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CASES

Guaranty and Suretyship

SELECTED BY

ROBERT E. BUNKER

Of the Department of Law of the University of Michigan

GEORGE WAHR

Publisher and Bookseller

ann arbor, mich.

1902.

<UMIONf*rLABEL>

PREFATORY.

The cases appearing- in this vokime have been selected for
use in connection with the lectures on Suretyship given in the
Law Department of the University of Michigan. Barring omis-
sion of irrelevant matter in some instances and of the briefs and
arguments of counsel in all instances, the cases appear in this
volume as they appear in chc reports themselves. Uniformity in
•spelling and punctuation has not been attempted or thought desir-
able. In regard to these matters, the reports have been followed,
except in cases of manifest error.

The purpose has been to put into the hands of the students
taking the course in Suretyship in this University a limited nimi-
ber of cases which will serve to illustrate and, in some measure^
to supplement the lectures on that subject. Some cases have been
selected for the forms and suggestions they furnish in the prac-
tical work of preparing bonds and such other instruments as per-
tain to the general subject — such work being a material feature
of the course. Such a volume as this would not be necessary
were it possible for students to consult 'the reports themselves in
season to prepare the work required of them. The great number
of students attending the Law Department of this University puts
that possibility out of question, and that, too, despite the very com-
plete Law Library so arranged as to afford the best means for its

largest use.

Uni\'eksitv of Michigan,

Ann Arbor, Mich.

November, 1902.

Ror.ERT E. Bunker.

6710B0

CASES REPORTED.

Abbott V. Brown, 92.
Aetna Ins. Co. v. Fowler, 247.
Alger V. Scoville, 175.
Andrews, Eissing v., 200.
Annable, Russell v., 193.
Arons, Morrison v., 245.
Auchampaugh v. Sclimidt, 206.

Backus, The People v., 134.
Bacon, Jones v., 167.
Baldwin v. Hiers. 164.
Ballard v. Burton, 110.
Barber, Easterly v., 274.
Blancbard, Dexter v., 190.
Blanchard, Gibbs v., 125.
Brown, Abbott v., 92.
Bruner, Moore v., 279.
Buckmyr v. Darnall, 181.
Butler, Guild v., 208.
Butler V. United btates, 250.
Burton, Ballard v., 110.

Campbell v. Sherman, 25.

Cass V. Shewman, 19.

Chalmers, The First Nat'l Bank v., 156.

Clark V. Kellogg, 81.

Clayton, Re Walker v., 281.

Coster, Union Bank v., 57.

Cox, Lansdale v., 272.

Daniels, Thayer v., 270.

Darnall, Buckmyr v., 181.

Davis V. Wells, Fargo & Co., 225.

Davis V. Patrick, 141.

Davis Sewing Machine Co. v. Richards,

118.
Deacon, Pearl v., 216.
Deering v. Moore, 254.
Deabold v. Opperman, 27.
Dexter v. Blanchard, 190.
Doby V .Fidelity & Casualty Co, 289.
Dodd V. Winn, 256.
Dover Stamping Co. v. Noyes, 83.

Easterly v. Barber, 274.
Eastwood V. Kenyon, 174.
Eissing v. Andrews, 200.
Emmert v. Thompson, 262.
Evansville Bank v. Kaufmann. 64.

Farmers' Bank, Gano v., 121.
Fidelity & Casualty Co., Dobv v., 289.
Foster, Vail v., 288.
Fowler, Aetna Ins Co. v., 247.

Gano V. Farmers' Bank, 121.
Geagan, Manley v., 131.
Gibbs V. Blanchard, 125.
Gillespie v. Torrance, 211.
Grey, Sutton v., 151.
Griffith v. Rundle, 53.
Griswold, Hazard v., 199.
Guild V. Butler, 208.

Hartley v. Sanford, 169.

Hawkins, Roberts v., 98.

Hazard v. Griswold, 199.

Henry McShane Co. v. Padian, 89.

Hiers, Baldwin v., 164.

Hooker v. Russell, 148.

Hungerford v. O'Brien, 235.

J. W. Butler Paper Co., Shei-burne v.

86.
Jones V. Bacon, 167.

Kaufmann, Evansville Bank v.
Kellogg, Clark v., 81.
Kearnes v. Montgomery, 1.
Kenyon, Eastwood v., 174.
Kimball v. Newell, 187.
Kingsland v. Koeppe, 38.
Kirkham v. Marter, 132.
Koeppe, Kingsland v., 38.

Lansdale v. Cox, 272.

Lee V. Yandell, 192.

Littler, Singer Mfg. Co. v.. 76.

McConnell v. Poor, 239.
McMurray v. Noyes, 95.
Manley v. Geagan, 131.
Marter, Kirkham v., 132.
Marvin, Welch v., 185.
Mead v. Watson, 165.
Mease v. Wagner, 183.
Millikin, Starr v., 139.
Millikin, Stoner v., 252.
Molleson. Smith v., 104.

64.

CASES REPORTED.

Montgomery. Kearnes v., 1.
Moore, Deering v., 254.
Moore v. Briuier, 279.
Morgan v. Wonlell, 266.
Morris v. Osterhout, 162.
Morrison v. Arons, 245.

National Surety Co., United States v.,

48.
National Bank v. Peck. 221.
Newell, Kimball v., 187.
Noyes, Dover Stamping Co. v., 83.
Noyes, McMurray v., 95.

O'Brien, Hungerford v., 235.
Opperman, Deobold v., 27.
Osterhont, Morris v., 162.

Packard, Pain v., 219.

Padian, Henry McShane Co. v., 89.

Pain V. Packard, 219.

Palmer, Villars v., 205.

Patrick, Davis v., 141.

