Partin v. Prince, 159 N.C. 553 (1912)

Oct. 16, 1912 · Supreme Court of North Carolina
159 N.C. 553

Mrs. G. W. PARTIN v. R. E. PRINCE.

(Filed 16 October, 1912.)

1. Contracts — Guaranty—Consideration—Statute of Frauds.

When one at bis own request receives money for investment from another, saying “he would guarantee it to be safe, and that the investor could look to him for the amount,” and not to the borrower, and acts independently of the investor in making the loan, the transaction does not come within the statute of frauds, for at the time of the guarantee there was no other debt contracted, the only contract, at that time, being one of guarantee between the parties, separate and distinct from the obligation of a principal debtor, and the faith of the investor in the guarantee was a sufficient consideration.

2. Same — Contemporaneous Transactions.

When one receives money from another to be invested by him under his promise to guarantee its safety, the contract of guaranty being contemporaneous with the principal debt requires no other consideration to support it and does not fall within the meaning of the statute of frauds. It is otherwise if the guarantee is made afterwards without any new consideration.

3. Contracts — Guaranty—Consideration—Interests—Statute of Frauds.

When one receives for investment money for another upon his guarantee that the investment proposed was. a safe one, and assumes personal responsibility therefor, and it appears that the one receiving the money invested it in a concern for which he was doing business locally, his pecuniary interest in the local business wherein he was interested is a sufficient consideration to support the guaranty.

*554Appeal by iilaintiff from Brag cm, J., at April Term, 1912, of WaKE.

Civil action. At tbe conclusion of tbe evidence, a motion to nonsuit was sustained. Tbe plaintiff appealed.

Tbe facts are sufficiently stated in tbe opinion of tbe Court by Mr. Justice Brown.

W. B. Snow aná J. W. Bunn for pllaántiff.

Mo counsel for defendant.

Brown, J.

The plaintiff sued to'recover $500 wbieb tbe defendant procured from tbe plaintiff for tbe purpose of investigating tbe same. Tbe plaintiff claimed tbat tbe defendant promised to guarantee tbe investment at tbe time tbe money was placed in bis bands at bis request; tbat tbe defendant bad tbe use and control of tbe money without any direction from tbe plaintiff, and tbat tbis formed a consideration wbieb supported tbe guaranty.

Tbe defendant claimed tbat tbe transaction, upon the plaintiff’s own showing, was a promise to answer for tbe payment of tbe debt of another, and not being in writing, it comes within the statute of frauds and is void. His Honor being of opinion with tbe defendant, sustained tbe motion to nonsuit.

Tbe plaintiff supports her alleged cause of action with a written guaranty contained in a letter of tbe defendant to tbe plaintiff, dated 8 November, 1906. Tbe plaintiff testified tbat the defendant came to see her and told her tbat be beard tbat she bad some money, and be desired to know if she wanted to lend it out, saying tbat be could invest it better out of tbe State, as then she would not have to pay taxes on it.

Tbe plaintiff testified tbe defendant went to see her several times and each time endeavored to persuade her to let him invest tbe money. She at first refused, because she did not want it invested away from borne. . Tbe last time tbe defendant came be said if she would let him have it, “be would guarantee it to be safe, and tbat she could look to him for tbe amount, and not to these other men.”

It appears tbat upon tbe faith of tbat guaranty tbe plaintiff let tbe defendant have $500. Tbe statements of tbe plaintiff *555are fortified and corroborated by the letter of 8 November,1 1906. The defendant offered no evidence.

In out view his .Honor erred in supposing that this transaction, if the evidence is taken to be true, presents the ordinary case of a promise to answer for the debt of another. At the time of this transaction there was no other debt contracted. The only contract that had been made wás between the plaintiff and the defendant, and that contract is a guaranty, that is to say, an obligation of the guarantor, and separate and distinct from the obligation of a principal debtor. Carpenter v. Wall, 20 N. C., 144; Coleman v. Fuller, 105 N. C., 328; Tell on Guaranties; 1; Smith on Mercantile Law, 217.

¥e think that the fact that this money was placed in the hands of the defendant at his request, and that he was given absolute control over it upon the faith of his promise to guarantee its safety, is, a sufficient consideration to support the contract ; but we doubt if any consideration is necessary, for where the contract of guaranty is contemporaneous with the principal debt, no other consideration is necessary, because the contract is founded upon the consideration existing between the parties. It is otherwise if the guaranty be made afterwards without any new consideration. Green v. Thornton, 49 N. C., 231.

It appears further in the evidence ¡that the defendant invested this money in a New Jersey concern without consultation with the plaintiff, who evidently relied entirely upon his guaranty, which concern was doing business in Raleigh and the defendant was its agent or representative.

If a consideration is necessary, the pecuniary interest of the defendant in the transaction is a sufficient consideration to support the guaranty. Whitehurst v. Hyman, 90 N. C., 487; Dale v. Lumber Co., 152 N. C., 651; Peele v. Powell, 156 N. C., 558; and Whitehurst v. Padgett, 157 N. C., 424.

We think his Honor erred in sustaining the motion to nonsuit.

New trial.