Simons v. Steele

FowleR, J.

The motion for a nonsuit rests upon four distinct grounds. The fourth, relating to the alleged usuriousness of the principal contract, does not render necessary any determination of the question, whether or not such a contract is to be deemed usurious, inasmuch as by our statute usury does not render a contract illegal and void, but only operates to reduce the amount of damages to be recovered for its non-fulfilment, where properly taken advantage of in a suit for its breach. Unless, therefore, it be shown, in the mode prescribed by the statute, that the amount of usury is so large that three times its amount is equal to or greater than the whole sum due upon the contract, by its terms, the existence of usury can never be a valid ground for nonsuit. Such is not the present case. Revised Statutes, chap. 190, secs. 2 and 8.

The third reason assigned for a nonsuit, that it did not appear that the president of the New-Hampshire Central Railroad was authorized to make the contract which the defendants guarantied, cannot prevail, without reference to the authority of that officer in the premises ; since the defendants are estopped by their own conduct from raising the question of his authority. It is apparent from the contract itself, at the bottom of which is the defendants’ guaranty, of the same date, and evidently executed at the same time, that the defendants not only stood by and witnessed the delivery by the plaintiff, of his Northern Railroad stock to the New-Hampshire Central Railroad, but, by volunteering their own agreement for its prompt return, as stipulated, contributed to induce, and probably furnished the principal inducement to such delivery by the plaintiff. To permit them now to evade the force and avoid the obligation of their own contract, on the ground that the Central Railroad was not authorized to borrow the stock, would be to permit them to take advantage of their own wrongful conduct, amounting under the circumstances to little less than actual gross fraud. The rule of law is clear and indisputable, that where one, by his words or conduct, causes another to believe in the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time. If, whatever a man’s real meaning may be, he so conducts himself that a reasonable man would take his representation to be true, and believe it was meant that he should act upon it, and he did act upon it as true, the party-making the representation would be equally precluded from contesting its truth, whether he knew it to be untrue or not, or whether he meant it should be acted upon as true or not. Pickard v. Sears, 6 Ad. & Ellis, 475 ; Freeman v. Cooke, 2 Exch. Rep. 654 ; 2 Smith’s Leading Cases 544, and numerous authorities; Mack v. Willard, 13 N. H. 389; Roe v. Jerome, 18 Conn. 138 ; Middletoum Bank v. Jerome, 18 Conn. 443 ; Farnum v. Bryant, 34 N. H. 9.

In the present case, one of the defendants was himself president of the Central Railroad, and as such executed the principal contract, while the others appear to have been his associates in the board of directors of that corporation. They knew or ought to have known whether the railroad was authorized to make, and its president to execute it or not; and however that may have been, having represented by their conduct, in guaranteeing the fulfilment of the contract, that it was duly authorized and valid, they cannot be permitted to deny it, after having induced the plaintiff to act upon their representation, by delivering over his Northern stock on the faith of it.

The second ground of the motion for a nonsuit, that it was not shown that any demand had been made upon the railroad, or any notice of the non-delivery of the stock in return, given to the defendants, is equally unfounded. For, regarding the defendants as simple guarantors only, it is well settled by the general current of authority that the obligation of a guarantor is that which the fair import of the language used imposes upon him; if he engages absolutely for the payment of money or the performance of any other act, he is not entitled to insist upon any'condition. Notice of non-payment or non-performance by the principal, is not necessary to charge the absolute guarantor, although it may generally be advisable to give him notice, in order to rebut any presumption of laches in the party guarantied. The rule in relation to negotiable paper is thus stated by Qhitty: “ In general, if the note or bill be given as collateral security, and the party delivering it were no party to it, either by indorsing or transferring it by delivery when payable to bearer, but merely caused it to be drawn or indorsed, or has merely guarantied the payment, it has been considered that he is not, within the custom of merchants, an indorser or party to it, so as to be absolutely entitled to a strict regular notice, unless he can show, by express evidence, or by inference, that he has actually sustained loss or damage by the omission.” Chitty on Bills, (11th Am. from 9th London Ed.) 441, 444.

Notice to the absolute guarantor is not a term or condition of the contract of guaranty upon a promissory note or bill of exchange ; he is no party to the instrument, and is not by the custom of merchants entitled to notice of the dishonor; but if he can show that, for want of regular notice, he has sustained actual damage, he will have a defence, at least pro tanto. Warrington v. Furber, 8 East 242; Phillips v. Astling, 2 Taunton 206; Swingard v. Bowers, 5 Maule & Selwyn 62; Hollrow v. Willkins, 1 Barn. & Cress. 10; Van Wort v. Wooley, 3 Barn. & Cress. 439; Camidge v. Allenby, 6 Barn. & Cress. 373; True v. Harding, 3 Fairfield 193; Reynolds v. Douglass, 12 Peters 497 ; Gibbs v. Cannon, 9 Serg. & Rawle 198; Erwin v. Lamborn, 1 Harrington 125; Prentice v. Danielson, 5 Conn. 175; 2 Amer. Leading Cases 33-98; Breed v. Hillhouse, 7 Conn. 523; Williams v. Granger, 4 Day 444; Read v. Cutts, 7 Grreenl. 186 ; Babcock v. Bryant, 12 Pick. 133, 416 ; 20 Johnson 365 ; 2 Comstock 225.

