Case ID: pelt_3/html/0254-01.html
Source: Caselaw Access Project
Author: {"author": "\n      CHARITS F. CIAI3CKIE» JUDGE»", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Char1es P. C1aiborne, Judge.
    SUCCESSION OF WM. W. TERRIFF VS. P. J. McMAHON & AL., APPELLANT.
    No. 7691
    April 5th, 1920.
   CHARITS F. CIAI3CKIE» JUDGE»

(pjia plaintiff did business under the name of "THS Y/0L7ERI11E SOAP CaUrJJTT^of Portland, Michigan. This suit is brought against Jfca Samuels, principal, and P. J, KoKahon, and S. Samuels, Suretj.es, on the following bonds

«COlTmCT Y/ITH SAITSUST»
This agreement made this Fifth day of December 1907 between «TEF V/OLVBRIHB SOAP CGMPANI”, of Portland, Michigan, N. S. A. hereinafter called the Company, and Kr. Ike Samuels of New Orleans, La., hereinafter oalled Salesman, v/itnassethj That the said Company hereby appoints the above named person to be salesman for its soaps, perfumes, and other products, x x x The Company further agrees to furnish to the salesman said medicines, soaps, perfumas, and other products on board cars at Portland, Michigan, at such times and in such reasonable quantities as the said salesman may order during the life of this contract, reserving the right,, however, to regulate or limit the amount of goods to be furnished, and agrees to charge such goods to hip. at rsgtflar wholesale prices to salesmen set forth in the printed confidential price list, or price lists, of the Company, y. y. x The salesman agrees to Pay for all goods furnishes him by said Company, as follows, namely 5 by remitting to the Company each week one-half of the cash produced by his business, unless otherwise directed b¿- said Company, until his account shall be balanced, x x x Che said salesman for his part further promises to per form faithfully, each and all of the agreements printed in the back of this oóntraot, {che clause pertinent to tí.is case printed, upon the back is as follov/s: "Co maíce regular and satisfactory weekly reports xo sh. Company1»)#
In witness whereof the said parties ¡.ave hereunto set their hands the day and year first above -..ritten#
"Sigilad** che ,/olVcrina Soap Co0
°J ft... Cerriff, president.
Tin StirdUftlB, Sfclasnan»
In consideration .of the appointment of the above named person as salesman, we hereby guarantee, jointly and severally, the honest and faithful performance of the said contract by him, waiving acceptance and all notice, and agree t’na/t any extension of time, change of territory, or reasonable modification of said contract shall not release us rom liability'hereon. ity 'harson.
"Signed" E. Sa,muels JE?
fi T in TiTillimi Sureties are entitled upon request, at any time, oo full statement from our Report Register, showing condition of salesman's business".

Ufa. W. Terriff died July 7'Mi 1913; his succession was opened in this Parish and an Executor appointed. In his petition the Executor alleges that, in accordance with the above contract, the plaintiff sold and delivered to Ike Samuels certain merchandise] that on June 21st, 1913 the said Samuels made a written report admitting an indebtedness to plaintiff of $1076.76; that on Juno 23d, 1913 he ordered more merchandise which was delivered to him to the amount of $170.98; that on June 21st, 1913 he remitted to plaintiff $25, thus leaving due to plaintiff #1222.74; that Ike Samuels died in Mew Orleans on July 8th, 1913; that his succession was opened, but was insolvent; that plaintiff received from it, on account, $133.91, leaving a balance duo of $1008.83, for which he claims judgment against S. Samuels and P. J. McMahon, Sureties.

E. Samuels failed to answer, and judgment by default was taken against him.

McMahon filed a general denial, but admitted that ho had signed the bond sued on; further answering, he averred: lo that at no time did the plaintiff ever advise him of tne sale, of the goods by plaintiff to Samuels, and at no time did pla.intiff ever render any statement to him for any sums or money due by Samuels for merchandise sold to said Samuols; 2o that pla.intiff was notified at one time that said Samuels was sick and weak and mentally unbalanced, a.nd that plaintiff should not trade with the said Samuels, and that said Samuels wa.s, to the knowledge of plaintiff, a. for considerable time, confined in the sanitarium. Despite that, plaintiff, so defendant is informed and believes, continued to -trade with sejW, Samuels,,but at no time notified or called "plaintiff1 a attention to the condition of Samuels' mind nor made any claim of any kind against defendants herein with respect thereto."

