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8trieb v. Cox, Treasurer, et al.

shall not exceed the sum of one hundred thousand dollars principal."

We are of opinion that the bonds issued by the board of commissioners of Grant county, under the provisions of the section quoted and pursuant to the authority thereby conferred, did not and do not constitute an indebtedness of such county, and did not and do not evidence an indebtedness incurred by such county, within the inhibition of article 13 of our State Constitution. Such bonds are not payable by the county, or out of the general funds of the county treasury. They are payable out of the particular fund to be raised by the collection of the assessments made on the lands adjacent to such free gravel road, "divided in such manner as to meet the payment of principal and interest of said bonds," and placed as divided upon the tax duplicates against the lands assessed, "and collected in the same manner as other taxes," which fund, when so collected, "shall be applied to no other purpose than the payment of said bonds and interest." No other provision is made by law for the payment of either the bonds or the interest thereon; and the bonds and interest are made payable out of the particular fund to be derived from the collection of the assessments made on the lands adjacent to such free gravel road, and from no other source, and such fund is pledged by the statute for the payment of said bonds and interest. It is manifest, we think, from all the provisions of the above entitled act of March 3d, 1877, and the amendments thereof, that the Legislature intended that the entire cost and expense of constructing any free gravel, macadamized or paved road, and all bonds of the county issued for the purpose of raising the money necessary to meet the expense of such improvement, should be borne and paid out of the particular fund to be raised by and from the collection of the assessments made on the lands adjacent to such road. While it is provided that the preliminary expenses of such an improvement may be paid out of the county treasury, yet it is further provided that the amount The Furst & Bradley Manufacturing Company v. Black et at.

so paid must be refunded out of the particular fund to be raised as aforesaid from the assessments on adjacent lands. Section 5096, R. S. 1881; Board, etc., v. Fullen, post, p. 410; Robinson v. Rippey, ante, p. 112.

Appellant has also assigned, as errors, the sustaining of appellees' demurrers to the first, second and third paragraphs of his reply. In the first and third paragraphs of his reply, appellant has stated matters which might, perhaps, have been available to him if he had appealed at the proper time from the proceedings, orders and assessments set forth in the third paragraph of appellees' joint answer herein, but which can be of no possible service to him in this collateral suit. In the second paragraph of his reply, appellant set up substantially the same matters stated in his complaint herein. The demurrers to the several paragraphs of reply, we think, were correctly sustained.

The judgment is affirmed, with costs.

Filed June 21, 1887.

HI 308

113 144 m

113

121 470

131 480

111 3081

1130 303[

111308] No. 12,573.

f153 194;

[m »08 The Furst & Bradley Manufacturing Company l*EJB v. Black Et Al.

Ill 308

W' Goaranty.Notice of Acceptance by Guarantee.When Necessary.—Where

there is a mere proposal on the part of those sought to be charged as guarantors to guaranty the faithful performance of some obligation which another may enter into, provided credit shall be extended, or a duty undertaken, the contract of guaranty is incomplete until the original obligation is entered into and the proposition of guaranty accepted, and due notice thereof given to the guarantors. Same.When Notice of Acceptance Unnecessary.—Where a guaranty is for the fulfilment of a contract already made, or for one executed contemporaneously with the contract of guaranty, or for the payment of an existing debt, or where the contract of guaranty is upon a consideration distinct, from ths credit extended to the principal debtor, and which The Furst A Bradley Manufacturing Company v. Black el al.

moves directly between the guarantor and guarantee, notice of acceptance is unnecessary.

Same.Direct Guaranty.When Guarantors Entitled to no Notice of Default.— An engagement on the part of guarantors or sureties themselves to pay or perform absolutely, and at all events, the contract of their principal, is in its nature original, direct and absolute, and the promisors are entitled to no notice of the default of their principal.

Same.Indirect and Collateral Guaranty.When Guarantors Entitled to Notice of Principal's Default.—Where guarantors agree that their principal will perform his contract, they not engaging to perform it in case he makes default, the guaranty is indirect and collateral, and the guarantors are entitled to notice of the default of the principal.

Same.Failure to Give NoticedDefence.—The failure of the guarantee to give notice to the guarantor of the -default of the principal debtor, where such notice is required, and the damages resulting from such failure, are matters of defence, and should be specially pleaded.

