Fales & Jenks McH. Co. v. Browning
Fales & Jenks McH. Co. v. Browning
Opinion of the Court
The opinion of the Court was delivered by
The Fales and Jenks Machine Co., a corporation of Rhode Island, on July 9th, 1900, contracted in writing with the Goldville Manufacturing Co., of Gold-ville, S. C., to deliver by November 1st, 1900, certain machinery for the erection of a yarn mill at the price of $9,404.24, f. o. b. cars at Pawtucket, R. I. “Terms of payment — one-half net cash, New York exchange thirty days from date of bill of lading; balance by two, (2) notes of equal amounts at six (6) and twelve (12) months, respectively, said notes to bear interest at the rate of six per cent. (6) per annum and to be dated from date of bill of lading.” On the 19th day of November, 1900, as further assurance, the defendants, J. S. Blalock, R. W. C. Blalock and M. E. Browning, executed and delivered to, plaintiff an instrument in writing, which after reciting the terms of the contract as above stated, stipulated as follows: “We hereby agree to indorse the said notes, and should the Goldville Manufacturing Co. fail to pay for said ¡machinery on terms of contract made between themselves and the Fales and Jenks Machine Co., dated July 9th, or shall fail to, pay any notes when due, which are given in payment, we the undersigned do hereby bind and obligate ourselves, jointly and severally, each with the other, and with the Fales and Jenks Machine Co., to make good and pay to the Fales and Jenks Machine Co. the amounts which may be due them in accordance with the contract above mentioned.” The machinery was shipped about December 1, 1900, was received and used for the purposes intended, and the cash payment of $4,702.12 was made on January 28,1901. The plaintiff did not require notes for the credit portion, of the contract.
This action was brought in January, 1902, for the balance due against James 'S. Blalock, R. W. C. Blalock and Mrs. M. E. Browning, individually, and as partners under the firm name of Goldville Manufacturing Co. The complaint alleging that Mrs. Browning was a partner in the Goldville *16 Manufacturing Co. at the time the machinery was purchased, and further sought to make her liable as guarantor under the instrument above stated. J. S. Blalock and E. W. C. Blalock having been adjudged bankrupt, each upon his own petition, the action was directed mainly against Mrs. Browning, and the issues arose upon her answer denying that she was a partner in the Goldville Manufacturing Go., and denying liability as guarantor upon the grounds: (1) that the guaranty was without consideration'; (3) that the contract of July 9th, 1900, was so changed as to discharge her; (3) because of the negligence of plaintiff in prosecuting the claim against the principal debtor, and in failing to give timely notice of default to her as guarantor. The action resulted in a verdict and judgment against Mrs. M. E- Browning for the amount claimed, from, which she appeals.
*18 There was testimony that J. S. Blalock and. B. W. C. Blalock were partners under the name otf the Goldville Manufacturing Co., and there was some testimony by one of the firm, that Mrs Browning had some interest in the partnership before it became incorporated. The testimony showed that a charter of incorporation was taken out October 23, 1900. At folio 215, “Case,” Mrs. Browning testified as follows: “I was at Goldville, the summer and fall of 1900, at my brother’s house. Before the Goldville Manufacturing Co. was chartered. Father and bud were interested in it. Q. Did you convey your land to the Goldville Manufacturing Co. where the mill is built? (Objected to by Col. Ferguson as being secondary.) A. I don’t know; I was never told that I was to get any stock in the company, but I supposed I would, as pa told me he wanted to make it a family affair. I suppose the correct time would be when Mr. L. W. C. Blalock says I was interested. I knew they were going to buy machinery for the mill, but I did not know that L. W. C. Blalock went north to buy the machinery some time during the summer of 1900. I don’t know when the machinery was delivered relative to the signing of the contract. I was never asked for my consent to be director nor was I notified that I had been elected. My father and brother never discussed the affairs of the mill with me except in an informal and social way. My brother looked after my interests in the mill.”
J. S. Blalock testified, at folio 148, that there was no partnership between him and Mrs. Browning; that she was not interested in the partnership, and that she became interested in the mill after it was incorporated. At folio 152, et seq., he testified substantially, that before B. W. C. Blalock went north to buy machinery, he (J. S. Blalock) told him that he would help him if he would make it a 5,000 spindle mill, and when asked the question, “Was anything said about his taking his sister in, did you tell him, if he would take her in that you would help him?” J. S. Blalock answered, “We talked about it afterwards, and I said I wanted her in if I *19 took anything in it, that I was working for them.” He further testified that they began the construction of a 5,000 spindle mill in August, 1900. Beginning at folio- 155, this witness further testified as follows: “Q. You say she was not a partner at that time? A. No, sir-; I never recognized her as a partner at all. Q. You looked after her interest in the mill, did you not ? A. I have looked after all her interests ever since she was born. Q. When you decided to make this mill a 5,000 mill, you decided to- put her interest in that mill? A. I expected to- put part of it there. Q. Where did she live? A. At Greenville, but she stayed at my home part of that year, and she was in bad health, her and her baby both. Q. She stayed there all the fall ? A. Yes, sir. Q. You expected her to have an interest in the mill?A. Yes, sir; but she had none in the land. Q. You built that mill with your o-wn hands? A. Yes, sir. Q. Made your own brick ? A. Yes, s-ir, all but a few.” While the testimony of J. S. Blalock was not given until after the refusal of the motion for nonsuit, it is not -improper to refer to the same in considering whether to set aside the order of nonsuit. Hicks v. Southern Railway, 63 S. C., 567, 41 S. E., 753. We do not think it can be said that there was no testimony whatever tendng to show that Mrs. Browning was a partner in the Goldville Manufacturing Co-., and it was proper to leave it to the jury to determine that issue.
