Farmers' Bank v. Tatnall

12 Del. 287

• Court: Superior Court of Delaware
• Decided: September 15, 1885
• Status: Published

Opinion

Comegys, C. J.,

delivered the opinion of the Court (Houston, J., dissenting):

After having bestowed a great deal of reflection upon the question raised by the demurrer, and having considered the authorities and weighed the arguments of counsel, I have arrived at the conclusion that the declaration is defective in not averring notice to the defendant, or excuse for want of it, of acceptance of his proposal by the plaintiff.

I think that no greater variety can be found in any class of legal contracts than those of guaranty. The one which is the cause of action in this suit is different in its language from any other that I have seen; but nevertheless it is in its quality and effect, like a great many others which have undergone judicial examination. It is in these words:

“ I, Henry L. Tatnall, of the city of Wilmington, Delaware, -do hereby request that the Farmers’ Bank of the State of Delaware at Wilmington, do from time to time discount to the credit of the the firm of H. L. Tatnall & Co. such negotiable paper as they may offer to said Bank, whether as maker or indorser; and in consideration of the discounting by the said Bank at any time hereafter of any such negotiable paper, I do hereby, for myself, my executors and administrators, guarantee to the said Bank the prompt and full payment at maturity of any and all such paper so to be discounted as aforesaid.

“Witness my hand and seal this 14th day of February, A. D. 1882.

(Signed.) H. L. Tatnall. [seal.]”

“ Signed, sealed and delivered in presence of

Wm. P. Taylor.”

There is. a consideration stated in the paper, which renders unnecessary the presumption of valuable consideration the law would raise from the existence of the seal. We must, therefore, take the expressed consideration as the only one existing• it was the future credit desired to be given the firm of H. L. Tatnall & Co. In like cases, the writing is to be treated as an offer to become bound. Until it is accepted, it is not binding upon the offerer. He may recall it before it is acted upon, but not afterwards, for it has then been accepted, and is a" valid agreement binding the guarantor. The consideration stipulated for has been performed. It is thus like the case of one who calls upon another to sell goods (for example) to a third person, promising in legal form that if he should do so, he the promisor will guarantee him against loss in so doing. Such an agreement means that the promisor undertakes to pay the debt contracted at his request, if the principal debtor should not do it.

As it is not a complete contract in the beginning—it being a proposal or offer proceeding from one person to another—if it should be accepted by such other, he ought to give notice to that effect in a reasonable time to the proposer. Until this be done, there cannot be said to be that ággregatio mentium, or consensus, necessary for any valid contract. The right to recall an offer until accepted is conclusive of the duty of notice. It" would be worth nothing otherwise. This duty is reasonable that the party making the offer may know that he may be looked to, and take means to protect himself against the consequences of his undertaking. He cannot know this without notice in some way. Where the act is to be simultaneously performed, the performance is, itself, notice of acceptance: where it is to be done futurely, other notice oí it must be given to show acceptance. The cases cited to us on both sides are in accord with these views. It would be an unnecessary consumption of time to go through them again. The question with respect to notice, in the case of guaranty, is this—is the writing an offer or incomplete engagement, or is it absolute? If the latter, then no notice of acceptance is required.

An absolute guaranty is one simultaneously acted upon, as in the case of goods then sold and delivered to a third party on the credit of the guaranty, or that has no element of futurity in it: the other is a proposition or offer, to become responsible, which, if not accepted and acted upon at the time as an engagement of present operation, is subject to be recalled at any time before the consideration arises which was stipulated for in it. Until recalled, it may be accepted; but notice of acceptance must be given. The simple receipt of a proposition to guaranty future credit, is not the kind of acceptance contemplated in law, otherwise no notice would be required.

The foregoing is the view substantially as taken by the Supreme Court of the United States from the case of Russell v. Clark, in 7th Cranch, 69, downwards, and which has been followed by a very large majority of the courts of this country. It is also recognized in McIver v. Richardson, I. M. & S., 557, and not impugned as is believed by any English case since that case was decided.

But in support of the view taken, we have the case of Taylor & Co. v. McClung’s Exr. which of itself would remove any doubt we might feel. In that case, this Court speaking through the late Chief Justice said, upon a review of the cases mentioned—“ These cases clearly show that the party tendering a guarantee for future and prospective credits is entitled to notice of acceptance, and the party receiving it is bound to give notice in a reasonable time after acceptance, or the party offering will not be bound by it.”

We are therefore of opinion that the demurrer should be sustained, and we so adjudge and order the proper judgment to be entered.