McConnon & Co. v. Prine

• Decision Date: 27 February 1922
• Docket Number: 22427
• Citation: 128 Miss. 192,90 So. 730
• Parties: MCCONNON & CO. v. PRINE et al
• Court: Mississippi Supreme Court

90 So. 730

128 Miss. 192

MCCONNON & CO. v. PRINE et al

No. 22427

Supreme Court of Mississippi

February 27, 1922

1 GUARANTY. Goods being furnished in reliance on guaranty immaterial that recited consideration of one dollar was not paid.

In a suit against guarantors under a contract of guaranty reciting a consideration of one dollar paid by the guarantee to the guarantors, said contract guaranteeing payment for the furnishing of goods, etc., to a named person in which the guarantors became bound, absolutely and. unconditionally, to pay the guarantee the full amount of such purchases, a plea averring that the recited consideration was not paid to them by the guarantee presents no defense, as the furnishing of such goods, etc., to the named person constitutes a consideration, and the recited consideration may be shown by proof not to be the real consideration and a demurrer to such plea should be sustained.

2. GUARANTY. Where contract made no provision for notice to guarantors, plea averring no notice is demurrable.

Where a contract of guaranty is absolute, unconditional, and continuing, and provides for payment of the guaranteed debt for goods furnished a third person, and contains a clause "it is understood that there are no conditions or limitations to this undertaking, except those written or printed herein," and where there is no condition or provision for notice of acceptance written or printed in the contract, none is necessary, and a demurrer to a plea averring that no notice of acceptance was given, the guarantors should be sustained.

3 GUARANTY. Contract may be essential ground of credit and a part of the principal contract, so that creditor may join principal debtor and guarantor.

While ordinarily a contract of guaranty is separable from the debt of the person whose debt is guaranteed, yet "where the guaranty or promise is made at the same time with the principal contract, and becomes an essential ground of the credit given to the principal debtor, the whole is one original and entire transaction, and the consideration extends to and sustains the promise of the principal debtor and also the guarantor. No other consideration need be shown than that for the original agreement upon which the whole debt rested;" and in such case the creditor may join all or either in a suit on such debt. The fact that the debt may be evidenced by different instruments is immaterial.

HON. W. H. HUGHES, Judge.

APPEAL from circuit court of Simpson county, HON. W. H. HUGHES, Judge.

Suit by McConnon & Co. against J. L. Prine and others. Demurrers to pleas were overruled, plaintiff declined to plead further, and suit was dismissed, and plaintiff appeals. Reversed and remanded.

Judgment reversed, and cause remanded.

A. M. Edwards, for appellant.

This is not a conditional guaranty like a letter of credit binding only on conditions of the giving of notice of any kind but is made absolutely unconditional in express words and agreeing now to guarantee the indebtedness of the said John Leonard Prine in consideration of plaintiff extending credit to the said John Leonard Prine.

The guaranty is not only unconditional, but it expressly defines what alone shall, as against the guarantee, put an end to its continuing force, to-wit: until revoked in writing. We submit that when the guaranty was accepted by plaintiff it then at that moment became binding upon the delivery of the instrument.

The guaranty being an unconditional one, the authorities hold that such notice in case of such a guaranty is not necessary. See Davis v. Wells, Fargo & Co., 104 U.S. 159, and cases there cited. Condon v. Laursen, 135 N.W. 213; Hughes v. Roberts, 72 S.W. 799; Sewing Machine Co. v. Richards, 115 U.S. 524; Buford v. Gibbs, 8 Cush. 154 (Mass.); Moses v. Bank, 149 U.S. 298; Hess et al. v. Watkins Md. Co., 123 N.E. 440 (Ind.); Duncan v. Tooth, 5 Bing (C.) 577.

We submit that when the guarantors, W. M. Prine, Jr., and B. P. Slay signed and delivered the said guaranty to the guarantee, McConnon & Co., that they then and there unconditionally guaranteed unto the said McConnon & Co. the indebtedness of the said J. L. Prine. Their obligations are absolute and unqualified, freed from all conditions made so by the express terms of the contract, and when the said J. L. Prine made default in the payment of said indebtedness McConnon & Co. had the right to look to the said guarantors for the payment of the indebtedness, and that without any further notice.

