Action for $1,289.11, balance alleged to be due by the defendant, T.A. Wilson, for goods sold and delivered to him by the plaintiff during the years 1922 and 1923. The defendants, J.M. Thomas, S.J. Kinsler, and J.H. Wilson are alleged to have been guarantors for the payment of the amount due by T. A. Wilson to the plaintiff, under a written contract.
It appears that during the year 1922 the parties were operating under a written contract for the sale by the plaintiff to the defendant, Wilson, of certain merchandise man *Page 201 by the plaintiff, upon certain credit terms; that at the end of the year the account stood:
Debits ......................................... $ 1,871.71
Credits ........................................ 485.05
__________
Balance due by defendant ....................... $ 1,386.66
On January 2, 1923, the parties entered into a renewal contract of similar character, and under it the plaintiff sold and delivered to the defendant, on credit, between January 24, 1923, and February 5, 1923, goods to the amount of $44.80. Thereafter and up to October 11, 1923, the plaintiff declined to ship further goods on credit, but made shipments C.O.D. or order notify on drafts with bills of lading attached, amounting to $1,057.83. Between January 9, 1923, and November 1, 1923, the defendant made payments, which included the drafts on C.O.D. shipments paid by him, amounting to $1,200.18. So that his account stood thus:
Dr.
Amount of goods shipped in 1922 ..... $1,871.71
Amount shipped in credit in 1923 .... 44.80
Amount shipped C.O.D. in 1923 ..... 1,057.83
Cr.
Payments made in 1922. ............... $ 485.05
Payments made in 1923. ............... 1,200.18
Balance unpaid ....................... 1,289.11
_________ ___________
$2,974.34 $ 2,974.34
_________ ___________
For this balance the action was brought against the defendant, Wilson, and the other defendants who guaranteed the payment of all that was due or might become due by the defendant to the plaintiff.
The defendants answered setting up various defenses, all of which were withdrawn except what is denominated "the third defense," which was as follows: *Page 202
"That at the time of the making of said contract it was understood by the defendants herein and the plaintiff herein that the plaintiff was to continue to extend credit to the defendant herein, and that said guarantee was given for the sole and express purpose of said credit being continued and said contract being kept in force until its proper legal termination, but that the plaintiff, in violation of its obligation under said contract, and in violation of the rights of these defendants, failed and refused to sell to the defendant, T. A. Wilson, said goods in accordance with said contract on credit, and that the said plaintiff did not give these defendants notice of the termination of said contract, as required therein, and that the plaintiff herein did not furnish the defendant, T.A. Wilson, herein, with the advertising matter which formed a special and ingredient part of said contract so made between the parties herein, and did not give to the defendant herein assistance as required in and by the terms of said contract, and that after the making of the said contract the plaintiff herein attempted to modify the same, and did modify the same, and changed the condition thereof and breached the same in the respects above set forth and in other respects so that the defendant herein was relieved or released therefrom and was caused to suffer great damage thereby, was caused to lose profits from the sales thereon, all of which the plaintiff herein had notice of, and that by reason of said failure on the part of the plaintiff to live up to said contract as aforesaid, the defendant, T.A. Wilson, herein, has been damaged in the loss of business, the loss of time and the loss of sales, all to his damage in the sum of $2,000.00."
No objection has been raised to the treatment of this defense as a counterclaim upon the ground that the matter contained there is not set up as a counterclaim. McGeev. Wells, 37 S.C. 365; 16 S.E., 29.
The gist of the so-called counterclaim is that under the contract the plaintiff was under obligation to sell goods to *Page 203 Wilson on credit; that after obtaining the guaranty of the defendant guarantors, the plaintiff made two small shipments aggregating $44.80 on credit and thereafter refused to make shipments otherwise than C.O.D., and that the breach of the contract in this respect not only released the guarantors, but entitled Wilson to damages in the sum of $2,000.00.
The case was tried before his Honor, Judge Whaley, of the Richland County Court, and a jury, and resulted in a verdict of $1,289.10 in favor of the plaintiff and of $2,000.00 in favor of the defendant, Wilson. Upon an order for a new trial nisi, the defendant, Wilson, remitted $500.00 of the verdict in his favor, leaving the difference between $1,500.00 and $1,289.10, $210.80 ($210.90?) upon which judgment was entered up in favor of the defendant, Wilson, the guarantors being thereby necessarily discharged. From this judgment the plaintiff has appealed upon exceptions which fairly present the matters hereinafter considered.
The appeal, in my opinion, turns upon the question whether, under the contract, the plaintiff obligated itself to sell goods to the defendant on credit. If it did not, the entire so-called counterclaim falls to the ground, and judgment should have been directed in favor of the plaintiff for the amount of its account, $1,289.11. This question, of course, can be answered only by recourse to the written contract, and to the attached guaranty, both of which, I think, may be resorted to.
