Church v. Brown

The statute requires every special promise to answer for the debt, default or miscarriage of another, to be in writing, subscribed by the party to be charged thereby, and expressing therein the consideration. The consideration and promise must be expressed in the instrument, or the agreement is void (2 H. S. 135). The referee held, in this case, that the agreement of the defendant was void, because no consideration was expressed therein, as required by the statute; and this is the single point for review.

Neither the English statute of frauds, nor ours, prior to-the revised statutes, in terms, required the consideration to be expressed in an agreement to answer for the debt or default of another; but the courts had held, before the verbal change of the statute in this respect, that the consideration and promise must both be expressed in

An undertaking to answer for another, is unquestionably within the statute, unless the consideration be expressed in the instrument subscribed by the promissor. But how expressed? Certainly, it has never been deemed absolutely necessary that any particular form of words should be used in expressing the consideration. It has been held, often, that a seal expresses the consideration, within the meaning of the statute. The same rules of construction are applicable to collateral, as to original undertakings, in implying or inferring the consideration from the terms of the instrument. It is enough, said Pratt, J., in delivering the opinion of the court in the Union Bank v. Coster’s Executors ( 3 N. Y. 203 ), if, from the whole instrument, the consideration, expressly, or by necessary inference, appears, *so that-it be clear that such, and no other, was the consideration upon which the promise was made. (Douglass v. Howland, 24 Wend. 35 ; Allen v. Jaquish, 21 Wend. 628 .) To hold, at this late day, that, for the purpose of satisfying the statute, a particular form of words, expressive of the consideration, must be written in a guarantee, Avould be to overthrow a seríeos of decisions extending through the last half century.

In Stadt v. Lill (9 East 348), the Avritten guarantee was in these words: “I guaran tie the payment of any goods which I. Stadt delivers to I. Nicholls.” It avus objected,

In Rogers v. Kneeland ( 10 Wend. 219 ), it appeared, that L. Morgan & Sons wrote to N. Rogers & Sons, requesting them to indemnify Kneeland against damages and costs, in a litigation which Kneeland was conducting for the benefit of the Morgans; Rogers & Sons indorsed upon this letter, and signed, the following promise: “We will promptly comply with the request of L. Morgan & Sons, as contained in the within order.” The objection that there was no consideration expressed in it, was overruled. The judgment of the supreme court was unanimously affirmed .in the court of errors ( 13 Wend. 115 ), Walworth, -Chancellor, delivering the opinion of the court., in which he said, “ there is sufficient consideration on the face of *this agreement, to take out of the statute of 7 frauds; if, from the terms of the whole agreement (the letter and guarantee), thus taken together, a sufficient consideration for the collateral promisS or guarantee appeal’s, it is sufficient.”

In Marquand v. Hipper ( 12 Wend. 520 ), the guarantee was in these words: “I do guaranty and agree to become

In Union Bank v. Coster's Executors ( 3 N. Y. 203 ), Hechscher & Coster, merchants in New York, sent to Kohn, Darrow & Co., in New Orleans, a letter of credit as follows: “Sirs—We hereby agree to accept and pay, at maturity, any draft or drafts on us, at sixty days’ sight, issued by Kohn, Darrow & Co., of your city, to the extent of $25,000, and negotiated through your bank.” At the foot of this was the following guarantee, signed by John G-. Coster:—“ I hereby guaranty the due acceptance and payment of any draft or drafts issued in pursuance of the above credit.” The court held, that, construing the two instruments together as one instrument, the consideration for the guarantee was sufficiently expressed. In Gates v. McKee ( 13 N. Y. 232 ), the guarantee was as follows: “Mr. Gates—Sir: I will be responsible for what stock Mr. E. McKee has had, or may want hereafter, to the amount of $500.” It was held, that the instrument expressed the consideration, *within the requirements of the statute.

