Taylor Co. v. McClung's Exr.

The following statement of facts in the case were agreed upon and submitted by the counsel for the parties respectively.

On the 13th October, 1854, John McClung gave to William McClung, his brother, then in the grocery business in Wilmington, Delaware, a letter in the following words, viz:

POST OFFICE, WILMINGTON, DEL., Oct. 13, 1854. MESSRS. TAYLOR GILLESPIE,

GENTLEMEN: — My brother William is desirous to purchase his goods of you, and has asked me to be security for him. To this I have no objections — I will therefore be accountable for any purchases he may make, with the understanding that he will get his goods on the usual terms and that he pays for them at the time you and him may agree on. If the terms agreed on by you and him should not be fulfilled, it is understood that I am to be notified on the subject.

Yours respectfully, JOHN McCLUNG.

At the date of the above letter and for some years previously, the plaintiffs in this action carried on the business of Wholesale Grocers at Nos. 7 and 9 South Water Street, Philadelphia, under the name, style and firm of Taylor, Gillespie Co.

On the ninth day of September, A. D. 1854, the same persons, the Plaintiffs in this action, commenced the business of Wholesale Grocers in North Water Street, in the same city, and conducted it under the name, style and firm of David B. Taylor Co. It was conducted under the particular supervision of David B. Taylor. The business of the two establishments was conducted separately; but the plaintiffs held similar interests in each.

On the 9th day of April, A. D. 1853, William McClung having been for several years previously a retail grocer in Wilmington, entered into an agreement with his creditors, whereby they accepted in full satisfaction for their debts, William McClung's promissory note indorsed by John McClung for 50 per cent. upon the amount of the debts — four notes being given to each creditor in equal amounts, payable at 6, 9, 12 and 18 months. At that date William McClung was indebted to the plaintiffs, for goods purchased of them as the firm of Taylor, Gillespie Company, to the amount of $1060. Taylor, Gillespie Co., were among the compounding creditors, and accepted notes given pursuant to the aforesaid arrangement. One of which notes it appears was paid by a check drawn by John McClung, dated Nov. 2d, 1854, for $265, on the Union Bank of Delaware, payable to Taylor Gillespie, and which is indorsed in the hand writing of one of the plaintiffs "Taylor, Gillespie Co."

After the composition above mentioned, made April 9th, 1853, William McClung continued to make purchases upon the usual credit at the house conducted under the firm of "Taylor, Gillespie Co.," until the 19th day of September, A. D. 1854, when the last purchase was made at that house.

On the 29th September 1854, he began to contract bills at the house conducted under the firm of David B. Taylor Co., and continued so to do, until the 28th February, 1855, when his dealings with that house ceased. An account of his dealings with the house of David B. Taylor Co., showing the dates and amounts of the several bills contracted by him, with the dates and amounts of the credits, is hereto annexed, and made a part of this case, stated. It is further agreed that the said William McClung was notoriously insolvent at the time of buying said goods of David B. Taylor Co., and from thence hitherto has been.

These bills were made upon a credit of four months, that being the usual credit upon purchases made by retail grocers of Wilmington, of the wholesale grocers of Philadelphia.

The letter of guaranty signed by John McClung, and above set forth, was given by him to William McClung, who took the same to Philadelphia, and called with it at the house of Taylor, Gillespie Co. He inquired for David B. Taylor, and on being informed that Mr. Taylor was then at the house of David B. Taylor Co., he went to that house, and there delivered to Mr. Taylor, the aforesaid letter. Upon receiving it, Mr. Taylor caused it to be filed among the papers of that house, where it afterwards remained until delivered to the attorney in the suit now pending.

At the time of giving the said letter of guaranty, and during the contracting of said bills with the house of David B. Taylor Co., John McClung was not informed by William McClung of the existence of that house, nor that the members of the firm of Taylor, Gillespie Co., also composed the firm of David B. Taylor Co. Whether John McClung during the period referred to, received such information from any other source or not, does not appear.

On the 15th May, 1855, John McClung addressed the following letter, which was received by Messrs. Taylor, Gillespie Co.; viz:

POST OFFICE, WILMINGTON, DEL., May 15, 1855. MESSRS. TAYLOR GILLESPIE:

GENTLEMEN: — I wrote you a letter some time ago requesting you to credit my brother with groceries, provided he complied with the terms agreed on between you and him. The object of this letter is to ascertain that fact; also to know to what amount he is indebted to your firm. Please to let me hear from you by return of mail.

Yours respectfully, JOHN McCLUNG.

