Summary
In Church v. Brown (21 N.Y. 315), decided in 1863, the defendant signed on the back of an agreement the following memorandum: "I will be responsible for all such goods as Mr. White shall buy of the Messrs.
Summary of this case from Hardt v. RecknagelOpinion
March Term, 1860
Campbell McMaster, for the appellants.
Morris Brown, respondent, in person.
The statute requires every special promise to answer for the debt, default, or miscarriage of another, to be in writing, subscribed by the party to be charged thereby, and expressing therein the consideration. The consideration and promise must be expressed in the instrument, or the agreement is void (2 R.S., 135). The referee held, in this case, that the agreement of the defendant was void, because no consideration was expressed therein, as required by the statute; and this is the single point for review.
Neither the English statute of frauds, nor ours, prior to the Revised Statutes, in terms, required the consideration to be expressed in an agreement to answer for the debt or default of another; but the courts had held, before the verbal change of the statute in this respect, that the consideration and promise must both be expressed in the writing. ( Sears v. Brink, 3 John., 210; Douglass v. Howland, 24 Wend., 35.) The Revised Statutes, therefore, added nothing but what had been judicially determined as necessary to fulfill the requirements of this noted statute, as it was originally adopted in England, and in this State. I know of no case, in the courts of this State, before or since the Revised Statutes, holding that where, from the whole instrument, the consideration does not expressly, or by necessary inference, appear, the omission may be supplied by parol proof, and the statute satisfied in that way. An undertaking to answer for another, is unquestionably within the statute unless the consideration be expressed in the instrument subscribed by the promisor. But how expressed? Certainly it has never been deemed absolutely necessary that any particular form of words should be used in expressing the consideration. It has been held, often, that a seal expresses the consideration within the meaning of the statute. The same rules of construction are applicable to collateral, as to original undertakings, in implying or inferring the consideration from the terms of the instrument. It is enough, said PRATT, J., in delivering the opinion of the court in the Union Bank v. Coster's Executors (3 Comst., 203), if, from the whole instrument, the consideration expressly, or by necessary inference, appears, so that it be clear that such, and no other, was the consideration upon which the promise was made. ( Douglass v. Howland, 24 Wend., 35; Allen v. Jaquish, 21 Wend., 628.) To hold, at this late day, that, for the purpose of satisfying the statute, a particular form of words, expressive of the consideration, must be written in a guaranty, would be to overthrow a series of decisions extending through the last half century. In Stadt v. Lill (9 East., 348), the written guaranty was in these words: "I guarantie the payment of any goods which I. Stadt delivers to I. Nicholls." It was objected that there was no consideration stated for the promise. But Lord ELLENBOROUGH held that the stipulated delivery of the goods to Nicholls, was a consideration, appearing on the face of the writing, and when the delivery took place, the consideration attached. In Bailey v. Freeman (11 John. R., 221), the defendant signed a guaranty attached to the agreement of one Blanche, to deliver merchandise to the plaintiff, in these words: "I do hereby guaranty the performance of the above agreement, and every part thereof, on the part of N. Blanche, to be performed at the time, and to the amount therein mentioned." It was urged that the guaranty was void for not expressing a consideration, but the court said that the guaranty was part of an entire contract, consisting of the agreement signed by Blanche, and the guaranty signed by the defendant, and, that as a consideration was apparent on the face of the original agreement, the agreement was good. In Rogers v. Kneeland (10 Wend., 219), it appeared that L. Morgan Sons wrote to N. Rogers Sons, requesting them to indemnify Kneeland against damages and costs, in a litigation which Kneeland was conducting for the benefit of the Morgans. Rogers Sons indorsed upon this letter, and signed the following promise: "We will promptly comply with the request of L. Morgan Sons, as contained in the within order." The objection that there was no consideration expressed in it, was overruled. The judgment of the Supreme Court was unanimously affirmed in the Court of Errors (13 Wend., 115), WALWORTH, Chancellor, delivering the opinion of the court, in which he said, "there is sufficient consideration on the face of this agreement, to take it out of the statute of frauds, if, from the terms of the whole agreement (the letter and guaranty), thus taken together, a sufficient consideration for the collateral promise or guaranty appears, it is sufficient." In Marquand v. Hipper (12 Wend., 520), the guaranty was in these words: "I do guaranty and agree to become security for the amount of any value, in silver or money, not exceeding $400, that Marquand Brother, may, from time to time, for the ensuing two years, put into the hands of I.I.M., for the purpose of manufacturing into work, and that, upon such deficiency being proved, if said M. refuses to pay, that I will assume to pay the same, with interest on the amount from time due." The court said: "The consideration sufficiently appears on the face of the instrument; it is the putting into the hands of M., by the plaintiff, of any amount of silver, not exceeding $400, for the purpose of being manufactured by him." In Staats v. Howlett (4 Denio, 559), the guaranty was as follows: "To B. P Staats — I hereby obligate myself to hold you harmless for any indorsement you may make for, or have made for the late firm of P.H. F., not exceeding $5,000." The court held that the