Merchants State Bank v. Sunset Orchard Land Co.

Taylor., C.

On February 19, 1916, the Sunset Orchard Land Company, at St. Paul, Minnesota, executed to the Merchants State Bank of Lewisville, Minnesota, its promissory note whereby it promised to pay to the order of the bank, one year after date, at Lewisville, Minnesota, the sum of $1,980.50, with interest thereon at the rate of 8 per cent per annum. As a part of the same transaction the individual defendants, all of whom are stockholders of the land company, guaranteed the payment of the note by an indorsement upon the back thereof. The note was also secured by a mortgage on a tract of land in the state of Montana. After the note became due, the bank foreclosed the mortgage by action, applied the proceeds thereof on the note, and obtained a deficiency judgment in the Montana court against the land company for the balance due thereon. The guarantors, who seem to have been residents of this state, were not parties to the Montana action. The Montana court permitted the bank to withdraw the note from its files, but first caused it to be indorsed: “Canceled by order of court as to maker only.” The bank brought suit on the note in this state against the guarantors. They interposed a lengthy answer, but admitted the execution of the note and of the guaranty. At the trial, when plaintiff rested, the court sustained an objection to the reception of any evidence under the answer on the ground that it stated no defense, and directed judgment for plaintiff. Defendants Wunderlich, Ferguson and G-ran appealed from an order denying a new trial.

Defendants contend that their guaranty of payment was without consideration for the reason that the note was given for a previously existing debt of the land company to the bank for which they were not personally liable. This debt was past due and the note by its terms extended the time of payment for a period of one year. This was a sufficient consideration to support the guaranty conceded to have been executed before the delivery or acceptance *110 of the note. Nichols & Shepard Co. v. Dedrick, 61 Minn. 513 , 63 N. W. 1110 ; Peterson v. Russell, 62 Minn. 220 , 64 N. W. 555 , 29 L. R. A. 612, 54 Am. St. 634; Bank of Montreal v. Beecher, 133 Minn. 81 , 157 N. W. 1070 ; Security Nat. Bank v. Pulver, 131 Minn. 454 , 155 N. W. 641 ; American Multigraph Sales Co. v. Grant, 135 Minn. 208 , 150 N. W. 676 .

Defendants further contend that under the Montana statutes plaintiff can maintain only one action for the recovery of its debt and the enforcement of its mortgage, and that, having brought an action in Montana and obtained a judgment against the land company in a Montana court, it is barred by the Montana statute from maintaining an action in the courts of this state against the guarantors. The statute relied upon merely regulates the procedure in Montana and has no extra-territorial force. The note was executed in Minnesota and is payable in Minnesota to a Minnesota bank. It is a Minnesota contract. An action upon it brought in the courts of this state is governed by the laws of this state. Even conceding that the Montana statute goes to the extent claimed by defendants, which we doubt, it does not affect this action. Hewitt v. Dredge, 133 Minn. 171 , 157 N. W. 1080 .

The fact that the Montana court treated the liability of the land company on the note as merged in the judgment rendered by that court and caused the note to be indorsed as canceled as to the land company, did not affect the liability of the guarantors nor preclude plaintiff from maintaining this action. Wood v. Bragg, 75 Minn. 527 , 78 N. W. 93 .

The learned trial court was correct in its ruling and its order is affirmed.