Booth v. Irving National Exchange Bank

Burke, J., delivered the opinion of the Court. On the 20th day of February, 1907, the appellant executed the following guaranty: “For the purpose of inducing the Irving National Exchange Bank to extend credit to O. S. Norris, their successor or successors, in the form of loans and discounts, a'nd otherwise, and in consideration of the granting of such credit now and hereafter, I, A. E. Booth, do hereby guarantee to the extent of ten thousand dollars, unto the said the Irving National Exchange Bank, its successors, endorsees and assigns, the payment at maturity of every and all sums of money that may become due by the said O. S. Norris, their successor and successors, to the said the Irving National Exchange Bank, its successors, endorsees and assigns, upon every and all obligations of the said O. S. Norris, their successor and successors, direct and indirect, written and verbal, and implied, that may be now and hereafter incurred; and I do hereby consent that the securities of any kind and character that are now and,may hereafter be left with the said the Irving National Exchange ⁶⁷¹ Bank, its successors, endorsees or assigns, as collateral to any such obligations, or upon which a lien may exist therefor, may be exchanged, withdrawn or surrendered, from time to time, and that the time of payment of any said obligations may be extended from time to time, without notice to me or assent from me; and 1 do covenant and agree that my liability on tbis guarantee shall be direct, and not conditional upon the pursuit by the said the Irving National Exchange Bank, its successors, endorsees or assigns, of whatsoever remedies it or they may have against the said C. S. Norris, their successor and successors, or the securities or liens that it or they may possess. Dated, Balto., this 20th day of February, 1907. Guaranteed until January 1st, 1909.

I (signed) A. E. Booth, 2532 Eutaw Place, Balto., Md.” The appellant delivered this guaranty to O. S. Norris, who in turn delivered it to the plaintiff in this case, the appellee on this record. C. S. Norris was the president of Turle & Skidmore, a corporation, which was engaged in the dried fruit business. That corporation borrowed on August 10th, 1908, from the Irving National Exchange Bank the sum of sixteen hundred dollars, and gave to the bank on that date a demand note for that amount. The note bore the signature of Turle & Skidmore, and C. S. Norris, its president.

By endorsement on this note C. S. Norris guaranteed to the Irving National Exchange Bank the prompt payment of the loan when due, and consented that the time of payment of the loan might be extended without notice or further assent from him, and he also waived demand of payment of the note from the maker, and agreed that his liability on tbis guarantee should be direct and immediate, and not contingent or conditional. Payment was demanded of Turle and Skidmore in September, 1908, but tbe note was not paid, except as to tbe sum of six hundred dollars, which the hank permitted O. S. Norris to pay on account. The total amount of the principal and interest due upon this note at tlie time the judgment in this ⁶⁷² case was entered, was eleven hundred and eighty-two dollars and six cents. Demand was made upon the defendant for payment of the amount due the bank, and he denied any liability under the guaranty.

Suit was brought under the speedy judgment act in the Superior Court of Baltimore City, and the plaintiff tiled with the declaration the note, the guaranty of the defendant and also the guarantee of C. S. Horris to the bank endorsed thereon. As the. defendant by his next succeeding pleading did not deny their execution, they must be admitted for the purpose of the action. * Code, Article 75, section 24, subsection 108; Nicholson v. Snyder, 97 Md. 415 ; Horner v. Plumley, 97 Md. 271 ; Commonwealth Bank v. Kirkland, 102 Md. 662 . The case was tried before Judge Gorter without a jury, and judgment was entered for the plaintiff, from which the defendant has appealed. There would seem to be no difficulty as to the principle to be applied' in the construction of the guaranty.

It is said in Miller v. Stewart, 9 Wheaton, 680 , that: “Hothing can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended, by implication, beyond the tei’ms of his contract. To the extent, and in the manner, and under the circumstances pointed out in his obligation, he is bound, and no further. It is not sufficient that he may sustain no injury by a change in the contract, or that it may even be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal.

And Courts of Equity, as well as of law have been in the constant habit of scanning the contracts of sureties with considerable strictness. The class of cases which have been cited at the bar, where persons have been bound for the good conduct of clerks, of merchants, and other persons illustrate that position;” or, as stated by ⁶⁷³ Judge M'cShujuiy in Hooper v. Hooper, 81 Md. 169 : “Whilst the undertaking of a guarantor technically differs from that of a surety (Kramph v. Hats, 52 Pa. St. 225), still the contract of guaranty is the obligation of a surety. Davis v. Well, Fargo & Co., 104 U. S. 159 .

Both are accessory contracts; that of a surety is in some sense conditional; that of a guarantor is strictly so. A guaranty is a secondary, whilst a surety is a primary obligation. A guaranty is a mercantile instrument to be construed according to what is fairly to be presumed to have been the understanding of the parties, without auy strict technical accuracy, but in furtherance of its spirit and liberally to promote the use and convenience of commercial intercourse. It should he given that effect which will best accord with the intention of the parties as manifested by the terms o-f the guaranty, taken in connection -with the subject-matter to which it relates, and neither enlarging the words beyond their natural import in favor of the creditor, nor restricting them in aid of the surety.

The circumstances accompanying the whole transaction may be looked to in ascertaining the understanding of the parties. Lee v. Dick, 10 Pet. 482 ; Mauran v. Bullus, 16 Pet. 528 ; Bell v. Bruen, 1 How. 169 ; Davis v. Wells, Fargo & Co., 104 U. S. 159 ; Mussey v. Rayner, 22 Pick. 228. The contract of a surety must have such a construction given to it 'as will caray out the intention of the parties to it. Englar v. Peoples’ Fire Ins.

Co., 46 Md. 333 ; McShane & Rogers v. Howard Bank, 73 Md. 135 , and the contract of a guarantor ought- not to he interpreted by any different rule.” There is evidence iu the record that the plaintiff accepted Ihe note of Turle and Skidmore and loaned the money on the faith of the guaranty. Mr. Ward, the cashier of the plaintiff, said, referring to the loan, “the credit in this case was extended upon the responsibility of O. S. Horans, as backed up by the guarantee of Alfred E. Booth,” and the record states that the plaintiff “acting on the faith of this guarantee” loaned the sum of sixteen hundred dollars to Turle and Skidmore. Both Turle and.Skidmore and C S. ⁶⁷⁴ Norris are indebted, to the bank, — the corporation on the note and O. S. Norris ujxon the guaranty endorsed upon the note. The terms of the guaranty signed by the defendant are broad and comprehensive.

It was given for the purpose of inducing the plaintiff to extend credit to Norris, and as credit was extended to him under the circumstances stated in the record whereby he became in August, 1908, within the period" limited by the guaranty indebted to the bank, there