Case Name: Hall vs. Rodgers
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1847-04
Citations: 7 Hum. 536
Docket Number: 
Parties: Hall vs. Rodgers.
Judges: 
Reporter: Tennessee Reports
Volume: 26
Pages: 536–541

Head Matter:
Hall vs. Rodgers.
3. Rogers, for a valuable consideration, endorsed the note of Cain to Hall in the following words: “I assign the within note to A. G. Hall for value received of him.” Hall sued Rogers as a guarantor, and upon trial, offered paro} evidence to show that at the time of the assignment, and for the new and valuable consideration then passing between them, Rogers agreed to pay the note if it could not be made out of the maker. Held that the evidence was competent, and should have been admitted.
2. Where a guarantor becomes responsible by some new and original undertaking between himself as endorser, and the endorsee, new contracting parties, and which is collateral to the original contract, — as when the payee of a bill single or promissory note endorses it for a valuable consideration and guarantees the payment thereof to the endorsee, — such guaranty is not a collateral undertaking to pay the debt of another, but a direct and immediate promise supported by a good consideration, and therefore not within the statute of frauds and perjuries, and may consequently, be proven by parol.
3. In the case of a guaranty, the guarantor contracts that, upon the dishonor of the note, he will pay the amount upon a presentment being made to the maker, and notice of the dishonor given him within a reasonable time; and this reasonable time is ordinarily measured by the fact, whether, by the omission to make due presentment at the maturity of the note, and to give him due notice of the dishonor, he, the guarantor, has sustained any loss or injury. If he has, then he is exonerated pro tanto; if he has not, then he is liable for the whole note.
Alexander G. Hall brought his action on the case, in the Circuit Court of Hardeman county, against John Rodgers upon the following bill single and endorsement:
$750. On or before the 25th of December next, I promise to pay John Rogers seven hundred and fifty dollars for value received of him, this January 12, 1839.
JOHN N. CAIN, [Seal.]
On the back of which was written:
“I assign the within note to A. G. Hall for value received of him, this February 5th, 1839.
JOHN RODGERS.
The declaration contained several counts, only one of which it is necessary to notice. The second count, aftpr setting forth the making of the bill single, and its delivery to Rogers, in the usual form, proceeds thus:
“And the said John Rogers afterwards, to wit, on the 5th day of February, 1839, endorsed and delivered the said bill single to the said plaintiff, and for, and in consideration of the sum of 750, then and there undertook and faithfully promised the said plaintiff, that if the said John H. Cain proved insolvent, or unable to pay the said sum of money in the said bill single specified, according to the tenor and effect thereof, he, the said John Rodgers, would pay the same to the said plaintiff And the said plaintiff avers that af ter the said bill single became due, the said John H. Cain failed to pay the same, and that said plaintiff commenced suit on the same against said Cain and recovered judgment for the amount with costs &c. — that a writ of fieri facias was duly issued and returned not satisfied, the said Cain, having proved insolvent and unable to pay and satisfy said judgment — by means whereof the said John Rogers became and was liable to pay &c.” concluding as in the ordinary form of a declaration in assumpsit.
The defendant pleaded the general issue, and upon trial by jury, William C. Dunlap, Judge, presiding, a verdict was rendered for the defendant. The plaintiff moved for a new trial, which motion being overruled, he appealed to the Supreme Court. The other facts, material to be considered, will be found in the opinion of the court.
J. C. Humphreys, Miller and Polk, for the plaintiff argued:
1. The endorsement of a note is not such a full contract, contemplated by the legal rule, that parol testimony will not be admitted to vary the written contract. The law makes the contract of the endorser. He can enlarge or diminish that liabil ity by a verbal contract; “modus et conventio vincat legum.” By the endorsement in question, there is expressed in words only a transfer of the legal title. The law thereupon implies a further contract between the parties — and such further contract may be shown by parol proof. Brent’s Ex’rs. vs. Bank of Metropolis, 1 Pet. Sup. C. Rep. 89; Story on Prom. Notes sec. 148 sec. 271-391; Story on Bills, sec. 317, 371; Union Bank vs. Hyde, 6 Wheat. Rep. 572; Taunton Bank vs. Richardson, 5 Pick. Rep. 436; Central Bank vs. Davis, 19 Pick. R. 373.
2. In relation to guaranties, Story (Prom. Notes, sec. 457,) mentions three classes of cases, and says: “A third class of cases is where the promise to pay the debt of another arises out of some new and original consideration of benefit or harm, moving between the newly contracting parlies, and this class ofcases is not within the statute of frauds.” To the same effect is 3 Kent’s Com. 122-3. See also, Williams vs. Leper, 3 Bur. Rep. 1S86; Cartling vs. Aubut, 2 East Rep. 325; Arm-stead vs. Greenly 18, Johns. Rep. 12; Wright vs. Latham, 3 Mur. Rep. 298; 13 Wend. Rep. 114; 6 Yerg. 508; Adcock vs. Fleming, 2 Dev. and Bat. 225.
John R. Fentress, for defendant insisted:
1. That the endorsement on the note constituted a written contract between the parties, which the law would not permit parol evidence to contradict or vary. 2 Stark. Ev. 545-548; Barry vs. Morse, 3 N. H Rep. 132; O’Harra vs. Hall, 4 Dal. Rep. 340, 3 Yerg. Rep. 330; 5 John. 197, 379; 2 Tenn. Rep. 329; 8 Johns. Rep. 146; 1 Greenleaf Ev. SIS'.

