
    SCHANZENBACH, Respondent, v. STOLLER et al., Appellants.
    (161 N. W. 329.)
    (File No. 3931.
    Opinion filed February 16, 1917.)
    1. Guaranty — Indemnity—Guaranty Against Encumbrances — Pur- . chaser’s Payment as Consideration.
    
      In a suit by a land .purchaser, against defendants who guaranteed payment of encumbrances upon, and to save plaintiff harmless from the existence thereof upon land purchased by him, the consideration of the contract being that plaintiff should pay the full purchase price of the land, and which contract was made at the time and as part of the contract of sale, and induced the sale, held, that such guarantee contract was supported by sufficient consideration, in view of Civ. Code, Sec. 1971, providing that where a guaranty is entered into at the same time with the original obligation, or with the acceptance of the latter by the guarantee, and forms with that obligation a part of the consideration to (him, no other consideration need exist.
    2. Damages — Guaranty Against Hand Encumbrances — Measure of Damages, Value of Hand as.
    In a suit by a land .purchaser, for damages under a guaranty against encumbrances upon the land, ■ which land was fully paid for, held, that the measure of damages was the value of the land at the expiration of the year of redemption under a '■foreclosure of the mortgage encumbrances; such encumbrances having been greater than the value of the land; that if 'the encumbrances had been less in amount than the value of the land, the measure of damages would have been the amount of indebtedness paid by the plaintiff to protect his title. So held, in view of Civ. Code, Sec. 2329, providing that no person can ■ recover a greater amount of damages for breach of an obligation than he could have .gained by full performance on both sides.
    3. Evidence — Bes Gestae — Band Sale, Guaranty Against Encumbrances — Who Must Guarantee, Declaration of Plaintiff's Agent, Competency.
    In a suit for breach of contract -.guaranteeing land' conveyed to plaintiff against encumbrances, statements of plaintiff’s attorney, made to the vendor, that he would advise plaintiff, vendee, to purchase the land if he could get anv two of the names stated in' the original • contract of sale, to sign the contract guaranteeing the payment of encumbrances, were competent, and not hearsay, and 'were .proper rebuttal; such evidence being part of the res gestae of the making and entering into the contract sued upon, and tending to disprove testimony of a defendant that other -persons by agreement with -plaintiff were to sign the contract.
    Whiting, J., dissenting.
    Appeal from Circuit Court, Walworth Count)''. Hon. Joseph H. Bottum, Judge.
    Action by Daniel Schanzenbach, against Jacob Stoiler and others, to recover upon a contract of indemnity against encumbrances of land purchased- by palintiff. From a judgment for plain-tiff, and from an order denying a new trial, the .named de-fandant and another appeal.
    Affirmed.
    
      Carpenter & Morrison> and H. G. Fuller, for Appellants.
    
      Brown & Smith, for Respondent.
    (1) To point one of -t'he opinion-, Appellants cited: 27 Cyc. 1359, mote 76.
    Respondent cited: Callender v. Bdim-iso-n, 8 S. D. 81, 65 N. W. 425; Stout v. Fo-lg-er, (Iowa) 11 Am. Rep. 138; Sticher v. -Cox, (Neb.) 72 N. W. 848; Locke v. Plomen, (Mass.) 41 Am. Rep. 199; Civ. Code, Sec. 1224.
    (2) To point two. of the -opinion, Appellants -cited: Lowe v. Turpie, (Ind.) 37 L. Ri A. 241; Code Civ. P'roc., Sec. 662.
    Respondent cited: 9 Cyc. 698; Callender v. Bdmison, S S. D. 81, 65 N. W. 425; Furnas v. D-urgin, (Mass.) 20 Am. Rep. 34i-
    (3) To-point three of the opinion, Respondent cited: Osborne v. Strin-gh-am, 1 S. D. 406, 47 N. W. 408; Jones -on Evidence, (2d ed.) paragraph ; En-cy. of Evi., Vol. 11, p. 292, paragraph 2; Vol. 9, p. 374, Paragraph C.
   McCO'Y, J.

