Court Opinion

ID: 8196807
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:20:12.947855+00
Date Added: 2024-06-11T16:40:47.478248
License: Public Domain

Fowler, J.
(on recwgument). I dissent from the disposition of the case made upon motion for rehearing and adhere to the opinion originally expressed. It is manifest that, the dominant purpose of the company in getting the guaranty in suit was to secure payment of the whole of the $1,690 then owing by Menning to the company which the company considered would never be paid otherwise. As I construe the transactions, this debt • included the $1,187 debt of Cronce assumed by Menning which was not covered by the guaranty of Menning’s original contract. Menning had not only not paid anything on this debt but had run in debt $500 more' for goods purchased during the term of his first contract. He had demonstrated his unreliability and irresponsibility, and the company evidently considered .this whole indebtedness uncollectible however it might be as to the $500. It was *412for the company’s very great advantage and benefit to get this whole indebtedness guaranteed. The corporation in getting the guaranty could only act through an agent. It saw fit to have Menning act for it in that behalf and made him its agent for that purpose. The recital in the guaranty of a one-dollar consideration paid by the company to the guarantor and received by the guarantor, while the one dollar is of no great intrinsic import in itself, stamps the contract of guaranty as negotiated directly between the company and guarantor for the company’s benefit and as procured at the company’s solicitation and of necessity by its agent. And it may properly be said in this connection that the one dollar, small as it is as a consideration, is fully as great and as-valuable as the extension of time granted to Menning for payment of his $1,690 debt relied on as consideration for the guaranty of the payment of that debt. A distinction may properly be and in the interest of honesty and fair dealing should be made between the situation here involved and the common one where a dealer requires a prospective purchaser to procure a guarantor of his account before he will sell him goods, or a banker requires a prospective borrower to procure a surety before he will loan him money or renew the note of a solvent maker whose existing note is collectible. It is in cases such as these that the principle stated in the majority opinion was laid down and to cases such as these that it is properly applied. To' apply the principle of the original decision to the case of a dealer who after selling goods on credit ascertains that the purchaser is wholly insolvent and contemplating bankruptcy or the like, in his own interest and for his own benefit gets the purchaser to procure a guarantor of payment of his debt, would not topple over the business world or injure any business conducted on the honest and generally practiced principle of giving fair value for value received. One who purchases an indemnity contract from another in the business of furnishing *413such contracts and pays for it a consideration commensurate with the risk assumed avoids being in the position of ratifying and seeking to profit by frauds practiced in securing the contract on which he relies. If we assume that the plaintiff company in getting the guaranty was entirely free of intent to overreach or get something for nothing, yet here, if ever, is place to apply the equitable rule that when one of two innocent persons must suffer from the wrong of another, that one should suffer who put it in the power of the wrongdoer to do the wrong. The assumption stated would be a violent one in view of the fact that although Menning’s new contract was ostensibly to run a year and his payments after its acceptance uniformly exceeded his purchases, while under the old contract they had uniformly been less, the company terminated the new contract in seven weeks after the guaranty was accepted. This speedy termination of the contract clearly evidences the dominant purpose of the company in getting the guaranty as first stated herein. It indicates moreover that the purpose in exacting a new contract from Menning was that it might be used to get his old and worthless debt guaranteed, and discloses the shallowness and hypocrisy of the plaintiff’s claim that the professed extension of time to Menning for payment of his debt operated as a valuable- consideration to support the guaranty of its payment. It is quite apparent that the plaintiff company set a trap to catch an unwary guarantor. It should not be regarded as innocent of the fraud of Menning found by the jury. Judgment should be entered upon the verdict dismissing the complaint as directed by the original mandate.
A motion for a rehearing was denied, with $25 costs, on February 10, 1931.