Falls City Construction Co. v. Boardman ( 1914 )

Wood, J.,

(after stating tbe facts). Tbe court erred in bolding that tbe instrument sued on was only an offer of guaranty. In 20 Cyc. p. 1407, III, it is said: “Both tbe English and American cases bold generally that tbe rule requiring notice by tbe guarantee of bis acceptance of tbe guaranty applies only where tbe guaranty is in legal effect an offer or proposal. Where tbe transaction is not merely an offer to guaranty tbe payment of debts and amounts to a direct promise of guaranty, all that is necessary to make the promise binding is that the promisee should act upon it; he need not notify the promisor of his acceptance,” and, at page 1409, it is said: “Where there has been a precedent request for the guaranty notice of its acceptance need not be given to the guarantor.” See Stewart v. Sharp County Bank, 71 Ark. 585-589; Davis v. Wells, 104 U. S. 159.

These principles apply to the facts of this record. The case of McCarroll v. Red Diamond Clothing Co., 105 Ark. 443, is in point. There we held that “where the guarantor directed the guarantee to ship certain goods upon the former’s ‘endorsement,’ if his credit was regarded good for the amount, and the guarantor had notice that the goods were shipped accordingly, he became liable, although the guarantee never- notified him that it would look to him for payment.”

Speaking of the letter, we said: “This was not a continuing guaranty nor a conditional one, but a special guaranty or indorsement.” In that case the letter was not an offer to guaranty, nor is it in the case at bar. The letters in both cases are direct, absolute and unconditional promises upon the part of the guarantor to pay the guarantee a certain fixed amount, when certain things are done by him. McCarroll v. Red Diamond Clothing Company, supra, can not be distinguished in principle, on the facts, from the instant case, and is controlling.

Appellee relies upon the case of McCollum et al. v. Cushing et al., 22 Ark. 540. In that case a firm of merchants at Camden wrote to a firm of merchants in New York introducing the latter to a lady who was visiting New York to purchase a small stock of goods. The Camden merchants recommended the lady to the New York merchants as worthy of credit, stated that she would pay promptly, and that they would guaranty for her to the extent of $500. The whole letter shows that it was only ‘ ‘ an offer of a promise ’ ’ by the Camden firm to pay the New York firm, if it extended the credit to the lady, to the extent of $500, if she did not pay herself in six months. The Camden merchants could not know that the New York firm would extend the credit to the lady until the New York firm had notified them of- that fact. Hence notice of acceptance was held necessary.

The court, quoting from Mr. Justice Story, in Douglas et al. v. Reynolds et al., 7 Peters 125, said: “A party giving a letter of guaranty has a right to know whether it is accepted and whether the person to whom it is addressed means to give credit on the footing of it or not, it may be most material, not only as to his responsibility, but as to Ms future rights and proceedings.” Here the direct promise of the guarantors was: “To purchase in cash at face value any part of the courthouse warrants representing said installment due July 15, 1912, which shall remain unpaid on that date according to the amounts set opposite our names below, or pay for the same in proportion to the amounts' set opposite our names shall bear on the whole amount of said installment unpaid, due July 15, 1912.”

Here the guarantors knew that the contract for building the courthouse only remained to be signed by the appellant to complete it. As citizens of Clarendon and officials of the county, they were interested in having the courthouse completed, they knew that appellant would not sign the contract, and would not build the courthouse unless they signed the guaranty, and they knew that appellant exacted this guaranty and would sign the contract and build the courthouse if the guaranty was executed. These facts clearly distinguish the instant case from the case of McCollum v. Cushing, supra. A further distinguishing feature is that the testimony shows that appellee signed the contract at the request of appellant. Judge Holloway circulated the contract at the request of appellant. Appellee testified that he gave the contract back to Holloway in order that Holloway might obtain other signers.

It follows that the judgment must be reversed, and, in view of a new hearing, it is proper to state that the undisputed evidence shows that, according to the terms of the contract of guaranty, the amount due appellant by the appellee is the sum of $214.95, for which judgment should he entered, unless there are new developments in the evidence.

Reversed and remanded for new trial.