But let us assume that Mrs. Browning was not a party to the original contract of July 9, 1900, between the Goldville Manufacturing Co. and plaintiff for the purchase of the machinery, and that her contract of November 19, 1900, is one of guaranty for the performance of the contract of the firm of Goldville Manufacturing Co., composed of L. W. C. Blalock and J. S. Blalock, either or both. The rule applicable is thus stated in 14 Ency Law, 2 ed., 1133: “Where the guaranty is collateral to the principal contract, but is made at the same time and becomes an essential ground of the credit given to the principal or direct debtor, there is not, or need not be, any other consideration than that moving between the creditor and the original debtor under the principal contract. In this class of cases, a benefit to the debtor without any benefit to the guarantor is sufficient. The consideration need not pass directly from the party, giving to the party receiving it. It is enough if a benefit arises to the party for whom the guaranty is given, or the party receiving the guaranty is or may be injured by it. Although the guaranty is executed subsequently fio the drafting of the principal contract, they will, nevertheless, be deemed to have been executed contemporaneously within the rule stated, if delivered at the same time and before any obligation or lia *21 bility is incurred under the principal contract. And a guaranty for the pa}unent of goods for which a contract of sale is made, though executed subsequently to the agreement of sale, is supported by a sufficient consideration, if the goods are not delivered until after the guaranty. The contract of sale is not complete until delivery.” In 2 Daniel Neg. Inst., 3d. ed., sec. 1759, it is stated that there are three classes of cases which should be discriminated: “(1) When the guaranty is contemporaneous with the principal contract. (2) When the guaranty is made after the contract is completed and is not for the benefit of the guarantor. (3) When the guarant3r is made after the contract is completed and is for the benefit of the guarantor. In the first class, the consideration of the principal contract will support the guaranty. In the second class, the original consideration being- exhausted, there must be some new and sufficient consideration to support it. In the third .class, the consideration moves directly to the guarantor for his own benefit, and is really his own debt.” In the leading- case of Leonard v. Vreden burg, 8 John, 29, 5 Am. Dec., 317, Kent, C. J., said: “There are three distinct classes of cases on this subject which require to be discriminated: 1. 'Cases in which the guaranty or promise is collateral to the principal contract, but is made at the same time and becomes an essential ground of the credit given to the principal or direct debtor. Here, as we have already seen, is not nor need be any other consideration than that moving between the creditor and original debtor. 2. Cases in which the collateral undertaking is subsequent to the debt, and was not the inducement of it, though the subsisting liability is the ground of the promise without any distinct and unconnected inducement. Here must be some further consideration shown having an immediate respect to such liability, for the consideration for the original debt will not attach to this subsequent promise. 3. A third class of cases and to which I have already alluded, is when the promise to pay the debt of another arises out of some new and original consideration of benefit or harm moving be *22 tween the newly contracting parties.” We think there was evidence tending to place the agreement of November 19, 1900, within the first class. The contract for the sale of the machinery made on July 9, 1900, was executory, and not complete until the delivery of the machinery, at which time the liability of the principal debtor attached. The contract called the guaranty was executed November 19, 1900, and the machinery was not delivered until about December 1, 1900. At the time of the guaranty there was no subsisting debt or liability in favor of plaintiff by the principal debtor, as the machinery had not been delivered. When the liability of the principal debtor arose, the contract of guaranty instantly attached; so that it may fairly be said that the guaranty was not subsequent to, but was contemporaneous with, the debt of the principal debtor. Independent of the testimony excluded by the Circuit Court, there was some evidence tending to show1 that the delivery of the machinery was induced by the guaranty. And we may further state that there was some evidence tending to show that Mrs. Browning received a benefit from the delivery of the machinery. When the machinery was delivered and when the guaranty was executed, the partnership, Goldville Manufacturing Co., had merged into the corporation of that name, of which Mrs. Browning was a large stockholder and a director, J. S. Blalock being president, L. W. C. Blalock being treasurer, these being the only stockholders and directors. The machinery upon its arrival at Goldville, S. C., consigned to the Goldville Manufacturing Co., was taken by the menager of the corporation and placed in its mill, and the circumstances are such as to make it extremely probable, to. say the least of it, that at the time of the guaranty the Blalocks and Mrs. Browning were aware that such use would be made of the machinery when delivered.
