Thomoson v. Garner

Jenkins, P. J. (After stating the foregoing facts.) The suit being on an executory contract, the question to be determined is whether the petition shows that the plaintiff has himself complied with the obligations imposed upon him by the agreement. The contention which appears to be mainly urged by plaintiff is “that what was done as set forth in the petition and the amendment was a full compliance with the contract and the equivalent of paying $15,000 in cash, because if the bank was made solvent as set forth in the contract, there would be no difference in plaintiff paying into the bank $15,000 in cash and turning over to the bank $15,000 worth of its own obligations which were accepted as cash and cancelled by the bank; because if $15,000 had been turned over to the bank in cash, the same money could and should have been used by the bank in paying and retiring its own obligation. Besides, even if there should have been a slight departure from the [458] exact terms of the contract, the defendant, as a stockholder in the bank, would be bound by what the bank did, and could not accept plaintiffs $15,000 in time certificates and have the same cancelled and retired as an obligation against the bank, and have the bank reopened, and then claim that plaintiff should not be reimbursed because time certificates were used and not actual cash.” The contention of the defendant in this respect is that “instead of paying the $15,000 which he guaranteed to pay, the plaintiff tried to turn the contract around and make it one whereby defendant and the other signers of the contract were to guarantee'his time certificates in a defunct, crippled bank to be worth one hundred cents in the dollar. In other words, instead of complying with his contract, he sought to pour his time certificates, which were worth less than par, in the tills of the bank, and then turn on defendant and say, ‘You pay me one hundred cents in the dollar for those certificates.5 55 The suit being on contract, we do not think that any change in the terms thereof, even though arrived at bjr the plaintiff and the officials having active management of the bank, would be binding upon the defendant unless such a novation of the agreement was agreed to by him. The question therefore is whether, as alleged by the petition, the plaintiff did actually comply with the obligations assumed by him under- the signed agreement. We agree with the contention of the plaintiff that the use of the pre-existing time certificates of deposit could be taken as a compliance with the provisions of the agreement that the plaintiff, “in order to secure that guarantee, will place with said Bank of Lawrenceville time deposit certificates amounting to fifteen thousand dollars.” The contract itself sets forth that the making good of the described assets in the amount of $15,000 would make the bank solvent and permit it to be reopened; and if it had been intended to compel Thomoson to pay in $15,000 of new money to secure his guaranty of the bad notes, and thus incidentally furnish additional ready cash for the bank to operate on, it would have been an easy matter to so provide. The expressed purpose of the contract does not, however, purport to require Thomoson to provide ready cash for the use and benefit of the bank; but the whole scheme for its rehabilitation, as expressed by the signed agreement, was that in order to avoid the necessity of the stockholders paying in $15,000 [459] of new assets in the form of money, the assets of the bank were to be increased $15,000 by the act of Thomoson in guaranteeing the payment of $15,000 of the bank’s discredited and supposedly worthless assets, thus increasing the bank’s actual assets in that amount and thus making good the impaired capital. The contract further required that Thomoson secure his guaranty of the supposedly bad paper, and provided how this should be done, to wit, by placing “with said Bank of Lawrenceville time deposit certificates amounting to $15,000,” but the instrument sued on nowhere says that Thomoson is to provide new ready cash for the future operation of the bank, and, as stated, fails to require that the time certificates to be pledged as security for Thomoson’s guaranty should represent a deposit of new money. According to the contract, all that was required to restore the impaired capital and make the bank solvent and enable it to be reopened was changing $15,000 of bad assets into good assets, by virtue of Thomoson’s secured guaranty thereof. The plaintiff unquestionably used for the common'good of the bank, its depositors and stockholders, his personal assets held by the bank, and it is with some reluctance that we feel compelled to hold that he can recover nothing in the suit maintained on the contract. The executory agreement plainly provides that the impaired capital is to be restored by the plaintiff increasing the assets of the bank by making good $15,000 worth of bad assets. He was to do this by guaranteeing their payment and securing his guaranty in the manner set forth by the contract. Whatever rights, if any, the plaintiff might have against the fellow stockholders in restoring the impaired capital in the manner resorted to, he can not recover on the executory contract sued on, unless he himself shows a compliance on his own part with the obligations therein assumed by him. He agreed to guarantee the bad paper belonging to the bank and to secure his guaranty. The defendants agreed to make good their pro rata share of any losses he might suffer as guarantor by virtue of such guaranty. In point of fact, the petition shows that he did not become guarantor upon this paper at all; but, on the contrary, it shows that he used his time-deposit certificates to buy the paper outright, and sought to collect it as his own property, using the bank merely as a collecting agent, without the bank being concerned as to the success or failure of its [460] efforts as a collecting agent, save in the performance of its duty in its fiduciary capacity. His suit is to recover -what he failed to collect on notes belonging to himself. Except when in contravention of law, parties may contract as they please, and even though the bank as collecting agent for an individual may be charged with the same degree of diligence as would be expected in the collection of its own assets, since the defendants had an interest in' the collection of the discredited paper they may have preferred that the bank, as a going concern, collect the notes from its own customers as papers belonging to itself, rather than undertake as agent for an individual to collect them in a mere fiduciary capacity. There might very well be a practical difference in the result. At any rate, the executory contract sued on expressly pointed out the method of procedure, and in a suit based thereon the signers of the contract have a right to stand on its terms. Judgment affirmed. Stephens and Bell, JJ., concur.