Perry v. Barret

Gamble, Judge, delivered tbe opinion of tbe court. 1. Some of the questions which have been argued in this case, have been considered and decided in tbe case of Lewis & Brothers v. Harvey & Stewart, which was before this court on tbe docket of tbe present term. To tbe opinion in that ease, reference is made, for tbe settlement of tbe questions which are there decided, and which are presented in this case. 2. This case has some features which are peculiar. Tbe defendant, Barret, put his name upon tbe back of a negotiable promissory note, made by Wm. J. Barret, payable to Ross & Harper, and which was made for tbe purpose of securing Ross & Harper in part for tbe amount of a stock of goods sold by Ross & Harper to Wm. J. Barret. Upon this note tbe plaintiff, who is an indorsee of tbe note, files his petition against tbe present defendant, charging him as guarantor of tbe note of Wm. J. Barret. Tbe defendant answers, denying that be became a guarantor for tbe payment of tbe note, but alleges that be put bis name on tbe back of it as “ tbe surety of tbe said Wm. J. Barret;” and be not only repeats, in bis original an-' [144] swer, tbe statement that he was security, but, in an amended answer, he sets up, as a defence, that he was surety and that he notified the plaintiff, under the statute, to commence an action against all the parties to the note, and that the plaintiff had failed to commence such action within thirty days after the service of the notice. The instructions of the court treat the contract of the defendant as a suretyship, as the defendant, himself, treats it in his answer, and the defendant is held liable if he wrote his name on the back of the note, at the time of its being made or .prior to the delivery to the payees, unless he had been discharged by the failure to bring suit, as required by the notice. We have, then, a petition that states the legal effect of the defendant’s contract to be a guaranty of the payment of the note, and its language is not set out, nor is it proved that any words were written over the defendant’s signature, and yet the case is always treated by the defendant and the court as a case of surety. That the facts of the case would have warranted the plaintiff in charging the defendant as a maker of the note, as surety for Wm. J. Barret, is evident, as well from the defendant’s answer as from his conduct in giving the notice in which he describes himself as security; but whether the plaintiff is entitled to recover upon these facts, and upon the law applicable to them, when his petition charges the defendant with a contract of a different character, is another question. Different forms of indorsements on notes have been held to subject the parties making them to liability as makers of the notes ; as, where A. made a note payable to B. or order, and, at the same time, C. and D. indorsed on the back of the note “For value received, we jointly and severally undertake to pay the money within mentioned to B.,” it was held, that each of the indorsers was to be treated as a joint and several promisor with A. on the note, as if he had, on the face of the note, signed the same as surety. White v. Howland, 9 Mass. Rep. 314. An indorsement on a note by a third person, in these words, 11 For value received, I guaranty the payment of the within [145] note and waive notice of non-payment,” has been held to bind such third person as a joint and several maker, as if he had signed the note as surety. Luqueer v. Prosser, 1 Hill N. Y. Rep. 256. So, an indorsement in these words, “ This may certify, that I guaranty the payment of the within note,” has been held to bind the third party as a joint and several maker. Hough v. Gray, 19 Wend. Rep. 202. These instances may suffice to show, that a party putting his name on the back of a note, may be held to be a maker, and liable as such, although he uses the word “ guaranty” in his indorsement. But, in the present ease, the plaintiff himself alleges that the legal effect of the indorsement by the defendant was, to make him a guarantor and not a maker or promisor. If, then, the plaintiff’ has set out one contract in his petition, as made by the defendant,, he cannot recover upon a different contract, although the defendant, in his answer, sets up such different contract, and although such other contract is more onerous upon the defendant than that declared upon. If the plaintiff had amended his petition so as to agree with the defendant’s answer in the statement of the contract, there would appear to be little difficulty in his recovering. It is evident that the court treated the case as the answer of the defendant set it out, and not as the petition stat,ed it. 3. Is the contract, the legal effect of which is a guaranty of the payment of a note, different from the contract of a surety ? When there are no special terms of the guaranty set out, and it is merely alleged that the party became guarantor for the payment of the note, the contract is collateral to the note itself, and bin<ls the guarantor to pay the money specified in the note, if it has been presented to the maker and he has refused to pay it. If the guarantor has not received notice of the dishonor of the note in a reasonable time, he is allowed to use such laches to defend himself against his contract, to the extent that he has been injured by want of the notice. Oxford Bank v. Haynes, 8 Pick. Rep. 428. Gibbs v. Cannon, 9 Serg. & R. 198. [146] Gamage v. Hutchins, 28 Maine, 565. In Oxford Bank v. Haynes, Chief'Justice Parker says, “That a guarantee differs in character from a surety, cannot be questioned, for he cannot be sued as promisor, as the surety may; his contract must be specially set forth. That he differs from an indorser is equally clear, and for the same reason; and also, because he warrants the solvency of the promisor, which the indorser does not. There are cases which adopt a distinction which is reasonable and just, in which the guarantee is discharged only by the joint effect of negligence on the part of the holder, and an actual loss or prejudice to the guarantee, in consequence of that negligence.” The court, then, erred in its instructions, which treated the case as one of suretyship, and not as the plaintiff himself had made it, as one of guaranty. . 4. In relation to the point made upon the notice given by Barret to the holder of the note, to commence suit thereon against all the parties liable, it may be sufficient to say that, when that notice was given, a suit was instituted and pending against all the parties liable on the note ; that the defendant, as well as William J. Barret, the maker of the note, were served with process, and that Bich, who is called in the defendant’s notice his co-surety, resided in the Indian country, out of the limits of the state. That action resulted in a judgment against Barret, the maker, and a return upon the execution of nulla bona; it was discontinued, as to the defendant,- and as to Bich, who was not served with process. The object of the statute is, to secure the party giving the notice against liability to pay the money when it might be collected from the principal; or more than his proportion, when it is to be collected from several co-securities. It is not an important advantage to the security giving the notice that he, himself, should be included in the action as defendant, and should have a judgment rendered against him; for, in the action brought against the other parties, the plaintiff, in order to hold the notifying security bound, must proceed with diligence to collect [147] the money. In a case in which a co-security is non-resident, as in the case against Rich, the plaintiff is not bound to send a notice to his residence to be served upon him, nor to proceed by publication, under article five of the code of practice; for such proceeding would delay the suit against the other parties, and, besides, such unusual proceeding is not within the contemplation of the act relating to securities. Hughes v. Gordon, 7 Mo. Rep. 297. The judgment is reversed, and the cause remanded for further proceedings.