Carroll County Sav. Bank v. Strother
| Decision Date | 19 April 1888 |
| Citation | 6 S.E. 313,28 S.C. 504 |
| Parties | CARROLL COUNTY SAV. BANK OF UNIONTOWN v. STROTHER et al. |
| Court | South Carolina Supreme Court |
Appeal from common pleas circuit court of Edgefield county PRESSLEY, Judge.
The Carroll County Savings Bank of Uniontown, Md., brought action on a note, or other obligation in writing, against J. C Strother, David Fowble, Edward Lynch, the Taylor Manufacturing Company, J. E. Taylor, P. H. Irwin, treasurer and H. Haines. Plaintiff obtained judgment, and defendants Fowble and Lynch appeal.
Jones & Jones and R. W. Shand, for appellants.
Rion & Barron and Wm. H. Lyles, for respondents.
This is the second time that this case has been before us, and reference may be had to the case as reported in 22 S.C. 552 for a more detailed statement of the facts than it is deemed necessary now to make, especially for a copy of the written instrument upon which the action is founded. After the case was remanded to the circuit court under our former decision, the plaintiff amended its complaint so as to make, in addition to the appellants herein, John C. Strother, the Taylor Manufacturing Company, P. H. Irwin, treasurer, J. E. Taylor, and H. Haines, parties defendant, although, at the former hearing, plaintiff had discontinued its action against Strother, and suffered judgment to go against it in favor of said Strother for his costs and disbursements in the former action. The complaint, as amended, is set out in full in the case, and alleges, among other things, that the paper called a "note," (and which, for convenience, we will designate in the same way,) upon which the action is founded, with several others of a similar description, was given to secure the payment of the purchase money of a saw-mill and engine sold by the Taylor Manufacturing Company to said Strother; that these notes were secured by a mortgage of the saw-mill and engine, as well as by "other papers," as collateral security; that the Taylor Manufacturing Company assigned all of said notes to the appellants, together with the aforesaid mortgage and other collaterals; that thereafter, and before the maturity of the note, the appellants, "desiring to negotiate the note herein set out with this plaintiff, transferred and assigned the above to the plaintiff, and, for valuable consideration, together with the defendants, the Taylor Manufacturing Company, P. H. Irwin, treasurer, J. E. Taylor, and H. Haines, guarantied the payment thereof" by an indorsement on said note, in these words: "For value received, we hereby guaranty the payment of within note when due, and hereby waive the demand and notice of non-payment thereof;" that the appellants have seized and sold, under said mortgage, the engine and saw-mill, and have commenced to foreclose the collateral held by them as aforesaid, but have refused to pay the plaintiff the note held by it. None of the parties named as defendants, except the appellants, were served with the summons and complaint; and they answered, denying, among other things, that the Taylor Manufacturing Company had ever assigned to them any mortgage on the engine and saw-mill, or other papers held by it, except a mortgage against Mrs. Edwards, "which has been foreclosed, and is in process of collection towards the payment of one of the notes given for the said engine and saw-mill, other than the one sued on in this case," which note appellants had taken up as indorsers. They admit that they instituted suit on one of the notes (other than the one sued on in this case) given for the said engine and saw-mill, and had the same sold under the judgment of the court given in that case, which did not near pay said judgment. As a further defense, appellants insist that plaintiff is not entitled to recover against them--" First, because the consideration of the note has failed; second, because, as mere accommodation indorsers or guarantors, they are discharged by the failure of the plaintiff to use due diligence in collecting the note from the principal debtor, Strother; third, because the note is usurious in stipulating for the payment of interest at the rate of ten per cent. after maturity, which exceeds the rate allowed by law at the time the note was given, and because of the stipulation for the payment of counsel fees." At the trial, on motion of the plaintiff, the circuit judge granted an order permitting the plaintiff to proceed against appellants, without serving the other parties named as defendants; and "the plaintiff proved that the note in suit had been discounted by the plaintiff for value, in due course of business, at its banking office in Maryland, and also proved the signatures of David Fowble and Edward Lynch to the guaranty indorsed on the note, and also proved the date of such transfer and guaranty, which was before the maturity of said note." This, so far as the case shows, was all the