W. T. Rawleigh Co. v. Warrington

• Citation: 39 Del. 366,199 A. 666
• Court: Superior Court of Delaware
• Decision Date: 14 March 1938
• Parties: THE W. T. RAWLEIGH COMPANY, a corporation of the State of Illinois, v. STEPHEN WARRINGTON, CLARENCE E. ABBOTT and ROBERT H. SWAIN

199 A. 666

39 Del. 366

THE W. T. RAWLEIGH COMPANY, a corporation of the State of Illinois, v. STEPHEN WARRINGTON, CLARENCE E. ABBOTT and ROBERT H. SWAIN

Superior Court of Delaware, Sussex County

March 14, 1938

Superior Court for Sussex County, Action of Assumpsit, No 37, October Term, 1937.

Case heard on special demurrer to the plaintiff's declaration. That declaration contained four special counts which were based on a contract alleged to have been made by the parties thereto on January 2, 1936. The first and second counts declared on that contract according to its legal effect, but a copy of it was, also, attached to the declaration and made a part of it. The third and fourth counts expressly set out all of the material provisions of the contract of January 2 1936.

Those provisions and the form of that contract, as well as certain material allegations of the various counts of the declaration, with respect to the simultaneous execution of those parts, covering the obligations assumed by the various parties, and the consideration therefor, will sufficiently appear in the opinion of the court.

In its declaration, the plaintiff company alleged that the defendants were responsible to it for the following sums of money:

1. A balance of $ 373.97 for goods sold Stephen Warrington, one of the defendants, under a contract prior to the contract dated January 2, 1936, but the payment of which balance was, also covered by the provisions of the latter contract.

2. A balance of $ 60.73 for goods sold the said Stephen Warrington under the contract dated January 2, 1936.

The defendants demurred to the plaintiff's declaration alleging that it was bad for a misjoinder of separate and distinct contracts.

The defendants' demurrer to the plaintiff's declaration is overruled.

Houston Wilson for plaintiff.

Tunnell and Tunnell for defendants.

HARRINGTON J., sitting.

OPINION

HARRINGTON, J.

The question raised by the demurrer is whether, under the facts alleged, Clarence E. Abbott and Robert H. Swain can be joined as defendants in an action against Stephen Warrington on the contract executed by him and declared on by the plaintiff.

The answer to that question largely depends on whether, under their contract, Abbott and Swain are sureties for Warrington, or merely guarantors of the obligations assumed by him.

The defendants, also, claim, however, that in any aspect of the case the contract with the plaintiff, signed by Abbott and Swain, is separate and distinct from the contract with that company, signed by Warrington, and that they, therefore, cannot be sued jointly with him.

According to the ordinary meaning of that term, a surety is a person "who binds himself for the payment of a sum of money, or for the performance of something else for another, who is already bound for the same". 2 Bouv. Law Dict., Rawle's 3d Rev., 3192; 50 C. J. 13, 16.

A suretyship is "an undertaking to answer for the debt, default or miscarriage of another, by which the surety becomes bound as the principal or original debtor is bound." 2 Bouv. Law Dict., Rawle's 3d Rev., 3192; see, also, Pingrey on Suretyship and Guaranty, § 4.

As a general rule, it is, therefore, essential to the existence of a suretyship that there be a principal debtor or obligor, and a valid and subsisting debt or obligation, for which the principal is responsible. ^[1] Bernd v. Lynes, 71 Conn. 733, 43 A. 189; Eising v. Andrews, 66 Conn. 58, 33 A. 585, 50 Am. St. Rep. 75; 2 Bouv. Law Dict., Rawle's 3d Rev., 3192; 21 R. C. L. 946; 50 C. J. 16.

But while the contract of a surety is, in a sense, accessory or collateral to a valid principal obligation contracted by another person, either contemporaneously or previously, his obligation to the creditor or promisee of the principal is direct, primary and absolute, and is, in no sense, conditional on the failure of the principal to pay his debt, or perform his contract, or on notice of such non-performance. Bernd v. Lynes, 71 Conn. 733, 43 A. 189; Northern State Bank v. Bellamy, 19 N.D. 509, 125 N.W. 888, 31 L. R. A. (N.S.) 149; Pingrey on Sur. & Guar., § 4; 1 Bouv. Law Dict., Rawle's 3d Rev., 1386; 2 Bouv. Law Dict., Rawle's 3d Rev., 3192; 21 R. C. L. 946; 50 C. J. 74.

As was aptly and concisely said in Pingrey on Suretyship and Guaranty, § 4, p. 9, "The contract of a guarantor is collateral and secondary; that of the surety is direct; the guarantor contracts to pay, if, by the use of due diligence, the debt cannot be made out of the principal debtor, while the surety undertakes directly for the payment, and is so responsible at once if the principal debtor makes default."

