18 F. 126 | U.S. Circuit Court for the District of Minnesota | 1883
(charging jury.) This suit is brought by D. M. Osborne & Co., a corporation organized under the laws of the state of New York, against the, defendant, Smith, who was one of its agents. The suit is brought upon the guaranty of Smith upon 29 notes, and is also brought to recover upon his individual promissory note, which was given to this company for the purchase of certain machines. This corporation was engaged in the manufacture of mowers and reapers, and the manufactured articles were sent broadcast to agents throughout the western states. Smith was appointed an agent under a contract which he made with the company for Jackson county, the county of Cottonwood, and portions of Nobles county, in this state, December 3, 1879. This contract ran for the season, which ended on the first day of August, 1880, and most of the obligations upon which he is sued as guarantor were made during the year 1880.
It is necessary, gentlemen, for the plaintiff in this case, before it can recover, in the first place to prove the contract of guaranty; next, to prove that the defendant, Smith, is in default. It is claimed that the contract of guaranty in these cases was contemporaneous with the original trade; that is, that when the principal debtor entered into his contract with the company, Smith, by virtue of his contract with the company, became contemporaneously responsible as guarantor for the payment of the debt — the principal debt. I might here call your attention to this contract of 1879, which was entered into, terminating, as I said, on the first of August, 1880. It is a very stringent contract, gentlemen, and a valuable one. It is a contract of agency for the sale of these machines, but certainly it is presumed to have been of considerable value to the defendant, for he subsequently renewed it, and we have here in evidence another contract which was entered into on the twentieth of December, 1881. Although it contained very stringent terms, as far as the agent was 'concerned, still it was signed and entered into by this agent with his eyes open. It is in print, and evidently must have been well understood by the defendant in this case when he entered into it. In order to sustain the first position which I stated to you, it was necessary for the plaintiff to prove this contract of 1879, which contains this provision: “All machines received from the said party of the first part [that is, the corporation] shall be sold by the said party of the second part, either for cash or such good and approved notes as are hereinafter described, and all such machines shall be and remain the property of the said D. M. Osborne & Co. until so sold or are otherwise settled for as herein provided.”
As between the agent and themselves it was a sort of conditional sale; that is, the machines that were shipped to him were conditionally sold to him, provided he complied with the terms of the contract itself. “When sold for cash, either in whole or in part, the moneys received, to the amount of the price of such machine as above specified, shall be received by said party of the second part as the moneys of and for the said D. M. Osborne & Co.”
Now, the plaintiff has offered in evidence, in addition, various notes which were received by the defendant, Smith, on the sale of these machines which were sent to him. These notes are all of the same character, although some of therp. have attached to them, and forming a part of them, a statement as to the amount of real estate that the party purchasing is possessed of. We have very little to do at present with the face of the notes. It is the contract of the defendant here upon the back which is important in this case. On the back of this note which I hold in my hand — the note of Langer — is the guaranty of Smith, by which he complies with the contract in the manner in which he bound himself- to comply when he signed it. All of these notes which have been offered in evidence here, in order to show what Smith engaged to do, are of similar character, except in some instances there appears to be more than Smith’s guaranty. Other persons appear upon the note as joint and several guarantors with him. Now, what was Smith’s contract? That is, what was the legal import of Smith’s contract when he, in pursuance of the original contract for the sale of these machines, put his name on the back of this note ? Smith’s contract is this: He agrees that if Osborne & Co. shall not be able to collect by due course of law these several obligations which have been signed by various parties here who bought these machines, that he, the defendant, — that is, he, Smith, — would consider himself responsible for the same, without requiring any demand or notice of the non-payment of the note itself. That is his contract of guaranty, and that is the legal effect of placing his name upon the back of these various notes as he has done.
Now, if the plaintiff has performed on its part all it was required to do under and by the terms of this guaranty, and the 'guarantor has all the rights which he as a guarantor was entitled to in law, why, then, he cannot escape the liability that is fixed upon him by
I will here call your attention to the other cause of action against Smith himself, individually, upon this note, which was given for the purchase of machines. This note was given by Smith, and the only defense that lie appears to have against it, which he attempts to urge here, is that there w'as a failure of consideration, viz., that the machines wore worthless. This defense of failure of consideration, as I said yesterday, gentlemen, comes too late, and so far as that obligation is concerned — $322, and interest upon it — there
There is another question here. In a great many of these cases chattel mortgages have been taken. Now, it is not necessary, when a chattel mortgage is taken in addition to other security, that the creditor should foreclose the chattel mortgage before he can sue upon the guaranty; but if he sues upon the guaranty before he exhausts-the remedy upon his chattel mortgage, and the guarantor pays the debt, then he is entitled to the benefit of all such securities received ; but in this case it does not appear that in any instance the guarantor has paid any of these obligations.. The question may hereafter arise if he pays up the amount here, and there has been a loss to him by negligence and failure to properly foreclose the seen-
Mr. O’Brien. I think that provision applies to the inception, if it was discovered within six months that they were worthless at the time they were taken.
The Court. I am mistaken. If these notes that were to be turned over in settlement were doubtful or worthless at the time that Smith took them, when he sold these machines, why then the company said: “You must be responsible for these notes. We must, however, be diligent, and we will say six months; that we must discover within six months that these notes were doubtful or worthless at the time of the sale.” It is immaterial whether Smith knew they were doubtful or not in fact at the time they were given. If at the time he took them upon the sale of this machinery they were doubtful, or were worthless, and the company within six months discovered the fact and asked Smith to replace them, if he did not do it he would be responsible. Now, there are four notes of that character, — the Leidtke and Zeilner notes; two of each, I think.
There is one note which amounts to some $200 and interest, called “the George Clark note.” The testimony .of Smith is that this note was received by this company in payment for machines which he (Smith) purchased. You will recollect what he said about this George Clark note. He says that Clark was a man who traded with him, buying groceries, etc., and that he was indebted to him; that he gave him this note in settlement, and that he (Smith) turned over this indebtedness to Osborne & Co. as part payment for some machines that he himself actually purchased. Under the terms of the contract he was required at the end of the year, at the option
Here is a little memorandum which I have made, which I think is correct, with the exception that the attorney’s fees, in every instance, should be struck out. In the ease of those four judgments of course the attorney’s fees are merged in the judgment, and that is the suit against the parties themselves, and can be recovered; but in the other cases you may strike out the attorney’s fees, and deduct that from any sum that you may find for the plaintiff in this ease.
Now, gentlemen, I think you will understand the testimony here, —understand the case, and I hope you will be able to arrive at a satisfactory conclusion. I will hand you this memorandum; I have compared it with the notes here, and it is proper also that you should have the pleadings and these notes, and you can run over this memorandum also, -so as to satisfy yourselves as to the correctness of it. This memorandum was merely made by me. to facilitate matters. You are not bound by it, gentlemen. You have the notes there and you can make your own calculations.