Draper v. Snow — 13 N.Y. Super. Ct. 662

Majority

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Draper, plaintiff and respondent v. Snow, defendant and appellant.

Headnote

George R. Hasewell entered into a written contract with the plaintiff, and the defendant signed a guaranty written thereon. The contract and guaranty read thus:—

“Penna. Zinc.

“ 350 shares, 3$ B 60. Hew York, April 3d, 1854.

“ I have purchased of Theo. S. Draper, three hundred and fifty shares of the stock of the Penna. and Leigh Zinc Co., at three and three-eighths dolls, per share, payable and deliverable, buyer’s option, in sixty days, with interest at the rate of six per cent per annum. Geo. R. Hasewell.’’

“ I guarantee the within contract. Geo. M. Snow.”

Held, that neither the written words of the guaranty, nor that and the contract of Hasewell when considered together, expressed any consideration for the guarantee ; and that, therefore, the latter being an agreement for the default of an

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other was void. That an averment of extrinsic facts, which, if expressed in the instrument, or fairly imported by it, might constitute a consideration, did not obviate the difficulty.

To satisfy the statute of frauds, a guaranty by one person of the performance by another of his contract, must, in terms or by fair construction, disclose the actual consideration of the guaranty, or, at all events, a consideration sufficient to make a contract obligatory at law. When it does not disclose any consideration, t.he guaranty, as a contract, is absolutely void.

Judgment for defendant, on a demurrer to the complaint.

(Before Oakley, Ch. J., Bosworth, Woodruff and Slosson, J.J.)

December 27, 1856.

This action comes before the court, on appeal by the defen aant, from an order made by Ch. J. Oakley, overruling a demurrer to the plaintiff’s amended complaint. It was in the words following, viz:&emdash;

The amended complaint of the above-named plaintiff, shows to the court&emdash;

That on the 3d day of April, 1854, he was in the actual possession of the certificates of 350 shares of the stock of the Pennsylvania and Lehigh Zinc Company.

That on the 3d day of April, 1854, one George R. Hasewell entered into a contract with the said plaintiff in the words and figures following, that is to say&emdash;

“Penna. Zinc.

“350 shares, 3f B 60. “Hew York, April 3d, 1854.

“I have purchased of Theo. S. Draper, 350 shares of the stock of the Penna. and Lehigh Zinc Co., at $3f per share, payable and deliverable buyer’s option in sixty days, with interest at the rate of six per cent, per annum. Geo. R. Hasewell.”

That before entering into the said contract with the said Hasewell, and as an express condition thereof, the said plaintiff required from the defendant above-named., his guaranty of the performance by the said Hasewell of the different stipulations on the part of the said Hasewell contained therein.

That therefore at the time of the making of the said contract above set forth, the said defendant indorsed thereupon his certain guaranty, in the words and figures following, viz.:

“ I guarantee the within contract. Geo. M. Snow.”

That thereupon in consideration of the giving of the said guar.

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anty by the said defendant as aforesaid, and not otherwise, and within the time limited therefor in the said contract, the said plaintiff delivered to the said Hasewell the aforesaid 350 shares of the said stock.

That neither the said Hasewell, nor the said defendant, have ever paid the said plaintiff therefor, as provided in the said contract, although often requested by the said plaintiff so to do.

Wherefore the said plaintiff demands judgment against the said defendant, for the sum of $1181.25, with interest thereon, from the 3d day of June, 1854, besides the costs of this action.

The defendant demurred to the amended complaint, because it does not state facts sufficient to constitute a cause of action against the said defendant, and specified the following as grounds of objection:—

1st. That the said complaint sets forth as the foundation of the action against the defendant a collateral agreement, or special promise in writing of the defendant to answer for the debt, default, or miscarriage of another person, (one George R. Hasewell,) which agreement or promise in writing has, as appears by the said complaint, no consideration expressed therein.

2d. That no fact, or facts, are stated in the said complaint showing any breach of the contract of the said George R. Hasewell set. forth in the said complaint, or any loss or damage thereby suffered, for which the defendant, under his collateral agreement, set forth in said complaint, is bound to answer, or is legally responsible.

An order was entered overruling the demurrer, and from that order the defendant appealed to the General Term.

W. 3. Scott, for the plaintiff.

W. Bloomfield, for the defendant.

This case and that of the Union Bank v. Coster's Executors, (3 Coms. 204,) are, in some respects, alike. In both cases the guaranty has no date. The court, in the Union Bank v. Coster's Executors, held, that the guaranty and the contract, on whieh it was written, should be deemed to haVe been made at the same time. (Id. 211.) In that case, they were moved to have been made at the same time. In the case

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before us, the complaint alleges, and the demurrer admits, that they were made at the same time.

Do the material facts of the two cases correspond in other respects ?

In the Union Bank v. Coster's Executors it was held, that the consideration of the guaranty appéared upon the instrument of which the guaranty was a part. That, applying to it the ordinary and settled rules of construction, it clearly appeared what the precise consideration of the guaranty was, and that the terms of the whole instrument necessarily excluded the idea that the consideration was, either in whole or in part, any thing else.

In that case, Heckscher & Coster agreed to accept and pay at maturity any drafts on them at sixty days’ sight issued by Messrs. Kohn, Daron & Co., of Mew Orleans, and negotiated through their bank to the extent of $25,000. And the defendant’s guaranty read thus: “ I hereby guarantee the due acceptance and payment of any draft issued in pursuance of the above credit.”

When that guaranty was made, it guaranteed the payment of no pre-existing or co-existing debt of Heckscher & Coster.

