McConnon & Co. v. Stallings

• Decision Date: 16 July 1927
• Docket Number: 4641
• Court: Idaho Supreme Court
• Parties: MCCONNON & COMPANY, a Corporation, Respondent, v. M. E. STALLINGS, Appellant, and C. C. DENNY and J. A. GARVER, Defendants

258 P. 527

44 Idaho 510

MCCONNON & COMPANY, a Corporation, Respondent, v. M. E. STALLINGS, Appellant, and C. C. DENNY and J. A. GARVER, Defendants

No. 4641

Supreme Court of Idaho

July 16, 1927

GUARANTY-DEFAULT IN PAYMENT OF OBLIGATION-LIABILITY OF GUARANTOR-EFFECT OF "ABSOLUTE GUARANTY."

1. Generally, guaranty of payment of obligation of another is an absolute undertaking imposing liability on guarantor immediately on default of principal, regardless of whether notice was given to guarantor.

2. Guaranty whereby guarantors jointly, severally and unconditionally promised and guaranteed full and complete payment of the obligation of principal constituted "absolute guaranty" and did not require notice of default of principal as prerequisites to recovery from guarantors.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Robert M. Terrell, Judge.

Action on contract of guaranty. Judgment for respondent. Affirmed.

Judgment affirmed. Costs to respondent.

Walter H. Anderson, for Appellant.

The guaranty in this case, being a continuing one, the duty rested upon the plaintiff, upon default to give the guarantors notice thereof, within a reasonable time in order that they might protect themselves. (Taussig v Reid, 145 Ill. 488, 36 Am. St. 504, 32 N.E. 918; Gimbell Bros. v. Mitchell, 203 Mo.App. 610, 219 S.W 676; Singer Mfg. Co. v. Littler, 56 Iowa 601, 9 N.W 905; Davis Sewing Machine Co. v. Mills, 55 Iowa 543, 8 N.W. 356; Stewart v. Knight & Jillson Co., 166 Ind. 498, 71 N.E. 182, 76 N.E. 743; Young v. Merle & Heaney Mfg. Co., 184 Ind. 403, 110 N.E. 669; Douglass v. Reynolds, 7 Pet. (U. S.) 113, 8 L.Ed. 626; Heberling Med. Co. v. Smith, 201 Ill.App. 126; Louisville Mfg. Co. v. Welch, 10 How. (U. S.) 461, 13 L.Ed. 497; Walker v. Forbes, 25 Ala. 139, 60 Am. Dec. 498.)

McDougall, McDougall & McDougall, for Respondent.

The instrument sued upon in this action is an absolute and unconditional guaranty. (28 Corpus Juris, 895; McConnon & Co. v. Laursen, 22 N.D. 604, 135 N.W. 213; Rawleigh Medical Co. v. Atwater, 33 Idaho 399, 195 P. 545; Miller v. Lewiston National Bank, 18 Idaho 124, 108 P. 901; Frost v. Harbert, 20 Idaho 336, 118 P. 1095, 38 L. R. A., N. S., 875; Citizens Trust & Savings Bank v. Bryant, 53 Cal.App. 735, 200 P. 823; Hess v. Watkins Medical Brand, 70 Ind.App. 416, 123 N.E. 440; Noyes v. Nichols, 28 Vt. 159; Huckaby v. McConnon & Co., 213 Ala. 631, 105 So. 886; Booth v. Irving Exchange Nat. Bank, 116 Md. 668, 82 A. 652; Farmers State Bank v. Hansen, 174 Wis. 100, 182 N.W. 944; Ives v. Williams, 143 Va. 855, 129 S.E. 675; Rawleigh Co. v. Deavours, 209 Ala. 127, 95 So. 459; Cumberland Glass Mfg. Co. v. Wheaton, 208 Mass. 425, 94 N.E. 803; Murphy v. Hart, 122 A.D. 548, 107 N.Y.S. 452.)

In case of an unconditional guaranty, notice of the principal's default need not be given to the guarantor to hold him liable under the guaranty. (28 C. J. 982.)

Contracts, such as the one sued upon here, have been by some courts held to be contracts of suretyship, and no notice of the principal's default is necessary to bind the surety. (Hess v. J. R. Watkins Medical Co., supra; Huckaby v. McConnon & Co., supra.)

WM. E. LEE, C. J. Budge, Givens and T. Bailey Lee, JJ., concur.

OPINION

WM. E. LEE, C. J.

McConnon & Company, plaintiff below, entered into a contract with one Denny, by which it was agreed that it would, from time to time, as ordered, sell him certain goods, wares and merchandise. Payment therefor was to be made from the proceeds of the sale of such goods and, on the expiration of the contract, a cash settlement was to be made for any outstanding balance. On the back of the contract, for a recited consideration, Stallings and another--

". . . . do hereby jointly and severally and unconditionally promise and guarantee the full and complete payment of said medicines, extracts, and other articles at the time and place and in the manner as in said agreement provided.

"J. A. CARVER.

"M. E. STALLINGS."

The action is against both the principal and guarantors for a balance due on the contract. Defendant Stallings answered, and by cross-complaint set up a claim for damages, equal to plaintiff's demand, incurred by reason of the failure to notify him, within a reasonable time, of Denny's default in making payment. The trial court sustained a motion for a nonsuit on the cross-complaint and directed a verdict for plaintiff. Defendant Stallings appeals from the judgment.

Appellant's contention is that, since the action was based on a continuing guaranty, the guarantee was required to give the guarantors reasonable notice of the default of the principal. Admitting that the contract with appellant is of a continuing nature, respondent upholds the action of the trial court on the ground that, since the guaranty is absolute and unconditional, it was not necessary to give notice of the principal's default in order to hold the guarantors.

As a general rule a guaranty of the payment of the obligation of another is an absolute undertaking imposing liability upon the guarantor immediately upon the default of the principal regardless of whether notice is given to the guarantor. (28 C. J. 972, 980; Farmers State Bank v. Hansen, 174 Wis. 100, 182 N.W. 944; Cumberland Glass Mfg. Co. v Wheaton, 208 Mass. 425, 94 N.E. 803; Booth v. Irving Nat. Exchange Bank, 116 Md. 668, 82 A. 652; ...