Valentine v. Donohoe-Kelly Banking Co.

This appeal is by the defendant corporation from the judgment and an order denying its motion for a new trial.

The facts are substantially as follows: Prior to January 24, 1896, a certain copartnership existed under the name and style of “ Francis and Valentine.” T. B. Valentine, plaintiff’s testate, was, at all times during its existence, a member of said firm. The said copartnership did its banking business with defendant. Prior to March, 1896,' the said copartnership became indebted to defendant upon seven promissory notes aggregating $33,975.85, which notes were executed by the said copartnership to said T. B. Valentine, and by him indorsed and transferred to defendant. On February 8, 1896, the said Valentine assigned to defendant a certain note and mortgage made to him by the Belvedere Land Company, of the value of fifty thousand dollars, as security for the payment of all of said promissory notes, of all sums due by said copartnership to defendant, and of all advances that might thereafter be made by said defendant to said firm. On January 24,1896, the members of the said copartnership incorporated under the corporate name of “Francis-Valentine Company,” the corporation becoming the successor in business of the former co-partnership. The account current of the copartnership with defendant was closed, and on March 2, 1896, the corporation —Francis-Valentine Company—opened an account with defendant, depositing on said date, to its credit, $1,220. At the time of so opening said account with the defendant by the corporation, — Francis-Valentine Company, — the said T. B.

After Valentine died, the Francis-Valentine Company continued its account current with defendant, in which account the defendant continued to charge the monthly interest upon the notes, as it had done during the lifetime of Valentine. This continued until November 23, 1897, at which time the executors of the Valentine estate sold the note and mortgage for fifty thousand dollars. The defendant, at the time of the said salé, agreed with the representatives of Valentine’s estate to deliver up the note and mortgage upon condition that the

“ Principal ...............................$30,835.10

Interest.................................. 147.92

$30,983.02”

The item of interest was for twenty-three days in November, the interest up to November 1st having been charged to the Francis-Valentine Company, in its ■ account with defendant. The plaintiffs then gave defendant a check for said sum of $30,983.02 against the new account, which check was accepted by defendant, and the notes delivered up and canceled. Plaintiffs drew further checks against the fifty thousand dollars, leaving finally a balance of $7,459.78 to their credit on the deposit account, which is the amount in controversy here, and for which plaintiffs recovered judgment. The defendant, although having charged this amount to the Francis -V alen tine Company in its current account, claims that the said amount is the amount of interest that the notes earned after they were sold to defendant, including interest earned after the death of Valentine, as well as before. There is no question as to the facts that the interest is charged to and is due defendant by the Francis-Valentine Company, and that the notes were surrendered up and canceled. We are therefore clearly of the opinion that the notes have been fully paid. This was manifestly the intention of all the parties, as shown by their conduct. The fact that the notes were surrendered up and canceled upon payment of what defendant stated to be the balance due for principal and interest is almost a conclusive circumstance, in the absence of fraud or mistake. It is provided in section 3290 of the Civil Code that “ accepting payment of the whole principal, as such, waives all claim to interest.” This section is broad in its language, and applies to express contracts. (Los Angeles v. City Bank, 100 Cal. 22 .)

It is said in Brandt on Suretyship and Guaranty (2d ed., sec. 34): “ When property of any kind is mortgaged or pledged by the owner to answer for the debt, default, or miscarriage of another person, such property occupies the position of a surety ■ or guarantor, and anything which would discharge an individual surety or guarantor who was personally liable will, under similar circumstances, discharge such property. This rule is applicable to every variety of circumstances.” (See cases cited in note 4 to sec. 34.)

The guaranty for future advances ceased when Valentine died and defendant had notice of his death. He could at any time during life have terminated the guaranty as to future advances, by giving notice. His death, with knowledge thereof, was notice. At his death his property vested in others, subject to all valid liens thereon. In case of a continuing guaranty, each advance made by the guarantee constituted a fresh consideration, and, when made, an irrevocable promise on the part of the living guarantor. A dead guarantor can make no promise. The guarantee, after knowledge of the death of the guarantor, cannot be held to have made the advance at the request of a dead man. (Jordan v. Dobbins, 122 Mass.