Crane v. Wheeler

Gileillan, C. J. In the insolvency proceedings Wheeler filed his petition, verified, by his attorney, setting forth his claim against the insolvents. The assignee disallowed the claim, and the claimant appealed to the district court. Upon such appeal the claim is to be [211] tried as other civil actions. Laws 1881, ch. 148, § 8. When the appeal came on for trial the assignee objected to evidence being offered to prove the claim on about this proposition, as near as we can tell from the statement of the objection in the settled case and from the brief: That the court is to hear the appeal only upon such proof of the claim as was offered before the assignee, and, if none was offered before him, then none can be received by the court. There is nothing in the statute to suggest such an idea. No trial except upon an appeal is contemplated. The claim was based upon the insolvent’s guaranty of a promissory note. The facts found by the court and the evidence fully sustained the findings, stating such facts briefly, they are: That in June, 1882, Wheeler left with Wilkins & Smith, to loan for him, a sum of money, with instructions to make no loan except upon security of first-class real estate, and paper indorsed by good indorsers. That, contrary to such instructions, they, in said June, loaned of said money $1,500 to one Gregson, taking his note therefor, payable to said Wheeler in one year. Afterwards, when informed they had made said loan to Gregson, Wheeler stated to them that he should look to them for the money they had loaned contrary to his instructions, and they agreed to be responsible for the same, as though they had borrowed the money, and to pay the note in case Gregson made default in payment; and they thereupon wrote and signed this guaranty on the note: “We hereby guarantee the collection of the within note. June 2, 1885.” The note seems, up to that time, to have been in the possession of Wilkins & Smith. The question mainly argued in the case is, does the guaranty come within the statute of frauds, so as to be void because it does not ex" press the consideration ? In form, at least, it is a promise to answer for the debt or default of another. The form, however, is not decisive; for where the leading purpose of the promise is not to become surety for another, not for the benefit in any way of such other, but to promote the interest, to effect some purpose, of the promisor, independent of the debt or contract guarantied, as where it is to enable the guarantor to transfer the debt or contract, (Nichols v. Allen, 22 Minn. 283; Wilson v. Hentges, 29 Minn. 102, 12 N. W. Rep. [212] 151,) or to satisfy or discharge an obligation resting on himself, (Sheldon v. Butler, 24 Minn. 513,) it is, notwithstanding its form, and although it incidentally guaranties the' debt of another, regarded as an original, and not a collateral, undertaking, and so not within the statute of frauds. This case cannot be distinguished from Sheldon v. Butler. The insolvents had misappropriated Wheeler’s money, and they were liable to him for it. If he could be induced to accept the Gregson note, and thus ratify what they had done, it would discharge their liability." To induce him to do it they guarantied the note. Under the circumstances, the guaranty, while in form a promise to answer for the default of another, was in fact and in substance a promise to pay and discharge their own liability if Wheeler could not collect it from Gregson. The claimant must stand on the terms and nature of the guaranty. It is a guaranty of collection, i. e., that the note is collectible. The condition of the guarantor’s liability is that the .creditor shall be unable to collect the debt, he using due diligence. Ordinarily, in such cases, due diligence requires of the creditor to promptly bring suit, and diligently prosecute it to the return of an execution. There may be circumstances that will excuse omission to bring suit, — as, if the principal debtor be insolvent, so that a suit against him would be fruitless; or if the guarantor should waive the use of diligence. The only effort which the court finds the claimant made to collect the debt from Gregson was that September 20, 1886, he brought an action against him, in due time recovered judgment and issued execution, which was returned unsatisfied. The note was past due when the guaranty was made, so that there was a delay of nearly 15 months before suit was brought. No fact is found to excuse this delay. The court found that since October 8, 1886, Gregson has been insolvent, but that, of course, would not excuse the prior delay. Whether the question of due diligence in such cases be one of law or of fact, or a mixed question of law and fact, an unexplained delay of nearly 15 months in bringing suit makes a case of omission to use due diligence. Moakley v. Riggs, 19 John. 69 ; Kies v. Tifft, 1 Cow. 98; Penniman v. Hudson, 14 Barb. 579; Craig v. Parkis, 40 N. Y. [213] 181. For failure of claimant to show due diligence to collect from Gregson, or to show any excuse for omitting it, there must be a new trial. Order reversed. (Opinion published 50 N. W. Rep. 1033.)