Fritz v. Mouakad

Ingraham, J.: On October 5, 1905, the defendant in consideration of a commission of three per cent guaranteed the payment of an account of the firm of Garzouzi Brothers amounting to §4,354.13, and on the 11th of October, 1906, for a similar consideration guaranteed the payment of an account of the same firm for $2,931.65. The terms upon which these goods were sold to Garzouzi Brothers were that that firm was to make weekly payments of $500 on account of the amount due. Plaintiffs paid the commission and the goods were delivered to Garzouzi Brothers by the plaintiffs. The firm of Garzouzi Brothers paid to the plaintiffs various sums of money from time to time on [690] account of this indebtedness, but on the 15th of March, 1907, they were considerably behind. On that day the plaintiffs wrote a letter to the defendant stating the condition of the account; from which it appears that they were $1,500 behind in. tiie payment agreed upon. Plaintiffs then said to defendant: “ For the proper protection of our own interests, as well as yours, we shall be obliged to enter suit against Messrs. Garzouzi Bros, and obtain judgment for the amount which is now past due ($5,282.61) unless you will advise us in writing that, under your guarantee we may, without prejudice to our interests and wholly at your risk, refrain from taking legal steps looking to the collection of the account or the obtaining of security. Please let ns hear from you immediately and oblige.” Plaintiffs received no answer to this letter, but on the -twenty-first of March had a conversation with the defendant over the telephone. The plaintiffs’ version of this interview is that the plaintiff Hyde. asked the defendant to answer the letter of March fifteenth which he declined to do. Defendant then told the plaintiff to go ahead and sue, and plaintiff stated that such a suit would be at the defendant’s expense, when defendant finally told the plaintiff that plaintiff could use his own judgment as to whether to sue or whether not to sue or what to do with the matter. On cross-examination, the witness said that .he could not recall just what was said at this interview, but he had repeated the substance of what was said as follows: “ He declined to put it in writing, and when I told him if he wanted suit brought he would have to. stand the expense of it, he didn’t want-to sue then, and told me I might use my own judgment whether to sue or whether not to sue.” Subsequently and on March thirtieth plaintiffs accepted notes from Garzouzi Brothers payable on May 31, 1907, and subsequent dates for the payment of their indebtedness. These notes were not paid at maturity and this action-is to recover upon the guaranty. At the end of the plaintiffs’ case the defendant moved to dismiss the complaint which motion was denied and defendant excepted. Defendant then denies this conversation vvith one of- the plaintiffs above referred to; denied having any knowledge of the taking of the notes or. having ever consented to it; and at the end of the-whole -case defendant renewed his motion to dismiss which was denied. The court submitted the question to the jury, correctly [691] instructing them that the taking of the notes discharged the defendant unless they were taken with the defendant’s consent; told the jury that the question was one of fact whether or not the seven notes to which reference had been made were given with the consent of the defendant; that if they were given with his consent then the plaintiffs were entitled to a recovery and if the notes were not given with his consent then there'could be no recovery'; that if the defendant in that telephone communication told the plaintiff Mr. Hyde that lie might use his own judgment in protecting the two parties; and if they found that that conversation was of such a nature and that that statement that was made by the defendant was so broad as to contemplate the giving of the notes, then they had reason for finding that the plaintiffs had authority to take the notes and that would be tantamount to knowledge and consent on the part of the defendant to the acceptance of those notes. And again stated to the jury: “ Then the question narrows itself down to the one after all that you are to decide here, whether the acceptance of those notes was the result of an understanding between the plaintiffs and the defendant that the plaintiffs had full authority to accept the notes, or some understanding such as is testified has been given over the ’phone or by any other conversations that passed between the parties, and whether, therefore, these notes were given with the consent in law of the defendant.” To this counsel for the defendant excepted upon the ground that the evidence would not justify the finding. One of the plaintiffs also testified generally that he had informed the defendant of the fact that he was expected to accept notes of the principal debtor but he was so indefinite as to the time and place of such notification and just what was said in relation to it that in the face of the positive denial of the defendant I-do not think the verdict can be sustained upon the ground that such a notice implied a consent of the defendant to accept the notes. The case comes down, therefore, to'the correctness of the proposition' as charged by the court that this authority given to the plaintiff over the telephone was sufficient to justify a finding that the defendant consented to the plaintiffs extending the time of payment of the indebtedness which the defendant had guaranteed, and accepting the plaintiff’s version of this conversation I do not think it was sufficient to justify a [692] finding of such consent. The letter of March fifteenth related solely to the question of the enforcement of the principal debtor’s obligation by legal proceedings. There was no suggestion that notes should be taken or that the time of payment of the indebtedness should be extended. The debtor had failed to pay according to his agreement; there was then upwards of $5,000 due, for which the defendant was liable on his guaranty, and the question was whether the collection of that indebtedness should be enforced by legal proceedings or not. The plaintiff requested from the defendant an answer in writing as to whether or not suit should be commenced at once to recover the indebtedness,. and, not having received such an answer, this conversation over the telephone resulted. It is not pretended that there was any suggestion made in that conversation as to the taking:, of notes or extending the time of the principal debtor. It was rather a question as to what steps should be taken for the enforcement of the claim, and while the- defendant refused to answer in writing he told the plaintiff that they could sue or not sue as they pleased. The plaintiff admitted that he could not definitely give the words that were used at this conversation. At one time, in repeating the conversation, he stated that what the defendant said was that he, the plaintiff, could use his own judgment as to whether to sue or whether not to sue, -or what to do with the matter. At another time, in attempting to recite the same conversation, he said the defendant told the plaintiff that the plaintiff might use his own judgment whether to sue or whether not to sue. But whichever phrase was used, the question that was presented for the defendant’s determination was what affirmative steps were to be taken against the debtor, not what favor or postponement of payment should be allowed to the debtor. And if the defendant said that the plaintiff could use his own judgment as to what to do with the matter it seems to me the matter referred to was the matter of suing or not suing, and nothing else. It is not. pretended that the plaintiff, who had this conversation, had in mind at that time the acceptance of notes and the postponement of the time of payment,'and.certainly the defendant was not called upon to determine whether or.not he would consent to the acceptance of. the notes which would postpone for months the time when the obligation could be enforced against the debtor. ' The whole amount of this indebtedness was due, and the [693] plaintiffs could have enforced it at any tiihe. By the acceptance of these notes they postponed for m'onths their right to collect the debt and prevented the defendant from taking any measures necessary for his' own protection. And when the matter in controversy was a question whether the plaintiff was or was not to sue, certainly a statement by the defendant that the plaintiff could use his own judgment as to what to do with the matter cannot possibly be construed as authorizing the plaintiffs to make any contract with the debtor that they pleased regardless of the rights of the defendant, who was responsible for the indebtedness. There is nothing to show that the defendant had the slightest interest in protecting this debtor. He certainly made no request to the plaintiffs to' do anything for the debtor’s benefit or accommodation. And when the defendant expressly refused to answer the letter in writing he must be-taken as declining to assume responsibility for anything that the plaintiffs might do in relation to the' enforcement of the claim against the debtor. I think the evidence is entirely insufficient to sustain a finding that the defendant, ever consented to the acceptance by the plaintiffs of notes of the debtor, and that the acceptance of these notes by the plaintiffs discharged the defendant from his obligation as guarantoi*. It follows, therefore, that the judgment appealed from must be reversed and a new trial ordered^ with costs to the appellant to abide the event. McLaughlin, Laughlin and Scott, JJ., concurred ; Houghton, J., dissented.