Gennett v. . Lyerly

BbogdeN, J. The defendant was the president and treasurer of a corporation known as the Yeager Manufacturing Company. His brother, Walker Lyerly, was secretary and treasurer thereof. Walker Lyerly, as such general manager, purchased from plaintiffs for and in behalf of the 'Corporation three carloads of lumber. The correspondence between the parties relating to said lumber discloses that the corporation ordered the lumber, and that the plaintiffs shipped the same upon such corporate orders. In the letter of 29 September, 1932, written by the plaintiffs, was a memorandum, as follows: “Our terms on this order are 2% — 30 days or a note for 60 days endorsed by Mi*. E. Lyerly.” The corporation went into bankruptcy in December, 1932, and the plaintiffs bring this action against the defendant, alleging that he was individually responsible for the payment of said lumber. The defendant denied liability and pleaded C. S., 987, as a defense. This statute provides, in *205 substance, that “no action shall be brought ... to charge any ■defendant upon a special promise to answer the debt, default or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party charged therewith or some other person thereunto by him lawfully authorized.” The record discloses that the defendant received no property as a result of the transaction, and signed no letter or memorandum. The record further discloses that the entry ■on the letter of plaintiffs, dated 29 September, 1932, was not signed by E. Lyerly, nor is there evidence that he ever saw the letter or knew of its ■existence. The plaintiffs stake their case and assert liability against the defendant upon three theories, to wit: (1) That Walker Lyerly, the brother of defendant, and general manager of the corporation, was the agent of the defendant, with power and authority to bind him for the debts of the •corporation; (2) that the course of dealing between the parties constituted Walker Lyerly an agent of defendant by operation of estoppel; (3) that notice to the corporation of the terms upon which the lumber was shipped was binding upon the defendant, who was not only president and treasurer of the company, but who also owned a large portion of stock. The solution of the first question of law depends, in part, upon whether the defendant E. Lyerly was an original promisor. All the decided •eases construing C. S., 987, are to the effect that if the party sought to be charged is in fact the direct paymaster or makes an original promise to answer for the debt of another that the statute of frauds constitutes no defense and affords no protection against liability. Peele v. Powell, 156 N. C., 553, 73 S. E., 234; Handle Co. v. Plumbing Co., 171 N. C., 495, 88 S. E., 514; McCall v. Institute, 187 N. C., 757, 122 S. E., 850; Beck v. Halliwell, 202 N. C., 846, 163 S. E., 747. This idea was expressed in Peele v. Powell, supra, as follows: 'Where the promise is for the benefit of the promisor, and he has a personal, immediate, and pecuniary benefit in the transaction, as in Neal v. Bellamy, 73 N. C., 384, and in Dale v. Lumber Co., 152 N. C., 653, or where the promise to pay the debt of another is all or part of the consideration for property •conveyed to the promisor, as in Hockaday v. Parker, 53 N. C., 17, .. . . or is a promise to make good notes transferred in payment of property, as in Adcock v. Fleming, 19 N. C., 225, . . . the promise is valid although in parol. “If, however, the promise does not create an original obligation, and it is collateral, and is merely superadded to the promise of another to pay the debt, he remaining liable, the promisor is not liable, unless there is a writing; and this is true whether made at the time the debt is created or not.” *206 The evidence in this case, as we interpret it, does not disclose that the defendant had “a personal, immediate, and pecuniary benefit in the transaction.” Of course, he was a stockholder and necessarily interested in the successful and profitable operation of the corporation; but such interest was no more “personal and immediate” than the interest of a landlord in a profitable crop made by a tenant, and such interest was declared in Peele v. Powell, supra,, to be insufficient without a written memorandum, although the landlord had verbally promised to pay the debt of the tenant. Consequently, it necessarily follows that no verbal promise by the defendant to pay the debt of the corporation would impose liability upon the defendant in view of the facts and circumstances disclosed by the present record. The next question is: Was there such a writing or written memorandum as the statute contemplates? Walker Lyerly, the brother of defendant, and general manager of the company, ordered lumber from the plaintiffs. The plaintiffs shipped the lumber and in acknowledging to the corporation the order and its thanks for the business, wrote in such letter of acknowledgment the words, “Our terms on this order are 2% — 30 days or a note for 60 days endorsed by Mr. E. Lyerly.” This letter was signed by the plaintiffs. There is no suggestion that even Walker Lyerly signed this memorandum either in behalf of the company or in behalf of the defendant E. Lyerly. Therefore, nothing else appearing, the plaintiffs were out of court. But the plaintiffs assert that on 15 June, 1932, the Yeager Manufacturing Company ordered lumber from them, and that Walker Lyerly, for and in behalf of the company, had signed an order containing the words “either discount or accept and endorsed by E. Lyerly.” Doubtless the words “accept and” are intended for the word acceptance. No point, however, is made of that. There was further evidence that the defendant E. Lyerly had paid for that car of lumber with a check signed by him as treasurer. There was no evidence that any acceptance had been given by him for such shipment, or that he had endorsed any negotiable instrument of any character evidencing the purchase price thereof. Indeed, the witness for plaintiffs testified: “I never had any conversation with E. Lyerly about the purchase of lumber. I talked with him a little. No, I never asked him about guaranteeing any bills. In the eighteen months that I called on the Yeager Manufacturing Company and saw him time and again, I never mentioned to him one time whether he guaranteed these bills or whether he would be responsible for them, or anything like them.” Hence, as the defendant had never made an original promise or verbally agreed to become paymaster, and as there was no writing signed by him in compliance with the statute of frauds, his liability must rest *207 •apon tbe notation made by Walker Lyerly on tbe order of 15 June, 1932. Walker Lyerly was placed upon tbe witness stand by tbe plaintiffs and testified tbat be bad no authority to bind tbe defendant. Moreover, assuming tbat E. Lyerly was bound by tbe notation, tbe extent of bis liability was for tbe purchase price of tbat particular car of lumber, and it is admitted tbat tbe same was paid in due time by tbe corporation. Such notation did not constitute a continuing guaranty as disclosed in Novelty Co. v. Andrews, 188 N. C., 59, 123 S. E., 314. Tbe record discloses tbat tbe shipments of lumber from tbe plaintiffs to tbe corporation were all independent transactions, and based upon independent orders. It follows, therefore, tbat E. Lyerly is not liable for tbe three cars of lumber in controversy, by virtue of tbe notation on tbe order of 15 June, 1932. Nor does tbe fact tbat tbe lumber was shipped to tbe corporation with a notation tbat E. Lyerly was to be responsible for tbe payment of tbe purchase price impose liability upon him. Asbury v. Mauney, 173 N. C., 454, 92 S. E., 267; Bank v. Courtway, 200 N. C., 522, 157 S. E., 864. It was held in tbe Courtway case, supra, tbat a resolution of tbe board of directors of a corporation did not impose personal liability upon them to tbe payee of a note. Manifestly, a letter written by a shipper would not impose a greater obligation than a formal resolution duly adopted. In tbe final analysis, tbe evidence discloses tbat E. Lyerly was not .an original promisor or paymaster as contemplated by law, and tbat there was no writing signed by him or bis agent “thereunto lawfully authorized,” and, consequently, tbe motion for nonsuit should have been granted. Eeversed. ScheNCb:, J., took no part in tbe consideration or decision of this case.