Another rule, also, is applicable to this class of contracts, viz., the construing together, as one instrument, two or more instruments given at the same time, and relating to the same subject-matter. This rule was applied in Rogers v. Kneeland ( 13 Wend. 115 ), and in Union Bank v. Coster’s Executors ( 3 N. Y. 203 ). In the former case, Chancellor Walwobth said:—“ When the guarantee, or promise to pay the debt of another, is made at the same' time with the agreement to which it is collateral, and is indorsed thereon, and refers thereto, the whole is to be taken together as an entire agreement, for the purpose of ascertaining whether it -is a valid agreement within the "“provisions of the statute. And if, from the terms of the whole agreement, thus taken together, a sufficient consideration for the collateral promise or guarantee appears, it is sufficient..’' In the latter case, Pbatt, J., uses this language: “ When a guarantee is given at the same time with the principal contract, and forms a part of the entire transaction, if the consideration be stated in the principal contract, though none be stated-' in the guarantee, it will suffice.” .

Now, if the cases cited, and especially that of the Union Bank v. Coster’s Executors, which arose long subsequently to the revised statutes, are to be followed as authority,

On the 1st of July 1852, the plaintiffs entered into an agreement with Thomas White, to sell to the latter, from their store, such articles of goods, in the hardware line, as he might want, on a credit of one year; interest to be charged thereon, after six months from the time of purchase. In case, at any time after the expiration of one year from the date of the contract, the plaintiffs desired to close up the contract, they were to give White one month’s notice of such intention, and, for the balance of the account, they might hold against him unpaid, according to the terms of the contract, they agreed to take good responsible notes, due in six months from the time of notification. Simultaneously with the execution of this agreement, the defendant indorsed upon it the following guarantee:—“ I will be responsible for all such goods as Mr. White shall buy of the Messrs. Church, within one year from date, and which shall not be paid for according to the terms of the within contract. July 1,1852. (signed) M. Brown.” Now, construing these instruments together as one, the consideration plainly appears on the face of the writing. It is the sale and delivery, by the plaintiffs, to White, of such goods as the latter might want from their store, for one year from the date of the agreement. Paraphrased, the contract would fairly read in this way: “ In consideration that you, the Messrs. Church, sell and deliver to Thomas White, from your store, such articles of goods, in the hardware line, as he may want, on a credit of one year, interest to be charged thereon after six months from the time of purchase, I, Morris Brown, will be responsible for all such goods as White shall buy

The case is a plainer one than that of the Union Bank v. Goster’s Executors, as paroi evidence was not required to show that the original and collateral contract related to the same subject-matter, or to aid the court in giving a true construction to any ambiguous terms in the agreement, as there were none. It seems a clear case, in which ^16 *cons^era^on i® manifest, and is sufficiently expressed, to satisfy the requirements of the statute, in the instrument of guaranty, and the agreement on which it was indorsed and to which it referred. The remarks of Bronson, J., in Staats v. Howlett ( 1 Denio 559 ), may well be applied to it, that “ if this contract should be held void (on the ground that the consideration was not expressed), it would overthrow most of the guarantees and letters of credit which now enter so largely into the commercial world.”

There is a class of cases in the books, in respect to guarantees of payment indorsed or written on promissory notes, that has not escaped observation. In regard to these, there is much confusion, or, at least, was, until the decision in Brewster v. Silence ( 4 N. Y. 207 ). In the earlier cases, where a person signed a guarantee of payment indorsed on a promissory note, and who was privy to the original consideration of the note, and signed the indorsement contemporaneously with the making of the note, it was held, that he might be treated as a joint and several promissor with the party signing on the face of the note. (Hough v. Gray, 19 Wend. 202 ; Lequeer v. Prosser, 1 Hill 256 .) In other cases, he was held to be an indorser. (Prosser v. Lequeer, 4 Hill 422 ; Leggett v. Raymond, 6 Hill 639 .) It is worthy of remark, that in the case of Lequeer v. Prosser, the words, “ for value received,” were in the written guarantee, which, it is said, in Brewster v. Silence, would have sufficed as an expression of the consideration. In Manrow v. Durham ( 3 Hill 584 ), it was

