99

At the time Gahren, Dodge & Maltby undertook the work there was an unsettled pay roll due the men who had been employed by Garrettson on the work. This pay roll was for the month of August and until about the 17th of September. Gahren, Dodge & Maltby, under their contract with appellant, retained in their employ the men who had worked for Garrettson, and to whom the money due on this pay roll was going. It will be observed from the foregoing writings that Gahren, Dodge & Maltby agreed that they would furnish not only the cash necessary for paying off Garrettson's unpaid pay"This agreement is based upon the approval of the chief of engineers of the War Department roll for August and September, 1912, but also of the United States government, and also up- all future pay rolls during the progress of on the annulment of the contract of Garrett- the work of construction; and, in addition, son, and the assumption of the same by Citizens' that they would furnish the necessary labor Trust & Guaranty Company of West Virginia, as surety for W. F. Garrettson. It is under and material and perform the work of comstood and agreed by the parties hereto that pleting the construction of the lock and dam. Gahren, Dodge & Maltby shall take care of and For the repayment of the sums advanced by pay the pay roll on this work until such time as the estimates received from the government Gahren, Dodge & Maltby to discharge the exceed the pay rolls paid. Garrettson and future pay rolls, as well as the cost of material, the above writings provide that appellant should turn over to them all amounts received from the government on the Garrettson estimates for August and September, 1912, and all subsequent estimates, and, in addition, that they should receive 10 per cent. of the amount of each of these estimates as a bonus; and, further, that if the actual cost to Gahren, Dodge & Maltby for the material and work required should be less than the government paid, they would make that much more profit over and above the 10 per cent. they would receive as stated; that is if the total cost was less than $55,000, then one-half of the difference between such total cost and $55,000 would

the estimates now due and unpaid, and hereafter Knapp, Secretary. Gahren, Dodge & Maltby, to become due; this ten per cent. (10%) to be by J. W. Butler, Vice President.' paid as and when these estimates are collected. The certified pay rolls and bills for supplies and materials necessary to carry on the work will be paid out of each estimate as it becomes due, and Gahren, Dodge & Maltby agree and guarantee that they will not remove any of their plant from the site of the work without the consent of Citizens' Trust & Guaranty Company of West Virginia. Citizens' Trust & Guaranty Company of West Virginia agrees to sublet the work to Gahren, Dodge & Maltby upon the foregoing terms and conditions, and it is further understood that if the total cost of completion by Gahren, Dodge & Maltby be less than $55,000, then one-half of the difference between that cost and $55,000 shall be paid to Gahren, Dodge & Maltby in addition to the ten per cent. heretofore mentioned.

"In witness whereof Citizens' Trust & Guaranty Company of West Virginia has caused this instrument to be signed in its behalf by R. J. A. Boreman, its first vice president, and its corporate seal to be affixed and attested, by J. H. Knapp, its secretary, this 17th day of September, 1912, and Gahren, Dodge & Maltby have caused its corporate name to be hereunto signed by J. W. Butler, its vice president, this 17th day of September, 1912. Executed in quadruplicate. [Signed] Citizens' Trust & Guaranty Company of West Virginia, by R. J. A. Boreman, First Vice President. Attest: J. H. Knapp, Secretary. [Signed] Gahren, Dodge & Maltby, by J. W. Butler, Vice President."

The second writing, of October 8, 1912, is as follows:

"A-19574. This agreement made this 8th day of October, 1912, by and between Citizens' Trust & Guaranty Company of West Virginia, a corporation, of the first part, and Gahren, be paid to Gahren, Dodge & Maltby as a Dodge & Maltby, a corporation, of the state of bonus. New York, of the second part, witnesseth: That the agreement heretofore entered into by and between the parties hereto, dated the 17th day of September, 1912, for the completion of the W. F. Garrettson contract at dam No. 13, Kentucky river, Kentucky, is intended to and does embrace and include the work and materials embraced and included in a contract dated the 7th day of October, 1912, entered into between Citizens' Trust & Guaranty Company of West Virginia, as contractor, and Major L. H. Rand, Corps of Engineers, U. S. A., contracting officer in behalf of United States government, a copy of which contract and the specifications, therein referred to as amended, is attached hereto.

"This supplemental agreement, with the copy of the contract and specifications above mentioned, to be attached to the agreement between the parties hereto, dated September 17, 1912, for the purpose of more clearly defining and explaining the various things intended to be included in and covered by the agreement of September 17, 1912.

