Case Name: John Yancey vs. Brown & Appleton
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1855-09
Citations: 3 Sneed 89
Docket Number: 
Parties: John Yancey vs. Brown & Appleton.
Judges: 
Reporter: Tennessee Reports
Volume: 35
Pages: 89–98

Head Matter:
John Yancey vs. Brown & Appleton.
1. Gvakantt. Notice. Of acceptance, or default of Principal. When absolute, none necessary. Where an instrument in the nature of a guaranty purports to he an absolute engagement, no notice, either of the acceptance of the guaranty or of the default of the principal, is necessary to fix the liability of the guarantor. Such absolute guaranty takes effect as soon as it is acted upon; and to support an action against the guarantor, nothing more is necessary to be shown than that the party to whom it is addressed acted under it. — •Vide Vanleer ys. Crawford, 2 Swan’s R.., 117; Bright ys. McKnight, et al., 1 Sneed’s R., 158.
2. Same. Construction. A written request in these words: “I want you to sell him a bill of goods on the best terms you can afford; I will guarantee the payment of every dollar,” is an absolute guaranty.
EEOM WASHINGTON.
This action on the case, upon the instrument copied into the opinion of the Court, is from the Circuit Court of Washington county. At the June Term 1855, before Hynds, Judge, there was verdict and judgment for the plaintiffs. The defendant appealed in error to this Court.
Maxwell, Millikan and Arnold, for the plaintiff in error.
The former said:
Is this undertaking absolute or collateral? This is matter of construction, and the rules for construing contracts apply:
1. A contract is to be construed as near the apparent intent of the parties as the rules of law will admit. And the situation and true interest of all parties, and the subject-matter, are to be considered in determining the meaning of the contract. — Chitty on Con., 4 Am. ed., top page 62, and N. 1, and margin page 63, and cases cited.
Here was a young man contemplating a future purchase of goods, and defendant says to plaintiff, “ I want you to sell him a bill of goods on the best terms you can afford; I will guarantee the payment of every dollar.” The defendant says, “ He has now visited your city with a view of buying a small stock of goods.” It seems obvious that the meaning of this lauguage is, that, if you will sell him the goods, and he does not pay for them, I will. Now, if the intention of defendant was to undertake, absolutely, why represent Stuart to be “ a young man of sober, moral, and industrious habits ?” If he was not intended to be the principal debtor, this , could make no difference to the plaintiff, and the representation wholly gratuitous and unnecessary. This was manifestly the construction put upon it by the plaintiffs, for they charged the goods to Stuart. If they had considered it an absolute undertaking, they would have charged them to defendant.
It is maintained that the Courts, for the benefit of commerce, should favor this construction, because, if held to be a collateral undertaking, the incident of notice of acceptance of the guaranty follows. There are many worthy and promising young men, without capital, who are and may be thus started in business by those with whom they have served their mercantile apprenticeship. Suppose that the undertaking is absolute. The young man, intending at the outset to purchase $10,000 worth of goods, and his patron, expecting to be liable for him to this amount, is, after the expiration of perhaps years, notified, by suits against him, that he has bought $50,000. The patron, still having an eye^ to his protege, has all along regarded him as worth $10,000. But the seller, not being bound to notify him of the extent of his liability, has left him ignorant of it until awaked to sure destruction. But suppose that, by construction of the Courts, he is compelled (which he ought to be) to notify the patron that his young man has purchased $50,000, and that he is looked to for payment. This is a fair business operation, and he has an opportunity to indemnify himself, and no injury can result to any one; for, if the seller intends to look to him for payment, he surely ought so to inform him. While all this is argued, it is of course competent for parties to bind themselves absolutely. But it is argued that, unless the terms of the contract preclude a construction by which the guarantor should have notice, the Courts, for the benefit of trade and its encouragement, should so hold as to entitle him to it. This view of the case is an argument db inconvenienti, and might be elaborated, but it is thought sufficient only to direct the attention of the Court, to it.' — See reasoning of the Court in Adams vs. Jones, 12 Peters, 213.