testimony offered at the trial on behalf of the plaintiff. The defendant then offered Strother as a witness to prove failure in the consideration of the note upon which the action was founded; but, upon objection from plaintiff, this testimony was not received,--the circuit judge holding "that as between the plaintiff and these defendants, a failure in the original consideration of the note was of no consequence, as it was against that very thing, in part, that these defendants had guarantied the plaintiff." No further testimony being offered, the circuit judge charged the jury that the stipulation in the note for the payment of 10 per cent. interest after maturity, was without consideration, inasmuch as there was nothing to bind the plaintiff to extend the time for payment after maturity, and hence such stipulation did not make the note usurious. He therefore instructed the jury that the plaintiff was entitled to recover the whole amount of the note, with interest thereon, from its maturity, at the rate of 7 per cent. per annum. The jury having rendered a verdict in accordance with this instruction, and judgment being entered thereon, the defendants appeal, upon the several grounds set out in the record, which allege, substantially, the following errors: First, in refusing to permit testimony to be offered tending to show a failure of consideration in the note; second, in charging the jury that the plaintiff was entitled to a verdict, "when the facts showed that plaintiff had not used due diligence in seeking to recover the debt from the maker" of the note; third, in instructing the jury that the note was not rendered usurious by the stipulation for the payment of interest at the rate of 10 per cent. per annum after maturity.
In considering the question raised by the first ground, it will be necessary to keep in mind the fact that there was no evidence tending to show that appellants had any interest in or connection with the Taylor Manufacturing Company, or that they received any benefit from the discount of the note by the plaintiff. So far as appears from the face of the paper these appellants were entire strangers to the original contract between Strother and the Taylor Manufacturing Company, and, for anything that appears, their only connection with the discount of the note by the plaintiff was, as they claim in their answers, that of mere accommodation guarantors. It is true that it is alleged in the complaint that the Taylor Manufacturing Company transferred the note to these appellants, and that they, desiring to negotiate the same, transferred it, for valuable consideration, to plaintiff, guarantying its payment when due, which might be regarded as implying that the note was discounted for the benefit of these appellants; but these allegations, except as to the guaranty of the note, are distinctly denied by the appellants in their answers, as may be seen by reference to the pleadings, which are fully set out in the case; and there is no testimony adduced in support of such allegations. The question, then, as to the admissibility of the testimony proposed, for the purpose of showing a failure in the consideration of the note, must be considered as if these appellants were strangers to the original contract, and received no benefit from the discount of the note. Looking at the case in that aspect, the first inquiry is, what was the contract of these appellants? Their agreement, as expressed in the writing indorsed on the note, was for "the payment of within note when due." Their contract was one of guaranty, which is a collateral undertaking for the payment of a debt of another. The plain meaning of the terms in which their contract was expressed, is that if Strother; the maker of the note, does not pay it when due, we will do so. It was therefore a contract to perform Strother's contract if he failed to do so. Whatever, then, would have the effect of relieving Strother from the payment of the whole or any part of the amount named in his contract, it would seem ought to have the effect of relieving the appellants to the same extent. If the appellants have contracted to pay Strother's debt, and that debt is legally ascertained to be, by reason of failure of consideration, less than what it purports to be, surely these appellants cannot be required to pay any more than what was justly and legally due on the note which they guarantied. As is said in 2 Pars. Cont. 4: "In general, the liability of the guarantor is measured by that of the principal, and will be so construed, unless a less or a larger liability is expressly assumed by the guarantor." And, again, at page 15: "The guarantor cannot be held to any greater extent than the original debtor, either in point of amount or of time." So it was said by Mr. Justice MCGOWAN, in the former opinion in this case: "It is certainly true, as a general proposition, that a guaranty...
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