Howland v. Aitch

Rhodes, J., delivered the opinion of the Court:

The appeal from the order denying the motion for a new trial not having been taken within the time prescribed by law, must be dismissed. The appeal from the judgment remains.

The defendant, Aitch, made his promissory note to the plaintiff, and within three days after its delivery the defendant, Thurston, indorsed upon the note the following guaranty : “I guarantee the payment of the within note. H. H. Thurston.” The guaranty was given in pursuance of a verbal agreement made by and between the three parties, about three days before the delivery of the note, whereby the plaintiff promised to sell to Aitch certain horses, and in consideration thereof Aitch promised to execute, and Thurston to guarantee the payment of, a promissory note for the price agreed upon for the horses.

The third finding of fact is as follows : “ That within three days after said promissory note was so made and delivered to plaintiff, and as part of the same transaction, and in pursuance of his said agreement so to do, defendant, Thurston, did guarantee the payment of said note, in writing, signed by him upon the back thereof, in the words set forth in said complaint.”

It is held in Ford v. Hendricks (34 Cal. 675), upon the authority of Riggs v. Waldo (2 Cal. 485), Evoy v. Tewksbury (5 Cal. 285), Jones v. Post (6 Cal. 102), Haseltine v. Larco (7 Cal. 32) and Otis v. Haseltine (27 Cal. 80), that it is “well settled in this State that the promise of a guarantor is not within the Statute of Frauds, if made before the delivery of the note.” The promise must, of course, be supported by a consideration, for, in the absence of a consideration, there is no contract, and the promise is a nudum pactum. (Leonard v. Vredenburgh, 8 John. 37.) The consideration which supports the promise of the guarantor must, under the doctrine of the cases above cited, be the consideration passing between the maker and payee of the note. This point was so decided in Otis v. Haseltine (27 Cal. 80). In that case, and in Ford v. Hendricks and the cases therein cited, the contract of guaranty was made at the same time as the note or contract upon which the guaranty was indorsed. But that fact is not the test as to whether the guaranty is an •original contract, resting upon the consideration of the contract, the performance of which is guaranteed; but it shows, in the absence of countervailing facts, that the two contracts are parts of one original transaction. In Haseltine v. Larco the two instruments were regarded as one transaction, and in Otis v. Haseltine it was considered that both the promise of the vendee and that of the guarantor constituted the consideration for the sale and delivery of the goods, thus showing that the two promises and the sale and delivery of the goods constituted one entire transaction. It is a matter of no moment at what time, relative to each other, the contracts may have been made and delivered, and the consideration may have passed, if they together constituted one transaction ; though it may be important, in ascertaining whether, in fact, they are branches of one transaction. Here it is found, as we understand the finding, that the sale and delivery of the horses and the making and delivery of the note and guaranty constituted one transaction. The consideration of the one promise, therefore, supports the other. The note and the guaranty, on the one side, and the sale and delivery of the horses on the other, constitute, respectively, considerations for each other; and the guaranty is valid, though the consideration is not therein expressed.

In view of the finding in this case, which we have alluded to, it becomes unnecessary to examine the doctrine of Brewster v. Silence (8 N. Y. 210) and other cases in that State, that the principal contract and the guaranty is each a distinct and entire contract, and that the writing in the latter case must express the consideration; but it is apparent that it cannot be sustained in this State without overturning the uniform authority of the cases in our own Courts.

Judgment affirmed.

Sprague, J., expressed no opinion.