Case Name: Joseph Carew versus Nathaniel P. Denny
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1829-09-17
Citations: 8 Pick. 363
Docket Number: 
Parties: Joseph Carew versus Nathaniel P. Denny.
Judges: 
Reporter: Massachusetts Reports
Volume: 25
Pages: 374–381

Head Matter:
Joseph Carew versus Nathaniel P. Denny.
Where a promissory note, payable in machine cards at cash price, was made to 4 person who was afterwards put under guardianship, and the guardian assigned to the plaintiff “ the balance which may be due on the note after deducting what may be due to one H, not exceeding 500 dollars,9* the note being then in the hands of one F, pledged for die payment of H’s debt, and the guardian guarantied to the plaintiff t( the payment of the note according to its tenor, after deducting the claim of H, which shall not exceed 500 dollars, “ it was held, in an action upon the guaranty, that if H had lost his lien, still the plaintiff’s claim under the guaranty was not thereby augmented, for only the balance after the amount due to H, was assigned and guarantied to the plaintiff.
Held also, that the assignment and guaranty did not include a sum whicli had beet previously paid and indorsed upon the note, there having been no fraudulent concealment on the part of the guardian, of such indorsement.
Held also, that H’s demand, not exceeding 500 dollars, was to paid be in money, so that although cards of more than 500 dollars worth at the appraised cash price were sold to produce that sum, only the balance of cards remaining due on the note was assigned and guarantied.
Such balance having been accepted by the plaintiff, of the maker of the note, it was held, that if there was any fraud as to the quality, the guardian was not responsible for it, it being the duty of the plaintiff to examine the cards.
This was assumpsit upon the following contract, dated April 13, 1825, viz. — “ Whereas Horace Smith heretofore made three several notes to Alpheus Smith for 2000 dollars each, payable in machine cards, one of which notes is now in the hands of Austin Flint of Leicester, and on which said Flint has a lien for the payment of a debt to H. G. Henshaw, of not more than 500 dollars, —-‘and whereas the balance of said note, after paying said Henshaw’s debt, has been this day assigned to Joseph Carew of Springfield, a creditor of said Alpheus Smith, — I do hereby warrant and guaranty to said Carew the payment of said note according to its tenor, after deducting the claim o<* said H. G. Henshaw. which shall not exceed 500 dollars : — The said Carew agreeing to take any sum not less than 500 dollars, upon reasonable notice, towards the payment of said note. Nathaniel P. Denny.”
At the time of the execution of this contract, Alpheus Smith was indebted to the plaintiff in a large sum of money, and Horace Smith was indebted to Alpheus upon three promissory notes, one of which, dated January 21, 1824, was for the sum of 2000 dollars, payable in good merchantable machine cards at cash price, in three years from the date, with interest annually. By an instrument under seal, dated April 13, 1825, Denny, as guardian of Alpheus, assigned to the plaintiff “ the balance which may be due ” on this note, “ after deducting what may be due to Horatio G. Henshaw from said Alpheus, not exceeding 500 dollars, which said note is now in the hands of Austin Flint, and is there to remain until said Henshaw is paid.” The plaintiff at the same time executed an agreement, ui which it is stated, that the amount due to him could not then be ascertained, and he agrees, in case the property assigned should exceed the debt, to pay over the balance to the defendant, “ it being understood that the cards received by virtue of the assignment shall be sold as soon as may be, and at the best advantage, and the proceeds shall be applied first to the payment of the debt to H. G. Henshaw, and the residue to the discharge of said Carew’s claims.”
There was an indorsement upon the note, under date of January 27, 1824, of a payment of 286 dollars 27 cents.
