Taylor v. Coon

Lyon, J.

Premising that under the settled practice in this court the order from which this appeal is taken must he treated as an order overruling the demurrer to the complaint, we will consider in their order the propositions urged by counsel against the sufficiency of the complaint.

1. It was suggested in the argument that the order appealed from was made by the judge at chambers, and hence not appealable. If so made, certainly it is not an appeal-able order; for the statute (E. S. sec. 3069) only gives an appeal from an order made by the court. The motion to strike off the demurrer was noticed before the judge at chambers, and the order recites that the matter came on to be heard at chambers. But it also recites that the hearing was before the court, and, inferentially at least, that it was made by the court. The language of the order is: “ The court having heard the argument of the counsel of the respective parties, it is ordered that said demurrer be, and the same is hereby, stricken from the files in this action.” This sufficiently shows that the order was made by the court, which, it must be assumed, was in session at Eau Olaire, where the order was made, as a special term of the St. Croix county circuit court, in which the action is pending. It must be held, therefore, that the order is appealable.

2. The first ground of the demurrer is the non-joinder as parties to the action of the other parties to the agreement in suit. Although this was not much relied upon in the argument,— perhaps not at all,— it is proper to say that we think the agreement, by any fair and reasonable construction of its terms, is several, as respects each of the parties thereto, and that any one of them who has a several valid claim under it against any other party liable to him upon such claim may maintain a several action therefor against the party so liable, without joining in the action those having like claims, or who are subject to like liability. Hence we find here no defect of parties.

*82 3. Counsel for defendant- maintain that the agreement in» suit is incomplete, because not executed by all of the persons whose names appear in the body of it as parties thereto; that defendant cannot be held bound by it without his consent until all such parties have executed it; and that,, unless facts are pleaded showing such consent, the complaint is defective and demurrable. For the purposes of this case, it may be assumed that these are correct legal propositions. Probably they are. Put it is alleged in the complaint that the defendant, “ for a good and valuable consideration, made, executed, and delivered to this plaintiff” the agreement in suit. Such delivery is a consent by the defendant that the agreement shall be binding upon-him without the signatures of the persons named in the body of the instrument, who did not execute it. Hence the complaint shows that the agreement was fully executed, so far as the defendant is concerned.

4. Counsel for plaintiff claims that the action is within sec. 2675, R. S., which is as follows: “In an action, defense, or counterclaim founded upon ah instrument for the payment of money only, it shall be sufficient for the party to give a copy of the instrument, and to state that there is-due to him thereon from the adverse party a specified sum, which he claims.” Inasmuch as a copy of the agreement is inserted in the complaint, and it is stated therein that, there is due the plaintiff from the defendant a specified sum, which the plaintiff claims, if the case is within the statute, that is sufficient, and we need not determine whether, independently of the statute, the complaint states a cause of action. The question is, therefore, is this one of the instruments mentioned in the statute? To support his contention that it is, counsel for plaintiff rely exclusively upon Coe v. Straus, 11 Wis. 72 . That was an action on a bond or undertaking to procure the release of attached property. The complaint stated a valid cause of actioh, independently *83 of the statute under consideration. The ruling of the court that the obligation was “ for the payment of money only ” seems to have been made with reference to a statute authorizing the entry of judgment by default in an action on such an instrument, without notice of the assessment of damages. R. S. 1858, ch. 132, sec. 27.

The present case is not distinguishable in principle from that of Carrington v. Bayley, 43 Wis. 507 , which was an action on a guardian’s bond. It was there held that the bond was not an instrument “ for the payment of money only,” within the meaning of sec. 24, ch. 125, R. S. 1858, which was the same as sec. 2675 in the present revision. Such is also the ruling of the courts in New York in several cases on similar instruments, under a similar statute, in which cases it was held that the statute only includes actions on instruments for the payment of money only, in which the liability is unconditional, and absolutely fixed and expressed in the instrument.

Carrington v. Bayley rules the present case, and, if anything was said in Coe v. Straus opposed to the ruling in that case, it must be considered overruled.

5. The complaint sufficiently avers that plaintiff was liable as indorser on the paper of the corporation Avhen the agreement in suit was executed, and still remains so liable. This paper is mentioned in the agreement as “ company’s paper ” and “ corporate paper.” The terms are used synonymously in the agreement, and manifestly were intended to, and do, include any and all obligations for the payment of money made by the corporation, or for its use and benefit.