consideration was expressed, so far as related to future indorsements. In Union Bank v. Coster's Executors (3 Comst., 203), Hechscher Coster, merchants in New York, sent to Kohn, Darrow Co., in New Orleans, a letter of credit as follows: "Sirs — We hereby agree to accept and pay, at maturity, any draft or drafts on us, at sixty days' sight, issued by Kohn, Darrow Co., of your city, to the extent of $25,000, and negotiated through your bank." At the foot of this was the following guaranty, signed by John G. Coster: "I hereby guaranty the due acceptance and payment of any draft or drafts issued in pursuance of the above credit." The court held that, construing the two instruments together as one instrument, the consideration for the guaranty was sufficiently expressed. In Gates v. McKee (3 Kern., 232), the guaranty was as follows: "Mr. Gates — Sir: — I will be responsible for what stock Mr. E. McKee has had, or may want hereafter, to the amount of $500." It was held that the instrument expressed the consideration within the requirements of the statute. In truth, the principle runs through all the cases that these contracts of guaranty are to be construed by the same rules as original undertakings, with the exception that the consideration must appear on the face of the writing; whereas in original contracts it may be shown by parol. A reasonable construction is to be given to the instrument, and if, from the terms of it, the consideration for the promise is necessarily inferable, it is expressed in it within the meaning of the statute. Of the cases above cited, in no single one was the consideration expressly stated in the writing, but in each and all of them was apparent, by a reasonable construction of the terms or language of the instrument. Another rule, also, is applicable to this class of contracts, viz.: the construing together, as one instrument, two or more instruments given at the same time, and relating to the same subject matter, This rule was applied in Rogers v. Kneeland (13 Wend., 115), and in Union Bank v. Coster's Executors (3 Comst., 203). In the former case, Chancellor WALWORTH said: "When the guaranty, or promise to pay the debt of another, is made at the same time with the agreement to which it is collateral, and is indorsed thereon, and refers thereto, the whole is to be taken together as an entire agreement, for the purpose of ascertaining whether it is a valid agreement within the provisions of the statute. And if, from the terms of the whole agreement thus taken together, a sufficient consideration for the collateral promise or guaranty appears, it is sufficient." In the latter case, PRATT, J., uses this language: "When a guaranty is given at the same time with the principal contract, and forms a part of the entire transaction, if the consideration be stated in the principal contract, though none be stated in the guaranty, it will suffice."
Now, if the cases cited, and especially that of the Union Bank v. Coster's Executors, which arose long subsequent to the Revised Statutes, are to be followed as authority, the referee clearly erred in holding that there was no consideration expressed in the defendant's guaranty, as required by statute. The present case cannot be distinguished from that of the Union Bank v. Coster's Executors; the controlling principle of which decision was necessarily involved, and reaffirmed and approved in Gates v. McKee (3 Kern., 232). On the 1st of July, 1852, the plaintiffs entered into an agreement with Thomas White, to sell to the latter, from their store, such articles of goods, in the hardware line, as he might want, on a credit of one year; interest to be charged thereon after six months from the time of purchase. In case, at any time after the expiration of one year from the date of the contract, the plaintiffs desired to close up the contract, they were to give White one month's notice of such intention, and, for the balance of the account, they might hold against him unpaid, according to the terms of the contract, they agreed to take good responsible notes, due in six months from the time of notification. Simultaneously with the execution of this agreement, the defendant indorsed upon it the following guaranty: "I will be responsible for all such goods as Mr. White shall buy of the Messrs. Church, within one year from date, and which shall not be paid for according to the terms of the within contract. July 1, 1852 (signed), M. Brown." Now, construing these instruments together as one, the consideration plainly appears on the face of the writing. It is the sale and delivery, by the plaintiffs, to White, of such goods as the latter might want from their store, for one year from the date of the agreement. Paraphrased, the contract would fairly read in this way: "In consideration that you, the Messrs. Church, sell and deliver to Thomas White, from your store, such articles of goods, in the hardware line, as he may want, on a credit of one year, interest to be charged thereon after six months from the time of purchase, I, Morris Brown, will be responsible for all such goods as White shall buy within one year, and which shall not be paid for according to the terms of the contract." The case is a plainer one than that of the Union Bank v. Coster's Executors, as parol evidence was not required to show that the original and collateral contract related to the same subject matter, or to aid the court in giving a true construction to any ambiguous terms in the agreement, as there were none. It seems a clear case, in which the consideration is manifest, and is sufficiently expressed to satisfy the requirements of the statute in the instrument of guaranty, and the agreement on which it was indorsed and to which it referred. The remarks of BRONSON, J., in Staats v. Howlett (4 Denio, 559), may well be applied to it, that "if this contract should be held void (on the ground that the consideration was not expressed), it would overthrow most of the guarantees and letters of credit which now enter so largely into the commercial world."