The demand of Henshaw against Alpheus Smith was on a promissory note, dated January 31,1824, on which Henshaw recovered a judgment in March, 1826, for 569 dollars, being the principal, interest and costs. In April, 1826, Horace Smith, at the request of Henshaw, engaged to make the cards in about a month, to pay Henshaw the amount of his judgment; and Henshaw stated that he should write to Carew for his consent; which if he did not obtain, he should wish the cards to be delivered and he should take them on execution, and have them sold on execution to satisfy his judgment. Accordingly on May 10, 1826, Horace Smith had prepared cards for delivery, and two persons were called in to appraise them. A quantity appraised at 1308 dollars 50 cents, was sold by auction by a deputy-sheriff, under the execution, the proceeds of which were no more than sufficient to satisfy the execution, and the sum of 1308 dollars 50 cents was then indorsed by Flint as so much paid upon the note. It appeared that the plaintiff had notice of the intention to turn out the cards and to sell them on execution, Washburn, the attorney of Henshaw, having written to Packard, agent of Carew, a letter dated March 21, 1826, in which he says, that Henshaw is in want of his money, and that Horace Smith is ready to pay the cards due on me note in Flint’s hands; and Washburn asks, whether Carevv “ will take all the cards and pay Henshaw’s debt, or let Hen shaw take enough to pay himself and leave the rest for Carewl Have you or Carevv any objection to Horace’s paying Henshavv, within a fortnight, cards enough to satisfy his debt ? If either of you have any thing to say on the subject, I wish you to write me soon ; as the cards will be ready for sale in a fortnight, and Henshaw has judgment on his note, and will sell them on execution when turned out to him.” But there was no evidence that Carew consented to this proposition, otherwise than In not answering the letter. He lived more than thirty miles from Leicester, where these transactions took place. When the note guarantied became due, the plaintiff called on Horace Smith for the cards, and Horace showed him cards ready for delivery. '1 he plaintiff asked if those were all ; and was informed that they were. These cards had before been appraised by two persons, having been examined by a person who accompanied the plaintiff for that purpose, and who stated that they were merchantable according to the contract. This person looked at the exterior of the bundles, without opening 01 s'parating them. They were then delivered to the plaintiff at the appraisement. The balance of the note thus paid was about 670 dollars. The defendant was present at this time. The plaintiff, being asked by Flint if he should give up the note to Horace Smith, turned to the defendant and asked him. The defendant said he had nothing to do with it. Where pan the plaintiff said it might be given up '; and thereupon it was given up by Flint as paid. The cards were afterwards transferred to Springfield, where they were received by an agent of the plaintiff. There was evidence tending to prove that they were not of a merchantable quality, and were worth much less than the sum at which they were opp aised, being packed so as to deceive ; and there was evidence to contradict this ; but the judge who tried the cause being of opinion that the acceptance of them by the plaintiff, upon such examination as took place, was a payment pro tanto, as it respected the defendant’s guaranty, and that if any fraud was practised, the defendant was not answerable for it, this evidence was considered irrelevant and was rejected.
The plaintiff insisted that the guaranty covered the whole of the note, except the claim of Henshaw to the amount of 500 dollars, without regard to the sum indorsed upon the note, paid before entering into the guaranty, and offered evidence to show that he did not know of this indorsement. But the judge was of opinion, that the evidence was irrelevant, whether the parties were or were not ignorant of the indorsement, unless the defendant knew and concealed the fact from the plaintiff; of which there was no evidence. The judge was of opinion, that the guaranty covered the sum due on the note at the time when the contract was entered into, and no more.
The defendant insisted that the legal effect of his contract of guaranty was only to the extent of what should be due on the note, after deducting the appraised value of the cards taken to satisfy the debt of Henshaw and costs of suit and of sale. viz. 1308 dollars 50 cents, and also deducting the sum previ ously indorsed ; so that the plaintiff having received cards for the balance according to this computation, the guaranty was satisfied and discharged. The judge was of opinion, that no further allowance could be made on account of Henshaw’s debt, than 500 dollars.
The plaintiff insisted, that by reason of the judgment and execution, and the proceedings under them, Henshaw had lost his lien on the note, and therefore that the defendant was liable for the whole amount of the note upon his guaranty ; but this was overruled.
The question as to the correctness of all these opinions was reserved for the consideration of the whole Court.
J. H. Jlshmtm and G. Bliss junior, contended, that by the
Sept. 16ft
terms of the guaranty, the sum of 286 dollars 27 cents, indorsed on the note, was not to be allowed the defendant, as nothing but the debt of Henshaw was excepted. As to the extent and construction of guaranties, see Fell on Guar. 116, 129; Chitty on Contr. 21; Cumpston v. M'Nair, 1 Wendell, 461; Merle v. Wells, 2 Campb. 413; Mason v. Pritchard, 2 Campb. 436 and 12 East, 227; 3 Wheat. 148, note Cremer v. Higginson, 1 Mason, 335. The note, as contem plated by the parties, is recited in the contract, and this iec¡tal is to govern. Arlington v. Merricke, 2 Saund. 411; Barker v. Parker, 1 T. R. 287.
The lien of Henshaw was discharged by the manner in which he proceeded to enforce his demand, and so the 500 dollars should not be deducted. The assignment was subject to the lien, and that being removed, the whole note was assigned. Cleverly v. Brackett, 8 Mass. R. 150; Swett v Brown, 5 Pick. 180; Gilman v. Brown, 1 Mason, 215, 217; Metcalf’s Yelv. 67 e ; Cowell v. Simpson, 16 Ves. 281; Cortelyou v. Lansing, 2 Gaines’s Gas 211.
The plaintiff did not assent that the cards should be sold before the note fell due ; he had no notice of the day and place of sale; and whatever might be the rights of Henshaw as to his lien, the premature delivery and sale of the cards were a breach of the defendant’s guaranty. Garlick v. Janies, 12 Johns. R. 146; Cortelyou v. Lansing, 2 Gaines’s Gas. 204 ; Metcalf’s Yelv. 177 a.
