William Williams v. Josiah Collins.

From Bertie.

Case of guaranty. A. applied to B. to purchase a vessel and cargo, and B, entertaining doubts of his solvency, refused to credit mm. A. then got from C. a letter directed to B, in which C. says, “ A. informs me that he is about bar-gaining with you for the purchase of a new vessel and cargo: In case you and he should agree, I will guarantee any contract he may enter into with you for the same, or any part thereof.” On tire credit of this letter, B. sold to A. a vessel and cargo, and took his bonds for the purchase money; one payable 1st January, 1805, another on the 15th June, 1805, and the third ton the 15th June, 1806. On the 17th August, 1807, suit was brought against A. on the bonds, judgment recovered in March, 1808, and execution against A’s property was returned to June term following, indorsed by the Sheriff, “ nothing found.” Whereupon B. brought suit against C. on his letter of guaranty. It appeared on the trial, that at the time the several bonds respectively fell due, A. had property sufficient to pay their amount; which property he mortgaged in October after the last bond fell due and in January following, to secure divers debts which he owed'. There was no evidence that B. had applied to A. for payment, until suit was brought on the bonds, except an inference' to be .drawn from ihe indorsement of certain payments'on the bonds, after they became due ; nor was there any evidence that C. had notice of A’s failure to pay, and that B. looked to him for payment, until suit was brought against him. Held, that C. was discharged from liability; on his letter of guaranty, by the want of due diligence in B. to get] payment from A, and by his failure to give notice, within a reason-] able time, to C, of A’s delinquency.

Henry Fleury applied to the Plaintiff to purchase, on a credit, a vessel and cargo ; but the Plaintiff, entertaining some doubts of his sufficiency, refused to credit him. Fleury then procured from the Defendant a letter , directed to the Plaintiff, in the following words :

Gen. TFm. Williams,

Sib — The bearer hereof, Mr. Henry Fleury, informs me that he is about bargaining with you for the purchase of a new vessel and a cargo for her, algo for a quantity of Indian corn. In case you and he *48should agrees I will guarantee any contract he may enter into with you for the same or any part thereof, and am

Your ob’t serv’t,

JOSIAH COLLINS.”

On the credit of this letter, the Plaintiff sold to Fleury a vessel and cargo for $2072 25, for which he gave three bonds, each bearing date the lith April, 1804 ; one for $902 25, payable 1st of January, 1805, with interest from the 15th June, 1804 j another for $585, payable 15th June, 1805 : and the third for $585, payable 15th June, 1806. There was a credit of $675 71, indorsed on the first bond, 15th June, 1806, and a credit of $450 indorsed on the last bond, 12th January, 1808. On the 17th November, 1806, Williams assigned the bonds to Thomas E. Sumner, who, on the 17th August, 1807, brought suit on them in Chowan County Court, and obtained judgment at March term, 1808, for £604 7s. IOd. He sued out execution, which was returned to the next term, “ nothing found and Williams having, in his assignment of the bonds, “ obliged himself to guarantee the ultimate payment thereof to Sumner,” did, upon the application of Sumner, pay the amount due upon the bonds, and on the 16th September, 1808, brought suit against Collins on his aforesaid letter of guaranty. The Defendant pleaded the “ general issue, set-off, stat. lim.”

Ou the part of the Defendant it was proved, that on the 29th October, 1806, Fleury mortgaged to him seven lots and one half lot of ground, with their improvements, lying in the town of Edenton, to secure the sum of JSÍ256, 18s. 8fZ. due by note ; and on the same day Josiah Collins, junior, took from Fleury a mortgage for the samé property on the back of the foregoing, to secure the payment of $954 22, due by note: and on the 15th January, 1807, Fleury mortgaged the same property, with a store-house and shop, eleven negroes and a considerable quantity, of furniture, to certain merchants in New-Tork, to secure the payment of six thousand dollars *49due by him to them. The Defendant also proved, that Fleury possessed the property mentioned in the foregoing mortgages for many years before, and that the lots were among the most valuable in the town of Edenton : that on the 6th August, 1806, one Francis Yallette, of Edep-ton, having died, bequeathed to Fleury property of the value of ÜS4090, which came to his hands.

