Hoffman v. Bechtel , 1866 Pa. LEXIS 82 ( 1866 )

The opinion of the court was delivered, March 26th 1866, by

Strong, J.

The contract of guaranty is peculiar. Unlike that of an ordinary surety, it is collateral and secondary. The creditor must resort in the first instance to the debtor, and the guarantor is liable only after the debtor has proved insolvent, and the creditor has used due diligence to obtain payment from him unsuccessfully. But what is due diligence ? Perhaps it is impossible to define it with any degree of certainty. It must vary with the circumstances of each case, and hence it is a question for the jui’y: Rudy v. Wolf, 16 S. & R. 79. It cannot be less than such as a vigilant creditor ordinarily employs to recover a debt for which he has no other security than the obligation of the debtor.

The guarantor has certainly a right to expect an honest, an intelligent effort of the creditor to obtain payment from the person primarily liable. Unless it be shown that legal process would have been fruitless, it is the creditor’s duty to employ that process without unnecessary delay, and if he does, there is a legal presumption that he has been duly diligent. This is all that was decided in Kirkpatrick v. White, 5 Casey 176, and Gilbert v. Henck, 6 Id. 205. But this presumption is not a conclusive one. There may be cases in which something more may be due than simply suing out legal process, and letting it run its course. This is intimated in both the cases last referred to. In Kirkpatrick v. White, Judge Lowrie said, due diligence does not require the creditor to accompany the collecting officer and show him personal property, “ unless he has some special knowledge relating to it and in Gilbert v. Henck the same judge said that where the principal is not liable to a ca. sa., and the plaintiff has issued a fi. fa., and it is returned “ nulla bona,” he has done all that the law requires of him in favour of the guarantor, “ unless it be' shown that the principal had property in some other county that was known to the plaintiff, or ought to have been, and that could he reached by ordinary execution process.” Here is a clear recognition of a duty resting upon the creditor, holding a guaranty of a third person, to do more in some cases than employ legal process against the debtor, and let it run its undisturbed course. He may often know that the debtor has tangible property quite sufficient to satisfy the debt, which the sheriff without his aid cannot discover. Surely, due diligence in such circumstances requires him to do more than put an execution into, the hands of the officer of the law. No jury would doubt that vigilant creditors would do more, if they had no surety or guarantor for the debt. It is not then to be taken as an universal rule that a creditor has done his whole duty to one who had guarantied the debt to him, when he has sued out legal process against the debtor, and placed it in the hands of the proper officer. The most that can be claimed for it is, that it makes a primé facie case of due diligence, which may be overcome by proof of want of good faith in the creditor, and by proof that the failure to recover from the debtor was in consequence of the creditor’s neglect to do what other prudent creditors in like circumstances would ordinarily have done: Brown v. Brooks, 1 Casey 210; Overton v. Tracey, 14 S. & R. 327.

These principles lead to the conclusion that the court below fell into error in rejecting some of the evidence offered by the defendant. The offer, which we think should have been received, was evidence to prove that the debtor was the owner of a lot and two houses thereon, worth $2500, upon which the judgment entered on the bond guarantied by the defendant was a lien, that the lot was subject to prior encumbrances, amounting to about $900; that under the execution issued by the plaintiff the lot was sold for $T0 to the wife of the debtor; that the plaintiff paid no attention to the sale, absented himself from it; that after the sale was made he came to the place, and remarked that he did not care, as he was secured for his claim; that he made no effort to have the sale set aside and a resale ordered, and that he privately offered to the purchaser an advance on his bid, if the purchaser would transfer the bid to him. We must, of course, now assume that all this could have been proved, and that it would have been, had the court allowed the evidence to be given. The question to be answered, then, is, would it have tended to show want of good faith to the guarantor or failure to use that diligence in collecting the debt from Henninger the debtor, which prudent creditors ordinarily exert in collecting debts due to them ? We think it would, and that it should have been submitted to the jury for them to find whether it was sufficient to overcome the primá facie case made out by the plaintiff. We do not assert that it is the duty of a creditor, to whom a guaranty has been given to attend the sheriff’s sale of his debtor’s property, and there bid upon it. Generally it is not. But there is much more in this case. All the facts are to be considered, and considered as bearing upon each other. The declaration of the plaintiff, the private offer to take the bid, the fact that the wife of the defendant was the purchaser, that the property sold for less than one-twentieth of its value, and that the plaintiff refused to apply to the court to set aside the sheriff’s sale ; all are more or less significant. It must be left to a jury to say whether they show that the plaintiff failed to use with good faith that diligence in collecting the debt from Henninger which prudent creditors ordinarily employ. If they do show that, they will avail for the defendant.

The other assignments of error are not sustained. The mere fact that the personal property was worth much more than it brought at the sheriff’s sale was of no importance in itself, and the charge given to the jury upon the facts in evidence was entirely accurate. But for the first reason we have mentioned, a new venire must be ordered.

Judgment reversed, and a venire de novo awarded.