Yarbro v. McGinnis Case Brief

Summary of Yarbro v. McGinnis
AZ S. Ct. [1966]

Statute of Frauds: Surety Contracts

Relevant Facts: Appellee, McGinnis, a farm equipment company, sold a tractor to Russell, on installments of 574/mo after denying Yarbro the credit to do so. Russell failed to make the first months payment, and a company rep met with Yarbro who agreed to make the payment. Over time Yarbro agreed to make several more late payments for Russell and did so. After a couple more payments were late McGinnis threatened to repossess. Yarbro submitted two checks both which were NSF and returned. The tractor was ultimately repossessed by McGinnis.

Legal Issue(s): Whether Yarbro’s promise to pay the debts of Russell, being oral, are enforceable under Statute of Frauds? Whether there was sufficient consideration to support the promise? Whether the judgment was excessive?

Court’s Holding: No, L. object exception; yes; yes.

Procedure: Trial ct. default against Russell, and found Yabro liable for the entire balance (8751.95); Affirmed as modified.

Law or Rule(s): As an exception to the writing requirement of the S/F, the nature and intent of the promisor regard must be given to the form of expression, the situation of the parties, and all the circumstances of the case to determine whether he was to become a surety for another or to secure a pecuniary advantage to himself(answer for his own debt).

Court Rationale: There must be consideration and benefit AND that benefit must be the primary object of making the promise as distinguished from the benefit which is merely incidental, indirect, or remote. The facts show before McGinnis dealt w/ Russell Yarbro sought to purchase the tractor but financing was denied. Yarbro thought he could get Russell to buy it. He borrowed it several times, when repairs were needed the repairman found the tractor at Yarbro’s, he requested that McGinnis not repossess the tractor in conjunction with offers to pay the late payments. The main and leading object of Yarbro in making his promises was not to become guarantor, but to serve his own interests. McGinnis had a legal right to re-possess but forbode so doing b/c Yarbro promised he would pay the delinquent payments. A detriment to McGinnis and a benefit to Yarbro. Thus consideration was sufficient to support an oral promise to guaranty. Evidence only indicates that Yarbro promised to pay the late payments of Russell from Oct 1957 to July 1958.

Plaintiff’s Argument: The primary purpose of df in promising to pay for the debt of another is actually to protect his own interest, and therefor and exception to the S/F writing requirement.

Defendant’s Argument: The sale of goods or promise to answer for debt of another must be in writing under Statute of Frauds.

Surety – separate and distinct contract.

Guaranty– joint undertaking with the principal

pecuniary-money or that which can be valued as money.

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