Where the absolute guarantor is not injured by the want of notice, he is liable, just the same as if duly notified, and the absence or want of notice does not imply such an injury to the guarantor as will discharge him from his liability. To have that effect it must be shown affirmatively that he has been injured by the omission. It is a matter of defence. The terms of the contract of guaranty are construed strictly, and the law does not supply any condition which is not incorporated into the agreement, or fairly implied from the langpage used. Gibbs v. Cannon, 9 Serg. & Rawle 198 ; Rhett v. Poe, 2 Howard U. S. 457; 4 Humph. 303 ; 9 Shepley 164; Matthews v. Chiesman, 12 S. & M. 595; Bigelow v. Benton, 14 Barber 123; Wright v. Johnson, 8 Wendell 512; Hunt v. Smith, 17 Wendell 179; Dobbin v. Brandley, 17 Wendell 422; Walrath v. Thompson, 6 Hill 540; 2 Comstock 185; Edwards on Bills and Notes 218-244; Butler v. Wright, 20 Johnson 365; Tillman v. Wheeler, 17 Johns. 326; Upham v. Prince, 12 Mass. 14; Beebe v. Dudley, 6 Foster 249, and authorities.

What has been said of the three other causes of nonsuit is also true of the first, that it has no validity. It is, that the contract of the defendants, being to pay the debt or fulfill the engagement of the railroad, is void within the statute of frauds, no consideration therefor being expressed therein. Admitting that, under our statute, a promise or agreement to pay the debt of another should not only itself he in writing, but the consideration also, we think the defendants’ guaranty is valid within the principle of numerous decisions, both in this country and England. There is nothing in the language of the statute, or in the construction put upon it in Wain v. Warlters, 5 East 10, to render it necessary that the consideration should be set forth in terms, and nothing more can be requisite, in any case, to avoid the operation of the statute, than that the necessary and constituent parts of the agreement should appear from written, and not from parol evidence. This is manifestly true where the consideration appears in any part of the writing containing the guaranty, and equally so where it can be gathered from any other instrument to which the guaranty refers, either expressly or by necessary implication.

It is very clearly apparent from an inspection of both what are called the principal and collateral contracts now under consideration, that both were made at the same time and for the same consideration, to wit': the loaning of his stock by the plaintilf to the Central Railroad, and also that the collateral contract was an essential ground of the credit given to the principal, or direct debtor. In such cases it is not necessary that there should exist or be expressed in writing any other consideration than that moving between the creditor and original debtor, for the consideration of one is manifestly that of the other. Leonard v. Vredenburgh, 8 Johns. 29, and authorities; Bailey v. Freeman, 11 Johnson 220 ; Nelson v. Dubois, 13 Johns; 175 ; D’Wolf v. Rabaud, 1 Peters 476 ; Rogers v. Kneeland, 10 Wend. 218 ; S. C., 13 Wend. 114; Staats v. Howlett, 4 Denio 559; Bank v. Carter, 3 Comstock 203.

So, too, it is not to be disguised that the undertaking of the defendants, though drawn partly in the form of a guaranty, is in substance an original promise, for a valuable consideration, expressed on the face of the instrument; and it has been repeatedly holden that a recovery may in such cases be had on the instrument of guaranty against the guarantor, as a maker of the original contract. Hunt v. Adams, 5 Mass. 358 ; White v. Howland, 9 Mass. 314; Hough v. Gray, 19 Wend. 202; Dean v. Hall, 17 Wend. 214; Lequeer v. Prorser, 1 Hill 256 ; 4 Hill 420.

The defendants seem to have been original parties to the contract, as well as the Central Railroad, and the contract, in its language as well as in its legal construction, may well be regarded as a direct and absolute promise of the defendants, as well as of the railroad, that the stock loaned should be returned to the plaintiff at the end of one year. The legal effect of the whole contract is hardly different from what it would have been had it been written and signed, binding the railroad as principal and the defendants as sureties, for the return of the stock at the expiration of the year.

Rut, regarding the contract of the defendants as one of simple guaranty alone, and therefore requiring the consideration as well as the promise to be in writing, it comes within the authority of numerous adjudications, to the effect that it is sufficient if the consideration can be fairly implied from the terms of the guaranty, or gathered from any other instrument, expressly or impliedly so referred to in it, as to fairly become a part thereof. The defendants’ contract is written directly underneath that of the principal,debtor, and expressly and in terms refers to it. They guaranty the fulfillment of the principal agreement in so many words, referring expressly to it, and promise. the plaintiff that his stock, that is, the stock by the principal agreement acknowledged to have been loaned to the principal debtor, shall be returned at the time specified in that agreement, agreeably to the stipulations of that agreement. Now, it seems to us, here is such an intimate connexion in sense between the two agreements, apparent on their face, that there can be no difficulty in collecting, without the aid of parol evidence, from the principal agreement, the consideration of the collateral one. The reference in the latter to the terms of the former is equivalent to an admission ; at all events, the fair and necessary implication is, that ⅛ consideration of the defendants’ promise was the receipt by the railroad of the borrowed stock. The only legitimate inference from the expressions used in the contract of guaranty itself is, that such was the consideration of the defendants’ engagement. Stadt v. Lill, 9 East 348 ; Rogers v. Kneeland, 10 Wend. 218, 250 ; Jackson v. Lowe, 1 Bing. 9 ; see also the authorities cited before, under the first clause of this topic, and notes to Birkmyr v. Daniell, 1 Smith’s Leading Cases 134, and those to Wain v. Walters, 2 Smith’s Leading Cases 147. See also notes of Williams to Forth v. Stanton, 1 Saunders 210.

As all the grounds of the motion for nonsuit were untenable, it was properly overruled, and there must be-

Judgment on the verdict.

Case Details

Case Name: Simons v. Steele

Court Name: Supreme Court of New Hampshire

Date Published: Jan 15, 1858

Citation: 36 N.H. 73

Court Abbreviation: N.H.