In- March, 19-11, plaintiff was ab-o-ut to purchase a certain portion of a quarter section of l'and from -defendant Haynes. The quarter section- w-as -covered by incumbrances in excess of the value of that portion sought to be purchased by plaintiff. The agreement between plaintiff -and Haynes -was that the portion of the quarter section should be deeded to plaintiff free and clear of all incumbrances. Plaintiff paid the frill purchase price of' $2,200, and -accepted a deed from Haynes reciting that the portion of the quarter section thereby conveyed was free from incumbrances. As a -matter of fact the land so- conveyed to plaintiff was not free from incumbran-ces1. In -order to -indiuce plaintiff to accept said land- and pay the full punchase p-rice therefor, the defendant Pl-aynes an'd the .appellant, S-toller -and Sp-iry, entered into a written contract guaranteeing and indemnifying plaintiff from any loss because of the existence of said- incum-brances. The Akaska Clay Works Company had some interest in-the -other portions of -s'ai-d quarter section, of -land, arid was -interested in the payment of said incumbrances. ’ Plaintiff alleged said guaranty contract in his complaint .and a breach thereof consisting of the 'defendants’ failure to pay said incumbrances anil in permitting a mortgage to be foreclosed and said land sold at foreclosure sale and the time of. redemption to- expire, by. reason of' which plaintiff was deprived of his title and ownership to said land so conveyed to him. Defendants Stoller and Spiry answered, alleging that they executed, signed, and delivered said guaranty contract to plaintiff upon the understanding and intention of making the Alaska Clay Works Company., a corporation, the party of the first part; that Haynes and plaintiff falsely represented' to defendants Stoller and Spiry that said contract was to be binding and made by the said corporation, and falsely and1 fraudulently represented to them that said contract was' to be signed by all the officers and directors of said corporation, and that these defendants, Stoller and Spiry, signed said contract Ibeiieving the same to be the contract of said corporation, and1 signed by them as officers thereof, and that they signed said contract with the understanding that -all said officers and directors would sign the same; that said contract was not signed by all the said officers and ■directors; that no delivery of said contract was had; and that the same was void, without consideration, and not binding on them. There was verdict and1 judgment in favor of plaintiff, and the defendants Stoller and' Spiry appeal.

[i] Appellants’ first contention is that the complaint failed to state a cause of action against them, and cite Lowe v. Turpie, 147 Ind. 652, 44 N. E. 25, 47 N. E. 150, 37 L. R. A. 241, as sustaining their contention. We are of the view 'that such contention is not well grounded, and that the 'decision cited has no' application' to a contract like the one alleged in the complaint in this action. The contract considered) in Lowe v. Turpie was one to loan money with, which to pay incumbrances. The contract in question is one guaranteeing die payment of incumbrances: and saving-plaintiff harmless from the existence thereof; the consideration of said contract being that plaintiff pay to Haynes $2,200, the full purchase .price for land contracted to; be conveyed to plaintiff free from incumbrances. This contract to guarantee was made at the tíme and as a part of the original contract of sale and of which it formed a part, and was the inducement that brought about the sale and conveyance of the land, and the acceptance thereof 'by plaintiff, and needed no other independent consideration. 'Section 1971, Civ. Cade.

