Hotchkiss v. Barnes

Park, J. This suit is based upon the following letter of credit addressed by the defendant to the plaintiff:— “Fair Haven, January 2, 1858. “ Mr. A. P. Hotchkiss : — Sir. You can let Mr. J. L. Day have what goods he calls for and I will see that the same are settled for. Yours truly, H. S. Barnes.” The first question in controversy between the parties is, whether this instrument is a continuing guaranty or whether it applies only to the first item in the plaintiff’s bill. The books are full of reported cases upon the subject of commercial guaranties. The decisions are not uniform in the conclusions arrived at, from the fact that no two cases can be found precisely alike, and different courts have adopted different rules of construction. In some of them a rigid rule has been applied to the guarantors, while in others a construction has been given most favorable to them. It was well said by Parke, J., in the case of Hargreave v. Smee, 6 Bingham, 244, “ that all these cases must be decided each on its own ground, and therefore it is useless to refer to the decisions except for any principle which may be incidentally laid down in them.” In relation to the rule that should govern courts in construing contracts of this description, the weight of authority, gathered from all the cases upon this subject, is in conformity to the rule of construction adopted by our own court, that the contract of a surety must be construed according to the intent of the par [34] ties. In the case of Hall v. Rand, 8 Conn., 560, Ch. J. Hosmer says: — “ The real inquiry is, what was the intention of the defendant, and to ascertain this his words must be taken in their plain, popular and obvious sense. That is the true meaning of the Contract which readily presents itself to a plain man of common understanding on reading it attentively and impartially, and not that which is elaborated with effort.” In the case of Lewis v. Dwight, 10 Conn., 100, Ch. J. Williams says : — “ The contract of a surety, must like all contracts, be construed according to the intent, and the question is, what is the fair import of the language of the guaranty.” In the case of White v. Reed, 15 Conn., 457, Hinman, J., adopts the same rule of construction. This rule may also be found in Hargreave v. Smee, supra, Lee v. Dick, 10 Peters, 482, and 2 Kent Com., 557. Applying this rule to the case in question, would the fair import of the language used in this guaranty be satisfied by the purchase of a few articles of merchandise at one time ? Suppose Day had casually passed the store of the plaintiff immediately after the guaranty had been given, and recollecting that he needed an article for a particular purpose, an article not usually kept by druggists of a limited business, had procured it, would the liability of the defendant be exhausted by the purchase of the article ? The language of the guaranty is, you can let Day have what goods he calls for. There is no limitation of the quantity or kind of goods that he may purchase. There is no limitation of the amount in value that the plaintiff may sell. The language is general — “ what goods he calls for.” The guaranty shows that the defendant was willing to trust Day to any amount, or else some limitation would have been made in the amount he might purchase. Even the defendant’s construction placed it in the power of Day to ruin the defendant in a single transaction. Now it is unreasonable to suppose that the defendant intended to limit Day to a single purchase of goods under such circumstances. Had he intended to limit his authority, we should look for a limitation in the amount rather than in the number of sales. [35] We are therefore inclined to think that a fair construction of this guaranty shows it to he a continuing one. But if we are wrong in this, the only other result to which the case tends is equally unfavorable to the defendant. It must be conceded that the language of this guaranty accords as well with sales made from time to time as it does with the first purchase of goods. Now if it is capable of either construction, and both are in harmony with the language used, then the guaranty possesses a latent ambiguity, and where that is the case' the extrinsic circumstances may always be shown in order to ascertain which construction the parties intended the instrument to have. Brown v. Brown, 4 Conn., 269 ; Lines v. Flagg, id., 581; Strong v. Benedict, 5 id., 210; Brown v. Slater, 16 id., 192 ; Baldwin v. Carter, 17 id., 201; Peisch v. Dickson, 1 Mason, 9 ; The King v. Inhabitants of Laindon, 8 T. R., 379 ; Ely v. Adams, 19 Johns., 313 ; Bailey v. Larchar, 5 R. Isl., 530 ; 1 Greenl. Ev., § 288 ; 1 Swift Dig., 182. Should we consider the guaranty aided by these circumstances, we can, have no doubt that the parties intended the guaranty to be a continuing one. The plaintiff was a merchant engaged in the wholesale grocery business in the city of New Haven and Day was a druggist in the village of Fair Haven. The goods purchased were adapted to the line