Heyman v. Dooley

• Decision Date: 14 March 1893
• Citation: Heyman v. Dooley, 77 Md. 162, 26 A. 117 (Md. 1893)
• Parties: HEYMAN v. DOOLEY ET AL.
• Court: Maryland Court of Appeals

26 A. 117

77 Md. 162

HEYMAN v. DOOLEY ET AL.

Court of Appeals of Maryland

March 14, 1893

Appeal from Baltimore court of common pleas.

Action by Jonas Heyman against James Dooley and Kanfman Thalheimer on a contract of guaranty. There was judgment for defendants and plaintiff appeals. Reversed.

Argued before ALVEY, C.J., and ROBINSON, BRYAN, McSHERRY, FOWLER PAGE, BRISCOE, and ROBERTS, JJ.

L Hochheimer, for appellant.

F. C Slingluff and J. M. Gallagher, for appellees.

ROBINSON J.

This is an action upon the following contract of guaranty:

"Baltimore, Md., July 29th, 1892. We have this day sold to J Heyman 500 cases No. 3 tomatoes, guaranty against swells and imperfections; to be delivered on buyer's pavement in the month of Sept., 1891. Terms, $150 cash, and ___. McAfee Bros."

"We, the undersigned, hereby guaranty the fulfillment of the above contract. James Dorsey, No. 846 Harford Avenue. K. Thalheimer, No. 1105 Broadway."

The original contract and the guaranty were written on the same paper, and were both delivered at the same time to the plaintiff, upon the faith of which he paid to McAfee Bros the contract price for the tomatoes. McAfee Bros. failed, however, to deliver the tomatoes, and, a few weeks after the time specified for the delivery of the same, they became insolvent, and made a general assignment of their property for the benefit of creditors. No notice of the default of McAfee Bros. was given by the plaintiffs to the guarantors, and the main question is whether the failure to give such notice discharged the guaranty. The amount involved is not large, but the question is one of considerable importance, affecting, as it does, the rights and liabilities of parties upon contracts of this kind, so often occurring in the ordinary transactions of life, and it is to be regretted that upon such a question there should be such a conflict of judicial opinion. This conflict has mainly arisen from a departure from the firmly-settled rule of the common law in regard to contracts of guaranty, and the attempt to ingraft upon such contracts, in a modified form, it is true, the law of demand and notice by which the liability of an indorser of negotiable paper is governed. The liability of a guarantor, like that of an indorser, is contingent, it is true, upon the default of the principle, but here the analogy ends. The liability of an indorser of a negotiable note does not become absolute unless there has been a demand upon the maker, and due notice of nonpayment by him has been given, not because the indorser has so stipulated in terms, but it is a condition annexed to the contract by the commercial law. In the case of an absolute guaranty, however, there is no condition annexed to the contract itself, nor is any condition implied by law, requiring the guarantee to notify the guarantor of the default of the principal. On the contrary, his liability is governed by the same rules of law by which the ordinary liability of one who has broken his contract is determined; and, this being so, if one guaranties in absolute terms the performance of specific act or contract by another, his liability being commensurate with that of the principal, whatever proof is necessary to support an action against the principal will be sufficient in an action against the guarantor; and, as demand upon the principal is not necessary to support an action against him for a breach of his contract, it is not necessary to allege or prove notice of demand upon and default of the principal to charge the guarantor. Having guarantied absolutely and unconditionally that another shall perform a certain specified contract, he must at his peril see that the contract is performed. The guarantee must know, it is true, of the default of the principal, and this default may be unknown to the guarantor; but it is not a fact which lies within the exclusive or peculiar knowledge of the guarantor. On the contrary, it is a fact in regard to which the guarantor had the easy and accessible means of information, either by inquiry of the guarantee, or of the principal himself; and having undertaken that the specific contract shall be performed, and the guarantee having accepted and acted upon the faith of the undertaking, it is the duty of the guarantor to see that the contract has been performed; and, this being so, there is no obligation, legal or moral, on the part of the guarantee to inform the guarantor of a fact which the latter, having the means of knowledge, was himself bound to know. And such was the well-settled rule of the common law. As far back as Somersall v. Barneby, Cro. Jac. 287, where the promise was to save harmless the plaintiff from all debts and liabilities that he might incur at the request of the defendant's son, notice was held to be unnecessary, because the defendant might have obtained the information from the son if he desired it. And in Brookbank v. Taylor, Cro. Jac. 685, where the promise was to pay the rent of a farm if the tenant did not pay it, notice of the default of the tenant was held to be unnecessary, and for the reason that the promisor was bound to ascertain whether the rent had been paid. And in 3 Com. Dig. tit. "Pleading," and 16 Vin. Abr. tit. "Notice," and Hodsden v. Harridge, 2 Wms. Saund. 62, note, and in fact in all the standard authorities, the rule is stated that if an act is to be done by a third person, who is known, notice of his default is unnecessary; and such is the uniform current of English decisions. In the later case of Bradbury v. Morgan, 1 Hurl. & C. 249, where it was alleged that the defendant's testator requested the plaintiff to give credit to a third person, and promised to guarantee the running balance of his account, the declaration was held to be good,...