Locke v. McVean

• Decision Date: 11 April 1876
• Citation: 33 Mich. 473
• Court: Michigan Supreme Court
• Parties: Owen M. Locke v. David McVean and another

33 Mich. 473

Owen M. Locke v. David McVean and another

Supreme Court of Michigan

April 11, 1876

Heard January 20, 1876

Error to Oakland Circuit.

Judgment affirmed, with costs.

J. E Sawyer and George H. Lothrop, for plaintiff in error, cited Farmers and Mechanics' Bank v. Kercheval, 2 Mich. 504; Hunt v. Smith, 17 Wend. 179; Dobbin v Bradley, Ib., 422; Walrath v. Thompson, 6 Hill 541; Smith v. Dann, Ib., 543; Salisbury v. Hale, 12 Pick. 419; Curtis v. Hubbard, 6 Met. 191; Lee v. Dick, 10 Pet. 493.

A. C. Baldwin, for defendants in error, cited: Milton v. Stewart, 9 Wheat. 680; Wright v. Johnson, 8 Wend. 576; Walch v. Bailie, 10 Johns. 180; Birckhead v. Brown, 5 Hill 640; Whitcher v. Hall, 6 B. & C., 269; N. H. Savings Bank v. Colcord, 15 N. H., 122; Watriss v. Pierce, 32 N. H., 574; Bouser v. Cox, 4 Beavan 379; Farmers and Mechanics' Bank v. Evans, 4 Barb. 487; Bigelow v. Benton, 14 Barb. 128; Henderson v. Marvin, 31 Barb. 299; Leeds v. Dunn, 10 N. Y., 469; Wilson v Edwards, 6 Lans. 134; Bagley v. Clark, 7 Bosw. 94; Bangs v Strong, 10 Paige 11; S. C., 7 Hill 250; Miller v. McCann, 7 Paige 459; Frank v. Edwards, 8 Exch. 214; Holland v. Lee, 9 Ib. 480; N. W. R. W. Co. v. Whinway, 10 Ib. 77; Stewart v. McKean., Ib., 675.

OPINION

Graves, J.

Locke and defendant in error, David McVean, entered into an agreement in writing on the 1st of March, 1871, of the following tenor:

"It is agreed that all sales of sewing machines which O. M. Locke, of Detroit, Mich., shall make to David McVean, of Lapeer, shall be upon the terms and conditions following, unless it shall be otherwise in writing hereafter agreed, during the continuance of this contract. All indebtedness by account, note or otherwise, which shall arise under this contract from said D. McVean to said O. M. Locke, shall be paid when due.

"First. Machines will be packed for transportation and delivered in Detroit by O. M. Locke, after which all expenses of every kind will be paid by said David McVean.

"Second. Said David McVean shall reasonably advertise and make all reasonable efforts to sell at prices not less than the regular retail prices of O. M. Locke, and shall introduce, supply and sell said machines as speedily, thoroughly and extensively as practicable throughout said Lapeer county, state of Michigan.

"Third. Said D. McVean shall neither keep nor deal in any other sewing machines than the 'Florence,' and shall supply himself, by purchase from O. M. Locke, with needles, threads and findings for said machines, that his customers and the community may be at all times promptly and conveniently supplied; and said needles, thread and findings shall be sold to him by O. M. Locke at the lowest wholesale price to such agents for cash.

"Fourth. O. M. Locke will, during the continuance of this agency, sell his machines to said D. McVean at a discount of twenty-five per cent. from the regular retail prices at Detroit.

"Fifth. Said D. McVean shall give to every purchaser of a Florence machine full and thorough instructions how to run said machine, and shall forfeit to O. M. Locke all profit or commission on such sale in case of failure or neglect to fulfill the requirements of this clause.

"Sixth. So long as said D. McVean shall conduct this business properly, energetically and to the satisfaction of O. M. Locke, no other local agent for the sale of said sewing machines will be established in said territory.

"Seventh. Said D. McVean shall give his note of hand for all purchases of machines, at the time of purchase, said notes to be on four months' time without interest. If so desired, an extension of time will be granted by O. M. Locke, equal to sixty days on each note, said McVean to pay interest therefor at the rate of eight per cent. per annum.

"O. M. Locke agrees to take good notes that said McVean may receive in exchange for machines, provided said notes are payable at bank or express office, bearing interest from date, on not over six months' time and endorsed by D. McVean. If not paid at maturity, said notes are to be returned to said D. McVean. If O. M. Locke shall not be satisfied with the conduct of said business and agency by said D. McVean, he may establish another agent in his stead at pleasure. Said D. McVean may discontinue this agency at pleasure, on notice of thirty days.

