Bagley v. Cohen

California Supreme Court Aug 2, 1898 No. Sac. No. 219Published

Before: Harrison

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Holding. The court held that the defendants' guaranty was an original undertaking commensurate with the principal's liability, which became absolute when the principal voluntarily disabled himself from performing the contract. The court further held that the trial court did not err in denying the motion to set aside the default judgment due to insufficient evidence of excusable neglect.

Issues

Whether the defendants' guaranty created an absolute liability when the principal voluntarily prevented his own performance.
Whether the trial court abused its discretion in denying a motion to set aside a default judgment based on a claim of excusable neglect.
Whether the complaint stated a cause of action against the defendants.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Their guaranty that Gould would perform his contract was an original undertaldng by them, and their liability as guarantors is commensurate with that of Gould.”

Synopsis

Guaranty Appended to Contract—Original Undertaking.—A guaranty appended to a contract before its delivery, to the effect that the contract shall be performed according to its conditions, is part of the same transaction with the contract, and the two instruments make but a single contract on the part of the guarantors, and is an original undertaking by them.

Id.—Commensurate Liability.—The liability of the guarantor upon such original undertaking is commensurate with that of the principal contractor, and is absolute, when he becomes absolutely liable for breach of the principal contract.

Id.—Guaranty of Note Payable out of Profits—Sale of Business.—Under a note payable out of the profits of a business, the payment of which is originally guaranteed in accordance with its conditions, the liability both of the maker and of the guarantors becomes fixed and absolute, when the maker voluntarily puts it out of his power to make any profit out of the business, or to fulfill the contract according to its terms, by a sale and conveyance of the business.

Id.—Insertion of Name in Guaranty—Execution.—The insertion of one only of the names signed to a guaranty, in the body of the guaranty, does not make the person so named the sole guarantor, where it appears that another person also executed it, not as a witness, but as one who made and subscribed the guaranty.

Changing Place of Trial.—An application for a change of the place of trial is properly refused, where the defendants did not appear, or answer or demur at the time when the motion was made.

Setting Aside Default—Rule Requiring Copy of Answer—Demurrer.— A rule of court requiring the copy of an answer proposed to be filed, to he served with the notice of a motion to set aside a default is proper; and a demurrer is not an “answer” within the meaning of such rule.

HARRISON, J. This action is brought against the defendants upon their guaranty of a contract made to the plaintiff by one Gould. The contract is as follows:

“On or before sixty days I, E. H. Gould, do hereby agree to pay to F. S. Bagley, or order, out of the profits realized by me from my business of packing raisins at Malaga, during the present season, the sum of three hundred and ten ($310) dollars in gold coin of the United States of America.

“Dated Fresno, September 12, 1894.”

“E. H. GOULD. [Seal]”

Prior to the delivery of this contract, and as a part of the same transaction, the defendant subscribed the following guaranty, which was written beneath the contract:

“I, E. A. Cohen, do hereby guarantee the payment of the foregoing note in accordance with the conditions thereof.

“E. A. COHEN. [Seal]

“By L. L. Cory, Agent.

“EDGAB A. COHEN.

“J. B. COHEN.”

Within ten days after the execution of the foregoing instrument Gould sold and conveyed all his right, title, and interest [606]in and to his business of packing raisins at Malaga, and thereby prevented himself from realizing any profits out of said business. Judgment by default was entered against the defendants, and they have appealed therefrom upon the ground that the complaint fails to state a cause of action.

The contract of the defendants being a part of the same transaction with the contract of Gould, the two instruments make but a single contract on their part. (Hazeltine v. Larco, 7 Cal. 32.) Their guaranty that Gould would perform his contract was an original undertaldng by them, and their liability as guarantors is commensurate with that of Gould. (Civ. Code, sec. 2808.) Their promise that he would perform his contract “in accordance with the conditions thereof” made them absolutely liable for his failure to perform it when he should be so liable. (Otis v. Haseltine, 27 Cal. 80.)

By the sale and conveyance of his business Gould voluntarily prevented himself from fulfilling his contract according to its terms, by putting it out of his power to make any profits in the business, and his liability became thereupon fixed and absolute. (Bishop on Contracts, sec. 1426; Wharton on Contracts, sec. 885 a; Wolf v. Marsh, 54 Cal. 228; Love v. Mabury, 59 Cal. 484; Poirier v. Gravel, 88 Cal. 79.)

Bagley v. Cohen

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