First National Bank v. Bradley

The opinion of the court was delivered by Smith, J.: While we have considered all of the numerous assignments of error, reference will be made to but few of them. As to those not mentioned, we hold against the contention of plaintiff in error. Among the notes guaranteed by the First National Bank and turned over to the First State Bank was one of A. Girard for the sum of $3600, for which judgment in the amount of $4495 was rendered against the defendant below upon the guaranty. After the receipt of this note, and about May 13, 1896, the First State Bank canceled it, and it was surrendered to the maker and destroyed. In the place of this [619] Girard paper there were substituted three notes ag. gregating an equal amount, one executed by Royal Matthews for $1000, one by A. E. Dwells for $1100, and one by L. M. Wyatt for $1500 ; and thereafter these latter notes were surrendered, and in their place the bank took $10,000 in bonds of the Western Water & Electric Company. It is clear that the several transactions subsequent to the taking of the Girard note and the substitution of other securities therefor did not operate as a renewal of the same to bring the transaction within the terms of the guaranty made by the First National Bank, so that it could be charged with the amount for which judgment was rendered. The notes subsequently taken were not renewals of the original obligation, for Girard, by the action of the bank, had stepped out and was no longer liable. In the case of Kepley v. Carter, 49 Kan. 72, 79, 30 Pac. 183, the rule as to the liability of guarantors is thus stated: £ ‘ Text-writers and courts have clearly enunciated the doctrine that the liability of a guarantor is not to be extended beyond the precise terms of his obligation. It will not be implied that he agreed to do more than was expressed in his contract. £ It isi now too well settled to admit of doubt that a guarantor, like a surety, is bound only by the strict letter or precise terms of the contract of his principal, whose performance of it he has guaranteed ; that he is in this respect a favorite of the law, and that a claim against him is strictissimi juris.’ ” The note of $5000 executed by R. Ella Matthews was included within the terms of the guaranty, and judgment was rendered thereon against the defendant below for $6153.26. It seems that this note was returned to the First National in March, 1896, and was by the First State Bank credited to bills receivable. In [620] July, 1897, it appeai’3 to have come back into the possession of the First State Bank, and. the amount was sued for in this action. At the time it was transferred back to the First National Bank by the First State Bank, other notes were taken in lieu of it, among them the following : Milliken, $334.05. This was paid or settled, and the guarantor should be relieved from the judgment to an amount equal to the same. The judgment of the court below will be modified, with directions to reduce the amount thereof by striking therefrom the amount stated. The costs in this court will be divided between the parties.