Appellants moved1 for a directed verdict at the close of the evidence on the ground that plaintiff failed to' show by any competent evidence any damages; that the contract was1 void and without consideration; that the contract, if delivered, was delivered conditionally; that the condition had never been complied with; and that said contract never went into effect. To the overruling of this motion appellants excepted, 'and1 now urge such resulting as error. We are of the opinion that this motion was properly overruled. The appellants contend .that there was no competent evidence upon which to base damages. This same proposition was1 presented by exceptions to the instructions to- the jury. The only proof of damages was that of the value of the said land! conveyed to plaintiff at the end of the year of redemption, at which time plaintiff was divested of 'his title under the foreclosure sale by reason of the failure of appellants to pay the said incumbrances guaranteed 'by them to' be paid. We are of opinion, under the circumstances of this case, that this evidence furnished the proper measure of damages. If the incumbrances had1 been less in amount than the value of the land conveyed to plaintiff, and plaintiff had paid the same in order to protect his title, then the rule or measure of damage would have 'been the amount of the indebtedness so paid by plaintiff; but In a case like this, where the indebtedness was almost double the value of the land, 'and -where plaintiff could' not protect his title and loss without the payment of the entire incumbrances, and where the amount of the incumbrances' would not represent the amount of -plaintiff’s loss' or damage, the value of the land at the time plaintiff was 'divested of title was his true measure of damage. The .measure of damage here applied was dearly within 'the provision of section 2329, Civ. Code, providing that no person can recover a greater amount of 'damage for the breach of an obligation, than he could have gained by full performance on both sides. If defendants had fully performed the contract sued upon, plaintiff would..have gained only the value of-the-land conveyed to -him. Plaintiff’s only lo's's was the title .and1 ownership of. the land .free and clear of all incumbrances.- •

Appellants also urge as error the overruling of. an objection to and the reception in evidence of certain testimony of cue Brown, a witness called on behalf of plaintiff. From the record' it appears that Brawn is ail attorney and was representing plaintiff in relation to the purchase and1 conveyance of said land from Haynes. One of the issues' raised by appellant’s answer was that other persons had also agreed to 'execute said guaranty contract, and that appellants only signed said 'contract upon the understanding that such other parties would also sign the same. The plaintiff controverted this claim of appellant, and there was sharp conflict in the testimony concerning this issue. There was evidence tending to show that the contract sued on was drawn up by Brown, without having seen appellants; that the contract was delivered to Haynes 'by Brown. While Brown was on the witness stand he was aslced the question:

“You may state what you said to Haynes in regard to Exhibit A [the contract sued on] at the time you delivered it to him, and who you were representing at that time.”

The question was 'objected to as hearsay, incompetent, and not proper rebuttal. The objection being overruled, the witness answered, in substance, that he told Iiaynes that he would advise Sohanzenbaoh, whom witness was representing-, to close his deal with Haynes if he could get any two of the names stated in the original contract to sign same, and ‘that without he did that he would advise Schanzenbaeh not to accept the contract. We are of the opinion that this evidence was competent, and not hearsay, and was proper rebuttal. This evidence was clearly a part of the res geste of the making- and entering into the contract sued upon, and tended to disprove the testimony of appellant to the effect that other persons, by agreement with plaintiff, were to sign said contract. Wigmore, Ev. 1770, 1772, and 1777.

Finding- no error in the record, the judgment 'and 'order appealed from are affirmed.

WHITING, J.