Peck, National Bank v., 221.

Pearl v. Deacon, 216.

Poor, McConnell v., 239.

Prior V. Williams, 259.

Regents, Weinberg v., 41.

Re Walker v. Clayton, 281.

Richards, Davis Sewing Machine Co.

v., 118.
Roberts v. Hawkins, 98.
Rudy. Trimble v., 286.
Rundle, Griffith v., 53.
Russell V. Annable, 193.
Russell, Hooker v., 148.

Saint v. Wheeler, 3.
Sanford. Hartley v., 169.
Sawyer, Weare v., 196.
Schmidt, Auchampaugh v., 206.
Scoville, Alger v., 175.
Sheldon. Smith v., 34.

Sherburne v. .1. \V. iiutler Paper Co., 86.

Sherman, Campbell v., 25.

Shewman, Cass v., 19.

Singer Mfg. Co. v. Littler, 76.

Smith v. MoUeson, 104.

Smith V. Shelden, 34.

Smith V. Van Wyck, 87.

Starr v. Millikin, 139.

Stoner v. Millikin, 252.

Sutton V. Grey, 151.

Swinney, The State v., 238.

Taylor v. Wetmore, 78.

Thayer v. Daniels, 270.

The First Nat'l Bank v. Chalmers, 156.

The People v. Backus, 134.

The State v. Swinney, 238.

Thompson, Emmert v., 262.

Torrance, Gillspie v., 211.

Trimble v. Rudy, 286.

Union Bank v. Coster, 57.
United States, Butler v., 250.
United States v. National Surety Co.,
48.

Vail V. Foster, 288.

Van Wyck, Smith v., 87.

Villars v. Palmer, 205.

Wagner, Mease v., 183.
Watson, Mead v., 165.
Weare v. Sawyer, 196.
Weinberg v. Regents, 41.
Welch V. Marvin, 185.
Wells. Fargo Co., Davis v., 225.
Wetmore, Taylor v., 78.
Wheeler, Saint v., 3.
Williams, Prior v., 259.
Winn. Dodd v., 256.
Wordell, Morgan v., 266.

Yandell. Lee v., 192.

GUARANTY AND SURETYSHIl

Kearnes 7'^\ Montgomery (1870).
4 W. V^a. 29.

Boggcss. for plaintift' in error.

Dennis & Price, for defendant in error.

The facts are stated in the opinion of Maxwell, J-

Maxwell, J. This was an action of assumpsit, to recover
from the defendant the sum of 2,000 dollars, with interest. The
facts certified show that on the 28th day of January, i860, the
plaintiff held the bond of the defendant and one J.N. Montgomery
for 2,000 dollars ; that the defendant, on the day and year afore-
said, proposed to exchange with the plaintiff for the said bond, a
bond of 2,000 dollars executed by Thomas Creigh and L. S. Creigli^
to the plaintiff , that the ])laintift' refused to accept the said last
mentioned bond unless the defendant would indorse the same,
inasmuch as it was payable to the plaintiff and not to the defendant :
whereupon the said defendant wrote his name upon the back of the
said bond, which was then accepted by the plaintiff', who. in ex-
chanafe therefor, delivered to the defendant the said bond of the
defendant and J. N. Montgomery ; that afterwards, and after the
institution of the suit, l)ut before the trial, the plaintiff' wrote above
the blank indorsement of the defendant, a promise binding the
defendant as surety of the said Thomas Creigh and L. wS. Creigh ;
that the bond with the indorsement thereon is as follows:

■'On or before the first of March, 1861, with interest from the first
of .March, 1860, we or either of us bind ourselves,, our heirs, etc., to pay

a GUARANTY AND SURETYSIIIP.

Alexaiulcr Kearnes the jus-l and full sum of two thousand dollars, for

value received.

"Witness our hands and seals this 2Sth of Januarj-, i860.

"Tho.m.vs Ckeigh. [seal]
"Lewis S. Creigh." [seal]

"For value received, I herebj- become the surely of Thomas Creigh
and Lewis S. Creigh as obligors in the within bond.

"Wm. H. Montgomery."

That the debt r.g'ainst the Creighs could have 1)een made by suit in
the year 1861, and after the close of tlie war in i<%5. and that the
said Crcighs have been insolvent since i860, and that since that time
the debt could not have ])cen made off of them by suit. I'jjon
these facts judgment was rendered for the defendant. The plaint-
iff in error insists that the judgment is erroneous, because upon
the facts proved, the defendant was a surety or maker of the bond
in question and primarily liable for its payment, while it is insisted
for the defendant that he was a guarantor merely and only liable
for the payment of the bond in case the money could not be made
oft' of the makers of the paper after it fell due, by the use of due
diligence which, he insists, was not used before the makers became
insolvent. Whet her, the defendant is guaranli"/ or niaker depejitls,,
Qn_ tlie understanchng of tlie parties, li_tlie^[3a}:e,e jjrjassi gnee of
paper^ not negotiali k^ indorse, his name in blank on t he back of it,
. he is JU'iincL facie assignor, buLif a stranger indorse his n a m e in
blank on the back of paper, not negotiable, he is prima facie guar-
a ntor : but this p restmiption may be relmlted by sbnwing the
original understanding of the parties, by showing an express
agreement other\^e,,,jjr3y_shp\ying;_circumk^iices from which
one. may be inferred. """" "

The contract of a guarantur is collateral and secondary. It
dift'ers in that respect generally from the contract of a surety
vliicli is direct; and in general the guarantor contracts to pay if,
by the use of due diligence, the debt cannot be made out of the
princix)al debtor, while the surety undertakes directly for the pay-
ment and so is responsible at once if the principal delator makes
default. As the proper diligence w^as not used against the Creighs,
if th.e defendant is guarantor merely he is not liable for the pay-
ment of the debt; while if he is to be treated as surety, he is liable.
It becomes, therefore, necessary to determine whether he is a
technical guarantor merely or a surety. * '■- *