There is a class of cases in the books, in respect to guarantees of payment indorsed or written on promissory notes, that has not escaped observation. In regard to these, there is much confusion, or, at least, was, until the decision in Brewster v. Silence (4 Seld., 207). In the earlier cases, where a person signed a guaranty of payment indorsed on a promissory note, and who was privy to the original consideration of the note, and signed the indorsement cotemporaneously with the making of the note, it was held that he might be treated as a joint and several promisor with the party signing on the face of the note. ( Hough v. Gray, 19 Wend., 202; Lequeer v. Prosser, 1 Hill, 256.) In other cases he was held to be an indorser. ( Prosser v. Lequeer, 4 Hill, 422; Leggett v. Raymond, 6 Hill, 639.) It is worthy of remark, that in the case of Lequeer v. Prosser, the words, "for value received," were in the written guaranty, which, it is said in Brewster v. Silence, would have sufficed as an expression of the consideration. In Manrow v. Durham (3 Hill, 584), it was proved, by parol, that C.P. Durham purchased a horse of the plaintiff, and, in part payment therefor, transferred to him a note of Ephraim Durham, of which he was the payee, on the back of which was indorsed the following guaranty, upon which the suit was brought: "We guaranty the payment of the within note." This was signed by C.P. Durham and one Moulthrop, who was proved, by parol, to have signed it at C.P. Durham's request, and as his surety. The Supreme Court held that the writing was, in substance and legal effect, a promissory note, and, as such, it imported prima facie to be founded upon a valuable consideration. The judgment of the Supreme Court was affirmed in this court, not on the ground that the instrument amounted to a promissory note or general indorsement, but on the ground that undertaking was for the payment of the debt of one of the guarantors, and, therefore, original, and not reached by the statute. This case follows that of Brown v. Curtis (2 Comst., 225), where it was held that where the payee and holder of a promissory note transferred it to his creditor, to pay his own debt, and, at the same time, executed on the back of the note transferred a guaranty of the payment thereof, that such guaranty was not within the statute of frauds, and was valid, although it expressed no consideration; it being, though in form, a promise to answer for the debt of another, in substance, an engagement to pay the guarantor's own debt, in a particular way, and would be good without any writing. It may be observed that the statute of frauds was not made a point in any of the cases cited above, as decided in our own State, in which the guarantor was held to be a joint maker of the note guaranteed, or an indorser, or the maker of a new note, until the case of Manrow v. Durham. In that case (the guaranty having been executed after the making of the note), three of the judges in this court were of the opinion that it was a collateral undertaking, and no consideration being expressed, it was void by the statute of frauds.
The case of Hall v. Farmer (5 Denio, 484), was an action brought on a guaranty of payment, indorsed on a promissory note. It was shown by parol, that the makers of the note, and the plaintiff, adjusted and settled their respective demands against each other, at the date of the note, finding due to the plaintiff the amount mentioned in it. The defendants were not present at the settlement. After the balance was ascertained, the note and guaranty were made; the defendants signed the latter in this form: "We, the undersigned, guaranty the payment of the within." It was claimed, in the Supreme Court, that the defendants were liable as makers of a promissory note, but the court held that it was not, itself, a promissory note, but was a special promise to answer for the debt or default of another, within the language and spirit of the statute of frauds, and, to be valid, must express the consideration on which it was made. This case was affirmed in this court by a vote of four to three; one of the majority placing his concurrence on the ground that the contract of the defendants was upheld by no consideration in fact. He thought that a collateral promise, by a third party, to pay a pre-existing debt, for which he was in no wise liable, and where no new credit was given, could not be sustained without some other consideration, which did not appear in the case. The decision settled no general principle. That the defendants were neither makers nor indorsers of a promissory note, but that their contract was one of guaranty, had been settled before. ( Spies v. Gilmore, 1 Comst., 321; Brown v. Curtis, 2 Comst., 225.)
