Cumberland Glass Manufacturing Co. v. Wheaton

94 N.E. 803, 208 Mass. 425, 1911 Mass. LEXIS 845

Opinion

Braley, J.

The defendants having offered no evidence at the trial and having conceded at the argument that the testimony introduced by the plaintiff should be treated as conclusive proof of the facts, the verdict ordered and returned for the plaintiff must stand unless the rulings of law were erroneous.

The action is brought to recover from the contesting defendants as guarantors, a debt due to the plaintiff for glass bottles sold to their principal, the Yo-Yo Company, hereinafter referred to as the company, and for damages arising from a breach of the contract by the purchaser. Before the contract of sale, negotiations as to its terms and conditions were had with the plaintiff’s local manager and the treasurer of the company. The company having no financial rating, guarantors were required, and the names of the defendants were submitted to and approved by the home office of the plaintiff. A contract on one of the regular forms used by the plaintiff, which contained not only the contract of sale but the clause of guaranty, was prepared and delivered to the treasurer and general manager of the company. It purports by the recitals in the first paragraph to be a contract between the respective corporations, and it is only in the last paragraph that the defendants in consideration of the plaintiff furnishing the company the “ various styles of bottles covered by this order ” guaranteed “ the account.” The declaration in each count alleges, that the contract was signed by the company, yet it was executed only by the defendants, and then delivered by the treasurer to the plaintiff’s manager, who apparently in his presence indorsed upon it the plaintiffs acceptance. But the intention of the treasurer to adopt and present it as the contract of the corporation is clear, and the defendants do not question that by virtue of his office he had authority to act in all matters pertaining to its usual course of business unless restricted by some vote or by-law, of which there is no evidence. Fillebrown v. Hayward, 190 Mass. 472, 480, and cases cited. It was stipulated in the contract that it should not be binding until accepted at the plaintiff’s home office, to which it was forwarded after the indorsement. If the act of the manager was not within the scope of his agency, a written- acceptance was not required, and the plaintiff never having given notice of disaffirmance and having manufactured and delivered a part of the bottles, there was sufficient proof that it not only accepted the agreement but independently ratified the act of its manager. Springfield v. Harris, 107 Mass. 532. Beacon Trust Co. v. Souther, 183 Mass. 413, 416.

But, if the contract of sale was accepted and the principals became bound, the defendants assert that they were not bound for want of notice to them of the acceptance of the guaranty. If the defendant’s undertaking had been merely a contingent offer to become responsible, notice to them of the plaintiff’s acceptance would have been necessary to complete the guaranty. Mussey v. Rayner, 22 Pick. 223. Bishop v. Eaton, 161 Mass. 496. The instrument, however, was executed and delivered by them to the treasurer, who was one of the guarantors, and the defendants do not contend that they were ignorant of its contents or of the purpose for which they signed or of the fact that it was to be delivered by him to the plaintiff. Having made the treasurer and co-guarantor their agent, they were bound by his acts in the formation and completion of the contract, and his knowledge of the plaintiff’s acceptance or affirmation, as if they had been individually present. Graham v. Middleby, 185 Mass, 349, 355. New-Haven County Bank v. Mitchell, 15 Conn. 206. Noyes v. Nichols, 28 Vt. 159. Nading v. McGregor, 121 Ind. 465. The delivery and acceptance of the contract of sale and the incorporated contract of guaranty, which was absolute and unconditional, were contemporaneous, and the sale of the goods and the extension of credit in reliance upon the guaranty were consummated as the parties intended by one connected transaction. A further or final notice of acceptance under these circumstances would have been a vain and useless act. Paige v. Parker, 8 Gray, 211. Lennox v. Murphy, 171 Mass. 370, 373. Lynn Safe Deposit & Trust Co. v. Andrews, 180 Mass. 527. Bank of Newbury v. Sinclair, 60 N. H. 100. Smith v. Dann, 6 Hill, 543. Noyes v. Nichols, 28 Vt. 159, 177, 178. New-Baven County Bank v. Mitchell, 15 Conn. 206, 218, 219. Wise v. Miller, 45 Ohio St. 388. Mitchell v. Mc Cleary, 42 Md. 374. Heyman v. Dooley, 77 Md. 162. Wills v. Ross, 77 Ind. 1. Frost v. Standard Metal Co. 215 Ill. 240. Davis v. Wells, 104 U. S. 159. Davis Sewing Machine Co. v. Richards, 115 U. S. 524.

