Hyperlawhypertext legal database Delaware, Lackawanna & Western Railroad v. Burkhard 23 N.Y. St. Rep. 96

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Delaware, Lackawanna & Western Railroad v. Burkhard

23 N.Y. St. Rep. 96 Court N.Y. Decision date 1889-04-23 English

Delivered by Follett, Ch. J.

Contents

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p. 96
The Delaware, Lackawanna and Western Railroad Company, App’lt, v. John M. Burkhard et al., Resp’ts.[1]
(Court of Appeals, Second Division,
Filed April 23, 1889)

Headnote

1. Contract—Of guaranty—-When guarantor not discharged—Construction.
The defendants, on June 9, 1881, executed and delivered to the plaintiff a guaranty whereby they undertook that one F., who was a retail coal dealer, should pay the plaintiff “ at such time or times, and at such prices as may be agreed between the said company and the said Frank J.
■ Florack, for all coal which may be shipped to him up to the 1st day of May, 1883, and in default of his so doing, we agree to pay for the same, whether the indebtedness be in open account or embraced in notes, drafts
p. 97
or bills of exchange.” The case does not disclose the contract between the plaintiff and F. at the date of the guaranty, prescribing the terms upon which coal had been, or should thereafter be, delivered, nor that there was any un ’.erstanding upon the subject, until August or September, 1881. At that time it was agreed between them that ci al delivered during every calendar month should be paid for on the twentieth of the succeeding month; if F. was unable to make payments then, the plaintiff was to accept his notes. Under this arrangement, deliveries were made for which F. gave his notes, which were renewed from, time to time. F. defaulted in the payment of one note, and this action was brought on the guaranty to recover the balance. The defendants contend that as the plaintiff had extended the term of credit given to F. when the coal was purchased, without their assent, they were thereby discharged from any liability as guarantors. Held, that as the guaranty, neither expressedly nor by implication, limit's the period of credit to the time for which the fiist note might be given, and it is plain that the guaranty was made with reference to a contract thereafter to be made, fixing the price and terms of payment, the plaintiff and F. had the right in the future to fix such prices and terms, either cash or ere it. and if credit, for such times, upon open account, notes, drafts or bills of exchange, as they might mutually agree upon.
‘3. Same—Evidence—Ebeob.
The plaintiff offered to show the precise terms of the agreement authorizing a renewal of the notes, which was rejected. Held, Error.
Appeal from a judgment entered upon the decision of the general term of the fifth department, denying a motion for a new trial made upon a case containing exceptions-and all of the evidence, and heard at general term in the first instance.
Wm. Nottingham, for app’lt; Henry W. Morris, for resp’ts.

In 1881, Frank J. Florack, of Bochester, New York, was a retail dealer in coal which he purchased from the plaintiff. To enable him to purchase coal upon credit, an instrument (called in this litigation a guaranty), was executed and delivered to the plaintiff, on the day of its date, of which the following is a copy;

“For a valuable consideration to us in hand, paid by the Delaware, Lackawanna and Western Bailroad Company, at and before the execution hereof, the receipt of which is hereby acknowledged, we do hereby agree to and with the •said company that Frank J. Florack, of the city of Bochester, state of New York, who has purchased or is about to purchase anthracite coal of said company, shall and will pay said company at such, time or times and at such prices as may be agreed upon between the said company and the said Frank J. Florack, for all coal that may be shipped to him up to the 1st day of May, A. D., 1883, and in default of so doing, we agree to pay for the same, whether the indebtedness be an open account, or embraced in notes, drafts or bills of exchange.

“ Witness our hands and seals this 9th day of June, 1881.

“ JOHN M. BUBKHABD,

[l. s.] “ GEOBGE FBITCHIE,

“ KATHABINE FBITCHIE.”

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It was conceded upon the trial that upon divers-days between May 3, 1881, and November 5, 1881, Florack received from the plaintiff coal, for which lie-agreed to pay $15,398.85, and that between May 3, 1881, and May '8, 1882, he paid on this account $12,697.21, leaving due and unpaid May 8, 1882, $2,701,64, to recover which this action was brought upon the instrument above set forth. All of the defendants answered, alleging various defenses, all of which were abandoned upon the trial except: (1.) that the plaintiff had extended the term of credit given to Florack when the coal was purchased without the assent of the defendants, and thereby they were discharged from any liability as guarantors; (2.) that Katharine Fritchie was the wife of George Fritchie, was not engaged in any business, and that the guaranty was not given for her benefit, or for the benefit of her separate estate, and that she is not liable thereon.

