Yank, J.
The learned judges of the General Term were of the opinion that the letter of guaranty was notice to the plaintiff of an understanding, on the part of the defendant, that all the purchases which Dhad been made by Dikeman & Co. would amount to but about $600, and as they exceeded that sum that he had acted upon an erroneous statement of the facts. They based their order of reversal upon the theory that the defendant had been deceived; that the plaintiff knew it, and hence had no right to rely upon a guaranty procured by misrepresentation. FTo such issue, however, was raised by the pleadings, for the defense of fraud, or the reliance of defendant upon an erroneous statement of the facts is not suggested in the answer, which contains simply admissions
and denials, but nothing by way of confession and avoidance. The defendant did not ask that any such question should be submitted to the jury. Moreover, the nature of the contract and of the subject-matter thereof was such that neither party could know what the ten cases would amount to until the last parcel had been weighed, or not until partial delivery had been made, when it was too late for the plaintiff to recede, or to refuse further performance. The contract was for ten cases at fifteen and one-half cents per pound, and according to the usage of the paper trade, with reference to which the parties are presumed to have contracted, that number of cases would vary in price from “ about $600,” which is the language of the guaranty, to about $900. The defendant had notice that the amount of the purchase was uncertain, because Dikeman told him that he did not know what it would come to, and his remark that it would not amount to more than $600 was in the nature of an estimate rather than the assertion of a fact. The letter of the plaintiff asking for a guaranty was also indefinite as to the amount of the purchase, for while he named $1,000 as the limit of liability, he added that it was not likely that Dikeman & Co. would “want as much as that.” The defendant, in answering this letter, seems to distinguish between the amount that he expected said firm might buy and the amount that he was willing to guaranty, for after speaking of his confidence in the integrity and reliability of Dikeman & Co. he says: “ Still I do not care to make
myself
liable for so large an amount as one thousand dollars.” He was willing, however, to become personally liable for six hundred dollars. The plain intimation seems to be that while it would be safe for the plaintiff to give the credit asked for, he was unwilling himself to guarantee the payment of more than the smaller sum named. His allusion to the bills “ thus far purchased ” also implies an expectation that further purchases would be made.
While the law requires the creditor to act in good faith toward the guarantor, it does not hold him responsible for any deception practiced by the principal upon the latter without
the knowledge of the former, nor require him to make any disclosure or explanation, the withholding of which would not amount to a fraud.
(Western N. Y. Life Ins. Co.
v. Clinton, 66 N. Y. 326;
Casoni
v. Jerome, 58 id. 315; Baylies on Sureties
&
Guarantors, 214; Burge on Suretyship, 218.)
We do not think that there was any evidence to support the conclusion that the plaintiff knew when he received the guaranty that it had been procured by misrepresentation of the facts. Indeed, it is very doubtful whether the facts were intentionally misrepresented to the defendant at all. He did not so claim when notified of the default of Dikeman & Co., nor in his answer to the complaint, nbr in his testimony on the trial. But even if he was deceived, the plaintiff did not know it, for he had no information on the subject aside from that conveyed in the letter of guaranty, which we consider inadequate for that purpose. The amount named was so qualified by the word “ about ” as to render it too indefinite to require the plaintiff to volunteer information. A failure to correct that which purported to be merely an approximation is no evidence of bad faith, especially as the plaintiff did not at the time know whether the purchase would exceed the sum mentioned or not.
Moreover, as each party moved that a verdict be directed in his favor, and neither asked to go to the jury upon any question, a finding that there was no fraud will be presumed, because the evidence warranted it.
(Sutter
v. Vanderveer, 122 N. Y. 652.)
The learned counsel for the defendant insists that the order of the General Term should be affirmed, aside from the question of fraud, because, as he further claims, the guaranty was made upon the condition that the purchases should not exceed six hundred dollars. This position depends upon the construction to be given to the last sentence of the letter of guaranty, in which the writer, referring to “ the bills thus far purchased,” says that he understands they amount to about six hundred dollars. The defendant contends that the real meaning is as if the paragraph read,
“
provided the bills do not exceed six
hundred dollars.” On the other hand the plaintiff claims that this clause is not a limitation of the credit of Dikeman & Co., but of the extent of defendant’s liability.
A contract of guaranty, as all the authorities agree, should receive a reasonable interpretation, according to the intent of the parties as disclosed by the writing, which, in a case of ambiguity, may be read in the light of surrounding circumstances.
(People
v. Lee, 104 N. Y.
