Cent. Sav. Bank v. Shine
| Citation | 48 Mo. 456 |
| Parties | CENTRAL SAVINGS BANK, Respondent, v. EUGENE SHINE, Appellant. |
| Decision Date | 31 October 1871 |
| Court | United States State Supreme Court of Missouri |
Appeal from St. Louis Circuit Court.
The first, second and third instructions given by the court for the plaintiff were as follows:
“1. That the contract set out in the plaintiff's petition is an absolute undertaking on the part of defendant to pay the plaintiff $15,000 if the plaintiff would loan that sum to O'Neil & Co.; and if plaintiff did loan said sum to O'Neil & Co. in pursuance of said contract, plaintiff is entitled to recover.
2. If the court finds that the paper set out in the petition was received by the plaintiff about the 30th of March, 1868, and plaintiff accepted the proposition therein contained, and on or about the day aforesaid loaned to O'Neil $10,000, and was then ready and willing to loan said firm the balance called for in the paper, and so notified said firm; and that plaintiff afterward, on or about the 9th of April, 1868, when required by O'Neil & Co., did loan them $5,000, the balance called for in said paper; and afterward, to-wit: about the 20th of May, 1868, defendant examined the books of plaintiff, and from said books and other information became aware that plaintiff had loaned said money to said firm, and that with such knowledge he approved of what plaintiff had done in the premises; and that, after the money was loaned to O'Neil & Co. as aforesaid, they became insolvent and failed to pay said money to plaintiff, and that defendant became aware of the insolvency of said firm as soon as plaintiff--then the plaintiff is entitled to recover the sum or sums so loaned to said firm, with legal interest, less the credit stated in the petition.
3. The court declares the law to be that the written instrument set out in the petition and read in evidence constitutes an undertaking on the part of the defendant to pay plaintiff $15,000 if plaintiff would loan to O'Neil & Co. that sum; and that if plaintiff did, in pursuance of said undertaking and on the faith thereof, loan to O'Neil & Co. the said sum, then defendant became and is liable to plaintiff therefor, less the payment made thereon.”
T. T. Gantt, for appellant.
I. The writing dated March 13, 1868, is a proposa to guaranty the plaintiff in a certain event, and upon the face of it the writer declares his uncertainty whether his proposal will be accepted. The plaintiff was bound in accepting it to give the guarantor reasonable notice of its acceptance, and in the absence of such notice the guarantor is discharged. The list might be much prolonged, but it is deemed merely useless to do this.
II. The guaranty is to be for an advance, by the plaintiff, of additional cash, over and above what has been already advanced by the plaintiff to O'Neil & Co., and this cannot be extended to cover the renewal of an advance already made to O'Neil & Co. by the plaintiff.
III. The proposal is to guaranty this advance to O'Neil & Co., and this cannot be construed to cover an advance to O'Neil alone, no matter how intended by the plaintiff and O'Neil.
IV. The failure to notify defendant of the non-payment of the loan at maturity in June, 1868, and the renewal of the loan (O'Neil being then solvent) discharged the defendant. (Reynolds v. Douglass, 12 Pet. 497; Louisville Manuf. Co. v. Welch, 10 How. 491.)
V. The renewal of the loan on the 1st and 11th of June, 1868, without Shine's consent, discharged him.
VI. The failure to give to Shine the information requested on the 24th of June, 1868, and the direction of the plaintiff to its cashier not to answer Shine's letter of that date, estops the bank to claim that the facts were otherwise than as supposed in that letter.