On the 16th of May, 1855, Messrs. Taylor, Gillespie Co., addressed to John McClung, in reply to the letter last mentioned the following which was received viz:

PHILADELPHIA, May 16th, 1855. JOHN MCCLUNG ESQ., Wilmington, Del. DEAR SIR: — Your favor of yesterday's date duly to hand, and in reply we state that Wm. McClung has complied with the terms agreed upon in the purchase of goods from us. He is indebted to us two thousand and seventy-two dollars and fifty-eight cents, ($2072.58.)

There will be due in all, this week, $716; and on the 21st, $154.27; and then not until the early part of next month. If it is not convenient for him to pay the amount falling due this week in full we would be willing to take his note at 60 days, with your indorsement, or will take it without your name on it, provided you will say it is all right. We make these suggestions thinking it might be an accommodation to Mr. Wm. McClung, and we would not suffer, as the money could be had on the notes from our banks. The writer will probably be

in Wilmington on Saturday next, and call on you. In the meantime we subscribe ourselves.

Your obedient servants, TAYLOR, GILLESPIE CO.

On the day following, May 17th, 1855, John McClung addressed to Messrs. Taylor, Gillespie Co., the following note, viz:

POST OFFICE, WILMINGTON, DEL., May 17th, 1855. MESSRS. TAYLOR, GILLESPIE Co.

GENTLEMEN: — Your letter of the 16th inst., is before me. In reply I have only to state that I think the balance due by William McClung is very large. I have not seen him to-day, but I want an explanation about the matter. I shall not be accountable for any of his transactions with you until I hear something satisfactory.

Yours respectfully, JOHN McCLUNG.

The account referred to in the case stated and as annexed to it, of the dealings of William McClung with the house of David B. Taylor Co., commencing on the 29th of September, 1854, and continuing until the 28th of February, 1855, contained numerous items of debit for goods sold to him and of credit for cash paid by him running through that period, leaving, however, a balance due from him to the house on the day last mentioned of $1339 06.

And it was agreed that if, upon this statement of facts, the court should be of opinion that the plaintiffs were entitled to recover the balance of the said account, or any part of it from the defendant, the executrix of the said John McClung since deceased, judgment should be rendered for the plaintiffs for the same, or such sum as the court should adjudge to them; otherwise judgment should be rendered for the defendant. From the facts presented, it appears that when the guaranty in question and the letter containing it was written and addressed to Messrs. Taylor Gillespie in Philadelphia by John McClung in the city of Wilmington, on the 13th of Oct. 1854, there were two commercial houses, or firms in the former city engaged in the grocery trade and doing business at different places, under different names and apparently as separate, distinct and independent houses, the one under the name and style of Taylor, Gillespie Co., and the other under the name and style of David B. Taylor Co. These two firms, however, though apparently distinct and independent of each other, were composed of the same individual members, proprietors, or owners, David B. Taylor, William Gillespie and John D. Taylor. The guaranty it appears was addressed to Messrs. Taylor Gillespie, which was not the formal business designation, or name of either firm, in the form of a letter from John McClung in Wilmington, and was placed in the hands of his brother William McClung, for whose benefit it was written, to be delivered to its address in Philadelphia, who, according to the case stated, took it first to the house of Taylor, Gillespie Co., and inquired for David B. Taylor, and on being informed that he was then at the house of David B. Taylor Co., without delivering it at that house, or as it would seem, without making any mention of it there, went to the house of David B. Taylor Co., and there delivered it to Mr. Taylor, who, on receiving it, caused it to be filed among the papers of that house, where it continued to remain until this suit was commenced, and where all the goods furnished upon the faith and credit of it, were afterward supplied to the party who bore it, William McClung. This house, or firm, however, had only been formed and established in business about a month previous to the date of the guaranty, and if William McClung himself was aware of this fact that it had been formed and was composed of the same members with the older firm of Taylor, Gillespie Co., previous to his visit to the city to deliver and avail himself of the guarantee, he did not inform his brother John McClung of it, and it does not appear that the latter at that time had any knowledge of its existence, or of the persons who composed it. But he was well aware that there was a mercantile firm in Philadelphia, of which Messrs. Taylor Gillespie were members, and that his brother had previous dealing with such a firm and had been under the necessity, owing to his failure in business, of compounding his his debts with it about a year before, and had had himself some business transactions with it on account of his brother, such as endorsing the notes of his brother to them to meet the amount due to them on the composition; and that firm was the house of Taylor, Gillespie Co.

