Court Opinion

ID: 6408656
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:55.388711+00
Date Added: 2024-06-11T15:51:17.889467
License: Public Domain

Wilde, J.
This is an action of assumpsit on the defendant’s guaranty in behalf of Jesse Dilliber, which, by the terms of it, was a continuing guaranty; and the question upon the facts stated is, whether seasonable notice was given of the plaintiffs’ acceptance of the guaranty, and the advances made thereon.
It is admitted that the defendant had notice of the acceptance of the guaranty at the time he signed it; but he denies that he had any notice of the advances made thereon, until long after the last advance was made, and after Dilliber’s insolvency ; and so it appears by the statement of the facts. The last purchase made by Dilliber of the plaintiffs, and the one for which they now seek to recover of the defendant, was made in September 1842; and no notice was given to the defendant of the amount of the credit given to Dilliber on the defendant’s guaranty, until about the 1st of January 1845. In the mean time, in January 1844, Dilliber wrent into insolvency, under the insolvent laws of this Commonwealth, and obtained his discharge in the month of April next following ; but he paid no dividend, and the plaintiffs never proved their claim against him. The question then is, whether there has not been such laches, on the part of the plaintiffs, as to discharge tne defendant from his liability for the advances made *365After examination of the authorities, and a full consideration of the case, we are all of opinion that the defendant is so discharged.
The law on this point is correctly laid down in the case of Cremer v. Higginson, 1 Mason, 340. That was a suit on a guaranty, and Story, J. said, “ it was the duty of the plaintiff, within a reasonable time after the advances were actually made, to give notice thereof to the defendants, and that reliance was placed upon their guaranty to insure the repayment; and if notice was not given in a reasonable time, nor until after a material change in the circumstances • of the debtors, such laches of the plaintiffs was a complete discharge of the defendants from their guaranty.”
The same doctrine is laid down in Douglass v. Reynolds, 7 Pet. 126. It was held in that case, that although, on a continuing guaranty, where a series of transactions was contemplated, no notice was necessary to be given to the guarantor of each successive transaction, yet “ when all the transactions were closed, notice of the amount for which the guarantors were held responsible should, within a reasonable time after, be communicated to them.” The case of Craft v. Isham, 13 Connect. 28, was decided upon the same principle. In that case, the authorities on this point were reviewed, and the court seem to us to be justified in saying that it was settled, by the decisions reviewed, beyond the possibility of doubt. The doctrine laid down in these cases has been held in several other States, and by this court in the case of Babcock v. Bryant, 12 Pick. 135. And the principle on which it is founded is just and reasonable. Good faith, we think, requires that when a party gives credit to another, on the responsibility or undertaking of a third person, he should give immediate notice to the latter of the extent of the credit; especially when, as in the case under consideration, a continuing guaranty is given without limitation of the time of its con-i tinuance, or of the amount of credit for which the guarantor might be held responsible. That reasonable notice was not *366given in the present case, appears to the court very clear from the facts agreed. No notice was given to. the defendant of what was done under the guaranty, until nearly three years after the guaranty was given, and over two after the last credit was given to Dilliber; soon after which the plaintiffs settled with him, and took his note for the amount due, which he now seeks to recover of the defendant. In the mean while, Dilliber ceased doing business, and mortgaged his property, worth from twelve to fifteen hundred dollars, to some of his creditors, and afterwards took the benefit of the insolvent laws, and obtained his discharge ; the plaintiffs not having proved their demand against him, under the insolvency proceedings. And it does not appear that they ever took any pains to collect their demand of Dilliber. This, in strictness, they were not bound by law to do; but they were bound, after all the transactions under the guaranty were closed, to give notice, within a reasonable time, to the defendant, of the amount due to them for which he was responsible, so that he might have an opportunity to secure himself. No such notice having been given, we are of opinion that this neglect, by law and justice, discharged the defendant from his liability.
And, on another ground, we think the defence may be well maintained. In March 1843, the plaintiffs settled with Dilliber, and took his note for the balance, payable in thirty days, which was not paid at its maturity. Of this delinquency of Dilliber the defendant was entitled to reasonable notice; and it was not given. Nor does it appear that the defendant had any knowledge of the fact, or of his subsequent insolvency, until long after he had obtained his discharge. His note fell due in April 1843, nearly two months before he mortgaged his property to secure some of his creditors. If the defendant had received seasonable notice of Dilliber’s delinquency, there is good reason to suppose that he also might have obtained security. It was gross negligence, on the part of the nlaintiffs, to withhold this information from the defendant *367and it would be unjust now to throw the loss on him. Oxford Bank v. Haynes, 8 Pick. 423.
On both grounds, therefore, we think the defendant has been discharged from his liability.

Judgment for the defendant.