Opinion:
Turley, J.
delivered the opinion of the court.
This is an action on the case, brought to charge the defendant, Rogers, as the guarantor of the payment of bill single drawn by John H. Cain, for the sum of seven hundred and fifty dollars, due on the 25th of December, 1839.
Upon the trial in the Circuit Court, it appeared from the proof, that Cain on the 12th day of January, 1S39, executed his bill single for the sum of seven hundred and fifty dollars to the defendant, John Rogers, payable on the 25th of December ensuing, which bill single, the said John Rogers afterwards to wit, on the 5th day of February, 1839, assigned to the plaintiff, A. G. Hall, by his endorsement in the words and figures following:
I assign the within note to A. G. Hall for value received of him. JOHN RODGERS.
February 5th, 1839.
The plaintiff offered in evidence the deposition of Huvy L. Goodrich, which proves in substance, that sometime in the monthof February, 1839, the plaintiff and the defendant cárne into his store, that the plaintiff stated, he had sold to the defendant, a wagon, team and negro boy, for which he was to take a note on John H. Cain, for seven hundred and fifty dollars, in part payment; that the defendant had made an assignment of the note to him, and he asked the witness to examine it and say whether it was sufficient to bind the defendant. Witness objected to the form of the assignment, because he did not think it full enough, and proposed that the endorsement should be written over again. To which the defendant replied no; that it made no difference, as he considered himself bound by his word as much as his assignment would make him, and said positively that he would pay the note himself if it could not be made out of Cain; that Cain was good, that the money could be made, but in case it could not, he the defendant, was good and would pay the note himself.
To the reading of this deposition the defendant objected, which objection was sustained by the court, and the deposition excluded from the jury.
This deposition would have well warranted the jury in finding the fact, that the defendant at the time of the transfer, guarantied the payment of the bill single, and the court therefore erred in rejecting it, unless the proof be illegal, upon the ground that a guaranty cannot be proven by parol, but must under the statute of frauds and perjuries be evidenced by a written promise or agreement.
Mr. Story in the 10th chapter of his treatise on promissory notes, sec. 457 says: <f A guaranty in its legal and commercial senses, is an undertaking by one person to be answerable tor the payment of some debt, or the due performance of some contract or duty by another person, who himself remains liable to pay or perform the same. It may be the guaranty of a pri- or debt or prior contract or duty, or of a future debt, or future contract or duty; but in all cases, it must be founded upon a sufficient and valid consideration.
Three distinct classes of cases may be propounded on this subject, which require to be discriminated.
1st. Cases, in which the guaranty or promise is collateral to the principal contract, but is made at the same time, and becomes an essential ground of the credit given to the principal or direct actor. Here there is not, nor need be, any other consideration, than that moving between the creditor and original debtor.
2d. Cases, in which the collateral undertaking is subsequent to the creation of the debt, and was not the inducement to it, although the subsisting liability, is the ground of the promise, without any distinct or unconnected inducement. Here there must be some further consideration shown, having an immediate respect to such liability; for the consideration of the original debt will not attach to this subsequent promise.
3d. A third class of cases is, when the promise to pay the debt of another arises out of some new and original undertaking of benefit or harm moving between the newly contracting parties. The two first classes of cases are within the statute of frauds; but the last is not. Leonard vs. Vredenburgh, 8th John. R. 29, 30; 3 Kent Com. Lick. 44, p. 122, 123; Manrow vs. Durham 3 Hill, N. Y. R. 484; Hough vs. Gray, 19 Wend. R. 588; D'Woolf vs. Kaband, 1 Pet. Sup. C. Rep. 476, 499, 501.
Now, under which of these classes does the present case fall? Most clearly under the last.
The first class is when the guarantor becomes liable at the time the contract is made, that is, promises, or agrees, to be responsible for performance of the contract; this is a collateral undertaking to pay the debt of another, and must under the statute of frauds be in writing.
The second class is, when the guarantor was no party to the- original contract, but subsequently to its creation, for some new consideration, promises or agrees to be responsible for its performance, as when, in consideration of the assumption of such responsibility by the guarantor, the holder of a bill single or promissory note agrees to extend the time of payment thereof to the payer.
This is also a collateral undertaking to pay the debt of another, and must under the statute of frauds be in writing.
The third class is, when the guarantor becomes responsible, by some new and original undertaking between himself as endorser and the endorsee, new contracting parties, and which is is collateral to the original contract, — as when the payee of a bill single or promissory note endorses it fora valuable consideration and guaranties the payment thereof to the endorser; — this guaranty is not a collateral undertaking to pay the debt of another, but a direct and immediate promise, supported by a good consideration, and therefore not within the statute of frauds and perjuries, and may be proven by parol. Such is this case.
The same author in the same work, chap. 10, sec. 460, says; "In the case of an endorsement, the endorser contracts to be liable to pay the note, in case of its dishonor, if it is duly presented for payment at its maturity, and due notice is given to him of the dishonor, and not otherwise. In the case of a guaranty, the rule is not equally strict; and the guarantor^ontracts, that, upon the dishonor of the note, he will pay the amount, upon a presentment being made to the maker, and a notice given to him of the dishonor within a reasonable time: and this reasonable time is ordinarily measured by the fact, whether, by the omission of due presentment at the maturity of the note, and to give him due notice of the dishonor, he, the guarantor, has sustained any injury. If he has,#then he is exonerated, pro tanto; if be has not, then he is liable for the whole note.
Reverse the judgment of the Circuit Court, and remand the cause for a new trial.