D. M. Osborne & Co. v. Lawson

• Court: Missouri Court of Appeals
• Writing for the Court: THOMPSON, J.
• Citation: D. M. Osborne & Co. v. Lawson, 26 Mo. App. 549 (Mo. App. 1887)
• Decision Date: 31 May 1887
• Parties: D. M. OSBORNE & COMPANY, Respondent, v. CHARLES LAWSON ET AL., Appellants.

26 Mo.App. 549

D. M. OSBORNE & COMPANY, Respondent, v. CHARLES LAWSON ET AL., Appellants.

Court of Appeals of Missouri, St. Louis.

May 31, 1887

APPEAL from the Lawrence County Circuit Court, M. G. MCGREGOR Judge.

Affirmed.

ADIEL SHERWOOD and N. GIBBS, for the appellants: The contract of a guarantor is his separate, independent contract; it is collateral and secondary, and not a joint engagement with the maker. The guarantor is liable only when the debtor has proved insolvent after due diligence has been used by the creditor to obtain payment; and due diligence is that which a vigilant creditor employs when he has no other security than the obligation of the debtor. The exercise of this due diligence is a condition precedent to the right of action against the guarantor, and the guarantor is excused to the extent of the damage he has suffered by this lack of due diligence and neglect on the part of the holder of the note. Oxford Bank v. Haynes, 8 Pick. 423; Phillips v Astling, 2 Taunt. 206; Warrington v. Furber, 8 East, 245; Perry v. Barret, 18 Mo. 140; Central Savings Bank v. Shine, 48 Mo. 463; McNall v Burrow, 33 Kas. 495; Murray v. Noyes, 72 N.Y. 523; McMillan v. Bank, 32 Ind. 11; Craig v. Parkis, 40 N.Y. 181; Pain v. Packard, 13 Johns. 174; Mizner v. Spier, 96 Pa.St. 533; Building Ass'n v. Lichtenwalner, 100 Pa.St. 103; Reigert v. White, 52 Pa.St. 438; Hoffman v. Bechtel, 52 Pa.St. 190; Johnson v. Chapman, 3 Pa. Rep. 18; Brown v. Brooks, 25 Pa.St. 210; Parker v. Culvertson, 1 Wall. Jr. 149, 161; Gilbert v. Henck, 30 Pa.St. 205; Parmerlee v. Williams, 71 Mo. 410. The waiver of demand or protest is simply a waiver of technicalities, and furnishes no excuse for the negligent acts of the plaintiff in this case. A waiver of technicalities is not a waiver of that due diligence which the law makes part and parcel of the contract of guaranty. Murray v. Noyes, 72 N.Y. 523; Hartman v. Bank, 103 Pa.St. 582; Zahn v. Bank, 103 Pa.St. 576; Hoffman v. Bechtel, 52 Pa.St. 190. The contract of guaranty being a separate, independent contract, requires a consideration to support it, and where, as in this case, there is a total failure of consideration, there can be no recovery. Between the parties the consideration may always be inquired into. The words, " value received," are only prima facie evidence of consideration. Aldrich v. Stockwell, 9 Allen 45, 46; Parish v. Stone, 14 Pick. 198; Howard v. Jones, 13 Mo.App. 595, 596; Pfeiffer v. Kingland, 25 Mo. 66; Cook v. Elliott, 34 Mo. 586; Stagg v. Linnenfelser, 59 Mo. 336, 342, 343.

HENRY BRUMBACK, for the respondent: The respondent's evidence, viz.: the contract of agency, having shown good consideration for the guaranty, and there being no competent evidence on behalf of the appellants, tending to show want of consideration, the appellants' first instruction was properly refused. Glenn v. Lehnen, 54 Mo. 52, and cases cited. The contract of guaranty expressly waives demand, and hence it was no part of the duty of the respondent to forward the note to the place of payment. The contract guarantees payment at maturity, and at any time thereafter; and hence the appellants could not require the respondent to proceed to collect, or to forward the note to them for collection, and the appellants' second and fourth instructions were improper. Koenig v. Bramlett, 20 Mo.App. 636; McMurray v. Noyes, 72 N.Y. 574. The answer set up that the principal was solvent at the maturity of the note; that the plaintiff neglected to demand payment, and to forward the note, and, in the meantime, the principal became insolvent, and the evidence offered to sustain these allegations constitutes no defence. Hence, the instruction given by the court is correct, and the appellants' third instruction was properly refused. Brown v. Curtis, 2 Comstock 225; Herrick v. Borst, 4 Hill 652; Airey v. Pearson, 37 Mo. 424; Routon's Adm'r v. Lacy, 17 Mo. 400; Cain v. Bates, 35 Mo. 427; Freligh v. Ames, 31 Mo. 254; Sappington v. Jeffries, 15 Mo. 628; Langdon v. Markle, 48 Mo. 360; Koenig v. Bramlett, 20 Mo.App. 636; Wright v. Dyer, 48 Mo. 526; Peters v. Linenschmidt, 58 Mo. 466; Miller v. Mellier, 59 Mo. 388; Rev. Stat., sects. 3896, 3897; Lockridge v. Upton, 24 Mo. 184; Bickford v. Gibbs, 8 Cushing 154; Worcester v. Davis, 13 Gray 531.

