Supreme Court of United States.
*531 The case was argued by Mr. Whipple, for the plaintiff in *532 error; and by Mr. Z. Collins Lee and Mr. Southard, for the defendant.
*533 Mr. Justice M'LEAN delivered the opinion of the Court.
Mr. Justice M'Lean after stating the facts, said,
The questions in this case arise on the instructions of the Court; and they, very properly, as we think, refer the jury to the facts and circumstances under which the guarantee was given. It is *534 only by such reference that that instrument can be correctly understood and construed. In the construction of all instruments, to ascertain the intention of the parties is the great object of the Court; and this is especially the case in acting upon guarantees.
The guarantee under consideration, in the first place, refers to the fact that Bullus, to whom it was addressed, was about to form a connection in the mercantile business in the city of New York, with the son of guarantor. And from the evidence, it appears that he was well acquainted with the nature and extent of that partnership, for he had read the articles of copartnership, or the memoranda from which they were drawn. As it appears from the statement of Bonney, that the articles were drawn in August, and placed in the hands of Bullus, who returned them with the blanks filled and some alterations, there can be little doubt that the defendant below read them while at New York. That he was well acquainted with the conditions of the partnership his son testifies.
With this knowledge we come to the next sentence in the guarantee, which is, "And as the said Joshua Mauran, Jr., having been, and is at this time prosecuting mercantile business in that city, on his own account."
It will be recollected, that in the articles of copartnership, Joshua Mauran, Jr., covenanted that he would give to his partner satisfactory security that he would pay all the debts which he then owed, and all the responsibilities incurred by him, in carrying on his former business, without drawing upon the partnership fund. Of this covenant, the defendant below not only had full notice, but it was proved that on his return from New York to Providence, he took with him a bond drawn by the person who drew the articles of copartnership, binding him to pay the debts of his son. This bond he did not execute, but wrote to Bullus the letter of guarantee.
With these facts in view, after stating the fact that his son had been in business in New York as above, and that Bullus was about commencing a partnership with him, the defendant says, "Now, therefore, in consideration of the same, and at the request of Joshua Mauran, Jr., I hereby agree to bear you harmless, in regard to the closing up and settlement of the said Joshua Mauran, Jr.'s former business. And I hereby guaranty you against *535 any loss you may sustain from the former business of said Joshua Mauran, Jr."
Now looking at the facts connected with the guarantee, and the circumstances under which it was given, there would seem to be no doubt of the understanding and intention of the parties. Bullus having a capital of nearly thirty thousand dollars, he was unwilling to advance it as the stock of the new firm unless he should be indemnified against the debts which had grown out of the former business of his partner. And Joshua Mauran, Sen., with the view of securing so considerable a capital, and so advantageous a connection in business for his son, was willing to indemnify Bullus against these debts. And he preferred the guarantee to the bond which was prepared. The latter would have imposed an unconditional obligation to pay these debts, whilst the former only required him to pay Bullus the sum advanced by him in discharge of them.
But it is earnestly contended that as these debts were paid by the firm, and not by Bullus only, he cannot maintain an action in his own name on the guarantee. It is very clear that the firm could not maintain an action on this instrument. The indemnity was personal and limited to Bullus.
But the best answer to this argument is the finding of the jury, under the instruction of the Court. They were instructed "that if, from the evidence, they should find that at the time of signing the letter of guarantee, it was understood both by the plaintiff and the defendant, that the plaintiff was to be at liberty to pay the debts of Joshua Mauran, Jr., either out of his own private funds, or out of the partnership funds; and in either case the plaintiff was to be entitled to indemnify therefor, under the letter of guarantee," &c., they should find for the plaintiff. They did so find, and consequently the facts hypothetically stated in the instruction are established. And the only question that can arise on this part of the instruction is, whether the facts found were properly submitted to the jury.
Now, out of what fund these debts were to be paid could not be a matter of any importance, it would seem, to the guarantor. The objection that Bullus cannot recover, because the debts were paid with the partnership funds, under the circumstances, it purely technical. Every dollar of the money thus paid, though used in *536 the partnership name, was in fact the money of Bullus. To meet this technical objection, and carry out the intention of the parties, we think the instruction was proper. The facts on which it was founded did not contradict the written agreement, nor, in any degree, affect the liability of the party beyond the clear import of the guarantee.
By the articles of copartnership either partner, with the consent in writing of the other, might withdraw from the firm any amount of money. This was known to the guarantor. And also the fact that the whole capital of Bullus was paid into the firm. If this be admitted, it followed that any payments made by Bullus in discharge of the debts, could only be paid out of the firm.
The jury also found in pursuance of the latter part of the same instruction, that Bullus was a creditor of the firm to the full amount of its capital stock.
These facts, found by the jury, disembarrass the case from the technicalities thrown around it by the counsel of the guarantor. They show that it was the understanding of the guarantor that Bullus should be indemnified against the previous debts of his partner, whether he paid them out of the partnership fund or otherwise.
The construction that the guarantor is only bound to indemnify, in case payment of these debts had been enforced against Bullus by legal measures, is not sustained by the words of the instrument.
In the first place, he was not and could not be made legally responsible for these debts. The guarantor then must have contemplated a voluntary payment, or at least not a payment by legal compulsion. The guarantor agrees to bear Bullus "harmless in regard to the closing up and settlement of the said Joshua Mauran, Jr.'s former business." Here is a strong recognition of an agency by Bullus in the settlement of these debts. To sustain the credit of the firm it was necessary to pay the debts in question; and we find that in a very short time after the firm commenced business, the payments of these debts were commenced, and such payments were made from time to time by the firm until near the time of its failure. The moneys received from the debts due to the previous concern were credited on the books of the firm, and the payments made by it on the *537 same account were charged. But the mode of keeping the account by the firm can have no bearing in the case, as the facts found by the jury obviate all objections on this ground.
Suppose Bullus had been charged on the books of the firm, with the moneys paid in discharge of the debts; the objection as to the partnership interest could not in that case be made. But the money thus applied would have been no more the money of Bullus than that which was paid by the firm. The facts found by the jury present the case in its true character, and give a strong equity to the plaintiff below. Generally, all instruments of suretiship are construed strictly, as mere matters of legal right. The rule is otherwise where they are founded on a valuable consideration. But in the present case the relationship of Mauran the partner and the guarantor, connected with the other circumstances, constitute as clear a case for indemnity as could well be imagined. That the debts of Mauran, Jr., were paid by Bullus or with his assent, in virtue of the guarantee, there is no reason to doubt. Indeed this fact is substantially found by the jury.
The assignment by the firm of the uncollected debts of Joshua Mauran, Jr., to Robinson, does not release the guarantor. In this respect the instruction of the Court was correct. The jury were directed if they should find for the plaintiff, to deduct from the amount thus found the full value of the debts of Joshua Mauran, Jr., which had been assigned by the firm, and render a verdict for the balance.
The debts of Mauran, Jr., assigned by the firm were proved to be bad, with but one exception; and that appears to have been deducted by the jury from the sum paid by the firm, in discharge of those debts.
Upon the whole we are satisfied that substantial justice has been done between the parties, by the judgment of the Circuit Court; and we think there is no principle of law arising out of the instructions which require a reversal of the judgment. It is, therefore, affirmed.
