Stewart v. Knight & Jillson Co.

• Citation: 71 N.E. 182
• Decision Date: 24 May 1904
• Docket Number: No. 4,674.,4,674.
• Court: Indiana Appellate Court
• Parties: STEWART v. KNIGHT & JILLSON CO.

71 N.E. 182

STEWART

v.KNIGHT & JILLSON CO.

No. 4,674.

Appellate Court of Indiana, Division No. 2.

May 24, 1904.

Appeal from Superior Court, Marion County; John L. McMaster, Judge.

Action by the Knight & Jillson Company against Moses J. Stewart. From a judgment in favor of plaintiff, defendant appeals. Reversed.

R. W. McBride, C. S. Denny, and Geo. L. Denny, for appellant. D. P. Williams, for appellee.

WILEY, J.

Action by appellee upon the following instrument: “Indianapolis, Ind., 6-23-1900. Knight & Jillson-Dear Sirs: Please let the bearer, Corvin Larkin, have whatever he wants at any time, and I will see that it is paid for. M. J. Stewart.” Complaint in one paragraph, to which a demurrer was overruled. Answer in eight paragraphs, to the third, fourth, seventh, and eighth of which a demurrer was sustained. Reply in general denial. Trial by jury. Verdict for appellant for $1,312.76. Motions for a new trial and in arrest of judgment, each overruled, and judgment on the verdict. All the rulings against appellant are assigned as errors. The complaint avers that appellee is a corporation engaged in dealing at wholesale in plumbers', gas fitters', and steam fitters' supplies; that on the 23d of June, 1900, appellant executed the writing above set out, whereby he agreed to pay to appellee, under the name of Knight & Jillson, for any and all goods, etc., it might furnish and deliver at any time to Corvin Larkin; that said instrument was addressed to appellee under the name and style of Knight & Jillson, and was by appellant delivered to Larkin, who, in person, delivered it to appellee at its office and place of business; that, relying upon the promise therein contained, appellee furnished and delivered to said Larkin at different times between the 23d of June, 1900, and the 31st day of August, 1901, goods, merchandise, wares, and supplies of the aggregate value of $1,352.84; that, after deducting all credits, there remained due $1,259.68. It is averred that, before the commencement of this action, appellee demanded of appellant payment of the amount due, which was refused; that the amount, $1,259.68, is due and wholly unpaid. The order given by appellant, and a bill of particulars of the goods, etc., sold and furnished Larkin, are filed as exhibits. The bill of particulars shows that the goods and supplies were sold and charged to Larkin & Co. Pending the trial, the appellee asked and was granted leave to amend its complaint so as to conform to the evidence. The amendment to the complaint was made by inserting therein at two different places the words “under the name and style of Knight & Jillson.” This amendment was rendered necessary by reason of the fact that the order given by appellant was given to Knight & Jillson, as a firm, and not to Knight & Jillson Company, as a corporation. The record does not show the filing of an amended complaint, but only that the above-quoted words were inserted therein, and the amendment is shown by a bill of exceptions, by which the original complaint and the complaint as amended are exhibited. After such amendment was made, it was not necessary to file the pleading as an amended complaint. Cleveland, etc., R. R. Co. v. Miles (Ind. Sup.; decided May 13, 1904) 70 N. E. 985.

The demurrer is for want of sufficient facts, and defect of parties defendant, in that Larkin should have been made a defendant. It is urged by appellee that, as no demurrer was filed to the complaint as amended, no question is presented by the demurrer. It is the rule that where a demurrer to a pleading is overruled, and subsequently such pleading is amended, the original goes out of the record, and on appeal such original pleading cannot be tested by the ruling upon the demurrer thereto. Tague v. Owens et al., 11 Ind. App. 200, 38 N. E. 541;Travellers' Ins. Co. v. Martin, 131 Ind. 155, 30 N. E. 1071;Hedrick et al. v. Whitehorn et al., 145 Ind. 642, 43 N. E. 942;Weaver et al. v. Apple, 147 Ind. 304, 46 N. E. 642. Whether this rule applies to an amendment pending trial, so the pleading may conform to the evidence, we do not decide, for, under the twelfth assignment, that the complaint does not state facts sufficient to constitute a cause of action, its sufficiency is reviewable.

