Bertie County NcArchives Court.....Williams, Vs. Collins 1811-18
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Source: North Carolina Reports
Written: 1811-18

JULY TERM. 1811.


WILLIAM WILLIAMS v. JOSIAH COLLINS.

From Bertie.

Case of guaranty. A applied to B to purchase a vessel and cargo, and B, 
entertaining doubts of his solvency, refused to credit him. A then got from C 
a letter directed to B, in which C says: "A informs me that he is about 
bargaining with you for the purchase of a new vessel and cargo. In case you 
and he should agree, I will guarantee any contract he may enter into with you 
for the same, or any part thereof." On the credit of this letter, B sold to A 
a vessel and cargo, and took his bonds for the purchase money; one payable 1 
January, 1805, another on 15 June, 1805, and the third on 15 June, 1806. On 17 
August, 1807, suit was brought against A on the bonds, judgment recovered in 
March, 1808, and execution against A's property was returned to June term 
following, indorsed by the sheriff. "Nothing found." Whereupon B brought suit 
against C on his letter of guaranty. It appeared on the trial that at the time 
the several bonds respectively fell due, A had property sufficient to pay 
their amount; which property he mortgaged in October after the last bond fell 
due and in January following, to secure divers debts which he owed. There was 
no evidence that B had applied to A for payment until suit was brought on the 
bonds, except an inference to be drawn from the indorsement of certain 
payments on the bonds after they became due; nor was there any evidence that C 
had notice of A's failure to pay, and that B looked to him for payment, until 
suit was brought against him: Held, that C was discharged from liability on 
his letter of guaranty, by the want of due diligence in B to get payment from 
A, and by his failure to give notice, within a reasonable time, to C, of A's 
delinquency.

Henry Fleury applied to the plaintiff to purchase, on a credit, a vessel and 
cargo; but the plaintiff, entertaining some doubts of his solvency, refused to 
credit him. Fleury then procured from the defendant a letter directed to the 
plaintiff, in the following words:

Gen. Wm. Williams.
Sir:—The bearer hereof, Mr. Henry Fleury, informs me that he is about 
bargaining with you for the purchase of a new vessel and a cargo for her, also 
for a quantity of Indian corn. In case you and he should agree, I will 
guarantee any contract he may enter into with you for the same or any part 
thereof, and am Your ob't serv't,
Josiah Collins.

On the credit of this letter, the plaintiff sold to Fleury a vessel and cargo 
for $2,072.25, for which he gave three bonds, each bearing date 11 April, 
1804; one for $902.25, payable 1 January, 1805, with interest from 15 June, 
1804; another for $585, payable 15 June, 1805; and the third for $585, payable 
15 June, 1806. There was a credit of $675.71 indorsed on the first bond, 15 
June, 1806, and a credit of $450 indorsed on the last bond, 12 January, 1808. 
On 17 November, 1806, Williams assigned the bonds to Thomas E. Sumner, who, on 
17 August, 1807, brought suit on them in Chowan County Court, and obtained 
judgment at March Term, 1808, for £604 7s. 10d. He sued out execution, which 
was returned to the next term. "Nothing found," and Williams having, in his 
assignment of the bonds, "obliged himself to guarantee the ultimate payment 
thereof to Sumner," did, upon the application of Sumner, pay the amount due 
upon the bonds, and on 16 September, 1808, brought, suit against Collins on 
his aforesaid letter of guaranty. The defendant pleaded the "general issue, 
set-off, statute limitation."

On the part of the defendant it was proved that on 29 October, 1806, Fleury 
mortgaged to him seven lots and one-half lot of ground, with their 
improvements, lying in the town of Edenton, to secure the sum of £1,256 18s. 
8d. due by note; and on the same day Josiah Collins, Jr., took from Fleury a 
mortgage for the same property on the back of the foregoing, to secure the 
payment of $954.22, due by note; and on 15 January, 1807, Fleury mortgaged the 
same property, with a storehouse and shop, eleven negroes and a considerable 
quantity of furniture, to certain merchants in New York, to secure the payment 
of $6,000 due by him to them. The defendant also proved that Fleury possessed 
the property mentioned in the foregoing mortgages for many years before, and 
that the lots were among the most valuable in the town of Edenton; that on 6 
Angust, 1806, one Francis Vallette, of Edenton, having died, bequeathed to 
Fleury property of the value of $4,000, which came to his hands.

It appeared in evidence that Collins, the defendant, was a subscribing witness 
to the mortgage executed by Fleury, on 15 January, 1807, to certain merchants 
in New York, and that the property included in this mortgage, but not in the 
preceding mortgages, was sold for £1,200 or £1,300. It did not appear that 
Fleury had any property out of which the debt to the plaintiff could have been 
satisfied, except the property before enumerated.

