Bridgeport Malleable Iron Co. v. Works

• Decision Date: 07 June 1906
• Parties: BRIDGEPORT MALLEABLE IRON CO. v. IOWA CUTLERY WORKS ET AL.
• Court: Iowa Supreme Court

130 Iowa 736

107 N.W. 937

BRIDGEPORT MALLEABLE IRON CO.

v.IOWA CUTLERY WORKS ET AL.

Supreme Court of Iowa.

June 7, 1906.

Appeal from District Court, Linn County; J. H. Preston, Judge.

Action at law upon an account for cutlery materials sold and delivered the defendant cutlery works. The defendants, Z. L. Brewer, C. M. Brown, and W. A. Hubbard are charged as guarantors of the payment of such account. Trial was had to the court without a jury, and from the judgment entered plaintiff appeals. Affirmed in part, and reversed in part.Powell & Powell and Shaw & Nicholson, for appellant.

Redmond & Stewart, for appellees.

BISHOP, J.

At the time of the execution of the contract of guaranty in question, plaintiff was a corporation doing business at Bridgeport, Conn., and the defendant cutlery works a corporation doing business at Cedar Rapids, this state. The other defendants named were officers of the latter corporation and engaged in the conduct of its business. Prior to July 8, 1902, materials had been purchased of plaintiff by the defendant company which had been only partially paid for. It does not appear upon what terms the credit had been extended. On the date named a further order was sent forward, calling for numerous items and with the request that certain of such items be given preference in shipment. Upon receipt of this order, plaintiff responded by making demand for security. The precise form of the demand does not appear from the record before us. To this the defendant company replied of date July 21st, saying: “We are somewhat at a loss to know just what you want as to guaranty. As president and general manager, and as secretary and treasurer, we can give our individual assurances that the bills will be paid, at thirty days, as required, and inclose such a guaranty herewith.” The inclosure was in words as follows: “July 21, 1902. We, the undersigned, president and general manager, and secretary and treasurer, for the Iowa Cutlery Works and for ourselves individually, do hereby agree with the Bridgeport Malleable Iron Company and guaranty that the bills of said iron company for work done and material furnished to said cutlery works will be paid promptly when the same come due, to wit: Net cash, 30 days. [Signed] Iowa Cutlery Works, by Z. L. Brewer, Gen. Mgr., C. M. Brown, Secy. & Treas., and Z. L. Brewer, Pres. & Gen. Mgr.” On July 24th plaintiff wrote in response to this as follows: “We have yours of the 21st inst., and guaranty of your company for payment of account. This is not according to our request, which was that we should have your individual guaranties, not as officers of the company. What we require is the guaranty of your Mr. Brewer and Mr. Hubbard personally. Awaiting your reply, with guaranty, we remain,” etc. Thereupon an instrument was forwarded to plaintiff in words as follows: “July 28, 1902. We hereby guaranty that the Bridgeport Malleable Iron Company shall receive prompt remittance for shipments of castings to the Iowa Cutlery Works at the expiration of thirty days as provided in invoices of same. [Signed] Z. L. Brewer. W. A. Hubbard.” On receipt of this, plaintiff wrote:“We have yours of the 28th, with guaranty which is satisfactory.” Forming part of defendant's letter of July 21st was a request to increase its order of July 8th as to one of the items thereof. And it appears that on July 28th a request was sent forward to further increase the order as to such item. Following the acceptance of the instrument of guaranty, the order for goods of date July 8th, as subsequently increased, was filled, and this was followed by several further orders, and shipments were made in compliance therewith. In April, 1903, the defendant company became insolvent, and its affairs passed into the hands of a receiver. In the meantime payments had been made to plaintiff on account sufficient to satisfy the amount due on July 8, 1902, and to reduce the amount of the order of that date to $103.88. Nothing was paid on the subsequent bills, which amounted to $2,648.47. Thus the total amount due plaintiff was $2,752.35. In its petition the plaintiff demands judgment against the defendant company as principal debtor, and against each of the other defendants as guarantors, for the full amount due. The defendant Brown answered, alleging that the instrument of guaranty signed by him as secretary and treasurer of the defendant company was rejected by plaintiff as per its letter of July 24th, and that no goods were ever shipped on the faith of or relying on said instrument. The defendants Brewer and Hubbard answered, admitting the execution of the instruments of date respectively July 21st and July 28th. As to the former instrument, they plead that it was rejected. As to both instruments, they plead that they were not continuing contracts of guaranty, but were given to guaranty the payment of the order of July 8th, as increased July 21st and 28th, all of which has been paid except the sum of $103.88. The defendant company did not appear. The judgment entered was against the defendant company on default for the full amount demanded, against the defendants Brewer and Hubbard for the sum of $103.88, and as to the defendant Brown the petition was dismissed. The appeal is from the judgment in favor of Brown, and from the refusal to enter judgment against Brewer and Hubbard for the full amount demanded.

1. First, as to the defendant Brown: We think the judgment in his favor was free from error, and should be affirmed. Whatever may be said of the legal effect of the instrument of date July 21st, signed by him, considered in the abstract, it appears clearly enough, from the letter of plaintiff of date July 24th, that the instrument was rejected. Apparently it was not regarded by plaintiff as carrying any personal responsibility. On the contrary, Brown was thought to be liable thereon only as an officer of the defendant company, and such was made a ground for its refusal to accept of the instrument. Moreover, in its letter plaintiff stated specifically its requirement in the way of security, and this included no reference to Brown. No goods were shipped until the specific requirement had been complied with, and there is no room to conclude otherwise than that shipments were made solely on faith thereof. It is true that the instrument signed by Brown was never returned to him. But, under the...