Watts v. Gross, 196 N.C. 103 (1928)

Oct. 3, 1928 · Supreme Court of North Carolina

196 N.C. 103

RIDLEY WATTS, CHAS. H. MURPHY, ARTHUR R. JOHNSON, BENJAMIN S. DENNIS, C. WHITNEY DALL, and DONALD B. STEWART, Copartners, Trading as Ridley Watts & Co., v. A. I. GROSS and A. L. PEARSON.

(Filed 3 October, 1928.)

Guaranty — Construction and Operation — Debts Guaranteed.

Where the stockholders give a written guaranty in stated amounts for the debts of the corporation, and the corporation is dissolved, and the manager of the corporation opens a business in another city under the same trade name, but in which the stockholders have no interest, the guaranty will not be extended to include the debts of the business thus operated, in the absence of some provision or stipulation clearly importing such extension.

Appeal by plaintiffs from Granmer, J., at February Term, 1928, of LeNOIR.

Civil action to recover on a written guaranty for merchandise shipped by plaintiffs to The Caswell Manufacturing Company, New Bern, N. C., during the months of November and December, 1923.

Plaintiffs are New York merchants and were doing business with The Caswell Manufacturing Company, a corporation with its principal place of business at Kinston, N. C., during the year 1922, and prior thereto. In the spring of 1922 the defendants executed to the plaintiffs a paper-writing or writings guaranteeing to the plaintiffs the payment of certain indebtedness due or to become due by the said “Caswell Manufacturing Company,” as designated in one guaranty of $2,000 and “Cas-well Manufacturng Company, Inc., Kinston, N. C.,” as named in another guaranty of $5,000.

It is admitted that the corporation, the debts of which the defendants guaranteed, was regularly dissolved 12 July, 1923.

The account for which plaintiffs seek to hold the defendants liable on their written guaranties, is for goods shipped by' plaintiffs to “Caswell Manufacturing Co., of New Bern, North Carolina,” during the months of November and December, 1923.

It seems that A. A. Silverstein, who managed the corporation, “The Caswell Manufacturing Company,” in Kinston, opened a business in New Bern under the trade name, “Caswell Manufacturing Company,” some time after the dissolution of the corporation in Kinston. The defendants were stockholders in the Kinston corporation, hut they had no interest in the New Bern business of A. A. Silverstein.

Upon the foregoing facts, which are admitted or not controverted, the court, being of opinion that the defendants were not liable to the plaintiffs on their guaranties, entered judgment as in case of nonsuit, from which the plaintiffs appeal, assigning error.

Dawson & J ones and H. P. Whitehurst for plaintiffs.

Qowper, Whitaker & Allen and Sutton & Greene for defendants.

Stacy, C. J.,

after stating the case: We agree with the trial court that the guaranties of the defendants, given to secure the debts of the Kinston corporation, in which the guarantors were interested, cannot be held, on the facts of the present record, to cover the obligations of a business in New Bern, conducted under a similar name, in wbicb tbe defendants bad no.interest. S. v. Bank, 193 N. C., 524, 137 S. E., 593.

A guaranty for tbe default of one person or firm is not to be extended to cover tbe default of another, in tbe absence of some provision or stipulation clearly importing sucb extension. 12 E. C. L., 1066; Note 19 L. E. A. (N. S.), 901.

Affirmed.