The plaintiff', after suit brought, wrote over the name of the
defendant, "For value received, 1 lurel)} become the surety of

SAINT VS. \viieelf:r. 6

Thomas Crcigh and Lewis S. Crcigh as obligors in the within
bond." It is upon this contract, so written by the plaintiff, that
he claims his right to recover from the defendant. The plaintiff
might write anything over the name of the defendant, consistent
with the contract of the defendant, so as to carry it 'out. He could
not write the words which he did write, unless upon special con-
tract between the parties, disclosed by the evidence and surround-
ing circumstances. The evidence, instead of sustaining and au-
thorizing this special contract as written by the plaintiff', does not
even tend to show any such understanding, but on the contrary
shows, so far as can be inferred from it, that the defendant was
to assume the same situation as to liability that he would have
occupied if the paper had been executed to him as payee and trans-
ferred by liim to the plaintiff". As the facts proved wholly fail to
show a contract on the part of the defendant to be liable as maker
or surety, it follows that he is liable only as guarantor.

The facts proved show afilirmatively that, by the use of due
diligence against the Creighs, the plaintiff' might have made the
money.

The judgment complained of will, therefore, have to be af-
firmed with damages and costs.

The concurring opinion of Brown, Pres't, is omitted.

Saint ct. a!, z's. Wheeler & Wilson Mfg. Co. (1891).
95 Ala. 362; 36 Am. St. R. 210; 10 So. 539.

Action by Wheeler & Wilson Mfg. Co. against R. F. Saint,
A. J. Crosthwait, C. M. Wright, J. F. Hall and J. R. Spragins,
parties to a contract under seal, in the words and figures following:

"For value received and in consideration of the within contract, R. F.
Saint (and the other defendants, giving their names and residences re-
spectively), hereby guarantee to the Wiieeler & Wilson Mfg. Co., its suc-
cessors or assigns, the full and faithful performance of the foregoing con-
tract, including all damages which may result to the said company from
any failure on the part of said R. F. Saint to 'perform any of the provisions
of said agreement to the amount of $1,000; hereby waiving all necessity
on the part of said company of instituting legal proceedings against said
R F Saint before havina, recourse on us ; herebv waiving the benefit of

4 GUARANTY AND SURETYSHIP.

all constitutional or statutory homestead or exemption laws now in force;
further agreeing to pay plaintifif's attorney's fees and all costs should suit
l)e necessary to enforce the collection of this bond.
"Witness our hands and seals, etc."

Tliis conlracl or ])uncl was written on llic Ijuck ul the cuutract
therein referred to. by which said company, as party of the first
part, employed said Saint, party of the second part, as its col-
lector, which contract sustained these provisions, among others :

1. The party of the first part (Wheeler & Wilson Alfg. Co.)
agreed to employ the partv of the second part as its collector.

2. The party of the second part is to engage in no other btisi-
ness but to devote his time exclusively to collecting claims given
liini frnm lime to time by the i)arty of the first part.

3. The jjarty of the second part agrees to remit to the party
of the first pai't on Sattu'day of each week the full aniotmt of all
collections made by him.

4. All notes, leases and cash received by the party of the
second part on account of the party of the first \rAV[ shall be held
and rendered strictly as die property of the said party of the first
])art sul)ject to their order and under their control.

6. The party of the second part is to receive as full compen-
sation for his services under this agreement, a salary of $50 per
month and necessary traveling expenses '•' '•' '•'.

All the defendants filed the plea of the general issue. The
other sureties on the bond filed separate pleas, twenty-two in num-
l)er, including those to which demurrers were sustained.

A. J. Crosthw^ait separately pleaded that, before Saint liad
entered on the discharge of his duties as collector, he notified
plaintiff to take his name ofl^ the bond — that he would not become
a suretv on the bond: tlial tlic ])laintiff made no olijection and he
was therebv released from any obligation on the l^ond. The other
sureties on the bond filed a separate plea that they signed the bond
with the understanding that Crosthwait was also jointly liable
with them on the bond and that a release of Crosthwait on the bond
without their consent released them.^

The evidence introduced on the trial of the case established
the following facts: That the above contract was executed l)y the
plaintiff and R. F. Saint and the bond was executed b\ the de-
fendants. Wright, Crosthwait, Hall and Spragins, as sureties on
the bond. That Saint received from the plaintiff a large list of

'The other pleas of the defendant and tlic furtlicr statement of facts arc omitted.

