Summary
In Jenkins v. Wilkinson, 107 N.C. 707 (709), it is said: "There is a plain distinction between a guaranty of payment and a guaranty of collection. `The former is an absolute promise to pay the debt at maturity, if not paid by the principal debtor, and the guarantee may begin an action against the guarantor.
Summary of this case from Garren v. YoungbloodOpinion
September Term, 1890.
Guarantor of Payment — Guarantor of Collection — Promissory Note — Extension of Time for Payment.
1. A was indebted to B, and gave his promissory note, which, at maturity, he failed to pay. In consideration of a further extension of the time for payment, C executed a writing, promising to guarantee the payment of the debt, provided B would hold a certain mortgage as collateral: Held, C was liable as a guarantor of payment, and not as a mere guarantor of collection.
2. A guarantor of payment is liable upon an absolute promise to pay, upon the failure of the principal debtor.
3. A guarantor of collection is liable upon a promise to pay the debt, upon condition that the guarantor shall diligently prosecute the principal debtor without success.
(708) APPEAL from Brown, J., at Fall Term, 1890, of GASTON.
(709) C. W. Tillett for plaintiff.
No counsel contra.
The complaint alleged that the defendant T. A. H. Wilkinson was indebted to him as cashier, and gave his promissory note, of which the following is a copy:
$800. GASTONIA, N.C. 5 January, 1888.
Ninety days after date, I promise to pay to the order of T. T. Jenkins, cashier, $800, negotiable and payable at the office of Craig Jenkins, bankers, value received, with interest at the rate of 8 per cent per annum after maturity. Due 4 April, 1888. T. A. H. WILKINSON.
Wilkinson paid the interest up to 4 July, 1888, but was unable to pay the note at maturity, when payment was demanded. In consideration of further indulgence, the defendant Nancy Wilkinson executed a paper-writing, of which the following is a copy:
DENVER, N.C. 14 April, 1888.
MR. T. T. JENKINS, Gastonia, N.C.
DEAR SIR: — You will please grant my son, T. A. H. Wilkinson, all the indulgence that you possibly can give, in reason, on the note that you hold against him at your bank, and I will guarantee the payment of the debt, provided that you hold the mortgage which T. A. H. Wilkinson, my son, made to N. A. W. Wilkinson as collateral on said debt.
Yours truly, NANCY WILKINSON.
The plaintiff alleged further that he had performed all the conditions named by the guarantor, and that the debt had not been paid.
There was a verdict and judgment for the plaintiff. Defendant appealed.
There is a plain distinction between a guaranty of payment and a guaranty of collection. "The former is an absolute promise to pay the debt at maturity, if not paid by the principal debtor, and the guarantee may begin an action against the guarantor. The latter is a promise to pay the debt upon the condition that the guarantee shall diligently prosecute the principal debtor without success." Jones v. Ashford, 79 N.C. 173; Baylie Sureties and Guarantors, 113.
This case belongs to the former of these classes, and the plaintiff, having complied with the terms imposed upon him by the contract, had a right to sue the defendant Nancy Wilkinson upon the maturity of the obligation.
Her agreement was not to pay after the plaintiff had exhausted the mortgage security, but it was absolute upon default of the debtor, and the requirement that the plaintiff was not to surrender the mortgage was only for her protection by way of subrogation, in the event of her being compelled to pay the debt.
No error.
Cited: Hutchins v. Bank, 130 N.C. 287; Cowan v. Roberts, 134 N.C. 419; Voorhees v. Porter, ib., 601; Mudge v. Varner, 146 N.C. 149; Johnson v. Lassiter, 155 N.C. 52; Sykes v. Everett, 167 N.C. 608; Crane Co. v. Longest Co., 177 N.C. 350.
(710)