Aud v. Magruder, 10 Cal. 282

Aud v. Magruder

10 Cal. 282 | Cal. | 1858

Baldwin, J., delivered the opinion of the Court

Field, J., concurring.

This record presents the question whether a joint maker of a promissory note, signing it as surety, is entitled to demand and notice before he can be held to pay it. We state the proposition in this simple form; for, though some technical objections are interposed to the mode of proof, we do not think it necessary to notice them.

An unvarying current of decisions in other States, and the well-settled doctrine of the English Courts, places the obligation of the surety in such cases upon the footing foan original promise; and such, we apprehend, has been the understanding of the *289profession and of commercial men generally in this State, until the decision of Bryan v. Berry, (6 Cal., 394,) which announced a contrary doctrine. Indeed, the Court, in Humphreys v. Yale, (5 Cal., 173,) recognizes the same rule. In that ease, the defence was that the note had been altered. The alteration was alleged to be made by tearing the word “ surety ” from the note, where it stood opposite to the name of Yale. The complaint did not aver demand and notice, but counted on the note as an original promise, so that the alteration was material; it changed the contract from one upon which the plaintiff could not recover to one upon which he could. The Court say, in delivering the opinion: “ The demurrer was well taken : first, because the owner does not aver that the alteration was made with the knowledge or consent, or by the authority of the plaintiff; and, second, because the alteration was not material so far as it affects any of the matters set up in defence. The defendants were liable to the plaintiff, whether they signed as principals or sureties, and it is well settled that an alteration which does not alter the meaning, the nature, or the subject-matter of the contract, is immaterial.” The matter set up in defence was this alteration; and, although other grounds of objection to the answer were given, yet this does not impair the authority of the decision as to this point.

The case was argued very elaborately upon the final hearing, and the briefs of counsel exhibit a thorough examination of the whole doctrine involved.

The case of Bryan v. Berry seems to us to rest upon mistaken views of the relation which a party signing a joint note with another, for the latter’s accommodation, bears to the creditor. It assumes that such surety is a mere guarantor or endorser. But the two classes of obligation are widely variant. The maker upon the face of the paper, with whatever motive or purpose he may sign it, is bound by the contract which he signs, according to the legal effect and meaning of the words. He can not vary that meaning by parol. The words import an unconditional promise to pay the payee so much money at a certain time. The law affixes to this unequivocal language its obvious signification. The payor is not permitted to contradict the words by showing that when he promised to pay absolutely, he meant to bind himself to pay conditionally, or on some contingency, or if another did not, or if demand was made and notice given. This contract being his own, and precise in its terms, he must fulfill it according to those terms. He is not—and this is the distinction in the two classes of engagements—guarantying another’s contract, but he is making his own ; and whether the consideration of the contract enure to him or to his friend is wholly immaterial, so far as the construction and obligation of it are concerned. An endorsement or a guaranty of a note, is wholly different. It is an agree*290ment of itself—a new contract undertaken for another, that the latter will perform his contract. The difference between a maker and an endorser or guarantor is, that the contract of the first, by its terms, imports an unconditional obligation to pay money— that of the last, by its terms, imports a conditional obligation. The rules of.law settle this species of contracts as well as others, and prescribe how they may be created—their legal effect, and mode of enforcement. The creditor may take his security in either form; the other parties may contract or not as they choose; but the contracts, when made, must stand or fall by the legal rules prescribed for them respectively. There is no magic in the words “surety” or “guarantor,” which gives to a contract made by this class of contractors any effect denied to the contracts of other persons. A surety for another may bind himself to a creditor for his principal, if he uses apt words of obligation, just as an agent may be bound for his principal, or a principal for himself—the obligation arising from the language of contract, not the man who makes it. We can see no reason, if the parties so agree, why the guarantor or endorser may not bind himself) absolutely and primarily, to pay the debt of another; nor why a man may not as well bind himself primarily to pay a note for another as surety for the other, as well as secondarily. He may pledge his goods or credits, or note, for him, and bind himself, without respect to any act to be done by the principal or the creditor. Precisely such is the nature of an obligation made in absolute terms, on a consideration, by A, to pay so many dollars to B by a certain day, though the note should say in the body of it that A promised to pay for 0, or as surety for 0. If such a note could be enforced as an original promise, if made by A alone, how is it less an original promise when made by A and C, jointly and severally, as in this case, though the joint note showed that A made it as surety for 0 ? It is immaterial to the payee how or why A signs it; that is a matter between the two payors; he is satisfied with holding them both as principals to him, and in doing this he is only enforcing the language of their own voluntary contract, according to its own plain words. In truth, the error, as we take it, in Bryan v. Berry, is, in supposing that whenever a party is shown to be a surety he is necessarily, without reference to the form of the engagement, a guarantor. A guarantor may, usually, be a surety, but a surety is not necessarily a guarantor. The Court say: “ It is not so much the position of the party’s name upon the paper which denotes his liability, (although it frequently does so,) but it is the intention with which he executes it, if such intention is made to appear" by the note itself, which determines whether his liability is primary or secondary.” This may be; but we think, with great deference, that the position of the names beneath the words which import a direct, primary obligation to pay the money to *291the payee, is conclusive evidence of that intention; the bare name on the back of the paper might not be. The word “ surety,” written opposite the name of one of the makers, is held to indicate no more than that, as between the payors, such maker is his surety. It is convenient for the purpose of evidence, in case the surety has to pay the money, but it does not in any way control the words of the note as between such payor and the payee; for, as we said before, there is no necessary inconsistency between an absolute engagement to pay money, and paying it on behalf or as security for another man. (Story on Promissory Notes, § 57; Hunt v. Adams, 5 Mass., 358; Morris v. Bird, 11 Mass., 438, and the numerous authorities cited in the appellant’s brief.)