There is another rule which it is thought settles the question of construction, and that is, “ that technical terms in a written contract must have a technical interpretation.” — Chitty on Con., top 67, margin 68, N. 3, citing Ellmaker vs. Ellmaker, 4 Watts, 89; James vs.- Bostrick, 1 Wright, 143.
The operative words in the contract, are, “I will guarantee every dollar.” The term guarantee is a technical term, and what is its meaning ?
A guaranty is a promise made upon a good consideration, to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person, who is, in the first instance, liable to such payment or performance. — BouviePs Institutes, p. 362, No. 912, citing 24 Pick. 250.
Again, the' very term guaranty implies that some other is the principal debtor, but a default may arise upon an executory contract; and a promise to pay for goods to be furnished to another, is a collateral promise to pay on the other’s default, provided the credit, in the first instance, was given exclusively to the other. — Id. No. 913, p. 363.
The undertaking of defendant is a collateral one, because the goods were charged to W. Stuart & Co^
If the person for whose use goods are furnished upon the defendant’s guaranty is liable at all, the defendant’s engagement, though it were the chief inducement to the plaintiff to supply the goods, is collateral.— Chitty on Con., top 402, margin 403; Rogers vs. Kneeland, 13 Wend., 114.
A collateral undertaking is one in which the promise is to pay if another does not.— Tappan vs. Campbell, 9 Yer., 440.
And the latter case, it is thought, explains the reason why case was brought in this suit, and not debt, or indebitatus assumpsit.
T. A. R. Nelson, for the defendant in error.
The Circuit Cofirt erred in not instructing the jury that the letter of . guaranty is absolute, and that no! notice of its acceptance, or of the failure of Wm. • G. Stuart to make payment, was necessary. The Court: was so requested to charge, as is shown in the plaintiff’s bill of exceptions.
The question, as to what is or is not an absolute guaranty, is a vexed question, upon which there are numerous conflicting authorities; but the weight of authority is in favor of the proposition, that an instrument containing such phraseology as this: “ I want you to sell him a bill of goods on the best terms you. can afford; I will guarantee the payment of every dollar,” is not a mere overture or proposition, tendering to guarantee, but is an absolute guarantee, upon which no notice is necessary. — See Pitman on Principal and Surety, 38 Law Lib., 39, top; Burge on Sure-tyship, 17; Pitman, 70; 2 Bouv. In., 56, No. 1392; Vanleer vs. Crawford, 2 Swan, 124, 125, 126; 2 Am. Leading Cases, 1st ed., 75, 79, 80, 91, 92; Taylor vs. Ross, 3 Terg. 330; Hunter vs. Dickinson, 10 Hum., 38; Allen vs. Rightmere, 20 Johns., 366; 3 Kent, 124.
The case of Bright vs. McKnight, 1 Sneed, 168 to 170, reported since the trial of this case in the Circuit Court, finally determines this question in Tennessee.

Opinion:
McKinney, J.,
delivered the opinion of the Court.
This was an action on the case, brought by Brown & Appleton against Yancey, on the following letter of guaranty :
"Jonesboro', October 4, 1847.
Messrs. Brown & Appleton :
Gentlemen: Mr. W. G. Stuart, the bearer of this, is a young man who has lived with me for the last twelve months, and has now visited your city with a view of buying a small stock of goods. Knowing bim to be a young man of strict integrity, and of sober, moral and industrious habits, (and I have known bim all his life,) I have no hesitancy in recommending him to you as such. I want you to sell him a bill of goods on the best terms you can afford; I will guarantee the payment of every dollar.
Yours, most respectfully,
John Yancey."
Fourteen days after the date of the above letter, Brown & Appleton, on the faith thereof, sold to Stuart a bill of goods amounting to $309.00. On the 5th of February, 1848, Stuart paid $100.00 on this account, and being unable to pay the remaining sum, by reason of insdlvency, the present suit was brought to enforce payment of the same by Yancey.
