Hickory Novelty Co. v. Andrews , 188 N.C. 59 ( 1924 )

Clarkson, J.,

after stating tbe facts: Tbe only question presented on tbe entire record is: Did tbe defendant guarantee to plaintiff tbe account sued on, $3,174.12 and interest? We are of tbe opinion that be did.

C. S., 987, is as follows: “No action shall be brought whereby to charge an executor, administrator or collector upon a special promise to answer damages out of bis own estate, or to charge any defendant upon a special promise to answer tbe debt, default or miscarriage of another person, unless tbe agreement upon wbicb such action shall be brought, or some memorandum or note thereof, shall be in writing and signed by tbe party charged therewith, or some other person thereunto by him lawfully authorized.”

Tbe statute applies to contracts of guaranty. Gilmer v. Improvement Co., 170 N. C., 452; Partin v. Prince, 159 N. C., 555.

A written promise by one to pay tbe debt of others, that “just as soon as tbe dry kiln gets in operation, I will see that your bill is paid,” is not a continuing guaranty, but, by fair implication, refers to an account already made and stated. Supply Co. v. Finch, 147 N. C., 106.

In Green v. Thornton, 49 N. C., 232, Battle, J., said: “It is not and cannot be denied that a guaranty in writing, made at tbe time of a contract between two or more persons, is binding upon tbe guarantor, because it is founded upon tbe consideration wbicb exists between tbe principal parties. But if it be made afterwards, without any new consideration, then it is not obligatory, and putting it in writing, if not under seal, will not help it. Rann v. Hughes, 7 Term Rep., 350, note a. Tbe statute of frauds does not require tbe consideration to be in writing, and it may therefore be proved by parol. Miller v. Irvine, 1 Dev. and Bat. Rep., 103.” Partin v. Prince, supra.

The statute does not apply to a promise to pay the debt of another out of the debtor’s property in the promissor’s hands. Mercantile Co. v. Bryant, 186 N. C., 553.

The statute does not apply where it is in the nature of an original obligation of the promissor. Marrow v. White, 151 N. C., 96; Partin v. Prince, supra.

In 12 R. C. L., 1053, it is said: “A guaranty has been defined by statute to be ‘a promise to answer for the debt, default, or miscarriage of another person.’ This definition substantially conforms to the judicial conception of a guaranty, which may fairly be summed up as a promise to answer for the payment of some debt or the performance of some obligation, on default of such payment or performance, by a third person who is liable or expected to become liable therefor in the first instance.” Grocery Co. v. Early, 181 N. C., 460; Enc. Dig. of N. C., Vol. 14, “Guaranty,” p. 275 et seq.

“If the object of the guaranty is to enable the principal to have credit over an extended time, and to cover successive transactions, it is a continuing one; hut if the intention of the guarantor, as indicated by the language used, is that hut one transaction is to be covered by the guaranty, it is a limited one.” Childs on Suretyship and Guaranty, sec. 23, p. 20. See 12 R. C. L., 1061.

In 12 R. C. L., 1062, part of section 11, it is said: “There seems to he no general rule for determining whether a guaranty is continuing; each must be construed according to its terms and the surrounding circumstances, to show which parol evidence is admissible. If the parties treat an instrument as a continuing guaranty, and its terms are not inconsistent with such construction, the courts will adopt that view.”

In Scovill Mfg. Co. v. Cassidy, A. & E. Anno. Cases (1898 E.), 611 (275 Ill., 462), under “Continuing Guaranties,” it is said: “Where by the terms of the guaranty it is evident that the object is to give a standing credit to the principal to he used from time to time, either indefinitely or for a certain period, it is generally deemed a continuing guaranty. ... It was said in Chester County Nat. Bank v. Thomas, 220 Pa. St., 360; 60 Atl., 813, 'Whether a contract of guaranty is a continuing undertaking is a question of intention which must be gathered from the instrument itself, or from the course of dealings between the parties or from both.’ If it appears that a future course of dealing for an indefinite time, or a succession of credits to be given, was contemplated by the parties, the contract will be construed to be a continuing guaranty,” citing a wealth of authorities.

In First Nat. Bank v. Waddell (74 Ark., 241), 4 A. & E. Anno. Cases, 822, under “Continuing Guaranties,” it is said: “In like manner, a guaranty will he held to be continuing if it is made in language which shows that the parties intended that it should cover not only present transactions, but also future transactions for an indefinite length of time,” citing many authorities.

We think the case of Newcomb v. Kloeblen, 77 N. J. L., 291, in point. The head-notes to that case are as follows:

"The plaintiffs were commission merchants; they refused to make any further sale to the defendant’s son unless his account was guaranteed by defendant. Defendant wrote to the plaintiffs, T will be responsible for any bill that my son James will make’: Held, that use of the word 'any’ did not limit the guarantee to the one bill of goods delivered when the guarantee was given," but that it was a continuing guarantee.