If the law he as we have stated, it is useless to inquire into the intention of the payor in such a case; the intent must be presumed to be according to the law. But if we were to hazard any opinion upon the subject, apart from this, we incline very strongly to think that, among business men, the idea is very general that a person signing a note as surety for another, makes himself immediately and directly responsible for the debt.

In overruling the case of Bryan v. Berry, we feel less reluctance because we think that the principle there laid down is of injurious import. We think that principles of commercial law, long established and maintained by a consistent course of decision in the other States, should not be disturbed; that the tendency of such disturbance, in any instance, is to confusion and uncertainty, and gives rise to perplexing litigation, and doubts and uneasiness, in the public mind. Almost any general rule governing commercial transactions, if it have been long and consistently upheld as a part of the general system, is better than a rule superseding it, though the latter were much better as an original proposition. Men knowing how the law has been generally received and repeatedly adjudged, govern themselves and are advised by their counsel accordingly; but if Courts establish new rules whenever they are dissatisfied with the reasons upon which the old ones rest, the standards of commercial transactions would be destroyed, and commercial business regulated by a mere guess at what the opinion of Judges for the time might be, and not by a knowledge of what the doctrines of recognized works of authority and the precedents of the Courts are. The commercial law has a system of its own, built up by centuries and the wisdom of learned jurists all over the world. It is not local, but applicable to all the States, with few modifications; and California, eminently commercial in its character, and in close commercial connection with the other States, finds her interest and safety in adhering to the well-settled general rules which prevail in those States as the laws of trade. We repeat, the stability and certainty of these rules are of more importance *292than any fancied benefits which might accrue from any innovation upon the system. Innovation begets innovation, and we cannot always see with clearness what is to be the consequence of the new rule established. This case itself is a good illustration ; for, if the doctrine be carried to its logical consequences, and whenever it appears, on the face of a security for money, a party is a surety, he is entitled to he held as a guarantor, what becomes of undertakings, acceptances for accommodation, etc. ? for, in the latter cases, why might not parol evidence be admitted to shew that the party was only accommodation acceptor, in a contest between the original parties, as to shew the same fact, as is frequently done, when suit is brought to recover money of the principal which the acceptor has paid on the acceptance.? And so, where the party does not sign as surety, but really is such?

The doctrine of stare decisis, seriously invoked by the respondent’s counsel, can have no effect; or, if any, only the effect to induce us the more readily to return to a principle recognized, we believe, for many years everywhere else in the commercial world. The conservative doctrine of stare decisis was never designed to protect such an innovation.

Judgment reversed, and cause remanded.