*23
The construction of the contract practically disposes of the remaining exceptions by appellant, which are based upon the view that the guaranty was of collectibility merely. The contract of guaranty being an absolute engagement to pay according to the contract of July 19, if the principal debtor failed to pay, no notice to the guarantor of non-payment was necessary. Carson v. Hill, 1 McM., 76; Bank v. Hammond, 1 Rich., 285. Whether such notice would be necessary in the case of a guaranty of a negotiable instrument, need not be considered here, as the instrument or contract guaranteed in this case was not negotiable, in which case, certainly, there was no necessity to give notice of non-payment to the guarantor. Savings Bank v. Strother, 28 S. C., 576, 6 S. E., 313.
The Court declined to charge that it was the duty of plaintiff, after failure of the principal debtor to pay the debt, to pursue the principal debtor by legal process and make diligent effort to collect the debt from the principal, but on the contrary charged: “Mere non-action, passivity or indulgence on the part of the plaintiff, would not as matter of law discharge any of the guarantors from obligations under the guaranty to pay the debt, and nothing short of a valid contract upon sufficient legal consideration extending the time of payment of the contract or changing the terms of the contract would have the effect in law of releasing any of the guarantors or unless the plaintiff had refused to take some legal step to collect the debt after positive request from the *25 guarantor to do so.” The refusal to charge as requested was proper under the principal stated in Savings Bank v. Strother, supra, and the charge is supported by numerous cases. Parnell v. Price, 3 Rich., 121; Lang v. Brevard, 3 Strob. Eq., 64; Hampton v. Levy, 1 McCh., 145; Jackson v. Patrick, 10 S. C., 200. Under the foregoing conclusions, the fifth, seventh, eighth, ninth, tenth and twelfth exceptions must be overruled.
This leaves to be noticed the sixth and eleventh exceptions —the thirteenth exception being a duplication of the eleventh. These exceptions are as follows: “6th. Because he erred in charging'the jury as follows: T'f you find in'this case, as a matter of fact, there was a contract for the purchase of machinery, and after the time the contract was entered into by Mrs. Browning, that the machinery was not delivered at that time but after that, that would be sufficient consideration but if not delivered it would not.” “11th. He erred in charging the jury, as requested by defendant, as follows: Tf the jury believes from the evidence that at the time of the execution of the guaranty of November 19th, 1900, there was no valuable consideration for the execution of said guaranty, then such guaranty would be null and void;’ and then modifying the same as follows: T charge you that, gentlemen, unless you should find from the testimony in this case that the guaranty was signed after the contract was made and before the delivery of the machinery, that would constitute a sufficient consideration.”
Under these, it is argued that the charge complained of was, in effect, a charge with respect to' the facts, in violation of the constitution, but it is manifest that the exceptions do not specifically raise any such question. As we understand the charge, the Court instructed the jury in accordance with the principle announced in considering the question of non-suit above, viz: “that a guaranty for the payment of goods for which a contract of sale is made, though executed subsequently to the agreement of sale, is supported by a sufficient *26 consideration, if the goods are not delivered until after the guaranty.”
'The judgment of the Circuit Court is affirmed.
Reference
- Cited By
- 7 cases
- Status
- Published
- Syllabus
- 1. Evidence — Judgment.— -Record of suit against a corporation, containing appointment of receiver, &c., properly admitted in evidence in suit by third party against corporation and -guarantor of its debt, on question of diligence -of plaintiff in pursuing principal debtor. 2. Ibid. — Bankruptcy—Admissions—Insolvency.—Duplicate original of schedule in bankruptcy is competent evidence as admission of party of insolvency. 3. Ibid. — -Ibid.—Certified copy of bankruptcy record is original evidence, under bankrupt statute. 4. Nonsuit — Partnership—-Jury.—In passing on refusal of nonsuit, this Court will consider evidence offered by defendant after refusal, and there being some evidence here tending to show that defendants were partners, that question was properly sent to jury. 5. A Guaranty made after a contract of sale of machinery, but before its delivery, needs no other consideration to support it, than that of ■the original contract; but under the facts here, the guarantor is found to have been benefitted by the purchase of the machinery. 6. Ibid. — -No evidence here sufficient'to warrant the Court in holding that contract of guaranty had been so changed, or that there was such want of diligence in pursuing the original debtor, as to discharge the guarantor. 7. Guaranty here is one of payment of non-negotiable contracts, and creditor was not bound, in order to bind .guarantor, to notify of nonpayment, nor tó use due diligence, by suit or otherwise, in pursuing principal debtor.