Hoffmann v. Mayaud

WOODS, Circuit Judge, after making the foregoing statement, delivered the opinion of the court. í -The réfusal;of the court to permit the witnesses to answer the questions propounded; it is urged, on the 'opinion of this court in U. S. [177] v. Indian Grave Drainage Disk, 57 U. S. App. 417, 29 C. C. A. 578, and 85 Fed. 928, is not reviewable, because it is not: shown by the bill of exceptions that the court below was informed what response the witnesses were expected to make; hut, while our view of the better practice was stated in that opinion, the decision turned upon other considerations. Our rule on the subject being then the same as that of the supreme court, we could not reasonably have enforced an interpretation or construction different from that declared by the supreme court in Buckstaff v. Russell & Co., 151 U. S. 626, 14 Sup. Ct. 448. The rule had not been changed when this case was tried. By a revision of onr rules adopted February 10,1899, rule 11 was so amended as to require that, “when the evidence rejected is oral testimony a written statement of the substance of what the witness was expected to testify shall be filed and brought to the attention of the court before the retirement of the jury.” We have no doubt that the interrogatories by which the plaintiffs in error were required to state their individual understanding, belief, or conclusion whether an acceptance of the guaranty was conditional, whether an extension of credit had been given in pursuance of the guaranty, what was the consideration of the guaranty, what consideration moved them to sign the guaranty, and the like, were properly overruled; hut when they were asked what conversations they had with Beck in reference to the giving of the guaranty they should have been allowed, we think, to answer anything relevant, and not inconsistent with the terms and meaning of the written guaranty. On its face that writing is indefinite and uncertain, and besides the proof of the previous dealings and existing relations of the parties, admitted in order to make out their intention, it was competent for the same purpose, so far as it could be done consistently with the writing, to show their negotiations and contemporaneous declarations. The agent, Beck, went beyond the terms of the instrument when he wrote to his principals that he had secured a guaranty of “the sum due and to become due.” He simply stated his conclusion, and, if that letter was competent evidence in behalf of the plaintiffs, as we think it was, because it contained the information on which they were to determine whether they would accept the proffered guaranty and incur the resulting obligation “to extend credit,” it was more clearly competent for the defendants to show the actual conversations which were had, and on which, presumably, Beck’s conclusion was based. Even when, on the evidence admitted, it was clear that a large commercial debt had been incurred, and that further purchases of goods on credit were contemplated, it was still uncertain, except as stated in Beck’s letter,whether the time for payment of the existing indebtedness was to be enlarged, and, if so, for how long a time; and, after determining that the existing debt was to be carried, as well as more goods sold, the most that could he said of the agreement was that the extension should be for a reasonable time. Of what would have been a reasonable time what better evidence could there be than the oral declarations or agreements of the parties at the time of the execution of the imperfect writing? The proof offered that the debtor company was to pay 1,000 francs per month, and as much in addition as it could-, [178] but was not to be pressed for more during the year 1898, would have contradicted no term of the written agreement, and, under the circumstances, could hardly be thought to have been unreasonable, especially in view of the creditor’s just disfavor of the corporation as a debtor, and the unquestioned and ample sufficiency of the proffered guaranty. If it be suggested that such proof would have shown a guaranty on terms different from those stated in Beck’s letter, the sufficient answer is that the plaintiffs alone should suffer for the failure of their agent to furnish them full information. By a familiar rule of agency, if they chose to accept the guaranty so procured for them, they were bound by the acts, declarations, or knowledge of their representative in the premises, as if their own, whether known to them or not. This brings us to the inquiry whether the evidence shows beyond question that the plaintiffs did in fact accept the guaranty, and so perform the consideration therefor, by “extending credit,” as to be entitled to maintain this action. It is not important to enter at large into the distinction between contracts of guaranty which, in order to become mutually binding, must have been accepted, and those which, from the beginning, are unconditional. Like other contracts, a guaranty requires the concurrent assent of the minds of the parties; and, as the doctrine has been applied by the supreme court of the United States, proof of acceptance by the guarantee, or of notice thereof to the guarantor, is required, because “deemed essential to an inception of the contract.” It is so declared in Davis v. Wells, 104 U. S. 159, where the following language, employed in Manufacturing Co. v. Welch, 10 How. 461, 475, is reaffirmed: “He [the guarantor] has already had notice of the acceptance of the guaranty and of the intention of the party to act under it. The rule requiring this notice within a reasonable time after the acceptance is absolute and imperative in this court, according to all the cases. It is deemed essential to an inception of the contract.” The contract under consideration, it is evident, did not take effect upon delivery to Beck. It is not shown, nor to be presumed, that he had authority to accept it. In his hands, to quote the brief for defendant in error, “it was a mere ‘projet’ until ratified by Mayaud Freres”; and it does not appear that he sent to them the writing, or a copy of it. They knew simply what he wrote them, and on that information, it is conceded, they were not satisfied with the arrangement, and on March 17, 1898, wrote Hoffmann Bros. Company the letter of that date. The letter contained no mention of the guaranty, and, if any inference on the point is to be drawn, it is of repudiation rather than of acceptance. The proper course for the guarantees would have been to write to the guarantors individually, informing them whether the guaranty had been or would be accepted and acted upon. But the guarantors are shown to have been in charge of the business of the corporation, and to have conducted or known of the correspondence, and if, in the letter addressed to the