There was judgment for plaintiff as prayed for, and defendant, McMahon, alone has appealed.

lo The first defense is based upon the case of Lachman & Jacobi vs Block, 47 A., 505; McMahon urges that plaintiff had never notified him that they accepted his offer to become a surety, or that, upon the faith of it, they had shipped or would ship goods to Samuelsp¿(ikére is no article of the Civil Code that makes it the duty of the creditor to give notice of the acceptance of suretyship, or to give notice of credit extended, Unless such duty is clearly established by the jurisprudence of our State we cannot impose it.

In the Lachman case 'the defendant Lazard, of New Orleans, had written to the plaintiffs in San Francisco as follows:

“I agree to become surety to you for $10,000 for Block Brothers",

with no intercourse whatever between the plaintiff and the surely either before or after the letter. The Court held that the letter of Lazard wqs merely an offer or pollicitation to become ^surety, and was not binding upon the security until he had been advised by the creditor that his offer had been accepted. Such were the facts in 7 A., 385 (389). But in the present case the document signed by^sureties was not a mere offer or pollicitation, but an absolute bond creating immediately and absolutely the obligation of a surety. The distinction is clearly established in La. & W. R. Rd. vs Dillard, 51 A., 1484 (1490) wherein it was said:

"Hence, the true doctrine is that a guaranty of a future act, which is subject to a condition, must bo formally accepted, and notice of such acceptance given by the guarantees; but it has no application to a contract absolute in terms, as the one sued upon is." See also Heitman vs Ry. Co., 136 La., 828, 829; 20 Cyc 1407; 106 La., 429; 140 La., 969 (975); 16 A., 19; 5 Ct. App. 169; 2 H. Dep. 1534, 1535; 11 La., 235; 7 Dalloz Rep., 524 & 23.

2o The notice of the mental condition affecting Iks Samuels, alleged by McMahon, is set forth as follows: A letter of his father to the plaintiff dated April 17th, 1907, in which he writes:

"I regret to inform you that the nerrous condition of my son Ike is such that if he continues as he is doing at present he will be worse than he was last year, i x x Ike is sanbitious and don't want to commence at the foot of the ladder, but he wants to get soap by the oar load and hare this City to be the distributing center; but he is physically unable to do it; he oould get the financial backing providing his nervous conditions was in shape; if you desire any further details I will give it. Therefore I suggest that you would not encourage him to extend the business for the present, but restrict him say 10 or 20 boxes weekly; of course you want to be protected. I refer you to Teutonia Bank concerning ■iiyse'it”,

The plaintiff^by letter dated April 21, acknowledged the flither' s letter of the 17th, and saj^i that they felt friendly to the son and would do nothing to iraoair his health; that they would not encourage him to extend his business;"fteither would they ship him any more goods, if they thought it would be a damage to his health"; but they thou$vt he would do better if he was given a chance than if he met with opposition.

On April 25 the father answered the plaintiff:

"I thanic you for yours of the 20th ult. of course I understand that you will continue to ship to ray son soap on a small scale; as I have stated i-n my last I will see that you are protected, but I don't think this is required on ray part judging from the oast business experienee you had with my son. If fortunately his nervous conditions improves I will immediately advise you. Thanking you for the interest you have taken in this matter &c“.

On Aoril 27 the plaintifft again write to the father assuring him that they will see that the son does business only on a small scale until they are informed of a change for the better in his physical condition.

The evidence shows that Ike Samuels did only a small ■business. Proa June 5th, 1907 to June 27th, 1913, the plaintiff»

shipped to him merchandise of the value of ill,045.10

On part payment of which he remitted 9.822,40

leaving a balance due of $ 1,222.70

McMahon testified that he knew nothing of Samuels' mental or physical condition; if he had known that there ms anything the matter with him he would not have signed the bond; that Ike Samuels asked him to sign the bond and not the plaintiff.