SAINT WS. WIIEKLER. 5

notes and accounts for collection ; that he collected a considerahle
amount of money for it. paying over a portion of it and retaining
or embezzling the balance of it. After the l)ond was executed,
Saint carried it or sent it to Nashville to the plaintiff; that when
Saint went to Nashville to begin work under the contract and
before he had reached that place or had received any notes or
accounts from the plaintiff', Crosthwait notified i^laintiff' to take
his name off the bond, which was a revocation of his guaranty,
and, plaintiff' not having refused, he regarded himself released.
Plaintiff' did not decline to release him but simply asked his rea-
sons ; and after that plaintiff' gave Saint the notes and accounts
to collect. That when Saint went to Nashville to take charge of
the work assigned to him under the contract, the original con-
tract was changed and Saiiit was permitted to retain from his
weekly collections all his expenses and a salary of $50 per month
instead of remitting to plaintiff the full amount of his collections.
That in Feljruary. 18S8, the plaintiff', through W. W. Walls, made
another change in the contract, whereby Saint was to get only
$9 per week instead of $50 per month for his services as collector,
and that Saint worked under this last contract until he quit, but, on
a settlement he made with the company through Walls, he was
allowed $50 per month. That Saint was required to sell and dis-
count notes and accounts which had been put in his hands for
collection under the contract. That he was required to take up
the sewing machines and sell them again for such prices as he
could get for them, and that he did take up some machines for
the plaintiff', but did not know how many, and sold some of them
vmder instructions from the plaintiff'. That Wright, Hall and
Spragins knew nothing about Crosthwait revoking, his guaranty
on the bond : that they signed it with the understanding and agree-
ment that Crosthv.ait was jointly liable with them. It was also
proved that in February, 1888, the plaintiff', through its agent,
had notice of Saint's defalcation and that after such notice said
company continued Saint in its employment. The defendants
knew nothing about the changes made in this contract between
Saint and the plaintiff after the bond was signed. They never
consented to any of the changes. The plaintiff never notified either
of them of Saint's dishonest act in appropriating the plaintiff"s
money. Defendants then offered to prove by each of the defend-
ants that they had not consented to a change in the contract and
had no knowledge of such change.

6 GUARANTY AND SURETYSHIP.

Defendants introduced as evidence a number of letters written
by plaintiff to the defendant, R. F. Saint, in which they authorized
him to discount notes and use his discretion. All the letters show
that Saint was required to do other work than that required under
the written contract ; all of which increased the risk which the
sureties had incurred.

In addition to the other charges rec^uested by the defendant
in writing were the following :

5. "If the jury believe from the evidence that in February,
1888, Saint had only used $50 or $60 of the plaintiff's money,
and that Saint notified the plaintiff that he was short that amount,
then it was the duty of the plaintiff to notify the sureties, Wright,
Crosthwait, Hall and Spragins, and, if the plaintiff failed to notify
them of such fact, they cannot recover against these sureties for
any defalcation of Saint after that time."

7. "If the jury believe from the evidence that A. J. Crosth-
wait was released from the bond as guaranty after the other sure-
ties, Wright, Crosthwait, Hall and Spragins had signed it. then I
charge you that such release was a material change in tlu' con-
tract. And if you further believe from the evidence that such
change was made without the knowledge and consent of \\'right,
Hall, and Spragins, and Crosthwait, then the plaintiff cannot re-
cover against them."

9. "If the jury believe from the evidence that in February,
1888, the plaintiff" had notice that defendant. Saint, had collected
money for it w'hich he had converted to his own use, then it was
the duty of the plaintiff to notify Wright, Hall, Crosthwait, and
.Spragins, his securities, and if it failed to notify them, the plaintiff'
cannot recover against said sureties for the money collected and
appropriated to his (jwn use after the time."

The defendants separately excepted to the court's refusal to
give the several charges requested by them * * *.

There were verdict and judgment for the ])laintiff. Defend-
ants appeal.

Kirk & Alinoii, for appellants.

RouUiac & Nathan, for appellee.

McClellan, J. The contract sued is not a guaranty, but
one of suretyship. Crosthwait and the other defendants, who
undertake that Saint shall faitlifully perform his contract with the
company, are sureties of Saint and not guarantors. The distinc-
tion between the two classes of undertakings is often sliadowy,

• SAINT VS. WIIKKLER. (

and often not observed by judges and text-writers; but tbat tbere
is a substantive distinction, involving not infrequently important
consequences, is, of course, not to be doubted. It seems to lie in
this : that when the sponsors for another assume a primary and
direct liability, whether conditional or not, in the sense of being
immicdiate or postponed till some subsequent occurrence, to the
creditor, they are sureties ; but when this responsibility is second-
ary, and collateral to that of the principal, they are guarantors.
Or, as otherwise stated, if they undertake to pay money or to do
any other act in the event their principal fails therein, they are
sureties ; but. if they assume the performance only in the event
the principal is unable to perform, they are guarantors. Or, yet
another and more concise statement, a surety is one who under-
takes to pay if the debtor do not ; a guarantor, if the debtor can-
not. The first is sponsor absolutely and directly for the prin-
cipal's acts; the latter, only for the principal's ability to do the
act. "The one is the insurer of the debt ; the other, an insurer of
the insolvency of the debtor." This is the essential distinction.
There is another, going as well to its form. The contract of
suretyship is the joint and several contract of the principal and
surety. "The contract of the guarantor is his own separate un-
dertaking, in which the principal does not join." Indeed, it has
been held, pretermitting all other considerations, that no con-
tract joined in by the debtor and another can be one of guaranty
on the part of the latter. (McMillan v. Bank, 32 Ind. 11, 10 Amer.
Law Reg., N. S., 435, and notes.) Though we apprehend that a
case might be put, involving only secondary liability on the spon-
sors, though the undertaking be signed also by the principal.
However that may l)c, it is certain that in most cases the joint
execution of a contract by the principal and another operates 1-0
exclude the idea of a guaranty, and that in all cases such fact is
an index pointing to a suretyship. See Brandt, Sur. Sections i,
2 ; 9 Amer. & Eng. Enc. Law, p. 68 ; Marherger v. Pott, 16 Pa.
St. 9; Allen V. Hubert, 49 Pa. St. 259; Reigart v. White, 52 Pa.
St. 438; Kram pit's H.v'r v. Hata's Ex'i\ Id. 525; Birdsall v. Hea-
cock, 18 Amer. Law Reg. (N. S.) 751. and notes; Hartman v.
Bank, 103 Pa. St. 581 ; Courtis v. Dennis, 7 Mete. (Mass.) 510;
Kcarnes v. Montgomery, 4 W. Va. 29 : Walker v. Forbes, 25 Ala.