Perhaps in most cases, a surety is a co-obligor or a co-promisor in a joint or joint and several obligation, along with the principal debtor, and is, therefore, bound with him by the same instrument, executed at the same time, and on the same consideration. Northern State Bank v. Bellamy, 19 N.D. 509, 125 N.W. 888, 31 L. R. A. (N.S.) 149; Pingrey on Sur. & Guar., § 2; 1 Bouv. Law Dict., Rawle's 3d Rev., 1386; 21 R. C. L. 946.

Where that relation exists, in the absence of some limiting clause in the contract, there is a precise identity of obligation on the part of both the principal and the surety, but this does not mean that they must be bound by the same instrument, or even by the same consideration. Westinghouse Electric & Mfg. Co. v. Wilson, 63 Pa. Super. 294; 21 R. C. L. 947; 50 C. J. 24, 26.

The sufficiency of the consideration to support the contract made by Abbott and Swain is not questioned, but perhaps I might state that, at least, when the instrument, which is claimed to create the relation of principal and surety, is not under seal, and is executed subsequent to and separate and apart from the contract of the principal debtor, like other contracts, a good and sufficient consideration is essential to its validity (50 C. J. 46, 49); and such consideration must usually be executory in character. Edwards v. Jevons, 137 Eng. Rep. 579; 50 C. J. 49. When, however, the suretyship contract, though not under seal, is made at the same time as the principal contract, and both contracts form parts of the same transaction, there need not be any consideration other than that moving between the obligee and the obligor under the principal contract. See Westinghouse Electric & Mfg. Co. v. Wilson, 63 Pa. Super. 294; Faust v. Rodelheim, 77 N.J.L. 740, 73 A. 491, 27 L. R. A. (N.S.) 189; Savage v. Fox, 60 N.H. 17; Leonard v. Vredenburgh, 8 Johns. 29, 5 Am. Dec. 317; 50 C. J. 48. This contract was under seal, but that rule was apparently recognized in drawing it.

Persons liable on several and distinct contracts, although with the same person, cannot be joined as defendants in the same action. 1 Woolley's Del. Prac. 104; see, also, 1 Woolley's Del. Prac. 107; Register v. Casperson, 3 Del. 289, 3 Harr. 289.

Applying that rule, and notwithstanding the nature of the contract of a surety, it seems that at common law a principal and a surety could only be joined as defendants in the same action when their obligations were joint. Pingrey on Sur. & Guar., § 1; Tourtelott v. Junkin et al., 4 Blackf. (Ind.) 483; Faust v. Rodelheim, 77 N.J.L. 740, 73 A. 491, 27 L. R. A. (N.S.) 189; Castner v. Slater, 50 Me. 212; 50 C. J. 202. A surety, therefore, could not be sued jointly with the principal debtor when his obligation arose on a subsequent and entirely separate and collateral undertaking. Pingrey on Sur. & Guar., § 1; Tourtelott v. Junkin et al., 4 Blackf. (Ind.) 483; 50 C. J. 203.

As the liability of a guarantor is merely secondary to that of the principal debtor he cannot be sued at law in the same action with the principal. Northern State Bank v. Bellamy, 19 N.D. 509, 125 N.W. 888, 31 L. R. A. (N.S.) 149; De Ridder v. Schermerhorn, 10 Barb. 638; 1 Bouv. Law Dict., Rawle's 3d Rev., 1386; Pingrey on Sur. & Guar., § 4; 21 R. C. L. 949.

What may perhaps be termed the primary contract declared on by the plaintiff company is signed by Warrington alone, and the contract executed by Abbott and Swain is immediately under that contract and on the same sheet of paper. At the middle of the page, on the lefthand side of it, and opposite the signature of Warrington, the principal in the transaction, there is an acceptance by the plaintiff company, dated January 2, 1936, and it is not denied that this acceptance also applies to the contract signed by Abbott and Swain.

That part of the contract declared on, signed by Warrington, provides: That "In consideration of the promises of undersigned buyer, the W. T. Rawleigh Company, * * * agrees upon acceptance of this contract to sell and deliver * * * such reasonable quantities of its products as the buyer may order, at current wholesale prices, and on time, * * *; and the buyer, in consideration of the above agreements, hereby promises to pay seller in full for all such products so sold and delivered under this contract, also promises and agrees to pay any balance due seller at the date of the acceptance of this renewal contract for products previously sold buyer under any and all former contracts by cash, or by installment payments, satisfactory to seller, at invoice prices, and according to the terms and conditions thereof * * * and subject to such cash discounts as may be shown in current discount sheets.

"It is mutually agreed that either party may terminate this contract by written notice at any time and when so terminated all accounts incurred hereunder shall become due and payable immediately. If this contract is not so terminated it shall expire on the 31st day of December 1936 * * *".

This part of the contract is signed by Warrington alone.

That part of it, which is signed by Abbott and Swain, and which...