Bell v. Bruen

42 U.S. 169 (____) 1 How. 169

JAMES C. BELL AND ROBERT GRANT, PLAINTIFFS IN ERROR,
v.
MATTHIAS BRUEN.

Supreme Court of United States.

Lord and Sergeant, for the plaintiffs in error.

Choate, for the appellees.

Choate, for defendant.

Mr. Justice CATRON delivered the opinion of the court.

The original action was founded upon a guarantee given by Matthias Bruen to Bell and Grant, in favour of Wm. H. Thorn, by the following letter:

New York, 23d April, 1831.

MESSRS. BELL AND GRANT, London. — DEAR SIRS: — Our mutual friend, Mr. Wm. H. Thorn, has informed me that he has a credit for £2000, given by you in his favour with Messrs. Archias and Co., to give facilities to his business at Marseilles. In expressing my obligations to you for the continuation of your friendship to this gentleman, I take occasion to state, that you may consider this, as well as any and every other credit you may open in his favour, as being under my guarantee.

I am, dear sirs, your friend and servant,

M. BRUEN.

To this letter the following answer was given by Bell and Grant:

London, 14th June, 1831.

MATTHIAS BRUEN, Esq., New York. — We are in the receipt of your favour of the 23d April, guarantying the credit opened on behalf of Mr. Wm. H. Thorn with Messrs. Archias and Co., of Marseilles, for £2000, for the purpose of facilitating his business with that place; and, moreover, desiring us to consider as under your guarantee, also, all credits existing, or that we may hereafter open for said friend, of which we take due note. And we trust, that Mr. Thorn, as well as your good self, will have every reason to be satisfied with the confidence which we feel a pleasure in assigning to both of you."

The declaration contains four counts:

1. That the plaintiffs, on the 31st of March, 1836, were requested by Thorn to open a credit in his favour, authorizing the firm of La Cave and Echicopar, of Cadiz, to draw on the plaintiffs to the extent of £2500. That on the 22d November, 1836, La C. and E. drew for £385: which was advanced on the 12th February, 1837, by the plaintiffs, according to Thorn's request.

2. That on the 10th of October, 1834, at the request of Thorn a credit was opened in his favour, authorizing R. Anderson and Co., of Gibraltar, to draw for £4000. On the 16th December, 1834, Anderson and Co. drew for £318 12s. 6d.: which plaintiffs paid, 19th March, 1837.

3. That on the 15th of August, 1836, the plaintiffs opened a credit in favour of Thorn, authorizing Amac, Zipcey and Co., of Smyrna, to draw for £3500. Of this sum, the house at Smyrna drew £1640: which plaintiffs paid, 8th April, 1837.

4. That on the 8th March, 1837, plaintiffs opened a credit to Thorn, himself, for £3500, for which amount he drew bills; and which were paid, 17th June, 1837.

Much other correspondence and evidence was given to the jury, that need not at present be referred to; but which appears in the statement of the case made out by the reporter, and presented to us.

The evidence being closed, the defendant prayed the Circuit Court to instruct the jury, as matter of law, that the letter of guarantee, of April 23d, 1831, was confined to credits to be opened to the house of Archias and Co., or other houses with whom Thorn might deal at Marseilles; and therefore the plaintiffs could not recover from the defendant, the advances made upon the bills of exchange given in evidence: being for the sums paid, as stated in the four counts of the declaration.

Thereupon the court did decide, as matter of law, "that by the true construction of the said letter of guarantee, of April 23d, 1831, the same only embraced credits which should be opened for account of Wm. H. Thorn to the house of Archias and Co., of Marseilles; and that the evidence of the other matters in this behalf proved, did not give the said letter of guarantee a more enlarged application. And therefore, that the jury ought to find a verdict for the defendant."

The jury found accordingly: and it is this instruction of the court alone, that we are called upon to examine, and revise. Does the letter of guarantee extend to, and cover the debts of Wm. H. Thorn sued for? is the question. It was an engagement to be executed in England, and must be construed and have effect, according to the laws of that country. Bank of the United States v. Daniel, 12 Peters, 54, 55. But it is necessary to remark that the law governing the agreement is the same in this country and in England: had it been made between merchants of different states of this Union, and intended to be executed at home, the same rules of construction would be adopted; and the same adjudications would apply.

It is insisted for the plaintiffs, that the Circuit Court erred in determining the question absolutely as a question of law, upon the construction of the letter: that it also erred in declaring the other circumstances did not allow of an application of the guarantee to the transactions in question: such other circumstances, being admitted, their effect on the extent and application of the guarantee was for the jury; and by deciding on their effect as matter of law, they were withdrawn from the jury.

The letter of Bruen was an agreement to pay the debt of another on his making default: by the statute of frauds, (29 Chs. 2,) such agreement must be in writing, and signed by the party to be charged: it cannot be added to, by verbal evidence; nor by written either, if not signed by the guarantor, unless the written evidence is, by a reference in the letter, adopted as part of it.