"For the more convenient prosecution of this agency, O. M. Locke agrees to furnish said McVean with a wagon, as soon as said McVean shall become satisfied that the territory will pay sufficiently well to justify the expense. Said wagon to be the property of O. M. Locke, and to be returned in as good order as received, 'natural wear excepted,' upon demand of O. M. Locke."

At the time this contract was entered into, a bond was written and executed on the back of it, from the defendant David McVean as principal, and the defendant Daniel McVean and one Alexander McVean, now deceased, as sureties, to the plaintiff Locke, in the penal sum of two thousand dollars, and conditioned that if David McVean should "well and truly keep and perform in all respects, according to its true intent and meaning," the contract in question, then the obligation should be void, otherwise in force.

Subsequently David McVean gave his five several promissory notes to Locke, each payable six months after date, and dated respectively May 17th, May 18th, September 22d, October 2d, and October 7th, in the year 1871, and each, except the second, only drawing interest after four months, and then at the rate of eight per cent. The second was so worded as upon its face to draw interest at seven per cent. from date for the first four months, and thereafter at eight.

The notes were all given for sewing machines furnished by Locke in the course of the business explained in the contract, and not being paid, Locke sued upon the bond to enforce collection of the surviving surety, When the case came on for trial, there was no dispute about the genuineness of the papers. The only question was whether the bond applied to and covered these notes. The contract and bond were admitted in evidence without objection, but the surety insisted that the notes were not such as he agreed to be liable for; that he only bound himself to be liable for notes given by David McVean to the plaintiff, and drawn payable at four months, whereas the notes offered were drawn payable at six months; and the judge sustained the objection and refused to admit the notes in evidence. The question in the case is upon the correctness of this ruling, and it turns upon the interpretation of the papers. In argument, counsel laid down conflicting rules as to the interpretation of guaranties. For the defendants it was contended that the undertaking of the guarantor must be read and applied according to the strict letter or precise terms used to express it, and Wright v. Johnson, 8 Wend. 512, and several other cases, were cited.

On the part of plaintiff in error it was claimed that the same principle is to govern which obtains where other contracts are in question, and that the intent of the parties is to be sought for and may be gathered from the whole instrument and the subject matter of the engagement, and Curtis v. Hubbard, 6 Met. 191, and Lee v. Dick, 10 Pet. 493, were referred to.

Formerly it is certain there was much diversity of opinion on this subject. A number of New York cases were very strongly on the side of construction favorable to the guarantor and such as would reduce his liability within the narrowest limits. Chancellor Kent seems to have inclined to that doctrine.--Com., Vol. 3, p. 124. There were likewise some English authorities which favored the same view. But in Mason v. Pritchard, 12 East, 227, the court of King's Bench declared that the words were to be taken as strongly against the guarantor as the sense of them would admit of, and in Merle and others v. Wells, 2 Campb. 413, Lord Ellenborough at nisi prius, acted on the same principle.

In Hargreave v. Smee, 6 Bing. 244, Tindal, C J., said: "The question is, What is the fair import to be collected from the language used in this guaranty? The words employed are the words of the defendant, the guarantor in this cause, and there is no reason for putting on a guaranty a construction different from that which the court puts on any other instrument. With regard to other instruments the rule is, that if the party executing them leaves anything ambiguous in his expressions, such ambiguity must be taken most strongly against himself." Park, J., observed, that it had been conceded that all these cases were to be decided each on its own ground; and that it was useless, therefore, to refer to the decisions, except for some principle incidentally laid down; that the only question of principle which had been agitated was, whether these instruments were to be construed strictly, and that he was not disposed to hold the doctrine which had been imputed to Lord Wynford, that a guaranty ought to receive a strict construction. Burrough, J., remarked, that he hoped the time would come when more reliance would be placed on principles than on cases; that he had no doubt as to the intention of the parties; that the writings were commercial agreements, and ought to receive a liberal, not a strict construction. In Wood v. Priestner, in the Exchequer in 1866, the Chief Baron observed, the question in these cases depends not merely on the words; but, when the words are at all ambiguous, requires a consideration of the circumstances to aid the construction; that it was therefore necessary to look at the existing state of things, and looking to that, to construe the words in such a way as the court considered most consistent with the intention of the parties; not, indeed, considering any...