Powers v. Clarke

The facts material to the question presented upon this appeal seem to be as follows:

On May 14, 1886, the plaintiff resided and carried on business at Springfield, Mass., under the name of the “ Powers Paper Co.,” and had an office in New York, where he did business through his agent, one St. John. Upon the day last named, St. John sold to Dikeman & Co., of Brooklyn, ten cases of Connecticut Valley paper at fifteen and one-half cents a pound. This was one lot of paper and ordered at one time. The exact amount of the purchase was not then known, and . could not be ascertained except upon weighing the goods, and they were not to be delivered until the defendant’s guaranty was received.

Immediately after the agreement for the sale, Mr. St. John wrote to the defendants as follows :

New York, May 14, 1886.

Mr. H. D. Clarke: ■

Dear Sir—Messrs. Dikeman & Co., of Brooklyn, refer to you and say you will guaranty their bills. Will you kindly give such a guarantee, say for $1,000. It is not likely they will want as much as that, but in case they do would like to have it; kindly return same by bearer and oblige.

Yours truly,

J. L. St. JOHN, P. P. Co.

“We are glad to give them long time on purchase, but at close margins we would like your guarantee.”

To which defendant replied as follows :

Office of Dikeman & Co., Commission Agents, 65 Bond Street, Brooklyn, May 14, 1886, 6 p. m.

Dear Sir—Your favor of this' date, just received. While I have no doubt of the integrity and reliability of Messrs. Dikeman & Co., still I do not like to make myself liable for so large an amount as $1,000. I am perfectly willing, however, to guarantee the amount of the bills thus far purchased, which I understand amount to about $600.

I am, sir, very truly yours,

HENRY D. CLARKE,

117 Montague Street, Brooklyn.

To J. L. St. John, 62 and 64 Duane street, New York City.

The goods were subsequently prepared for delivery, and weighed, and the purchase price was ascertained to be $919.15, and the goods delivered.

The defendant being notified that Dikeman & Co.’s account was unpaid, sent the following telegram:

“ September 13, 1886.

To J. L. St. John, 62 and 64 Duane street. New York:

Cannot come over to-day. Your attention is called to the fact that my guarantee only covered bills purchased previous to the date on which it was written, and does not hold me for any purchases after that date; and said guaranty was limited to, $600. Better see Dikeman & Co. to-day.

HENRY D. CLARKE.”

Upon the trial of this action, the court directed a verdict for the sum of $600 and interest, and from the judgment thereupon entered, this appeal is taken. The single question presented is, whether under the foregoing circumstances the defendant has incurred any liability whatever to the plaintiff. A guaranty, like every other contract, must be construed according to the intention of the parties, and if the plaintiff had a right to rely upon this guaranty to the extent of $600, the recovery can be sustained.

The letter to the defendants from the plaintiff’s agent, asked for a general guaranty of Dikeman & Co.’s bills to the extent of $1,000.

To this the defendant declined to accede, and he gave a limited guaranty, in which he distinctly stated what he understood to be the condition of the purchases which had' already been made by Dikeman & Co. After refusing to make himsel liable for any future purchases, or for so large an amount as $1,000, he says: “I am perfectly willing, however, to guarantee the amount of the bills thus far purchased, which I understand amount to about $600.”

By this reply the plaintiff was notified that the defendant liad been informed that the bills purchased amounted to about $600, and that such being the case he was willing to guarantee them. The plaintiff knew before he delivered the goods that the defendant had acted in giving his guarantee upon an erroneous statement of the facts. He knew that the defendant supposed that he was guaranteeing all the purchases, which had then been made, which would amount to about $600. Whether if the defendant had been aware of the fact that there had been a single purchase amounting to over $900, he would have been willing to guarantee $600 of it, we do not know.

The plaintiff well knew, however, that such was not the guarantee which the defendant intended to give; but that he supposed that he was guaranteeing all the purchases made at that time which would not amount to more than about $600, and that there was no intention upon the part of the defendants to guarantee to the extent of $600.

The plaintiff, therefore, knew that the defendant had given his guarantee under a misapprehension as to the true condition of affairs, and he had no right to rely upon it, as making his future deliveries.

Under these circumstances the plaintiff cannot be said to be a bona fide holder of this guaranty. He knew that either by a false representation as to the amount of these purchases, or, for some other cause, the defendant had given this guarantee, while believing that the whole amount of the bills did not exceed $600, and it may well

By the very language of his letter the defendant had protected himself and distinctly informed the plaintiff under what circumstances he was giving his guarantee.

The telegram sent upon being notified of the claim upon the guarantee, also supports the view above-expressed. When notified of Dikeman & Co.’s failure to pay, and that the claim against Dikeman & Co. amounted to over $900, the defendant says: “Your attention is called to the fact that my guarantee only covered bills purchased previous to the date on which it was written and does not hold me for any purchases after that date, and said guarantee was limited- to $600.

This telegram clearly shows that the defendant supposed that the excess of the claim over $600 arose from purchases subsequent to the guarantee, and well he might, because he had distinctly informed the plaintiff that he had given the guarantee under the belief and representation that the amount of the bills which had then been purchased, did not amount to more than about $600, and he had accepted the guarantee, knowing that it had been given under that representation.

It seems to us that it is plain that the plaintiff knew when he received this guarantee that it had been procured by a misrepresentation of the facts, and he had no right to rely upon the same.

The judgment appealed from should be reversed and a new trial granted, with costs to the appellant to abide the event.

Cullen, J., concurs.