The record is voluminous, and presents various questions which we do not think it necessary to discuss. The only point material to be considered, arises upon the charge of the Court.
His Honor instructed the jury, that, to entitle the plaintiffs to recover, "It was necessary for them to show that they gave notice to defendant of their acceptance of the guaranty, and that they had acted under it." And that it was likewise necessary for them to show, " that they made a proper demand of the debt from Stuart, after it became due, and that, upon his default in paying it, they had given notice thereof to defendant in a reasonable time afterwards." But the Court left it to the jury, upon " the facts and circumstances proved," to determine whether or not notice of the acceptance of the guaranty, and of the failure of Stuart to pay, had been given.
The jury found for the plaintiff, and judgment was rendered accordingly, to reverse which, the defendant has prosecuted an appeal ;in error to this Court.
We think the instruction of the Court, as to notice of the acceptance of the guaranty, and the default of Stuart to pay, is erroneous. But of this the plaintiff in error cannot complain; and this point being decided against him, all the other questions made in the case cease to be of any importance.
Upon much consideration, we have adopted the doctrine of the English authorities upon this subject; and the settled law in this State now is, that where the instrument purports to be an absolute engagement, no notice either of the acceptance of the guaranty, or of non-payment by the principal, is necessary. That such absolute guaranty takes effect as soon as it is acted upon; and to support an action against the guarantor, nothing more is necessary to be shown than that the party to whom it is addressed acted under it. We are fully aware that the current of American authorities establish a different doctrine. According to the later authorities, the liability of a guarantor is made to depend upon principles of commercial, rather than of common law. Indeed, some of the cases seem to go the length of holding, that in order to fix the liability of the guarantor, almost the same degree of strictness in giving notice is necessary as is required by the law merchant between endorsee and endorsor. This principle has no foundation in the common law. It is a new principle, but recently introduced into the jurisprudence of some of our sister States, upon the authority of the Supreme .Court of the United States. With proper respect for the authority of that high tribunal, we have felt constrained to adhere to the established principle of the common law, because, in our judgment, it furnishes a more just and sensible rule of decision.
The instrument set forth in the declaration in this case, is not, as was assumed in argument, a mere proposition or offer to become bound as surety for Stuart; nor does it contemplate any notice of acceptance, or of the failure of Stuart to pay. The operative terms of the instrument are, "I want you to sell him (Stuart) a bill of goods on the best terms you can afford; I will guarantee the payment of every dollar." Here is an express request by the defendant to the plaintiffs, to sell Stuart a bill of goods, and an absolute undertaking to be bound for the payment thereof. Upon well established common law principles, a request, followed by performance, is sufficient to constitute a valid contract between the parties. Yet the position assumed, that notice of the acceptance of a guaranty, • and that the party has acted under it, is necessary in order to bind the guarantor, is to maintain that an executory contract, founded upon an antecedent request of the one party, and followed by performance of the other party, is not a binding contract. We do not so understand the law.
It is certainly true, that Stuart, the principal, was himself liable to the plaintiffs; and admitting furthermore, that he was liable, and that the undertaking of the defendant was upon the implied condition of the failure of his principal to pay, yet his liability was commensurate with that of his principal, for whom he had agreed to become absolutely bound, and the means of information being equally within his reach* he was bound, at his peril, to inform himself as to whether the guaranty had been accepted, the goods sold upon the faith of it, and payment made by the principal. To * hold otherwise, in the case of an absolute guaranty, would be to make letters of guaranty instruments of fraud and illusion. We do not deem it necessary to examine tlie authorities, in this opinion. Indeed, very little aid is to be derived from the cases upon this subject, as they turn very much upon the language of each particular instrument. See the case of Bright vs. McKnight, 1 Sneed's R., 158; 2 Swan, 117.
Judgment affirmed.