American Iron & Steel Manufacturing Co. v. Beall

Briscoe, J., delivered the opinion of the Court. This action was brought by the appellant, the American Iron and Steel Manufacturing Company, a corporation under the laws of the State of Pennsylvania against the appellee, as guarantor of a debt on simple contract, due the appellant by the firm of Flaherty & Lande, of Baltimore City. The defense to the action is made by a demurrer to the plaintiff’s declaration, on the ground of release and discharge of the undertaking of guaranty. ⁴²⁴ The cause of action and the facts of the case are set out in the declaration and briefly stated areas follows: The defendant on the 4th of April, 1904, guaranteed to the plaintiff payment for certain goods sold and delivered to the firm of Flaherty & Lande, amounting to the sum of $2,000 for use in the Baltimore Light House, on a thirty days’ credit, with one per cent discount for cash within ten days after shipment. The debt was not paid at maturity, and on July 26th, 1904, the plaintiff wrote the defendant the following letter: “We are in receipt of a letter from Flaherty & Lande asking for an extension of time on their bills of April 19th and 29th, amounting to $1,722.87.

Inasmuch as you have guaranteed the account we advise that we will agree to a thirty days’ extension, as they ask, if the same is satisfactory to you. Please drop us a line by early mail.” On July 27th the defendant made the following reply: “I have yours of the 26th instant, and note contents relative to the extension of account of Flaherty & Lande which is entirely satisfactory.” The declaration then states that thereafter the extension of credit was given by the'plaintiff to Flaherty & Lande, but at the expiration thereof they failed to pay the bill, whereupon, after conference with them in relation thereto the plaintiff on the 30th day of August, 1904, again wrote the defendant as follows: “We had a telephone conversation with Flaherty & Lande this morning, and they"asked for another extension of one month on bills of April 19th and 29th, amounting to $1,722.87. We advised them that we would accept a one month.’s note for the account so as not to discommode you, and also favor them. In conclusion wish to state that note will have to be met at time of maturity.” “This letter was duly mailed by the plaintiff to the defendant on the day of its date and was duly received by the defendant in due course of mail, but the defendant made no reply to it, whereby the plaintiff was induced to believe and the defendant intended to make it believe, that Flaherty & Lande’s second application for an extension, being made as much for ⁴²⁵ the benefit of the defendant as for their benefit, had been made with his approval and that his failure to object thereto operated as a tacit acquiescence and consent to the granting of extension and the defendant by such silence did in fact acquiesce in and consent to the extension, and the plaintiff relying upon such acquiescence and consent by the defendant did thereafter accept from Flaherty & Lande their promissory note for the sum of $1,722.87 without interest dated August 31st, 1904, and payable thirty days after date without interest; which note was given without any new consideration therefor moving from Flaherty & Lande to the plaintiff and it has never been transferred by it except for the purpose of collection only, and it still remains in the possession of the plaintiff, but when the note matured Flaherty & Lande did not pay the same, but the same remains due and unpaid to the plaintiff.” It will be seen that the plaintiff bases its right to recover, upon two distinct grounds, first: because the second agreement for extension of time was wholly without consideration and therefore ineffectual to relieve the defendant from liability under his contract and second: because the agreement to extend time was given with the alleged acquiescence and consent of the defendant, and will not relieve him from liability.

There can be no difficulty as to the rule of