139.

Applying these principles to the bond sued on, the conclusion
must be tliat it is not a guarantv, but a contract of suretyship, on

8 GUAKAXTV AND SURKTYSIIir.

the part of Crosthwait. W'riyht, I lall ami Spragins. It is no<j
their separate undertaking, but the principal also executes it.
While they employ tlie wo'-d "guaranty," they directly obligate
themselves, along with Saint, to pay — absolutely and wholly,
irrespective of Saint's solvency or insolvency — all damages which
may result to the obligee from his default. Not only so. but they
expressly stijjulate that the C'impan\- need not exhaust its rem-
edies against Saint before proceeding against them, it is, in other
words, and in short, a primary undertaking on their part — not
secondary and collateral — to pay to the companx' in the event of
Saint's failure, jind not an undertaking to pay only in the event of
Saint's default and inal)ility to pay. They are sureties of Saint,
and not his guarantors ; and their rights depend upon the law
applicable to the former relation, and not u]x)n the law controlling-
the latter. On.e of the im])orta]it dilYcrences in the operation,
eifect, and discharge of the two contracts finds illustration in this
case. The undertaking of guaranty, in a case like this, is primar-
il\- an otter, and does not l)ecomc a binding obligation until it is
accepted and notice of acceptance has been given to the guarantor.
Till this has been done, it cannot be said that there has been that
meeting of the minds of the ])arties which is essential to all con-
tracts. Machine Co. v. Richards, 115 l'. S. 524, 6 Sup. Ct. Rep.
173; IValkcr v. I'orbcs, 25 Ala. 139. T-eing thus a mere offer it
may be recalled, as. of course, at any time before notice of accept-
ance. Indeed, there are authorities which hold that even after
acceptance, and notice thereof, the guarantor may revoke it by
notice that he will no longer be bound, unless he has received a
continuing or independent consideration which he does not re-
nounce, or unless the gaiarantee has acted upon it in such way
as that revocation would be inequitable and to his detriment ; and,
in cases of continuing guaranty, the effect of such revocation is
to confine the guarantor's liability to ])ast transactions. 2 Pars.
Cont. 30; .llhiii v. Kcniiiiii^, 9 Bing. 6ivS; Offord v. Paz'ics, 12 C.
B. (X. S.) 748; Tischler v. Hofhcinicr, (\'a.) 4 S. E. Rep. 370.
All this is otherwise with respect to the contract of a surety. He is
bound originally, in all respects, upon the same footing as the
principal. 1 lis is not an oft'er depending for efficacy upon accept-
ance, but an absolute contract, depending for efficacy u])on com-
plete execution ; and its execution is completed by delivery, hroni
that moment his liability continues until discharged in accordance
witli stipulations of the instrumeiU. (ir by some unauthorized act

SAINT VS. WHEELER. 9

or omission of the oblig'ee violative of his rights under tlie instru-
ment, or l)v a vaHd release. Nothing that he can do outside of the
letter of the bond can free him from the (kities and liabilities it
imposes. He cannot assert the right to revoke unless the right is
therein nominated. As was said by the English court, if he
desired to have the right to tenninate his suretyship on notice, he
should have so specified in his contract. Calvert v. Gordon, 3
Man. & R., 124; Brandt. Sur. Sec. 113, 114.

The evidence here as to the release of Crosthwait tends to
show no more than this : That after the bond had been delivered
to plaintiff, and after its officers had advised Saint that they were
ready for him to enter on the discharge of his duties under the
contract secured by the bond, he (Crosthwait) requested plaintitt"
to take his name off the paper. Xo assent to this request is
shown, but only an inquiry on the part of plaintiff as to Crosth-
w^aite's reasons for desiring to be released. It would seem that the
court itself should have decided that these facts did not release
Crosthwaite, but the question appears to have been submitted to
the jury. If this submission, or any of the instructions accom-
panying it. was erroneous, no injury resulted to defendants, since
the jury determined the point against the alleged release, as the
court should have done, assuming it to have been a question of
law. On the other hand, if it were a cjuestion for the jury, it is
to be presumed they were properly instructed as to the rules of
law wdiich should guide them to its solution, as no exceptions were
reserved in that regard. The exceptions which w-ere reserved on
this part of the case are to charges given, and to the refusal to^
give charges asked hv defendants declaratory of the eff"ect which
the discharge of Crosthwaite. if the jury found he had been dis-
charged, would have upon the liability of his co-sureties. As the
jury found expressly that he had not been discharged, these ex-
ceptions present mere abstractions not necessary to be decided.
We have no doubt, however, but that che law in this respect was
correctly declared by the court to be that the release of Crosth-
waite operated 10 release the other sureties only to the extent of
his aliquot share of the liability.

Brandt, Sur. Sec. 383; Burge, Sur. 386; Kliiigcnsiuitli v.
Kliiigcnsinith, 31 Pa. St. 460; Ex Parte Giff'ord. 6 Ves. 805;
Shock V. Miller, 10 Pa. St. 401 ; Currier v. Baker, 51 X. H. 613;
Governor v. Jeiniso;i, 47 Ala. 390.