OPINION

THOMPSON J.

This was an action upon the following contract of guaranty, indorsed on the back of a promissory note, for the sum of one hundred and seventy-five dollars, which note was given, by T. S. Price, to the plaintiffs:

" For value received, I, or we, hereby guarantee the payment of the within note, at maturity, or any time thereafter, and waive demand, protest, and notice of non-payment thereof.

LAWSON, CLEMENTS & CO."

The substantial defences were, that the contract of guaranty was made without consideration; that the plaintiffs had failed to present the note at maturity to the maker, Price, for payment, although requested by the defendants so to do; that, at the date of payment, and for some time thereafter, Price was solvent, and could and would have paid the note, if presented, but, subsequently, and before the note was, in fact, presented to him for payment, became, and continued to be, insolvent; by reason of which negligence of the plaintiffs, the defendants contend that they are released from the obligation of their contract of guaranty. The court refused a number of instructions, presenting to the jury the defendants' theory of their defence, and, at the request of the plaintiffs, gave an instruction to the effect that the defence, if made out, was not good in law. Thereupon, there being nothing for the jury to do but to compute the amount due upon the note, the plaintiffs' counsel made the computation, in open court, and handed it to them, and they, without retiring from their seats, returned a verdict for the plaintiffs for the amount of the note, with interest, upon which judgment was entered, from which judgment the defendants prosecute this appeal.

I. The plaintiffs put in evidence, at the trial, a long printed and written contract between them and two of the defendants, describing themselves as D. M. Osborne & Company, whereby these defendants undertook to become their agents, for the sale of agricultural machinery manufactured by them. This contract contains, above the signatures of the parties, the following provisions relating to the terms of payment upon which the defendants might sell the plaintiffs' machines. After providing that payments might be made, partly in cash and partly in notes, it recites: " And when not wholly paid for in cash, notes, of the form furnished by the party of the first part, shall be taken for the unpaid balance, signed by the purchaser, and payable to the order of the party of the first part, and the same shall be indorsed, and the payment thereof guaranteed, by said party of the second part, waiving demand, protest, and notice of non-payment thereof, and be made payable at some bank or express office, near the residence of the purchaser." Below the signatures of the parties, there was printed, in blank, the form of a supplementary contract of guaranty. This was signed by Lawson and Clements, in like manner as they had signed the contract itself, but their signatures, on the copy kept by them, had been erased. The defendants gave evidence tending to show that they erased their signatures to this supplementary contract, before the delivery of the contract, because they refused to become bound to guarantee the notes of the parties to whom they might sell the machines. They, also, offered evidence to the effect that, notwithstanding the clause in the contract above their signatures, as above quoted, it was understood that they were not to be bound to guarantee the notes to parties to whom they might sell machines. On objection of the plaintiffs, this evidence, contradicting the terms of the written contract, was excluded. This ruling, upon an elementary principle in the law of evidence, was correct, and the point requires no discussion.

The explanation of the erasure of the signatures of Lawson and Clements to the supplementary contract is scarcely credible; because, they had, already, by signing the contract in chief, agreed to guarantee the notes of parties to whom they might sell machines, and, because this supplemental guaranty was, by its own terms, a guaranty, not by the contracting parties, but by some other party, to be obtained by them, to guarantee their fidelity and good conduct, as well as the payment of the notes taken by them for machines. Their signatures to it were entirely inappropriate; since, by signing the main contract, they had already agreed to do all that it required of them. The matter of this erasure was, therefore, properly disregarded by the trial court.

II. The existence of this contract disposes of so much of the defence as sets up that the contract of guaranty was made without consideration. It was made in pursuance of this contract between the plaintiffs and two of the guarantors, whereby the plaintiffs constituted these two guarantors their agents, within a considerable territory, to sell their agricultural machinery for a lucrative commission. Although the contract was made between the plaintiffs, and Lawson and Clements, only, the evidence shows that it enured to the benefit of the partnership firm of Lawson, Clements & Company, as subsequently constituted, composed of the defendants, Lawson, Clements, and Ryan. The benefits accruing to the firm, under this contract, constituted a consideration good in law for this guaranty by the firm, and the statement of the defendant, Lawson, on the witness stand, that the guaranty was made...