J. R. Watkins Medical Co. v. Mc Call

• Decision Date: 29 December 1911
• Docket Number: Nos. 17,437 - (167).,s. 17,437 - (167).
• Citation: 116 Minn. 389
• Parties: J. R. WATKINS MEDICAL COMPANY v. J. W. McCALL and Others.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

Page 389

116 Minn. 389

J. R. WATKINS MEDICAL COMPANY v. J. W. McCALL and Others.¹

Nos. 17,437 - (167).

Supreme Court of Minnesota.

December 29, 1911.

Action in the district court for Blue Earth county to recover $813.79, upon a written contract. The complaint alleged that, at the time of the execution and acceptance of the agreement, there was due to plaintiff from defendant McCall the sum of $848.37,

[Note] Necessity of notice of acceptance to bind guarantor, see note in 33 L.R.A.(N.S.) 960.

which the defendants by the conditions of the agreement promised to pay. Defendant Schweitzer, in his separate answer, alleged that he signed the instrument as an offer of guaranty for which no consideration passed from plaintiff; that it was not signed at plaintiff's request and he denied specifically he received any consideration for making such offer or was ever notified the offer was accepted; that during the existence of the agreement plaintiff and defendant McCall, without the knowledge of the other defendants, wholly disregarded the terms and conditions of the agreement in a manner totally inconsistent with its terms regarding the payment of the account of defendant McCall, and plaintiff waived the conditions of the agreement in several particulars, one of which was by extending the time of payment for the goods; that plaintiff did not notify either of the other defendants that defendant McCall had not lived up to his agreement, and they did not have knowledge of such facts. The answer also alleged that the agreement terminated January 31, 1905, and plaintiff fully knowing the facts wrongfully neglected to inform defendants. Similar allegations were made concerning the agreements executed in the years 1905 and 1906; that plaintiff annulled the agreement with defendant McCall in November, 1906, without notifying the other defendants who received no notice of any default from plaintiff until April, 1908; that if, at the time of cancelation of the agreement, notice had been given to the other defendants, they would have been able to collect from defendant McCall all of the amount for which he was indebted. Defendants Schroeder and Murphy also filed a separate answer.

The case was tried before Pfau, J., who at the close of the case denied defendants' motion to direct a verdict for the defendants Schweitzer, Schroeder and Murphy, and denied the motion of plaintiff for a directed verdict in its favor. The jury returned a verdict in favor of plaintiff for $685.22. From an order denying defendants Schweitzer, Schroeder and Murphy's motion for judgment notwithstanding the verdict or for a new trial, they appealed. Affirmed.

From an order denying plaintiff's motion for judgment notwithstanding the verdict in the full sum of $813.79, it appealed. Appeal dismissed.

A. R. Pfau, Jr., C. J. Laurisch, and Tawney, Smith & Tawney, for plaintiff.

C. L. Benedict and C. O. Dailey, for defendants Schweitzer, Schroeder and Murphy.

BROWN, J.

The facts in this case are substantially as follows: Plaintiff is a corporation engaged in the business of manufacturing and selling patent medicines and household remedies of various sorts. The sales of its products are made through representatives located in different parts of the state and elsewhere. In 1904 plaintiff entered into a contract with defendant McCall, in and by the terms of which plaintiff sold and agreed to deliver to McCall such of its products as he might from time to time order, to be by McCall sold from house to house within the territory mentioned in the contract. By the terms of the contract McCall was designated as the "traveling salesman" of plaintiff, but the products delivered to him became his property, and he was given the option of two methods of making payment therefor: (1) By remitting weekly as sales were made; or (2) by paying in cash within ten days from date of the bill of goods shipped, receiving in that case a discount of three per cent. The contract extended for one year, and expired about January 1, 1905. Defendants Schweitzer, Schroeder, and Murphy guaranteed the faithful performance of the contract by McCall, and agreed to become responsible for the payment of any indebtedness incurred by him thereunder. This guaranty was in writing, attached to and made a part of the contract.

At the expiration of the contract a new one of the same import was entered into for the ensuing year; defendants Schweitzer, Schroeder, and Murphy being guarantors as before. That contract contained the provision: "At the expiration of this contract, the J. R. Watkins Medical Company hereby agrees to make a new contract with said traveling salesman, without requiring his account to be paid in full at the time, provided the amount of his business and the conduct of the same has been satisfactory to said company." Before the expiration of that contract, a third one was entered into, in the same form as the preceding contract, and defendants again became guarantors. The contract of guaranty was in the following language: "For and in consideration of the appointment of the above-mentioned traveling salesman, we hereby agree to be jointly and severally responsible to said The J. R. Watkins Medical Company for the faithful performance of this contract on the part of said traveling salesman, as outlined on back of this agreement, and for the payment of any balance that may be due said company by him at date of acceptance of this contract." At the time this third contract was entered into, McCall was indebted to plaintiff for goods received under prior contracts, then due and unpaid, in the sum of $848.37, which was reduced by payments during the life of the third contract to the sum of $813.79.

This action was brought to recover that amount, with interest, and the action is predicated, as to defendants Schweitzer, Schroeder, and Murphy, upon their guaranty attached to and made a part of the third contract. The guarantors, Schweitzer, Schroeder, and Murphy, alone answered, setting up several defenses, and the questions raised thereunder will be disposed of in their order. Plaintiff had a verdict, and defendants appealed from an order denying their alternative motion for judgment or a new trial.

1. It is contended that the court below erred in not dismissing the action at the close of the plaintiff's case, and in refusing to direct a verdict for defendants, because the evidence failed to show an acceptance by plaintiff of defendants' contract of guaranty. We do not sustain this contention.

Whether the formal acceptance of a contract of guaranty like that involved in the case at bar, as applied to sales of goods upon credit in the future, is essential to the validity of the contract, is a question upon which the courts are hopelessly in conflict. In a note to Wm. Deering & Co. v. Mortell (S. D.) 16 L.R.A.(N.S.) 352, numerous authorities are collected, showing the diversity of opinion upon the subject. The case of Winnebago Paper Mills v. Travis, 56 Minn. 480, 58 N. W. 36, is in line with those courts which hold to the rule that acceptance and notice thereof by the guarantee is necessary. And while the rule requiring notice of acceptance is applied in the abstract by probably a majority of the courts, the existence of certain facts in respect to the contract is held to render the formal acceptance unnecessary — for illustration, the receipt of a valuable consideration. And the courts also distinguish between the conditional and the absolute undertaking on the part of the guarantor, applying the rule of...