Case ID: monaghan_1/html/0030-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Slagle & Co. v. Amberson et al., Executors.
    A contract, signed and sealed in the following terms: “ In consideration of five dollars, the undersigned hereby guarantees to Charles W. Slagle & Co., the payment of the amount already loaned hy them to Jacob H. Forney, trading as J. H. Forney & Co., and also any amount that they may hereafter loan to said J. H. Forney, not to exceed in all two thousand dollars; this to he a continuing guarantee to the extent of two thousand dollars, without demand or notice,” given hy a father as a guaranty for advances to a son, is a revocable guaranty, as to future loans, and may he revoked hy notice.
    The facts that such contract is recited as made “ in consideration of five dollars,” the guarantee not being hound to make advances, and is under seal, do not render it irrevocable.
    In such contract, the death of the guarantor operates as a revocation of the guaranty, and his estate is not liable for loans made hy the parties guaranteed, after his death had become known to them.
    May 30, 1888.
    Error, No. 17, May T. 1888, to C. P. Franklin Co., to review a judgment on a verdict for the defendants in an action of assumpsit, at Sept. T. 188Y, No. 182. Teunkey, J., absent.
    The facts appear from the charge of the court below, by Howe, P. J.:
    “ This is an action by C. W. Slagle & Co., against Lewis S. Forney’s executors, brought upon a guaranty which I now read :
    “ ‘ In consideration of $5, the undersigned hereby guarantee to Charles W. Slagle & Co. the payment of the amount already loaned by them to Jacob H. Forney, trading as J. H. Forney & Co., and also any amount they may hereafter loan the said Forney, not to exceed in all $2,000, this to be a continuing guaranty to the extent of $2,000, without demand or notice. Witness our hands and seals, this 9th day of February, 18Y8. (Signed) Lewis S. Forney, Ad. Forney. (Seal.) Witness Conrad Huth.’
    “ The execution of this guaranty is not denied, and, in pursuance of it, the plaintiff has shown that he advanced moneys by way of checks to J. H. Forney & Co. to the amount of $3,600— to an amount which exceeded $2,000. He has also shown that J. H. Forney, he being really J. H. Forney & Co., is insolvent. This is not a contested point in the case; he tells you so himself, that as to these claims, they could not be made off him by legal process.
    “ The plaintiff has, therefore, shown, not only the guarantee, but tbe advances upon it, and tbe insolvency of tbe principal debtor, and, having shown this, it became incumbent upon the defendants to show why he should not recover; because, upon that state of facts only, the plaintiff would be entitled to recover.
    
      “ The answer that the defendant makes to that is this: that these moneys were furnished on March 27, 1885, and during that month of March and April, down to April 20th, and that Lewis S. Fomey died on July 11, 1884, — that is conceded — that Lewis S. Forney died on July 11, 1884; consequently he was dead at the time when the moneys were loaned by the plaintiff to the principal debtor, and had been dead for a considerable period; and the defendant has also-undertaken to show that, not only was this so, but that the plaintiff had knowledge of that fact — the death, and knowledge of the death on the part of the plaintiff. Now that the guarantor, Lewis S. Forney, is dead, is conceded, as I have said, and that the plaintiff here had knowledge of the fact, testified to by J. H. Forney, who tells you that, on the Sunday following, or on the next Sunday thereafter, after the death of his father, he met -Mr. Slagle who sits before you, C. W. Slagle, of the plaintiff’s firm, and that the death of his father was conversed about; that the notice of the death from a Hanover paper was read there, and that the plaintiffs thus — one of the plaintiffs — was made acquainted with the fact of the death of the guarantor. Then Mr. Amberson tells us that another plaintiff sent in an account against Lewis S. Forney, after his death, in the fall of 1884, before these moneys were advanced, and that the executors of Lewis S. Forney paid that account. This, I suppose, in the absence of any other evidence, would be satisfactory to you, as showing that the firm of Slagle & Co. knew of the death of Lewis S. Forney; and, especially so, since Mr. Slagle, who sits before you, has not thought it worth while to go upon the stand and say that he did not know it. I take it for granted, therefore, upon this evidence, that the plaintiffs did know of the death of Lewis S. Forney. Now [I instruct you that if the plaintiffs knew that Lewis S. Forney was dead, that the plaintiffs cannot recover, but your verdict must be for the defendants] [1]; but I take occasion, although I need not say anything more to you on the subjeét, I shall take this occasion to give my reasons why I think so.
    “ This contract does not have any limit as to time; it does not say how long it shall continue to run ; it does not say, on the one hand, that it shall be perpetual and last as long as C. W. Slagle & Co. shall advance any money to J. H. Forney & Co., and it does not say, on the other hand, that it shall cease and determine upon notice given by Lewis S. Forney.
    