After beginning and continuing the work of construction required of them by the contract evidenced by the two writings referred to from October 8 until about December 31, 1912, Gahren, Dodge & Maltby violated the contract by refusing to proceed further with the work, and removed from the place of work their plant and equipment, which compelled appellant to assume and complete the work of construction. By reason of Gahren, Dodge & Maltby's abandoning their contract and repudiating their obligations, no settlement was ever had with them by appellant.

On the 22d day of October, 1912, and within two weeks after Gahren, Dodge & Maltby, under their contract with appellant, began work on lock No. 13, the company applied, through its vice president, Butler, to James A. Wallace, cashier of the appellee, Farmers' Bank of Estill County, for a loan of $5,000 to pay the Garrettson pay roll for August and a part of September, 1912. Wallace refused to make the loan to Gahren, Dodge &

"In witness whereof the parties have caused their corporate names to be signed hereto and their corporate seals to be affixed and attested by their proper officers thereunto duly authorized this 8th day of October, 1912. This supplemental agreement is executed in duplicate, one copy to be retained by each party. Citizens' Trust & Guaranty Company of West Virginia, Maltby, but, upon being told by Butler that

So he got them over the phone and talked to them at some length, and then he [Butler] told them to repeat the conversation to me. I took the phone and I asked him if that was Mr. Knapp, and he said it was, and I asked Mr. Butler if that was his voice, and he said it man, but Butler said that was his voice, so I was, so I was not acquainted with this gentletold Mr. Knapp that Mr. Butler asked the loan for them to pay off the Garrettson pay roll, and him to confirm that by letter or wire, and he did he told me to let him have the money. I asked both. Mr. Butler signed up the papers at that time, and after I got the letter and telegram I placed it to their [Gahren, Dodge & Maltby's] was that money drawn out of your bank? credit. Q. And by whom and on what account That was to pay laborers and things of that kind; that was supposed to be the Garrettson pay roll."

ed to have told him appellant was considered, let him have it I would let him have the money. good, and if it would say let him have the money he would make the loan; and, following a conversation over the long-distance telephone between Butler and Wallace, on the one part and Knapp, appellant's secretary and treasurer, on the other, Butler was furnished the $5,000 by Wallace. The proceeds of the loan were not, however, placed to the credit of Gahren, Dodge & Maltby on the books of the bank until after Wallace had received a telegram and letter from Knapp transmitted and mailed October 22, 1912. The loan not having been repaid by Gahren, Dodge & Maltby, or by appellant, suit was brought against them for the amount thereof by the appellee bank April 24, 1913. The petition, after setting out the corporate status of the appellant and Gahren, Dodge & Maltby,

contains these averments:

"The plaintiff says that on the 22d day of October, 1912, at the special instance and request of both of the defendants, the plaintiff loaned to them the sum of $5,000, which amount they each and both jointly and severally agreed to pay to plaintiff one day after date with 6 per cent. interest from date until paid, and plaintiff says that said indebtedness is just and due, and that no part thereof has ever been paid, and that no interest thereon has ever been paid, although same has frequently been de

manded."

By the prayer of the petition judgment was asked against each of the defendants for $5,000, with 6 per cent. interest from October 22, 1912, until paid, and for the plaintiff's costs. Although appellee claims to have taken a note for the amount of the loan, it will be observed that the petition does not declare upon the note. The appellant filed its separate answer, specifically denying each of the above allegations of the petition and praying that the petition as to it be dismissed, and for its costs. The reIsult of the trial has already been stated. The single question presented for decision by the record before us is: Was the $5,000 obtained of appellee by J. W. Butler for Gahren, Dodge & Maltby a loan for which appellant became liable? It is not claimed by appellee that appellant is liable to it as surety for Gahren, Dodge & Maltby, but that its liability for the debt sued on is that of a joint obligor; the other obligor being Gahren, Dodge & Maltby. If the evidence found in the record fails to sustain this contention of the appellee, the contention of appellant that its motion for a peremptory instruction should have been sustained must prevail. In order to correctly determine the matter at issue it will be necessary to consider what was said and done at the time of the transaction in question. The testimony of appellee's cashier, Wallace, as to what then occurred is as follows:

"Mr. Butler came in to get this loan to pay up the Garrettson pay roll, and I would not let him have the money, and he told me he was acting for the Citizens' Trust & Guaranty Company of West Virginia, and I told him they

A.