10 GUAUA.NTV AND SUKETVSIIIP.

The sureties of Saint insisted on the trial below that they
were discharg-ed from all lialjility on the bond by reason of certain
alleged changes made in the original contract between their prni-
cipal and the company, by tlio jwrties thereto, after they became
sureties for its faithful performance, and without their knowledge,
consent, or ratification. It is not pretended that the paper writing
evidencing this contract was ever altered in any respect, but that
its terms were changed by subsequent parol agreements, in the
following- respects, among others to be presently considered : First,
tliat under this contract, which constituted Saint a collector only
for the company, he was instructed and required to take up and
resell sewing machines when he found the notes for the purchase
money of the same, and which were in his hands for collection,
could not be collected ; and, second, that he was authorized to dis-
count or sell the notes placed in his hands for collection, when the
same could not be otherwise realized upon. Nothing is claimed
in this action 011 account of Saint's misconduct in respect of any
property thus taken up or resold, or of any note discounted by him,
or with respect to the proceeds of any such sale or discount. If
these duties were such as usually devolved upon a collector for a
sewing machine company, — as to which there is no evidence in this
record, and no necessity for any, under the present complaint, —
it may be that Saint's sureties would be responsible for their faith-
ful performance on his part to the same extent as for money col-
lected on notes in his hands. Bank v. Zicglcr, 49 Mich. 157, i-^ N.
W. 496.

However that nia\- l)e, the fact that they were imposed upon
him, assuming they were not covered by his contract, and hence
were in addition to those assured by the other defendants, cannot
relieve his surties from liability with respect to those which were
imposed by the contract, unless the imposition of these new duties
and their performance by Saint rendered impossible, or materially
hindered or impeded, the proper and faithful performance of the
service originally undertaken. There is no evidence here that
these new and additional duties interfered with the collection of
notes placed in his liands for that purpose, nor is any claim made
against his sureties on account of any failure to collect such notes.
]]ut the gravamen of the action is that he ( i ) did collect these
notes, and converted the proceeds to his own use; or (2) that
he failed to deliver such notes to the company on the termination
of his emnlovment. ^^'e arc unable to conceive how the fact that

SAINT VS. WHEELER. 11

he had other property and funds — machines and the proceeds of
discounted notes — in his possession, could have hindered or im-
peded him in the accounting for funds coUected or notes remain-
ing in his hands, or could in any degree have conduced to his con-
version of such funds or notes. To the contrary, it would seem,
in all reason, that the possession of this other property and these
other funds, out of which he might have met the necessities which
presumablv induced his malversations, would have lessened the
chances of misappropriation of the funds and property for which
his sureties were responsible, and thus have lessened, instead of
increased, their exposure to liability. We are very clear to the
conclusion that the imposition of these new duties, not covered by
the contract, did not discharge the sureties with respect to those
embraced in the contract, and as to which no change in the partic-
ulars we are considering was attempted.

City of Nczv York v. Kelly, 98 N. Y. 467; State v. Vilas,
36 N. V. 459; Ills. Co. v. Potter, 4 Mo. App. 594; Coin. v.
Holmes, 25 Grat. 771 ; Bank v. Traube, 75 Mo. 199; Gaussen v.
U. S., 97 U. S. 584; .Ao/;r.y v. ['. 6"., 18 Wall. 662 ; Ryan v. Morton,
65 Tex. 258; Bank v. Cerke (Md.), 13 Atl. 358, 6 Amer. St. R.
453, and note, 458; Bank v. Zeigler, 49 Mich. 157, 13 N. W. 496.
The sureties further defended on the ground that the con-
tract between Saint and the company was changed without their
knowledge or assent by a subsequent parol agreement entered
into by their principal and Walls, representing the company,
whereby Saint's compensation was to be reduced from $50 per
month to $9 per week. There was evidence of such agreement
but none that it was supported by a consideration or that it was
approved bv plaintifl' ; and it appears from other evidence that all
of Walls' contracts were subject to approval or rejection by other
officers of the corporation, and that plaintiff settled with Saint on
a basis as to compensation of $50 per month. We think, on these
facts, this defense is wiuiout merit.

Steele v. Mills, 68 Iowa, 460, 27 N. W. 294.
Equally untenable, in our opinion, is the defense which pro-
ceeds on the ground that the instruction of plaintifT to Saint to
retain his salary and expenses out of collections made by him was
a material change of that provision of the contract which required
him to remit to the com.pany on the last day of each week the
amount collected up to that day. The contract provided for Saint's
compensation and expenses, l)ut was silent as to the manner of

i.- GLAliANTV AXIJ SURETV.SUl 1".

payment. Method of payment tlms adopted tended to decrease the
risks of the snreties. as affordins:;- less occasion for conversion by
Saint than had jjayments to liim l)een made onlv at the end of
each month. It is well settled that mere indulg-ence of the cred-
itor to the principal, tlu' mere forl)earance to take steps to enforce
a liability u])()n defauli. or evvn an understanding- between them
looking to payment of the deficit presently due at some time in the
future, which does not, for the want of a consideration iu support
it. or other inlirmily, prevent the creditor from immediately de-
manding paynienl. will not discharge the surety, i fence what took
place between Walls and Saint in l-\'bruary, 1888, in regard to
allowing the latter furtiier time to wiikv good the sum he had
theretofore converted, afforded no defense to the sureties with
respect to the sum, then due.

3 15rick Dig., ]>. 715. Sec. 3<^-43; o .\mer. & I'jig. I'.nc.. Law,
p. 83, note 4; Canal, etc., Co. v. Can I'orsl, 21 X. J. Law, 100.

