November 9, 1931.
Guaranty, in view of terms, held continuing guaranty to amount of one hundred dollars open on account until revoked or recalled.
2. GUARANTY. Guarantor, having furnished money for payment without notifying guarantee, held not entitled to credit therefor where debtor paid money on account without disclosing source.
An instrument reading as follows: "I request that you open an account in the name of Leo S. Domergue and I hereby guarantee said account to the extent of one hundred dollars, during such time as it may be open on your books, or until this guarantee is recalled," signed by a third person, is a guaranty of the account of such person to whom credit was extended so long as the guaranty is not withdrawn and the amount does not exceed the amount named, and the guarantor is liable although some payments have been made on the first items of the account. Where, under the guaranty set forth in the opinion, the guarantor furnished to his son, whose account was guaranteed, money to pay on the account, without notifying the guarantee of such fact and not directing it to be applied in payment of his liability as guarantor, he is not entitled to credit where the son paid the money on his own account as his own money, or without disclosing that it was furnished him by the guarantor.
APPEAL from circuit court of Forrest county; HON.W.J. PACK, Judge.
A.A. Hearst and R.J. Bishop, both of Hattiesburg, for appellant.
Payment of the debt by the principal or any one for him discharges the guarantor, and being once discharged a revival of the debt in any way will not renew his liability. And an extinguishment of part of the claim relieves the guarantor pro tanto.
20 Cyc. page 1474 (c.); Oberdorff v. Union Bank, 31 Md. 126, 1 Am. Rep. 31; Sweet v. Newberry, 92 Mich. 515, 52 N.W. 1005.
In an action on a guaranteed debt against the guarantor a plea of part payment by the assignee of the debt is good, since such payment will operate as an extinguishment pro tanto of plaintiff demand.
Solarry v. Slutz, 22 Fla. 263; Piano Mfg. Co. v. Permenter, 41 Ill. App.? 635; Lozier v. Greaves, 91 Iowa 482, 59 N.W. 285; Miles v. Linnell, 97 Mass. 298; Hopkins v. Farwell, 32 N.H. 425.
If the principal obligation is satisfied in part the guarantor will be discharged pro tanto.
28 C.J., page 1003, Sec. 164 (1).
Currie, Stevens Currie, of Hattiesburg, for appellee.
The mere fact that the guarantor furnishes the money to the principal debtor with which to make payments does not discharge the guarantor, unless of course the entire debt is covered by the guaranty, unless the creditor has express notice that the money with which the payments are being made is furnished by the guarantor, and expressly agrees that such payments are to be applied on that part of the debt covered by the guaranty.
On October 4, 1929, the appellant, E.J. Domergue, sent to appellee, Mayer-Israel Company, at New Orleans, La., the following instrument of writing:
"I request that you open an account in the name of Leo S. Domergue and I hereby guarantee said account to the extent of One Hundred Dollars, during such time as it may be open on your books, or until this guarantee is recalled. I understand your terms to be —
"Respectfully, E.J. DOMERGUE."
The appellee, Mayer-Israel Company, opened an account with Leo S. Domergue and extended not only credit to the amount of this guaranty, but to the amount of two hundred eighty dollars. Leo S. Domergue made some small payments upon the account thus opened, but failed to pay the account in full, and suit was brought against him individually without joining E.J. Domergue, in which suit a judgment was recovered for the amount due by Leo S. Domergue which was in excess of the amount guaranteed by E.J. Domergue. After this judgment was rendered against Leo S. Domergue, an execution was issued, and the appellant, E.J. Domergue, furnished Leo S. Domergue money amounting to sixty dollars, being for different amounts at different periods, which was paid by Leo S. Domergue to the appellee on account, but without any understanding on the part of appellee that E.J. Domergue was making these payments or had directed them to be made on the guaranty.
The appellee, Mayer-Israel Company, plaintiff in the county court, filed suit upon the above instrument, and sought judgment against E.J. Domergue for the amount of the guaranty.
E.J. Domergue denied the amount of the guaranty, but admitted the debt to be forty dollars, and tendered that amount, setting up by way of pleadings, the payment of sixty dollars of the amount of the guaranty, leaving only forty dollars to be due.
It was agreed on the trial of the case below that E.J. Domergue executed said guaranty, and an account was opened and credit extended to the amount of two hundred eighty dollars, upon which small payments had been made, and that the appellant, E.J. Domergue, had paid through his son, without giving notice or directions that the money was to be paid on his (E.J. Domergue) guaranty, sixty dollars; but that after the payment of this sixty dollars more than the amount of the guaranty would still be due by Leo S. Domergue.
There was a judgment in the county court originally for forty dollars, but on appeal to the circuit court the judgment of the county court was reversed with directions to render judgment for the full amount of one hundred dollars. An attempted appeal was made from this order, but the appeal was dismissed, and thereafter the county court entered judgment for one hundred dollars and costs, from which an appeal was prosecuted to the circuit court where the judgment was affirmed, from which judgment of the circuit court this appeal was prosecuted.
We are of opinion that the guaranty is a continuing one under its terms, and that it guarantees the amount of one hundred dollars standing upon the open books of the appellee, Mayer-Israel Company, until the guaranty was revoked or recalled. There is no pretense that there was any recall or revocation of the guaranty.
We do not think the appellant is entitled, under the circumstances detailed, to have the money which he furnished his son to pay on the account credited on appellant's liability as guarantor. There was, admittedly, no direction by appellant to have it so applied, and no declaration by Leo S. Domergue as to the source from which he obtained the money. The creditor had the right to assume that the money in the possession of Leo S. Domergue was his own money, and it was in legal contemplation, and we cannot require it to be credited upon the guaranty.
The judgment of the circuit court will therefore be affirmed.