I am unable to agree with that portion of the majority opinion relating to the admissibility of the testimony of the witness Brown.- I do not believe that the statements by Brown to Haynes are in any respect a part of the res geste, the entering into the contract sued on, 'and therefore admissible as against the 'appellants. I can find nothing in the sections of Wig-more on Evidence cited in the majority opinion that upholds such opinion. To get a clear understanding of the cuestión presented it is necessary to . know the circumstances surrounding- this transaction owing to some business transaction that had formerly been bad between Haynes and other parties, including appellants, appellants, 'together with one other party, had entered into a written contract with Haynes' whereby they 'had agreed' to save Haynes harmless from certain mortgages that stood of record against a tract of land a part of which belonged to Haynes. These mortgages remained unpaid at the time that Haynes made his deal with plaintiff by which he was selling to plaintiff his part 'of said land, and, in order to1 consummate such sale without the necessity of Haynes’ paying- off these mortgages, Haynes and plaintiff agreed that, if Haynes and the parties- to the other contract 'would guarantee to- save plaintiff harmless from such mortgages, plaintiff would purchase the land' of Haynes. It was then that Brown, as the attorney for plaintiff, drafted this guaranty contract, and, when he turned the same over to Haynes for Haynes to get the proper parties to execute same, he advised Haynes ’that plaintiff would be satisfied if Haynes procured two of said parties to sign the guaranty with him. It .is this statement to Haynes that was improperly -received in evidence. The majority cite'sections 1770, 1772, and 1777, Wigmtore-on Evidence. The first section treats of “Utterances Constituting a Part of -the Issue.” That the facts of the present c-ase do n-'o-t bring it under t-his subdivision 'seems to me too -clear -to- require any discussion to elucidate same. Sections 1772 and 1777 treat of “Utterances 'Constituting a Verbal Part of an Act.” In announcing what will come under this subdivision, Wigmore states there are four -limitations :

“(1) The conduct to be characterized by the words must be independently material to the issue; (2) the conduct must be equivocal; (3) the words must merely aid in giving legal significance to the conduct; (4) the words must accompany -the conduct.”

Measured by these rules, it seems clear to me that the statement of Brown to Haynes comes far from being- a verbal .part of the execution -and delivery of the instrument as the legal contract of appellants — the real question -in issue. To be a part -of the res gestae — the execution and delivery of the contract of guaranty by appellants — the statement must needs be the statement of appellants, or so made in their presence as to be presumed to be explanatory of their acts. But even outside of that fact it is clear that such statement did not accompany any act of appellants, nor was the act of appellants, the said execution and delivery of the contract, in any respect equivocal. What they did was a complete legal act. Wigmore says :

“The utterance must * * * exactly accompany the other conduct; for otherwise it is no part of the act and can serve merely as an ordinary hearsay assertion, of w'hat was done.” Section 1776.

And:

“The conduct must be equivocal or incomplete as a legal act before the utterance can he admissible.” Section 1774.

If appellants, after signing their names to this- contract, had handed the same to some stranger thereto who had given it to plaintiff, and', upon action being' brought, appellants had denied a legal delivery, any statement made bjr appellants at time of parting with possession of the instrument and which tended to show their prtrpose in. handing -same to such stranger would come directly under the limitations prescribed by Wigmore. The conduct of parting with possession of the instrument would of itself be “independently, material' to the issue”; it would be “equivocal” being “incomplete as a legal • act”; the statement would “merely aid in giving legal significance to the conduct” otherwise “incomplete”; and the words would1 “accompany the conduct.” If the mere delivery of the unexecuted- contract by Brown to Haynes had 'been of itself “independently material to the issue” then before the court, and such delivery had been “equivocal,” and the words of Brown such as would1 give “legal significance” to such “equivocal” delivery, we would then have a case where Brown’s statement would be res gestae because such statement did, as' a matter of fact, “a-comp-any such act.” But whether Brown delivered the instrument to Haynes, or whether Haynes prepared it himself, or whether it was prepared by appellants, was in and of. itself absolutely. immaterial to ¡the issue before the court — it threw no. light upon the question of appellants’ liability.■ It was not the delivery of the instrument that was “independently material,” but, upon- the other hand,-.'it was -the statement which, if' material at all, was material regardless and • independent of the act of delivering- the instrument to Haynes, and would have -beer, just as material if in no manner connected .with either the drawing or delivery of the instrument. It must be borne in mind that, in case of word's that are a part of the .res geste, they must be a part of the conduct or act, and1 neither the a'ct is legally complete .without the words nor the words material except in connection with, and1 as they destroy the equivocal quality of, the act.

I am, however, unable to believe that the mere fact that this conversation got before'the jury could have misled it in its determination of whether appellants understood that their liability did not depend upon there being other signers to such guaranty. I therefore concur in the result.  