From the Jasper Circuit Court.

S. P. Thompson, for appellant.

F. W. Babcock aud E. P. Hammond, for appellees.

Mitchell, J.—On the 26th day of February, 1878, Samuel M. Black, residing at Remington, Indiana, signed and transmitted to Henry J. Prier, of Indianapolis, Indiana, the following order and proposal: , "H. J. Prier, Indianapolis, Indiana:

"Please have manufactured for us, and deliver at the depot in Chicago, which you will ship to Remington via Logansport railway, by or within ten days thereafter, the

goods specified in this list, for which we agree to pay as follows, viz.:" (Here follows a list of the articles to be shipped, with time of credit and rate of discount).

"We also agree to settle for the same monthly, by notes, • or notes with security, due as above, and to pay interest at the rate of ten percent, per annum on all notes and accounts after maturity, and to remit with exchange on New York or Chicago, or by express, charges prepaid.

"We further agree to pay for all goods shipped us for this season's trade subsequent to those now herein ordered, on The Furst & Bradley Manufacturing Company v. Black d al.

same terms as above, all payable without relief from valuation or appraisement laws. S. M. Black."

Upon the back of this order there was endorsed the following contract of guaranty:

"For and in consideration of the credit which H. J. Prier may extend to S. M. Black, and in further consideration of <me dollar to me in hand paid by H. J. Prier, the receipt of which is hereby acknowledged, I hereby guarantee to him the fulfilment of the within contract on the part of the said S. M. Black, and the payment by S. M. Black to H. J. Prier or order, without demand, of all moneys for the payment of which the said S. M. Black may become liable under this contract, including all implements that may be ordered of the said H. J. Prier subsequent to this date and during the year 1878.

"I further guarantee to the said H. J. Prier the payment of all notes that may be taken by him in part or full payment of all sums for which he may become liable under this contract, including in the above guarantee the payment of all notes made by any other person whatever that may be transferred to said H. J. Prier by S. M. Black. Payable without relief from valuation or appraisement laws.

"A. M. Traugh.
"S. N. Snoddy.
"S. A. Henry."

The order or agreement proposed by Black was accepted by the following endorsement written thereon:

"H. J. Prier agrees to accept the above order on condi, tions named, or notify you within twenty days from this date. H. J. Prier."

In a complaint upon the contract of guaranty set out above, it was alleged that, on the 10th day of August, 1878, Prier and Black had a settlement and accounting of their dealings under the foregoing contract, at which it was found that there was due from Black to Prier the sum of about thirteen hundred dollars, on an account stated, which account, The Fa ret & Bradley Manufacturing Company v. Black et al.

with the contract of guaranty, was assigned to the plaintiff. • The complaint avers that the guarantors had been duly notified of the indebtedness, and that Black had become wholly insolvent and a non-resident of the State.

The guarantors answered in four paragraphs: general denial, payment, set-off and accord and satisfaction. There was a verdict and judgment for the guarantors.

With their general verdict the jury returned answers to interrogatories submitted by the parties respectively. The errors assigned are, overruling the appellant's motion for judgment on the answers to the special interrogatories, notwithstanding the general verdict, and overruling the motion for a new trial.

On the trial the defendants were permitted to give evidence tending to prove that in 1878, when the debt sued for matured, their principal was a resident of the State and solvent; that they received no notice of his default until this suit was brought in 1884, .and that meanwhile he had become wholly insolvent and a non-resident of the State.

The court gave the case in charge to the jury distinctly upon the theory that the guarantors were legally discharged, in the event the evidence established the foregoing facts.

By the answers to the special interrogatories, these facte were all expressly affirmed by the jury. The case presents two abstract propositions of law growing out of the contract upon which the suit is based. It is made a question whether or not the guarantors are liable, in the absence of notice that the contract of guaranty had been accepted. Another question is, whether or not they were entitled to notice of the default of their principal, and whether, if they were, the failure to give notice of the default and the subsequent non-residence and insolvency of Black operated to discharge the guarantors under the issues upon which the case was tried. As to the necessity of notice of acceptance: It is unquestionably true that a contract of guaranty is a transaction between the guarantor and guarantee, and is separate and, in many re

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