Guaranty. Release. Accord and Satisfaction. Payment.
In a suit in equity for the enforcement of a guaranty by the defendant of the payment to the plaintiff by a corporation of the price of certain goods shipped to the corporation by the plaintiff, it appeared that, in compliance with certain provisions of the contract, the plaintiff had given notices to the defendant as the payments came due, that before a final payment was made the plaintiff rendered to the principal debtor a statement which was incorrect in that it overstated the amount of a credit of which the plaintiff had given the debtor a memorandum, and understated the balance due, that the debtor forthwith sent the statement to the defendant, that the defendant caused the check of a stranger to the transaction for the erroneous balance to be sent to the plaintiff with a letter stating that it was sent as "the final payment" under the guaranty and requesting a return of the receipt to the maker of the check, that the plaintiff receipted the statement and returned it to the stranger with a letter stating that the check was received "in final settlement" of the account of the principal debtor, and that seven weeks later the error was discovered and the defendant was notified. Held, that there was no release or discharge of the principal debt nor any accord and satisfaction, and that the principal debt and the guaranty remained in force.
Where, in a suit in equity by a creditor to enforce a guaranty, a master finds that the plaintiff through a mistake rendered to the debtor a statement of a balance of the debt due which was too small by $3,600 and at the debtor's request the amount of the erroneous balance was paid to the plaintiff by the guarantor, that the guarantor was notified by the creditor of his mistake seven weeks later, that during the first three of those seven weeks there was a debt owing to the debtor by a stranger which the guarantor might have attached in an action against the debtor and that the debtor was insolvent during the seven weeks and at the time the suit was brought, the guarantor is not discharged, because he has failed to sustain the burden of proof, which was on him, of showing that, when notified of the creditor's error, he had lost any material pecuniary advantage against his principal which he might have enforced had no mistake been made by the creditor.
BRALEY, J.
The defendant as guarantor became bound upon notice within thirty days from maturity for all moneys due the plaintiff from the sale of wood paving blocks to the principal debtor, and under the admissions in the answer, and the master's report, he is liable for the amount claimed unless relieved by the conduct of the plaintiff. Cumberland Glass Manuf. Co. v. Wheaton, 208 Mass. 425, and cases cited.
If by reason of a clerical error in bookkeeping the bill rendered to the principal debtor as a statement of the final payment was very largely below the amount actually owing, the acceptance of the check in settlement, and the sending of the letter with the statement receipted, did not release it from liability for the unpaid balance. Grinnell v. Spink, 128 Mass. 25. It also is immaterial that the check was made by a third party. The statement, even if returned at its request to the maker and sender of the check, was open to explanation by extrinsic evidence. Hildreth v. O'Brien, 10 Allen, 104. Nor was it a discharge in writing of the debt or an accord and satisfaction within the doctrine of Guild v. Butler, 127 Mass. 386, 390. The notice to the defendant upon discovery of the mistake having been given within thirty days from default and the debt still existing, there was a compliance with the terms of the guaranty. Cumberland Glass Manuf. Co. v. Wheaton, 208 Mass. 425.
But it is further contended that as the debtor at the date of the notice of the mistake had no attachable property which he could reach for reimbursement, although at the time of sending the bill and check it had credits subject to trustee process, the defendant has been damnified by the plaintiff's negligence, and hence is discharged. It is clear, however, from the master's findings, that the principal debtor had become insolvent, and the defendant on whom rested the burden of proof, failed to show that when notified of the error in computation with a demand for payment, he then had lost any material pecuniary advantage against his principal which might have been enforced, if the original statement of the final indebtedness had been as represented. Cumberland Glass Manuf. Co. v. Wheaton, 208 Mass. 425. Welch v. Walsh, 177 Mass. 555.
The decree for the plaintiff must be affirmed with costs.
Ordered accordingly.