The sale of the cards by the officer by auction, and at Leices ter, wffiich was not a suitable market, and upon the short notice of four days, was a breach of the guaranty. The plaintiff was at least entitled to have the cards sold in a prudent manner, and not at a great sacrifice.
The cards delivered to the plaintiff were deficient in quality through the fraud of Horace Smith. There was therefore no payment to the plaintiff, and although he might have an action against H. Smith, he is not obliged to look to him, but may rely, for his remedy, upon the guaranty.
Sept. 17th.
Bates, for the defendant.

Opinion:
Wilde J.
delivered the opinion of the Court. The plaintiff claims to recover in this action the whole amount of the note assigned to him by the defendant; and the defendant, on his part, contends that, upon the facts appearing in the report, he is by law wholly discharged from his responsibility.
The defendant was the guardian of one Alpheus Smith, who was indebted to the plaintiff in a large amount, and the note in question was assigned for the purpose of satisfying that demand ; the plaintiff agreeing to account with the defendant, as guardian of Smith, for the amount he should receive on the note assigned, and to pay over the balance, if any there should be, after satisfying his own demands.
By the terms of the assignment, the plaintiff became entitled to the balance due on the note assigned, after deducting the claims of one H. G. Henshaw, to whom the note had been pledged, which claims were however not to exceed the sum of 500 dollars.
It appears that after the assignment of the note, Henshaw commenced a suit against Alpheus Smith for the recovery of his demand, and proceeded therein to judgment and execution ; and it has been argued for the plaintiff, that Henshaw thereby virtually relinquished his lien on the note. We think however that this is immaterial in the present action ; for if the lien on the note was discharged by these proceedings, still, by the terms of the assignment and guaranty, Henshaw's claim, to the amount of 500 dollars, was to be satisfied out of the proceeds of the note , and as to this amount the plaintiff has no title under the assignment and guaranty. So that the only question on this part of the case is, as to the amount to be deducted for Henshaw's claim — whether it shall be limited to the sum of 500 dollars, or is to be extended to the amount of sales which were made on Henshaw's execution to satisfy that amount. And we think, that by the obvious construction of the defendant's contract, the amount of sales must be allowed. Henshaw's debt, not however to exceed the sum of 500 dollars, was to be paid. The limitation clearly applies to the debt, and not to the amount of sales which might be made to pay it. The whole of Henshaw's debt, provided it should not exceed 500 dollars, was to be discharged by the sale of cards, to be delivered according to the terms of the note. Whether the cards would sell for more or less than the appraised value, could not have been ascertained at the time of the contract, nor is there any reason to suppose that such a question was within the contemplation of the parties. Henshaw was under no obligation to receive his pay in cards ; and when Horace Smith, the maker of the note, turned them out at an appraised value, the plaintiff, if he wished to avoid any loss by a forced sale, should have prevented it by paying Hen shaw's demand, as he might have done, for he had notice of the intended sale.
The plaintiff must have been aware of the construction now put on the contract of assignment and guaranty, by Wash-burn's letter to Packard, the plaintiff's agent; yet he made no objection to the sales under Henshaw's execution ; but on rhe contrary, he impliedly ratified and confirmed them, by receiving the balance of the note and delivering the note up to the maker.
We are therefore clearly of opinion, that the amount of sales, to the extent of satisfying Henshaw's demand to the amount of 500 dollars, must be allowed in payment in favor of the defendant. So far as the sales exceeded the amount necessary for this purpose, the plaintiff is entitled to recover in this action ; and the cards thus sold are to be accounted for at their just value, and the indorsement of 1308 dollars 50 cents must be reduced accordingly, to the amount necessary to satisfy the sum of 500 dollars, and no more.
As to the sum of 286 dollars 27 cents, indorsed before the assignment of the note, that also we think must be allowed. It was contended at the trial, that this sum ought not to be allowed without proof that the plaintiff or his agent had knowledge of the indorsement, at the time of the assignment of the note ; and evidence on this point was offered by both parties, which however was thought immaterial, no evidence being offered to show any fraudulent concealment on the part of the defendant; and we are all of the same opinion. We can not infer from the language of the assignment or the guaranty, that the defendant intended to stipulate that any particular sum was due on the note. The intention was to assign the balance actually due, whatever the amount might be, subject to a deduction to the extent of Henshaw's debt under the limitation specified.
The amount of the plaintiff's demand was not known, nor could it be ascertained whether the balance due on the note was sufficient, or more than sufficient, to discharge the demand Accordingly the balance, after making the stipulated deduction, was to be received and accounted for by the plaintiff, but the amount of the balance was not ascertained.
The sum of 669 dollars 61 cents, received in cards from Horace Smith, must also be allowed. If there was any fraud or deception as to the quality of the cards practised by him, the defendant is not responsible for it. The cards were accepted by the plaintiff, and it was his business to examine their quality, and the loss, if any, should fall on the plaintiff, rather than on the defendant, who had no concern in that transaction.
Judgment for plaintiff.