281 P. 400 | Cal. Ct. App. | 1929
The plaintiff, as the assignee of Meyer Cloak Suit Company, instituted this action to recover judgment against the defendants upon a written guaranty signed by them, in the words and figures following, to wit:
"We hereby guarantee payment for all merchandise purchased from Meyer Cloak Suit Company, and Granada Knit Mills by Mrs. N.L. Stucky of Red Bluff, California, up to the amount of Fifteen Hundred Dollars ($1500.00).
"WM. DANGERFIELD. "E.J. BAKER.
"Witness: C.E. PATTERSON. "Dated: March 3, 1925."
The defendants had judgment and the plaintiff appeals.
The crucial question involved in this case is whether the guaranty just set forth constituted a continuing guaranty. If so, the judgment of the trial court should be reversed, the court having held that the instrument just set forth did not constitute such a guaranty. The record is silent as to transactions between Mrs. Stucky and the Meyer Cloak Suit Company and the Granada Knit Mills prior to March 3, 1925. However, the record does show that on March 3, 1925, Mrs. Anna L. Stucky was, and prior thereto had been engaged in the business of selling ladies' furnishing goods, and had a store in the city of Red Bluff where such business was conducted by her. The record further shows that the guarantors knew of the business conducted by Mrs. Stucky, and had been aware of her conducting such business for at least some time prior to the execution of the guaranty. The record shows that after the execution of the guaranty Mrs. Stucky opened an account with the Meyer Cloak Suit Company, and continued to buy merchandise from said company up to and including December 15, 1926, purchasing in all merchandise of the value of something over $5,000, and paid thereon, from time to time, sums aggregating $3,944.63. There is nothing in the record to show that at the time of the execution of the guaranty it was contemplated that Mrs. Stucky was buying a complete *69 stock of goods, or that the guaranty was intended to cover a single transaction. The account admitted in evidence, to which we have referred, shows that the merchandise was bought from time to time as wanted by Mrs. Stucky in dealing in the furnishing goods referred to. On the fifteenth day of September, 1926, the defendants, Dangerfield and Baker, signed and delivered to the assignor of the plaintiff a notification that they thereby canceled, terminated and withdrew from the guaranty dated March 3, 1925. As bearing upon the question of whether the guaranty was a continuing one, the court admitted the following testimony (we quote from the testimony of the defendant Baker): "Q. By Mr. McCoy: Mr. Baker, you were shown this morning by counsel for the plaintiff the paper that is sued upon and called a guaranty, and it has been introduced here and marked `Plaintiff's Exhibit 1.' . . . Now, handing you the paper, that you may see what it is again, I will ask you if you understood at the time you were signing that paper, and all the time since, that your obligation under that paper was a continuing or not a continuing guarantee? A. No, sir. Q. Well, what did you understand? A. I understood that when she got the first bill of goods that whenever she paid any money in for those bills that it was to be credited on that first bill. Now, that was the way I believe that guarantee was, just like an open account, and as fast as she paid her credit was to be paid on the first bill bought. Q. Well, did you understand that that was to be continued from time to time and indefinitely? A. Not for a long time." In this connection we quote from the transcript three letters, one from the Meyer Cloak Suit Company to E.J. Baker, a reply thereto by Dangerfield, and a letter by Baker stating that he was familiar with the Dangerfield letter:
"San Francisco, Jan. 26, 1926.
"E.J. Baker, "Red Bluff, Calif.
"Dear Sir:
"In the matter of Nancy Lee Stucky, we have a guarantee executed by you to cover the amount of $1500.00. This guarantee was made on March 3rd, 1925, and at the present time the account of Nancy Lee Stucky is considerably beyond the guarantee, namely $1500.00, and her account has *70 never been reduced enough to bring the balance down to $1500.00.
"On the other hand, we feel that not only the amount beyond the $1500.00, but the $1500.00 as well should have been paid long ago. If you had figured interest on same, it would amount to a considerable sum. Please let us know as to the settlement of the account.
"We have made a proposition to Mrs. Stucky, in which we would be only too willing to send merchandise on consignment instead of selling her outright, and in this way, she would benefit on the sale of each and every garment, and would at the end of the accounting period, which is about ten days, settle the entire transaction, namely, return the merchandise not sold, and send us her check for the garments sold, but before this proposition can be considered, the account must be closed in some satisfactory way.
"We would like to hear from you by return mail, as to just what you think of the matter and how to adjust same satisfactorily.
"Yours truly, "MEYER CLOAK AND SUIT CO. "H.J. SCHMIDT." "Red Bluff, Cal. Jany 28, 1926.
"Meyer Cloak Suit Co., "130 Sutter St., S.F.
"Dear Sirs:
"I am in receipt of your letter of the 26th instant. I fail to see why you should be uneasy in regard to Mrs. Stucky's acc.