The controlling question as to the sufficiency of the complaint is to determine whether the writing sued on, by which appellee seeks to fix liability upon appellant, is an original or collateral undertaking. The learned counsel for appellant concede that if it is an original undertaking, by which their client agreed to pay for all goods, supplies, etc., purchased of appellee by Larkin, then notice of formal acceptance by appellee, and notice of default on the part of Larkin, was not required. As to what constitutes an original or collateral undertaking is not always easily determinable. While there is some confusion in the authorities, we think in this case that the character of the writing under consideration is readily ascertainable from the authorities, and its plain language and meaning. The writing must be regarded as a letter of credit. If so, it was a collateral undertaking. In Smith v. Bainbridge, 6 Blackf. 12, the appellant, by letter to appellee, stated that he would be entirely safe in making sales of goods to Bark & Campbell to any reasonable amount, and that he would stand as security for them until they should secure the confidence of the appellee by their own punctuality. Appellee sued appellant directly upon his promise. The pivotal question in the case was whether the letter was a collateral or an unconditional obligation. The court said: “Letters of credit, to be sure, frequently state in express terms that, if the third party do not pay, the writer will, but the insertion or omission of such statement is not the test by which to determine the character of the contract. If the writer state that he will guaranty the payment of goods to be afterward sold to another, or that he will see the goods paid for, or that he will be security for their payment, the promise is only collateral. The purchaser, under these circumstances, for whose use the goods are furnished, is himself liable in the first instance, and it is only after his default that the surety becomes liable.” In the case from which we have just quoted it was held that it was necessary to a right of recovery that a demand be first made on the original debtors, and notice to the surety or guarantor of nonpayment, and that these were indispensable to constitute a casus fœderis. Chitty on Contracts, 397 et seq., announces the same rule. Parsons on Contracts declares that a contract of guaranty, like any other contract, implies two parties, and requires the agreement of two parties to make it valid, and that a promise to pay the debt of another is not valid unless accepted by the promisee. In discussing the rule applicable to a guaranty relating to future operations, the author says: “But if the guaranty were for a future operation, perhaps for one of uncertain amount, and offered by letter, there should then, according to the weight of authority, be a distinct notice of acceptance, and also a notice of the amount advanced upon the guaranty, unless that amount be the same that is specified in the guaranty itself. The reason of this is that the guarantor may know distinctly his liability, and have the means of arranging his relations as he would with the party in whose favor the guaranty is given, and take from him security or indemnity. From the reason of the thing, we may state the rule to be that every guarantor must have this opportunity; and, unless the transaction is such that of itself it gives him all the knowledge he needs, at a proper time, then this knowledge must be given him by specific notice. The principle which underlies the whole law of guaranty is that this contract, like every other, must be known to the parties to it.” 2 Parsons on Contracts (2d Ed.) pp. 12-15. In Milroy v. Quinn et al., 69 Ind. 406, 35 Am. Rep. 227, the action was upon the following writing. “Delphi, Ind., Jan. 14, '74. Gents: Allow me to say to you, that any cigars that C. Conover of Logansport, Ind., may order from you for the next six months, if he fails to pay for them, I will stand responsible to you for them.” Signed, “Samuel L. Milroy,” and addressed to appellee at Eaton, Ohio. The appellees received this writing, and upon the faith thereof, and within the six months next succeeding, upon Conover's order, sold and delivered to him $1,000 worth of cigars, for which he failed to pay. Appellees brought an action upon this guaranty, and recovered judgment against the guarantor, appellant, in the sum of $976.80. In deciding the case the Supreme Court said, in substance, that guaranties are expressed in so many different forms, and are applicable to so many different conditions of things, that it sometimes becomes difficult to give them their true interpretation. The court said: “Guaranties are capable of classification, however, and have fixed rules of interpretation, but which are not always easy of application to given cases. For these reasons the authorities do not always harmonize. But the rule seems to be settled that when the guaranty is direct, and the thing guarantied definite in its amount, and known to the guarantor at the time he gives his guaranty, neither notice of the acceptance of the guaranty, nor of the default of his principal, need to be given to the guarantor, for he knew when he made the guaranty the full extent of his liability. But when the guaranty is collateral, and the debt guarantied yet to be created, the amount of which is uncertain, and may be variable, and cannot be known to the guarantor at the time he makes the guaranty, notice within a reasonable time, to the guarantor by the guaranty, of his acceptance of the guaranty, and of the default of the principal, is necessary, or the guarantor will be discharged, for he cannot,...