Stearns v. Jones

• Decision Date: 17 November 1917
• Citation: 199 S.W. 400
• Parties: STEARNS v. JONES et al.
• Court: Tennessee Supreme Court

199 S.W. 400

STEARNS v. JONES et al.

Supreme Court of Tennessee.

November 17, 1917.

Certiorari to Court of Civil Appeals.

Bill of complaint by R. L. Stearns against E. M. Jones and others. A judgment for plaintiff was affirmed by the Court of Civil Appeals, and defendant Jones brings certiorari. Affirmed.

Thompson, Williams & Thompson, of Chattanooga, for R. L. Stearns. S. B. Smith, of Chattanooga, for E. M. Jones and others.

WILLIAMS, J.

Complainant filed the bill of complaint to enforce the liability of defendant Jones as a guarantor. The chancellor and the Court of Civil Appeals decreed in favor of complainant.

One of the questions raised in the assignments of error in support of a petition for certiorari is that the contract of guaranty was satisfied, it not being a continuing one.

Stearns is a wholesale merchant, and Jones guaranteed payment for sales made by him to a firm of Peters & Soulyet up to $1,500, without naming any time limit.

In defense, it is urged that complainant extended to that firm credit on sales to an amount above $7,000, and proof shows that the guaranty sum was largely more than paid by the firm from time to time on the running account. It is not contended by complainant that the balance due on such total credit exceeds $1,100. The case for liability turns, therefore, on whether the contract was one of continuing guaranty.

In this state it had been held, following Drummond v. Prestman, 12 Wheat. (U. S.) 515, 6 L. Ed. 712, in respect of a guaranty in a commercial transaction, that the guarantor shall be held to the full extent of his engagements, and that the rule in construing such an instrument is that the words of the guaranty are to be taken as strongly against the guarantor as the sense will admit. Bright v. McKnight, 1 Sneed (33 Tenn.) 158. This rule obtains in a number of jurisdictions and is based on the idea that it is important to uphold such guaranties as helpful to trade and enterprise, which very often "depend upon a combination of the labor and energy of those without means with the credit of those who have them."

The rule differs from that enforced in respect of a contract of ordinary suretyship.

A "continuing guaranty" is one which is not limited to a particular transaction or specific transactions, but which is intended to cover future transactions until revoked. It is generally unlimited as to time, but frequently limited as to the amount of indebtedness to be charged against the guarantor. 12 R. C. L. p. 1061; 1 Words and Phrases (Second...