Butler, who was introduced in behalf of appellee, testified as follows:

"Mr. Wallace said he would loan it to the trust company, but not to us. I said, 'We must have the money right away; if we don't get it there will be a riot;' and he suggested calling up the Citizens' Trust & Guaranty Company, and Mr. Knapp answered the phone, and I asked him what we were going to do about paying off the men. I said, 'Mr. Wallace has agreed to loan $5,000 to pay them off.' Mr. Knapp said, Get it for yourself.' I said, "They won't loan it to us; they will loan it to you; and he said, 'All right; get it.' I said, 'Is it all right for me to sign a paper?' He said, 'Yes.' I said, 'You repeat that to Mr. Wallace;' so I got off the phone and let Mr. Wallace get on."

Although Wallace's testimony is in most respects corroborated by that of Butler, it will be observed that neither of them said Knapp gave any assurance that appellant would repay the loan or guarantee its payment. Wallace's testimony goes no farther than to say that, when he informed Knapp Butler asked a loan to pay the Garrettson pay roll, Knapp said to let him have it, following which he asked Knapp to confirm that by telegram or letter, which he promised to do and did, both by telegram and letter. The substance of Butler's testimony is that when he told Knapp Wallace would not let Gahren, Dodge & Maltby have the desired loan, but would make it to appellant, Knapp said, "All right; get it," and that when he asked Knapp if it would be right for him to sign a paper the latter said, "Yes." Wallace does not claim to have heard this statement made by Knapp to Butler, or to have been told by Knapp that it would be right for Butler to sign a paper. It will also be observed that Butler does not claim to have asked Knapp if it would be right for him to sign appellant's or Knapp's name to a paper. The inquiry on this point was limited to whether it would be right for Butler to sign a paper, without indicating the character of the paper.

J. H. Knapp, appellant's secretary and treasurer, being introduced in its behalf, in substance, gave the following testimony:

"Mr. Butler called me over the long-distance telephone and said that he was in Irvine, Ky., that he had arranged with the Farmers' Bank there to borrow $5,000 of money to pay the

*

that the bank would not let him have the money
unless he would agree to send to the bank the
money from the government when we got it,
and I told him that we would be willing to do
that.
* * I talked to Mr. Wallace over
the telephone and reiterated to him the same
statement, that we would send to the bank-
Butler had told us to send to the bank, and we
would do it-this government money whenever
it was received and after it was received. Mr.
Wallace did not ask me over the telephone to
guarantee the payment of the note, or anything

of that sort."

Knapp claimed he had never heard of Wallace's bank prior to that time, and further said:

"Mr. Wallace did not say anything to me about money being borrowed for the guaranty company, and I said nothing to him about it, and I did not ask him to let Gahren, Dodge & Maltby have the money."

The letter is as follows:

"Citizens' Trust & Guaranty Company of West Virginia.

"Parkersburg, W. Va., Oct. 22, 1912. "Farmers' Bank, Irvine, Ky.-Gentlemen: Referring to work on dam No. 13, Kentucky river, which is being completed by this company under contract with the United States government, the said contract being made by reason of this company's liability as surety upon the bond of W. F. Garrettson, a former contractor, and which work we have subcontracted to Gahren, Dodge & Maltby, our understanding is with the latter concern that they are to advance certain funds to meet the pay roll, which sums are to be covered by estimates received by us from the government. We are requested by telephone today to wire you agreeing to turn these estimates over to you till reimbursed for sums advanced Gahren, Dodge & Maltby for purposes of meeting these pay rolls, and we assume, therefore, that they have made arrangements with you for advancing them the necessary cash. Pursuant to this telephonic request, we have just wired you as follows:

when received from government for reimbursing
"Will pay to you estimates on dam thirteen,
funds advanced Gahren, Dodge & Maltby for
pay roll on dam thirteen.

which wire we now confirm.
"Citizens' Trust & Guaranty Co. [of W. Va.]'

