First Securities Co., Ltd. v. Story

WILSON, J.,

pro tem.

These are appeals from a judgment in favor of respondents following the sustaining of their demurrers to the second amended complaint without leave to amend.

It is alleged that while Glenoaks, Inc., was engaged in subdividing and selling a tract of land in Los Angeles County, it sought to obtain from appellant’s assignor, Pacific-Southwest Trust & Savings Bank, the sum of $625,000, and proposed to sell its bonds to the bank in the said amount; that the bank agreed to purchase the said bonds upon condition that the payment thereof be guaranteed by the respondents; that for the purpose of inducing the bank to purchase the bonds, the respondents executed an instrument in uniting which appellant asserts is an agreement of guaranty, whereupon the bank purchased the bonds and Glenoaks, Inc., executed a trust indenture securing the same. Default having occurred in the payment of the bonds, this action was commenced to recover from the respondents the amounts alleged to have been guaranteed by them respectively.

The instrument sued upon bears the heading “guarantee note” and .by its terms the respondents promised to pay all sums of money which the bank had theretofore advanced or loaned or might thereafter advance or loan to Glenoaks, Inc., under said bond issue, or upon bills receivable, drafts, or other evidences of indebtedness, “said advances and loans being made at our special instance and request, and upon the faith of this undertaking”. No claim is made by appellant that any amounts were advanced to Glenoaks, Inc., except upon the bonds. If, as maintained by respondents, the document was a direct primary obligation to pay money on demand the action is barred by the provisions of section 337 of the Code of Civil Procedure, while if the appellant is correct in its assertion that the instrument is one of guaranty, the same is not barred.

The agreement referred to reads as follows: “Guarantee Note. In consideration of the sum of Ten Dollars, to us in

[272]

hand paid by Pacific-Southwest Trust

&

Savings Bank 'of Los Angeles, California, the receipt whereof is hereby acknowledged, and for divers other valuable consideration, I/or we jointly and severally promise to pay to the said Trust