But as the statute does not prescribe the form of a binding agreement, it is sufficient that the natural parts of it appear either expressed, or clearly to be implied: and correspondence and other evidence may be used to ascertain the true import and application of the agreement; by the aid of which extrinsic evidence, the proper construction may be made. Such is the doctrine of this court, as will be seen by reference to the cases of Drummond v. Prestman, 12 Wheat.; Douglass v. Reynolds, 7 Peters; Lee v. Dick, 10 Peters.

In the present instance, the question having arisen, and construction been called for, the matters referred to in the letter of the defendant, were considered; (as circumstances attending the transaction,) to aid the court in arriving at a proper understanding of the engagement: so soon as it was understood, its construction belonged to the court, and was, "matter of law," within the general rule applicable to all written instruments. It rested with the court to decide, whether the guarantee extended to, and covered the credits set forth in the declaration: and was the common case of asking the court to instruct the jury, that the plaintiff had not proved enough to entitle him to recover, admitting all his evidence to be true. In England, the same end is attained, by moving for a nonsuit.

For the defendant it is contended: That the letter of April 21, 1831, is a contract, preceded by a recital, and that the engagement extends no further than the recital.

The recital introduces in direct terms, or by reference, the entire arrangement made between plaintiffs and Thorn, by the letters of the 23d of February, 1831, and March 22, 1831; and the words "this credit," in the defendant's letter of 23d April, 1831, mean the first £2000; and the words "and any and every other credit," mean the subsequent credits, to be opened under the same arrangement.

The general rule is well settled in controversies arising on the construction of bonds, with conditions for the performance of duties, preceded by recitals; that where the undertaking is general, it shall be restrained, and its obligatory force limited within the recitals. The leading case, is Arlington v. Merricke, 2 Saund. R. 403. It has been followed by many others: Liverpool Waterwork Co. v. Harpley, (6 East, 507;) Wardens, &c. v. Bostock, (2 Bos. and P. 175,) Leadley v. Evans, (2 Bingh. R. 32;) Pepin v. Cooper, (2 Barn. and A. 431,) are some of the principal cases affirming the rule.

Where a mercantile guarantee, is preceded by a recital, definite in its terms; and to which the general words obviously refer, the same rule applies, of limiting the liability, within the terms of the recital, in restraint of the general words. We find the courts constantly referring to the cases arising on bonds with conditions, for the rule of construction, and applying it to commercial guarantees; the most approved text writers on this subject do the same: does the engagement before us fall within the rule? It recites:

"Our mutual friend, William H. Thorn, has informed me that he has a credit for two thousand pounds, given by you in his favour with Messrs. Archias and Co., to give facilities to his business at Marseilles." The agreement is: "I take occasion to state, that you may consider this, as well as any and every other credit you may open in his favour, as being under my guarantee."

We are of opinion that the engagement should be construed as if it read — "You may consider this, credit with Archias and Co., as being under my guarantee: as well as, any and every other credit, you may open in favour of William H. Thorn with any and every other person, as also being under my guarantee." And that therefore the first branch of the undertaking has reference to the recital; and that the latter part, is independent of it. To hold otherwise, would reject the general words — "as well as any and every other credit" — as unmeaning and useless: the agreement having the same effect, by the construction claimed for the defendant, if these words were struck out, as if they are left in it.

The general words, it is insisted, related to the character of the credit opened with Archias and Co., because it was an open and continuing credit, for £2000. That this appears by the letters of Thorn to Bell and Grant, and to Archias and Co.; which are sufficiently referred to in the recital of the letter to make them part thereof, and to extend it to the continuing credit with Archias and Co.

That the two letters of Thorn were sufficiently referred to, and could be read to establish the nature of the credit; and that it was open, we have no doubt; but their adoption was just as certain without the general words, as with them. The special reference to the recital, adopting it as explained by the letters, leaves the general words still without meaning unless the guarantee extends beyond the credit opened with Archias and Co.

To make a proper application of the general words, it becomes necessary to lay down a definite rule of construction applicable to them; as the authorities are in conflict, and to say the least, in considerable confusion, on the subject. The arguments are in direct conflict.

For the plaintiffs in error, (Bell and Grant,) it is contended: "That the guarantee by letters is to be taken, in case of doubt, or ambiguity, on its face or otherwise, in the broadest sense, which its language allows, and in which it has been acted on by the parties." Drummond v. Prestman, (12 Wheat.;) Douglass v. Reynolds, (7 Peters;) Dick v. Lee, (10 Peters;) Mauran v. Bullus, (16 Peters;) Mason v. Pritchard, (12 East;) Merle v. Wells, (2 Campb. R. 413;) Bent v. Hartshorne, (1 Metcalfe R.;) Hargreave v. Smee, (6 Bingh. R.; 10 Eng. Com. Law Rep. 69;) Mayer v. Isaac, (6 Mees. and Wels. Exch. R.;) and Bastow v. Bennet, (3 Campb. R.) are relied on, to support the construction claimed as the true one.

On part of the defendant, (Bruen,) it is insisted, "That the apparent diversity of terms, between the recital and the engagement in the defendant's letter, raises a doubt upon the face of the guarantee as to its true extent; and upon the doubt, thus raised, the construction will be in favour of the surety.