      “ I take it that if this paper were not under seal there would not be much question- — that, if the consideration were that which arose with every advance of money, simply upon the contract, that-then it would not be contended that it could not have been put an end to by notice on the part of Lewis S. Forney; but it is under seal, and purports to be in consideration of $5, and the contention on the part of plaintiffs’ counsel is that, as it was a contract in consideration of $5, under seal, that it is a contract and covenant on the part of Lewis S. Forney to guarantee any amount which the plaintiffs might loan to J. H. Forney & Co., not to exceed $2,000; and •that, from the acceptance of this paper by the plaintiffs, there came .about a binding contract, and that it was not revokable — that it was not an instrument of a revokable nature, as an ordinary authority would be, but a binding contract, and therefore they contend that, inasmuch as it was not revokable by Mr. Forney in his lifetime— could not be put an end to by him by any notice — they argue, if that be so, then it was not revoked by his death, nor by any knowledge of his death. If it be true that Mr. Forney had no pov^er to put an end to this contract in his lifetime, I am of the opinion that it would not be revoked by his death, or by the knowledge of it.
    “ I do not accede to that, or fully accede to this view of it, that it is not a contract revocable in its nature, as a mere authority would be. Where one man simply gives an authority, such as a power of attorney, or the like, uncoupled with an interest, it is revocable — a paper of a revokable nature.
    “ This paper is not in its nature a revokable paper. I accede to that; but, whilst agreeing to that, I am of the opinion still that Mr. Lewis S. Forney could, in his life time, have put an end to it. "While it is a contract and was binding, upon acceptance,® and not at all in the nature of an authority, revocable upon that account, yet I am of the opinion that this paper must be construed in accordance with the intention of the parties, and I am of the opinion that we must read into it a condition — that there is an implied condition that it was to cease upon notice on the part of Mr. Forney.
    “Now, as I said before, it does not express at all when it is to cease, and therefore something has to be implied — something or other has to be implied; the parties have not said how long it was to last. If we say it is to last perpetually — last so long as the plaintiff chooses to advance money upon it — that is an implied condition; it is not there. We have got to imply something. I say, what is to be implied, in my opinion, is, that it was to be good until notice was given by the guarantor that he would no longer be responsible for advances made.
    “ I first call your attention to the fact that the consideration is stated to be $5; that is a nominal consideration. If the consideration had been a $1,000,1 think the construction of this instrument would be different, or might be different, because it might tend to show that the parties meant it to be irrevocable. It is a nominal consideration of $5 — that is a fact to be considered here, whether, for the nominal consideration mentioned, Forney entered into a contract guaranteeing to pay for such moneys as plaintiff should see proper to advance, not to exceed $2,000 ?
    “ Now, the next point that I wish to call attention to is that there was here nothing to bind the plaintiffs to advance any money. They could lend the money or not as they saw proper; that was wholly in their discretion whether they would or would not advance any money.