The jury rendered the following verdict, to wit: "The jury find, from the 
evidence adduced, that the defendant must have been better acquainted with the 
circumstances of Henry Fleury than the plaintiff, and that the plaintiff could 
not at any period have obtained his money from Henry Fleury, even though he 
had commenced suit as soon as his cause of action accrued, and that the 
defendant did assume liability within three years; that there is no set-off, 
and assess the plaintiff's damages to £716 1s. 8d." A rule was obtained to 
show cause why a new trial should not be granted, on the grounds, (1) that the 
verdict was contrary to law; (2) that it was contrary to evidence, at least so 
far as it found that the plaintiff could not, at any time after the debt 
became due, have obtained payment from Fleury. The rule for a new trial was 
sent to this Court.

Browne for defendant.

Jones and Cherry for plaintiff.

Browne, in support of the rule, said this contract must be considered either 
as a primary or a secondary contract; if as a primary contract, then the 
plaintiff's cause of action accrued at the respective times when Fleury's 
bonds fell due, and his right of recovery is barred by the statute of 
limitations. But he did not suppose this contract ought to be so considered; 
it is a contract of a secondarv kind. Defendant agreed to guarantee the debt 
to the plaintiff, and is placed by the law in the same situation with 
indorsers of bills of exchange or promissory notes. He agreed to guarantee a 
primary contract, and the lww, whilst it deems this guaranty binding upon him, 
does so sub modo only; it at the same time imposes certain obligations upon 
him who claims the benefit of this guaranty; it declares to him that he shall 
use due diligence to reap the benefit of the primary contract, and to collect 
the debt from him who really owes it. For the person making this secondary 
contract only agrees to pay the debt if the principal does not; and in all 
cases is discharged from liability if due diligence be not used to enforce the 
contract against the principal and get the money from him. In this case 
Williams had discharged Collins from his guaranty by the indulgence which he 
extended to Fleury. Had he sued Fleury when his bonds became due, the money 
could have been collected; but he neither sued nor demanded payment, nor gave 
notice to Collins of Fleury's neglect to make payment. This is a commercial 
transaction, and is to be governed by the general law respecting commercial 
contracts, where one man guarantees the payment of another's debt. Williams 
having failed to use the diligence which that law required in demanding 
payment, and giving notice of Fleury's neglect or refusal to make such 
payment, has discharged Collins, who, not having received any such notice, 
remained ignorant of Fleury's failure to pay at the time when he took the 
mortgage to secure his own debt. This is the legal presumption, for every man 
shall be presumed to have done his duty until the contrary appears; Fleury 
shall be presumed to have paid his bonds at the times they respectively fell 
due, or that he would have paid them if Williams or his assignee had applied 
for payment. It was not the duty of Collins to inquire whether he had made 
such payment; it was the duty of Williams to give him notice if Fleury failed 
to pay; and to compel him to make good the debt to Williams would be, not to 
conform to the true spirit of the contract on his part, but to subject him to 
a hardship against which he has no relief. If he had been regularly called 
upon for payment as Fleury made default, he could have advanced the money to 
Williams and indemnified himself out of Fleury's property. Williams gave 
indulgence until Fleury became insolvent, and Collins has not been called upon 
for payment until he has lost all opportunity of indemnifying himself.

Collins was liable on his letter of guaranty only in case of Fleury's failing 
to pay; and it may be laid down as a general principle that where one man 
agrees to indemnify another against any loss which he may sustain from any 
transaction, the person thus indemnified must use ordinary diligence to 
prevent any loss. Doug., 514; 3 Term, 524; 8 East, 242. Here the first demand 
on Fleury was by suit, one year and two months after the last bond became due; 
and the first notice of Fleury's delinquency that was given to Collins was two 
years and three months after the last bond became due. This was not using due 
diligence to get the money from Fleury and prevent a loss to Collins.

By the Court. For the reasons urged by the defendant's counsel, let the rule 
for a new trial be made absolute.

Cited: Eason v. Dixon, 19 N. C., 79; Shewell v. Knox, 12 N. C., 412; Straus v. 
Beardsley, 79 N. C. 67.

Additional Comments:
North Caroline Reports, Vol. 6, Cases Argued and Determined in the Supreme 
Court of North Carolina, Reported by A.D. Murphey, Annotated by Walter Clark. 
1811 to 1813, Inclusive and at July Term, 1818. Reprinted by the State. E.M. 
Uzzell and Company, State printers and binders, 1910.

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