Kearnes v. Montgomery

Maxwell, J. This was an action of assumpsit, to recover from the defendant the sum of 2000 dollars, with interest. The facts certified show that, on the 28th day of January, 1860, the plaintiff held the bond of the defendant and one [39] J. N. Montgomery, for 2000 dollars; that the defendant, on the day and year aforesaid, proposed to exchange with the plaintiff for the said bond, a bond of 2000 dollars executed by Thomas Creigh and L. S. Creigh to the plaintiff; that the plaintiff refused to accept the said last mentioned bond unless the defendant would endorse the same, inasmuch as it was payable to the plaintiff and not to the defendant,whereupon the said defendant wrote his name upon the back of the said bond, which was then accepted by the plaintiff, who in exchange therefor, delivered to the defendant the said bond of the defendant and J. N.-Montgomery; that afterwards, and after the institution of the suit, but before the trial, the plaintiff wrote above the blank endorsement of the defendant, a promise, binding the defendant as surety of the said Thomas Créigh and L. 8. Creigh; that the bond, with the endorsement thereon, is as follows: “ On or before the first of March, 1861, with interest from the first of March, 1860, we or either of us bind ourselves, our heirs, &c., to pay Alexander Kearnes, the just and Ml sum of two thousand dollars, for value received. Witness our hands and seals, this 28th of January, 1860. “Thomas Creigh, [seal.] “Lewis S. Creigh, [seal.]” “For value received, I hereby become the surety of Thomas Creigh and Lewis S. Creigh, as obligors in the within bond. Wm. H. Montgomery.” That the debt against the Creighs could have been made by suit in the year 1861, and after the close of the war in 1865, and that the said Creighs have been insolvent since 1866, and that since that time the debt could not have been made off of them by suit. Upon these facts, judgment was rendered for the defendant. The plaintiff in error insists that the judgment is erroneous, because upon the facts proved, the .defendant was a surety or maker of the bond in question, and primarily liable for its payment, while it is insisted for the defendant that he was guarantor merely, and only liable for the payment of the bond in case the [40] money could not be made off of the makers of the paper after it fell due, by the use of due diligence, which he insists was not used before the makers became insolvent. Whether the defendant is guarantor or maker, depends on the understanding of the parties. If the payee or as-signee of paper, not negotiable, endorse his name in blank on the back of it, he is prima facie assignor, but if a stranger endorse his name in blank on the back of paper not negotiable, he is prima facie guarantor, but this presumption may be rebutted by showing the original understanding of the parties, by showing an express agreement otherwise, or by showing circumstances from which one may be inferred. The contract of a guarantor is collateral and secondary. It differs in that respect generally, from the contract of a surety which is direct; and in general the guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor, while the surety undertakes directly for the payment, and so is responsible at once if the principal debtor makes default. As the proper diligence was not used against the Creighs, if the defendant is guarantor merely he is not liable for the payment of the debt; while, if he is to be treated as surety, he is liable. It becomes, therefore, necessary to determine whether he is a technical guarantor merely, or a surety. If the paper signed by the Creighs had been payable to the defendant, then the defendant would have been the assignor thereof, with the rights and liabilities of an assignor, unless some special agreement existed to create a different relation: and as the paper is payable to the plaintiff, the defendant is the guarantor thereof, unless by some special agreement he is liable as maker or surety. The plaintiff', after suit brought, wrote over the name of the defendant: “For value received, I hereby become the surety of Thomas Creigh and Lewis S. Creigh, as obligors in the within bond.” It is upon this contract, so written by the plaintiff, that he claims his right to recover from the [41] defendant. The plaintiff might write anything over the name of the defendant, consistent with the contract of the defendant, so as to carry it out. He could not write the words which he did write, unless upon special contract between the parties, disclosed by the evidence and surrounding circumstances. The evidence, instead of sustaining and authorizing this special contract as written by the plaintiff, does not even tend to show any such understanding, but on the contrary shows, so far as can be inferred from it, that the defendant was to assume the same situation as to liability, that he would have occupied if the paper had been executed to him as payee and transferred by him to the plaintiff. As the facts proved wholly fail to show a contract on the part of the defendant to be liable as maker or surety, it follows that he is liable only as guarantor. The facts proved show affirmatively that, by the use of due diligence against the Creighs, the plaintiff might have made the money. The judgment complained of will, therefore, have to be affirmed, with damages and costs. BrowN, President. The facts of this case show that it was the intention of the parties to change obligations, and that the liability of the defendant was thenceforth to be collateral only. Without attempting to reconcile or distinguish the numerous cases decided on the subject, the conclusion I deduce from them, as applicable to this case is, that the endorsement in blank, of the single bill in question, by the defendant, made him collaterally liable, as an assignor would have been after due diligence, and not primarily liable as claimed by the plaintiff. I think, therefore, that the judgment should be affirmed, with costs and damages to the appellee. Berkshire, J., concurred in the views of Maxwell, J. Judgment aeeirmed.