Zahm v. First National Bank

Mr. Justice Sterrett delivered the opinion of the court In addition to the common counts, in support of which no testimony was adduced, the declaration contains a special count on the written undertaking of the plaintiff in error, indorsed on [580] a note made by Differ & Groff for $1,350, at sixty days from May 9th 1877, to the order of Samuel Groff, indorsed by him and by D. G. Swartz. That undertaking is in these words: “ I hereby guarantee the payment of the within note without protest.” The liability of plaintiff in error, if he is liable at all, is as guarantor and not as surety for the makers or indorsers of the note. If he had undertaken “ to see the note paid,” as in Amsbaugh v. Gearhart, 1 Jones 482; or had guaranteed its payment “when due,” as in Campbell v. Baker, 10 Wright 243, or “ according to its terms,” as in Roberts v. Riddle, 29 P. F. Smith 468, it would have been a contract of suretyship and not of guaranty: Mizner v. Spier, 15 Norris. 533, and eases there cited. In that case the undertaking which alone gave commercial value to the notes on which it was indorsed, was in these words : “I hereby guarantee the payment of this note for value received.” It was held that the contract being one of pure guaranty, the principals must be exhausted before resort could be had to Mizner-the guarantor. Under the most liberal construction of which they are susceptible, the words “ without protest,” can have no other effect than to so qualify the contract as to exclude the specific defence that by not protesting the note the indorsers are released. If either of them continued liable to the bank, notwithstanding the note was not protested, he must stiff be considered a principal, and plaintiff in error has a right to insist that such principal or principals shall be first exhausted before recourse is had to him on his technical guaranty. Assuming that the words, “ without protest,” are to be understood in the sense claimed by defendant in error, the bank was not required to forbear making demand of the makers.of the note. It might or might not do so at its pleasure, but if either of the indorsers waived protest, or by any other act remained liable, for the note, the guarantor is entitled to the benefit thereof; in other words, if the money can be made off either of the other parties to the note, the bank is bound to do so before resorting to the plaintiff in error, whose only relation to the note is, as we have seen, that of technical guarantor. After reciting the note and indorsements thereon, according to their tenor and effect, the declaration avers that “ the said defendant guaranteed the payment of said note without protest, and in consequence of said guaranty said note was not protested and the aforesaid indorsers released from the payment of the same.” ' It is conceded that the guaranty was not given rintil long after the note was made, indorsed and discounted. No consideration for the guaranty is expressed on the face thereof, and the only suggestion of any consideration is that implied rather than expressed in that clause of the declaration above [581] quoted. The signing of the guaranty was admitted, but under the pleadings it was incumbent on the bank to prove the averment that in consequence of the guaranty the note was not protested, &c. No such evidence was introduced by tlie plaintiff, and for that reason, if no other, the judgment cannot be sustained. As the case stood upon the pleadings and evidence, the court would have been justified in entering a compulsory non-suit as requested. The fourth and fifth specifications of error are sustained. Aside from this, we think there was also error in excluding the testimony offered by plaintiff in error. He proposed to prove, inter alia, that, on the last day of grace and before he signed the guaranty declared on, Swartz, the second indorser, for whom the note was discounted, directed the bank, in case the note was not renewed for ninety days, to charge the old note to him and credit the new note to his account, promising at the same time to indorse the latter note; also, that Swartz had then to his credit in the bank more than sufficient to cover the note. This testimony, in connection with the further offer to prove that he subsequently gave the bank a written guaranty onbracing all the notes on which be was indorser then due or to become due, would have tended to prove clearly, if not conclusively, that in the absence of formal protest Swartz continued liable to the bank as a party to the note. The facts which defendant below offered to prove would have been proper for the consideration of the jury on the question whether the indorsers were in point of fact released. The last assignment- of error is not sustained. It may be remarked, however, that if defendant on re-trial wishes to amend his special plea, so as to conform more fully to the facts he should be permitted to do so. Judgment reversed and a venire facias de novo awai’ded.