Hall vs. Farmer and Doolittle

Hall vs. Farmer and Doolittle. Where a debtor settles an account with his creditor, and gives his note for the balance due, payable on demand, and at the same time procures a third person to endorse on the. back of the note a guaranty of the payment thereof, and delivers it with the note, such guaranty is void by the statute of frauds, unless a consideration be expressed therein. Per Jewett, C. J., and Gardiner, and Hoyt, JJ. Contra, per Ruggles, Cady and Strong, JJ. Pei Shankland, J. Such an undertaking is void because it is founded upon no consideration in fact, there being no new advance, nor any new credit given. The judgment of the supreme court in this ease (5 Denio, 484,) determining that such a guaranty is within the statute of frauds and void, affirmed. Assumpsit in the supreme court, tried before Willard, Circuit Judge, at the Herkimer circuit, in September, 1847. The declaration contained the common money counts and special counts on a guaranty. On the trial the plaintiff gave in evidence a promissory note, and an instrument endorsed thereon, and signed by the defendants, as follows : “ $715,88. For value received, we promise to pay Luther Hall, to the order of H. W. Doolittle and John Farmer, seven hundred and fifteen TW dollars with interest, March 1, 1843. (Signed) Kathern & Doolittle.” “We the undersigned, guaranty the payment of the within. John Farmer. H. W. Doolittle.” By the evidence on the part of the defendants it appeared that prior to the date of the note, Kathern & Doolittle were indebted to the plaintiff in a considerable sum of money, and that they also had accounts against the plaintiff. At the date of the note the parties adjusted their respective demands against each other, finding due to the plaintiff the amount mentioned in the note. The defendants were not present at the settlement. After the balance was so ascertained, the note and guaranty were made, the defendants signing the latter at the request of Kathern and Doolittle. It further appeared that one item in the account so adjusted was a note for $1400, held by the plainliff against Kathern &' Doolittle for money lent. The note was overdue at the time of the settlement. The defendants were endorsers on that note, but they had not been charged as such by demand and notice of non-payment. It was understood on the settlement that the defendants should continue as sureties for the amount found due to the plaintiff. The defendant’s counsel insisted that the plaintiff could not recover on the grounds, 1. That the writing endorsed on the note was an undertaking within the statute of frauds, and was void because it expressed no consideration; 2. That the evidence proved there was not in fact any consideration for the undertaking of the defendants. The judge overruled these positions and directed a verdict for the plaintiff. The defendants excepted. The supreme court, on bill of exceptions, set aside the verdict and granted a new trial. (See 5 Denio, 484.) The plaintiff appealed to this court. S. A. Foot, for appellant. The defendants were liable as makers of a promissory note. (Prosser v. Luqueer, 4 Hill, 420 ; S. C. 1 id. 256; Manrow v. Durham, 3 id. 584; Miller v. Gaston, 2 188; Hough v. Gray, 19 Wend. 202.) The guaranty, or whatever it may be called, was a cotemporaneous act with the signing of the body of the instrument, and supported by the same consideration. No other consideration was necessary, or existed, or could truly have been averred. It is a part of the same contract and it is upheld by the same consideration. Jointly and severally it is the same absolute promise that the debt shall be paid. (Leonard v. Vredenburgh, 8 John. 29; Tibbats v. Doud, 23 Wend. 379; Hunt v. Brown, 5 Hill, 145 ; Leggett v. Brown, 6 id. 639 ; Hall v. Newcomb, 7 id. 416; Curtis v. Brown, 2 Barb. S. C. Rep. 51; Coddington v. Davis, 1 Comst. 186; Heywood v. Pierce, 10 Pick. 228; Hunt v. Livermore, 5 id. 395 ; Doolin v. Hill, 2 Fair. (11 Maine) 434; 1 Greenl. Ev. § 269. H. Denio, for respondents. 1. One of the theories on which the statute of frauds has been sometimes overruled is, that under certain circumstances a guaranty may be called a promissory note. There was never any principle in this theory or in the decisions based upon it. A note is an absolute promise that the maker wdll pay a sum of money, and if the language of the instrument does not import this, we deny that it can be made' out by extrinsic evidence. This would be to make for a party a contract which he never signed. A guaranty, on the other hand, is a promise that another person will pay. It is not a promise to pay at all. A guarantor may be compelled to pay, but that is only in consequence of a breach of the guaranty. In this case the instrument sued. on is not a note. (Story on Prom. Notes, § 1 ; Chitty on Bills, ed. 1839, p. 548; 1 R. S. 768, § 1 ; Smith on Merc. Law, 113; 6 Barn. Ald. 417; Goshen Turnpike Co. v. Hurtin, 9 John. 217; Coolidge v. Ruggles, 15 Mass. 387; Spies v. Gilmore, 1 Comst. 