Maurice Peitel is an uncle of Ike Samuels; he knows that Ike Samuels was in a sanitarium for quite -a while but he does not remember in what year; thinks he was there more than once; he wrote to the plaintiffs that Ike Samuels was not in his good sound mind and that they should not send him any more soap because he was not capable of attending to his business; that ho was in a sanitarium and he thought it advisable for them not to ship him any more goods; he took a press copy of the letter, but his books were left in charge of a colored man who allowed goats to eat them up; so he could not find the copy; no one opposed the sort of business Ike Samuels was in; at different timed Samuels used to come to him when there was soap at tile depot, where he had to pay; it always came bill of lading eifdvt draft attached, and a dozen times he came to him and got a check to take the soap out, so that he could go out and sell it.

The following letter, we presume, answers the information transmitted by Feitel to the plaintiff:

New Orleans, Juneml3th, 1907,
Mr. M. Peitel, City.
Dear Uncle, I have decided to let the matter drop in re-fard to letter written by jtou to the Wolverine Soap Co., defaming ray character, and "Por reasons best known to myself" I will not take action against you. Now, beieve me, I am writing this letter without consulting any one, as I have now gone over my various routes and have vindicated myself with almost every one of my customers as to my sanity, vfoicji you know has handicapped me greatly, as I could bring you to hundreds of people who wili testify that parties you have in your employ have spread this stigna around this City, that I was sent to an Insane Asylum, when, God Knows, I was"aufferirg from a nervous and melancholia disease* caused from dissipation and and worrlment over capital to'handle a business oí which I have cada a wonderful success* as my boots will prove* Now, unde, I will be very thankful to you if you will send me an itemized aocount of what I owe you, as x wish to pay my debts* I do not want my people to go around saying I owe you money* Trusting you will send me my bill by return mail, I an
Your- nephew
«•Signed» Use Samuels»

B* Samuels, a co-surety with Me Kahon, and a brother of Its Samuels, swears that Bee Samuela was in a sanitarium prior to 1907 and afterwards; and that he died in the City Mental hospital in 1909: he was over in Biloxi in Dr. Totes* Hospital for nervous people? he «would not lite to see Mr* Mo Mahon stuot for something'he is innocent of»; in that way he has an Interest in the suit*

The plaintiff toot thé testimony of C. E* lie Car thy, a ootton broker* He testified that he had lived in New Orleans from August 1904 to 1913; that he knew Ike Samuels very well; that he, witness, boarded at 6030 Garfield Streep that from 1911 until 1913, Ike Samuels lived with them; he did not think ha was mentally unbalanced; he was peculiar, but not mentally unbalanced; ha died July 6th, 1913yabout two weeks before his death, he had a sunstroke; It; was very hot, and jumping in and out of his wagón, he was overoome with the heat and after that he acted very peculiarly*

The plaintiff also introduced in evidence an itemized statement &A oharges and credits in the aocount of the v/olverine soap Co* with Ike Samuels from JUne 5th, 1907 to June 27th, 1913 showing from month to month, and someticas from week to week, the value of goods shipped to Samuels, and the sums remitted by him to plaintiffs, also from month to month, and sometimes from week to week, amounting,as previously stated, to $11,045*10 charged and $9,622*40 remitted»

They also offered in evidenoe an order for goods dated June 23d 1913, in the handwriting of Ike Samuels and signed by him*

They also offered in evidence a report of Ike Samuels to the plaintiff» dated JUne 21st 1913, in his handwriting, and signed by him, aoousing an indebtedness of $1222*70*

In the presence of this testimony, we must conclude that the defense of mental unsoundness has not been established. While Feitel writes to the plaintiff that lies Samuels v/as not in his right sound mind* Samuels* father» at the same period of time» writes to the plaintiff that he hopes they will continue to ship to his son soap on a small scale; and Feitel himself advances Samuels money and encourages him to trade with the plaintiffs. E,53amuels tes» tifies that his brother was in a sanitarium, and yet he signs his bond v/ith Mo Mahon; we cannot believe that he then considered his brother inoapaoitated from:, doing businesses that would be accusing him of assisting his brother in bringing possible loss upon the plaintiffs and upon MO Mahon. Besides, ha was anxious that Mo Mahon should not he "stuck'1, even lf^by releasing Mm, the plaintiffs were "stuck"*

Sor is it possible, if Samuels was of unsound mind, that he could have carried on Ms business during six consecutive years, receiving goods» distributing them along Ms routes, sending orders, making returns and remittances, without an interruption or an error at any time.