It appeared in evidence, that Collins, the Defendant, was a subscribing witness to the .mortgage executed by Fleury, on 15th January, 1807, to Certain merchants in New-York, and that the property included in this mortgage, but not in the preceding mortgages, was sold for twelve or thirteen hundred pounds. It did not appear that Fleury liad any property out of'which the debt to the Plaintiff could have been satisfied, except the property before enumerated.

The Jury rendered the following verdict, to wit, “ The J ury find, from tiie evidence adduced, that the Defendant must have been better acquainted with the circumstances of Henry Fleury, than the Plaintiff, and that the Plaintiff could not affany period have obtained Ins money from Henry Fleury, even though he had commenced suit as soon as his cause of action accrued, and that the Defendant did assume, tliat he did assume within three years, that there is no set-off, and assess the Plaintiff’s damages to £716 Is. 8d,” A rale was obtained to shew cause why a new trial should not be granted, on the grounds, 1st. That the verdict was contrary to Law. 2dly. That it was contrary to ev idénco, at least so' far as it found that the Plaintiff could not, at any time after the debt became due, haw obtained payment from Fleury. The rule for a new trial was sent to this Court, where it was argued by Browne, for the Defendant, and by Jones and Cherry for the Plaintiff.

Browne, in support of the rule, said, this contracf must be considered either as a primary or a secondary *50contract: if as a primary contract, then the Plaintiff’s cause of action accrued at the respective times when Fleury’s bonds fell due, and ids right of recovery is barred by the statute, of limitations. But lie did not suppose this contract ought to be so considered : it is a contract of a .secondary hind. Defendant agreed to guaranty the debt to the Plaintiff, and is placed by the Law in the same situation with indorsers of bills of exchange or promissory notes. He agreed to guaranty a primary contract, and the Law, whilst it deems this guaranty binding upon birn, does so sub modo only : it tit the same time imposes certain obligations upon him who claims the benelii’of this guaranty $ it declares to him, that he shall use due diligence to reap the benefit of. the primary contract, and to coliect the debt from him who really owes it. For the person making this secondary contract only agrees to pay the debt, if the principal does not; and in all cases is discharged from liability, if due dili-' gence be not used to enforce the contract against the principal, and get the money from him. In this casé, Williams had discharged Collins from his guaranty by the indulgence which he extended to Fleury. Had he sued Fleury when his bonds became due, the money could, have been collected : but he neither sued nor demanded payment, nor gave notice to Collins of Fleury’s neglect to make payment. This is a commercial transaction, and is to he governed by the general law respecting commercial contracts, where one man guarantees the payment of another’s debt. Williams having failed to use the diligence which that law required in demanding payment, and giving notice of Floury’s neglect or refusal to make such payment, has discharged Collins , who, not liaving'received any such notice, remained ignorant of Fleury’s failure to pay at the time when he took the mortgage to secure his own debt. This is the legal pre~. sumption; for every man shall be presumed to have clone his duty until the contrary appears $ Fleury shall *51be presumed to have paid his bonds at the times they respectively fell due, or that he would have paid them if Williams or his assignee had applied for payment. ■ It was not the duty of Collins, to enquire whether he had made such payment j it was the duty of Williams to give him notice if> Flenry failed to pay $ and to compel him to make good the debt to W illiams, would be, not to conform to the true spirit of the contract on his part, but to subject him to a hardship against which he has no relief. If he had been regularly called upon for payment as Fleury made default, he could have advanced the money to Williams and indemnified, himself out of Fleury’s property. Williams gave indulgence until Fleury became insolvent, and Collins has not been called upon for payment, until lie has lost all opportunity of indemnifying himself.

Collins was liable on his letter of guaranly, only in case of Fleury’s failing to pay 5 and it may be laid down as a general principle, that where one man agrees to indemnity another against any loss; which he may sustain from any transaction, the ] erson thus indemnified must use ordinary diligence to prevent any loss — (Bong, 514 — S Term Hep. 524 — 8 East 242.) Here the first demand on Fleury was by suit, one year and two months after the last bond became due j and the first notice of Fleury’s delinquency that was given.to Collins, was two years and three months after the last bond became due. This was not using due diligence to get the money from •Fleury, and prevent a loss to Collins. And