The sureties, liowever, on another aspect of the transaction
last above referred to between Saint and Walls, predicate a defense
going to the amount of their liability. They insist that Saint was
at that time a defaulter by embezzlemenl : that Walls knew this
lacl. and, without giving any notice of it to them, he, acting for
the company, continued Saint in its employment, and committed
other funds to him. which were al.so converted ; and that this action
of Walls discharged them from all lial)ility for funds thus con-
verted after he knew of Saint's dishonesty. The general principle
here relied on hnd-. al)undant support in the authorities. In the
leading case of PhiUihs v. Po.vall. L. R. 7. O. U. 666, the propo-
sition is tluis stated by Qitain, I.:

"W e think that in a case of continuing gtiarantv for the hon-
esty of a servant, if the ma.ster disccners that the servant has been
guilty of acts 01 dishonesty in the course of the service to which
the guaranty relates, and if. instearl of dismissing the servant, as
he may do at once and without notice, he chooses to continue in
his employ a dishonest servant, without the knowledge and con-
sent of the surety, express or implied, he cannot afterwards have
recourse to the surety to make good any loss which may arise from
the di.shonesty of the servant during the suljseciuent service."

And this proposition is rested upon con.;iderations which, to
our mind,-,, are iinintiit!\- satisfactory. I "remising that had a de-
fault involving dishonesty, and occurring before the surety became
bound, been known to the cnMlitor, and concealed bv him from

SAINT VS. WHEELER. IS-

the surety, the effect would have beeu to discharge the surety, — a
doctrine which appears to be well established. — the court ])roceeds
to declare the same result from a concealment of dishonesty pend-
ing- a continuins: sfuarantv, as follows : "One of the reasons usually
given for the holding that such a concealment (at the time the
surety enters into the obligation) would discharge the surety is
that it is only reasonable to suppose that such a fact, if known to^
him, would necessarily have influenced his judgment as to whether
he would enter into the contract or not ; and, in the same manner,
it seems to us equally reasonable to suppose that it never could
have entered into tlie cnntemplation of the parties that after the
servant's dislion.esty in the service had been discovered the guar-
anty '^ * ''■ should continue to apply to his future conduct, when
the master chose, for his own purpose, to continue the servant iit
his employ, without the kiiowledge or assent of the surety. If
the obligation of the surety is continuing, we think the obligation
of the creditor is equally so, and that the representation and under-
standing on which the contract was originally founded continue
to apply to it during its continuance and until its termination."

The citations supporting this conclusion are quasi dicta of
Lord Redesdale in Sinifh v. Bank, i Dow. 287, and of Alalins,
V. C, in Burgess v. Ei'c, I.. R. 13, Eq. 450; but tlie case was sub-
secjuently followed in England and the United States, and no-
wdiere abstractly dou])te(l. We follow these authorities and adopt
their conclusions as sound in principle.

Sanderson v. Asfon. L. R. 8 Exch. ~t,\ Brandt, Sur. Sec.
368; Roberts v. Donoz'an. 70 Cal. to8, 11 Pac. R. 599; Railroad
Co. v. Gozv, 59 Ga. 6S5 ■ Telegraph Co. v. Barnes, 64 N. Y. 385 ;
Ne-ojark v. Slouf, 52 N. J. Law. 35. 18 Atl. 943-

Indeed, the foregoing doctrine is not controverted in this
case, but it is contended that it has no a])plication as between a
corporation, being the creditor, and the surety of one of its officers
or employes; and there are not a few adjudged cases which sup-
port this view. The argument u]ir^n which this conclusion is
reached is that "corporations can act only l)y officers and agents.
They do not guarantv to the sureties of one officer the fidelity of
the others. The fact that there were other unfaithful officers and
agents of the corporation, who knew and connived at his ( the
principal's) in fidelity, ought not in reason, and does not in law
or equity, relieve the sureties from their responsibility for him.
They undertake that he shall be honest, though all around him be

3.4 GUARAXTV AXn SURETYSHIP.

rogues. Were the rule different, by a conspiracy between the
officers of a bank or other nioncyrd insiitutiun all their sureties
niiglit be discharged. It is iniunssible that a doctrine leading to
such consequences can be sound."

Railzi'ay Co. v. Shacffcr, 50 I'a. St. 356; Taylor v. Bank, 2
J. j. Marsh. 565; McS/iaiicy v. Bonk, (Md.) 20 Atl. 776; Brandt,

.Sur. Sec. 369.

It is to he noted that these cases — and there may he others
which follow them — hold, not only that, where there is a con-
spiracy between the officers of a corporation to embezzle its funds,
the dereliction of neither officer will discharge the sureties of the
other, but also where ihvw is a negligent faihu-e on the part of one

.sucii officer to give notice to the sureties of another of his dishon-
esty, and a continuance of the dishonest servant in the corporate

.service without the assent of his sureties, given with a knowledge
of the default, the sureties are not discharged from liability for
subsequent deficits, though confessedly they would be were the

..creditor an individual or copartnership. It may be that the first
position stated is sound. Tt would seem to be immaterial whether
an original default results from the dishonesty of the principal
alone, or conjointly from his and the dereliction of another cor-
porate employe. The sureties are bound to answer for the results
of any form of original dishonesty. That is what they insure

.against. It may be, too. — doubtless w^ould be, — that no conceal-
ment by a conspirator of the fact of the principal's original de-*
.fault, no continuance in the service by an officer of the corpora-
tion in pari delicto with the principal, would suffice to discharge
the surety, since all of this is malversation participated in by the
principal, and violative of the contract which the sureties have
undertaken to see faithfully performed. Moreover, the acts and

.omissions of one agent of a corporation, in conspiracy with an-
other to filch their common master, in furtherance of their nefari-
ous purposes, are, in the nature of things, without authorization.
by implication or otherwise, and can in no just sense be said to be

•acts or omissions ot the corporation. Upon this idea, it may be
that where one officer, though not originally participating in the
default of another, conceals that default from the sureties of his
fellow-officer and from the company for sinister purposes of his
own, and not as representing his employer or in its interest, and

