EN BANC
[G.R. No. L-11073. February 21, 1918. ]
WISE & CO. (Ltd.) , Plaintiff-Appellant, v. JAMES KELLY and MARIANO LIM, Defendants-Appellees.
Lawrence, Ross & Block for Appellant.
Cosme Ferrer for Appellees.
SYLLABUS
1. CONTRACTS; OBLIGATIONS; CONDITIONS; SURETY. — A purchased merchandise from B on credit and agreed that he would apply the proceeds of its sale to the discharge of his indebtedness. C as surety for A undertook that A would pay over to B the entire proceeds of the sale of the merchandise. Held: That C is not liable for the difference between the amount realized from the sale of the merchandise and the purchase price of the same.
D E C I S I O N
FISHER, J.:
This action was brought in the Court of First Instance of Manila against the appellee, Mariano Lim, and one James Kelly, the former as surety and the latter as principal, to recover the amount of a promissory note.
The note upon which the action was brought is in the following terms:jgc:chanrobles.com.ph
"Be it known that we guarantee unto the firm of Wise & Co. (Ltd.) the payment of the sum of thirteen thousand seven hundred and forty-nine pesos and nine centavos (P13,749.09) which James Kelly, a merchant, owes to the said firm of Wise & Co. (Ltd.) , for goods and merchandise received and purchased by Mr. Kelly, to be sold in his establishment, upon the condition that Mr. Kelly will pay over to the firm of Wise & Co. (Ltd.) at the end of each month all sums which he may receive from the sale of said goods and merchandise, and that in the contrary event we, the sureties, undertake to pay to the firm of Wise & Co. (Ltd.) such sums as Mr. James Kelly may fail to turn in as above stated.
"In witness whereof we have signed this instrument, Manila, P.I., December 12, 1912.
(Sgd.) "JAMES KELLY.
(Sgd.) "MARIANO LIM."cralaw virtua1aw library
In his answer to the complaint the appellee, Mariano Lim, interposed, among others, the defense that the obligation was conditional as to him, and that the fact constituting the condition had not occurred.
The trial judge in his decision said, concerning the construction which in his opinion should be placed upon note in suit:jgc:chanrobles.com.ph
"It will be seen that the said document obliges Lim to respond for the payment to the firm of Wise & Co. (Ltd.) of the sum of P13,749.09 which the principal obligor Kelly owes to it for goods and merchandise received and purchased prior thereto, to be sold in his establishment, to the extent that Kelly fails to comply with the condition of paying in at the end of each month all sums which he may collect from the sale of such goods and merchandise, it appearing that he has only undertaken to pay such sums as have been received from the sale of merchandise by the principal obligor which have not been paid in by the latter."cralaw virtua1aw library
Upon the evidence submitted the court below held that plaintiff had not proven that the principal obligor Kelly had failed to turn over any money whatever received from the sale of the merchandise for which note was given, and establishes the conclusion that Lim had therefore incurred no liability, and that plaintiff has no cause of action against him.
In accordance with this conclusion, judgment was rendered against the principal debtor Kelly for the full amount of the note in suit, with interest, and the action was dismissed as to Lim. From this judgment plaintiff appealed and has assigned as error the conclusion of the trial court with regard to the conditional nature of the obligation assumed by Lim.
Upon an examination of the document in question it becomes evident that Lim, as surety, did not undertake absolutely to pay the sum of P13,749.09, in which the principal debtor admits himself to be indebted to the creditor firm. His agreement was limited to respond for the performance by Kelly of one of the necessary pacts of the contract evidenced by that document, namely, the undertaking to deliver to the plaintiff firm the total proceeds of the sales of the merchandise for the invoice value of which the promissory note was given.
It not having been stipulated that the merchandise was to be sold at a price not less than cost, it follows that even were Kelly to pay in the total amount derived from its sale, part of his obligation to the sellers might remain undischarged. He, unquestionably, is liable for the payment of the note whatever may be the price at which the merchandise might be sold; but this obligation is not extended to Lim. It having been determined by the court, in its findings, which we regard as fully supported by the evidence of record, that plaintiff has not proved that it has not in fact received all the money derived from the sale of the merchandise mentioned in the note, it follows that there is no evidence of the existence of the condition to which the obligation assumed by Lim was subordinated. In obligations subject to a suspensive condition the acquisitions of the right on the part of the creditor depends upon the occurrence of the event constituting the condition. (Civil Code, art. 1114.)