It may be observed, that the statute of frauds Avas not made a point in any of the cast s cited above, as decided in our OAvn state, in which the guarantor Avas held to be a joint maker of the note guarantied, or an indorser, or the maker of a neAv note, until the case of Manrow v. Durham. In that case (the guarantee having been executed after the making of the note), three of the judges in this court were of the opinion that it Avas a collateral undertaking,

The case of Hall v. Farmer ( 5 Denio 484 ), was an action brought on a guarantee of payment, indorsed on a promissory note. It was shown by paroi, that the makers of the note, and the plaintiff, adjusted and settled their respective demands against each other, at the date of the note, finding due to the plaintiff the amount mentioned in it; the defendants were not present at the settlement. After the balance was ascertained, the note and guarantee were made; the defendants signed the latter in this form:—• “ We, the undersigned, guaranty the payment of the within.” It was claimed, in the supreme court, that.the defendants were liable as makers of a promissory note, but the court held, that it was not, itself, a promissory note, but was a special promise to answer for the *debt or default of another, within the language and spirit of the statute of frauds, and, to be valid, must express the consideration on which it was made. This case was affirmed in this court, by a vote of four to three ; one of the majority placing his concurrence on the ground that the contract of the defendants was upheld by no consideration in fact; he thought that a collateral promise, by a third party, to pay a pre-existing debt, for which ho was in no wise liable, and- where no new credit was given, could not be sustained, without some other consideration, which did not appear in the case. The decision settled no general principle; that the defendants were neither makers nor indorsers of a promissory note, but that their contract was one of guaranty, had been settled before. (Spies v. Gilmore, 1 N. Y. 321 ; Brown v. Curtis, 2 Ibid. 225.)

The case of Brewster v. Silence ( 8 N. Y. 207 ), was an action on a guarantee, written beneath a promissory note, in this form: ‘.‘I hereby guarantee the payment of the above note. (Signed)

It is not perceived, however, that the court decided anything new, except, possibly, overthrowing a class of cases, holding that a guarantee made at the same time with the principal contract, and constituting an essential ground of the credit given to the principal debtor, requires no other consideration than that which upholds the principal contract, and that the consideration need not be expressed in the written guarantee, but may be shown by paroi evidence. It had been held before, that similar contracts of guaranty could not be construed to mean something else than what the language of the in-instrument plainly imports, with the view of giving effect to the supposed intention of the parties, as ascertained from extrinsic evidence; that, in form, it was a promise to answer for the debt or default of another, and is to

It is said, that the case, in its facts and principles, is just like that of the Union Bank v. Coster's Executors, and the one under consideration. This is not so, but it is plainly distinguishable. There was nothing in the instrument of guarantee expressing the consideration, and no terms or language from which it might be legally inferred, nor, if the note and guarantee were taken and construed together as one instrument, would any consideration for the guarantee appear on the face of the writing. Neither the consideration for the original nor collateral undertaking appears; the original ivas a mere promise to pay money, and although the words “ value received” '^imported a consideration sufficient to uphold that promise, yet, it could be shown, by paroi, that there was no consideration in fact to sustain it. But conceding that the consideration for the note sufficiently appears in the instrument, and the note-is to be treated as the debt of the maker, the guarantee is of an existing debt, and not of a debt to be contracted upon the credit of the guarantee. The consideration for the guarantee is a past, and not a future consideration. A consideration that will support a contract of guaranty, must consist in some benefit to the promissor, or some other person, at his request,

In the latter cases, the promise is to do an act, in consideration of some act to be done by the promissee, which implies a request. In the case under consideration, for example, the promise was, to be responsible for goods that White should buy from the plaintiffs, in consideration that the plaintiffs would sell and deliver to White such goods as he ■ might want, on a credit of one year. The ¡promise implied a request to furnish the goods to White, and *a compliance on the part of the plaintiffs, closed the contract and made it binding. Although it was necessary to show performance by the promissor, by paroi evidence, yet, as was said in the Union Bank v. Coster’s Executors—“ Such evidence is no violation of the statute requiring the consideration to be in writing; the consideration of the promise is express

