Holmes v. Saenger Amusement Co.

JANVIER, J.

(dissenting). I agree with the statement made in the majority opinion that this case turns upon an interpretation of the guaranty indorsed upon the bonds; though, if it were necessary to refer to the act of mortgage securing the bonds, I am well convinced that that document is sufficiently identified with the bonds to permit of its being taken into consideration; but I cannot concur in the view that the guaranty can be interpreted as placing upon the guarantor an obligation greater than that undertaken by the principal.

It is true that the guaranty is involved in legal phraseology and is unnecessarily long, but a reading of it shows that it is. divided into two complete sentences, the first of which terminates with the statement that the liability of the guarantor comes ino existence “if default in payment thereof be made by said Canal Realty & Improvement Company, Inc.,” and the sec*677ond of which terminates with a similar clause to the effect that the guarantor shall he liable “in the event default in the payment hereof be made by said maker.”

Thus each of the sentences contains a conditional clause to the effect that the guarantor’s liability comes into existence only in the event the principal defaults in making payment.

It is conceded by all parties that the principal has not defaulted and has made every payment in strict accordance with the stipulations of the obligation undertaken by it.

Since the guarantor is liable only in the event the principal defaults, and since it is conceded that the principal has not defaulted, then the guarantor is not liable.

It is true that in the guaranty reference is made to the trustee and to any “other person or corporation whatsoever,” but one who reads the document carefully will immediately see that the guarantor of the principal is not made liable for the acts or omissions of the trustee, or of other third persons, but merely that the provision is that, if the guarantor’s liability comes into existence by reason of the default of the principal, then nothing the trustee or any other third person can do will impair or otherwise affect such liability. Evidently the purpose of the guaranty was to place the guarantors, who were well known as being financially sound, in the shoes of the principal, an unknown subsidiary, and, in my judgment, it was not intended nor stipulated that the guarantors should also stand behind the trustee, the depositor, and all other persons or corporations whose names may appear in any of the Various documents.

I think the liability of the guarantors is limited to that of the principal, and I therefore respectfully dissent.