Mudge v. Varner

• Decision Date: 27 November 1907
• Citation: 59 S.E. 540,146 N.C. 147
• Court: North Carolina Supreme Court
• Parties: MUDGE. v. VARNER.

59 S.E. 540

146 N.C. 147

MUDGE.

v.VARNER.

Supreme Court of North Carolina.

Nov. 27, 1907.

1. Guaranty—Liability of Guarantor.

The liability of one who guarantees that a corporate debt will be paid on a designated date is that of a guarantor of payment, and not of collection, and, on the corporation failing to pay, his obligation to pay is absolute.

[Ed. Note.—For cases in point, see Cent. Die. vol. 25, Guaranty, §§ 36—41.]

2. Same.

A guarantor of payment is liable on an absolute promise to pay on failure of the principal debtor to pay, while a guarantor of collection is liable on a promise to pay on condition that the creditor will diligently prosecute the principal debtor without success.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 25, Guaranty, §§ 36-41.]

3. Evidence — Parol Evidence — Written Guaranty.

Where a contract of guaranty is in writing and free from ambiguity, the guarantor cannot alter it by proof that he did not intend to be bound according to its terms.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 20, Evidence, §§ 1813-1817.]

4. Guaranty—Consideration.

A guaranty by one that the debt of another will be paid on a designated date, if the creditor will delay enforcement of the claim until that time, is, on the creditor agreeing to delay, supported by a sufficient consideration.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 25, Guaranty, §§ 13-17.]

Appeal from Superior Court, Rowan County; Moore, Judge.

Action by Edmund T. Mudge against H. B. Varner. From a judgment for plaintiff, defendant appeals. Affirmed.

John L. Rendleman and Adams, Jerome & Armfield, for plaintiff.

R. Lee Wright and P. S. Carlton, for defendant.

HOKE, J. Plaintiff, holding a valid account past due for goods sold, and delivered to the Globe Publishing Company to the amount of $286.88, and having some reason to complain of inattention on part of the company to his letters concerning it, placed the same in the hands of an attorney for collection. Defendant, who was the president of the Globe Company, wrote protesting against such course, whereupon plaintiff wrote that, if defendant would give notes for the account and indorse same, the plaintiff would withdraw the claim from the hands of the attorney. Defendant replied, giving plaintiff general assurance of payment, but not offering to indorse any notes for the account. Thereupon plaintiff wrote defendant a letter containing this statement: "Now, please do not misunderstand us. We are making a claim against the Globe Publishing Company, and not against you, and, if you have any confidence yourself in the Globe Publishing Company, you will indorse the notes. Should we have a satisfactory settlement from you by Friday of this week properly secured, we will withdraw the claim entirely from the hands of the attorney, otherwise we will authorize him to proceed to collect the account by suit of necessary. If you should decide to indorse the note, and will wire us at once, we will withdraw the claim immediately." In reply defendant wrote on June 25th inst. saying: "Will you be so kind as to hold up this account until July 10th. If so, I will guarantee that it will be paid on that date." Plaintiff immediately replied, agreeing to the delay. The account was not paid, and some time thereafter the company became insolvent, and the present action was instituted against defendant personally, on the agreement contained in this written correspondence.

Recovery was resisted by defendant chiefly on the ground that the plaintiff was required to show that he had proceeded with diligenceagainst the principal debtor. The evidence does not indicate very clearly that the plaintiff has been at all remiss in this respect, but conceding that this should be established, we are of opinion that it would not avail to relieve defendant from liability, for the reason that the agreement, shown by the correspondence, is a guaranty of payment and not simply of collection, and, on default of the principal, the defendant's obligation to pay became absolute. Cowan v. Roberts, 134 N. C. 415, 46 S. E. 979, 65 L. K. A. 729, 101 Am. St. Rep. 845; Jenkins v. Wilkinson, 107 N....