Bright v. McKnight

• Citation: 33 Tenn. 158
• Parties: JOHN W. BRIGHT v. WILLIAM McKNIGHT et al.
• Decision Date: 31 December 1853
• Court: Supreme Court of Tennessee

33 Tenn. 158

JOHN W. BRIGHT

v.WILLIAM McKNIGHT et al.

Supreme Court of Tennessee.

December Term, 1853.

FROM LAWRENCE.

The plaintiff in error, a citizen of the city of Louisville, Ky., entered into a written contract with one Jas. H. Moore, by which said Moore became the general travelling agent of the plaintiff in error, for the sale of certain books described in said contract, which were to be shipped to said Moore in North Carolina, and sold there or wherever else said Moore might be able to sell them. Under the contract, Moore was to receive a portion of the proceeds of the sales, and to remit the balance to the plaintiff in error, at Louisville. It was understood, also, between the parties, that Moore was to procure guarantors for the faithful performance of said agency, and to that end the plaintiff in error wrote upon the paper containing the contract the following instrument, to which Moore agreed to procure the required signatures, and forward the same to the plaintiff in error at Louisville: “We guarantee to John W. Bright that the above-named James H. Moore will well and truly perform all his above and foregoing undertaking, pursuant to the tenor and effect of said contract.” This was signed by the defendants, and enclosed in a letter to the plaintiff in error, in which Moore uses these words: “Enclosed you will find our contract, signed as requested.” Upon receipt of the instrument the plaintiff in error commenced shipping to Moore the books mentioned in the contract, and which Moore appears to have received to the amount of near $1,000, many of which appear to have been sold by him, but none paid for. It does not appear that any notice was given to the defendants of the acceptance of the guaranty by the plaintiff in error. After waiting for several years in vain for remittances from Moore, the plaintiff in error came down to the county of Lawrence, where the guarantors resided, and demanded payment of them, which being refused, he instituted in the circuit court of said county this action on the case upon the guaranty. At the October term, 1853, of said court, the cause was submitted to a jury, when there was a verdict and judgment for the defendants; from which the plaintiff appealed in error to this court. The part of the charge of the court (Judge Walker) to which exception was taken sufficiently appears in the opinion.

Rose and Tinnon, for defendants in error.

The right of the plaintiff to recover fails him upon the following grounds:

It will be observed that this guaranty is collateral in its character, that being the force of the words, “we guaranty,” as well as the intention of the parties. To make this conclusive it need only be borne in mind that the contract is entirely prospective in its operation, depending altogether upon future contingencies, unlimited as to the time when, and the amount of books which were to be sent to Moore. In fact, other contracts are contemplated, and books are to be sent and sold in other states as Bright and Moore may agree. We think this guaranty cannot be regarded in any other light than as merely a general letter of credit to Bright. The courts constantly draw a very clear distinction between guaranties of this kind, and those upon fixed and certain liabilities already incurred, where the guarantors know precisely what they agree to pay. The cases cited by plaintiff's counsel will be found to be of this character.

Then, we contend, first, that to entitle the plaintiff to recover, he must aver and prove notice to the guarantors, in a reasonable time, of his acceptance of their guaranty, and his intention to act upon it; that this notice of acceptance on the part of the plaintiff is an absolute condition antecedent to any legal operation of the guaranty; and it must appear that the same was given, before any responsibility can attach to the guarantors under the guaranty.

This point is well settled in many adjudications by the highest authority. The doctrine is discussed in the case of Douglass v. Reynolds, 7 Pet. 113-127, and again in the same case in 12 Pet., in which Mr. Justice Story declares the law, in substance, as above set forth. The same point is affirmed in Bradley v. Carey, in 8 Greenl. 234, S. P.; Adcock v. Fleming, 2 Dev. & B. 225;Clark v. Russell, 7 Cranch. 69-92; Marshall, C. J., in Edmonson v. Drake, 5 Pet. 624, and Wilds v. Savage, 1 Story, 22. In the case of Lee v. Dick, which went up to the United States Supreme Court from West Tennessee, the court says: “When the guaranty is prospective, and to attach upon future transactions, and the guarantor uninformed whether his guaranty has been accepted and acted upon or not, the fitness and justice of the rule requiring notice is supported by considerations that are unanswerable.” 10 Pet. 48, 452.

