Opinion
(December Term, 1847.)
1. In an action upon a guaranty in the following words, "This is to certify that I pass over the following notes to S. A. for value received and I agree to make them good should any of them not be so" (naming the notes): Held, that this was a guaranty not only that the notes were good at the time they were passed, but that they would be good when payment should be required in a reasonable time.
2. Even if this were a contract within the statute of frauds (Rev. Stat., ch. 50, sec. 10), it would not be requisite that the written contract should set forth the particular consideration; but to this contract the statute does not apply. It is a debt of the defendant himself, arising upon a new and original consideration of loss to the plaintiff and benefit to the defendant by means of the contract between these parties.
3. Notwithstanding gross negligence in the holder, the guaranty will be continued or revived by a new promise, made with a full knowledge of the facts.
4. The contract of guaranty is not like that of indorsement in the strictness of their conditions to be observed or in the consequence of their nonobservance. A guarantor is not discharged simply by the negligence of the other party, but he must also show a loss by it; if a particular loss, he is exonerated pro tanto; if no loss, he remains liable for the whole debt.
APPEAL from the Superior Court of Law of SAMPSON, at Spring Term, 1847, Battle, J., presiding.
Badger for plaintiff.
Strange for defendant.
This is an action upon a guaranty of the note of David Underwood, which the defendant passed to the plaintiff's intestate in part payment for his crop of cotton, and was tried on the general issue. The guaranty is in these words: (115)
CLINTON, 1 May, 1840.
This is to certify that I pass over the following notes to Street Ashford for value received, and I do agree to make them good, should any of them not be so. One note of J. S. Chesnut for $136.05. One note on, etc. The above notes are made payable to me. JOHN ROBINSON.
It appeared upon the trial that Ashford issued a writ against Underwood, in the name of the defendant, on the note in question, on 4 February, 1841, returnable to the County Court on the third Monday of that month, and that it was not executed in consequence of Underwood's having gone out of the county on business. The plaintiff gave evidence that an alias was issued, and that the defendant was about serving it, and was prevented by the present defendant, who told him not to do so, as Underwood was insolvent, and he (Robinson) would have to pay the debt, and did not wish to be put to any further costs.
Afterwards the plaintiff brought another suit against Underwood, and got judgment in November, 1841, but was unable to levy the money, as all Underwood's property was sold under executions on 15 April, 1841, and he was afterwards insolvent. The defendants afterwards mentioned to the sheriff that he made himself liable for the debt through ignorance, and he sent word to the plaintiff that he would still pay it if the plaintiff would take a certain claim on another person. The plaintiff declined doing so, and demanded the money from Robinson, who refused to pay it; and this action was brought in February, 1843.
The counsel for the defendant contended that, as the guaranty did not express the consideration on which it was given, it was void under the statute of frauds. But the court held otherwise. He further insisted that the defendant had only bound himself for the solvency of Underwood at the time the guaranty (116) was given, and that, as he did not fail until nearly a year afterwards, this action would not lie. And also, that the defendant was, at all events, discharged for the want of due diligence of the plaintiff and his intestate in endeavoring to collect the money from Underwood.
The court instructed the jury that, by the proper construction of the contract, the defendant was bound to make good the notes, provided the plaintiff could not collect them by due diligence. The court further stated to the jury that the plaintiff had been guilty of laches in respect to Underwood's note, which would prevent a recovery from the defendant, unless they should find from the testimony that he had waived his right to take advantage of it, and that, if they should believed the evidence, that he did so waive his right and promise to pay the debt, the plaintiff ought to recover. Verdict and judgment for the plaintiff, and the defendant appealed.
If this were a contract, within the act for the prevention of frauds, Rev. Stat., ch. 50, sec. 10, it would not be requisite that the written contract should set forth the particular consideration, but it is sufficient to aver and establish it by proof aliunde. Miller v. Irvine, 18 N.C. 103. But this is not a case within the act. Although, in one sense, it is a promise to answer the debt of another, yet it is not simply and merely that, but is, in another sense, the debt of the defendant himself, arising upon a new and original consideration of loss to the plaintiff and benefit to the defendant, by means of the contract between these parties. To such promises the act does not apply; and the defendants oral engagement would have bound him. Cooper v. Chambers, 15 N.C. 261; Adcock v. Fleming, 19 N.C. 223; DeWolfe v. Rabaud, 1 Peters 476; 3 (117) Kent Com., 122 (5 Ed.).
