Strouse v. Elting

COLEMAN, J. The plaintiffs instituted the present action to recover $2,000 upon a written agreement signed [139] by the defendant, by which he covenanted and agreed to pay said sum for purposes and upon conditions stated in the agreement. The cause was tried by the court, without a jury. The defense relied upon arises under the third sub-division of section 1732 of the Civil Code, which declares that “every special promise to answer for the debt, default or miscarriage of another” is void, unless the agreement is in writing and expresses the consideration. The question was raised both by demurrer to the complaint and by plea. The general rule is that the statute of frauds must be pleaded, and, unless it affirmatively appears in the complaint or bill that the agreement declared upon was obnoxious to the statute of frauds, a demurrer will not lie. To authorize a recovery or relief, a valid contract must be proven.—Hunt v. Johnson, 96 Ala. 130; Manning v. Pippen, 86 Ala. 357. Tested by this rule, the first, third, fourth, and fifth counts of the complaint were sufficient. The second count makes no reference to any other covenant or agreement than that set out, and, standing alone, showed on its face an obligation, as surety, for a past debt of another, and it does not express a consideration for the obligation. The demurrer to this count was properlv sustained. The vital question in this case arises under the third count of the complaint. In this count the entire transaction between the parties, as disclosed by the evidence, was stated ; and the question for consideration is whether the plea of the statute of frauds is an answer to it, or, if the proof sustained the averments of this count, the plaintiff was not entitled to recover. We have stated that this was the material question, for it is settled in this State that, if any credit is given to the party for whose benefit the promise was made, the promise is within the statute of frauds.—Webb v. Lumber Co., 101 Ala. 630; Clark v. Jones, 87 Ala. 474; Boykin v. Dohlonde, 37 Ala. 577. It is evident, we think, that credit was extended to the South Birmingham Coal & Iron Company, the maker of the note. The question, then, is whether the third count sufficiently avers an agreement in writing, which expressed the consideration, subscribed by the defendant, to pay the sum of $2,000, and, if so, does the evidence support the complaint? It is not necessary to a compliance with the statute of frauds [140] that the contract of the parties be evidenced by a single writing. It has always been held sufficient if the contract is so clearly evidenced by two or more instruments having reference to each othef as tó show they were parts of the same, and together constituted the contract of the parties. The object of the statute is to protect persons from fraud and imposition by parol evidence, in respect to the contracts and. obligations provided for by the stáiutó. The genéral rule is that it is not competent to connect the several papers by parol, but the several instruments must be connected by references contained in the papers themselves. The rule is not absolute, and the following quotation from the case of Beckwith v. Talbot, 95 U. S. 289, was cited with approval in the case of Jenkins v. Harrison, 66 Ala. 345, 360: “There may be cases in which it would be • a violation of reason and common sense to ignore a reference which derived its significance from such proof. If there.is ground for any doubt in the matter, the general rule should be enforced; but, when there - is no ground for doubt, its enforcement would aid, ifisteád of discouraging, fraud.” This court then continues as follows : ‘ ‘The implication of connection between the memorandum and the deed is almost irresistible, from their mere inspection, and there was no just objection to parol evidence of the contemporaneous facts and the circumstances surrounding the parties, showing that they were but parts of the same transaction.” The same rule has recently been reaffirmed in the case of White v. Breen, 106 Ala. 159. The case presents the following circumstances and correspondence : The South Birmingham Coal & Iron Company was a corporation in need of money, and without credit. Its capital stock was $120,000, of 1,200 shares. The First National Bank- of Florence owned 200 shares of the stock, being one-sixth of the whole. D. B. Strouse, a stockholder, on the 18th of October, 1890, addressed a letter to the stockholders, including one to the defendant, who was the cashier of the First National Bank of Florence, detailing the condition of the Coal & Iron Company, and its need of $12,000, and inquired whether they would guaranty their ¡oro rata amount of that sum. To this letter the defendant replied by letter bn the 23d of October, having previously replied by telegram. The letter is as follows : “No. 3,981. The First [141] National Bank, Florence, Ata., Oct., 23rd, 1890. D.B. Strouse, Esq., Salem, Va. — Lear Sir: Your fayor of the 18th received. I wired you yesterday as follows: ‘Directors decline proposition. I have proposed to bank to purchase their interest provided you accept my guaranty for two thousand ($2,000) of the required $12,000. Answer.’ My object in making this proposition to the bank is to protect them, if possible, from loss. Our directors refuse to advance or guaranty one cent of the $12,000. One of our directors claims that the mine was filled with water at one time, and the whole board, with the exception of myself, voted against your proposition. A committee was appointed to visit Helena, and make an examination of the property. They reported that the company had been badly managed, &c., &c. Of course, this feature will be eliminated if Messrs. McDonald & Beers assume the management. Personally, I have faith in your ability to make the scheme a success, and am willing to purchase the stock of the bank for the amount of their claim, and guarantee $2,000 of the required $12,000, on the terms named, and run my chances. If you decline my proposition, the bank proposes to allow the stock to go by default, and collect, if possible, their claim from the maker of the note; suit having been instituted last fall. Please wire me at my own expense, your decision in the matter. Yours truly, N. 0. Elting.” This letter was replied to, accepting the proposition of Mr. Kiting, the defendant. Other stockholders acceded to the same proposition, and signed a similar agreement. All this occurred prior to the 31st of October, the day the money was borrowed. Mr. Elt-ing purchased the stock from the Florence Bank, and had the same transferred to him on the books of the company. The agreement was then signed by the other stockholders, and forwarded to Mr. Elting, which was signed by him. It was marked “Exhibit 4” to the bill of exceptions, and read as follows: “Whereas, the South Birmingham Coal cfc Iron Company has, for the purposes of said company, borrowed the sum of $12,000, —$3,500 from the Farmers’ National Bank of Salem; $158.64 from J. W. F. Allemong, of Salera, Va.; and $8,341.36; from James A. Bonsack, of the city of Philadelphia: Tt is agreed by the undersigned, who is a stockholder in the said company, that, in case the said [142] note to the said Janies A. Bonsack shall not be paid by the South Birmingham Coal & Iron Company, then the undersigned will, on demand, contribute to the payment thereof, as surety therefor, the sum of two thousand dollars. November 15th, 1890. N. C. Elting.” Indorsed on back: “For value received, I assign the-within obligation to D. B. Strouse and T. J. Shickel, without• recourse on me. James A. Bonsack.” The note upon which the money was borrowed reads as follows : “$8,841.36. On- demand, we and each of us promise to pay to James A. Bonsack the sum of eight thousand three hundred and forty-one dollars and thirty-six cents ($8,341.36), with interest from date, for value received. Given under our hands, this 3.1st day of October, 1890. South Birmingham Coal & Iron Co., by D. B. Strouse, Vice-Prest.” The contention is that the agreement, Exhibit 4, supra, does not express the consideration, and is therefore not a compliance with the statute of frauds. The written correspondence expresses very clearly the consideration, and the only question is whether it can be admitted in evidence as a part of the agreement, and whether their connection and the circumstances under which the transaction was had can be shown by parol. As was declared in 95 U. S. 289, supra, not to admit the evidence in this case would “violate reason and common sense,” and “encourage fraud,” to apply the rule in this case. “The implication of connection” arises from the mere reading of the correspondence and agreement. The facts are averred substantially in the third count as we have detailed them, and the evidence fully supports the complaint. There was no controversy that the plaintiff had satisfied the note given for the borrowed money, and that all the other stockholders had paid their pro rata share, according to the agreement; nor was there any controversy that the plaintiffs were the assignees and owners of the claim against the defendant, The court erred in its judgment, and a judgment will be here rendered for the plaintiffs. Reversed and rendered.