It is upon this state of facts that the first question raised in this case has been submitted to the court, viz: to which of these houses or firms of "David B. Taylor Co.," or "Taylor, Gillespie Co.," was the letter and guaranty of John McClung addressed; and, under the circumstances, we can have no hesitation in saying that it must have been to the latter; and if to the latter, that the house of David B. Taylor Co., the plaintiffs, had no authority to deal with, or trust William McClung for goods on the basis and credit of it, and have no right to recover the demand in suit from the defendant. The fact that the two houses were composed of the same identical members, with the same relative interests or shares, as partners in each, established as they were, at different times and doing business at different points in the city, and under different names, or styles as commercial houses, and, so far as the public was concerned, apparently on separate and distinct grounds, each for itself, could not entitle them to consider and treat a guaranty, or proposition of guaranty addressed to one house, as alike addressed to both, or indifferently to either; or that either one of the firms, or any but the firm to which it was addressed, or for which it was in point of fact designed, could act upon it, as a valid and binding guaranty. For the identity of members will not constitute an identity of firms under such circumstances, if it can indeed, under any circumstances where they are doing business as separate and distinct houses in different places, even under the same name; because, a commercial house consists of something more than its individual members, or proprietors merely. Its stock in trade, stand, or place of business, books, bills, notes, accounts and papers, as well as many other appliances peculiar to every such house, and in which no other firm, as a firm, can have any property, or interest as a proprietor, are all essential matters, which enter into the constitution and composition of a mercantile firm, or co-partnership, as well as members or owners; and it would be productive of the greatest confusion, injustice and embarrassment in all legal and judicial proceedings, if they were to be considered and treated as in effect, and substantially one and the same house, because the respective members of them happen to be the same. It is for this reason therefore, that every firm must sue and be sued by and in its own name as a firm, for a partnership debt, or a debt contracted with it as a firm; and that one firm cannot, in its own name as a firm, sue for and recover a debt contracted with another firm, in the name of that firm, even though composed of the same members. In all these respects, two different houses doing business under two different commercial names as firms, though constituted of the same members having the same interest in each, are in contemplation of law, as separate and distinct from each other as two persons; and one cannot act, or sue upon a guaranty intended for or given to another, any more than it can sue for a debt, or an account contracted with the other; for if the guaranty be accepted by the party to whom it is offered, or for whom it is intended by the guarantor, it is as much a matter of contract between the parties to it in the one case, as in the other.

And here we might dismiss the case, as the view which we have taken of this question, must decide it. But there was another point presented and discussed in the argument, on which we think it proper to make some remarks before we dispose of it. Assuming, for the sake of argument, that the letter of guaranty was addressed, or might, under the circumstances, be considered as having been addressed, to the firm of David B. Taylor Co., instead of the firm of Taylor, Gillespie Co., the question to which we next refer is, was the guaranty legally accepted by that firm, so as to bind the party offering it? It is not pretended that any formal notice was expressly given to John McClung of its receipt and acceptance by either of the firms, nor does it appear from the case stated, that his brother, William McClung had even informed him of its acceptance by the new house of David B. Taylor Co., and that he was making his bills at that house instead of the other, on the credit of it; for we do not agree with the counsel for the plaintiffs that there is anything in his letter, of May 15th, 1855, to Messrs. "Taylor Gillespie", to warrant the inference which he has drawn from it, that he certainly knew by that time, that his guaranty had been accepted by Messrs. David B. Taylor Co. But even if such were the case, it would not have been sufficient to bind the party tendering it; for it is a well established principle of law, that a party tendering a guaranty of this nature, for future and prospective credits, or advances, is entitled to reasonable notice of its acceptance, and that it will be duly credited, and acted upon by the parties to whom it is addressed, or he will not be bound by it. On this point there is a strong case reported in 12 Peters 497, not cited in the argument. The guaranty was by letter, addressed to a third person in the following terms: "Sir, On this sheet you have the list of articles wanted for Miss Betsey Miller's millinery establishment, which you were so good as to offer to purchase for her. I will be security for the payment either to you, or to the merchants in New York of whom you may purchase them, and you may leave this in their hands, or otherwise, as may be proper. I hope to your favor and view may be added all possible favor by the merchants to the young lady, in quality and prices of goods, as I have no doubt she merits as much by her knowledge of her business, industry and pure conduct and principles, as any whatever". The person to whom the letter was addressed, purchased the goods mentioned of the plaintiffs, who were merchants in New York and left the letter with them. There was no further proof than what might be implied from this fact, that the writer of it, the guarantor, had notice that the plaintiffs had accepted the guaranty, and acted upon it. On the argument it was conceded by the counsel for the plaintiffs that when the engagement of the guarantor is prospective, and is intended to apply to future transactions, the guarantor is entitled to notice, and has a right to know whether it is accepted, and if the person to whom it is addressed, intends to give credit upon the footing of it, or not. But he endeavored to distinguish the case from those in which this principle had been recognized and established, on the ground that the guaranty in question was not prospective, nor intended to cover any other goods than those set forth in the memorandum accompanying the guaranty; and that as soon as those goods were furnished the authority of the guaranty was exhausted and no further credit was warranted by it, and therefore no. further notice of its acceptance to the defendant was necessary than that which was in the knowledge of his agent who delivered his letter to the plaintiffs.