Nielsen v. Davidson

NOTJRSE, J.

Plaintiff sued the defendant to recover upon a written contract guaranteeing the payment of two promissory notes in the sum of $6,250. Plaintiff owned

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the University Creamery in the city of Palo Alto and, in December, 1919,' agreed to sell it to Allen and Carter for the sum of $25,000, plus the inventory of stock in trade. Pending the running of the statutory notice fixing the day of sale, the bill of sale was executed and deposited in escrow with the First National Bank of Palo Alto. During this time the buyers reguested Nielsen to accept two promissory notes to cover one-half of the agreed purchase price. Plaintiff agreed to accept the promissory notes providing they should be satisfactory to the First National Bank, and emphasized the fact that it would be necessary for the cashier of said bank to assure him that the notes were as good as cash, as he was selling the creamery for cash. This was agreed to and one of the purchasers brought the defendant Davidson to the First National Bank of Palo Alto and introduced him to the cashier. The whole transaction was explained to Davidson, and during the course of the conversation he explained that he was a silent partner in the creamery; that he did not want his name known but would guarantee the notes and would write a letter to that effect. On December 5th he sent to the cashier of the bank the letter which is the basis of this action and in which he stated that he understood that the plaintiff wanted an agreement with the bank whereby at any time he might cash the two notes and that his letter might be treated as an agreement of guaranty for the purposes mentioned -in the event that the bank should see fit at any time to purchase or carry the notes. This letter was supplemented by a letter from the defendant’s bank in San Francisco to the effect that he was good for the payment, and these were shown to the plaintiff by the cashier of the First National Bank, who thereupon assured the plaintiff that the notes were good and that the transaction might be completed in accordance with his wishes. Upon such assurance plaintiff consented to the bank’s delivery of his bill of sale to the purchasers. The sale was thus completed in the first part of December, 1919, and the purchasers took possession Sometime in August of the year following the defendant herein endeavored to revoke his guaranty. The notes had been made payable to the First National Bank of Palo Alto and when the defendant attempted to cancel his guaranty the Ibank assigned the notes to plaintiff herein, who com