Cole v. Merchants Nat. Bank.

O. C. C. 447 (3 N. S. 428), and it is said in the syllabus in that

case:

"A contract of guaranty like any other contract will be given that construction and effect which best accords with the intention of the parties as manifested by the terms thereof, considered in connection with the subject-matter to which it relates, and the circumstances accompanying the transaction."

Something is said distinguishing between concomitant circumstances and subsequent circumstances-the use that may be made of each class of circumstances. I read the fourth clause of the syllabus:

"Subsequent transactions not amounting to a modification of the contract, and not part of the concomitant circumstances, can not be considered as a part of the circumstances under consideration in formulating the terms of the contract, and hence can not be looked to for the purpose of ascertaining the sense in which or the intent with which such terms were used; but subsequent transactions under or in pursuance of the contract, or with the contract in view, may be looked to for the purpose of discerning the interpretation the parties have put upon doubtful provisions."

its

The matter is discussed at some length and these Ohio authorities are cited and referred to.

We think there is a great deal of sound legal philosophy in the extract quoted by counsel for Newton from 4 Wigmore, Ev., Sec. 2407, p. 3499:

"The truth had finally to be recognized that words always need interpretation; that the processes of interpretation inherently and invariably mean the ascertainment of the association between words and extrinsic objects; and that this makes inevitable a free resort to extrinsic matters for applying and enforcing the document. Words must be translated into things and facts. Instead of the fallacious notion that there should be only interpretation when it is needed, the fact is that there must always be interpretation. **** Once freed from the primitive formalism which views the document as a self-contained and self-operative formula, we can fully appreciate the modern principle that the words of a document are never anything but indices to intrinsic things, and that therefore all the circumstances must be considered which go to make clear the sense of the words that is, their associations with things."

The allegations of the purposes for which the guaranty was

Lucas County Circuit.

given by Mrs. Cole, together with the allegations that "it was not intended or contemplated, either by said bank or by said Lucy A. Cole that such guaranty should apply to any loans made by said bank to said F. E. & G. H. Cole, or either of them, other than loans made for and on account of work done under said contracts with the said city of Toledo," should not be construed too narrowly. We think that, fairly and reasonably construed, in connection with the other allegations which have been quoted, these allegations amount to saying that the guaranty was not to apply to any other transactions or loans; that it was so understood by the parties; that they contemplated nothing else; that they had nothing else under consideration; that it was not understood or agreed upon between Mrs. Cole and the bank that her guaranty should extend to other transactions, but it was understood and agreed that the guaranty should be limited to the Toledo transactions.

Questions of evidence were argued in the appeal case, where evidence upon that issue was heard under an arrangement that the case should be so tried and a demurrer to this defense in the appeal case should afterward be considered. The questions of evidence debated there, have no bearing upon the questions presented here, upon this record, and we do not mean to intimate, any opinion as to the degree of certainty in the evidence that would be required to bring about the result sought by the plaintiff in error. We do not mean to intimate any opinion as to the construction that should be put upon this guaranty, in the light of the allegations, supposing them to be true-I mean the allegations of the circumstances surrounding the transactionsbut we think enough is stated to authorize the introduction of evidence of such purpose and intent as is averred, and of such circumstances as are set forth.

We hold that the court erred in striking out these averments and in refusing to allow proof of the circumstances stated in the pleading, and this error was clearly prejudicial, and, on that account, the judgment must be reversed.

In the appeal case this same question is presented by demurrer to the answers of the administrator and heirs of Lucy A. Cole, where these same allegations are set forth as a second

Cole v. Merchants Nat. Bank.

defense, and by demurrer to the amended answer of John T. Newton, where the same matters are set forth; and it follows from what we have said that our holding in that case will be that the demurrer should be overruled; and we now proceed to decide that case as though that defense were in, but we do not find it necessary to consider it, or express an opinion upon the facts adduced in support of that defense; leaving that matter to be tried out in the court of common pleas in the law case.

We come now to consider the case of Merchant's National Bank v. John T. Newton, which is the appeal case, and presents many interesting questions, some of which appear to be rather close, but we are compelled to pass over them rapidly and can not discuss them fully. The action was brought by the bank against John T. Newton, Lucy A. Cole and others, to set aside a conveyance of certain property in the city of Toledo, made by Lucy A. Cole to John T. Newton on September 2, 1903, and filed for record on February 2, 1904.

The petition sets forth that Mrs. Lucy A. Cole was indebted to the bank on this guaranty in the sum of $48,000, at the time this conveyance was made, and it charges that the conveyance was made in fraud of the rights of the plaintiff. The petition states:

"Plaintiff is informed and believes and charges the fact to be that at the time of the execution of said deed said Lucy A. Cole was indebted to said John T. Newton for a large sum of money, the exact amount of which is to plaintiff unknown, and that if any consideration passed from the said John T. Newton to Lucy A. Cole for said conveyance, which this plaintiff does not admit but expressly denies, said consideration was the then existing indebtedness of the said Lucy A. Cole to the said John T. Newton, and that said John T. Newton was not a bona fide purchaser of said premises for a valuable consideration.

