George D. Witt Shoe Co. v. Peacock, 150 N.C. 545 (1909)

April 29, 1909 · Supreme Court of North Carolina

150 N.C. 545

GEORGE D. WITT SHOE COMPANY et al. v. J. L. PEACOCK and R. W. FULLER.

(Filed 29 April, 1909.)

1. Writing — Notes—Construction—Entire Instrument.

Wlien there is no repugnancy in the expression of the various parts of a written instrument the court will so construe it as to give effect to every part.

2. Notes — Guarantor—Surety—Liability Enlarged — Construction.

The liability of a grantor or surety cannot be enlarged by construction. ' .'

3. Same.

P. and P. gave a note to R., reading, “We promise to pay to R. the sum of $1,000, to be applied to the payment of all claims for collection R. had against P., and to all such others as he may receive for that purpose, until the full amount is paid.” It was stipulated therein that its purpose was to secure and guarantee said claims to the extent and in the sum specified. R., having claims to the amount of $1,S00, received from P. the sum of $647, with instructions from him to prorate that sum on the amount of claims held: Held, under the terms of the guarantee, such would enlarge the liability of the guarantor, and the sum so received should have been applied to the reduction of the guaranty.

Aotion tried before J ones, J., and a jury^ at February Term, 1909, of Davidson.

Plaintiff company sues upon the following instrument:

“$1,000. December 7, 1907.

“Sixty days after date, we, or either of us, promise to pay to Emery E. Eaper, attorney, or order, the sum of one thousand dollars, for value received, which money, when received by him, to be applied to tbe iDayment of all claims be bas now in bis bands for collection against tbe said J. L. Peacock and to such-others as be may receive for collection, until tbe full amount is applied. Tbis note executed for tbe purpose of securing and guaranteeing tbe payment of tbe said claims to tbe extent of one thousand dollars.

“Said claims now in band are as follows:.

“J. L. Peacock. [Seal.]

“R. W. Fullee. [Seal.]”

A list of tbe claims is attached, aggregating $896.

Defendant R. W. Fuller admitted the execution of tbe obligation, and by way of defense alleged that be has never been indebted to tbe plaintiffs in any sum whatever, exceqit as surety on an obligation in tbe amount of $1,000, guaranteeing tbe payment of $1,000 to plaintiffs and other creditors of J. L. Peacock; that be is informed and believes that since tbe execution of said obligation as surety, aforesaid, tbe said Emery E. Raper bas received other claims for collection than those mentioned and set out in tbe. complaint, and that be bas received moneys from J. L. Peacock and bis agents, to be applied to said accounts and tbe accounts mentioned in tbe complaint, to more than a sufficient amount to relieve tbis defendant from any obligation or responsibility as surety aforesaid. It was in evidence that other claims against Peacock were placed in tbe bands of Mr. Raper for collection, amounting to $1,016.87, aggregating about $1,800. Peacock paid $50 on tbe note, which was duly credited.

Tbe following is tbe only evidence introduced: “About 10 February, 1908, J. L. Peacock sold to Z. I. Walser and Emery E. Raper bis equity of redemption in bis borne, there being mortgages on same, and on account of tbe price of tbis lot tbe sum of $647.50 was paid*on tbe claims in tbe bands of Emery E. Raper, which amount was, by express -agreement of J. L. Peacock, applied to all tbe creditors, pro rata, on their claims of $1,816.33, tbe creditors being those set out in tbe complaint. After 10 February, 1908, other claims were'placed with Emery E. Raper, but nothing bas been collected on them and no claim is made for them.”

Tbe following issue was submitted to tbe jury: “What amount bas been paid on said note of $1,000 by J. L. Peacock and R. W. Puller, or others, since tbe execution of tbe note, I December, 1907?” Tbe court instructed tbe jury tbat if tbey believed tbe evidence to answer tbe issue “$730.50”; tbat there should not only be included in tbe amount paid tbe $50 admitted, but also tbe further amount paid by Peacock, tbe $647.50. Plaintiff excepted to tbe charge on the issue as to tbe item of $647.50. There was an item of $33 credited on tbe note, not necessary to be noted. Judgment was rendered for $270. Plaintiff appealed.

E. E. Raper and Walser & Walser for plaintiff.

J. A. Spence and H. M. Robins for defendant.

Connor, J.,

after stating the case: Tbe sole question presented by plaintiff’s exception is whether the $647.50 received by Mr. Raper shall be applied to the obligation of defendant Fuller in reduction of bis liability for $1,000, the amount of the bond. Plaintiff insists tbat Peacock bad the right to apply the $647.50 to the payment, pro raía, of all of the debts against him in the bands of Raper for collection, including those received subsequent to the execution of the bond. Applied in this way to the total amount of the debts, $1,816, there remains due on them $1,181.81, for which, to the extent of $1,000, plaintiff insists, defendant Puller is still liable. Tbe obligatory words of the bond, “promise to pay,” are explained by the last clause, “This note is executed for the purpose of securing and guaranteeing the payment,” etc. Tbe obligation, therefore, assumed by Puller is to secure and guarantee the payment by Peacock of $1,000, “which money, when received by Raper, to be applied to the payment of all claims be bas now in bis bands for collection against the said J. L. P'eacock, and to such others as be may receive for collection, until the full amount is applied.” It is evident tbat the words “full amount” refer ’to the claims then in Mr. Raper’s bands and such others as be might receive for collection. Thus Puller’s liability is expressly restricted to $1,000, and the guarantee is, by the last words of the note, limited to “the payment of the claims to the extent of -$1,000.” It was immaterial to Puller wbat amount of claims came into Raper’s bands for collection subsequent to the execution of the bond. Tbis was doubtless uncertain. Tbe evident meaning of the language is tbat Fuller guaranteed tbat Peacock would pay on all of the claims against bim in Raper’s bands so mucb as $1,000, and tbat, when paid or “received by bim,” it was to be applied to sucb claims. When, therefore, the $647.50 was paid by Peacock, bis express agreement tbat it should be applied, pro rata, to all of the claims bad no other effect than to comply with the terms of bis bond. Tie could' not change or enlarge Fuller’s liability. If the payment be applied, as contended for by plaintiff, Peacock could impose upon Fuller the obligation to pay the full amount of .the bond, disregarding the express provision tbat the money, “when received,” should be applied to the debts until the full amount is applied. In other words, Peacock may have paid the whole amount for which Fuller was liable, and yet 'leave bim liable for the balance of bis indebtedness to the extent of one thousand, dollars. Tbis would do violence to the language and evident purpose of the parties when the bond was executed. It is an elementary rule of interpretation tbat where there is no repugnancy every part of an instrument must be given effect. It is also well settled tbat the liability of a guarantor or surety is not to be enlarged by construction. TIis obligation is to be fixed by the language of bis bond and not carried beyond its terms. It is strictissimi juris. No question of the right of the debtor to make sucb application of a payment by bim from bis general -funds, as be wishes, is presented in tbis appeal. It was a matter of no concern with Fuller bow the $647.50 was applied as between the creditors of Peacock. His right, under the terms of bis contract, was to have it applied to the reduction of bis guaranty. We concur with bis Honor in the instruction given the jury. There is

No Error.