corporation, it had been stated that the guaranty had been received and accepted, it would, of course, have been equivalent to a like statement to the guarantors directly. The plaintiffs not only did not accept the guaranty, or approve the arrangement made and reported by Beck; they insisted upon a remittance of [179] 20,000 francs in addition to the 1,000 francs promised in the letter of January 10th to be sent monthly, and declared themselves under a necessity “neither to increase nor maintain the uncovered balance” of the account. To this the corporation responded by its letter of April 11 tb, regretting the stand taken, declaring its inability to make present remittances, and urging upon the plaintiffs, by promising not to increase the indebtedness, by reference to the guaranty, and on other grounds, to reconsider their decision, and “to fill the order given Mr. Beck.” That order was in addition to the order of January 31st, which yet remained unfilled. In their reply, by the letter of April 28th, the plaintiffs omitted again to mention the guaranty, or in any way to signify their acceptance of it, but declared their purpose to forward “the goods ready” on the order of January 13th, and “to put in hand” the order given to Mr. Beck. Their determination to do so was not stated to be in consideration of the guaranty, but “with regard to the express promise” of the debtor to scud “next remittances besides the monthly drafts.” About one-half only of the goods covered by the January order were forwarded, and whether the order sent by Beck was put in band does not appear. No goods were sent: upon it. In the account filed with the declaration, credit is given for eight monthly payments of 1,000 francs, ending with the month of August, 1890, and, additional credit for goods having been given only to the amount of 1,000 francs, it follows that there had been no increase, but a considerable reduction, of the debt when the letter of August 7, 1896, was written, complaining that remittances (beyond the monthly drafts) had not been forwarded, and urging that 50,000 francs be sent them “within the end of Keptember, and the balance of the account in December prox.” Other than this, there is to be found in the entire correspondence no promise, or ground for inferring a promise or intention, to extend credit, or give further time for the payment of the existing indebtedness; and, even if this expression could be considered to be such a promise, it was not pretended to be made with reference to the guaranty, or, indeed, upon any consideration. That a definite extension of the time for the payment of the 50,000 francs mentioned was not intended is shown by the notice given in the postscript that no goods would be sent before receipt of “a very large remittance.” To this Hoffmann Bros. Company replied on August 22d, begging further indulgence, and urging that the goods ordered be shipped, but directing that the order he canceled if they decided not to ship “at present.”' The plaintiff's responded on September 18th that they could only confirm the terms of their letter of August 7th, and repeat that it was quite impossible for them “to increase, and even to maintain, the actual outstanding debt”; but before that letter could have reached Milwaukee the possibility of further negotiations ended with the filing of the creditors’ bill. The guarantors had knowledge of this correspondence, conducted it on one side, and, of course, are bound by it; but the assertion in the brief that it shows a modified arrangement between the parties, by which “Mayaud Freres agreed to ship the goods in August only on condition that such shipment would not increase the account, and on condition that in the meantime a [180] substantial payment should be made,” is not justified. On the contrary, persistent disagreement at every step of the correspondence is evident. The most that can be said is that Mayaud Freres offered to make further shipments, but upon conditions never assented to by the Hoffmann Bros. Company. If, however, the alleged new or modified arrangement were conceded to be deducible from these letters, or any of them, it could be of no effect upon this controversy unless made on the faith of the guaranty, and of that there is no direct evidence, and, if any from which an inference of acceptance could be drawn, certainly not enough to warrant a withdrawal of the question from the jury. The complaint shows that the guaranty was given to induce the plaintiffs “to extend credit upon” and to secure to them payment of “bills contracted * * * for goods theretofore and thereafter sold.” After the agreement was made, the plaintiffs, as already stated, gave further credit for goods sold to the amount of 1,000 francs only. They received monthly payments to the amount of 7,000 francs. The debt was drawing interest meanwhile at the rate of 5 per cent. There had been, therefore, no actual increase of indebtedness above the amount due at the date of the guaranty. At that date the debtor was already insolvent, as the guarantors probably knew, and unable to continue in business, unless helped out of its difficulties; and for that purpose, being themselves possessed of large wealth, and amply responsible, they consented to give the guaranty. Instead of the credit expected and necessary to keep the company in business, the small additional shipment'of goods was made as stated, and for seven months the company had the benefit "of not being sued, though frequently pressed for payments, upon the principal debt, for the extension of which the guaranty had been given. Nothing was actually done in avowed reliance upon the guaranty, and it is impossible to say that the entire consideration for its execution was performed. It appears that the court below was of opinion that there was some consideration in the fact that Beck, when in Milwaukee, did not bring suit or institute proceedings of any character to enforce the payment of the debt, and that there was in fact an extension of credit. An agreement on the part of the creditor for general indulgence towards the debtor, without any definite time being specified, with proof of actual forbearance for a reasonable time, has been held to be sufficient consideration for á guaranty of the debt (Brandt, Sur. § 16, and authorities cited); but it is equally well settled, as the authorities there cited show, that forbearance without an agreement on the part of the creditor to forbear will not be deemed a sufficient consideration. “There must be promise for promise.” This record contains no evidence upon which it can be said conclusively that there was an agreement by the plaintiffs, in consideration of the guaranty, to extend credit or to forbear bringing suit upon their demand. The judgment below is reversed, with direction to grant a new trial.