The case of Brewster v. Silence, therefore, is neither in its facts nor principles just like the case of the Union Bank v. Coster’s Executors, and kindred cases. . In the one case, the guarantee was of an existing debt; in the other, of a debt to be contracted on the credit of the guarantee. One had a past consideration to support the promise, which was none at all; in the other, the promise was supported by an act to be done by'the prornissee at the implied request of the promissor. In the one, there was no consideration moving between the promissor and prornissee; there was none in fact, and none could be legally implied. The note and instrument of guaranty, taken together,- showed no valid contract of guaranty, and, therefore, by no rule of construction could the writing be held to express a consideration; in the other, the act to be done by the prornissee, at the request of the promissor, and which was the" consideration of the promise of the latter, was expressed in the writing. In the one, the only consideration that could support the promise, was one of benefit to the promissor, and this must have been expressly stated, and by no rule of construction applicable to this class of contracts, could be inferred; in the other, the promise rested upon some act to be performed in the future by the prornissee, at the request of the promissor; the thing to be done by the prornissee, was the consideration for the promissor.

Nor does the case show an intention to overrule or interfere with that of the Union Bank v. Coster’s Executors, or the principles that controlled the judgment in that case. Nothing is evinced showing that the court intended to overrule the principle that where the guarantee is of a to be contracted on the credit *of the guarantee, and the consideration of the guarantor’s promise, is something to be done by the prornissee, at his

In fact, there is no ground for saying that the case of Brewster v. Silence is in direct conflict with that of the Union Bank v. Coster’s Executors, or that it was intended to, or overrules the latter case. The cases are clearly distinguishable; but, if it were otherwise, the former must yield to the latter. To hold that all judicial powers of construction are paralyzed, when coming to an agreement depending on the statute of frauds, and that the requirements of the statute are not satisfied, in any case, unless the promissor has set forth in the writing, particularly, the reasons which induced him to enter into the contract, would be, especially since the case of the Union Bank v. Coster’s Executors, to inflict infinite mischief upon the commercial public. Securities, doubtless, since that

*The present case is in line, and cannot be distinguished from the case of the Union Bank v. Coster’s Executors. The defendant cannot escape the effect of his promise, on the ground that the consideration for such promise was not sufficiently expressed. The judgment of the supreme court should be reversed, and a new trial ordered, with costs to abide the event.

According to the contract between the plaintiffs and White, they were to sell him goods, from time to time, aud he was to pay them therefor, at the expiration of the specified period of credit. On the back of that writing, the defendant signed an agreement-, of the same date, declaring that he would “ be responsible for all such goods as White should buy of the Messrs. Church (the plaintiffs), within one year from the date, and which shall not be paid for according to the within contract.” These two instruments were made up at the same time, and the one which the defendant signed, expressly refers to the other. It is a direct and irresistible inference from the writings themselves, that the undertaking of the defendant was the foundation of the credit on which the goods were to be sold and delivered to White. The sale and delivery of those goods, was, therefore, the consideration of the defendant's agreement. This conclusion is perfectly plain on the face of the instrument; no extrinsic proof is required, nor is it even necessary, for this purpose, to turn the paper over and look at the other side. There is no occasion to consult the principal contract, except to ascertain the term of credit. The collateral writing, itself, discloses the consideration on Avhich it was giAren, to be the prospective sale of goods to another person. That this is sufficient within the statute of frauds, is certainly plain in principle, and it is moreover as Avell settled by

The supreme court pronounced the judgment under review, upon the supposed authority of Brewster v. Silence ( 8 N. Y. 210 ), as the latest decision of this court affecting the question. We followed that case in the very recent one of Draper v. Snow ( 20 N. Y. 331 ), but, in so doing, it is proper to say, that some of the members of this court,, finding that no distinction between the two cases existed,, d’.d not examine the principles involved, or the antecc