    “ Here, then, is a contract for a nominal consideration to indemnify for advances made; the guarantee — who is the person to whom the guaranty was given — the guarantee not being bound in any way to make any advances; those are two considerations; now, then, that being the state of affairs, was it intended that this should be a perpetual guaranty ? That it should exist not only during the life of Forney, and after his death, and whatever the change of circumstances might be in regard to J. H. Forney & Co., that still Mr. Lewis S. Forney was to be held, responsible forever, or as long as the plaintiffs chose to advance the moneys to J. H. Forney? ¥e must so conclude, or else we must come to the conclusion that the parties meant and intended amongst themselves that it should have some limit, and I am of the opinion that it is fairer and more reasonable to suppose, not that they contemplated that it should be perpetual, as against all contingencies, and whatever might be the changed situation of J. H. Forney & Co., that L. S. Forney became responsible for moneys loaned to them, but that the parties must be understood to have meant that Lewis S. Forney would be responsible for moneys advanced to them, up until such time as he would give notice to them that his guaranty would no longer be acted upon.
    “ It is, therefore, in my opinion, a question simply of the construction of the instrument, in the light of the circumstances, and every written instrument is to be construed in the light of the surrounding circumstances. Every instrument is not to be construed precisely like another, but every instrument stands upon its own bottom. There is-no ease shown here that is authority binding upon this court at all, but an English authority has been cited, tending to show that, if one becomes a guarantor for the honesty of another in an employer’s business, that it continues after the death of the guarantor.
    “Now, I think there is a distinction, even supposing that case ought to be regarded by me — ought to be followed — 1 think there is a distinction; I do not know the exact facts in that case, but I can conceive that there may be cases where the guarantor would be held bound for acts subsequent to his death, as, for instance, in the case of a man who employs another man and has a great interest in the services of a valuable employee; he might make such a contract and also make a contract for a particular period, and might be compelled to keep the employee, and in all such circumstances, of course, there would be quite a difference. But I am of the opinion that, where it is optional with the parties to advance money or not to advance it, as here, and where there is a nominal consideration only, that it would not be a reasonable construction of the agreement to hold that it was intended to be beyond the power of the guarantor at any time to put an end to it; that it would hold him bound during his life, and after his death, no matter what the change of circumstances might be. That, I think, is not a reasonable construetion of the agreement, and I do not find any authority to bind me to hold so, and, consequently, I instruct you that this was an instrument, whilst not in its nature revocable, still there was an implied condition, which we must read into it, that it was to be good until notice was given of its revocation.
    [“ Now, that being so held, it disposes of the case in favor of the defense, the executors of Lewis S. Forney. The only question submitted to you, then, is just simply that one, about which, as I have said before, there is no controversy, the death of Lewis S. Forney being conceded.] [1.]
    “ I suppose that the instructions of the court upon the law of the case, will render it not very necessary for me to say to you that if you find for the plaintiff your verdict will be for the amount of $2,000 guaranteed; there would not be anything else. You could not go beyond that; but, under the instructions I have given to you, I suppose that you will not have much difficulty, and will not have much to do with the question further. [As I have said before, there is no contest before you whether there was or was not knowledge, and you will return your verdict for the defendants, if that should be your opinion.] [1.]
    Yerdict for the defendants, and judgment thereon.
    
