Holcomb v. People's Trust Co.

205 F. 491 | 6th Cir. | 1913

DENISON, Circuit Judge

(after stating the facts as above). [1] 1. The first defense is that the original contract for a $100,000 loan was so far modified as to release the guarantors. The modification was material, and we see no occasion to doubt that a nonconsenting guarantor would have been released; so that this case must turn on the effect of the instrument of consent signed by Holcomb and Latimer. Their counsel argue that, at the time of the consent to the extension, the guarantors were not liable, because the loan which they had agreed to guarantee had never been made, and that their consent to the extension of some other loan, to which they were strangers, could not make them liable therefor, in the absence of a new, express promise by them. On the other side, it is urged that this defense is in the nature of a privilege, was waived because not claimed, and that, in any event, the formal consent to the extension implies a new promise to pay. We do not find it necessary to consider the legal question thus presented. Each of the extension agreements recited that the loan which had been made and to which the extension related, was one of $90,000, and then says:

“All the covenants and provisions of tlie said agreement of March 20, 1905, * * * shall apply to the said loan so extended.”

Whether it is intended to refer to the preliminary agreement of March 9th, or to the guaranty of March 25th, the reference includes a “covenant and provision’,’ by Holcomb and Latimer that they will guarantee $20,000 of the debt, and, in either view of the meaning of the reference, the express promise by Holcomb and Latimer in their original guaranty was thus, by the very words of each extension agreement, renewed and repeated' as to the $90,000 loan. If, under the circumstances here existing, a new, express promise by the guarantor is required in order to continue or to recreate his liability, it is here present. The first defense is not sufficient.

[2] 2. In somewhat similar manner, the facts make it unnecessary to consider the second and third defenses in the light in which they were presented by counsel. If we fully accept defendants’ theories, both of fact and of law, with regard to their reliance upon Conners’ concurrent action in guaranteeing and in extending, and their original ignorance of his elimination from the field, yet they cannot deny knowledge of the- facts recited in the last extension paper which they signed, nor the knowledge which must result from those recitals. They then had full notice that Mills had never become an underwriter, and that Peters and Roycroft had paid up their full original underwritings, leaving only Conners’ $25,000, Holcomb’s $10,000, and Latimer's $10,-000, and then that Peters had paid “in cancellation of said amounts underwritten by him in said underwriting the further sum of $10,000.” These recitals lead, inevitably, to the conclusion that Peters had been •substituted for one of the original underwriters, and that this substitution must have been in the place of Conners, as there was no one else left besides Holcomb and Latimer. With this knowledge, Hoicomb and Latimer join in the contract for a further extension of the remainder of the loan, and expressly agree that their original covenant of guaranty shall apply to the loan as so extended, and the Trust Company, at least in part upon consideration of this promise by Holcomb and Latimer, makes the desired extension. These facts and the degree of notice which they carry regarding Conners’ elimination (and in the absence of any suggestion of bad faith or misleading by the Trust Company) do not permit Holcomb and Latimer to be heard to say that they then relied upon Conners. The second and third defenses are therefore unavailable.

The judgment must be affirmed, with costs.