Utica City National Bank v. Williams — 14 N.Y. St. Rep. 163

Majority

p. 163

Utica City National Bank v. Elliot S. Williams and Charles H. Smyth.

(Supreme Court, Oneida, Special Term,

Filed March, 1888.)

Headnote

Contract of guaranty—When becomes binding and operative.

In an action in the nature of a creditors bill to set aside a-general assignment made by defendant Williams oh the ground that a debt to Henry 0. Albright which was preferred was fraudulent, it appeared that the debt arose in the following manner, viz.: Church who was a retail dealer in coal was desirous of purchasing coal from the firm of Albright & Pratt, and a contract of guaranty was entered into by Williams & Mills which ran direct to Albright & Pratt; it was executed by them at the request of Church on January 20, 1886, and on the same day handed to Church to deliver to them. Church enclosed it in an envelope, marked the name of Albright & Pratt on it and laid it in his safe, and then notified the persons at their office that he held the paper for them. Held, that the agreement^ of Williams & Mills, and guaranty of sales of coal made by Albright &° Pratt to Church became binding and operative on them from the time the same was executed to Church to be delivered to Albright & Pratt on January 20th, 1886, and by reason thereof they became liable to pay the demand preferred, the same having been contracted by Church for coal sold him by them during the latter part of 1886.

Action in the nature of a creditors bill to set aside a general assignment made by the defendant, Williams for the benefit of creditors and giving preferences. The plaintiff recovered against Joshua W. Church, as maker, and Elliot S. Williams and Andrew W. Mills, as endorsers, upon certain promissory notes held by it, three several judgments in the month of May, 1887. Executions were issued on each to the proper county and returned wholly unsatisfied. On the 28th day of April, 1887, the defendant Williams made a general assignment of all his property for the benefit of his creditors, to the defendant Smyth. Among the debts preferred was one to Henry C. Albright for several thousand dollars which the plaintiff claims is fraudulent and that such preference should avoid the assignment. The debt to Albright was for the purchase price of coal sold and delivered by the firm of Albright & Pratt, wholesale coal dealers in the city of Utica, to Church, who was a retail dealer at the same place, during the latter part of the year 1886. After the co-partnership of Albright & Pratt was dissolved, the said claim was transferred and became the property of Albright alone' The liability of Williams for this obligation if it existed at the time of the making of ■ the assignment accrued under and in pursuance of a writ

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ten obligation or guaranty executed by him and the said Mills the 20th day of January, 1886, to the effect that if the said Albright & Pratt would from time to time sell and deliver to the said Joshua W. Church such quantity of coal and upon such terms as might be by them agreed, and in consideration of one dollar to them in hand paid by said Albright & Pratt, they (said Mills & Williams), in case said Church failed to pay for said coal, would pay said Albright & Pratt for the same, and they undertook by the same instrument to become primarily liable therefor.

It is conceded that said demand was for coal already sold and delivered to Church by Albright & Pratt and that he made default in the payment. It is as well conceded by the plaintiff that if said agreement of guaranty was an actual and subsisting obligation at the time the same were contracted, that they (Williams and Mills), became and were liable to pay the same. The ground upon which the claim of the plaintiff rests that this preferred debt is fraudulent, is that said guaranty was not in fact delivered to Albright & Pratt until the early part of the year 1887, and that no liability existed when the coal was sold to Church and the debt contracted.

In 1883 a firm existed in Utica known as “McKinney & Albright whose business was that of wholesale coal dealers. This firm sold coal to Church and to secure them, said W illiams & Mills executed and delivered a like guaranty. This firm was succeeded by'Henry C. Albright alone in 1884, and pursuant to his requirement, said Williams & Mills executed a like guaranty for Church, to him in 1886. Albright associated with him in business, one Pratt, and a partnership was formed for carrying on the same under the name of “Albright & Pratt.” Church proposed to continue the purchase of coal from them as before. As a condition of their selling him, the firm demanded a new contract of guaranty, and upon the 20th day of January, 1886, Church called upon. Williams & Mills and requested them to enter into one for him. A blank provided by Albright & Pratt was thereupon filled up, executed by both and delivered to Church with directions that he deliver the same, to Albright & Pratt; Church took the same, enclosed it in an envelope and endorsed thereon “ For Albright & Pratt” and placed the same in his safe in his office and thereupon gave notice to persons in charge of Albright & Pratt’s office of the-fact. After then and through the year 1886, Albright & Pratt sold and delivered coal to Church and the debt before mentioned and preferred in the assignment is for the purchase price of the same.

Beardsley & Beardsley, for pl’ff; C. D. Adams and S. M. Lindsley, for def'ts.

The contract of guaranty entered into by Williams & Mills ran direct to Albright & Pratt. It was executed by them at the request of the latter on the 20th day of January, 1886 and on the same day handed to Church to deliver to them. Church enclosed it in an envelope, marked the name of Albright & Pratt upon it and laid it his safe, and then notified the persons at their office that he held the paper for them.

The evidence shows that when the paper was handed to Church by Williams & Mills with instructions that he deliver it to Albright & Pratt, it was then put beyond the power of the makers to recall it. This being; so it may be stated as a general proposition that the delivery became complete (Brown v. Austen, 35 Barb., 341 ; 2 Greenleaf Ev., § 297) and its acceptance by Albright & Pratt will be presumed from the fact of such delivery and from the beneficial nature of the agreement to them. Spencer v. Carr, 45 N. Y., 406 -410; Jackson v. Bodle, 20 John., 184 .

Again this agreement was delivered to Church to be by him delivered to Albright & Pratt and for their use. This was a good delivery to them their assent thereto appearing. If this proof of actual assent on their part was wanting, the paper having been drawn and executed at their request, its acceptance by them will be presumed. Church v. Gilman, 15 Wend., 656 -662; Ernst v. Reed, 49 Barb., 367 -373.

In my judgment the agreement of Williams & Mills and guaranty of sales of coal made by Albright & Pratt to Church became binding and operative on them from the time the same was executed to Church to be delivered to Albright & Pratt on January 20, 1886, and by reason thereof they became liable to pay the demand preferred, the same having been contracted by Church for coal sold him by them during the latter part of the year 1886.

It follows that a judgment should be directed dismissing the complaint on the merits, with costs.