      The assignments of error specified, 1, the portions of the chai'ge in brackets, quoting tnem; and, 2, the direction to find a verdict for the defendants.
    
      John Stewart, for plaintiffs in error.
    This contract has three features which distinguish the case in hand from other adjudications upon the subject - of continuing guaranties; it is an obligation assumed by a father in aid of Ms son; it has a good and valuable consideration; and it is under seal. These make it a contract, as distinguished from a mere authority, which would be revocable, before being acted upon, at the pleasure of the party making it.
    An authority is simply a promise which is not obligatory unless the promisee have varied his position in consequence of the inducement held out by the promisor. Hare on Contracts, 309; Offord v. Davies, 12 C. B. R., N. S. 748. In Offord v. Davies, the instrument lacked the consideration and the seal. It was a simple parol promise.
    But, as a guaranty under seal is binding immediately upon delivery, it cannot be recalled by the covenantor, even when conditioned for the performance of some act by the covenantee, wMch the latter may omit or fulfil at pleasure. An unsealed guaranty, on the other hand, does not become obligatory until a consideration moves from the creditor, and, consequently, may be revoked by the guarantor at any time before credit is given. Hare on Contracts, 311; 3 Addison on Contracts, 134.
    The consideration cannot properly be said to be nominal. It may bear no just proportion to the compensation claimed, yet it is substantial, and the relation of the parties expresses more. It is not essential that the consideration should be adequate in point of actual value. Hind v. Holdship, 2 Watts, 105. Moreover, the moving consideration is doubtless to be found in the father’s desire to assist his son by pledging his own credit to the amount of the guaranty. ,-
    If this guaranty was revocable by the guarantor at all, it was revocable at any time. It follows that, within an hour after the execution of the guaranty, he could have discontinued it, and retained the consideration which was paid him for it.
    It follows, necessarily, that if the contract was not revocable by the guarantor, it was not revoked by his death. Where the contract with the decedent is of an executory nature and the personal representative can sufficiently execute it, it will he enforced. 1 Parsons on Contracts, 131; Wentworth v. Cock, 10 A. & E. 42; White’s Exrs. v. Com., 39 Pa. 176. Although a contrary doctrine is expressed in Williams on Exrs., 1604, its authority is doubted in Bradbury v. Morgan, 1 H. & C. Ex. R. 254. And while Harris v. Faucett, L. R. 8 Ch. Ap. 866, questions the correctness of Bradbury v. Morgan, in neither of the two cases last cited had the guaranty the marked features of a contract,such as distinguish the casein hand. ' Neither expressed a valuable consideration ; neither was under seal; both reserved the right to discontinue on notice. They in no wise conflict with the law as laid down in Hare on Contracts.
    In the case of Coulthart v. Clemenston, 5 L. R. Q. B. 46, the guaranty was revocable by the guarantor in his lifetime. This difference is recognized in Lloyds v. Harper, 16 L. R. Ch. D. 312, which is the most recent English authority on the subject.
    In guarantees for advances to be made from one time to another, each advance is regarded as a separate consideration. But, in our case we have a valuable consideration moving directly to the guarantor, from the promisee, apart from the consideration of the advances to the son. The guarantor himself is paid for the risk he assumes, not by the party who is to make the advances. This fact ought not to be lost sight of, for it makes a wide and clear distinction between the cases. In not one of the cases cited was there any consideration moving directly to the guarantor.
    While the English cases may leave the question undetermined whether a naked guaranty for advances to be made can be discontinued, we are still left in a secure position with the written covenant, supported by a consideration adequate in law.
    We find no adjudications in Pennsylvania upon the question discussed.
    
      W. Rush Gillan, with him F. M. Kimmell, for defendants in error.
    If the guaranty was one which the guarantor could himself have determined by notice in his lifetime, then notice of his death will operate as a revocation. De Colyar on Guarantees, 2d Eng. ed., 349.
    Whether the guaranty was revocable, or not, depends upon whether the consideration was given once for all, or was to be made up of separate advances of money. In the case at bar, each advance of money was a separate consideration. In Lloyds v. Harper, tbe father became responsible for the engagements of the son as an underwriter. It was, in effect, a surety for his good conduct, and in that respect similar to surety on the bond of an administrator.
    The plaintiffs were not bound to make advances. In Westhead v. Sproson, 6 H. & N. Ex. R. 728, it was held that, where guarantors, for a consideration, agreed to be responsible for any goods furnished to a third person, and also for an existing debt, the parties guaranteed had bound themselves to do nothing, and, having furnished no goods, they could not maintain an action against the guarantors for the money already due.
    Bradbury v. Morgan, supra, is not in point, for the reason that in that case there was no evidence to show that the creditor had knowledge of the death of the guarantor at the time credit was given.
    Harris v. Faucett, supra, goes very far toward sustaining our contention. The contract there provided for its termination upon six months’ notice. Advances were made after the death of the guarantor, and no notice was given. Yet it was held that advancements made after the death could not be recovered. Coulthart v. Clemenston, supra, is to the same effect. Offord v. Davies, supra, if relied upon as authority, shows that this contract was countermand-able at any time.
    Jordan v. Dobbins, 122 Mass. 168, s. c. 23 Am. E. 305, which Judge Hare, in his work on Contracts, appears to have overlooked, closely resembles the case in hand. There the contract expressly said “ for value received,” and was under seal.
    October 1, 1888.
   Per Curiam,

The court below properly held that the guaranty in suit was a revocable instrument, and that the death of the guarantor revoked it.

The judgment is affirmed. J. C. S.