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Mosaic Tile Co. v. Jones

Decided: September 27, 1933.


On appeal from the Moumouth County Circuit Court.

For the defendant-appellant, McDermott & Finegold.

For the plaintiff-respondent, E. Garfield Gifford.


The opinion of the court was delivered by

PERSKIE, J. This appeal brings up for review a judgment of $3,070.11 entered on December 29th, 1932, on a jury verdict in favor of the plaintiff-respondent and against the defendant-appellant. The plaintiff-respondent sued on a guarantee which was in the following form:

"Whereas the Beach Construction Company is erecting a building on Second Avenue, Bradley Beach, New Jersey, and the Mosaic Tile Company has been requested to furnish tile to Harry Nelson for said Beach Construction Company, said tile to be used in the furnishing and erection of said building, and

"Whereas in order that the work of completing said building may be started and proceeded with, the creditors of said Beach Construction Company have entered into an agreement that they will receive payment of their claims from the proceeds of a certain mortgage of one hundred thirty thousand dollars, said sum of money to be paid to the creditors pro rata, in the event that money paid from the proceeds of said mortgage to the Mosaic Tile Company shall be insufficient to pay the full amount due for supplying said tile to Harry Nelson as aforesaid and in consideration of the Mosaic Tile Company joining with other creditors in signing said agreement with the trustees covering payment on said job, this will guarantee the payment to the said Mosaic Tile Company of any balance

of its account that may remain unpaid after distribution of the balance of the proceeds of the mortgage as aforesaid. Witness as to J. Wm. Jones,



The Beach Construction Company owned lands at Bradley Beach, and was engaged in constructing an apartment house thereon. Plaintiff-respondent was to furnish tile and had already supplied tile to the extent of $410.26 when the Beach Construction Company became financially involved or embarrassed, as a result of which it was unable to complete the undertaking. As a result of various conferences between the owners, material men and others in interest, a trust agreement was prepared on July 6th, 1929, in which John W. Davis and J. William Jones and J. William Jones, individually, were designated as trustees. The trust agreement provided that the building was to be completed, and moneys disbursed out of a proposed $130,000 building and loan association mortgage which had apparently been secured. All parties in interest executed this trust agreement with the exception of the plaintiff-respondent, who was to furnish additional tile to the amount of $2,500. The plaintiff-respondent refused to execute the agreement unless it was guaranteed the payment of the tile yet to be furnished. In order to induce the plaintiff-respondent to supply this tile and execute the trust agreement the defendant-appellant signed the guaranty aforesaid. Whereupon plaintiff-respondent delivered tile to the amount of $2,502.77. The trustees proceeded with the completion of the building. It, however, developed that the building and loan association which had agreed to advance the sum of $130,000 (all necessary instruments having been executed, delivered and recorded) found itself unable to do so. It further appears that, if the proceeds of the $130,000 mortgage had been received it would not have been sufficient to meet the disbursements necessary to complete the undertaking, and that the creditors would have received nothing. Thereupon the trustees, without notice to the plaintiff-respondent and without its consent, negotiated a new mortgage loan [111 NJL Page 388] in the sum of $150,000. The proceeds of this mortgage were also insufficient to meet the necessary disbursements and accordingly the creditors received nothing. Whereupon this suit was brought upon the guaranty. Motion for nonsuit as well as motions for directed verdicts were made by each party and were refused. This we think was proper. The testimony adduced presented a jury question. The defendant-appellant in limine, contends that the guaranty was conditional, i.e., if the proceeds of the $130,000 mortgage were insufficient then defendant-appellant could be made to respond to his guaranty. It further contends that the placing of a new mortgage of $150,000, though without notice to or consent of the plaintiff-respondent, released the guarantor of liability. With this contention we do not agree. "The rule that a guarantor is entitled to have his undertaking strictly construed does not mean that there should be any strict, technical accuracy -- but the guarantee should receive a liberal, fair and reasonable interpretation in furtherance of its spirit and in order to attain the object designed." 28 C.J., p. 936, ยง 81, 4. As we read the guarantee it appears to us that the clear intent thereof was simply that if the proceeds of the mortgage were insufficient, he, the defendant-appellant, would pay. Obviously, the proceeds of the $130,000 mortgage was insufficient as were likewise the proceeds of the $150,000 mortgage. To permit the defendant-appellant to avoid liability ...

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