“In an action on a guarantee, where the issue is whether the guarantee is a continuing one, conversations between the guarantor and his son at the time of executing the guarantee are inadmissible for the purpose of showing the meaning of the guarantee.

“In construing a contract of guarantee, whatever may be the limitations as to time or amount, the rule of construction is to take the words of the contract together with the surrounding facts as the exponent of the meaning of the parties.”

The Court, in that case, said: “The fact of the previous dealing between James Kloeblen and the plaintiffs there appeared, and the absolute necessity on his part for a general credit for the future, as the plaintiff refused to make him further sales unless his father, the defendant, would guarantee his account with them. Under these circumstances the defendant guaranteed to be responsible for 'any bill that my son James will make,’ and this leads inevitably to the conclusion that the guarantee was to remain continuing until revoked.”

Similar cases are as follows: “Thus, a guaranty, without limitation as to time or amount, of the payment 'of all bills of goods sold or that may be sold,’ is a continuing one.” Conduitt v. Ryan, 3 Ind. App., 1. See, also, Doyle v. Nichols, 15 Colo. App., 458; Boehne v. Murphy, 46 Mo., 57. “A letter of credit stating that 'I will guarantee their engagements, should you think it necessary, for any transaction they may have with your house,’ is a continuing guaranty.” Grant v. Ridsdale, 2 Har. & J. (Md.), 186.

We think that the letters and undisputed facts, as appear from the record, disclose that the transaction was a “continuing guaranty.” The guaranty was in writing, as required by the statute, “To answer the debt, default or miscarriage of another person.” The question of the consideration of the promise or implied promise of the defendant to pay the outstanding account, which amounted to $3,509.68, does not arise on the record, as that- amount has been paid. If it did arise, the fact tbat tbe defendant stated tbat be was interested in C. W. Andrews & Eros., and tbe letter of 3 January, 1920, taken in its entirety, would imply tbat be was a partner witb bis sons in tbe business and create liability as a partner. Tbe Home Savings Bank letter, enclosed in D. W. Andrews’ letter of 3 January, 1920, says: “Mr. D. W. Xndrews, of the firm, is worth over $30,000.”

We tbink tbe letter of 3 January, 1920, was a continuing guaranty by defendant to both Hutton & Bourbonnais Co. and Hickory Novelty Co., for tbe future debts or obligations tbat were incurred by C. W. Andrews & Bros. Tbe letter is an effort to get a line of credit for C. W. Andrews & Bros., and enclosed a letter from tbe bank showing bis financial standing. He stated in tbe letter: “I am personally responsible for all outstanding debts up to this time, and all accounts that will follow.” He says: “We have in view a large volume of business for tbe future,” showing tbat be expected C. W. Andrews & Bros, to continue to do business witb tbe two firms, including tbe plaintiff. He knew tbat tbe plaintiff knew bis sons were members of tbe firm of C. W. Andrews & Bros., and in tbe course of business would probably become indebted to it, and be was using every expression be could in bis letter to have plaintiff satisfied tbat tbe defendant would be responsible for tbe obligations of C. W. Andrews & Bros, then existing and to be incurred in tbe future. “I am interested in C. W. Andrews & Bros., and will personally see that all business transactions between C. W. Andrews & Bros, and Hutton & Bourbonnais Co. and Hichory Novelty Company are settled and adjusted satisfactorily entirely with your concerns.” Tbe letter is addressed to Hutton & Bourbonnais Co., but defendant knew tbat tbe Hickory Novelty Company was closely allied witb them, tbat tbe same interests were in charge of tbe two companies. Tbe language in tbe first part of tbe letter in which tbe two firms are referred to as “your concerns.”

In considering tbe letter of 3 January, 1920, and tbat of tbe Home Savings Bank, bearing upon tbe intention and construction, we should consider tbe surrounding circumstances .and should take into consideration tbe letters of 21 July, 1922, and 1 August, 1922, which indicate tbat tbe defendant understood tbe liability be bad created and incurred. These letters all speak for themselves, and a more extended analysis we deem unnecessary to show a “continuing guaranty.” Tbe record shows plaintiff bad no notice of tbe partnership changing to a corporation. Tbe evidence shows tbe account was made in tbe name of C. W. Andrews & Bros. We do not tbink tbat tbe language of tbe letter of 3 January, 1920, calls for notice to be given tbe defendant. Tbe facts in this case are different from cases cited by defendant in bis brief. This was an unfortunate business venture on tbe part of tbe defendant’s sons. Humanly, and rightly, the defendant was trying to help his sons to success, and allowed them his 'credit. The defendant says in his evidence: “I stated in my answer that the reason I signed the letter of guarantee was because I wanted to help the boys; I was interested in the boys; any father is in his sons, I presume. I feel that way about mine.”

This statement is laudable on the part of the defendant and, under the facts in this case, he made the “continuing guaranty” to help his boys. They have become insolvent; he must fulfill his obligation.

For the reason given, the judgment of nonsuit is

Beversed.