Nor was the plaintiff required to notify the defendants of sales made to their principal, or that, the company after the contract had been partially performed having given notice that it would be unable to pay for future deliveries in accordance with its terms, the plaintiff ceased further performance, but did not exercise the option of cancellation. It was said in Vinal v. Richardson, 13 Allen, 521, 527, where the doctrine invoked by the defendants is elaborately discussed by Wells, J., “ It is true, there are authorities to the effect that a demand upon the party primarily liable, and notice of his default given to the guarantor, are necessary, before any action can be maintained upon the guaranty. But the better doctrine, and that which seems to us to be best supported, both upon reasoning and authority, is that demand and notice are not essential prerequisites to an action, and need not be alleged nor proved, unless the terms of the guaranty, or the nature of the thing guaranteed, require such proceeding, in order to [show] a proper fulfilment of the obligations imposed by the guaranty upon the party holding it, or in order to establish a default by the principal and a breach of the contract declared on. ... It must be derived, if it exist, from the terms of the contract, or the nature and circumstances of the particular case, and not from the general rule.” The contract guaranteed was specific as to the quantity of bot-ties to be manufactured, and the price, and there was no contingency under which credit could be so extended, at the option of the plaintiff, as to create a liability in excess of that contemplated and secured by the defendants. If the guaranty had not been furnished, the contract would not have been made. It expressly formed part of the consideration, and the defendants must be held to have understood that the contract was to be performed according to its terms, by which no notice to them of either the debtor’s failure to pay for goods delivered or refusal to receive and pay for goods manufactured but not delivered, was required. The plaintiff having proved a default by the principal, was not compelled to prove notice to the defendants of the default in order to recover. Vinal v. Richardson, 13 Allen, 521. Watertown Fire Ins. Co. v. Simmons, 131 Mass. 85. Welch v. Walsh, 177 Mass. 555. A. M. McPhail Piano Co. v. Meservey, 168 Mass. 209. Smith v. Dann, 6 Hill, 543. New-Haven County Bank v. Mitchell, 15 Conn. 206. Mathews v. Chrisman, 12 Sm. & M. 595. Noyes v. Nichols, 28 Vt. 159. Dickerson v. Derrickson, 39 Ill. 574. Hitchcock v. Humfrey, 5 Man. & G. 559. Heyman v. Dooley, 77 Md. 162. Bank of Newbury v. Sinclair, 60 N. H. 100, 106. Wise v. Miller, 45 Ohio St. 388. Nading v. McGregor, 121 Ind. 465. Hubbard v. Haley, 96 Wis. 578. Goring v. Edmonds, 6 Bing. 94.

But upon a narrower ground, the defendants’ position is not well taken. The guarantor can insist upon the defense of want of notice only where he has been or may be prejudiced by the failure to notify of the principal’s default. Vinal v. Richardson, 13 Allen, 521, 528. Salisbury v. Hale, 12 Pick. 415. Bishop v. Eaton, 161 Mass. 496. Davis v. Wells, 104 U. S. 159. The plaintiff upon the debtor’s default diligently pressed for payment, and then brought suit and attached the company’s property. The attachment was dissolved by proceedings in bankruptcy, and the plaintiff proved the claims demanded in the present action, and credited the dividend received. If the defendants upon notice had paid the indebtedness, adjusted the damages claimed and sued their principal, or proved in bankruptcy its liability to them, they would have derived no greater benefit than that conferred by the plaintiff’s suit and proof.

But, if the plaintiff is entitled to recover, the defendants, while admitting their liability under the first count for the bot-ties delivered, deny that they are responsible in damages under the second and third counts for the company’s breach of the contract. If the language of their obligation is restricted to bottles delivered, they are right in this contention. It is however the intention of the parties to be ascertained from the whole instrument, viewed in connection with the conditions when the contract was made, which must control. Bent v. Hartshorn, 1 Met. 24, 25. Smith v. Vose & Sons Piano Co. 194 Mass. 193. The contract of sale is entire, even if each delivery of bottles as the company called for them is stipulated to be a separate contract for which payment could be enforced. Fullam v. Wright & Colton Wire Cloth Co. 196 Mass. 474, 476. It was not merely an obligation to pay the instalments as they became due, but an absolute promise to make the plaintiff whole for the full amount if the debtor defaulted. The measure of the plaintiff’s recovery consequently is commensurate with the company’s liability. The plaintiff could have sued the company for the breach, but it could not enhance damages by manufacturing bottles after notice that the company declined to accept them. It would have been entitled only to the difference between the market price and the contract price for bottles ready for delivery and bottles to be manufactured to the amount called for by the contract. Barrie v. Quinhy, 206 Mass, 259. The defendants, however, if held in damages do not question the assessments, and the result is, that all their requests for rulings and their request that a verdict be ordered in their favor were rightly denied.

Exceptions overruled.