"The value of the premises conveyed by said deed over and above the mortgaged indebtedness thereon was and is largely in excess of the amount then and there owed by said Lucy A. Cole to said John T. Newton."

The indebtedness beside that to Newton was about $23,000, upon a mortgage in favor of the Security Savings Bank & Trust Co. The petition proceeds to allege that the sons of Lucy A. Cole were in failing circumstances and on the verge of bankruptcy

Lucas County Circuit.

at the time this conveyance was made to Newton; that this conveyance carried to Newton all of the real estate of which Mrs. Cole was then the owner and that she had no personal property except her household goods, and then follows this:

66

'Said deed was executed and delivered by said Lucy A. Cole to said John T. Newton in contemplation of insolvency, and with design to prefer the said John T. Newton to the exclsion of all her other creditors, and was made by her with intent to hinder, delay and defraud her creditors, all of which was well known to said John T. Newton."

After this petition was filed Lucy A. Cole departed this life and Louis M. Cole was appointed her administrator. Louis M. Cole, ad administrator, and her four sons, including said Louis M. Cole, being all her heirs at law, join in an answer. John T. Newton also answers. The answers are substantially alike-I don't know but exactly alike. The first part of the answer denies some material allegations of the petition, and then is set forth the second defense, which was considered in the error case, and then a third defense, as follows:

"Further answering, these defendants say, that on the first day of June, 1904, the plaintiff herein, the Merchants National Bank of Toledo, Ohio, filed its petition in the United States district court for the northern district of Ohio, western division, against the said Lucy A. Cole, and alleging the nature and amount of its claims against her as follows, to wit:

"Said claim is founded upon contracts of guaranty whereby the said Lucy A. Cole agreed to and did, guaranty the payment of all notes of F. E. and G. H. Cole held by your petitioner, the Merchants National Bank of Toledo, Ohio, also all renewals of the same, and any new loans made to either the said F. E. and G. H. Cole by said bank, and under said contracts of guaranty the said bank holds the notes of said F. E. and G. H. Cole evidencing an indebtedness as of forty-seven thousand nine hundred ($47,900.00) dollars and interest.

"Said petitioner in bankruptcy further alleged that:

"Your petitioner further represents that said Lucy A. Cole is insolvent and that within four months next preceding the date of this petition, the said Lucy A. Cole committed an act of bankruptcy in that she did, heretofore, to wit, on September 2, 1903, convey and transfer all her real estate, with intent to hinder, delay and defraud her creditors. That on said day she transferred, while insolvent to prefer said creditor over her

Cole v. Merchants Nat. Bank.

other creditors; that said transfer and conveyance was made by a warranty deed, which said deed was first filed in the recorder's office in and for said Lucas County, Ohio, on February 2, 1904.

"The prayer of said petition is to the effect that said Lucy A. Cole may be adjudged by the court to be a bankrupt within the purview of the national bankruptcy law. The said Lucy A. Cole filed an answer to said petition putting in issue the said above mentioned allegations thereof.

"This defendant further says that the guaranty referred to in said bankruptcy petition, and the deed referred to in said bankruptcy petition, are the same guaranty and deed referred to in the petition herein.

"After the filing of said petition in bankruptcy, and prior to December 22, 1904, the said Lucy A. Cole died, and on said Lucy A. Cole died, and on said last mentioned date, by order of the said district court of the United States for the northern district of Ohio, western division, the action was revived in the name of Louis M. Cole, as administrator of the estate of said Lucy A. Cole, he having been prior to that date duly appointed and qualified as such administrator by the probate court of Lucas county, Ohio.

"Afterwards, to wit, at the December term of 1905, of the said district court of the United States, northern district of Ohio, western division, final judgment was entered by said court in said cause, the court finding and adjudging that the facts set forth in said petition in bankruptcy were not proved, and that the said Lucy A. Cole was not a bankrupt, as alleged in said petition, and that said petition was dismissed with costs.

"From said judgment the said petitioning creditor, plaintiff herein, the Merchants National Bank of Toledo, Ohio, appealed to the United States circuit court of appeals for the sixth circuit, and on January 8, 1907, the said United States circuit court of appeals, sixth circuit, affirmed said judgment.

"This answering defendant further says that the only issues involved or decided in said bankruptcy cause were:

"First. Was Lucy A. Cole insolvent; that depended entirely on whether she was indebted to said bank by reason of said guaranty, it being admitted that the said F. E. and G. H. Cole were indebted to said bank, and that if said Lucy A. Cole was liable to said bank on said indebtedness by reason of said guaranty, then she was insolvent.

"Second. Did she convey her said real estate to said John T. Newton with intent to hinder, delay and defraud her creditors; or did she while insolvent, transfer her said property to