
    No. 836
    HOFFMASTER et v. JUNKIN
    U. S. Appeals, 6th Circuit
    No. 4115.
    Decided Jan. 6, 1925
    313. CORPORATIONS — Where it gives note for extension of time within which to pay debt without guarantor’s knowledge, they are not bound.
    
      Attorneys—McKain & Ohl for Hoffmaster et; Harrington, DePord, Huxley & Smith for Junkin; all of Youngstown,
   MACK, C. J.

This action was brought by Paul Junkin as receiver of the Perfection Tire Co. ag'ainst L. P. Hoffmaster et al, in the District Court upon their written agreement guaranteeing the payment of all purchases heretofore made and that may hereafter be made by the Automative Tire Service Co. (of which Hoffmaster et al. were directors) from the Perfection Tire Co. up to $10,000.

Junkin claimed a balance of $8,327.34 after offsetting of certain credits. Hoffmaster claimed that the Service Co. was • entitled to further offsetting credits. The verdict and judgment was for $8,240 in Junkins’ favor.

By the contract the time of payment was definitely fixed at “net thirty days from date of invoice.” When the account of the Service Co. was past due however, a note was given to the Perfection Co. first for 30 days but later 90 days was agreed upon. Hoff-master testified that the note was given and accepted as full payment and it was expressly agreed that the guaranty be cancelled. The Perfection Co. denied this. The case was taken up on error and it was contended in the Circuit Court that the Perfection Co. was more concerned to liquidate the account and get a note which could be discounted than it was to preserve its rights under the guaranty. The Circuit Court of Appeals held:

1. Since one Gifford and one Riehl as guarantors, had no knowledge of the giving of the note to the Service Co. intended to extend time for payment of the account, they as non-assenting guarantors were released.

2. The request for a directed verdict as to them should have been granted.

3. If the note was given and taken in absolute and not in conditional payment of the account, the guaranty would be exhausted as the account guaranteed would have been paid. No question of consideration would arise.

4. The position of the agent of the Perfection Co. in charge of the Automotive Company’s account, would suffice to bind his principal whether or not, in turning in the note, he fully advised the officers of the Perfection Co. of the entire transaction.

5. Therefore the failure to submit to the jury as requested, the issues of conditional or absolute payment and express waiver of the guaranty was reversible error.

Reversed and remanded.  