The contract provides for the following obligations upon the part of the plaintiff, seller, and the defendant, buyer:
(1) The seller to sell to the buyer, such of its products as the seller may determine to sell to the buyer, the kind and quantity of which shall be optional with the seller, delivery to be made f. o. b. Memphis or other point agreed upon, at current wholesale prices, upon the signed orders of the buyer. *Page 204
(2) The buyer to pay the seller the invoice price of products purchased under the contract, also any balance due to the seller at the date of its acceptance of the renewal contract, by cash, or by installment payments satisfactory to the seller.
I do not find in these provisions the slightest ground for the contention that the plaintiff agreed to sell the defendant a single dollar's worth of goods on credit. If so, how much and upon what terms of credit? It seems to me that the question is absolutely concluded by paragraph 4 of the contract. It is to be remembered that the buyer's undertaking covered both the balance past due and the purchase that might be made in the future. The clause of the contract referred to reads:
"The buyer agrees to pay said seller the invoice price for all products so purchased under this agreement, also any balance due the seller at the date of the acceptance of this renewal contract, by cash, or by installment payments satisfactory to the seller, subject to the discounts as shown in the current discount sheets and subject to paragraph 6 hereof" (relating to termination of the contract).
It seems clear that the phrase "by cash, or by installment payments," refers to both "the invoice price for all products so purchased" and to "any balance due the seller."
It may be suggested that the terms of the guaranty contract indicate an agreement of the plaintiff to supply the defendant with goods on credit. It declares: "For and in consideration * * * of the above-named seller extending further credit to the said buyer, * * *" etc. In view of the fact that at that time the defendant admittedly owed the plaintiff upon the transactions of the previous year $1,386.66, and of the undertaking for "the full and complete payment of all moneys due or owing, or that may become due or owing said seller, and all indebtedness incurred by the buyer under the terms of the above and foregoing instrument by the buyer named as such therein and to all the *Page 205 terms, provisions and agreements contained in said instrument, we fully assent and agree," it seems clear that the reference to the first quoted clause is to the debt then outstanding.
It is exceedingly significant that on June 30, 1923, six months after the renewal contract went into effect, the plaintiff furnished the defendant with an itemized statement of his account showing at that time that there was a balance due the plaintiff of $1,306.46, and that the defendant on July 14, 1923, returned to the plaintiff a signed statement to this effect:
"I have examined the above statement of account and find the balance of $1,306.46 to be the correct balance due the company at close of business June 30, 192 — (1923?), which balance I agree to pay according to the terms of my contract."
And the remarkable circumstance connected with the statement of account is that it contains the following debit items which were entered after the refusal to sell further on credit and which were offset by payment of the C.O.D. drafts:
March 8, 1923 .................................. $ 137.00
April 11, 1923 ................................. 76.10
May 12, 1923 ................................... 128.13
June 6, 1923 ................................... 136.35
__________
$ 477.58
Showing by the acknowledgment of the correctness of the balance of $1,306.46, which included them, an acknowledgment of the right of the plaintiff to cease selling upon credit and ship C.O.D.
In addition to this the statement of the account set out in the record shows additional debit items which also were set off by payments of the C.O.D. drafts: *Page 206
July 2, 1923 ................................... $ 103.50
July 21, 1923 .................................. 104.55
August 17, 1923 ................................ 160.10
September 11, 1923 ............................. 133.90
October 11, 1923 ............................... 78.20
__________
$ 580.25
A total of $1,057.83 of drafts paid by the defendant, the last as late as October 11, 1923; a crushing admission of the plaintiff's right to close down credit and insist upon C.O.D. shipments; without, so far as the record before me shows, the slightest complaint on the part of the defendant.
I cannot see that the case of Furst v. Moore, 129 S.C. 223;123 S.E., 825, has any application to the questions raised in this appeal. In that case, which is not fully reported, the only points decided were: (1) That the case was properly submitted to the jury upon the liability of the guarantors for the full amount due upon the principal's obligation; and (2) that the contract entered into by the guarantors was a continuing guaranty. The case does not touch the point in this case as to the obligation of the party guaranteed, to sell goods to the principal obligor on credit.
I do not think that the right of the plaintiff depends upon a termination of the contract. In fact I see nothing in the case which suggests an effort on the part of the plaintiff to terminate the contract. The plaintiff continued to sell goods to the defendant throughout the year. Its contention, which, I think, has been sustained, is that it was under no obligation to sell goods on credit, and that there could be no damages accruing to the defendant by reason of the breach of an obligation which never existed. (The contract, the guaranty and the Judge's charge should be reported.)
I think that the judgment of the County Court should be reversed and that the case should be remanded to the County Court, with directions to enter judgment for the plaintiff for the amount conceded to be due, $1,289.11, with interest from the date of the verdict heretofore rendered. *Page 207