In regard to the second assignment of error, we submit that this is also well taken, and that the court committed grave error in dismissing the case because, it is said, that notice of acceptance of the guaranty was said not to have been shown in the said declaration to have been given to the said W. M. Prine, Jr., and B. P. Slay, guarantors; for the reason that such an allegation would have been absolutely unnecessary, and if it had been averred, should have been treated as mere surplusage. 2 S. & M., page 139.

I submit that it is a well-settled rule of law in this country, that where the contract of guaranty, as it is in the case at bar, is absolute and unqualified free from all condition whatever, that no notice of acceptance of the guaranty to the guarantors is necessary.

Without further prolonging the argument here I submit that the judgment of the lower court should be reversed and the case remanded for trial.

Hilton & Hilton, for appellees.

There are two reason why this case should be affirmed. We wish first to call the court's attention to the fact that a demurrer was interposed by appellees here to the declaration on the ground that the suit of appellant attempted to sue J. L. Prine on an open account and in such suit joined the other two appellees, W. M. Prine, Jr., and B. P. Slay as guarantors. It is to be noted that to this declaration is attached the written guaranty of W. M. Prine, Jr., and B. P. Slay. This guaranty was not signed by J. L. Prine nor by the appellants. It was an open, continuing and unlimited guaranty of W. M. Prine, Jr., and B. P. Slay to McConnon & Co. for all advances they might make to J. L. Prine in the way of goods, wares, etc. To this declaration is also attached a sworn itemized account of goods bought by J. L. Prine. It is a suit in which appellants attempted to hold principal J. L. Prine liable for an indebtedness on an open account and to hold the other two appellees liable for an indebtedness on their written guaranty.

We appreciate the rule of law which gave them the right to either sue J. L. Prine on an open account or they could have sued W. M. Prine, Jr., and B. P. Slay in separate action on written guaranty. In other words a joint action against J. P. Prine on an open account and against the other two appellees on a guaranty cannot be brought in the same suit. The cause of action is different. The parties are different. The defense may be altogether different. For instance the principal may not have any defense. The defense of W. P. Prine, Jr., and B. P. Slay may be non est factum, or failure to give notice to them of acceptance of their guaranty. In other words only those who signed the written contract or guaranty can be sued in the same suit.

We call attention to the case of. McConnon & Co. v. Richardson, 78 So. 292, 117 Miss. 345. We now come to the question and only question stressed by appellant, and that is whether the lower court erred in overruling his demurrer to our special plea number two in which we set up that no notice had been given by McConnon & Co. of the acceptance of the guaranty.

There are a great many authorities on this proposition. We, however, call the court's attention to the fact that the guaranty itself stipulates that the liability of the guarantors is a continuing one, that no time is fixed when their liability shall cease. No amount of liability is stipulated in the guaranty. In other words it is an open, continuing, and unlimited, conditional guaranty for future advances to be made by McConnon & Co. to J. L. Prine. It is not an absolute guaranty, because it could not be an absolute guaranty as it does not fix the time of expiration of liability, nor the amount of liability, nor does it state any present delivery of goods but specifically states for advance to be made in the future. The case that the counsel relies on, Davis v. Wells, Fargo & Co. , 104 U.S. 159, is quite a different case from the one at bar. The Fargo case was a guaranty for a stipulated sum. The court held that it was an absolute guaranty.

A later case is Sewing Machine Co. v. Richards, 115 U.S. 524. That was a case in which there was a guaranty for a stipulated sum, but it failed to recite the consideration and the court held that notice was necessary. This question has been discussed in a great many other opinions. Montgomery v. Henderson, 1 Tex.App. Civ. Cas. (White & W.); Long v. Hemphill, 5 Ky. Rep. 771; Estey v. Murphy, 7 Ky. L. Rep., 596; Mozley v. Tinkler, 1 Cromp. M. & R. 692, 5 Tyrw. 416, 1 Gale 11; Bay v. Thompson, 1 Pearson (La.) 551; Fay v. Hall, 25 Ala. 704. The author of Lawyers Reports Annotated in his footnote Book 16 (New Series 1908), under the case of Deering & Co. v. Mortelle et al., page 353, gives the best discussion of this question, under part two denominated introductory.

It will therefore be seen that there is quite a difference made in absolute guaranty and continuing conditional guaranty guaranties fixed in amount and unlimited guaranties. In the suit at bar the guaranty was unlimited, continuing and conditional and based upon future advances and under the authorities cited, notice was necessary. We have been unable to find a single case brought in any state or decided by the supreme court of...