Court Opinion

ID: 5212087
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:14:54.51787+00
Date Added: 2024-06-11T08:27:23.221695
License: Public Domain

Ingraham, J.:
The defendant’s son was a member of the firm of H. J. Hearn & Co., engaged in the dry goods business. On April 30, 1907, the defendant had indorsed for the accommodation of the firm a note for $5,000, which the plaintiff had discounted. Subsequently the defendant went to Europe, and on the fourteenth day of June following, H. J. Hearn wrote him a.letter explaining the financial difficulties of the firm and the necessity for larger working capital, and that the firm must have at least $10,000 immediately, and reminding the defendant that he had said before he left that he had seen the people at the bank (manifestly referring to the plaintiff) and had stated that they would take care of the firm, and that the bank had refused to discount the firm’s paper without the defendant’s indorsement, but that with such indorsement the firm could have $15,000, and that all that was necessary to obtain the money *588for the firm was for the defendant to cable the bank that he would indoi’se to the aznount of $15,000, which was to include the $5,000 . already discounted. This letter was received by the defendant at Berlin on the twenty-fourth day of Juné, and he cabled the bank, “Will indorse ten thousand.” Thereupon and in reliance upon such cablegram, but without defendant’s actual indorsement arid without coznmunicating with defendant in.any way, the plaintiff, on the twenty-sixth day of June," discounted the firm’s note for $5^000,- and "on the fifteenth day of July following discounted ariother note "of the firm for $5,000. On July thirtieth the note dated April thirtieth which the defendant had indorsed became due, and, without protesting it, the plaintiff - accepted in place thereof a new note, without defendant’s indorsement, made by the firm alone. The note of June twenty-sixth became due on September twenty-sixth and before defendant returned from Europe, and plaintiff gave notice by mail to the defendant that if had been presented for payment, which had been refused, and that plaintiff looked to him as guarantor for payment. On- the second day of October an involuntary petition in bankruptcy was. filed against the firm óf H. J. Hearn &Co., and they were thereafter adjudged bankrupt. The defendant refused to indoz:se either of the notes discounted on receipt of his telegrazn, and this action- is brought for damages for breach of his alleged contract to indorse, being the aznount of the notes less about twenty 23er cent dividends received in th.e bankruptcy proceedings. The plaintiff recovered judgment,, from which.the defendant appeals.
It is "conceded that a contract to indorse a note, of one, provided another will discount it, is a promise to answer for the .debt of another" and, therefore, within the provisions of the Statute of Frauds. It was held in Canille v. Crane (5 Hill, 483) that such a promise is not an original one but collateral and one to answer for the debt of anothez’, and hence must be in-writing.;, and' that case has been followed in this State. The cablegram sent by defetidant to the plaintiff, standing alone, is not a sufficient memorandum to satisfy the Statute of Frauds. ' The first- question is, .whether the . letter written by Hearn to the - defendant and the defendant’s cable to the bank can' be read together so- as., to make a contract between the parties. , . *
*589The cablegram does not on its face refer to the letter of Hearn to the defendant or purport to be an answer to that letter; it is' addressed directly to the plaintiff, and not to Hearn, the writer of the letter. The letter itself does not purport to be from the plaintiff or written at its request; and to connect the letter and the cablegram together parol testimony is required; so that parol testimony is essentia] to make a valid contract. The cablegram on its face accepted no proposition contained in the letter, and I cannot,, therefore, see how a letter from a third party to the defendant, with a cablegram from the defendant to the plaintiff, which on their face have no reference to each other, can be taken to be a contract in writing to indorse Hearn’s notes. But assuming that they can be taken together, I do not think there was any contract that could be enforced. The Hearn letter requested the defendant to agree to indorse notes to the extent of $15,000, including the ■ $5,000 for which he was then an indorser upon a note which was shortly to become due. The defendant was asked in this letter to cable the plaintiff, “Will endorse to amount $15,000;” but the defendant failed to comply with that request. He did cable, “ Will indorse ten thousand.” There was no evidence that the plaintiff knew that the Hearn letter had been sent to the defendant, or that it had been made acquainted with its terms. But if we assume that the bank knew of the'letter, it must have known that the plaintiff had refused to accept the proposition contained in it but had made a counter proposition to indorse for $10,000. Whether the indorsement for $10,000 was to include the $5,000 note upon which the defendant was then liable as indorser is not stated. As the request to indorse for $15,000 was to include the note upon which he was already an indorser, it must be assumed that the defendant declined to be liable for more than $5,000 in addition to the $5,000 for which he was already liable. There < was no acceptance of the' original proposition, but an offer to indorse for a less sum, which, to make a contract between the plaintiff and the defendant, had to be accepted by the plaintiff. Neither in the letter nor in the cablegram was it stated what the defendant would indorse. The terms of the note or notes which he was to indorse are not stated, nor is the purpose of making the note stated. It seems to me clear, that something more ■ was required before there was any actual contract *590between, the plaintiff and the defendant. The defendant, having refused to accept the proposition to" indorse for $15,000, including . the $5,000 for which he was then liable, made, ah offer to indorse for $10,000. Before that contract could become binding upon him an acceptance at. least was required, so that lie could know that the 'bank had accepted his offer and would look to' him to indorse the notes'which it was about to discount. He may have been willing to-make an indorsement for the firm if'its total liability, would be,the $5,000: for which he was already liable,, with an. additional $5,000-■but not willing to become responsible if its indebtedness was ..for more than that amount. He was at -least entitled to know that the .bank accepted his proposition so that he could take necessary steps for his own protection. The discount by the bank of Hearn’s notes -without notice to the defendant was not an- acceptance by the plaintiff of-the defendant’s proposition, as there was no contract between the-plaintiff and the defendant, by which the defendant was to ndórse any notes op become liable for Hearn’s indebtedness except •■on the note that he had already indorsed. T do not think,, therefore, that there was ever a valid contract between the- plaintiff and the defendant by which the defendant agreed to indorse these notes, and for that reason there was nó liability.
The judgment should be reversed and a new trial ordered, with costs to the, appellant to abide the event. • , ■
McLaughlin, Clarke and Soott, JJ.,. concurred.