Opinion
January, 1909.
Charles L. Greenhall, for appellant.
Wilber, Norman Kahn (Louis L. Kahn, of counsel), for respondent.
The defendant was sued upon the following guaranty: "In consideration of Whitall-Tatum Company supplying merchandise on credit to American Dentifrice Company, 51 East 59th street, I hereby guaranty to them prompt payment for any goods that the said company (up to $1,500) may order from them, the bills to be charged to American Dentifrice Company on running account, subject to the usual thirty days' credit. This guaranty to remain in force until withdrawn in writing." At the time of the guaranty the dentifrice company had given its order for about $1,500 worth of goods and thereafter gave orders for others. Of all the goods ordered the plaintiff actually delivered but $222.15 worth when the dentifrice company became financially embarrassed and ceased to give shipping instructions as agreed, and this action was brought to recover the agreed price of the goods delivered to and accepted by the dentifrice company with that of the goods manufactured by the plaintiff and remaining in its possession.
There can be no reasonable denial that the guaranty was intended to be a continuing one and to apply to future orders. Such is the fair import of the provision for its discontinuance by written notice. So also it may be that the plaintiff was absolved from making delivery or tender of delivery of the goods remaining undelivered because of the dentifrice company's insolvency and failure to give the agreed shipping instructions. But it does not follow that the defendant must respond for the value of the goods last referred to however much the plaintiff would be entitled to recover against the dentifrice company therefor. The defendant did not guaranty the dentifrice company's performance of its contracts with the plaintiff but bound himself for no more than the prompt payment for goods ordered by that company and supplied by the plaintiff upon a credit of thirty days and which should remain unpaid for at the expiration of that time.
Prepared as such instruments usually are in the common affairs of life by persons unacquainted with technical language and legal niceties, a guaranty is to be construed according to what fairly appears therefrom to have been within the contemplation of the parties at the time, and within that rule it is to be taken most strongly against the guarantor, that is to say, if the language is reasonably open to conflicting meanings, that meaning is to be adopted which is most favorable to the guarantee. But the guarantor's liability is in no case to be extended beyond the fair import of the language of the instrument and the nature of the transaction. Particular constructions or interpretations of such instruments, therefore, are of little value in other cases since the language employed and the surrounding circumstances are rarely, if ever, identical, and past adjudications serve only to illustrate the rules applied in arriving at the meaning of the instruments. McShane Co. v. Padian, 142 N.Y. 207. As in the case of other contracts, however, the rights and obligations of the parties thereto depend upon their mutual assent to the terms of the guaranty (Davis Sewing Mach. Co. v. Richards, 115 U.S. 527), and upon no proper theory can there be imported into the instrument a provision not fairly within its language or spirit.
Recurring to the instrument under review it is obvious that what the parties had in contemplation at the time were purchases by the dentifrice company executed by the actual delivery of the goods ordered. In no other manner can the language of the guaranty be satisfied. A commercial credit for goods purchased usually attaches only upon the shipment thereof and begins from the date of the invoice which accompanies the shipment. If it be held, therefore, that the present guaranty covers goods ordered but never taken or accepted by the dentifrice company, the provision for a credit of thirty days is wholly disregarded and a material part of the contract divested of every effect. Furthermore, that the guaranty was intended to cover only purchases completed by actual delivery is apparent from the recital that it was given in consideration of the plaintiff's "supplying merchandise on credit" to the dentifrice company, not in consideration of the plaintiff's mere agreement to supply the merchandise. The plaintiff had several remedies available to it upon the dentifrice company's breach of its contract to purchase the goods ordered. If, instead of treating the goods as those of the dentifrice company and insisting upon the price agreed to be paid, the plaintiff had sold the goods for the dentifrice company's account and claimed as damages the difference between the proceeds of sale and the agreed price, it would be plain beyond the peradventure of reasonable dispute that the plaintiff's claim was not within the terms of the guaranty. De Luka v. Goodwin, 142 N.Y. 194.
We conclude that the trial court erred in directing a verdict for the plaintiff for the full amount claimed, and the judgment appealed from should, therefore, be reversed and a new trial ordered, with costs to appellant to abide the event, unless the plaintiff will stipulate to reduce its recovery to $222.15, the value of the goods actually delivered, with interest, and costs below, in which event the judgment will be affirmed, as reduced, without costs of this appeal to either party.
GILDERSLEEVE and GUY, JJ., concur.
Judgment reversed and new trial ordered, with costs to appellant to abide event, unless plaintiff stipulate to reduce its recovery to $222.15, with interest, and costs below, in which event judgment affirmed, without costs.