S. Reber, for appellant.
It is settled by the weight of authority that where the debt to be guarantied is ascertained and agreed on by previous negotiations between the parties, and the guaranty is given of such a debt, no notice of the acceptance of the guaranty is necessary, because the guarantor has such notice at the time he gives his guaranty. But where the proposal is to guaranty a debt to be created in the future, and which is not already agreed on between the parties, the proposal must be accepted by the guarantee by notice to the guarantor to that effect. Until this is done there is no bargain struck--no aggregatio mentium. It is illusory to say that the guarantee accepts the undertaking of the guarantor by simply giving the credit for which the guarantor proposed to become responsible. The doctrine that notice of the acceptance of the guaranty is necessary in the cases above mentioned is adopted as the law of this State in the cases cited from 5 Mo. and 9 Mo. In the latter case Judge Scott dissents, but on the ground that the defendant's engagement was an original and not a collateral one. (See 7 Mo. 682.)
It is just as important to the guarantor to have notice of acceptance as it is for the drawer of a bill to have notice of its non-payment.
The cases in the United States reports are all in conformity with the Missouri cases. (2 Am. Lead. Cas. 79.) As illustrating the difference between a guaranty and a proposal to guaranty, see Howe v. Nichols, 22 Me. 175; Eaton v. Shaw et al., 2 H. & Gill, 22; Allen v. Pike, 3 Cush. 243; Walker v. Forbes, 25 Ala. 139; Fay v. Hall, id. 709; McDougal v. Calef, 34 N. H. 534; Beebe v. Dudley, 26 N. H. 249.
Sharp & Broadhead, and J. R. Lackland, for respondent.
I. The contract of appellant is a primary, direct promise to the bank that he will be responsible to it for the $15,000--not a conditional or collateral one, nor a guaranty for payment to be made by O'Neil & Co., or any third person. O'Neil & Co. did not apply to respondent for the loan of the money; they did not agree to repay the money. No contract was made or existed between the bank and O'Neil & Co., consequently appellant's undertaking was not and could not be collateral or secondary, for there was no agreement to which it could be so.
The only true meaning and construction of appellant's contract is that he primarily applied for the loan of the money to be made to O'Neil & Co.; he promised, not that O'Neil & Co. should pay it and he would be responsible that they should, but that he himself would pay it to the bank. The only contract made with the bank was appellant's contract, that if it would loan the money he would pay the amount to it. To secure sch repayment by him he pledged as collateral security for his performance a note held by him on Walker for a like amount. There is no provision or requirement that O'Neil & Co. should agree to pay or become liable for the money to the bank, or become a principal debtor, or for appellant to be secondarily or collaterally liable for them, or guarantor for payment by them. When this paper was delivered to and received by the bank, and the money loaned thereon, appellant became at once directly bound as original contractor or debtor, and no notice was necessary to complete his liability. (Allen v. Rightmore, 2 Johns. 364; Ridgeway v. Day, 13 Penn. 208; 37 Mo. 424; 26 Me. 358; 16 Me. 257; 37 N. H. 539; 6 Conn. 81; Mason v. Pritchard, 2 Campb. 436.)
II. In the cases in which undertakings have been held to be guaranties, when, upon a fair construction of the terms of the undertaking, the party bound himself to be responsible for goods or property sold to another, and not a collateral undertaking for performance by another of the terms of some agreement of such other person, it is held to be an absolute guaranty; and when acted upon according to its terms, the liability of the guarantor is fixed. No notice of acceptance, or that it has been acted upon, or will be acted upon, or of default of principal debtor, is necessary.
III. Even if the undertaking sued on could be construed as strictly and technically a guaranty for O'Neil & Co., and for payment by them, and that notice of its being acted upon and of the money loaned, and notice of default of payment by O'Neil & Co., should have been given to appellant, yet the averments in the petition and the evidence on those points are amply sufficient. After averring the facts, it is alleged that appellant had due notice of them; and the evidence shows that he was in St. Louis in two months after the money was loaned, and well knew and approved all that had been done.
In cases of undertakings of guaranty, where notice has been held to be necessary, it is held that it need not be immediate, but that if notice or information is received by the guarantor in reasonable time it is sufficient, and the notice need not be formal or proven by direct evidence. If information is acquired by the guarantor, this is sufficient, and it may be inferred from circumstances; and the notice or information is within a reasonable time if it be before any...
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