Hammond v. Chamberlin

The opinion of the court was delivered by Isecam J. The note on which the plaintiff has declared, was executed in common form by Daniel and Hiram Aikens, payable to the defendant or order on demand, and was afterwards transferred to the plaintiff under the following written guaranty: “ I hereby guarantee this note good until January 1, 1850.” It is insisted that there is a variance between the several counts in the declaration and the legal liability arising from this obligation. On this question it becomes necessary to determine the legal effect of the contract or guaranty, placed on the back of this note. The defendant guarantied the note good until January 1, 1850. He did not promise to pay the note on that day, nor that it should be paid by the makei-s, as was the guaranty in the case of Partridge v. Davis, 20 Vt. 500. It is an obligation on his part having rela [413] tion m erely to the solvency and ability of the makers to pay the note; in other words, the defendant agreed that during the period mentioned in the guaranty, the makers of the note should be in that condition, that payment of the note could be enforced against them, if legal diligence was used for that purpose. The note was good, if during that period, they had the means of payment, or if payment could be enforced by legal measures. The contract of the defendant was collateral, and arose only upon the inability of the makers of the note to pay it, and of the plaintiff to collect it, when the contract matured. This construction of that guaranty is in accordance with the obvious intention of the parties. That being the legal effect of this contract of guaranty, no recovery can be had under the first or second count in the declaration, for the defendant is not liable as indorser ; nor on an absolute engagement to pay the note on that day, if the makers neglected to do it We think, however, a recovery may be had on the other counts, and that the legal effect of the contract is sufficiently set forth, to avoid the question of variance. The third count states the defendant’s promise to be “ that the makers of the note were good and responsible for the amount of the note, and should so remain until January 1, 1850, and that payment could be enforced at any time until that period.” The fourth count sets out the contract in its words, and by averments treats the obligation thereby created, as it is set forth in the third count. In each of these counts, we think, the legal effect of that contract of guaranty is sufficiently set forth. They differ only in the form or mode of setting out the same thing. The liability of the defendant on his guarantee commenced when that degree of insolvency on the part of the makers existed, which rendered them unable to pay the note, or the plaintiff to collect it. In both of these counts it is averred, that the makers of the note were not before nor on the 1st day of January, 1850, good or responsible for the note, but on the contrary were poor, irresponsible, destitute of property, and the notes uncollectable of the makers. These averments, state a breach of that contract of guaranty ; sufficiently so, to charge the defendant, and under those counts, we think the contract of guaranty was properly received in evidence. [414] The general question in the case, therefore arises, whether upon the facts stated in the exceptions, the defendant is liable upon this guaranty. The plaintiff is not the party in interest. The suit is prosecuted for the benefit of the sheriff, by whom the debt has been paid to the plaintiff. The defense which is interposed by the defendant, rests upon two distinct and independent grounds; and we are satisfied that they are available in the case for that purpose. In the first place, the evidence introduced shows that there has been no breach of that contract or guaranty. It is conceded in the case, that on the 1st day of January, 1850, the makers of the note were not only the owners, but were in the open and visible possession of property, both real and personal, more than was sufficient to secure and pay this debt, and it does not appear that any attempt was made to show that a different state of things existed at any time between that date, and the time of giving the guaranty. It cannot be said, therefore, that before or at the time the guaranty terminated, the makers of the note were not good or responsible for its payment, nor that the plaintiff was unable to enforce its collection. So long as the makers continued in that 'situation, with those means at their disposal, and subject to an attachment of their creditors, the note was good, the makers were able to pay it, and the creditor could enforce its payment. This view of the case is not avoided by showing that previous attachments had been placed upon their property ; for the whole object is attained, so far as this guaranty is concerned, if they were so disposed of, that the makers of the note, retained their property in their possession, and held it subject to their own disposal, and to the attachment of their creditors. The fact that there has been no breach of that contract of guaranty, has met with absolute confirmation, in the circumstance that on the 1st of January, 1850, the plaintiff attached the property of the makers, for which a receipt was obtained by the sheriff, and for the responsibility of which, the sheriff and the county were liable. Upon that liability of the sheriff, created by that attachment, the plaintiff, to whom this guaranty was given, has obtained payment, and actual satisfaction for his debt. There has been, therefore, no breach of this contract of guaranty; the note has proved good to him, as guarantied, for it has been paid to him on the attachment of the property of the makers of the note, and from liabilities growing out of it. [415] In the second place, if there was a breach of that contract of guaranty, the defendant is discharged from his liability upon it, by the payment of that debt to the plaintiff by the sheriff, in consequence of his liability arising out of the insolvency and failure of his rec.eiptor. It is insisted, however, that by the payment of the debt, the sheriff is entitled by subrogation to the right and the remedy of this plaintiff, against thedefendant on this guaranty. For that purpose, and on that ground, this suit is prosecuted. , It is undoubtedly true, that so far as the sheriff has been compelled to pay this debt out of his own means, he is entitled to the right and remedy of the creditor against the makers of the note. To that extent he may be treated as the purchaser of the claim, but it is only as against the makers of the note that this right of subrogation exists. 1 Lead. Cas. in Equity 96, note (2.) 2 Vernon 608. Parsons v. Briddark. The suit that was commenced against the makers of the note, was for the benefit of the creditor and this defendant, who at the time stood as surety or guarantor for the makers of the note. When the sheriff attached the property, and took a receipt for the same, he stood, to the extent of the value of the property in the shoes of the debtors, the makers of the note; and the creditor, as well as the guarantor, could look to the sheriff for the application of the property attached, in payment and satisfaction of the note, and of the defendant’s contract of guaranty. If by the insolvency of the receiptor or by his neglect, the property attached has been lost, or rendered unavailable, and the sheriff rendered liable for the debt, his payment of the same was, so far as the creditor and this defendant as guarantor was concerned, a payment by one, who stood in the shoes of the makers of the note; for it was paid in consequence of his liability arising from the attachment of their property, on this debt. The defendant stood as a surety or guarantor, to the creditor for a given period for the goodness of the note, or the ability of the makers to pay it. When it appears, therefore, that during the period for which the guaranty was given, the note was good, and the makers able to pay the debt, there is no propriety in saying, that the defendant, as guarantor, is now to be made liable for the inability of the makers to pay the note, when that inability arose subsequently to the period when that guaranty terminated; nor is there any proprie [416] ty in saying that the sheriff shall be subrogated to the remedy of the creditor against the defendant, as guarantor, when that claim would have been satisfied and cancelled by the property of the makers of the note, but for the neglect of the sheriff in making the attachment, or in taking insufficient receiptors for the property. We are fully satisfied therefore, that the defense in this case, is available, on the ground that there has been no breach of the contract of the guaranty, and also, that the payment of the debt by the sheriff will inure to the benefit of this defendant, and was a discharge of his liability on his guaranty; and though the sheriff may have paid the debt out of his own means, he can be subrogated to the rights of the creditor, only as against the makers of the the note, and not against the defendant. The judgment of the County Court is affirmed.