Case Name: MICHELIN TIRE CO. v. AMELIA F. FISHER
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1925-11-17
Citations: 116 Or. 217
Docket Number: 
Parties: MICHELIN TIRE CO. v. AMELIA F. FISHER.
Judges: McBride, C. J., and Burnett and Rand, JJ., concur.
Reporter: Oregon Reports
Volume: 116
Pages: 217–221

Head Matter:
Argued October 8,
affirmed November 17, 1925.
MICHELIN TIRE CO. v. AMELIA F. FISHER.
(240 Pac. 895.)
For appellant there was a brief over the name of Messrs. Hodges & Gay, with an oral argument by Mr. G. M. Hodges.
For respondent there was a brief over the names of Mr. G. L. Rauch and Mr. E. M. Morton, with an oral argument by Mr. Morton.

Opinion:
COSHOW, J.
A guaranty is defined in Gile Grocery Co. v. Lachmund, 75 Or. 122 (146 Pac. 519), as follows:
£iA guaranty is an absolute undertaking to pay the debt when due, and is not discharged by the failure of the creditor to exhaust his remedy against the principal debtor." Depot Realty Syndicate v. Enterprise Brewing Co., 87 Or. 560 (170 Pac. 294, 171 Pac. 223); Steams on Suretyship (3 ed.), 5, § 6; 28 C. J. 886.
An absolute guarantor's liability is fixed according to the terms of the guaranty. When the principal debtor defaults the guarantee is not required to pursue the debtor, but may at once require the guarantor to pay the debt.
A conditional guarantor, however, or one wild indemnifies against loss, is not liable to the guarantee unless and until lie has exercised reasonable effort to collect from the principal debtor,—that is, the person whose performance was guaranteed: 23 C. J. 970, § 123; Stearns on Suretyship (3 ed.), 74, § 62; 12 R. C. L., 1064, § 13; Burton v. Dewey, 4 Kan. App. 589-591 (46 Pac. 325); Pierce v. Merrill, 128 Cal. 464 (61 Pac. 64, 79 Am. St. Rep. 56). Both the allegations in the complaint and the contract itself expresses clearly, the undertaking of the defendants to this effect: "I agree to indemnify you against any loss on account of any moneys which he may from time to time owe you." This is in effect a conditional guaranty. That being so it was necessary for the plaintiffs to endeavor to collect from said Williams before suing the defendant on her contract of indemnity. j
"The intention of the parties to a contract of guaranty, when ascertained, is to prevail as in other contracts; still, it is said that it is now too well settled to admit of doubt that a guarantor, like a surety, is bound only by the strict letter or precise terms of the contract of his principal, whose performance he has guaranteed; that he is in this respect a favorite of the law, and that a claim against him is strictissimi juris. (Kingsbury v. Westfall, 61 N. Y. 356.) And in determining the liability of a surety or a guarantor, it must be remembered that he is a favorite of the law, and has the right to stand upon the strict terms of his obligation, when such terms are ascertained." Staver & Walker v. Locke, 22 Or. 519-524 (30 Pac. 497, 29 Am. St. Rep. 621, 17 L. R. A. 652); The W. T. Rawleigh Co. v. McCoy, 96 Or. 474-482 (190 Pac. 311); Stearns on Suretyship, 59-62, § 50; 28 C. J. 930-937; Noble v. Beeman et al., 65 Or. 93, 101 (131 Pac. 1006, 46 L. R. A. (N. S.) 162).
The record discloses that the contracts of guaranty were prepared by the plaintiff and sub mitted to the defendant, who is a very old lady, and that she was a guarantor without hire; consequently if any doubt exists as to the real nature of the contracts sued upon it should be resolved in favor of the defendant. The contract being in writing its construction is for the court. All of the decisions of this court cited by plaintiff involved absolute guaranties: Schucking v. Young, 78 Or. 495 (153 Pac. 803); Miller v. Head Camp, 45 Or. 192 (77 Pac. 83); Smith's Estate, 43 Or. 596 (73 Pac. 336, 75 Pac. 133); Davenport v. Dose, 40 Or. 336 (67 Pac. 112). The theory on which the plaintiff presented its case is that the contracts are absolute guaranties. The allegations of the complaint as well as the contract itself disclose a conditional guaranty. For these reasons the learned Circuit Court was correct in granting the non-suit. The plaintiff has asked this court to render judgment in its favor on the record, thus recognizing that the case should be disposed of in this court by construing the contracts of guaranty. Before the plaintiff could have recovered judgment against the defendant, it must have both pleaded and proved that it has made reasonable effort to collect from said Williams whose performance was guaranteed. No pretense is made that such has been done. There has been no effort to prove that plaintiff has suffered any loss. It has gone no further than to allege and adduce evidence to the effect that Williams did not pay at maturity. This is not. enough.
Other interesting questions are discussed in the briefs, but in the light of our conclusions need not be passed upon. The judgment of the Circuit Court is affirmed. Aeeirmed.
McBride, C. J., and Burnett and Rand, JJ., concur.