321 ; Brown v. Curtiss, 2 id. 225.) The instrument is a guaranty which, almost in the language of the statute of frauds, is defined to be a promise to answer for the payment of some debt or the performance of some duty by another who in the first instance is liable. (Pitman on Pr. and Surety, 1, 5, 36; 3 Chit, on Com. Law, 317; Chit, on Cont. 5th Am. ed. 499 ; 3 Kent’s Com. 5th ed. 121; Story on. Prom. Notes, § 457; Manrow v. Durham, 3 Hill, 591.) II. The contract, considered as one of guaranty, is a “ special promise to answer for the debt, default or miscarriage of another person,” and is void by the statute of frauds, because it expresses no consideration. (Felt on Guar. 1; 3 Kent, 121 ; Wain v. Walters, 5 East, 10; Ex parte Gardom, 15 Ves. 287; Saunders v. Wakefield, 4 Barn, & Ald. 595; Jenkins v. Reynolds, 3 Brod. & Bing. 14 ; Clancey v. Piggott, 2 Adolph, & E. 473; Morley v. Clarke, 3 Bing. 107; Sears v. Brink, 3 John. 210; Rogers v. Kneeland, 10 Wend. 218, and cases referred to; Raikes v. Todd, 8 Adolph, & E. 846; 2 R. S. 135, § 2 ; Smith v. Ives, 15 Wend. 182; Packer v. Willson, id. 343 ; Newcomb v. Clark, 1 Denio, 226; Bennett v. Pratt, 4 id. 275 ; Allnutt v. Aspenden, 5 Mann. & Gr. 392.) There is a class of cases commencing with Leonard v. Vredenburgh, ( 8 John. 29,) recognizing the doctrine, that where the guaranty is made at the same time with the primary contract, upon some consideration parted with at the time, it is good, although no consideration be expressed. This doctrine never rested upon any sound principle, and was overruled in the two cases cited from 15 Wend. Since the revised statutes the consid¿ration must be expressed, in the collateral undertaking, or it will be void. Again, in Leonard v. Vredenburgh, the guaranty was the ground of the credit. Such is not the case here. The debt was a pre-existing one, and no new credit was given. The note on which the guaranty sued upon is endorsed, is payable immediately. III. But whatever we call the instrument in question, the evidence shows that it is founded upon no consideration in fact, and for that reason it is utterly void. There was no consideration of benefit to the defendants. They received nothing, and were in no wise liable for the debt of Kathern <fe Doolittle, which the note and guaranty were" intended to secrn’e.- Nor was there any consideration consisting in harm or prejudice to the plaintiff. He parted with nothing upon the strength of the guaranty. Nor did he even extend the time of payment by any new credit. The undertaking, therefore, whether within or without the statute of frauds, is in fact without consideration and void. (Chitty on Bills, ed. 1842, 73, 74, and case in note 2; Holliday v. Atkinson, 5 B. & C. 501 ; S. C. 8 Dow. Ryl., 163; Schoonmaker v. Roosa, 17 John. 301; Bank of Troy v. Topping, 9 Wend. 273; Tenney v. Prince, 7 Pick. 243; Hill v. Buckminster, 5 id. 391; Com. Bk. of Lake Erie v. Norton, 1 Hill, 501, Slade v. Halsted, 7 Cowen, 322.) This case and the preceding one are reported not as settling any general princi* pie, but in the belief that the discussion may be useful in the future adjustment of the questions involved. [MAJORITY — Jewett, C. J.] Jewett, C. J. There can be no distinction in principle between this case and that of Durham v. Manroe, (ante, p. 533,) where I have expressed my views at large. I am satisfied with the reasoning of Chief Justice Beardsley in the court below, and am clearly of opinion that the contract is void by the statute of frauds. The judgment should therefore be affirmed. Gardiner, Hoyt, and Shanicland, concurred, the lattei on the ground that the contract of the defendants was upheld by no consideration in fact. A collateral promise by a third party to pay a pre-existing debt for which he was in no wise liable, and where no new credit was given, he thought could not be sustained without some other consideration, which did no! appear in this case. Ruggles, Cady, and Strong, JJ., were for reversal. Bronson, J.,not having heard the argument, gave no opinion Judgment affirmed.