Simeon Benjamin, Plaintiff In Error v. Oliver Hillard and Moses Mordecai

Citation23 How. 149,64 U.S. 149,16 L.Ed. 518
PartiesSIMEON BENJAMIN, PLAINTIFF IN ERROR, v. OLIVER B. HILLARD AND MOSES C. MORDECAI
Decision Date01 December 1859
CourtU.S. Supreme Court

THIS case was brought up by writ of error from the Circuit Court of the United States for the southern district of New York.

Hillard & Mordecai, the plaintiffs below, of Wilkesbarre, in Pennsylvania, made a contract with Hopkins & Leach, of Elmira, New York, dated September 11, 1847, under seal. Benjamin guarantied the performance of this contract, as follows:

'For value received, I hereby guaranty the performance of the within contract on the part of Hopkins & Leach; and in case of non-performance thereof, to refund to Messrs. Hillard & Mordecai all sums of money they may pay or advance thereon, with interest from the time the same is paid.'

The action was brought upon this guaranty, which resulted in a verdict for the plaintiffs, damages six thousand dollars, and $1,869.15 costs. A motion was made for a nonsuit, which was overruled. The particulars of the case are stated in the opinion of the court.

It was submitted on printed arguments by Mr. Tracy and Mr. Noyes for the plaintiff in error, and by Mr. Goddard for the defendants.

The counsel for the plaintiff in error made the following points:-

I. The court erred in the construction of the defendant's agreement.

1. It was the contract of a surety, which is to be taken strictissimi juris, and is not to be enlarged by a liberal or loose interpretation.

Leggett v. Humphreys, 21 Howard, 66, 76.

Miller v. Stewart, 9 Wheaton, 681, 703.

Wright v. Johnson, 8 Wendell, 512, 516.

2. The motive and design of the writing was to protect the plaintiffs against the loss of the money they were to advance. It therefore guarantied a performance of the contract by a delivery of the articles, and that if they were not delivered the money should be refunded with interest.

3. That it referred to such a performance, or such a nonperformance, is evident from the stipulation that provides for a repayment of the entire advances with interest, and not for any partial damages. This suretyship is for such a performance only, and is answerable only for a failure in that respect. Under this agreement, if the articles should be made and accepted, and the business settled by the principals, the surety has no liability.

4. There is nothing in the surety's agreement which binds him to answer for the breach of any warranty which the principals have contracted to make. The sealed agreement binds the manufacturers to warrant the engine capable of driving six run of stones, but the guaranty has no connection with such a prospective warranty. The surety's obligation must be and is definite; he is liable at once, or never; the articles are delivered, or they are not; if delivered, he is clear; if not delivered, he is at once liable to refund the money advanced, but nothing else.

5. The essential idea of having the money refunded in gross, apparent on the face of the paper, shows that it was a total non-performance alone which should charge the surety, and the mention of that sum necessarily excludes all other liability.

6. The surety cannot be supposed to have intended to assume an indefinite future liability for ultimate defects in articles accepted and used by the plaintiffs, and as to which the defendant was wholly ignorant.

7. The interpretation adopted by the charge renders three-fourths of the writing senseless and inoperative. The writing is in five lines, and all below the word 'Leach,' in the second line, is deprived of all force and effect. This passage is manifestly intended to limit and define the extent of the obligation of the surety, and it performs that office, and no other.

II. The undertaking of the defendant was astisfied by the performance of Hopkins & Leach's contract.

1. The delivery and acceptance of the engine, &c., the giving Hopkins & Leach credit therefor, the settlement of the account, and payment of the balance, and the giving of a receipt in full, were acts of the plaintiffs, determining and proving a performance of the contract. The contract for the engine, boiler, and appurtenances, constituted one item at a set price; and the delivery of the whole completed that part of the contract, and the charging, crediting, and allowing of the same as done, and settling for the price, closed that part of the contract.

2. The receipt which went forth from the plaintiffs was justly relied upon by the defendant as a full discharge of the contract; and he acted upon it in relinquishing valuable securities which he held for his indemnity. The plaintiffs are therefore estopped from denying the performance so evidenced by their receipt.

Broom on Common Law, 841, 842, (91 L. L. O. S.)