The meaning of the guaranty cannot be doubted for a moment. It is said that "not be so" restricts the guaranty to the solvency of the debtors at the time of the contract. But an agreement "to make a debt good, should it not be so," taken even literally, is not merely an engagement that it is good at the moment of speaking. The party is to answer, "should the debt not be good." When? Why, certainly, when payment shall be required in a reasonable time. The intention was that if the money could not be collected from the debtor by due diligence, then the defendant should make the note good, that is, by paying the money himself.
Upon the other point the Court may, perhaps, he unable to administer strict justice between the parties by reason of the omission of the plaintiff to set forth in his exception the period at which Underwood's note came to maturity, so that it might be seen whether the plaintiff has discharged the defendant by his laches. Upon the supposition that he had, we do not, indeed, see any error in the opinion given by the court, that if the evidence were believed, he had waived the laches and bound himself by his interference with the proceedings against Underwood and his voluntary promise to pay the debt, without any further proceedings of the plaintiff. The defendant knew all the facts when the note fell due, and was transferred, when the suit was brought, and the insolvency, at that time, of Underwood. It is a settled rule in respect to the undertaking of an endorser that his promise, with a knowledge of the facts, binds him, though, but for the promise, he would be discharged by the laches of the holder. It is not seen that there can be a distinction in that respect between a liability upon an endorsement of a note and upon a guaranty of it by a separate instrument. In Smith v. Morgan, 14 N.C. 511, it seems to have been taken for granted that a subsequent promise to pay the debt (118) would excuse previous laches. And the Supreme Court of Massachusetts has directly decided the point that, notwithstanding gross negligence of the holder, the guaranty will be continued or revived by a new promise made with a full knowledge of the facts. Sigourney v. Wetherell, 6 Metcalf, 553. The plaintiff was obliged to use the name of the defendant in suing Underwood, and it must be understood as a part of the contract that he was at liberty to do so. By his orders to the sheriff, then, not to serve the writ, the defendant, in truth, interfered with the rights of the plaintiff by a violation of his agreement and laid a just ground for an unconditional promise from him to pay the money.
But, for the reason before mentioned, if there were an error in the last point, the judgment could not be reversed for it, because, as the facts are stated, no laches can be inferred, and the real error in the case was in advising the jury, upon these facts, that there had been laches. The contract of guaranty is not like that of endorsement, in the strictness of the conditions to be observed or in the consequences of their nonobservance. Exact punctuality in presenting the note for payment and giving notice of its dishonor to an endorser is indispensable to charge him, and he is not obliged to show that he has incurred any loss by the want of it. But a guarantor is not discharged simply by negligence of the other party, but he must also show a loss by it; if a partial loss, then he is exonerated pro tanto; if it has produced no loss to him, he remains liable for the whole debt. Story Prom. Notes, sec. 400. Here the defendant says he sustained a loss by the neglect to sue Underwood before his insolvency in April 1841. But he does not show that the plaintiff could not have sued, so as to have put his execution on the debtor's property, before the sale of it; for the Court cannot assume that the note was due before February, 1841, or that the plaintiff had increased the defendant's risk by granting indulgence to the debtor, or that the plaintiff could have (119) done better to secure the defendant from loss than by the suit, which the defendant stopped by his directions to the sheriff and his engagement to pay the money, without any further pursuit of Underwood.
The whole foundation of the defense, therefore, failed.
PER CURIAM. Judgment affirmed.
Cited: Farrow v. Respass, 33 N.C. 174; Nichols v. Bell, 46 N.C. 33; Jenkins v. Peace, ib., 417; Rowland v. Rorke, 49 N.C. 339; Kenyon v. Brock, 72 N.C. 557; Thornburg v. Masten, 88 N.C. 295; Tunstall v. Cobb, 109 N.C. 325; Sullivan v. Field, 118 N.C. 360; Haun v. Burwell, 119 N.C. 547; Hall v. Misenheimer, 137 N.C. 188; Satterfield v. Kindley, 144 N.C. 461.