The truth of the facts alleged in the defense herein designated as the second, was conceded on the trial, and a non-suit was directed in favor of Katharine Fritchie.

The case does not disclose the contract, if any existed, between the plaintiff and Florack, at the date of the-guaranty, prescribing the terms upon which coal had been, or should thereafter be delivered; nor does it appear that there was any understanding upon the subject, until in August or September, 1881, when Florack was compelled to order an unusual quantity of coal because the tracks of the N. Y. C. and H. R. R. R. Co. were about to be elevated through the city, and connection with Florack’s coal yard temporarily severed. At this time it was agreed between plaintiff and Florack that coal delivered during every calendar month should be paid for by Florack on the twentieth day of the succeeding month, if he could, but if he could not, the plaintiff was to accept his notes due in from one-to three months; and if the coal was not sold at the maturity of the notes, that plaintiff would then be as lenient as it could be.

Under this indefinite arrangement the subsequent deliveries were made, and October 20, 1881, Florack gave his-note for $2,500, due in three months; and November 21, 1881, he gave his note for $2,596.58, due in three months. The first note was taken up January 23, 1882, partly by cash and by a note for $1,700, due in three months. The second note was taken up February 24, 1882, partly by cash and by a note for $1,596, due in one month; which was taken up March 27, 1882, partly by cash and by a note-for $1,378, due in one month. The note for $1,700 and. the one for $1,378 were dishonored, but subsequently were partly paid, and this action was brought to recover the-

p. 99
remainder, which was conceded on the trial to amount, principal and interest, to $2,974.95. The amount included in these notes represented but part of the price of the coal ■delivered between September 13th and November 5, 1881. There was no dispute on the trial about any of the material facts, and, at the close of the evidence, the court directed a verdict in favor of Burkhard and George Fritchie. Upon the decision of the general term, it was adjudged that the ■complaint be dismissed upon the merits as to all of the defendants, with one bill of costs in favor of George and Katharine Fritchie, and with one bill of costs in favor of Burkhard.

The defendants’ agreement was that Florack should pay the plaintiff, e‘ at such time or times and at such prices as may be agreed upon between the said company and the said Frank J. Florack, for all coal which may be shipped to him up to the 1st day of May, A. D. 1882 ; and in default of his so doing, we agree to pay for the same whether the indebtedness be in open account or embraced in notes, drafts or bills of exchange.”

It is plain from this language that the guaranty was not made with reference to a then existing contract between the plaintiff and Florack, fixing the price of coal and the terms of payment, but with reference to a contract, or contracts, thereafter to be made, fixing the price of coal and the terms of payment; and that they had the right in the future to fix such prices and terms of payment, either cash or credit, and if credit, for such time or times upon open account, upon notes, drafts or bills of exchange, as they might mutually agree upon.

The mode by which credit was given,a note,is expressly authorized by the guaranty; but the guaranty neither expressly nor by implication, limits the period of credit to the time for which the first note might be given. If it be contended that the terms of the first agreement, made in August or September, between Florack and the plaintiff, must control, and that a subsequent extension of credit ór change of the terms of sale, would release the defendants from their contract, the answer is, that there is no evidence that the renewal of notes was not authorized by their agreement, and the plaintiff’s offer to show the precise terms of this agree ■ ment —• clearly relevant facts — was rejected. The court erred in rejecting this evidence, and, under the evidence given, in not directing a verdict for the plaintiff.

The plaintiff, in form, appeals from the whole judgment, and against all of the defendants, although it does seem to question the correctness of the non-suit granted in favor of Katharine Fritchie.

That part of the judgment which dismisses the complaint in favor of Katharine Fritchie, is affirmed, without costs to

p. 100
either party; but that part of the judgment which dismisses the complaint with costs, in favor of George Fritchie and John M. Burkkard, is reversed, and a new trial granted, with costs to abide the event.

All concur, except Bradley and Haight, JJ., not sitting.