441; Evansville National Bank
v. Kaufmann, 93 id. 273; Brandt on Suretyship, 106; Fell’s Law of Guaranty, 43.) Some of the cases go farther and hold that if the doubt is not thus dispelled it should be resolved against the guarantor, because the words used are his own, and he is responsible for the ambiguity.
(Belloni
v. Freeborn, 63 N. Y. 383, 388;
Walrath
v. Thompson, 4 Hill, 200 ;
Crist
v. Burlingame, 62 Barb. 351.)
It is not reasonable to suppose that the defendant in writing this mercantile instrument to aid his friends in obtaining credit, intended to limit their credit, especially when he was so careful to throw no doubt upon the responsibility of the firm of which his brother-in-law was a member. On the other hand, it is reasonable to suppose that he intended to limit his own liability, because his interest would thereby be promoted. The words of limitation should, therefore, be applied to his liability, rather than to that of the firm, especially as he had already written that he did not care to make himself liable for so large an amount as one thousand dollars. The limitation of his own liability to six hundred dollars is thus made emphatic by contrast with what might be the liability of the firm. This seéms to have been the construction that the defendant himself placed upon his words, because he said in his telegram to the plaintiff, when notified of the failure of Dikeman & Co. to pay, that “ said guarantee was limited to six hundred dollars.” He did not suggest that it was conditional, or that if the purchases exceeded $600 he was not to be bound.
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Yank, J.
The learned judges of the General Term were of the opinion that the letter of guaranty was notice to the plaintiff of an understanding, on the part of the defendant, that all the purchases which Dhad been made by Dikeman & Co. would amount to but about $600, and as they exceeded that sum that he had acted upon an erroneous statement of the facts. They based their order of reversal upon the theory that the defendant had been deceived; that the plaintiff knew it, and hence had no right to rely upon a guaranty procured by misrepresentation. FTo such issue, however, was raised by the pleadings, for the defense of fraud, or the reliance of defendant upon an erroneous statement of the facts is not suggested in the answer, which contains simply admissions
and denials, but nothing by way of confession and avoidance. The defendant did not ask that any such question should be submitted to the jury. Moreover, the nature of the contract and of the subject-matter thereof was such that neither party could know what the ten cases would amount to until the last parcel had been weighed, or not until partial delivery had been made, when it was too late for the plaintiff to recede, or to refuse further performance. The contract was for ten cases at fifteen and one-half cents per pound, and according to the usage of the paper trade, with reference to which the parties are presumed to have contracted, that number of cases would vary in price from “ about $600,” which is the language of the guaranty, to about $900. The defendant had notice that the amount of the purchase was uncertain, because Dikeman told him that he did not know what it would come to, and his remark that it would not amount to more than $600 was in the nature of an estimate rather than the assertion of a fact. The letter of the plaintiff asking for a guaranty was also indefinite as to the amount of the purchase, for while he named $1,000 as the limit of liability, he added that it was not likely that Dikeman & Co. would “want as much as that.” The defendant, in answering this letter, seems to distinguish between the amount that he expected said firm might buy and the amount that he was willing to guaranty, for after speaking of his confidence in the integrity and reliability of Dikeman & Co. he says: “ Still I do not care to make
myself
liable for so large an amount as one thousand dollars.” He was willing, however, to become personally liable for six hundred dollars. The plain intimation seems to be that while it would be safe for the plaintiff to give the credit asked for, he was unwilling himself to guarantee the payment of more than the smaller sum named. His allusion to the bills “ thus far purchased ” also implies an expectation that further purchases would be made.
While the law requires the creditor to act in good faith toward the guarantor, it does not hold him responsible for any deception practiced by the principal upon the latter without
the knowledge of the former, nor require him to make any disclosure or explanation, the withholding of which would not amount to a fraud.
(Western N. Y. Life Ins. Co.
v. Clinton, 66 N. Y. 326;
Casoni
v. Jerome, 58 id. 315; Baylies on Sureties
&
Guarantors, 214; Burge on Suretyship, 218.)
We do not think that there was any evidence to support the conclusion that the plaintiff knew when he received the guaranty that it had been procured by misrepresentation of the facts. Indeed, it is very doubtful whether the facts were intentionally misrepresented to the defendant at all. He did not so claim when notified of the default of Dikeman & Co., nor in his answer to the complaint, nbr in his testimony on the trial. But even if he was deceived, the plaintiff did not know it, for he had no information on the subject aside from that conveyed in the letter of guaranty, which we consider inadequate for that purpose. The amount named was so qualified by the word “ about ” as to render it too indefinite to require the plaintiff to volunteer information. A failure to correct that which purported to be merely an approximation is no evidence of bad faith, especially as the plaintiff did not at the time know whether the purchase would exceed the sum mentioned or not.
