James Reynolds, John Byrne and William Farriday, Merchants Trading Under the Firm of Reynolds, Byrne Co v. James Douglass, Thomas Singleton and Thomas Going

• Decision Date: 01 January 1838
• Parties: JAMES M. REYNOLDS, JOHN B. BYRNE AND WILLIAM FARRIDAY, MERCHANTS, TRADING UNDER THE FIRM OF REYNOLDS, BYRNE & CO. v. JAMES S. DOUGLASS, THOMAS G. SINGLETON AND THOMAS GOING
• Court: U.S. Supreme Court

37 U.S. 497

12 Pet. 497

9 L.Ed. 1171

JAMES M. REYNOLDS, JOHN B. BYRNE AND WILLIAM FARRIDAY, MERCHANTS, TRADING UNDER THE FIRM OF REYNOLDS, BYRNE & CO. v. JAMES S. DOUGLASS, THOMAS G. SINGLETON AND THOMAS GOING.

January Term, 1838

IN error to the district court of the United States for the district of Mississippi.

This case was before the Court at January term, 1833, on a writ of error prosecuted by the plaintiffs in the court below; and was then remanded to the district court of Mississippi, with directions to issue a venire facias de novo, 7 Peters, 113. The facts of the case are fully stated in the case reported in 1833.

The plaintiffs again brought up the case; and it was argued by- Mr. Southard for the plaintiffs in error, and by Mr. Jones for the defendant.

Mr. Justice M'LEAN delivered the opinion of the Court:

This case is brought before this Court by a writ of error to the district court of Mississippi.

The action is founded on the following guaranty:

Port Gibson, 27th December, 1827. Messrs. Reynolds, Byrne & Co.

Gentlemen,—Our friend, Mr. Chester Haring, to assist him in business, may require your aid from time to time, either by acceptances or endorsement of his paper, or advances in cash. In order to save you from harm in so doing, we do hereby bind ourselves severally and jointly, to be responsible to you, at any time, for a sum not enceeding eight thousand dollars, should the said Chester Haring fail to do so.

Your obedient servants,

JAMES S. DOUGLASS,

THOMAS G. SINGLETON,

THOMAS GOING.

On the trial, the plaintiffs proved that they treated this paper as a continuing guaranty; and from time to time, on the faith of it, accepted drafts, endorsed bills, and made advances of money at the request of Haring. And an account current was given in evidence showing a balance due to the plaintiffs, from Chester Haring, on the 1st of July, 1828, of thirteen thousand seven hundred and two dollars and seventy-three cents; on 1st of January, 1829, of thirty-two thousand nine hundred and twenty dollars fifty-seven cents; and on the 1st of July in the same year, of twenty-five thousand one hundred and nine dollars and fifty-seven cents. And eight bills of exchange, drawn of Haring on the plaintiffs, amounting to eight thousand dollars, and which were accepted and paid by them in the year 1828; were also given in evidence.

On the first of May, 1829, it was proved that Haring executed five promissory notes, in the whole amounting to twenty-five thousand dollars, which were endorsed by Daniel Greenleaf, and also by the plaintiffs; and which were payable in the months of November, December, January, February and March, succeeding; the proceeds of which notes, when discounted, were to be credited to Haring in the general account.

On the 11th of April, 1829, Haring sold and transferred to Daniel Greenleaf his mercantile establishment, which constituted the whole of his property; and in August or September, following, he died.

At the time this transfer was made, Greenleaf gave a bond in the penalty of thirty-two thousand dollars, with Thomas G. Singleton, one of the guarantees and others security, conditioned that he would faithfully pay the debts of Haring, as therein stated; and especially after paying the home debts, 'that he should pay the sum of eight thousand dollars to the securities and signers of a letter of credit to Reynolds, Byrne & Co., in favour of the concern of Chester Haring, for that amount; or otherwise relieve and exonerate the securities and signers to said letters of credit.' And on the 24th of December following, Daniel Greenleaf assigned to James S. Douglass, another of the guarantees, by deed of trust, on the conditions stated therein, 'all his debts, claims and demands, either at law or in equity due, or to become due.' This assignment included the property, &c., he received from Haring.

One of the witnesses examined, stated, that he heard James S. Douglass and Thomas Going say, they considered the above assignments would indemnify them for their liability under the guaranty.

