John H. Lyon & Co. v. Plum

• Decision Date: 02 March 1908
• Citation: 75 N.J.L. 883,69 A. 209
• Parties: JOHN H. LYON & CO. v. PLUM.
• Court: New Jersey Supreme Court

69 A. 209

75 N.J.L. 883

JOHN H. LYON & CO.

v. PLUM.

Court of Errors and Appeals of New Jersey.

March 2, 1908.

(Syllabus by the Court.)

Error to Supreme Court.

Action by John H. Lyon & Co. against Matthias Plum. Judgment for plaintiff, and defendant brings error. Reversed.

Coult, Whiting & Smith, for plaintiff in error. Harry N. Reeves, for defendant in error.

PARKER, J. At the foot of an order for merchandise dated October 3, 1895, signed by George W. Downs and addressed to Messrs. J. H. Lyon & Co., was appended the following guaranty, signed by the defendant: "Mess. J. H. Lyon & Co.—Gents.: 1 hereby agree to become responsible for the purchases made by G. W. Downs for his Newark Mill. Matthias Plum." At the date of the guaranty J. H. Lyon & Co. were a partnership consisting of John H. Lyon and Philip M. Knight. This partnership sold goods to Downs on running account, until on January 1, 1898, the amount due was $1,012.97. On that date Joseph C. Tully was admitted into the partnership, which continued with these three members until February, 1905, when it was incorporated as John H. Lyon & Co., the present plaintiff. Both the second partnership and the corporation continued the Downs account until in June, 1903, Downs, then owing a balance of $1,620.36 on the account and notes for goods purchased, was declared a bankrupt. Suit was brought by the corporation of Lyon & Co. against Plum on his guaranty, the bills of particulars annexed to the declaration setting forth all the items of the Downs account from the beginning; and at the trial in the Essex circuit, the above facts appearing on the plaintiff's case, motion was made to nonsuit on several grounds, among them that the guaranty was not a continuing one; that it had been discharged by the acceptance of notes by Lyon & Co., thereby extending the time of payment, and that the guaranty ceased to be operative on January 1, 1898, the date of Mr. Tully's admission into the firm, since which time the statute of limitations, which was duly pleaded, had run. This motion was denied, and, defendant having rested his case without offering any evidence, the jury by direction of the court returned a verdict in favor of plaintiff for the full amount claimed and interest. On exceptions to the refusal to nonsuit duly taken, and the refusal being assigned for error, the grounds then urged are now before us.

Regarding the guaranty as a continuing one, and the guarantor's liability as not discharged by the acceptance of notes, we think the trial judge nevertheless erred in refusing to nonsuit, as the case is in our opinion controlled by the third ground of nonsuit presented to the trial court. On this point the rule, as stated in 12 E. R. C. 469, is as follows: "A document in terms a continuing guaranty, given to two or more persons constituting a body fluctuating as to numbers, will in general continue in force only so long as the body remains unchanged." And in 20 Cyc. 1431, the rule as stated in the text is that, if the guaranty is directed to a firm, a change in the partnership terminates the offer, and advances made by the new firm are not secured by it. An examination of the decisions shows that they fully support the rule. In the case of Wright v. Russell, 3 Wilson, 530, a bond given for fidelity of a clerk to his then employer was held not to apply to his subsequent service in a partnership formed of the original employer and one associated with him. The case of Barclay v. Lucas, noted in the report of Barker v. Parker, 1 T. R. 291, is the only one we find to the contrary. In that case the bond was for the faithful service of one Philip Jones...