Tidioute Sav. Bank v. Libbey

• Decision Date: 22 November 1898
• Citation: Tidioute Sav. Bank v. Libbey, 101 Wis. 193, 77 N.W. 182 (Wis. 1898)
• Parties: TIDIOUTE SAV. BANK v. LIBBEY ET AL. FIRST NAT. BANK OF ESCANABA v. LIBBEY ET AL.
• Court: Wisconsin Supreme Court

101 Wis. 193

77 N.W. 182

TIDIOUTE SAV. BANK

v.LIBBEY ET AL.

FIRST NAT. BANK OF ESCANABA

v.LIBBEY ET AL.

Supreme Court of Wisconsin.

Nov. 22, 1898.

Appeal from circuit court, Winnebago county; Geo. W. Burnell, Judge.

Two actions by the Tidioute Savings Bank and by the First National Bank of Escanaba against Lura A. Libbey and others, to recover on a written guaranty. From a judgment for plaintiffs, defendants appeal. Affirmed.

In the month of February, 1895, and for a long time prior thereto, the firm of W. T. Rickards & Co. was engaged in the business of banking, and the purchase and sale of commercial paper and securities, at Chicago, Ill. On February 25, 1895, the defendants executed and delivered to said firm a written guaranty of the following tenor: “For and in consideration of the sum of one dollar to each of us in hand paid, and in consideration of the granting of credit and discount by W. T. Rickards & Co., of Chicago, Illinois, to the Farson & Libbey Company, a corporation of Chicago, Illinois, we, for ourselves, and for our heirs, executors, administrators, and assigns, do hereby jointly and severally guaranty to said W. T. Rickards & Co. their heirs, executors, administrators, and assigns, the payment of any and all indebtedness now due, or hereafter to become due, to said W. T. Rickards & Co., their heirs, executors, administrators, or assigns, growing out of, or occasioned by, any or through any act or acts of the said Farson & Libbey Company. It is further agreed that such guaranty shall remain in full force and effect in respect to all indebtedness or renewals thereof now existing or hereafter to accrue, growing out of any and all transactions originating prior to the time a notice in writing of the cancellation of this guaranty, signed by either of the undersigned, shall be received by said W. T. Rickards & Co. It is provided, however, that the undersigned shall not be liable under this guaranty for an amount to exceed the sum of twenty thousand dollars ($20,000). The undersigned hereby waive notice of the acceptance of the guaranty and of the amount of the indebtedness existing from time to time from said Farson & Libbey Company to said W. T. Rickards & Co.” This guaranty was in full force at the time of the purchase and discount by W. T. Rickards & Co. of the notes hereinafter mentioned. On September 11, 1895, the City Sash & Door Company executed and delivered to the Farson & Libbey Company its promissory note for $885.11, due in four months. On October 7, 1895, under and pursuant to the said contract of guaranty, the Farson & Libbey Company sold and indorsed said note to Rickards & Co. for value, and, in writing on the back thereof, guarantied the payment thereof at maturity, or at any time thereafter, with interest at 7 per cent. On October 31, 1895, Rickards & Co. sold said note to the Tidioute Savings Bank, the plaintiff in one of said actions, who took it without notice of the existence of the written guaranty of the defendants to Rickards & Co. The note was presented for payment, duly protested, and notice given. At the date of the trial there was found to be due thereon the sum of $527.30, for which judgment was ordered against the defendants, and from which judgment this appeal was taken. The facts in relation to the case of the First National Bank of Escanaba against these defendants are the same, except that it is founded upon a note of the Suburban Lumber Company to the Farson & Libbey Company, dated October 26, 1895, for $1,217.90, due in four months. This note was purchased by Rickards & Co. on November 15, 1895, and sold to the bank November 18, 1895. At the time of the sale to the bank, it had notice of the defendants' written guaranty mentioned, and relied upon the same in making the purchase of said note. The amount found due thereon at the trial was $1,223.83, for which judgment was ordered for the bank. These notes were sold by Rickards & Co. in the due course of business, and no formal assignment of the defendants' guaranty was made in either case. These actions are brought by the holders of each of said notes against the defendants, as makers of said written guaranty. The defendants have appealed from the judgments in favor of the plaintiffs, and the sole question is whether they are liable on said guaranty to the present holders of said notes.

Barbers & Beglinger, for appellants.

Thompson, Harshaw & Thompson, for respondents.

BARDEEN, J. (after stating the facts).

A “guaranty” is defined to be “a separate, independent, contract, by which the guarantor undertakes, for a valuable consideration, to be answerable for the payment of some particular debt, or future debts, or the performance of some duty, in case of the failure of another person primarily liable to pay or perform”; and it is said that such guaranty is assignable, with the obligation secured thereby, and that it goes with the principal obligation, and is enforceable by the same persons who can enforce that. Coleb. Coll. Sec. § 253; Ellsworth v. Harmon, 101 Ill. 274;Claflin v. Ostrom, 54 N. Y. 581;Stillman v. Northrup, 109 N. Y. 473, 17 N. E. 379;Everson v. Gere, 122 N. Y. 290, 25 N. E. 492;Lane v. Duchac, 73 Wis. 655, 41 N. W. 962;Kimball Co. v. Mellon, 80 Wis. 143, 48 N. W. 1100. The rule is that the transfer of a note carries with it all security without any formal assignment or delivery, or even mention of the latter. Carpenter v. Longan, 16 Wall. 271;Croft v. Bunster, 9 Wis. 503. A general guaranty is one open for acceptance by the public generally. A special guaranty is limited to the person to whom it is addressed, and usually contemplates a trust or reposes a confidence in such person. Such a guaranty may not be assignable until the right of action has arisen thereon. Jex v. Straus, 122 N. Y. 293, 25 N. E. 478, ...