The case of Brewster v. Silence (4 Seld., 207), was an action on a guaranty, written beneath a promissory note, in this form: "I hereby guarantee the payment of the above note (signed), F. Silence." It was shown, by parol, that on the 18th of April, 1848, George Silence purchased a pair of horses of one Thompson, and that a condition of the sale, was, that the note to be given for them should be guaranteed by the defendant, and the sale was not to be consummated until after the execution of the guaranty. George Silence made and executed a note for $140, payable to the order of Thompson, at the Rochester City Bank, by the 1st of November, following, and the defendant signed the guaranty at the same time. After the execution of the note and guaranty, the horses were delivered by Thompson to George Silence, who at the same time delivered the note and guaranty to Thompson. The court held that a guaranty, written beneath the promissory note of a third person, and delivered with it upon a previous agreement, is not a part of the note, and the guarantor is not a joint maker with the maker of the note; but it is a distinct contract to answer for the debt of a third person, and must be in writing and express the consideration upon which it is made, or it will be void; that such consideration cannot be supplied by parol proof; accordingly, it was held that the action could not be sustained upon the guaranty. It is not perceived, however, that the court decided anything new, except possibly overthrowing a class of cases holding that a guaranty made at the same time with the principal contract, and constituting an essential ground of the credit given to the principal debtor, requires no other consideration than that which upholds the principal contract, and that the consideration need not be expressed in the written guaranty, but may be shown by parol evidence. It had been held before, that similar contracts of guaranty could not be construed to mean something else than what the language of the instrument plainly imports, with the view of giving effect to the supposed intention of the parties, as ascertained from extrinsic evidence; that in form it was a promise to answer for the debt or default of another, and is to be so construed and treated, unless it be shown, by parol proof, that in substance it was an undertaking, by the guarantor, for his own benefit, and upon a full consideration received by himself. ( Brown v. Curtis, 2 Comst., 225.) Being a promise to answer for the debt or default of another, and nothing else, the consideration could not be shown by parol, but must be expressed in the instrument to make it valid. All that the case decides, is, that an undertaking, in form and substance collateral, though executed simultaneously with the promissory note on which it is written, is invalid if the consideration be not expressed therein; and, although there may be a good consideration for the special promise, it cannot be shown by parol evidence in an action on the guaranty. It is said that the case, in its facts and principles, is just like that of the Union Bank v. Coster's Executors, and the one under consideration. This is not so, but it is plainly distinguishable. There was nothing in the instrument of guaranty expressing the consideration, or no terms or language from which it might be legally inferred, nor, if the note and guaranty were taken and construed together as one instrument, would any consideration for the guaranty appear on the face of the writing. Neither the consideration for the original nor collateral undertaking appears. The original was a mere promise to pay money, and although the words "value received" imported a consideration sufficient to uphold that promise, yet it could be shown, by parol, that there was no consideration in fact to sustain it. But conceding that the consideration for the note sufficiently appears in the instrument, and the note is to be treated as the debt of the maker, the guaranty is of an existing debt, and not of a debt to be contracted upon the credit of the guaranty. The consideration for the guaranty is a past, and not a future consideration. A consideration that will support a contract of guaranty, must consist in some benefit to the promisor, or some other person at his request, or some detriment to the promisee. It cannot be pretended that the guarantor of an existing debt of a third person, is, himself, to be benefited by the guaranty. It is nothing but an undertaking, on a past consideration, for the benefit of another. A past consideration, unless done at the request of the promisor, is not sufficient to support any promise. Regarding the note as the existing debt of George Silence, and the defendant as the guarantor for the payment of it, the promise of the latter would have a past consideration, only, to support it; and, to make that sufficient, the guaranty must have been made at the guarantor's own request. So that construing a promissory note, or any contract for the payment of an existing debt, with the instrument of guaranty, instead of being able to imply or infer from the terms and language of the instruments taken together, a consideration for the guaranty, no binding contract of guaranty even could be inferred; and herein lies the plain distinction between this case and that of the Union Bank v. Coster's Executors, and other cases cited, where the guaranty was of a debt to be contracted on the credit of the guaranty, and the consideration a future one. In the latter cases the promise is to do an act in consideration of some act to be done by the promisee, which implies a request. In the case under consideration, for example, the promise was, to be responsible for goods that White should buy from the plaintiffs, in consideration that the plaintiffs would sell and deliver to White such goods as he might want, on a credit of one year. The promise implied a request to furnish the goods to White, and a compliance, on the part of the plaintiffs, closed the contract and made it binding. Although it was necessary to show performance by the promisor, by parol evidence, yet, as was said in the Union Bank v. Coster's Executors: "Such evidence is no violation of the statute requiring the consideration to be in writing. The consideration of the promise is expressed, and the parol evidence is only used to show, not what the consideration is, but that the act which constitutes that consideration has been performed."