of business Day was pursuing. The defendant was frequently in the plaintiff’s store during all the time the goods were being delivered, and had knowledge of the kind of goods purchased, and the amount thereof, together with the fact that they were furnished upon the credit of his guaranty. He made no complaint at any time, and, after the indebtedness had fully accrued, promised to pay the amount on three different occasions. It is difficult to see what could more satisfactorily show the construction the parties put upon the guaranty. The plaintiff sold the goods upon the credit of the guaranty. This shows in what sense he understood the contract. The defendant knew of the purchases, and made no complaint, and afterwards repeatedly promised to pay the amount. This shows that he regarded the guaranty as a continuing one. [36] Both parties then understood the contract in the same sense, and such must be its construction. The defendant further claims that most of the goods purchased by Day were spirituous and intoxicating liquors ; that they were sold contrary to the provisions of the statute law of the state for the suppression of intemperance; and that although the legislature in 1861 repealed the sections of the act making void all sales of such liquors, and in 1863 passed an act legalizing all such sales that had been or should thereafter be made, still the act does not reach or affect in any way the contract of guaranty. The claim is, that the contract should be construed as extending only to such sales as the plaintiff might lawfully make. The plaintiff could not lawfully sell spirituous and intoxicating liquors, therefore such sales were never guarantied by the defendant, and consequently the act legalizing the sales would not extend the guaranty to transactions not embraced by it originally. This is an ingenious argument, but there is fallacy in the premises it assumes. It assumes that the contract should be construed as though it read, “ you can let Day have what goods he calls for, except spirituous and intoxicating liquors.” If such had been the language of the guaranty, or if such should be its interpretation, then iñ either caSe the claim of the defendant would be sound. No doubt the law presumes every man to act in accordance with law till the contrary appears, and his contracts should be construed upon that presumption in ordinary cases. But such presumptions of law must give way to proof of a contrary character. What would the defendant say if the language of the guaranty was, you can let Day have what goods he calls for, including spirituous and intoxicating liquors ? Then, no doubt, the act validating the sale would validate the contract. Now, under the circumstances of the case the guaranty must be construed as including originally spirituous and intoxicating liquors. The plaintiff so understood it from the fact that he sold them upon the credit of the guaranty. The defendant so regarded it, from the fact that he knew when the sales were made that the goods were spirituous and in [37] toxicating liquors ana wore sold upon his credit. He made no complaint at the time, and afterwards promised again and again to pay the amount. It is clear that he intended originally that the guaranty should extend to the sale of such liquors. There is nothing in the language of the guaranty that excludes them. It applies as much to liquors of this description as it does to goods that could be lawfully sold. The act of 1863 provides “ that nothing contained in the act entitled an act for the suppression of intemperance passed May session 1854, shall impair in any way the validity of any contract already made, or which shall hereafter be made ; nor shall said act render such contracts illegal.” Public Acts 1863, p. 16. This act is as extensive to restore legality to contracts as the act of 1854 was to render them illegal; and it applies as much to this guaranty, which was void by the statute of 1854, as it does to the contract of sale by the plaintiff to Day. If the one was legalized, so also was the other. It is said by the defendant that the revised statutes of 1866 so changed the act of 1863 that it no longer has a retroactive effect. But the statute of 1863 legalized the guaranty as soon as it was passed, and the revised statutes found it a valid contract, consequently no matter whether the act in its present form is retrospective or not. The defendant further claims that the note given by Day discharged the guaranty. It may well be questioned whether this defence is admissible under the pleadings in the case, but, if it can be made, it is clear from the facts found by the court that the defendant waived all objection to the change made by giving the note. He had full knowledge of the dealings of the parties during all the time that the goods were delivered and afterwards on three different occasions promised to pay the note when presented to him. There is no error in the judgment complained of, and no ground for a new trial. In this opinion the other judges concurred.