Sheldon v. Butler

Cornell, J. It is objected that under the statute of frauds (Gen. St. c. 41, title 2, § 6, subd. 2,) the contracts of guaranty sued on are void because no consideration is therein expressed. Upon the facts stated in the complaint the guaranty of the defendants as to each note, although in form an undertaking to answer for the debt or default of another, was not such, in fact, within the meaning of the statute. It had its root in a transaction and written agreement between them and the plaintiff, in which the makers of the notes had no interest, but which concerned the plaintiff and the defendants alone. Under said agreement defendants had received from the plaintiff certain threshing machines to sell on commission, [516] and upon certain terms and conditions, by which, among other things, they were obligated to sell to none but responsible parties, and to indorse or make secure to plaintiff’s satisfaction all notes taken on sales made to persons considered irresponsible by the plaintiff. The notes in question were received by defendants in part payment of one of the machines sold by them to the makers under this agreement. Deeming the makers irresponsible, plaintiff refused to accept the notes. Whereupon, to induce him to take them, and credit their amount on their indebtedness to him under the agreement, the defendants agreed, in writing, in consideration thereof, to procure the makers of the notes to give security for their payment, or, in default thereof, to indorse them personally to the plaintiff. Failing to obtain such security defendants guaranteed their collection, and, thereupon, plaintiff took them with such guaranty in satisfaction and discharge of the obligations of the defendants, under said written agreements, and their indebtedness to him thereunder, to the amount of the notes for threshing machines theretofore delivered. It thus appears that the contract of guaranty indorsed upon both notes was supported by a valid consideration beneficial to the defendants, and proceeding to them directly from the plaintiff. The leading purpose of the defendants in making it was to promote their own interest by obtaining a discharge from a then existing liability to the plaintiff, and not simply to become sureties upon the notes for the benefit of the makers, or at their request. Their promise in each case was an original one, as distinguished from a purely collateral undertaking, founded upon a valid consideration, moving solely from the plaintiff to them, and wholly distinct and independent of the notes to which the guaranty related, and it was, therefore, not within the statute of frauds. Though it had rested entirely in parol it would not therefore have been invalid. Nichols v. Allen, 22 Minn. 283; Leonard v. Vredenburgh, 8 John. 23; Farley v. Cleveland, 4 Cow. 432; 9 Cow. 639; Johnson v. Gilbert, 4 Hill, 178; Brown v. Cur [517] tiss, 2 N. Y. 225; Cardell v. McNiel, 21 N. Y. 336; Mallory v. Gillett, 21 N. Y. 412; Thomas v. Murray, 32 N. Y. 605; Nelson v. Boynton, 3 Met. 400. The complaint contains no allegation that plaintiff acted in his capacity as agent of Nichols, Shepard & Co. in making either of the contracts with the defendants. The disconnected averment in the forepart of the pleading, that he was the general agent of that firm for the sale of their threshing machines, is, therefore, an immaterial one, and irrelevant to any cause of action therein stated. The facts stated show that the plaintiff is the lawful owner of the notes and demands in suit. Though Nichols, Shepard & Co. are named as payees in the notes they never accepted them, but refused to do so. Their indorsement of them without recourse, under the circumstances as stated in the complaint, cannot be construed into an admission of ownership. Its sole purpose and effect was to vest in the real owners the apparent as well as the absolute legal title to the notes, so that they could be used as negotiable paper, and the indorsement was a mere formal one to that end. The order overruling the demurrer is affirmed.