The appellee, the American National Bank of Tucumcari, is defending before us a judgment recovered by it in the district court of Quay county against Trinidad Bean Elevator Company, the appellant, for the nonpayment of four certain drafts drawn upon appellant by one H.J. Ward then doing business at Tucumcari under the trade-name of Tucumcari Produce Company. The drafts were all payable to the order of Tucumcari Produce Company and indorsed in its name by the said Ward. Upon their deposit in appellee bank, the amount of each draft was placed to credit of the payee and subsequently dishonored when presented to appellant for payment. The present suit followed, with judgment for appellee as indicated. We shall not proceed further without stating sufficient of the facts to render understandable the position of the parties.
During the summer and early fall of 1929, the above-mentioned Ward, operating as Tucumcari Produce Company, appears to have been engaged as a wheat buyer in the vicinity of Tucumcari under some arrangement with appellant, all the details of which are not before us. This much, however, does appear: That appellant was obligated to pay Ward 100 per cent. for the wheat purchased at appellant's quotations; he (Ward) guaranteeing weights and grades upon all shipments made.
Subsequent to the arrangement between Ward and appellant, and apparently through the desire of Ward to render immediately *Page 516 available funds to meet checks given in payment of wheat purchased, he discussed the matter with the president of appellee bank, exhibiting to him a copy of his contract with appellant. This officer, not feeling "exactly satisfied regarding the contract," placed a long-distance telephone call to Trinidad for Trinidad Bean Elevator Company, the appellant, and conversed with some one whose identity is not disclosed, regarding Ward's contract and operations
Upon the day following the conversation over the telephone, and apparently as a result of it and a conversation had in the meantime between officers of appellant and Ward, the appellant dispatched to appellee a telegram and letter, reading as follows:
"Trinidad Colo 322P Jul 1 1929.
"American National Bank Tucumcari NMex
"You may use this telegram as our guarantee to pay Mr Ward one hundred percent for wheat purchased at our quotations with understanding however that Mr Ward guarantee weights and grades on all shipments in accordance with our contract
"The Trinidad Bean and Elevator Co."
"Trinidad, Colo. July First, 1929.
"American National Bank, Tucumcari, New Mexico.
"Gentlemen: This letter confirms our wire this afternoon having reference to a contract made with Mr. H.J. Ward of your city for the buying of wheat.
"In talking to Mr. Ward this afternoon he mentioned that you had requested us to guarantee to pay Mr. Ward 100% of the amount due on purchases from him at our quotations. This of course was entirely satisfactory because it is simply what we would have expected to do, and under no circumstances would we handle in any other manner. However, in accordance with the terms of the contract, Mr. Ward is to guarantee the weights and grades of such shipments of wheat at the destinations. Final settlement of shipments cannot be made until the car reaches the destination and the papers issued at that point, because we ourselves do not know what the grade will be or the extent of the contents.
"So that there would be no misunderstanding with you, and as requested by Mr. Ward, we wired you today that we would guarantee payment in full of all purchases, with the understanding that Mr. Ward guarantee the weights and grades on all shipments, in accordance with our contract.
"We hope that our manner of handling has been entirely satisfactory also that our arrangement with Mr. Ward will prove mutually profitable and of some benefit to you.
"Very truly yours,
"The Trinidad Bean Elevator Company."
All of the matters related preceded the extension of credit by appellee upon any of Ward's drafts on appellant. Subsequently, seventeen drafts for wheat purchased and consigned to appellant or to its order were drawn on appellant by Ward and deposited with appellee. The amount of each was placed to credit of Tucumcari Produce Company, Ward's trade-name, and upon presentment they were *Page 517 duly paid by appellant. Then followed the four drafts in suit. Two of the four were first returned because of the absence of the signature of Ward to a form of certificate appended to each reciting that the grain it represented was on hand as the property of appellant and held subject to its order. The missing signature was furnished, and presently all four drafts were dishonored as not representing purchases of wheat.
It is readily apparent that the decision of this case will be controlled by a determination upon which party trust in Ward is to be imposed from the record before us. Each party contends it is the other which must bear the consequences of that misplaced trust. If the details of the telephone conversation between the president of appellee bank and the unidentified person presuming to talk for appellant from its place of business in Trinidad are properly to be considered, we could the more readily admit the correctness of the trial court's decision.
But the reception in evidence of the details of this telephone conversation was challenged upon two grounds: First, that the person purportedly talking for appellant was not identified; and, second, that the two writings relied upon as containing the guaranty of payment of Ward's drafts merged all previous oral communications; the tendered conversation being declared immaterial in its tendency to vary or contradict the same. We see no merit in the first ground of objection. Upon appellee's offer to keep the case open for the purpose of identifying the person talking from appellant's place of business, appellant's counsel stated it was not his desire that such be done. This was a waiver of further proof on the point.
Something should be added as to the course of proceedings antecedent to judgment before disposing of the second ground of objection to the admissibility of the telephone conversation. The case was decided upon a demurrer to the evidence interposed by appellant at the close of appellee's case as a challenge to the sufficiency of the proof to support a judgment for appellee. The appellant stood upon the trial court's action in overruling the demurrer, and itself produced no evidence. It requested, and the trial court denied, a finding that the telegram and letter alone evidenced whatever assurance was extended to appellant by appellee.