Knapp also testified that it was agreed in the conversation between him and Wallace what he said with respect to the loan should be confirmed by a telegram or letter, both of which were on that day, October 22, 1912, sent to Wallace, and it is admitted by Wallace that the telegram was received by him that day, and the letter on October 24th, "Yours truly, W. G. Peterkin, President." two days later. It is patent, therefore, that whatever assurance was made or obliga[1, 2] The above telegram and letter were tion assumed by appellant in the conversa-introduced in evidence by appellee and read tion in question was contained in the tele- and identified by Wallace in giving his tesgram and letter, and further patent that timony. They therefore constitute a part of the subsequent action taken by Wallace in making the loan was based upon the contents of the telegram and letter, for he emphatically states, and more than once repeats the statement, that the $5,000 loaned was not placed to the credit of Gahren, Dodge & Maltby until October 24th, and after the telegram and letter had both been received. If the assurance given or undertaking assumed by appellant as expressed in the telegram and letter had differed in any material respect from the understanding between the parties arrived at over the telephone, the conclusion is inevitable that Wallace, as the representative of the appellee bank and a good business man, would have held up the loan and had a further communication with Knapp. It is the contention of appellant that the only agreement made by Knapp with Wallace and Butler over the telephone was that appellant would turn over or pay to the appellee bank the estimates on dam 13 when received from the government, or the money received upon such estimates from the government, to reimburse it for funds it advanced Gahren, Dodge & Maltby for settlement of pay rolls on dam 13, and the telegram and letter referred to fully sustain this contention. The telegram is in the following words and figures:

"Parkersburg, W. Va., Oct. 22, 1912. "Farmers' Bank, Irvine, Ky. Will pay to you estimates on dam thirteen when received from government for reimbursing funds advanced Gahren, Dodge & Maltby for pay roll on dam thirteen.

appellee's evidence. They were without objection accepted by appellee as confirmatory of the agreement made with appellant through Knapp over the telephone, and were retained by it as evidence of the agreement of the parties. This being true, their relation to this case is the same as would be sustained by a paper written and signed by the parties to evidence an oral agreement previously made, and which, in the absence of a claim of fraud or mistake on its execution, must be accepted as containing the whole agreement or contract made by the parties. It is a well-known rule of law that, where the parties to a contract have deliberately put their engagements into writing, so expressed as to import a legal obligation, without any uncertainty as to the object or extent of their engagement, all previous negotiations and agreements with reference to the subjectmatter are presumed to have been merged in the writing, and with respect to such contract it is a well-known rule of law that, in the absence of fraud or mistake, parol or extrinsic evidence is not admissible to vary, add to, modify, or contradict the terms or provisions of the contract as put in writing. But, as said in 17 Cyc. 599:

"It is, of course, necessary to the application of the rule just stated that there shall be a complete written contract between the parties, the writing being of such a nature as to show that it was intended to evidence their agreement with reference to the subject-matter, and having the element of mutuality necessary to constitute a complete contract, but it is not necessary that the contract shall be in any particular form or that it shall be all contained in one paper, or

vine, Ky., value received, with interest at the rate of 8 per centum per annum after maturity until paid. Indorsers waived demand, protest, notice of protest, and all legal diligence to enforce collection. As per agreement of this date hereto attached, this money advanced is for Aug. and part of Sept. pay roll of W. F. Garrettson at lock 13 Ky. and other small bills, as per telephone with Mr. Knapp.

ing the whole of an agreement between the par- | vine, Ky., five thousand dollars, negotiable and ties which has been delivered, accepted, and un- payable at Farmers' Bank of Estill County, Irder which business has been transacted cannot be varied by parol, even though it is not signed. Nor does the fact that a contract originally rested in parol and was reduced to writing only after being partly performed preclude the application to the writing of the rule excluding parol evidence to vary or contradict the writing, for the parol agreement is merged in the written one.' Nat. Mutual Benefit Ass'n v. Heckman, 86 Ky. 254, 5 S. W. 565, 9 Ky. Law Rep. 525; Vansant v. Runyon, 44 S. W. 949, 19 Ky. Law Rep. 1981; Gaither v. Dougherty, 38 S. W. 2, 18 Ky. Law Rep. 709; Farmer v. Gregory, 78 Ky. 475; Voss v. Schebeck, 76 S. W. 21, 25 Ky. Law Rep. 481.

writing:

"Citizens' Trust & Guaranty Co.,
"Of Parkersburg, West Va.
"Gahren, Dodge & Maltby, Agent,
"J. W. Butler, V. P."

"Irvine, Ky., Oct. 22/12. the Farmers' Bank of Estill Co. ($5,000.00) "This is to certify that I have borrowed from five thousand dollars for the Citizens' Trust & Guaranty Company of Parkersburg, West Virginia, to pay W. F. Garrettsons pay roll for conversation over telephone with Trust Co. and Aug. and part Sept. and other small bills as per this day confirmed by wire to said bank.