But bt that as it may, there is no oharge and no evidence, that the balance due by Ike Samuels was caused by reason of Ms unsound mind, and that the loss would not have occurred had he been of sound mind*

So It was also urged in argument that the contract between the plaintiffs and ike Samuels was void for want of mutuality, in that the plaintiffs bound themselves to ship goods to him, while he did not bind himself to take any -, and the oase of Campbell vs. Lambert, 36 A., 35 is quoted as authority* That oawe is quite different from the one under consideration. The Lambert Case was an attempt to recover damages for a violation of the oontract; in this case the contract has been executed; ike Sannals has received the goods and he must pay for them* Also 120 La., 966; 11 L. R. A. N. S. 717.

4o It was also urged in argument that Me Mahon was not bound because the plaintiffs failed to notify him that at the time he signed as surety Ike Samuels was already indebted to them in the sum of ^250 which was a concealment of a material circumstance, calculated to increase the risk of the surety, and that he was thereby discharged*

There are authorities to that affect* 32 Cyc 62; Stearns on Suretyship 15.154; 17 C. B. (N.S) 482; 2 K. B. (1912) 72; 10 Cl. 5 Fin , 934; H. of L. BK 8; 1 Dow 272. 292; Spenoer on Suretyship 67 & 51; 8 Ch. Div. 475.

But we prefer to rest our conclusions upon what is said in Cyo on p* 63 (C) j

"The creditor or obligee is not under a duty to disclose former trivial defaults of the princljjal, such as that he had failed to aocount or to remit promptly, or that ha had intermingled hia funds ■with those of his employer, nor in the absence of inquiry is the creditor or obligee obliged to divulge the indebtedness of hia principal, or that a judgment has been obtained against him, or that ha is insol— vant».

m this oase tin plaintiffs had sold goods to B» Samuels; ha was to pay for them "by remitting to the Company each week one half of the oash pro.-drced by his business»# Samuels failed to do this on some occasions, but there was no active fraud in the omission; it was merely the passive neglect of a duty. It would be difficult to draw the line if this court should decida tlat in order to hold a surety the creditor must have informed him of every circumstance which might increase his risk, or of the reason which moved him to demand surety "tba very fact that security is called for should malee the surety alert"• p 64.

So (Che last defense urged is that the plaintiffs failed to notify the surety that Ha Samuels had failed to mala weekly remittances to the plaintiffs as he was bound to do under his contract. The defendant relies upon the following cases: 68 N. W., 33; 71 N. W., 709; 113 Ill., 390; 81 Ky., 540; 35 Nova Scotia, 94.

But the tendency of our Supreme Court has been to hold sureties liable unless clearly discharged by some provision of the law,

in Dougherty vs Peters, 2 R., 534, a-suit against a defaulting sheriff, the defendant contended he was discharged because the "plaintiff had not given the sureties due notice of the default". The court disregarded tbs defensa

In the case of the La. State Bank vs Ledoux, 3 A., 675, the surety of a defaulting clerk resisted payment upon the ground that the officers of the Bank had failed to perform the duties imposed upon them by the.By-laws of the Bank in the following particulars: lo they required the cashier daily to examine the settlement of the oash accounts of the Bank; So that the Directors should visit monthly the vault in which the oash was deposited and to make an inventory of the same; axti 3o that the books of the Bank should be balanced semi-annually; all of which had not been done. The surety argued that if the of íioe: s had performed their duty, the defalcations would not have been possible. The supreme Court answered, that the By-laws were directory to the offioers of the Bank and formed no part of the contract with the surety; that the surety had guaranteed that the Clerk would perform his duty and it was not a coition of the hond that the offioers of the BaWc woula tnm üalNi «ostiasU|llt Anos en tgqtrMtw O. nptlU >•

la O* tu of xedoaz rm Ladoux vs. Jona, 20 A., 520, the m« rojee tod the defease of o surety on • lHM <J»t HM lessor never notified him of the etenderaant of tía irenlses* by the lessee.