We are aware that there may be cases where the guaranty is of a specific existing demand by a promissory note, or other evidence of debt, where the guarantor knows precisely what he guarantees, and the exact extent of his liability, that no notice is necessary, because it would be useless. Lee v. Dick, 10 Pet. But the court says that doctrine was not applicable to that case; neither can it apply to this, by any sort of construction of that contract.

Second. To entitle the plaintiff to recover, this being a continuing or standing guaranty, and prospective in its intention, under which an indefinite number of shipments were to be made to Moore, in the future, the plaintiff, Bright, must aver and prove notice, to the guarantors, of the fact, when the transactions between him and Moore were closed, and of the nature and amount of their liability under the guaranty.

This doctrine is declared in several of the cases before referred to, both by Story and Marshall; but the case of Douglass v. Reynolds, 7 Pet. 113-127, may suffice, under the third instruction asked for in that case in the court below.

These are the cases relied on in the court below, and we think there can be no error in the charge of his honor the circuit judge. That being so, the finding of the jury is correct.

M. S. Frierson, for the plaintiff in error, said:

1. We admit there is a class of cases which decide, and decide correctly, that a mere letter of credit, or offer, or proposition to guarantee the performance of a contract thereafter to be made and entered into, is not binding upon the guarantor until accepted, and notice of the acceptance given. Lee v. Dick, 10 Pet. 482, 474, 475; 15 Conn. 206-217; Douglass et al. v. Reynolds et al., 7 Pet. 113;Wilds v. Savage, 1 Story, 22;Adams v. Jones, 12 Pet. 207; 4 Greenl. 526; Story on Con., sec. 873.

2. If the proposition comes from the guarantee, as in this case, and the same is accepted and entered into by the guarantor, it constitutes a good and binding guaranty, without any notice of acceptance from the guarantee, because there is, in such a case, a meeting of minds, and a perfect agreement and contract is entered into. Phillom v. Van Meirass, Burr. 1663; Hol. L. C. 194, 195; Calhoun et al. v. Dawson, 4 Eng. Law & Eq. 378; Story on Con., sec. 384 et seq.

3. A guarantee of a contract, the terms of which are all agreed upon between the parties at the time of executing the same, is binding as an actual present guaranty, and requires no notice of acceptance. Lee v. Dick, 10 Pet. 482-495; 15 Conn. 406, 414; Wilds v. Savage, 1 Story, 22; Brud v. Hillboon, 7 Conn. 523; Whitney v. Grool, 24 Wend. 82;Jackson v. Loudes, 7 Blackf. 526; 2 Bouv. Inst. 56; Vanleer v. Crawford, 2 Swan.

4. But suppose the court should be of opinion that this guaranty belongs to that class of cases which require notice to be given to the defendants before they are bound by it, still, in this case, it is clear that the defendants knew it was accepted and acted upon by the plaintiff. The principal, Moore, and these guarantors lived in the same town. Moore was also living in the house of one of the guarantors at the time, and continued to live there until after the first lot of books was delivered. They furnished him a carry-all to take them off; and McKnight's letter to Garvin shows they knew all about the plaintiff's acting under this guaranty; and Moore's letter to Bright says: “You will find our contract enclosed, signed as requested.” And an acceptance and notice thereof may be established as well from circumstances as direct proof, and so the court told the jury; and their finding for the defendants is against both the law and evidence in the case. 15 Conn. 206, 457; 2 Am. Ld. Cas. 70-72.

CARUTHERS, J., delivered the opinion of the court.

This is an action on the case upon a written guaranty.

In 1847 James M. Moore entered into a written contract with the plaintiff, to act as general agent in selling “Bright's Family Practice” and “Parley's Annuals,” in the state of North Carolina, or any other part of the country. He bound himself to pay to the plaintiff $3 for each volume of the first-named work, and 75 cents for the second, that might be furnished him, and not to...