The case of Brewster v. Silence, therefore, is neither in its facts nor principles just like the case of the Union Bank v. Coster's Executors, and kindred cases. In the one case, the guaranty was of an existing debt; in the other, of a debt to be contracted on the credit of the guaranty. One had a past consideration to support the promise, which was none at all; in the other, the promise was supported by an act to be done by the promisee at the implied request of the promisor. In the one, there was no consideration moving between the promisor and promisee; there was none in fact, and none could be legally implied. The note and instrument of guaranty, taken together, showed no valid contract of guaranty, and, therefore, by no rule of construction could the writing be held to express a consideration; in the other the act to be done by the promisee, at the request of the promisor, and which was the consideration of the promise of the latter, was expressed in the writing. In the one, the only consideration that could support the promise, was one of benefit to the promisor, and this must have been expressly stated, and by no rule of construction applicable to this class of contracts, could be inferred; in the other, the promise rested upon some act to be performed in the future by the promisee, at the request of the promisor; the thing to be done by the promisee, was the consideration for the promisor. Nor does the case show an intention to overrule or interfere with that of the Union Bank v. Coster's Executors, or the principles that controlled the judgment in that case. Nothing is evinced showing that the court intended to overrule the principle that where the guaranty is of a debt to be contracted on the credit of the guaranty, and the consideration of the guarantor's promise, is something to be done by the promisee, at his request; the promise and consideration for it being stated in the writing, the latter is sufficiently expressed to satisfy the requirements of the statute. The case of the Union Bank v. Coster's Executors is not, nor is any other case upon that class of guaranties having a future consideration to support the promise, even cited or alluded to by the judge who delivered the opinion of the court. Three of the judges who took part in, and sustained the decision in Brewster v. Silence, had agreed to the judgment in the Union Bank v. Coster's Executors, although two of them in Durham v. Manrow, and Hall v. Farmer, were of the opinion that the guaranties in those cases of an existing debt, were void, for the reason that no consideration for the promise was stated, appeared, or was expressed on the face of the writing. In Gates v. McKee, which was decided in December, 1855, without any dissenting vote, and turning necessarily on the question involved in the present case, as the point was distinctly taken that the instrument did not express the consideration, two of the judges who were of the majority in Brewster v. Silence, took part in the decision, and, although such decision was put on the authority of the Union Bank v. Coster's Executors, expressed no dissent. In fact, there is no ground for saying that the case of Brewster v. Silence is in direct conflict with that of the Union Bank v. Coster's Executors, or that it was intended to, or overrules the latter case. The cases are clearly distinguishable; but if it were otherwise, the former must yield to the latter. To hold that all judicial powers of construction are paralyzed, when coming to an agreement depending on the statute of frauds, and that the requirements of the statute are not satisfied, in any case, unless the promisor has set forth in the writing, particularly, the reasons which induced him to enter into the contract, would be, especially since the case of the Union Bank v. Coster's Executors, to inflict infinite mischief upon the commercial public. Securities, doubtless, since that case, to an immense amount have been taken in business throughout the State, in reliance upon the idea that the doctrines affirmed by it might be regarded as settled.
The present case is in line, and cannot be distinguished from the case of the Union Bank v. Coster's Executors. The defendant cannot escape the effect of his promise, on the ground that the consideration for such promise was not sufficiently expressed.
The judgment of the Supreme Court should be reversed, and a new trial ordered, with costs to abide the event.
DENIO, SELDEN and CLERKE, Js., concurred.