In tía onot of Mayor vs Redmond, 28 A., 276. a «nlt against a defaulting ta*-oollsotcr, the Conrt saldi

ttasuedag ao defendants contend, that plaintiffs non guilty ef lodos In not requiring tho oollootor to ñau monthly roper to ao ha naa In duty hound hy on ordlaanoo ef tho council, lt vonld not discharge tho sureties*.

m Board no »*■*■ , 33 A., 363 the Conrt said on p. 3861

"Defendant argos tho t the fallar» to require regalar aooosmta froa tho Trooonror and regalar oottlenonts oí thsao aoconnta, operated ao a discharge of the sureties. m o an find no oarlt In this defense". c5<2£- t. 3b

In 2 A.. 188 and 18 A.. 652. tho surety nas hold liable for so TO ral months* rent, althongh the lessor had aliened the nnt to eoorn» without notifying tba surety. See Also 29 A., 841.

In Union Bank vs Beattie, 10 A., 378, 41a supremo conrt adopted the opinion of Sroplong and oald>

"In the absence of any previous aomnmloatlon hetoson the orsdltor and the surety, the creditor hinds himself to nothing.*

JUdgnent affirmed.

April 5th, 1920.

May 31st, 1920.

ON REHEARING.

The bond sued on is dated December 5th, 1907; the balance due by the defendant, according to the detailed account, is $1822.70; it extends from June 5th, 1907 to June 27th, 1913. According to this account, it appears that up to December 2nd,1907 the plaintiffs had sold to the defendant, Samuels, goods amounting to $552.18, on account of which the defendant had remitted x to the plaintiffs $321.55, leaving a balance due by the defendant to the plaintiffs, on December 2nd, 1907 of $230.63. This amount of $230.63 is included in the balance of $1222.70 claimed by plaintiffs from defendant. In his application for a rehearing, the defendant surety, McMahon, calls our attention to the error in the judgment holding him liable for sales made to Samuels at a time anterior to the date of his signing the bond. We think he is right, and that our judgment in that particular is erroneous. There is nothing in the bond from which it could be inferred that it was intended to cover past indebtedness by Samuels to the plaintiffs. The presumption therefore is that it was to apply only to future sales by plaintiff to Samuel. C. C., 3039 (3008) :

"Suretyship cannot be presumed; it ought to be expressed, and is to be restrained within the limits intanded by the contract1'
"One who seeks to make another liable for the debt of a third person, m\ist prove such liability beyond all doubt or he cannot recover". 2 H. D., 1530, No. 1.
"The surety in a sequestration bond cannot be made responsible for any injury to the property sequestered prior to the date of the band". 7 R., 13.

Suretyship is of strict law and cannot inure or extend from one thing to another thing, from one person to another person, nor from one time to another time. 3 A., 255, 256.

"Tile rule is well settled that the contract of suretyship is not to be eictended to any other subject, to any other person, or to any other period of time, than is expressed or necessarily included in it".
9 A., 403.

Sureties for the fidelity of an officer appointed for a limited term are not liable for his defaults beyond the term of the apooint-nent or comqission under which the bond was furnished. 40 A., 241; 48 A., 251; Trolong Caution §> 155.

"But the contract of a surety is not retroactive and no liability attaches for defaults occurring before it is entered into, unless an intent to.be so liable is . indicated". 32 Oye p 74.- /
"Nor does an undertaking that ttts principal will pay for goods to be furnished cover goods already on hand”. id p 110.
"Usually an undertaking as to future indebtedness does not cover indebtedness already existing”, id p 118*
"The contract of guaranty and suretyship is not retroactive and the guarantor or surety cannot be held liable for anything occurring prior to the delivery of his contract unless the contract so stipulates”. 5 Elliott on Contracts p 19 ^ 3944.

It is evident, therefore, that the defendant is not liable for this amount of $230.63 as surety.

It is therefore ordered that the judgment herein previously rendered^aa far P. J. McMahon is concerned h# reduced from One Thousand, Two Hundred and Twenty-two 70/100 Dollars, to Nine Hundred and Ninety-two 7/100 Dollars, and as thus amended tha.t it be affirmed, the plaintiff, appellee, to pay the costs of appeal.

May 31st, 1920*