Furst & Bradley Manuf'g Co. v. Black

• Decision Date: 21 June 1887
• Citation: 111 Ind. 308,12 N.E. 504
• Court: Indiana Supreme Court
• Parties: Furst & Bradley Manuf'g Co. v. Black and others.

111 Ind. 308

12 N.E. 504

Furst & Bradley Manuf'g Co.

v.Black and others.

Supreme Court of Indiana.

June 21, 1887.

Appeal from circuit court, Jasper county.S. P. Thompson, for appellant. F. W. Babcock and E. P. Hammond, for appellees.

Mitchell, J.

On the twenty-sixth day of February, 1878, Samuel M. Black, residing at Remington, Indiana, signed and transmitted to Henry J. Prier, of Indianapolis, Indiana, the following order and proposal:

“ H. J. Prier, Indianapolis, Indiana: Please have manufactured for us and deliver at the depot in Chicago, which you will ship to Remington via Logansport Railway, by ------, or within ten days thereafter, the goods specified in this list, for which we agree to pay as follows, viz.: [Here follows a list of the articles to be shipped, with time of credit and rate of discount.] We also agree to settle for the same monthly by notes, or notes with security, due as above, and to pay interest at the rate of ten per cent. per annum on all notes and accounts after maturity, and to remit with exchange on New York or Chicago, or by express, charges prepaid. We further agree to pay for all goods shipped us for this season's trade subsequent to those now herein ordered, on same terms as above, all payable without relief from valuation or appraisement laws. S. M. Black.”

Upon the back of this order there was indorsed the following contract of guaranty:

“For and in consideration of the credit which H. J. Prier may extend to S. M. Black, and in further consideration of one dollar to me in hand paid by H. J. Prier, the receipt of which is hereby acknowledged, I hereby guaranty to him the fulfillment of the within contract on the part of the said S. M. Black, and the payment by S. M. Black to H. J. Prier or order, without demand, of all moneys for the payment of which the said S. M. Black may become liable under this contract, including all implements that may be ordered of the said H. J. Prier subsequent to this date, and during the year 1878. I further guaranty to the said H. J. Prier the payment of all notes that may be taken by him in part or full payment of all sums for which he may become liable under this contract, including in the above guaranty the payment of all notes made by any other person whatever that may be transferred to said H. J. Prier by S. M. Black. Payable without relief from valuation or appraisement laws. A. M. Traugh.

S. N. Snoddy.

S. A. Henry.”

The order or agreement prepared by Black was accepted by the following indorsement written thereon:

“H. J. Prier agrees to accept the above order on conditions named, or notify you within twenty days from this date. H. J. Prier.”

In a complaint upon the contract of guaranty, set out above, it was alleged that on the tenth day of August, 1878, Prier and Black had a settlement and accounting of their dealings under the foregoing contract, at which it was found that there was due from Black to Prier the sum of about $1,300 on account stated, which account, with the contract of guaranty, was assigned to the plaintiff. The complaint avers that the guarantors had been duly notified of the indebtedness, and that Black had become wholly insolvent, and a non-resident of the state. The guarantors answered in four paragraphs,-general denial, payment, set-off, and accord and satisfaction. There was a verdict and judgment for the guarantors. With their general verdict the jury returned answers to interrogatories submitted by the parties respectively. The errors assigned are overruling the appellant's motion for judgment on the answers to the special interrogatories, notwithstanding the general verdict; overruling the motion for a new trial.

On the trial defendants were permitted to give evidence tending to prove that in 1878, when the debt sued for matured, their principal was a resident of the state, and solvent; that they received no notice of his default until this suit was brought, in 1884, and that mean while he had become wholly insolvent, and a non-resident of the state.

The court gave the case in charge of the jury distinctly upon the theory that the guarantors were legally discharged in the event the evidence established the foregoing facts. By the answers to the special interrogatories these facts were all expressly affirmed by the jury. The case presents two abstract propositions of law growing out of the contract upon which the suit is based. It is made a question whether or not the guarantors are liable, in the absence of notice that the contract of guaranty had been accepted. Another question is whether or not they were entitled to notice of the default of their principal, and whether, if they were, the failure to give notice of the default, and the subsequent non-residence and insolvency of Black, operated to discharge the guarantors under the issues upon which the case was tried.

As to the necessity of notice of acceptance. It is unquestionably true that a contract of guaranty is a transaction between the guarantor and guarantee, and is separate, and in many respects entirely distinct, from the contract between the latter and the principal. In order to the completion of such a contract, it is essential, as in all other contracts, that the minds of the parties shall have mutually assented to its terms. Where, therefore, there is a mere proposal, on the part of those sought to be charged as guarantors, to guaranty the faithful performance of some obligation which another may enter into, provided credit shall be extended or a duty undertaken, authorities all agree that the contract remains incomplete until the original obligation is entered into, and the proposition of guaranty accepted, and due notice thereof given. This is so upon the familiar principle that while the proposition remains pending, without notice of acceptance, that simultaneous concurrence of mind, essential to the completion of a contract, has not taken place. Where, however, the guaranty is for the fulfillment of a contract already made, or for one executed contemporaneously with the contract of guaranty, or for the payment of an existing debt, or where the contract of guaranty is upon a consideration distinct from the credit extended to the principal debtor, and which moves directly between the guarantor and guarantee, notice of acceptance is...