According to the contract between the plaintiffs and White, they were to sell to him goods, from time to time, and he was to pay them therefor at the expiration of the specified period of credit. On the back of that writing, the defendant signed an agreement, of the same date, declaring that he would "be responsible for all such goods as White should buy of the Messrs. Church (the plaintiffs), within one year from the date, and which shall not be paid for according to the within contract." These two instruments were made up at the same time, and the one which the defendant signed, expressly refers to the other. It is a direct and irresistible inference from the writings themselves, that the undertaking of the defendant was the foundation of the credit on which the goods were to be sold and delivered to White. The sale and delivery of those goods, was, therefore, the consideration of the defendant's agreement. This conclusion is perfectly plain on the face of the instrument. No extrinsic proof is required, nor is it even necessary, for this purpose, to turn the paper over and look at the other side. There is no occasion to consult the principal contract, except to ascertain the term of credit. The collateral writing, itself, discloses the consideration on which it was given, to be the prospective sale of goods to another person. That this is sufficient within the statute of frauds, is certainly plain in principle, and it is moreover as well settled by authority as any legal proposition can be. ( Bailey v. Freeman, 11 Johns., 221; Rogers v. Kneeland, 10 Wend., 219; S.C. in error, 13 Id., 115; Marquand v. Hipper, 12 Wend., 520; Whitney v. Groot, 24 Id., 82; Walrath v. Thompson, 4 Hill, 200; Fellows v. Prentiss, 3 Denio, 512; Staats v. Howlett, 4 Id., 559; Union Bank v. Coster's Executors, 3 Comst., 203; Gates v. Mc Kee, 3 Kern., 232.) An undertaking, by one person, to be responsible for goods to be delivered to another, is, in effect, a request to deliver the goods. It is, in law, no more and no less than a letter of credit, general or particular, according as it may or may not have a particular address; and, if we hold such undertakings, when in writing, to be invalid, for want of a consideration expressed, we strike at a vast number of the commercial guarantees which are used in the dealings of mankind. The principle on which these guarantees rest, is simple and elementary. It is this: A promise to do an act, in consideration of an act to be done by the promisee, implies a request that the promisee, on his part, shall perform the act specified. If the promisor is to receive the direct benefit of the thing to be done, then the undertaking is original, and need not be in writing. If another person receives the benefit, and becomes originally liable, then the undertaking is collateral, and must be in writing. But in either case, the consideration is the performance of the act on the request of the promisor ( Union Bank v. Coster's Executors, supra), and, as I have said, an agreement to pay for goods to be delivered, plainly imports a request that they shall be delivered.
The Supreme Court pronounced the judgment under review, upon the supposed authority of Brewster v. Silence (4 Seld., 210), as the latest decision of this court affecting the question. We followed that case in the very recent one of Draper v. Snow ( 20 N.Y., 331), but, in so doing, it is proper to say that some of the members of this court, finding that no distinction between the two cases existed, did not examine the principles involved, or the antecedent authorities. The present case has led me to that examination, and I am so well satisfied that we were in error that I feel myself bound to say so. In Brewster v. Silence, the guarantee sued upon was written at the foot of a promissory note, and it was executed and delivered at the same time with the note. The instrument was held to be void under the statute of frauds, on the ground that it did not express the consideration. But the guaranty referred to a note which did express a consideration, received by the principal debtor. The legal import and language of the defendant's contract, therefore was, that in consideration of money, or some other value received by the principal debtor, he, the defendant, undertook that this note should be paid at maturity. As both instruments were executed and delivered at the same time, and to the same person, the presumption of law was that both were the foundation of the credit; in other words, that the value, which the note expressed, in the general language used in such instruments, was parted with by the payee, on the strength of the guaranty, as well as the note. These principles of construction, which, I persuade myself, are simple and elementary, if they had been adopted, would have led to a different conclusion. But they do not appear to have been overlooked. The precise error in the case, it seems to me, was in looking at the guaranty, without looking at the other instrument, which became a part of it by express reference. This was discarding a universal rule for the interpretation of writings. I fully agree that the statute of frauds, in its very letter, requires a consideration to be expressed in the collateral undertaking. But what is the collateral undertaking? The answer plainly is, that it is made up, not only of the particular writing to which the name of the guarantor is signed, but of all others which that refers to and adopts. If, therefore, the consideration appears in any one of the writings, which, together, constitute the contract, the requirement of the statute is answered.
Cases, almost without number, might be cited to support the rule of construction here laid down. Without referring to them at large, I will mention one of a very marked character, which arose under a statute quite as precise, in its terms, as the statute of frauds. In Tonnelle v. Hall (4 Comst., 140), a testator had disposed of real estate, in the body of his will, by designating the numbers of the lots, according to a map, a copy of which was attached after the signatures of the testator and the witnesses. The reference to the map was as follows: "Which said lots are designated on a certain map, now on file in the office of the register of the city and county of New York, a copy of which, on a reduced scale, is hereto annexed," and then followed a particular description of the map on file. A blank sheet intervened between the attestation clause of the will and the signatures, and the copy of the map. There was in the body of the will no description of the real estate sufficient to pass the title thereto, without a reference to the map. The statute of wills requires that the testator shall "subscribe," and the witnesses shall "sign" their names at " the end of the will." This court held, upon the fullest consideration, that the map was, in judgment of law, incorporated into the body of the will; and consequently that the instrument was subscribed, at the end thereof, as the statute required. This decision is of great significance, when it is considered that the statute of wills, as contained in the Revision of 1830, was designed to abrogate the construction which had been given to the English and our own former statute, by requiring the testator's signature to be written in a literal and exact sense, at the end of the will.
