Cullender v. Levers

I am unable to agree that "in consideration of further time granted by Helen Miller," appearing in the contract of guaranty, may be read "in consideration of six years further time granted by Helen Miller." An extension of a note originally due one year after date for a period of six years is unusual. This guaranty contract was drawn by a banker, and it will come as a surprise to the banking community that the familiar phrase "further time" may be given the meaning placed upon it by the court. There is no dispute between the parties as to the real agreement.

"The law cannot reasonably impose obstacles, under the guise of rules of evidence, to the establishing of facts about which originally there was no dispute or misunderstanding." Stearn on Suretyship, p. 57.

The vital question in the case is, "When did the right of action accrue to Helen Miller?" It is admitted that appellant guaranteed the payment of the past-due note, and no question is raised as to the sufficiency of the consideration, although it appears from the findings of the court that more than six months — a reasonable time — elapsed after the date of the contract of guaranty before demand was made. It has been held that: "A guaranty of a note in consideration of an extension of time of payment is not invalid because there is no definite time fixed for such extension where there is an actual forbearance for a reasonable time." Note, page 68, Stearn on Suretyship.

It thus appears that if the sufficiency of the consideration had been questioned, the indefiniteness of the period of the extension of the note would not have been fatal.

Appellant's third point relied upon for reversal reads as follows: "3. The court erred in refusing to adopt appellant's requested finding of fact No. 5 (Tr. R. p. 13) and in refusing to hold that no suit or action upon such note or guaranty was commenced within six years from the date of demand for payment of the said note made upon the said R.E. Levers."

If the extension of the note was for an indefinite time, the demand made ended the period of forbearance, and the right of action accrued.

"The statute of limitations begins to run upon a contract of guaranty the moment a right of action upon the contract accrued, not before." 37 C.J. p. 837.

Is the contract of guaranty ambiguous? An attempt to reconcile the comments on this language in the opinion of the court with the pronouncement of the learned trial judge quoted therein and the finding prepared by the able counsel of appellee will disclose a want of absolute unanimity as to its meaning.

Chief Justice Rugg, in Merrimac Chemical Co. v. Moore,279 Mass. 147, 181 N.E. 219, 221, said: "The real question to be determined in the case at bar is the meaning of the guaranty, including ascertainment of the person intended to be benefited thereby, as disclosed by its words read in the light of the knowledge of the parties touching the facts, their relations to each other and to the transaction, and all other material circumstances to the end that by a fair and reasonable interpretation the purpose of the parties may be given effect."

See, also, Sun Oil Co. v. Heller, 248 N.Y. 28, 161 N.E. 319.

"If a mutual understanding of the parties cannot be established by reference to the context, the declarations and conduct of the parties or the surrounding circumstances, the construction placed upon the contract by the promisee, upon which he acted, should prevail without regard to the understanding of the promisor, providing such construction by the promisee was reasonable."

I am unable to concur in the view of the case taken by the majority of the court, and I therefore dissent.