The following authorities are relied on to sustain the construction here claimed: Pothier on Obligations, part 2, sec. 34; Code Napoleon, art. 2011, 2015; Russell v. Clarke, 7 Cranch; 1 Mason, 336; 2 Caines's Cases in Error, 29, 49; 10 Johns. R. 180, 325; 8 Wend. R. 516; 7 Wend. 422; 2 Pick. R. 234; 16 Peters, 537; 1 Stark. R. 192; 8 Taunt. 224; 3 B. and A. 594, 595; 1 Crompt. and Mees. 52, 54; 3 Wilson, 530; 1 Term R. 287; 2 So. 370; 3 East, 484; 4 Taunt. 673; 8 Moore, 588; 1 Perry and D. 249; 10 Adolph, and Ellis, 30.

The adjudged cases referred to, giving a construction to bonds with conditions, and contracts made directly between debtor and creditor, afford little aid in arriving at the true understanding of a commercial guarantee. Bonds, &c., are entered into with caution, and often after taking legal advice; they contain the entire contract, beyond which the courts rarely look for circumstances to aid, in their construction. And if there be sureties bound by them, and the meaning is doubtful, the construction is restricted, and made most favourable to the sureties. Such is the result of the authorities cited for the defendant.

On the other hand: letters of guarantee are (usually) written by merchants; rarely with caution, and scarcely ever with precision; they refer in most cases, as in the present, to various circumstances, and extensive commercial dealings, in the briefest, and most casual manner, without any regard to form; leaving much to inference, and their meaning open to ascertainment from extrinsic circumstances, and facts, accompanying the transaction: without referring to which, they could rarely be properly understood by merchants, or by courts of justice. The attempt, therefore, to bring them to a standard of construction, founded on principles, neither known, or regarded, by the writers, could not do otherwise than produce confusion. Such has been the consequence, of the attempt to subject this description of commercial engagement to the same rules of interpretation applicable to bonds, and similar precise contracts. Of the fallacy of which attempt, the investigation of this cause has furnished a striking, and instructive instance. These are considerations applicable to both of the arguments.

The construction contended for as the true one on part of the plaintiffs, is, That the letter of the defendant must be taken in the broadest sense which its language allows; thereby, to widen its application. To assert this as a general principle, would so often, and so surely, violate the intention of the guarantor, that it is rejected. We think the court should adopt the construction which, under all the circumstances of the case, ascribes the most reasonable, probable, and natural conduct to the parties. In the language of this court, in Douglass v. Reynolds, 7 Peters, 122, "Every instrument of this sort ought to receive a fair and reasonable interpretation according to the true import of its terms. It being an engagement for the debt of another, there is certainly no reason for giving it an expanded signification, or liberal construction beyond the fair import of the terms." Or, it is, "to be construed according to what is fairly to be presumed, to have been the understanding of the parties, without any strict technical nicety;" as declared in Dick v. Lee, 10 Peters, 493. The presumption is of course to be ascertained, from the facts, and circumstances accompanying the entire transaction. We hold these to be the proper rules of interpretation, applicable to the letter before us.

The general words not being restricted by the recital, they fairly import that Matthias Bruen was bound to Bell and Grant for the credits they opened in favour of William H. Thorn with Archias and Co.: and for the credits also, they opened in favour of Thorn, with any and every other person; covering those set forth in the three first counts in the declaration: and we think that the Circuit Court erred, by instructing the jury to the contrary.

Whether the guarantee covered the credit extended to Thorn himself, directly, it is not thought necessary to inquire; as no argument was founded on such an assumption; Thorn, who was introduced as a witness in the Circuit Court by the plaintiffs, on his cross-examination declared, that the £3500, mentioned in the last count in the declaration, "had no relation whatever to the guarantee of the defendant:" it being under the guarantee of a different person.

It was insisted also: That when Thorn failed, and the dealings between him and the plaintiffs ceased, they were bound to notify the guarantor, of the existence of the debts due them by Thorn, and for which Bruen was held liable, in a reasonable time after the dealings ceased: that Thorn failed April 10th, 1837; and the notice was not given until December 31st, 1838; the debts sued for in the three first counts of the declaration being then due: therefore the notice was too late, and the defendant discharged.

The record shows that this ground of defence was not brought to the consideration of the Circuit Court; we do not therefore feel ourselves at liberty to express any opinion upon the question.

Again it is insisted: The original arrangement made between the plaintiffs and Thorn, in March, 1831, was subsequently, in the spring of 1834, abandoned and deserted; and in the autumn following, a new and inconsistent one, enlarging the credits to be given, and diminishing the security, was made, rendering notice to the defendant necessary, but to which no notice could have given legal effect to charge the defendant for subsequent credits.

To this, and all other questions raised here, on which the court below was not called to express any opinion, we can only give the same answer, given to the next preceding, supposed ground of defence.

It is ordered, that the judgment of the Circuit Court be reversed, and the cause remanded for another trial thereof.

ORDER.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the southern district of New York, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said Circuit Court in this cause be and the same is hereby reversed, with costs; and that this cause be and the same is hereby remanded to the said Circuit Court, with directions to award a venire facias de novo.