3. The defendant being a mere surety, and not a principal in the contract, was ignorant of the transaction, and knew not whether the contract was performed or broken. He was informed and assured of its performance by the receipt, and that became his full voucher for treating the performance as established.

4. The making of the last payment was a determination that the contract was 'fully completed;' for it was only to be had 'when the contract is fully completed.'

5. The case shows that the settlement of the plaintiffs with Hopkins & Leach was made December 18th, 1848; before the mill was fully tried, which was not done till December 25th, 1848.

Thus the plaintiffs waived the right to test the work by a full trial, and proceeded to a closing of the contract at once. After that, they could not resort to the surety, on the ground of non-performance.

6. The plaintiffs treated this settlement with Hopkins & Leach as a determination of the suretyship. Thus, on the 27th December, 1848, being nine days after the settlement, they gave notice to Hopkins & Leach of the failure of the engine; but they never gave any notice to the defendant till the last of May, 1849. The idea that the defendant owed them any undischarged obligation was an afterthought, occurring five months subsequently to the discovery of the failure of the engine.

III. The defendant's obligations as surety were discharged by the acts and agreements of the plaintiffs and Hopkins & Leach.

1. The time of performance by Hopkins & Leach was enlarged. The contract required them to deliver the articles at Wilkesbarre, by the first navigation of the ensuing spring, which would be in March, 1848. The new agreement, to which the defendant was not a party, gave them till the third rise of water in October, to complete the delivery. Such new agreement was made upon a good consideration, and was valid and binding. It made a permanent and material change in the contract.

The surety thereupon ceased to be liable. The identity of the contract was gone. He was not subject to be made liable thus for a longer period, with increased risks, and larger amounts of interest in case of being charged to refund advances.

Whether the change was for the benefit of the one party or the other, or both, it was, in either case, a change of the contract, and discharged the surety.

Miller v. Stewart, 9 Wheaton, 681, 703.

Burge on Suretyship, 203, 206.

Pitman on Pr. and Surety, 208.

Theobald on Pr. and Surety, 154.

Parsons Mercantile Law, 67.

Brigham v. Wentworth, 11 Cushing, 123

Dickerson v. Commissioners, 6 Indiana, 128.

Hunt v. Smith, 17 Wendell, 179, 180.

Walwrath v. Thompson, 6 Hill, 540; 2 Const., 185.

McWilliams v. Mason, 6 Duer, 276.

Bangs v. Strong, 7 Hill, 250.

Samuel v. Howarth, 3 Merivale, 272.

Thus, in Miller v. Stewart, (above cited,) Judge Story says: 'Nothing can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended, by implication, beyond the terms of his contract. To the extend and in the manner and under the circumstances pointed out in his obligation, he is bound, and no further. It is not sufficient that he may sustain no injury by a change in the contract, or that it may be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal.'

So in Parsons Mercantile Law, (above cited,) 'If the liability of the principal be materially varied by the act of the party guarantied, without the consent of the guarantor, the guarantor is discharged.'

So in Walwrath v. Thompson, (above cited,) it is laid down that the terms of the guaranty must be strictly complied with, or the guarantor will not be bound. If he propose a credit, that particular credit must be given to the principal.

In 3 Merivale, 272, the Lord Chancellor said that an extension of time to the principal discharged the surety, 'although such giving of time is manifestly for the benefit of the surety.'

So in Brigham v. Wentworth, (above cited,) it is held that an agreement by the plaintiff, for a consideration, changing the obligation of the principal, discharges the surety.

The like rule runs through all the authorities above cited.

After the plaintiffs in this action made the new agreement with Hopkins & Leach, in March, 1848, they could maintain no action against Hopkins & Leach for not completing the delivery by the first water of the spring. The time of performance was effectually enlarged to June and October. For this extension the plaintiffs paid a consideration—the agreement to add $200 worth of extra work—a consideration of benefit to the plaintiffs and of loss to Hopkins & Leach.

The case thus falls perfectly within the rule, that the contract of the principel being changed, the surety is discharged.

The fact that the time of performance originally contracted for had already arrived, and Hopkins & Leach might be deemed in default of performance, makes no difference in the application of the rule. The plaintiffs chose to waive the default and make a new contract. If the plaintiffs had insisted on the default, then Hopkins & Leach would have kept...

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