J. R. Watkins Medical Co. v. Warren

Smith, J. This is the second appeal in this case. The opinion on the former appeal is found in 140 Arkansas at page 487. As a result of that opinion, certain issues have passed out of the case. Appellant instituted the action to recover the sum due on a contract for the purchase price of certain articles sold and delivered to N. E. Montgomery, and against appellees, W. L. Warren and J. J. Hall, as sureties on the contract of Montgomery with appellant. At the trial from which the first appeal was prosecuted, the court took the case from the jury as to the liability of Hall, upon the ground that he had filed an affidavit denying the execution of the instrument sued on, and no testimony was offered that he had in fact signed the obligation. We reversed that judgment because the affidavit denying the execution of the obligation was not an unqualified denial as required by the statute, but was made merely on belief. Sec. 4114, C. & M. Digest. Upon the remand of the cause, such an affidavit as the statute required was filed, and as no evidence was offered contradicting the recitals of the affidavit denving the execution of the obligation, the court properly directed a verdict in Hall’s favor. Thereupon Warron the other surety, asked that a verdict be also directed in his favor, upon the ground that the discharge of Hall operated to materially alter the obligation and to discharge him also. This prayer was granted, and a verdict in War'ren’s favor was also directed, and the appellant seeks by this appeal to reverse the judgment of the court below as to both parties. We have just said that a verdict was properly directed in Hall’s favor. Must Warren be discharged from his liability on that account? There is an interesting discussion in the brief of appellee Warren of the difference in the obligations of sureties and guarantors, and it is earnestly insisted that Warren is a guarantor, and not a surety. We dispose of this contention by saying that the obligation signed by Warren designates him as a surety, and makes him such, and required him to sign expressly as a surety. Places were provided for the signatures and for the attestation of the signatures of the sureties. These sureties were designated first surety and second surety. Warren signed as first surety. There is no showing that he knew anything about who would be the additional surety, or whether any other person would sign as surety, except that there was a blank space for that purpose; nor was there any showing that his signature was conditional or, if so, that the condition was known to the obligee, the appellant medicine company; and so far as appellee Warren was concerned the obligation would have become a completed contract upon its delivery to, and acceptance by, the appellant, although no other person had signed as surety. Warren is liable, although the subsequent signature of Hall was a forgery, for appellant did not know tha+ such was the case. It received its first intimation that the signature of Hall was a forgery after it brought this suit to enforce the obligation; and, this being true, the rule would be the same, even though Hall had signed before Warren did. In the case of Wheeler v. Traders’ Deposit Bank, 55 S. W. 552, it was decided by the Court of Appeals of Kentucky (to quote the syllabus as it appears in the Southwestern Reporter) that “A surety in a note cannot escape liability on the ground that a signature which appeared to the note when he signed, and which he supposed to'be genuine, has turned out to be a forgery) as the fraud was practiced upon him by the principal, and not by the payee, who accepted the note supposing all the signatures to be genuine.” This case is extensively annotated in 49 L. R. A. 315, and the editor’s note ther'eto is as follows: “The main case, to the effect that one signing an obligation as surety guarantees the genuineness, of preceding signatures, is supported by nearly all of the cases. Those holding the contrary have either been repudiated in the States in which they were rendered, or were decided on the ground that the agent of obligee procured the signatures.” The cases cited in the notes to this annotated case are to the effect that one signing a contract as surety, so far as his own liability thereon is concerned, guarantees the genuineness of the signatures of all sureties whose names precede his own, and that regardless of the validity of the names following his own, unless his. own signature was obtained upon a condition not complied with known to the obligee at the time he accepted the contract. Our cases of Stiewel v. American Surety Co., 70 Ark. 512, and Wüliams v. Morris, 99 Ark. 319, do not decide this express point, but the reasoning of those cases is applicable here. In the first of these cases, this court held that misrepresentation made to induce a surety to sign a bond, if unknown to the obligee, would not defeat the right to recover against the surety. In the second case the court held that, where a surety signed a note as joint maker, and left it in- the hands of his principal, who procured it upon condition that it be first signed by a co-surety, but delivered it to the payee, who took it in good faith without notice of such agreement, the surety was bound for its payment. The insistence is renewed that Montgomery was the agent of appellant in the procurement of the signatures of Hall and Warren; but the opinion on the former appeal is against appellee in this contention. The judgment in favor of Hall will be affirmed; that in favor of Warren will be reversed, and the cause, as to him, remanded for a new trial.