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61 Mich. 327

Mathews v. Phelps

Michigan Supreme Court

Decided May 6, 1886

Michigan Supreme Court · decided 1886-05-06

<p>Contract of suretyship — Construed to be a continuing guaranty where liability is limited as to amount and not as to time — Construction of contract — Intention of the parties should be carried into effect — To be ascertained ■from language used, and' facts and circumstances attending its execution —Admissions—Of copartner and joint contractor competent evidence to bind co-defendant — Whether same ruj.e applies to cosurety, Query— If admitted, but remaining testimony makes plaintiff’s case, defendants offering none, error, if any, not prejudicial, and judgment will not be reversed.</p> <p>1. Plaintiff employed an agent to sell cigars upon an agreed commission; the agent was to account for all moneys received on such sales, and defendants agreed in writing “ to become his surety for the sale of cigars, to plaintiff, to the extent of two hundred dollars.” The agent’s sales amounted to over one thousand dollars, and he failed to account for .one hundred and sixty-nine and 4-100 dollars of the money received thereon.</p> <p>Held, in a suit brought by the plaintiff against the sureties, upon their agreement, to recover this deficit, that in the light of the surrounding circumstances the guaranty was intended to continue so long as the agent sold cigars for plaintiff, or until ended by notice from the sureties; and that under a fair construction of defendants’ contract of suretyship they were liable to plaintiff for the proceeds of the agent’s sales, such liability being limited to two hundred dollars.</p> <p>2. In construing a contract of guaranty, the general rule arising from the implication of the language used is that when the amount of • the guarantor’s liability is limited, and the time is not, it will bo held to be a continuing guaranty.</p> <p>8. A contract should always be so construed as to carry into effect the intention of the parties, which must be ascertained from the language of the instrument, and the facts and circumstances attending its execution.</p> <p>4, The admissions of a copartner and of a joint contractor have been held admissible in evidence to bind, not only themselves, but their co-defendants; but whether alike rule applies to a co-surety is a question unnecessary to he determined in this case.</p> <p>5. Where in a suit against two co-sureties the admissions of one as to their liability were received in evidence, against the objection of the other, but the remaining testimony for plaintiff made out his case, and none was introduced by the defendants,—</p> <p>Held, that the error, if any was committed, could not have prejudiced the defendants, and the judgment will not be reversed for that reason.</p>

Key passage — most relied on by later courts

““The general rule arising from the implication of the language used is that. when the amount of the liability is limited, and the time is not, the contract should be construed as a continuing guaranty.””

quoted by 1 later decision, including Farmers Co-Operative Creamery Co. v. Huhn

Relies on Farmers & Mechanics Bank v. Kercheval · Switzer v. Pinconning Manufacturing Co. · Gard v. Stevens

Good law ✅— No negative treatment on recordhow we know

Affirmed · Decided 1886-05-06

How this case has been cited

Cited by 15 later decisions — most recently December 1938

15 state decisions

40188618901900191019201930decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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Champlin, J.

¶1Suit was brought by the plaintiff against the defendants before a justice of the peace, in which the plaintiff declared against the defendants in an action of assumpsit upon all the common counts, and on a memorandum of suretyship as follows:

*331“ Detroit, October 22, 1883.
“It is hereby mutually agreed that William E. Moloney and Ralph Phelps, Jr., is to become the surety of CharlesSavenac, for the sale of cigars, to James L. Mathews, to the extent of two hundred dollars.
“Ralph Phelps, Jr.
“ W illiam E. Moloney.”
At the trial in the circuit court, to which the case had been appealed, it appeared that Mathews was a manufacturer of cigars in the city of Detroit, and had entered into an arrangement with Challes Savenac to sell cigars for him, and return the money to Mathews, for which Mathews-was to give five dollars a thousand “all round,” and defendants signed the written agreement above set forth for the purpose of becoming responsible for the money Savenac did not return, and delivered the same to the plaintiff, who thereupon furnished Savenac with samples, and he proceeded to sell cigars for the plaintiff. Under these facts, the court construed.the contract as if it read as follows:
“ Detroit, October 22,1S83.
“ It is hereby mutually agreed that William E. Moloney and Ralph Phelps, Jr., is. to become the surety of Charles Savenac to James L. Mathews, for the sale of cigars, to the extent of two hundred dollars.”

¶2Vo think the court construed the contract of surety-ship correctly, in the light of the surrounding circumstances. If construed literally, it would be meaningless. By the transposition of a single phrase, the intention of the parties is expressed in clear and unambiguous language.

¶3The record further shows that Savenac failed to return to the plaintiff money received by him on the sale of cigars, to the amount of $161).Of. It also appears that the sales made by Savenac for the plaintiff amounted to more than $1,000, and defendants’ counsel contends that the contract of surety-ship did not extend beyond the sale of $200 worth of cigars, and was not continuous; and, plaintiff having received returns exceeding $200, the defendants are not liable in this action. This would be a narrow construction to place upon the terms of the contract. It is the extent of the liability, and not the extent of the sales, that is limited to $200

¶4*332The general rule arising from the implication of the language used is that when the amount of the liability is limited, and the time is not, the contract should be construed as a continuing guaranty: Gard v. Stevens, 12 Mich. 295.1

¶5In all cases the contract should be so construed as to carry into effect the intention of the parties ; and such intent must be ascertained from the language of the instrument, and the facts and circumstances attending the execution thereof.2

¶6Yiewing the contract under consideration in the light of the circumstances under which it was made, it is plain that the guaranty was intended to continue so long as Savenac should continue to sell cigars for Mathews, or until ended by notice from the sureties that they would not continue to be responsible any longer; the extent of their liability being fixed at $200.

¶7The court permitted plaintiff to testify to admissions of defendant Phelps as to the liability of defendants upon the contract. This the counsel for defendants insists is error, for the reason that admissions made by Phelps could not bind his co-surety, Moloney. The admissions of a copartner and of a joint contractor have been held admissible in evidence to bind, not only themselves, but their co-defendants; but whether the admissions of .a surety are proper evidence to bind a co-surety is a question wliich ngpd not be determined in this case. No testimony was introduced- on behalf of defendants. The testimony of the plaintiff made out a case under which he was entitled to recover without the admissions as to liability of defendant Phelps. The error, if any was committed, could not by any possibility have prejudiced the defendants, and the judgment will not be reversed for that reason.

¶8Perceiving no error prejudicial to defendants, the judgment is affirmed.

The other Justices concurred.

¶9 See Farmers' & Mechanics’ Bank v. Kercheval, 2 Mich. 505.

¶10 See Switzer v. Pinconning Mfg. Co., 59 Mich. 488.

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