what the pleader conceived was done by these principals, if, in fact, the purpose of their agreement ever became effective.

In plea 10, as amended, express reference was made to the fact that the contract mentioned in the plea was the same contract set out in the complaint. There is no contention that the contract declared on in the first count was other than the same contract set out in the second count. The plea must be read and considered in connection with and in the light of the pleading it purports to answer. The plea, as amended, quoted the feature of the contract, of which the bond purported to guarantee performance, whereon the defendants relied to show such a change of the contract by the principals as operated to release the sureties on the bond. The form of this plea was unobjectionable. It is settled in this jurisdiction that the contract of a guarantor must be strictly construed, according to the letter of the undertaking. Manatee County Bank v. Weatherly, 144 Ala. 655, 39 So. 988, and authorities therein cited. Where a third party becomes interested in the contract entered into by other parties by binding himself to its faithful execution, the contract becomes a part of his obligation, and its provision cannot be waived or changed, in any material respect, so as to affect his interest without his consent. First National Bank v. Fidelity Deposit Co.,145 Ala. 335, 40 So. 415, 8 Ann. Cas. 241; Ala. Fidelity Casualty Co. v. Ala. Fuel Iron Co., 190 Ala. 397, 405, 406,67 So. 318.

In the contract between appellee and Siegel — a contract constructed on a blank form evidently prepared by the brewing company for use in the conduct of its business — this paragraph occurs:

"All beer sold and shipped by the first party to the second party, under this agreement, shall be paid for by the second party in cash or New York Exchange as follows: When the fourth car is ordered the first shall be paid for, etc., and settlement shall continue in like order throughout the term of this contract, that is, the second party shall have a line of credit equivalent to three carloads of beer, but upon the determination of this contract by consent or otherwise, all sums due and owing first party, shall be immediately paid;this, however, can be altered or changed by consent of thefirst party. The first party shall have the right at any time to terminate this contract for any default of second party hereunder." (Italics supplied.)

According due effect to the rule of construction before restated, the italicized provision in the quoted paragraph cannot be soundly interpreted as authorizing the principals or either of them in that contract to alter or change the distinctly expressed line of limited credit thereinabove defined. The italicized expression is controlled in its application by the pronoun this, and that pronoun has reference only to the provision for immediate payment of "all sums due and owing said first party" at the time the contract should be terminated "by consent or otherwise." In other words, the authority to alter or change referred to in the italicized provision of the contract was intended to justify an extension of the time of payment after the determination of the contract by consent or otherwise. If the italicized provision should be interpreted as authorizing an alteration or change in the line of credit specifically defined violence would, in our opinion, be done to the very grammatical structure of the quoted provision of the contract. Plea 10, as amended, sought to assert a release of the guarantors in consequence of the shipment by the appellee of a fourth carload of beer, on, to wit, May 21, 1912, before said Siegel had paid the plaintiff for any one or all of the three cars previously shipped to Siegel without requiring Siegel to pay for said first, second, or third carload of beer, or either of them, all without the consent of the defendants; and that the plaintiff continued to ship beer to Siegel subsequent to May 21, 1912, and that all beer sold and shipped by plaintiff to Siegel subsequent to that date was not shipped in accordance with the terms of said contract; and that each of said shipments by said plaintiff to Siegel was at a time when Siegel was indebted to the plaintiff for three carloads of beer or more, and that these subsequent shipments were made without the knowledge or consent of any of these defendants; and the plea concludes with the averment that the first three cars of beer shipped by the plaintiff to Siegel have been paid for in full since May 21, 1912. The plea, therefore, asserts a departure by the principals from the limited line of credit by which the sureties' contractual obligation was to be measured, and to conform to which limited line of credit the brewing company was obliged if it would avoid the release of the sureties from the obligation of the guaranty on which the brewing company declares. It was error to sustain the demurrer to plea 10 as amended.

Plea 11 was subject to the same objection, taken in the demurrer, as was plea 9, treated above in this opinion. The plea is not specific in its reference to the contract referred to therein. On the face of the plea it is at the very least doubtful whether the allusion to a contract had reference to the contract copied in the second count, or to some other contract between the principals. There was no error in sustaining the demurrer to plea 11.

A consideration of the excerpts from the oral charge of the court, to which exceptions were reserved and assigned for errors here, does not disclose any error in these respects, under the particular averments of the pleadings constituting the issues tried in the court below. The trial court was correct in its view that the alteration of the contract, if such was made, must have been material.

For the error committed in sustaining the demurrer to plea 10, as amended, the judgment is reversed, and the cause is remanded.

Reversed and remanded.

ANDERSON, C. J., and SOMERVILLE and GARDNER, JJ., concur.

¹ 198 Ala. 474.

² 198 Ala. 474.

On Rehearing.