Referring now again to Brewster v. Silence, I find it suggested in the opinion which is reported, that our present statute of frauds was intended to alter the former one, by requiring the consideration to be expressed. It is added, that "since the Revised Statutes, something more than mere argument and inference have been deemed necessary to make out a consideration." With much deference, I think that such suggestions are not entitled to the weight which appears to have been given to them in determining that case. The statute of frauds, in the respect under consideration, underwent no change in our revision. It had been long and perfectly well settled, both in England and this State, that by force of the word "agreement," contained in the old statute, the consideration, as well as the promise, must be expressed where the undertaking was to answer for the debt or default of another person. Then as to "mere argument and inference," if, by the use of this phraseology, the learned judge who gave the opinion intended to say that argument and inference are to be excluded in the consideration of these questions, the proposition seems to me to be plainly unphilosophical and unsound. It is enough on this point to say, that wherever there is room for difference of opinion, the construction of a written instrument is always open to argument, and that whatever may be fairly inferred from the language used, and the surrounding circumstances viewed in connection there with, is in judgment of law a part of the written language itself. These principles are applicable to all contracts, those coming within the statute of frauds forming no exception. I agree that a consideration is not to be implied, but this only means that when there is no expression of the parties, in any part of the contract, from which a just inference can be drawn, there is no mere implication of law that a fact exists, in regard to which the instrument itself is entirely silent. The distinction between express and implied covenants, will illustrate the idea. Express covenants are created by any words, in a sealed agreement, evincing an intention to be bound by the obligation. Every form of expression, however slight and inartificial, declaratory of such an intention is an express covenant. Implied covenants, on the other hand, are those which depend for their existence on a mere intendment of law. Thus, a lease without any expression, whatever, beyond the usual words of demise, imports a covenant for quiet enjoyment. So, according to the common law, a covenant was implied from certain words in a deed, which were literally words of grant or conveyance only. (Platt on Covenants, 26, 40.) The statute of frauds requires certain contracts to be in writing, and the consideration to be expressed. By this it was simply intended that the courts are not to imply a consideration, or suffer it to be proved by parol, when none appears in the terms or admissions of the contract itself. But the mode of expression is not determined by the statute. It may be in plain and direct words: it may be by the mere use of a seal: or it may be the result of a just inference from the language of the contract, examined in all its parts.
This question has very lately been examined and decided by the Supreme Court of New Hampshire, in the case of Simmons v. Steele ( 36 N.H., 73). In that case the principal debtor, which was the New Hampshire Central Railroad, had signed a writing acknowledging the receipt, from the plaintiff, of seventy-two shares of stock, and promising to return the same in one year, with certain interest specified. The defendants, at the same time, executed a collateral instrument at the foot of the other, in this language: "We guarantee the fulfillment of the above obligation, and hereby promise that said stock shall be returned at the time specified." The action was on that guaranty, and the question, under the statute of frauds, was, whether it expressed a consideration. The court held that it did, and the reasons given for that conclusion appear to me entirely unanswerable. "It is very clearly apparent," the court said, "from an inspection of both what are called the principal and collateral contracts, that both were made at the same time, and for the same consideration, to wit: The loaning of the stock to the Central Railroad — and also that the collateral contract was an essential ground of the credit given to the principal, or direct debtor. In such cases it is not necessary that there should exist, or be expressed in writing, any other consideration than that moving between the creditor and original debtor, for the consideration of one is manifestly that of the other." Again it was observed, "Here is such an intimate connection in sense between the two agreements, apparent on their face, that there can be no difficulty in collecting, without the aid of parol evidence, from the principal agreement, the consideration of the collateral one. The reference in the latter to the terms of the former is equivalent to an admission; at all events, the fair and necessary implication is, that the consideration of the defendant's promise was the receipt by the said railroad of the borrowed stock. The only legitimate inference from the expressions used in the contract of guaranty itself is, that such was the consideration of the defendants' engagement."