In its complaint appellee alleged Ward to be the agent of appellant for the purpose of buying wheat for it, agreeing to pay him 100 per cent. for wheat purchased at its quotations, and to pay appellee the drafts drawn on it by Ward for the purpose of enabling him to purchase wheat and pay for the same, subject only to the condition that Ward guarantee to it weights and grades of wheat purchased. Appellee further alleged: "That such guaranty and agreement with this plaintiff on the part of said defendant, consisted of telegrams and letters, as will be hereinafter set forth."
And further alleged: "A copy of the telegram of guaranty from the defendant to the plaintiff is hereto attached, marked Exhibit `B,' and made a part of this complaint; a *Page 518 copy of the letter confirming said telegram is also attached, marked Exhibit `C,' and made a part hereof."
It was solely upon the view that the conversation over the telephone merely explained, but did not alter or change, the assurance extended by the telegram and letter, that the trial court permitted appellee's president to give in evidence the details of such conversation. The writings were relied upon in the complaint and at the trial as constituting the guaranty. The telephone conversation was not mentioned in the complaint. At the trial, however, and in this court, its admissibility is defended upon the ground that it tends to explain the assurance extended in the letter and telegram.
As we view the matter, the clear purport of the telephone conversation is to change entirely the scope of the assurance extended by the writings. It seems fairly deducible from them that the bank was contemplating an extension of credit to some one in connection with purchases of wheat by Ward. Otherwise its inquiry would have disclosed it as an officious intermeddler into the affairs of Ward and appellant. And what arrangement was more likely in contemplation than that actually pursued in the handling of drafts drawn by Ward on appellant?
Under the writings appellant assures appellee that it will pay Ward 100 per cent. for wheat purchased at its quotations; Ward guaranteeing weights and grades at destination. And appellee is admonished: "Final settlements of shipments cannot be made until the car reaches the destination and the papers issued at that point, because we ourselves do not know what the grade will be or the extent of contents."
These writings were calculated to reassure appellee bank that, if it should extend credit to Ward on drafts covering purchasesof wheat, it would not suffer loss due to a decline in the market, with the warning, nevertheless, that loss might occur from discrepancies in weights or grades guaranteed by Ward. The writings plainly contain no guaranty or assurance whatever that appellant will pay any draft, except "for wheat purchased." Their clear purport is directly opposite. And the trial court refused to find that the drafts in question represented purchases of wheat.
But, when we consider the telephone conversation, an entirely different meaning appears. If accepted, it shows an explanation to appellant that Ward desired to draw each day for the purchases made during the day and appellant's reply that such was its intention, followed by an oral promise to pay the drafts. Under such a plan it would be impractical, if not impossible, for the bank to verify Ward's purchases before extending credit on the drafts. Quite naturally such an arrangement, as held by the authorities cited in the trial court's memorandum opinion, imposed no duty on the bank to look beyond the representation of the drawer.
Our analysis reduces the matter to this: Under the writings alone the bank trusted Ward. The telephone conversation transforms the person trusting and the consequences *Page 519 of a breach of the trust from the bank to appellant. So viewing the matter, we must hold the telephone conversation inadmissible. Without this conversation in evidence, neither agency, the basis of the trial court's conclusion of liability, nor an assurance broad enough to cover appellee's claim of liability, is established.
We have felt justified in indulging the inference that the writings related to the handling of drafts, since both parties agree that such was the case. The appellee in its complaint so declares, and appellant in a letter following dishonor of the drafts so admits. It will be observed, however, that the writings thus relied on themselves make no mention of drafts. They were merely an assurance from appellant to appellee to pay Ward 100 per cent. for wheat purchased at its quotations, subject only to the latter's guaranty of weights and grades.
But it is unnecessary in support of our decision to infer what the parties admit — that the particular transaction which the writings contemplated was the handling of drafts. The writings are plain and unambiguous. They do not require explanation. They do not admit of it in derogation of the assurance extended, either the one way or the other. The appellee would no more be denied recovery for a loss within the guaranty, although wholly disconnected from draft transactions, than permitted to avail itself of one outside it.
Let us suppose that, instead of advancing money on drafts, the appellee had loaned Ward the money on notes with which to purchase wheat, having as security for repayment an assignment of his expected returns on the basis of the guaranty contained in the writings. If, under such circumstances, appellant's breach of the guaranty should result in loss to appellee, the appellant's mouth would be just as effectually closed against showing that the guaranty related solely to drafts as is appellee's against proving that appellant's guaranty was to pay Ward a price certain, not alone for wheat actually purchased, as promised in the writings, but also for wheat represented by him to have been, but not in fact, purchased.
It follows that the judgment of the lower court should be reversed, and the cause remanded, with directions to set aside the judgment heretofore rendered and enter judgment for appellant. The appellant will recover its costs. It is so ordered.
WATSON, C.J., and HUDSPETH and ZINN, JJ., concur.