No. 14387
I N THE SUPREME C U T O THE STATE O MONTANA
O R F F
1979
OTTO STENSVAD,
P l a i n t i f f and Respondent,
MINERS & M R H N S BANK O
E C A T F
ROUNDUP, M N A A
O T N ,
Defendant and A p p e l l a n t .
Appeal from: D i s t r i c t Court of t h e F o u r t e e n t h J u d i c i a l D i s t r i c t ,
Honorable R o b e r t D. M c P h i l l i p s , Judge p r e s i d i n g .
Counsel o f Record:
For Appellant:
Towe, B a l l , E n r i g h t & Mackey, B i l l i n g s , Montana
G e r a l d Neely a r g u e d , B i l l i n g s , Montana
F o r Respondent:
Moses, T o l l i v e r and W r i g h t , B i l l i n g s , Montana
Kenneth T o l l i v e r a r g u e d , B i l l i n g s , Montana
Submitted: J u n e 1 3 , 1979
~ecided&U& 1 193
Mr. Justice John C: Sheehy delivered the Opinion of the Court.
Appeal is by the Miners & Merchants Bank of Roundup,
Montana (Bank) from an order of the District Court, 14th
Judicial District, Musselshell County, dated May 11, 1978,
dissolving a writ of attachment levied against property of
Otto Stensvad. The order is appealable under Rule l(b),
The matter comes to us on an agreed record on appeal.
It appears therefrom that on two occasions Otto Stensvad
executed two instruments denominated "guaranty". One instru-
ment was dated January 2, 1970 and related to borrowings made
from the Bank by Agri-Services, Inc. The second instrument
dated September 16, 1971 related to borrowings made by M-V
Enterprises, Inc., M & S Cattle Feeders, L. D. Stensvad
Cattle Company, and L. D. Stensvad as an individual. Each
instrument contains the following pertinent language:
ItGUARANTY
"The undersigned hereby requests the Miners &
Merchants Bank, Roundup, Montana (herein
called the "Bank") to give and continue to
give (herein called the Borrower) credit, as
the Borrower may desire and the Bank may
grant, from time to time, ...
and in
consideration of any credit given, the
undersigned [Otto Stensvad] hereby absolutely
and unconditionally guaranties prompt payment
when due and at all times thereafter of any
and all existing and future indebtedness. . .
from the Borrower to the Bank. The ..
undersigned [Otto Stensvad] hereby waives
presentment, protest, notice, demand or
action on delinquency in respect of any
such indebtedness or liability, including
any right to require the Bank to sue or
otherwise enforce payment thereof.
". . . It is agreed that the undersigned's
liability hereunder is several and is
inde2endent of any other guarantees at
any time in effect with respect to all or
any part of the Borrower's indebtedness
to the Bank, and thatthe undersigned's
liability hereunder may be enforced
regardless of the existence of any such
other guaranties."
Each guaranty is limited to $200,000 although the
aggregate amount of guaranty is disputed by Stensvad.
Stensvad commenced the action in the District Court
on November 16, 1971, by his complaint seeking exoneration
from the said written guaranties. By answer and amended
counterclaim, the Bank seeks judgment against Stensvad in
the total sum of $400,000 plus attorney fees on the ground
that the nbtes and loans of the Bank to the borrowers have
all become due and delinquent or have become accelerated,
due, and delinquent. On January 31, 1972, a writ of attach-
ment was issued by the District Court in the action and levied
upon sroperties of Otto Stensvad. On March 3, 1978, Otto
Stensvad moved to vacate the writ of attachment on the ground,
among others,that the attachment was not based upon a contract
for the direct payment of a sum certain of money. On May 11,
1978, the District Court issued its order dissolving,-
releasing and discharging the attachment as to all properties
upon which the levy had been made. Appeal was taken by the
Bank and the matter comes to us in the usual course. We
ordered the appeal to be submitted to us on briefs without oral
argument, and the cause is now ready for decision.
We affirm the order of the District Court dissolving
the writ of attachment. The sole issue presented to us is
whether the guaranties involved here are contracts for the
direct payment of money so as to entitle the Bank to a writ of
attachment under the Montana statutes. A guaranty, under
Montana law, is clearly not a contract for the direct payment
of money.
Section 27-18-101 MCA, says that:
" (1) Property may be attached in:
(a) an action upon a contract, express or
implied, for the direct payment of money. . ."
Section 28-11-101 MCA, defines a guaranty:
"A guaranty is a promise to answer for the
debt, default, or miscarriage of another
person. "
It is firmly established in Montana law that an
instrument of guaranty will not support the issuance of a writ
of attachment. In General Finance Co. v. Powell (1941), 112
Mont. 535, 540, 118 P.2d 751, 753-754, this Court said:
"The attachment law is purely of statutory
origin and while, like other statutes, it
must be liberally construed to effect its
objects (sec. 4, Rev. Codes), the courts
have not the right under the guise of
liberal construction to read into the
statute any meaning which its words,
construed according to the statutory rules,
do not convey. To construe a statute is to
ascertain the intent of the legislature
(sec. 10520, Rev. Codes), and not to
substitute the court's discretion for that
of the legislature (sec. 10519, Rev.