This conclusion of the Supreme Court of New Hampshire is identical with the main proposition enunciated by Chief Justice KENT, in Leonard v. Vredenburgh (8 Johns., 28), the correctness of which was never questioned in this State for forty years. I have looked at all the cases antecedent to the decision in Brewster v. Silence, and I am confident that not one of them is in conflict with that proposition. On the contrary, there are few cases in the books which have been more frequently referred to, as the unquestioned law of the land, in respect to the main point determined. That point was, that a guaranty at the foot of a note, executed at the same time, and delivered with it, is to be read in connection with the principal contract, and is supported by the same consideration. The doctrine was not applied by Chief Justice KENT, and I do not apply it, to cases where the consideration between the principal parties is executed and past before the guaranty is made. In such cases, the difficulty is not in the want of a consideration expressed, but it arises out of the insufficiency of that consideration to sustain a collateral promise, whether in writing or not. To this class belong the cases of Smith v. Ives (15 Wend., 182), Parker v. Wilson ( Id., 343), Hall v. Farmer (5 Denio, 484), S.C. on appeal (2 Comst., 553), and these were the only ones cited in Brewster v. Silence, which were supposed to have the slightest tendency to support that decision. In all these cases, remarks of a general nature were made by judges, relative to the necessity of having a consideration appear upon the face of such collateral promises, as come within the statute of frauds. Such a proposition, no one disputes; but the precise point is whether the requirement of the statute is not complied with, when a guaranty refers in terms to another contract, made and delivered at the same moment of time, in which a present consideration, for both the writings, is expressly stated. Believing this to be a plain question, upon the examination I have now given to it, and that great mischief and inconvenience will arise in the business of the community, if error shall become established law on this subject, I have felt it necessary to make these comments upon one of the decisions of this court. I have made them with greater freedom, because I followed that decision, with my associates, in the very recent one which has been mentioned. With my present convictions, I shall be prepared, hereafter, to uphold the contracts and dealings of men belonging to the class which are condemned in the decision referred to. We ought to feel no hesitation in correcting the error, if there be one; because its correction can do no possible injury. When the rules laid down by the courts become the laws which sustain titles and contracts, they are, in general, to be sacredly adhered to, but when they can be used only as instruments of destruction, error ceases to be sacred, and principle and truth ought to be reasserted.
I am of opinion, however, that the court below erred in supposing that the present case was entirely undistinguishable from that of Brewster v. Silence. In that case the guaranty, without a reference to the note at the foot of which it was written, did not state a consideration. In the present one, the instrument, examined by itself, shows that the plaintiff was proposing to sell goods to the principal debtor, and that the guaranty was intended to assure to him the payment for those goods. I think, myself, that this distinction is of no great value; because, for the reasons which have been given, I do not doubt that the defendants' agreement would, for every legal purpose, have been the same, if, referring to the principal contract, it had simply, and without other words, guarantied the performance thereof. If that had been the form of the writing, the one to which it was annexed, and to which it referred, would have shown with equal clearness that the intended sale of goods was the basis of both the contracts. There cannot be much difference between a promise, which, by its own terms, guaranties a certain debt to be contracted by another person, and one which, in general words, refers to, and guaranties the performance of the other person's obligation, when that obligation, on its face, shows that the thing guarantied is precisely the same. Nor can there be any wide distinction between a collateral undertaking, in either of these forms, to answer for a credit to be given, and one to answer for a credit actually given at the very moment when the undertaking is entered into. If in one of these examples, we may look at the principal writing, in order to ascertain what it is that is guarantied by the instrument annexed, and thus to learn the consideration, we surely may do so in the other. Upon distinctions such as these, however slender as they seem to be, the case of Brewster v. Silence must have proceeded, and they are therefore just as valuable as are the principles which that decision involves. If we are to understand that case as not resting upon such distinctions, then we must view it as directly in conflict with the Union Bank v. Coster's Executors, also determined by this court, and with a long and unbroken series of decisions in the courts of England, and in this State. But the Union Bank v. Coster's Executors, and the numerous class of cases to which it belongs, do not appear to have been even referred to; and therefore it could not have been intended to overrule them. In that class the present controversy is included; and however slight or groundless, in principle, may be the distinction between it and the case which the court below profess to have followed, it is nevertheless a distinction which offers the only solution to that case.
Entertaining no doubt that the instrument, on which this suit was brought, is a valid guaranty within the statute of frauds, I think the judgment of the Supreme Court should be reversed and a new trial granted.
WELLES, J., concurred in this opinion; DAVIES and BACON, Js., were for reversal, expressing no opinion in respect to the points of difference in the reasoning of COMSTOCK, Ch. J., and WRIGHT, J.
Judgment reversed and new trial ordered.