Metzger v. Hubbard

• Decision Date: 05 October 1899
• Citation: 54 N.E. 761,153 Ind. 189
• Parties: METZGER v. HUBBARD et al.
• Court: Indiana Supreme Court

153 Ind. 189

54 N.E. 761

METZGER

v.HUBBARD et al.

Supreme Court of Indiana.

Oct. 5, 1899.

Appeal from circuit court, St. Joseph county; John H. Gillett, Special Judge.

Action by Lucius Hubbard and others against John B. Metzger. Judgment for plaintiffs, and defendant appeals. Affirmed.

Dudley M. Shively and Chambers, Pickens & Moores, for appellant. Andrew Anderson and A. L. Brick, for appellees.

MONKS, J.

On March 29, 1884, John Snorf executed his promissory note to appellant, in these words: “Niles, Michigan, March 29, 1884. Five years from the 16th day of April, A. D. 1884, for value received, I promise to pay to John B. Metzger twenty-eight hundred and thirty-five dollars, with interest at the rate of seven per cent. per annum; the interest on the whole sum to be paid annually on the 16th day of April of each year; a mortgage bearing even date herewith being collateral thereto. [Signed] John Snorf.” On the same day Snorf and wife executed a mortgage to appellant on lands in the state of Michigan to secure said note. On March 31, 1884, appellant, Metzger, sold and transferred said note to one Daniel Ward, in consideration of $2,800 then paid by said Ward to him, and assigned said note to said Ward by the following agreement in writing indorsed thereon: “For value received, I hereby sell and assign the within note to Daniel Ward, of South Bend, Indiana, and guaranty the payment and collection of the same, and agree to pay all attorney's fees, and do waive presentment for payment, protest, and notice of protest and nonpayment of the same; all without relief from valuation and appraisement laws. [Signed] John B. Metzger.” Said Ward died at St. Joseph county, Indiana, in 1892, testate. The will was duly probated, and an executor appointed, who sold and assigned said note, by indorsement, to appellees. The interest was paid on said note each year by the maker thereof, in full, to October 19, 1891. This action was commenced by appellees against appellant upon his said contract indorsed upon said note. Appellant's demurrer to the complaint for want of facts was overruled, and he filed an answer in five paragraphs, the first being a general denial. Demurrers for want of facts were sustained to the third, fourth, and fifth paragraphs of answer. The trial of said cause by the court resulted in a finding and (over a motion for a new trial) judgment in favor of appellees.

The complaint proceeds upon the theory that appellant's contract indorsed upon said note was a direct agreement to pay said note, upon which he was liable at the suit of his own or any subsequent assignee. If this theory is correct, the court did not err in overruling appellant's demurrer to the complaint. It is the settled rule in this state that, when the form of the contract is that of an original and absolute undertaking to pay the debt of another, the liability of the promisor is that of surety, but when the agreement is that another shall pay in the first instance, and the promisor only becomes liable upon the default of the other, the contract is one of strict guaranty. “Usually the contract of the guarantor is to answer for the default of his principal, if by the use of due diligence a loss results from such default, while the surety is responsible at once upon his direct engagement to pay.” Manufacturing Co. v. Black, 111 Ind. 308, 313, 12 N. E. 504;Ward v. Wilson, 100 Ind. 52, 55, 56;La Rose v. Bank, 102 Ind. 332, 335, 336, 1 N. E. 805. It has been uniformly held in this state that where any person, upon a sufficient consideration, by contract in writing guaranties the payment of the debt of another, evidenced by a promissory note or otherwise, in language substantially as follows, “I guaranty the payment of [describing the debt],” such contract is a direct and absolute undertaking to pay the debt, without any condition or contingency whatever, and renders him primarily liable thereon, and that therefore such person is not entitled to any notice of the failure of the other party to pay the debt, and no laches of the holder of said indebtedness, or failure to collect or attempt to collect the same from the other parties liable for its payment, will relieve the person making such contract from the payment thereof, and that such a contract passes to the assignee of such indebtedness. Nading v. McGregor, 121 Ind. 465, 23 N. E. 283;Wright v. Griffith, 121 Ind. 478, 481, 23 N. E. 281;Manufacturing Co. v. Black, 111 Ind. 308, 12 N. E. 504;Ward v. Wilson, 100 Ind. 52;Kline v. Raymond, 70 Ind. 271;Frash v. Polk, 67 Ind. 55;Cole v. Bank, 60 Ind. 350;Studabaker v. Cody, 54 Ind. 586;Sample v. Martin, 46 Ind. 226;Dickinson v. Colter, 45 Ind. 445;Watson v. Beabout, 18 Ind. 281;Burnham v. Gallentine, 11 Ind. 295. In Burnham v. Gallentine, supra, the agreement entered on the back of the note by the payee was in the following words, “I guarantee the payment of this note, and costs, if any are made on it;” and it was held to be, in substance and legal effect, a promissory note, and the person executing it an absolute promisor,-unconditionally bound to pay the note, without regard to the solvency or insolvency of the maker thereof. In Sample v. Martin, supra, the agreement indorsed on the note by persons, neither one being the payee, was, “We guaranty the payment;” and it was held that the persons executing the same were unconditionally liable, and were not discharged by the failure to use diligence to collect the note of the maker while he was solvent and able to pay. In Studabaker v. Cody, supra, the note was indorsed by the payee as follows, “For value received, I assign this note to Edgar Henderson, and guaranty the payment of the same when due;” and it was held that the same was a direct agreement by the payee to pay the note when due, depending upon no demand of payment, or other condition, and upon which he was primarily and absolutely liable at the suit of the first or any subsequent assignee. In Cole v. Bank, supra, two persons, not the payees of the note, indorsed on the back thereof the following: “We jointly and severally, for value received, hereby guaranty the prompt payment of the within note.” Said note was afterwards sold and assigned by the payee to said Merchants' Bank, and the assignee brought an action on said agreement; and it was held that said contract passed to said bank, and it was entitled to recover thereon, upon the doctrine declared in Sample v. Martin, supra, which was approved. In Frash v. Polk, supra, William Frash assigned to one Polk a judgment, and at the same time he and one John Frash executed an agreement which, omitting that part which described the judgment, assigned it as follows; “We hereby guaranty that said judgment, bearing ten per cent. interest, shall be paid to said Robert Polk on or before December 25, 1875; and, in case it is not paid by that time, we guaranty the payment of three per cent. additional interest from said date (Dec. 25, 1875) until said judgment is paid.” And it was held that said contract was not a collateral guaranty, but that it was a direct and absolute contract of the persons executing it, and that they were severally liable thereon. In Kline v. Raymond, supra, the writing sued on read: “I hereby guaranty the payment of six hundred dollars to Raymond, Lowe & Co., for goods bought April 23, 1872, by G. H. Baxter, Muncie, Ind., the terms being for net goods 60 days, and time goods 4 months. This guaranty...