Cowan, McClung & Co. v. Roberts
| Decision Date | 22 March 1904 |
| Citation | 46 S.E. 979,134 N.C. 415 |
| Parties | COWAN, McCLUNG & CO. v. ROBERTS. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Buncombe County; Hoke, Judge.
Action by Cowan, McClung & Co. against W. S. Roberts. From a judgment of nonsuit, plaintiffs appeal. Reversed.
One who guarantees payment of a debt, and not merely that the debtor shall be able to pay, or for collection, is liable without regard to the diligence of the creditor in attempting to collect from the principal debtor.
This action was brought to recover the sum of $2,000, alleged to be due by the defendant on a guaranty. The firm of Roberts Bros. on 9th April, 1899, was indebted to the plaintiffs, who were merchants, in the sum of $1,742.60 for goods theretofore sold and delivered, and were desirous of making further purchases, but the plaintiffs refused to sell any other goods to them unless they would secure by a guaranty their then existing indebtedness and any other amount that might become due for future sales. Roberts Bros. then requested the defendant to give the required guaranty for them, so that they could purchase more goods. The defendant complied with this request by executing a paper writing, of which the following is a copy:
"Knoxville Tenn., April 8, 1899.
I hereby guarantee to Cowan, McClung & Co. any debts which Roberts Bros. now owe, or may owe in the future, to the extent of Two Thousand Dollars. This obligation to remain in full force until the debt now due Cowan, McClung & Co. is fully discharged and this agreement annulled in writing.
W. S Roberts."
The original paper is in the handwriting of one of the plaintiffs, and was delivered to the plaintiffs by Roberts Bros. On the faith of this guaranty the plaintiffs afterwards sold and delivered to Roberts Bros. several bills of goods amounting in all to $475.45, which amount they failed to pay at maturity, whereupon the plaintiffs notified the defendant of their default, and when, after demand, he refused to pay the amount specified in the guaranty they brought this action in September, 1899. The firm of Roberts Bros. became insolvent and in August, 1899, were adjudicated bankrupts. No assets were left after allotting the exemptions and paying the costs and charges of administering their estate. There was evidence tending to establish the foregoing facts, and also to show that one of the plaintiffs' salesmen demanded of the defendant the payment of the amount of the guaranty, and the latter stated to him that he had seen the guaranty, and wished to have it adjusted, and expressed surprise that he was "in for so much." He also stated to the salesman that he had signed the guaranty with the understanding that the members of the firm of Roberts Bros. would have their father, J. J. Roberts, sign the same with him. The defendant and J. J. Roberts agreed to give notes for the amount of the guaranty, but at the last moment J. J. Roberts refused to sign them. It was also in evidence that on the day after the guaranty was signed the defendant asked Roberts Bros. if J. J. Roberts had signed, to which they answered that he had not, as they had concluded not to go to him, but to get Robinson & Baird to sign it, and the defendant then told them to write to the plaintiffs, and have his name taken off the paper. The defendant inquired every week if they had received any answer from the plaintiffs, and, not being able to get a satisfactory answer, wrote himself to the plaintiffs on July 7th, and requested them to erase his name, as he would not indorse for them any longer, because they had deceived him. All the goods had then been sold. The plaintiffs introduced in evidence the following letter from the defendant to them, dated July 24, 1899: "Please send me by return mail a copy of that paper with my name attached to it, sent by Roberts Bros. of this place; also amount purchased by them since the date of that paper, and oblige. ***" And also a letter from them to the defendant dated July 8, 1899, in reply to his letter of July 7, 1899, as follows: The defendant, who was introduced as a witness in his own behalf, testified that he signed the guaranty upon the condition that J. J. Roberts would sign it with him. He was told by Roberts Bros. that they needed the guaranty in order to get more goods to renew their stock. He further stated that Roberts Bros. had told him that they had written to the plaintiffs to erase his name, but that he mistrusted them, and wrote himself after waiting three months. At the close of the testimony the court intimated that it would charge the jury to find the issue for the defendant, in deference to which intimation the plaintiffs, after excepting, submitted to a nonsuit and appealed.
Merrimon & Merrimon, for appellants.
F. A. Sondley, for appellee.
WALKER, J. (after stating the case).
The defendant's counsel, in his able argument before us, relied upon three grounds of defense: (1) That there was no evidence that the plaintiffs had accepted the guaranty and notified the defendant of their acceptance; (2) that there was no consideration to support the guaranty as to the debt already due by Roberts Bros. to the plaintiffs, amounting to $1,742.50; (3) that the guaranty was given upon a condition which was never performed, and that it is therefore void, even in the hands of the plaintiffs.
A guaranty is a promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person who is himself in the first instance liable to such payment or performance. Carpenter v. Wall, 20 N.C. 279. There is a well-defined distinction between a guaranty of payment and a guaranty for the collection of a debt--the former being an absolute promise to pay the debt at maturity, if not paid by the principal debtor, when the guarantee may bring an action at once against the guarantor; and the latter being a promise to pay the debt upon condition that the guarantee diligently prosecutes the principal debtor for the recovery of the debt without success. Jones v. Ashford, 79 N.C. 172; Jenkins v. Wilkinson, 107 N.C. 707, 12 S.E. 630, 22 Am. St. Rep. 911. The guaranty may also be absolute in form, or one which binds the guarantor to pay unconditionally, or at all events, upon the default of the principal; or it may be in the form merely of an offer to become bound upon the default of the principal. In the former case--that is, where there is an absolute guaranty or an unconditional promise to indemnify against loss by the principal's default-- no notice of acceptance by the guarantee is required, the liability of the guarantor being fixed and determined by the ordinary rules in the law of contracts. In the latter case, when the transaction takes the form of an offer merely to become responsible for the principal, notice of acceptance of the offer is, of course, necessary, in order to charge the party who makes the offer as guarantor, and this is so because the minds of the parties have not met; there is no aggregatio mentium until the offer is accepted. There is a well-recognized distinction, therefore, between an offer or proposal to guaranty and a direct promise of guaranty. The former requires in some cases notice of acceptance, while the latter does not. When the offer to guaranty is absolute, and contains in itself no intimation of a desire for or expectation of specific notice of acceptance, it may be supposed that the offerer has a reasonable knowledge that his guaranty will be accepted and acted upon, unless he is informed to the contrary. 2 Parsons, Cont. (8th Ed.) c. 2, § 4, and notes, where the subject is fully discussed. It is said that, if the party distinctly and absolutely guaranties a certain line of credit, it presupposes some sort of a request for a guaranty, emanating from the guarantee, and for this reason no formal acceptance by the guarantee is necessary; but if it be only a proposition to guaranty the credits, and not a positive promise to guaranty them, the acceptance of the proposition must in some way, and within a reasonable time, be communicated, before the guarantor can be held liable on it. Tiedeman on Com. Paper, § 420. In our case the guaranty is a direct and unconditional promise to answer for the default of the principal to the amount of $2,000. The words of the contract are in praesenti-- "I do hereby guaranty"--and super-added are the words, "This obligation to remain in full force." Language could not be stronger to express the intention to become liable at once without any expectation of notice that the plaintiffs will accept the guaranty. It was not an offer, nor did it imply an offer merely, but it was in itself a complete and binding promise to guaranty, and needed only the sale of the goods by the plaintiffs to make it otherwise effectual. 1 Parsons, Cont. pp. 466, 467.
We cannot distinguish this case from Straus v Beardsley, 79 N.C. 59, where the court says: ...
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