Codes). Consequently our duty is to decide
the meaning of the legislature's words,
construed ordinarily according to the
context and the approved usage of the
language (sec. 15, Rev. Codes). The
question is sirn~lythis: Is a guaranty
of 'the full payment of said contract
and prompt payment of all sums due there-
under' a contract for the direct payment
of money?
"As pointed out by this Court in Ancient
Order of Hibernians v. Sparrow, 29 Mont.
132, 74 P. 197, 64 L.R.A. 128, 101
Am.St.Rep. 563, 1 Ann.Cas. 144, the word
'direct' first appeared in our attach-
ment statute in 1866 and again as the
statute was re-enacted in 1867 after the
congressional invalidation of the 1866
legislation (14 Stat. 427) was omitted in
1869, and reinserted in 1895. Therefore
there can be no doubt that the legislature
attached some substantial meaning to the
word. 'Direct' is defined by Webster's New
International Dictionary (Webster-Merriam
2d Ed.) as denoting 'the absence of any
intervening medium or influence'; as meaning
'marked by the absence of an intervening
agency or influence.' Obviously defendant's
guaranty of the purchaser's performance of the
conditional sales contract is not a contract
for the direct payment of money, since
defendant's liability is conditioned entirely
upon an intervening medium, agency or
influence--namely, upon the purchaser's default,
which as to eventuality, time and amount was
entirely problematical. If it is to be
construed as a contract for the direct
payment of money, it is hard to imagine
any contract for the payment of money
which is not for its direct payment.
"This court has long held that the term
meant an unconditional and absolute
obligation to pay money (Ancient Order
of Hibernians v. Sparrow, supra; Heffron
v. Thomas, supra; Wall v. Brookman, 72
Mont. 228, 232 P. 774), and not a
collateral agreement dependent or
contingent upon some other agreement.
Square Butte State Bank v. Ballard,
64 Mont. 554, 210 P. 889; Gilna v.
Barker, 78 Mont. 343, 254 P. 169.
In the Square Butte Bank Case [64
Mont. 554, 210 P. 8901 suit was brought
upon defendant's contract of guaranty
that 'for value received, I hereby
guarantee the collection and payment
of the within note,' and it was held
that the guaranty, being dependent upon
the contingency of the debtor's breach
of another contract, was not a contract
for the direct payment of money. In
Wall v. Brookman, supra, this court
went so far as to suggest that the
elimination of the word 'direct' from
the statute would be beneficial, but
as the legislature has not seen fit
to eliminate it, the CDU~-tsmaynot
overrule the legislature in order to
do so."
See also Wall v. Brookman (1925), 72 Mont. 228, 232
P. 774; Square Butte State Bank v. Ballard (1922)) 64 Mont.
555, 210 P. 889; Butte Machinery Co. v. Carbonate Hill Mining
Co. (1926), 75 Flont. 167, 242 P. 956; Muri v. Young (1926),
75 Mont. 213, 245 P. 956.
The Bank however contends that the instruments
involved here are not instruments of guaranty, but rather of
surety, and as such Otto Stensvad is bound with the principals
as an original promissor on the borrowings. We cannot
interpret the instruments before us as contracts of surety.
Each is denominated by the Bank as a "guaranty"; each is a
promise by Otto Stensvad to answer for the debt, default, or
miscarriage of another person or entity. As such, each in-
strument is a guaranty instrument, and not a surety instrument,
even though each provides that Stensvad's liability is "several"
and that Stensvad waived all right to require enforcement of
payment from the borrower. The Bank cannot escape the effect
of the instrument with respect to Stensvad, that his liability
is conditioned entirely upon an intervening event, that is the
borrower's default. General Finance Co. v. Powell, supra.
As early as 1900, in Cole Mfg. Co. v. Morton (1900),
24 Mont. 58, 60 P. 587, this Court distinguished between a
surety and a guaranty, pointing out that a surety is bound as
an original obligor, while a guarantor is bound on a collateral
promise. A surety makes himself responsible for the perfor-
mance of his principal, a guarantor only agrees to answer for
the debt, default or miscarriaqe of another. These distinctions
are preserved in our statutes. Compare section 28-11-401 MCA
defining surety, with section 28-11-101 MCA defining guarantor.
When all the smoke clears in this appeal, a single
fact stands out: Otto Stensvad is not liable under the
instruments he executed for the Bank unless the borrowers
defaulted to the Bank. Therefore the District Court was correct
in ordering the writ of attachment dissolved.
Af firmed.
Justice
We concur:
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/hie£ Justi e
r -