MORTGAGE GUARANTEE CO v. CHOTINER

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District Court of Appeal, Second District, Division 2, California.

MORTGAGE GUARANTEE CO. et al. v. CHOTINER et al.*

Civ. 10709.

Decided: March 25, 1936

Alvan M. Palmer and Harvey A. Harkness, both of Los Angeles, for appellants. Charles J. Katz and Alfred Gitelson, both of Los Angeles, for respondents.

Defendants subscribed their names to the following writing, indorsed upon the back of a $70,000 promissory note: “For value received, I guarantee payment of the within note, with interest, in accordance with its terms. I waive demand, or notice of nonpayment, and I authorize extensions without notice. If suit is brought to enforce this guarantee, I will pay attorney's fees and costs of suit.” Originally the note was secured by a deed of trust upon real property, but before commencement of the within action the security had been sold and the proceeds applied upon the note. This suit was then brought for the deficiency against the guarantors only. Judgment went for defendants, and plaintiffs, owners of the note, appeal.

Several theories are advanced as justification for releasing respondents from their obligation as guarantors. In the first place, it is claimed that they received no consideration for their guaranty. Inasmuch as the execution of the note and guaranty was coincidental, no other consideration need exist. Civ.Code, § 2792. Furthermore, the guarantors were officers and stockholders of the family corporation which executed the note, and therefore they derived a benefit from the transaction, of itself a good consideration for the guaranty. Seth v. Lew Hing, 125 Cal.App. 729, 14 P.(2d) 537, 15 P. (2d) 190.

Respondents claimed that the wording of the guaranty rendered its terms uncertain and ambiguous, and they were permitted over the objection of appellants to introduce testimony of a conversation had between them and a representative of the payee of the note at the time the document was signed, to the effect that the “extensions without notice” referred to in the guaranty “applied only to, and only authorized extensions to the maker.” The trial court made a finding in accordance with this evidence, which would effectually preclude appellants from recovery because several extensions of the obligations of the note were granted, not to the original maker thereof but to its successors. In permitting this parol testimony to vary and explain the terms of the written guaranty we believe the trial court erred.

The wording of the instrument is plain, free from ambiguity, easily understood, and presents no scope for explanation upon the ground of uncertainty. First National Bank v. Spalding, 177 Cal. 217, 170 P. 407. Respondents expressly consented in broad and unequivocal language to extensions of time without qualification of any kind, and it must be held that they cannot rely upon any asserted ambiguity in the guaranty in this case to avoid its consequences, nor can parol evidence be invoked to vary or alter the plain terms of the writing. Moreover, no adequate showing was made that the person purporting to deal with respondents respecting the alleged restriction upon the extensions had authority to speak for the corporation payee of the note, or was even an official of or in any way authorized to bind the corporation as to any verbal understanding with relation to the written guaranty. Obviously, evidence should have been produced as to the authority of the person assertedly so speaking for the corporation. Anderson v. Standard Lumber Co., 64 Cal.App. 410, 221 P. 686.

But, while respondents may not be relieved upon the theory that the terms of their written guaranty may be altered by parol testimony, we are of the opinion that another consideration absolves them from liability. When the original maker of the note transferred to another the real property pledged as security, such original maker became the surety for the payment of the note, entitled to all the protection which the law gives to sureties (Braun v. Crew, 183 Cal. 728, 192 P. 531), including the Code provisions that he cannot be held beyond the express terms of his contract (Civ.Code, § 2836), and that he as surety is exonerated if by any act of the creditor, without the consent of the surety, the original obligation is altered in any respect (Civ.Code, § 2819). In the case here under consideration the payee of the note on more than one occasion granted extensions in the payment of principal installments, all without the knowledge or consent of the original maker of the note. Such extensions, being in writing, presume a consideration, and, in addition to such presumption, there was positive evidence as to one extension that it was given in consideration of the payment in advance of a certain principal installment. Such sufficient consideration for the extension being shown, and the extension altering the original terms of the obligation having been made without the consent of the original maker of the note, the original maker was exonerated. Braun v. Crew, supra. The original maker of the note being thus released, respondents as guarantors were also released. Anderson v. Shaffer, 98 Cal.App. 457, 277 P. 185. It follows that upon this ground respondents are exonerated from liability.

Judgment affirmed.

GOULD, Justice pro tem.

We concur: CRAIL, P. J.; WOOD, J.

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