Evans v. Loomis

Opinion by

Mr. Justice Moschzisker,

The defendants contend that the liability created by the bond and mortgage referred to in the findings of the court below was one of indemnity only, to save and keep harmless Evans and Brown from any loss or damage by reason of their liability as sureties or indorsers on the note to the use plaintiff, Miss Keith; that when the indorsers were released by the payee of the note, the condition of the bond and mortgage was fully satisfied and there could be no recovery thereon; while the use plaintiff contends that the contract was not for the sole purpose of indemnifying the indorsers, but that it was also for the purpose of making the obligors and mortgagors liable to pay the note; that the obligation to pay the note, and the obligation to *565indemnify the indorsers, were separate and independent conditions or covenants, and that the first could not be satisfied or affected by the release of the other. The court below decided in favor of the plaintiff, and we see no error in the result reached.

The contract recites the note of the cork works to Miss Keith, and that Evans and Brown were liable as sureties thereon; it provides, “Now if the said Erie Cork Works, or the parties of the first part hereto (the defendants Loomis), shall pay the said obligatipn .... (the note in question) and shall save and keep harmless the said George W. Evans and B. B. Brown from any and all loss or damage resulting to them by reason of the liability incurred by them .... then this obligation to be void . . . ., or else to be and remain in full force and virtue.” The language used is sufficient to create a double obligation, first, to pay the note, if not paid by the corporation debtor, and next, to indemnify the indorsers on the note.

The fact that the defendant’s obligation was given to a trustee, and not directly to the indorsers, lends force to the thought that it was intended to create such a double liability; otherwise, there was no necessity for the use of a trustee. When called as a witness for the defense, Evans testified: “I was instrumental in getting the money from her (Miss Keith), and I did not want her to blame me.” He and Brown, the indorsers on the note, had been large stockholders in the cork works, and when they sold their stock to the defendants Loomis, they were anxious, apparently, not only to protect their own interests so far as the obligation of the corporation upon which they were sureties was concerned, but they also desired at the same time to take care of and fully protect the interest of Miss Keith. It is easy to believe that the obligation then exacted from the defendants was made and entered into with this double object in view. Presumably, if the defendants Loomis had not undertaken to pay this debt of the cork works, upon which Evans and Brown were liable, the *566latter would have liquidated the obligation, added that much to the value of the works and charged the defendants for their stock accordingly; so the latter were in no manner prejudiced by the assignment of the mortgage to Miss Keith or by the release given to Evans and Brown.

The desire to carry out this thought of protecting Miss Keith was recognized by the trustee named in the contract up to the time of the acquittance of Evans and Brown; he testified that he assigned the bond and mortgage over to Miss Keith as security to her when she gave the release, and that their transfer was the only consideration for the release known to him. Since the bond and mortgage were given to the trustee and “his assigns,” he had the legal right to assign them to the use plaintiff, and since the words used therein indicated that one of the purposes was to secure the payment of the note, Miss Keith had the right to assume that she could safely accept them from the indorsers as a substitute for their liability. The defendants did not offer any facts surrounding the creation of the bond and mortgage which would tend to indicate that it was not their intention to become responsible for the payment of the note to Miss Keith, if called upon. On the whole, we conclude that the court below fell into no error in holding that the obligation of the defendants was not simply to indemnify the indorsers, but was also to pay the debt to the holder of the note.

The other note given by the corporation to Miss Keith and indorsed by one Kraemer, referred to in the seventh finding of the court below, has plainly written upon its face, “This note is collateral for one of like amount now past due,” the reference being to the note upon which Evans and Brown were indorsers. A party may hold more than one collateral for the same debt; under the circumstances we cannot say that there was error in the conclusion that the acceptance of this note by the use plaintiff did not affect the question of the liability of the defendants.

We have discussed all the points suggested in the state*567ment of the question involved, and necessary to the determination of this case; the assignments of error which comprehend these points are overruled; all others are dismissed; and the order of the court below is affirmed at the cost of the appellant.