6. There is no averment in the complaint that the plaintiff has paid the obligations upon which he was thus liable as indorser, or suffered any loss or damage on account of his indorsements. Whether such an averment is essential to the statement of a cause of action is the only remaining question to be determined. The answer thereto depends *84 upon the interpretation of the agreement. If it contains an indemnity against liability to pay the indorsed paper, there is a breach of the covenant of indemnity as soon as the liability of the indorser to pay the same is fixed, and an averment that he has paid it'is not essential to the cause of action. But if it is only an indemnity against loss or damage by reason of such liability there is no breach until payment, or until the plaintiff has suffered some loss or damage by reason of his indorsements. Such payment or loss, being a condition precedent to the right of action, must be averred and proved, or there can be no recovery. All this is elementary law, and is not controverted. We are called upon, therefore, to determine the true character of the indemnity in the agreement under consideration. Is it an indemnity against liability to pay a debt, or only against loss or damage on account of such liability? Counsel for plaintiff maintain that it is an indemnity against liability, while counsel for defendant maintain that it is only an indemnity against loss or damage. These propositions have been discussed by the respective counsel with marked ability, and numerous adjudications have been cited by each in support of his contention. There seems no conflict in the principles decided in the cases referred to, but each case turns upon the language of the particular instrument under consideration. We do not feel called upon to discuss the cases at length, but will proceed to state briefly what we consider the true interpretation of the language of the agreement in controversy. Applying such language to the parties before us, the defendant recited in the agreement that he ought to indemnify and save harmless the plaintiff, on account of his indorsements, to an amount proportionate to the stock owned by him. The defendant then agreed to “ indemnify, protect, and save harmless ” the plaintiff because of such indorsements in the same proportion, and to that end he covenanted that if plaintiff should be called *85 upon as indorser to pay such paper the defendant would contribute towards such payment his proportionate share thereof. The plaintiff had become liable to pay certain obligations of the corporation. As to a proportionate share thereof the defendant covenanted to “ indemnify, protect, and save harmless ” the plaintiff. There is no express covenant thus to indemnify the plaintiff against mere liability to pay such obligations. TJnder all the cases these words, when so used, create only an indemnity against loss or damage on account of liability, and not against the liability itself. The clause in the covenant, that defendant will contribute should the plaintiff be Galled ivpon as indorser to pay such paper, does not, we think, alter or increase the obligation of the surety as thereinbefore expressed. In the light of all the other stipulations in the agreement, which so clearly evidence the intention of the parties thereto that the indemnity should only be against loss or damage, we think the subsequent words “ called upon to pay,” as employed therein, should be construed as the équiv-alent of “compelled or required to pay.” This construction makes the agreement consistent and harmonious in all its parts. It would not be so were we to read the latter clause “ asked or requested or pressed to pay.”

It must also be remembered that the obligation of a surety is strioti juris, and must not be enlarged by mere construction. This whole subject is quite fully discussed in Thompson v. Taylor, 30 Wis. 68 . That was an action on a bond, one of the conditions of which was that the obligors (the defendants) would save the obligee harmless from ah loss or liability for or on account of certain judgments. This, standing alone, would clearly be an indemnity against liability. Yet, because of certain other conditions in the bond, the language of which imported only an indemnity against loss, it was held that, notwithstanding the condition first above mentioned, the bond was only for indemnity *86 against loss. So we hold Rere that the covenant to pay a proportionate share of the indebtedness the indorser may be called upon to pay (the meaning of which may be somewhat equivocal) must, in the light of the other clauses in the covenant, be interpreted as only an indemnity against loss. Thompson v. Taylor is a stronger case for holding that the indemnity was against liability than is this case. We do not care to add anything further to what is there said on the subject. Our conclusion is that the complaint herein is fatally defective, in that it does not aver that the plaintiff has paid the obligations upon which he was indorser, or suffered any loss or damage by reason of his indorsements. It was error, therefore, to strike off the demurrer as frivolous. Such demurrer was well taken, and should have been sustained.

By the Court.—The order is reversed, and the cause will be remanded for further proceedings according to law.