Stone-Ordean-Wells Company v. Helmer

• Decision Date: 25 April 1919
• Docket Number: 21,111
• Parties: STONE-ORDEAN-WELLS COMPANY v. JOHN HELMER AND ANOTHER
• Court: Minnesota Supreme Court

171 N.W. 924

142 Minn. 263

STONE-ORDEAN-WELLS COMPANY v. JOHN HELMER AND ANOTHER

No. 21,111

Supreme Court of Minnesota

April 25, 1919

Action in the district court for St. Louis county to recover $800 upon a contract of guaranty. The facts are stated in the opinion. The case was tried before Ensign, J., who when plaintiff rested granted defendants' motion for a directed verdict. Plaintiff's motion for judgment notwithstanding the verdict was denied. From an order granting plaintiff's motion for a new trial, defendants appealed. Affirmed.

SYLLABUS

Guaranty -- notice of acceptance unnecessary.

The letter of credit set out in the opinion held to constitute an unconditional promise to pay by the guarantor and that notice of the acceptance thereof by the creditor was not necessary.

Alford & Hunt and Fryberger, Fulton & Spear, for appellants.

Courtney & Courtney, for respondent.

OPINION

BROWN C.J.

The material facts in this case are not in dispute. It appears that one McDonald was a retail grocery dealer doing business in the city of Duluth. In February, 1916, he was indebted in a considerable amount to plaintiff, a wholesale dealer, for goods and merchandise theretofore sold and delivered to him and he applied for further credit for additional goods. Plaintiff declined further credit, unless McDonald gave adequate security for the payment of the same, and suggested that he procure some responsible parties to sign a letter of credit in an amount sufficient to cover his present needs, the suggestion being accompanied with a form of such a letter. Whereupon McDonald applied to defendants in this action and procured them to become his sureties, and to that end each signed a document, addressed to plaintiff, in the following language:

"Duluth, Minn., Feb. 2, 1916.

"Stone-Ordean-Wells Company,

"Duluth, Minn.

"Gentlemen: --

"We, the undersigned, in consideration of the sum of one dollar ($1.00) to me in hand paid, receipt whereof is hereby acknowledged and the further extension of credit granted by Stone-Ordean-Wells Company to Knowlton Grocery Company (Alex McDonald, proprietor) * * * shall at any time be owing to said Stone-Ordean-Wells Company, its successors or assigns, on account of goods heretofore or hereafter sold, whether said indebtedness is in the form of notes, bills or open account. This shall be an open and continuing guaranty and shall continue in force notwithstanding any change in the form of such indebtedness, or renewals or extensions granted by you, without obtaining my consent thereto, and until expressly revoked by written notice from me to you, and any such revocation shall not in any manner affect my liability as to any indebtedness contracted prior thereto.

"Notice of indebtedness and of default in payment are hereby waived. Liability under this guarantee shall at no one time exceed the sum of $800.

"Witness:

"L. St. James.

John Helmer,

H. Gazett."

McDonald presented the document so signed to plaintiff, and, upon the strength thereof as security, further credit was extended to him in an amount exceeding $800. McDonald subsequently became insolvent and filed a voluntary petition in bankruptcy, but the property turned over to the trustee was insufficient to pay his debts. The sum of $42.60 only was paid upon plaintiff's claim, leaving a balance due thereon of about $900.

This action was brought upon the contract of guaranty to recover the amount stipulated therein, namely, $800 with interest. Defendants by their answer admitted the execution of the contract, but alleged that they received no consideration therefor. The answer also contained a general denial. At the trial below plaintiff offered the letter of credit in evidence and the sale and delivery of goods to McDonald in reliance thereon to an amount in excess of the stipulated limit of $800, and rested its case. Defendants were not present at the trial, being represented by counsel, and, after procuring a concession from counsel for plaintiff that defendant Helmer would testify to certain facts if present, both defendants rested without other showing in support of the defense. The concession of counsel was that if defendant Helmer were present he would testify that he signed the letter of credit, but that the first information he received from plaintiff on the subject was a letter of date November 10, 1916, calling attention to the guaranty and the sale of goods to McDonald thereunder and that plaintiff had filed its claim in the bankruptcy proceedings, concluding with the statement: "We notify you of this so in case you prefer to handle the matter in another way, you may advise us at once."

Counsel for defendants then requested an instructed verdict in their favor on the ground that plaintiff had failed to make out a case. The motion was granted, and a verdict directed accordingly. On subsequent reflection the learned trial judge became satisfied that it was error to so direct a verdict and he granted plaintiff's motion for a new trial. Defendants appealed.

It is contended in support of the appeal that the letter of credit was in law conditional, and ineffective as a valid contract until formally accepted by plaintiff and notice thereof given to defendants. That was the theory on which the verdict was directed by the court below, and if that view of the contract be sound the action of the court was right and the verdict should stand, for no notice of acceptance was given to defendants. Winnebago Paper Mills v. Travis, 56 Minn. 480, 58 N.W. 36. In our view of the matter the final conclusion of the trial court that the contract was not...