For the reason stated, we affirm the judgment appealed with the costs of this instance to the appellant. So ordered.
Arellano, C.J., Torres, Johnson, Carson, Araullo, Street, Malcolm and Avanceña, JJ., concur.
The note upon which the action was brought is in the following terms:jgc:chanrobles.com.ph
"Be it known that we guarantee unto the firm of Wise & Co. (Ltd.) the payment of the sum of thirteen thousand seven hundred and forty-nine pesos and nine centavos (P13,749.09) which James Kelly, a merchant, owes to the said firm of Wise & Co. (Ltd.) , for goods and merchandise received and purchased by Mr. Kelly, to be sold in his establishment, upon the condition that Mr. Kelly will pay over to the firm of Wise & Co. (Ltd.) at the end of each month all sums which he may receive from the sale of said goods and merchandise, and that in the contrary event we, the sureties, undertake to pay to the firm of Wise & Co. (Ltd.) such sums as Mr. James Kelly may fail to turn in as above stated.
"In witness whereof we have signed this instrument, Manila, P.I., December 12, 1912.
(Sgd.) "JAMES KELLY.
(Sgd.) "MARIANO LIM."cralaw virtua1aw library
In his answer to the complaint the appellee, Mariano Lim, interposed, among others, the defense that the obligation was conditional as to him, and that the fact constituting the condition had not occurred.
The trial judge in his decision said, concerning the construction which in his opinion should be placed upon note in suit:jgc:chanrobles.com.ph
"It will be seen that the said document obliges Lim to respond for the payment to the firm of Wise & Co. (Ltd.) of the sum of P13,749.09 which the principal obligor Kelly owes to it for goods and merchandise received and purchased prior thereto, to be sold in his establishment, to the extent that Kelly fails to comply with the condition of paying in at the end of each month all sums which he may collect from the sale of such goods and merchandise, it appearing that he has only undertaken to pay such sums as have been received from the sale of merchandise by the principal obligor which have not been paid in by the latter."cralaw virtua1aw library
Upon the evidence submitted the court below held that plaintiff had not proven that the principal obligor Kelly had failed to turn over any money whatever received from the sale of the merchandise for which note was given, and establishes the conclusion that Lim had therefore incurred no liability, and that plaintiff has no cause of action against him.
In accordance with this conclusion, judgment was rendered against the principal debtor Kelly for the full amount of the note in suit, with interest, and the action was dismissed as to Lim. From this judgment plaintiff appealed and has assigned as error the conclusion of the trial court with regard to the conditional nature of the obligation assumed by Lim.
Upon an examination of the document in question it becomes evident that Lim, as surety, did not undertake absolutely to pay the sum of P13,749.09, in which the principal debtor admits himself to be indebted to the creditor firm. His agreement was limited to respond for the performance by Kelly of one of the necessary pacts of the contract evidenced by that document, namely, the undertaking to deliver to the plaintiff firm the total proceeds of the sales of the merchandise for the invoice value of which the promissory note was given.
It not having been stipulated that the merchandise was to be sold at a price not less than cost, it follows that even were Kelly to pay in the total amount derived from its sale, part of his obligation to the sellers might remain undischarged. He, unquestionably, is liable for the payment of the note whatever may be the price at which the merchandise might be sold; but this obligation is not extended to Lim. It having been determined by the court, in its findings, which we regard as fully supported by the evidence of record, that plaintiff has not proved that it has not in fact received all the money derived from the sale of the merchandise mentioned in the note, it follows that there is no evidence of the existence of the condition to which the obligation assumed by Lim was subordinated. In obligations subject to a suspensive condition the acquisitions of the right on the part of the creditor depends upon the occurrence of the event constituting the condition. (Civil Code, art. 1114.)
For the reason stated, we affirm the judgment appealed with the costs of this instance to the appellant. So ordered.
Arellano, C.J., Torres, Johnson, Carson, Araullo, Street, Malcolm and Avanceña, JJ., concur.