Cases, almost without number, might be cited, to support the rule of construction here laid down. Without referring to them at large, I will mention one of a very-marked character, which arose under a statute quite as precise, in its terms, as the statute of frauds. In Tonnelle v. Hall ( 4 N. Y. 140 ), a testator had disposed of real estate, in the body of his will, by designating the numbers of the lots, according to a map, a copy of which was attached, after the signatures of the testator and the witnesses. The reference to the map was as follows: “ Which *said lots are designated on a certain map, now on file in the office of the register of the city and county of New York, a copy of which, on a reduced scale, is hereto annexed,” and then followed a particular description of the map on file. A blank sheet intervened between the attestation clause of the will and the signatures, and the copy of the map. There was in the body of the will no description of the real estate sufficient to pass the title thereto, without a reference to the map. The statute of wills requires that the testator shall “ subscribe,” and the witnesses shall “ sign” their names, at “ the end of the tvill.” This court held, upon the fullest consideration, that the map was, in judgment of law, incorporated into the body of the will; and consequently, that the instrument was subscribed, at the end thereof, as the statute required. This decision is of great significance, when it is considered that the statute of wills, as contained in the revision of 1830, was designed to abrogate the construction which had been given to the English and our own former statute, by requiring the testator’s signature to be written, in a literal and exact sense, at the end of the will.

Referring now again to Brewster v. Silence, I find it suggested in the opinion which is reported, that our present statute of frauds was intended to alter the former

The distinction between express and implied covenants, will illustrate the idea. Express covenants are created bv any words, in a sealed agreement., evincing an intention to be bound by the obligation; evervform of expres

This question has very lately been examined and decided by the supreme court of New Hampshire, in the case of Simmons v. Steele ( 36 N. H. 73 ). In that case, the principal debtor, "-which was the New Hampshire Central Railroad, had signed a writing, acknowledging the receipt, from the plaintiff, of seventy-two shares of stock, and promising to return the same in one year, with certain interest specified. The defendants, at the same time, executed a collateral instrument at the foot of the other, in this language: “We guarantee the fulfilment of the above obligation, and hereby promise that said stock shall be returned at the time specified.” The action was on that guarantee, and the question, under the statute of frauds, was, whether it expressed a consideration. The court held that it did, and the reasons given for that conclusion appear to me entirely unanswerable. “It is very clearly apparent,” the court said, “from an inspection of both what are called the principal and

Tnis conclusion of the supreme court of New Hampshire is identical with the main proposition enunciated by Chief Justice Kent, in Leonard v. Vredenburgh ( 8 Johns. 28 ), the correctness of which was never questioned in this state.for forty years. I have looked at. all the cases an*®cec*en* *° th® decision *in Brewster v. Silence, and I am confident, that not one of them is in conflict with that proposition. On the contrary, there are few cases in the books which have been more frequently referred to, as the unquestioned law of the land, in respect to the main point determined. That point was, that a guarantee at the foot of a note, executed at the same time, and delivered with it, is to be read in connection with the principal contract, and is supported by the same consideration. The doctrine was not applied by Chief Justice Kent, and I do not apply it, to cases where

I am of opinion, however, that the court below erred in supposing that the present case was entirely undistinguishable from that of Brewster v. Silence. In that case, the guarantee, without a reference to the note at the the foot of which it was written, did not state a consideration. In the present one, the instrument, examined by itself, shows that the plaintiff was proposing to sell goods to the principal debtor, and ‘that the guarantee was intended to assure to him the payment for those goods. I think, myself, that this distinction is of no great value; because, for the reasons which have been given, I do not doubt, that the defendant’s agreement wmuld, for every legal purpose, have been the same, if, referring to the principal contract, it had simply, and without other words, guarantied the performance thereof. If that had been the form of the writing, the one to which it was annexed, and to Avhich it referred, would have shown with equal clearness that the intended sale of goods was the basis of both the contracts. There cannot be much difference between a promise, which, by its own terms, guaranties a certain debt to be contracted by another person, and one which, in general words, refers to, and guaranties the performance of the other person’s obliga - tian, when that obligation, on its face, shows that the thing guarantied is precisely the same. Nor can there be any wide distinction between a collateral undertaking, in either of these forms, to answer for a credit to bo given, and one to answer for a credit actually given, at the very moment when the undertaking is entered into. If, in one of these examples, we may look at the principal writing, in order to ascertain what it is that is guarantied by the instrument annexed, and thus to learn the consideration, we surely may do so, in the other. Upon dis