Zahm v. First Nat. Bank of Lancaster

• Decision Date: 01 October 1883
• Citation: 103 Pa. 576
• Parties: Zahm <I>versus</I> First National Bank of Lancaster.
• Court: Pennsylvania Supreme Court

103 Pa. 576

Zahm versus First National Bank of Lancaster.

Supreme Court of Pennsylvania.

May 14, 1883.

October 1, 1883.

May 14th 1883.

Before GORDON, PAXSON, TRUNKEY, STERRETT and GREEN, JJ. CLARK, J., absent. MERCUR, C. J., did not sit.

ERROR to the Court of Common Pleas of Lancaster county: Of July Term 1883, No. 53.

Nauman and Baker, for the plaintiff in error.—The contract of Zahm was one of pure guarantee. The bank should therefore have exhausted all prior parties to the paper, before resorting to him. While Swartz's co-indorsers may have been released by the failure to protest the note and Zahm's guarantee of said note "without protest," yet Swartz, in view of his written direction to the bank to "charge the note to him," and his "guarantee" of it, certainly was not so discharged, and until he was pushed to insolvency no recourse could be had to Zahm: Isett v. Hoge, 2 Watts 128; Bank v. Eyer, 8 P. F. S. 97; Mizner v. Spier, 15 Norris 538. The narr. averred a failure to protest by reason of Zahm's guarantee. No evidence was offered to sustain this material allegation. In the absence of such testimony, our motion for a non-suit should have been granted.

A. Herr Smith, for the defendant in error.—The meaning of the request or direction of Mr. Swartz to the bank is not very intelligible. He speaks of an old note and a new note. Evidently he contemplated a reduction of $100 and a renewal for $1,250. This would make a new note necessary, which he would indorse, as he was indorser on the old note. But his anticipations were not realized. No reduction was made, and no new note given. Hence the request or "direction" was not carried into effect. But the request or "direction" of Mr. Swartz did not change his status as indorser toward the bank. Least of all, could his request or "direction," not granted or executed and not known to Mr. Zahm, affect the latter favorably or otherwise. Without any knowledge of such request or "direction" — for it is not pretended that Mr. Zahm knew it — he guarantees the note in question without protest. This is his contract with the bank. On the good faith of that contract the note was not protested, and, as a legal consequence, the indorsers were discharged.

Nor does the second paper, dated July 25th 1877, relieve Mr. Zahm from legal liability. Mr. Zahm is no party to this paper. It was executed after the guaranty on the note, and could not affect that act. It cannot be pretended that the bank could not get, after Mr. Zahm's guaranty, even without his consent, additional security on the note, if deemed necessary to insure its safety.

Independent of these facts, Mr. Zahm's guarantee was not general but special. He guaranteed the note "without protest." This discharged the indorsers, and the bank, having exhausted the makers, beyond whom it could not go, has exhausted all the parties that are primarily liable. It therefore properly has recourse to the guarantor: Campbell v. Baker, 10 Wr. 245; Roberts v. Riddle, 29 P. F. S. 468; Mizner v. Speir, 15 Norris 533.

Mr. Justice STERRETT delivered the opinion of the court October 1st 1883.

In addition to the common counts, in support of which no testimony was adduced, the declaration contains a special count on the written undertaking of the plaintiff in error, indorsed on a note made by Diller & Groff for $1,350, at sixty days from May 9th 1877, to the order of Samuel Groff, indorsed by him and by D. G. Swartz. That undertaking is in these words: "I hereby guarantee the payment of the within note without protest."

The liability of plaintiff in error, if he is liable at all, is as guarantor and not as surety for the makers or indorsers of the note. If he had undertaken "to see the note paid," as in Amsbaugh v. Gearhart, 1 Jones 482; or had guaranteed its payment "when due," as in Campbell v. Baker, 10 Wright 243, or "according to its terms," as in Roberts v. Riddle, 29 P. F. Smith 468, it would have been a contract of suretyship and not of guaranty: Mizner v. Spier, 15 Norris. 533, and cases there cited. In that case the undertaking which...