For some reason not explained by Wallace Neither the telegram nor letter contains or Butler, the former also caused the latter any intimation of an agreement or undertak- to execute to him the following additional ing on the part of appellant to assume the payment to appellee of the $5,000 loaned by it to Gahren, Dodge & Maltby; nor does either contain any statement or admission of an understanding on the part of appellant that the loan of the $5,000 had been made to it. On the contrary, the contents of both clearly indicate a mere understanding on the part of appellant that the loan of the $5,000 was made by appellee to Gahren, Dodge & Maltby, and that appellant was only asked to turn over to appellee, in behalf of Gahren, Dodge & Maltby, the estimates furnished by the government from time to time upon the work done on dam 13, or the money received on such estimates, that they might be applied to the payment of the loan of $5,000 made Gahren, Dodge & Maltby by appellee, until discharged.

It will further be observed that neither the telegram nor letter manifests any agreement or understanding on the part of appellant or Knapp that appellant was to execute or become a party to a note or other writing to be taken by appellee for the loan; nor does either contain any authority to Butler to execute such a paper or sign appellant's name thereto. In this connection it should be remarked that the understanding of appellant, expressed in the telegram and letter, which Knapp testified is the only agreement made by him with Wallace and Butler over the telephone, is in accordance with the contract it made with Gahren, Dodge & Maltby, a provision of which required it to turn over to Gahren, Dodge & Maltby, to reimburse them for moneys they were to advance on the pay rolls and for supplies, not only the government estimates, or moneys received thereon, in arrears on the work done on dam 13 by Garrettson, but also such estimates or moneys as appellant might receive for the work of Gahren, Dodge & Maltby; and, as we shall presently see, there is no contrariety of evidence as to the fact that appellant has fully complied with the above provision of its contract with Gahren, Dodge & Maltby. The note Wallace claims to have taken from Butler October 22, 1912, is as follows: "$5,000.00

Irvine, Ky., Oct. 22, 1912. "One day from date we promise to pay to the order of Farmers' Bank of Estill County, Ir

"Citizens' Trust & Guaranty Co. "Gahren, Dodge & Maltby, Agents, "By J. W. Butler, V. P."

If the execution of the note was unauthorized by appellant, the execution of the above writing by Butler was also unauthorized. As neither Wallace nor Butler claims that their conversation with Knapp over the telephone, or any memorandum thereof, was at the time or subsequently put in writing, the statement in the note that it was executed "as per agreement of this day, hereto attached," must either refer to the independent writing given by Butler or the telegram that day received by Wallace from Knapp. any event, the agreement expressed by the telegram and in the letter from appellant of the same date must be regarded as the one made between Knapp, Wallace, and Butler over the telephone, for both were sent at Wallace's request to confirm what had been agreed on by telephone, and were without objection received and accepted by both Wallace and Butler as confirmatory of the telephone agreement.

In

As to the signing of appellant's name by Butler to the note and writing, Knapp testifies that Butler in so doing acted without authority. Butler alone claims that it was authorized by Knapp, but, as Knapp's testimony as to the agreement made by telephone is corroborated, and that of Butler as well as Wallace contradicted, by the contents of the telegram and letter, we are constrained to accept the denial of Knapp that he had authorized the signing of appellant's name to the note. Moreover, it appears from other evidence in the record, which is uncontradicted, that Knapp himself was without authority to sign appellant's name to the note; such authority, under its corporate powers and by-laws, being vested in its president and vice president, and not in its secretary or treasurer, both of which positions Knapp

[4] Appellant's compliance with the agree-lant, as asked by the latter, should have been ment made with appellee by telephone and expressed in its telegram and letter to it is equally free from doubt. There is no contrariety of evidence as to the fact that it paid to appellee for Gahren, Dodge & Maltby every estimate and all moneys it received from the government for work on dam 13. Appellant did not pay appellee the money on estimates for the work of August and part of September, 1912, done by Garrettson on dam 13, for those estimates and the money

thereon have never been furnished or paid (Court of Appeals of Kentucky.
by the government and are yet withheld for
future adjustment. But, independent of the
Garrettson estimates, appellant paid to ap-
pellee for Gahren, Dodge & Maltby, from
October 12, 1912, down to the time Gahren,
Dodge & Maltby threw up their contract and
abandoned work on dam 13, on estimates
from the government, about $11,000; and,
as the sums thus paid were placed to the

1. GUARANTY 91-CONTRACT-SUFFICIENCY
OF EVIDENCE.

In an action against a guarantor of notes, evidence held insufficient to support the defense that defendant's guaranty was written above his indorsement in blank without his knowledge or consent.

[Ed. Note. For other cases, see Guaranty, Cent. Dig. § 104;. Dec. Dig. 91.]