The whole instrument was treated as being a request of each party signing it, addressed to the bank to which it was delivered, to purchase drafts that might be drawn in pursuance of it. Heckscher & Coster agreed to accept and pay such drafts at maturity. The defendant agreed that they would so accept and pay. The future purchase of such drafts, on the faith of the whole instrument, was the consideration, as well of the guaranty as of the special promise of Heckscher & Coster. That this was the whole actual consideration was as clearly expressed by the instrument itself as if it had been formally stated in the most explicit terms. The agreement of the defendant, therefore, was not only in writing, but the writing itself expressed the consideration of it.

In the case before us, the paper, or contract, signed by Hasewell, states that he had made a purchase of 885 shares of stock at a price which amounted to $1,181^-, the stock to be delivered and money paid at his option, in sixty days.

Irrespective of the extrinsic facts alleged in the complaint, a stranger to the transaction, looking at the whole instrument, and to that only, could not know whether the guaranty was an inducement to Draper to sell the stock, and was a constituent part of the

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consideration for his contract to sell and deliver, or whether some special consideration was paid to- Snow for making it, or whether it was, in fact, made without any consideration.

It is, indeed, apparent that the stock was to be delivered on a day subsequent to the date of the guarantee, and that the liability of Hasewell to accept it and pay for it became absolute on his executing the contract, and not before. (2 R. S. § 3.) The consideration of his contract is expressed by the writing which he signed. If the consideration of the guaranty is so clearly and fully disclosed by it that the court can see that it is a particular thing, and nothing else, then it is unnecessary to state it otherwise than by setting forth, in full, the whole instrument, of which the guaranty forms a part.

The plaintiff, instead of relying upon the terms of the whole instrument, as expressing the consideration of the guaranty, has deemed it expedient to allege, “that before entering into said contract with the said Hasewell, and as an express condition thereof, the said plaintiff required from the defendant above-named, his guaranty of the performance by the said Hasewell of the different stipulations on the part of the said Hasewell contained therein. That therefore at the time of the making of the said contract above set forth, the said defendant indorsed thereupon his certain guaranty, in the words and figures following, viz.” ....................

The plaintiff has therefore stated what was the actual consideration of the guaranty. Is the consideration, which is thus formally averred, clearly shown, by a just construction" of the instrument itself, to be the actual, the whole, and the only consideration of the guaranty.

If it is not, and if some other consideration is equally consistent with the terms of the instrument, and all inferences which a proper construction of it will warrant, then the extrinsic facts alleged to show the actual consideration may be controverted by the answer, and a failure of the plaintiff to prove them would entitle the defendant to a verdict. An entire want of consideration would be a defence to the action, independent of the difficulty presented by the statute of frauds.

Suppose, upon the trial of an issue raised upon these allegations of extrinsic facts, it should appear that the plaintiff and Hasewell

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had concluded their contract, and that Hasewell had executed and delivered it, before any thing had been said by either party upon the subject of having its performance by Hasewell guaranteed, and that the defendant, at the request of either, or of both, signed it, without any consideration therefor, paid, or agreed to be paid, could the plaintiff recover?

I think he could not recover, and that on the whole instrument, the necessary inference is, that the defendant guaranteed the performance by Hasewell of a contract existing when the guaranty was signed; and that it not only does not appear from the instrument itself, what was the actual precise consideration of the guaranty, but that it was made without any consideration is not repugnant to the fair and natural import of its terms.

In the Union Bank v. Coster's Executors, it was held, that it was apparent from the instrument itself, that the future purchase of drafts, on the faith of the guaranty, was the consideration of the guarantor’s promise, that the drawers should accept and pay them at maturity.

The decision in Brewster v. Silence does not conflict with that made in the Union Bank v. Coster's Executors. That such is the judgment of the Court of Appeals, is evident from Gates v. McKee, (3 Kern. 232-238.)

In the former case, it was said that the note was the debt of the maker, and the guaranty was the engagement of the defendant that the maker should pay his note when it became due. There was nothing on the face of the whole instrument from which it could be inferred, with certainty, what the consideration of the guaranty was.

In Brown v. Curtiss, (2 Coms. 225,) the defendant, although his written contract was in the form of a guaranty, was held to have contracted directly with the plaintiff for his own benefit, and upon full consideration received by himself; and that on the particular facts of the case, his contract was an original and not a collateral one, and would have been good without any writing ; that his contract was one made for the payment of a debt owing by himself, and not by a third person. Under that view of the case, it did not decide that the contract satisfied the statute, but that the case did not come within the statute. (Id. 229 and 234.)

In Dunham v. Manrow, (2 Coms. 533,) the decision was put on

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the ground that the case did not fall within the statute. Three of the seven Judges who heard the argument were of the opinion that the case came within the statute, and that the guaranty was void. Kone of them held, that if within the statute, the guaranty was valid.

In Hall v. Palmer, (2 Coms. 533,) the plaintiffs failed to recover. The three Judges who held that Dunham v. Manrow was a case within the statute, also held that the two cases were not distinguishable, and voted to affirm. Three of the four Judges who held that Dunham v. Manrow was not within the statute, voted to reverse, but on what ground the report of the case does not state. The other of the four voted to reverse, on the ground that the contract of the guarantor was upheld by no consideration in fact. (Id. 557.)

In Brewster v. Silence, all the Judges, except one, concurred in the judgment given. Unless there is a substantial distinction between that case and the present, the decision made in the former must control the one to be made in this.

We think no such distinction exists, and that the order appealed from should be reversed, and judgment given on the demurrer, in favor of the defendant.

Entertaining this opinion, we deem it unnecessary to consider the second point, made by the defendant, on the argument of this appeal.

Order appealed from reversed, and judgment ordered for the defendant.