Court Opinion

ID: 6407403
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:02.212808+00
Date Added: 2024-06-11T15:51:15.484240
License: Public Domain

Dewey, J.
delivered the opinion of the Court. Upon tha first question presented in this case there can be no doubt. The promise of the defendant was clearly a collateral undertaking for the debt of another. The principal debtor was Menzies Rayner junior, for the performance of whose promises the defendant, if liable at all, is liable upon the principles governing the contract of guaranty.
The next inquiry is, was this a continuing guaranty. The defendant insists, that upon this point a strict rule of construction should prevail, and that it ought to appear unequivocally, that it was the purpose of the defendant to guaranty the payment of debts contracted by M. Rayner junior, from time to time. Such a rule has often been stated by eminent jurists. 12 East, 227 ; 1 Mason, 336 ; 7 Cranch, 369. On the other hand, there are authorities countenancing the doctrine, that a liberal construction is to be given in such cases in favor of a person claiming rights under such a guaranty, and holding it to be the duty of the guarantor to limit his guaranty expressly to a single dealing, if he would avoid a further responsibility. Thus in *228the case of Merle v. Wells, 2 Campb. 413, where Loid Ellenborowgh says, “ if a party means to be a surety only for a single dealing, he should take care to say so.” Probably the better rule of construction would be that applied to other contracts, to give the instrument that effect which shall best accord with the intention of the parties as manifested by the terms of the guaranty, taken in connexion with the subject matter to which it relates, and neither enlarging the words beyond their natural import in favor of the creditor, nor restricting them in aid of the surety.
Upon a careful consideration of the terms of the letter of credit given in the present instance, the Court are strongly inclined to the opinion, that it was not limited to a single purchase or debt to be contracted by the principal debtor, but that it embraced within its object, the genera! business of establishing a bookstore, and procuring additional supplies by way of keeping the stock good, or enlarging it if occasion should require. The promise, after reciting the nature of the business in which the party was to engage, in its very terms stipulates “for the faithful management of the business and punctual fulfilment of contracts relating to it.”
Assuming therefore the construction of the plaintiff to be correct as to the nature of this contract, and considering it to be a continuing guaranty, the further question arises as to the duties devolving upon the creditor who claims to have acquired rights under it. Is he to treat it as an ordinary guaranty of a promissory note, or other liability for a defined and specific amount already due to a party whose name is inserted in the contract ? Must there not be some evidence of acceptance of it, besides the mere act of a subsequent sale of goods to the person named in the letter of credit ?
The general rule of law on this subject seems now to be well settled, requiring that in cases of a written guaranty for a debt yet to be created and uncertain in its amount, the guarantor should have notice, in a reasonable time, that the guaranty is accepted, and that credit has been given upon the faith of it. This position seems to be recognized in Norton v. Eastman, 4 Greenleaf, 521 ; Tuckerman v. French, 7 Greenleaf, 115; Babcock v. Bryant, 12 Pick. 135; Beek*229man v. Hale, 17 Johns. R. 134; Rapelye v. Bailey, 3 Cowen, 438 ; Cremer v. Higginson, 1 Mason, 324.
The reasonableness of such a rule is peculiarly manifest in a case like the present, where the letter of credit is of the most general character, addressed to no particular individual, but “ to all whom it may concern,” and without limitation in amount or time of continuance, being in its form rather a proposition than a contract. In such a case the law requires, that due notice be given to the party, that the proposed guaranty has been acted upon and made the basis of credit to the person for whose accommodation it was drawn.
Upon recurring to the facts in the present case, it appears that the guaranty was executed on the 4th of October, 1831 ; that the plaintiff sold to M. Rayner junior, on the 12th of October, 1831, a quantity of books and stationery, and also at duvers other times, between that day and the 20th of February, 1834 ; but there was no evidence of any notice from the plaintiff to the defendant, of any such sales, or of any acceptance of the guaranty, or any claim under it, before the month of July, 1834.
This, as it seems to the Court, was an unreasonable delay and amounts to such laches on the part of the plaintiff as must discharge the defendant from any liability upon his guaranty. We do not think it a sufficient answer, that the accounts continued open during most of the period. The time in which the notice was required to have been given, is to be considered with reference to the period of the original acceptance of the guaranty, and not the time of the last sale to the principal debtor.
It is urged on the part of the plaintiff, that the defendant has recognized his liability, and virtually waived all objections arising from the laches of the plaintiff, by his act of drawing an order in favor of the plaintiff, on Marsh, Capen, & Lyon, of Boston, for a number of books, at the time when the plaintiff demanded payment of his account for goods sold M. Rayner junior. It does not however appear from the evidence reported upon that point, that the defendant did this under any acknowledgment of his liability as guarantor. It may have been under that supposition, and it may have been a merely *230gratuitous act of liberality towards one, who had sustained a loss through the insolvency of his son. The character of the act is too equivocal to draw after it the consequences contended for by the plaintiff. It is also in evidence, that although at this time the plaintiff urged a settlement or the giving security for the entire debt, the defendant did not comply with the request. It is argued by the counsel for the plaintiff, that upon this point this case is clearly within the principles of the case of Duval v. Trask, 12 Mass. R. 154. It seems to the Court, that the acknowledgment of liability and promise to discharge the same, was more explicit in that case, than in the present; and also, that the subsequent cases have rather restricted than extended the rule applied there.
The case before us must therefore be decided upon the general principles before alluded to, treating the proposed guaranty of the defendant as a collateral promise, requiring on the part of him who would avail himself of it, reasonable notice to the defendant of his acceptance of the guaranty, and! that he had made advances upon the credit of it. No such notice having been given in the present case, within a reasonable time, the action cannot be supported.

Plaintiff nonsuit.