"In the short time during which she has been in business she has paid you well over $3000.00. I understand that she has offered you notes for the small balance over the $1500.00 and these notes will be duly sent. The only thing is to reduce the $1500.00 so that you may supply her with more goods, and this she should be in a position to do early next month, when her collections come in.
"You must be quite aware that it is hard to get money out of customers at the moment, but Mrs. Stucky's book debts are all good and she only requires time to come along all right. She has undoubtedly the best class business in this town. *71
"It would appear to me to be your own interest to help her along as a good future customer.
"I am,
"Yours truly, "WM. DANGERFIELD." "Red Bluff, Calif., Jan 29th, 1926.
"Meyer Cloak Co., "San Francisco, Cal.
"Gentlemen:
"Your letter 26th
"Mr. Dangerfield advises me he has answered yours to him which is the same as to me. He has kept in touch with Mrs. Stucky's affairs and has written you about all that can be said just at present I cannot add anything as he says he has explained conditions fully.
"Yours truly, "E.J. BAKER."
[1] The transactions which we have heretofore referred to show conclusively that the guaranty was not intended to cover a single purchase. By its own terms it refers to and covers "all merchandise purchased," and thus, section
To sustain the judgment of the trial court the respondents first cite the case of Nason Co. v. Kennedy,
In the case of Lean v. Geagan,
A case identical in principle, though differing somewhat as to the facts, is that of Sinnige v. Oswald,
In 28 C.J. 961, where the amount of the guaranty is limited but time is not, the law applicable is thus stated: "Where the guaranty contains a limitation as to the amount *73 for which the guarantor will be bound, but contains no limitation as to time, and there is nothing in the circumstances surrounding the execution of the contract to evince a contrary intention, it will, in general, be construed to be a continuing guaranty and operative without limitation, except as to the amount of liability, until revoked. The limit mentioned in such a guaranty has reference to the amount of dealing between the principal and the guarantee and the guarantor will be held liable to the extent of his guaranty, notwithstanding the principal debtor may have, during the existence of the contract, contracted debts to an amount equal to, or greater than, the sum named in the guaranty, and paid them. But where it is apparent, either from the language of the guaranty itself or from such language in connection with the circumstances, that the intention was to limit the guaranty to the amount specified for the first transaction, or series of transactions, it is not a continuing one and will not extend to other transactions after such limit has once been reached." In the case at bar it is evident that there is nothing in the surrounding circumstances to show that the intention was to limit the guaranty to any particular transaction. It was simply a guaranty covering "all merchandise purchased," without any limitation as to time, and had no reference whatever to any initial stock of goods or any particular order for goods. The letters which we have set forth show that there was no intent to limit the guaranty to any particular order. The best that can be made of it is that the defendant Baker thought the guaranty was not to continue "for a long time," which justifies only the conclusion that he knew the guaranty covered successive transactions.
In 13 California Jurisprudence, page 95, in treating on the subject of guaranty, the text is as follows: "Whether or not a guaranty is continuing must be determined from the language of the instrument, or in case of an ambiguity, by resort to parol evidence of the situation surrounding all the parties, and the guaranty interpreted in the light of such circumstances. The tendency of the decisions in this country, however, has been against construing guaranties as continuing, unless the intention of the parties is clearly manifested so that if there is any doubt as to what was intended, the presumption is against holding the guaranty to be continuing." *74 Here, the circumstances surrounding the parties at the time of the execution of the guaranty show that Mrs. Stucky was engaged in the business of buying and selling ladies' furnishing goods, and that in the pursuit of her business it was necessary to purchase such goods from time to time as the trade warranted. There is nothing in the guaranty itself which appears to be ambiguous or uncertain. It was for all goods to be purchased, and limited only as to amount, the parties executing the guaranty having knowledge of the kind of business the person was conducting, for whom they were becoming guarantors. Further, quoting from 13 California Jurisprudence, page 96: "A guarantor may limit the amount for which he will be liable, or the time for which his guaranty will run, or may limit his liability to a single transaction between the principal debtor and the creditor, as distinguished from a continuing guaranty. However, a limitation as to the amount for which the guarantor will be liable does not militate against the construction that the guaranty is a continuing one. Such a limitation is not construed as a condition as to the extent of credit to be given, the breach of which would release the guarantor so the guarantor will still be liable even though the creditor has, at various times, contracted and paid debts equal to, or greater than the amount of the guaranty."
In the note to Scovill Mfg. Co. v. Cassidy, reported in Ann. Cas. 1918E, 602, beginning on page 609 [
In the case of Kierulff Ravenscroft v. Koping,
From what we have set forth it is evident that the findings of the trial court in this case are unsupported by the evidence and that the judgment must be reversed. It is so ordered.
Thompson (R.L.), J., and Finch, P.J., concurred. *77