There was a good deal of evidence in the case, which, in considering the questions of law on the instructions, it is not material to notice.

This case was brought before this Court on certain exceptions, at the January term, 1833; at which time the following points were adjudged.

1. That the paper in question was a continuing guaranty, and was not discharged on the payment of advances, acceptances and endorsements amounting to eight thousand dollars; but that it covered future and successive advances, acceptances and endorsements.

2. That to entitle the plaintiffs to recover on the guaranty, they must show, that within a reasonable time they gave notice of its acceptance.

3. That notice of the future and successive advances, acceptances and endorsements, after the acceptance of the guaranty, was not necessary.

4. That in case of non-payment, the plaintiffs were required to show a demand of Haring; and, within a reasonable time, a notice to the guarantees.

After the evidence was closed, the plaintiffs moved the court to instruct the jury, 'if they believe that Chester Haring was insolvent previous to the maturity of any of the five promissory notes drawn by Chester Haring, dated the 1st May, 1829; and that these notes were endorsed upon the faith of the letter of credit, by the plaintiffs; then such previous insolvency rendered it unnecessary for the plaintiffs to give the defendants, as guarantors, notice of a demand upon and refusal by Chester Haring to pay the said notes; and the plaintiffs are entitled to recover. But the court refused to charge as requested; and charged the jury, that the insolvency of Chester Haring could be proved only by a record of the insolvency, or by admission of the defendants, and not by common rumor or hearsay evidence.'

This instruction was incautiously drawn, and its language is open to criticism. It would seem at the first view to place the right of the plaintiffs to recover, on the fact of Haring's insolvency. This would dispense with notice of the acceptance of the guaranty, and with all evidence of advances of money by the plaintiffs, and of acceptances and endorsements under it, except the five notes referred to. But such could not have been the meaning of the instruction, as understood by the counsel concerned in the case, and by the court. Much evidence had been given of advances of money, of acceptances and of endorsements on the faith of the guaranty; and also evidence of facts, from which the jury might, in the exercise of their discretion, infer a notice to the defendants that the guaranty had been accepted. In the view of these facts, it cannot be supposed that the plaintiffs would ask the court to instruct the jury to find in their favour; aside from all the other evidence in the case; if the insolvency of Haring should be satisfactorily established.

The instruction was undoubtedly intended to cover the objection that no demand had been made of Haring on his failure to pay, nor notice given to the defendants. And that if the jury should find the notes referred to had been endorsed on the faith of the letter of credit, the previous insolvency of Haring rendered notice of a demand on him unnecessary; and consequently the want of this notice constituted no objection to the plaintiffs' recovery. That the court considered the instruction in this light, is clear from the qualification which they annexed to it. By charging the jury that the insolvency of Haring could be proved only by the admission of the defendants or by record evidence, the court seem to consider if the fact of insolvency were legally made out, demand and notice were unnecessary.

Although the objection to the structure of the prayer is not without force, yet we are inclined to think that if the instruction had been given in the terms requested by the plaintiffs, under the circumstances, it could not have misled the jury. The could not have understood the instruction as laying down the basis of a recovery, independent of all other evidence in the case.

In this part of the record, the question is fairly raised whether the insolvency of Haring, either prior to or at the time of payment, will excuse the plaintiffs from making a demand on him, and giving notice to the guarantees.

At the death of Haring, the notes given by him on the 1st May, 1829, and endorsed by Greenleaf, were not due. And these promissory notes, to have had an influence in the case, under the instruction, must have been endorsed by the plaintiffs on the faith of the guaranty.

An objection is made, that these notes greatly exceed in amount the guaranty; and, consequently, that they could not have been endorsed on the credit of the guarantees. The same objection is urged against the various balances, which exceed the amount of the guaranty as stated in the account current. And it is contended, that to bind the guarantees, the advances, acceptances and endorsement, although made at successive periods, on the faith of the guaranty. must not exceed it in amount.

If this objection were well founded, it could not affect the right of the plaintiffs. They have brought their action on the guaranty, and exhibit eight bills of exchange, amounting to eight thousand dollars, which they aver were accepted and paid by them on the faith of the guaranty.

The question as to the liability of the guarantees, under acceptances and...