Moreover, as each party moved that a verdict be directed in his favor, and neither asked to go to the jury upon any question, a finding that there was no fraud will be presumed, because the evidence warranted it.
(Sutter
v. Vanderveer, 122 N. Y. 652.)
The learned counsel for the defendant insists that the order of the General Term should be affirmed, aside from the question of fraud, because, as he further claims, the guaranty was made upon the condition that the purchases should not exceed six hundred dollars. This position depends upon the construction to be given to the last sentence of the letter of guaranty, in which the writer, referring to “ the bills thus far purchased,” says that he understands they amount to about six hundred dollars. The defendant contends that the real meaning is as if the paragraph read,
“
provided the bills do not exceed six
hundred dollars.” On the other hand the plaintiff claims that this clause is not a limitation of the credit of Dikeman & Co., but of the extent of defendant’s liability.
A contract of guaranty, as all the authorities agree, should receive a reasonable interpretation, according to the intent of the parties as disclosed by the writing, which, in a case of ambiguity, may be read in the light of surrounding circumstances.
(People
v. Lee, 104 N. Y.
441; Evansville National Bank
v. Kaufmann, 93 id. 273; Brandt on Suretyship, 106; Fell’s Law of Guaranty, 43.) Some of the cases go farther and hold that if the doubt is not thus dispelled it should be resolved against the guarantor, because the words used are his own, and he is responsible for the ambiguity.
(Belloni
v. Freeborn, 63 N. Y. 383, 388;
Walrath
v. Thompson, 4 Hill, 200 ;
Crist
v. Burlingame, 62 Barb. 351.)
It is not reasonable to suppose that the defendant in writing this mercantile instrument to aid his friends in obtaining credit, intended to limit their credit, especially when he was so careful to throw no doubt upon the responsibility of the firm of which his brother-in-law was a member. On the other hand, it is reasonable to suppose that he intended to limit his own liability, because his interest would thereby be promoted. The words of limitation should, therefore, be applied to his liability, rather than to that of the firm, especially as he had already written that he did not care to make himself liable for so large an amount as one thousand dollars. The limitation of his own liability to six hundred dollars is thus made emphatic by contrast with what might be the liability of the firm. This seéms to have been the construction that the defendant himself placed upon his words, because he said in his telegram to the plaintiff, when notified of the failure of Dikeman & Co. to pay, that “ said guarantee was limited to six hundred dollars.” He did not suggest that it was conditional, or that if the purchases exceeded $600 he was not to be bound. I| is apparent that he had in his mind his own liability when he wrote the contract and the telegram, and not the liability of the firm in excess of the amount assumed by him. This practical con
struction of the guaranty by the guarantor himself accords with our own, as it is the most reasonable and, therefore, the most probable. If he intended to effect such a strange purpose as to place a limitation upon the credit of Dilceman & Co., and thus impair their ability to protect him from liability on his guaranty, he should have made his meaning plain, so that the plaintiff could have understood it and withheld his goods. Because he was unwilling to bind himself beyond a certain sum, why should he restrict his principals to an unreasonable condition in which he had no concern? An instrument designed to further a business transaction should be so construed as to promote, rather than retard, its general purpose, and a construction that would operate as a useless restriction upon trade should be avoided, if possible, as not within the design of a reasonable man.
We think that the defendant intended to become responsible for the firm to the amount of $600, not by way of a continuing guaranty, but for goods already pui’chased, and that he did not intend to annex any other condition to his contract, or otherwise limit his liability.
The following authorities, more analogous in principle than similar in their facts, are cited in support of this construction.
(Stillman
v.
Northrup,
109 N. Y. 473 ;
Melcher
v.
Fisk,
67 id. 607;
Ringe
v.
Hudson,
24 id. 64 ;
Gates
v.
McKee,
13 id. 232;
Union Bank
v.
Coster,
3 id. 203;
Pratt
v.
Matthews,
24 Hun, 386;
Parker
v.
Wise,
6 M. & S. 239.)
The order of the General Term should be reversed and the judgment entered upon the verdict affirmed, with costs of both appeals.
All concur.
Order reversed and judgment affirmed.
Sickels—Yon. LXXXII. 54