('Continues the defaulting officer in the service, the sureties would

:not be discharged as to subsequent deficits. This far we may go

SAINT VS. WHEELER. . 15

with the learned courts in which the cases we have cited were
decided. But even our conservatism in following adjudications
of courts of acknowledged ability and learning can in no degree
constrain us to adopt the second proposition stated above. We
cannot subscribe to the doctrine that there is the radical difference
insisted on, or any material difference in fact, between the efficacy
of acts and omissions of an agent of a creditor corporation, having
authority in the premises, on the one hand, and the acts and omis-
sions of the agent of an individual creditor, or of the individual
himself, on the other, in respect of condoning the defalcation of an
emplove, omitting notice to the employe's sureties, and continuing
him in the service, to operate a release of the sureties as to subse-
quent deficits of the dishonest employe. No doctrine of the law
is more familiar than that notice to an agent, within the scope of
his agency, is notice to the principal ; and the doctrine has in no
connection been applied more frequently and uniformly than to
corporations and their agents. Indeed, there is an absolute neces-
sitv in all cases for its application to corporations, since they act
and can be dealt with only through agents. Notice to one agent
of a corporation with respect to a matter covered by his agency
must be as etffcacicus as to its directors or to its president, since
these also are only agents, with larger powers and duties, it is true,
but not more fully charged with respect to the particular thing
than he whose authority is confined to that one thing. In the case
at bar, Walls had authority to make the contract with Saint, sub-
ject to the approval of another agent of the corporation. He did
in fact make it. This contract contained a provision for its ter-
mination by either party at pleasure. The evidence was that
Walls had full supervision over Saint, and over all matters em-
braced in the contract made by Saint. It was at least a fair in-
ference to be drawn by the jury that he could terminate the em-
ployment, either under the stipulation in the instrument, or for a
violation of it by Samt, subject to the approval of the other officer
or agent referred to. There is no ground to doubt but that to
have given the sureties notice of Saint's default w^ould have been
in the line of his duty and authority. Equally clear it must be
that their assent to him to a continuance of Saint's employ-
ment would have bound them for the subsequent defalcation;
and on the other hand it must be that their dissent from such
continuance, communicated to him, would have had the same
effect as had it been given to any other officer of the creditor com-

16 . GUARAXTY AXn SUKFTYSTTTP.

])any. lie had notice of the default. He received it as represent-
ing the company. In that capacity, lie condoned it, made arrange-
mcnt.s with Saint to make it good, continued the employ-
ment, and tliereljy continued Saint's opportunities to eniliezzle
the company's funds, on ihe supposed security for its reim-
bursement afiforded l)y the obligation of the sureties, who
liad contracted on the assumption of Sanit's honesty, and
were entitled to know of his dishonesty, when it should de-
velop, as a condition to their subsequent liability. There is no
intimation of connivance ur conspiracy on the part of Walls with
Saint to defraud either the creditor or the sureties. What he did
was doubtless done in good faith, and for the interest, as he sup-
posed, of his employer. It was in the line of his employment. If
his further duty was to report his action to another officer of
the company, the presumption is that he made such report. There
is nothing in the record to rebut such presum])tion. We cannot
hesitate to affirm, on this state of the case, that what he did which
ought not to have been done, and what he failed to do which
ought to have been done, were the acts and omissions of the cor-
poration, involving the same conse([uences, in all respects as if
the corporate entity had been capable of direct personal action,
so to speak, and had acted as he did, or as if he himself, and not
the Wheeler & Wilson ^Ifg. Co., had been the creditor. We sup-
pose it would not be contended in any (|uarter, that if these sure-
ties had in terms stipulated that, in case of Saint's default, notice
to them, and assent on their ])art, should be a condition precedent
to their liability for further defaults, they could be held, without
such notice and assent, and yet, under the doctrine announced
in the cases cited, such a stipulation would be entirely nugatory,
and the failure of i-very agent and officer, all w ith knowledge of
the sti])ulation and of the default, to notify the sureties thereof,
would avail them nothing. Yet it would manifestly be no more
the duty of the corporation to give a notice so stipulated for than
to give a notice made a part of the contract by the law of the
land. And such doctrine, carried to its legitimate results, would
defeat all corporate liability growing out of the contracts, acts,
and omissions of agents clothed with power and authoritv in the
premises. That it is unsound is demonstrated, not only in logic,
but upon analogous authority. As we have seen, the Englisli
court, in the leading case of Phillips v. Foxall, supra, — which has
never been called in question there or in this country, either as

SAINT VS. WHEELER. 17

to the result or the reasoning upon which it was reached, — sup-
ported the principle declared upon the same considerations which
underlie the doctrine that if an employer have knowledge of the
previous dishonesty of a servant, and accept a guaranty for his
future honesty without disclosing such knowledge to the surety,
this is a fraud upon the latter, and he is not bound. Now, sup-
pose an officer of a corporation, charged with the duty of finding
surety for another officer, knowing of such previous dishonesty
on the part of such other officer, takes bond for his faithful and
honest performance of the services contracted for, without giving
the surety notice of the prior dereliction. Would not that omis-
sion of duty on his part stand upon the same plane before the
law, and involve precisely the same consequences, as if the default
had occurred after the surety has bound himself, and the officer
had then failed to give him notice of it? If the corporation is
not prejudiced by the omission in one instance, can it be in the'
other? If the corporation is responsible for the dereliction of
its agent with respect to notice of a previous default, would it
not also be responsible for its agent's failure to give notice of the
subsequent default ? There can, in our opinion, be but one answer
to these questions. There can be no possible difference in the
duty of the agent and the corporation's liability for its non-per-
formance in the two cases ; and the law is well-settled that the
failure of the agent of a corporation to give notice of such pre-
vious dishonesty avoids the obligation of the sureties for future
misconduct. Singularly enough, too, some of the cases holding
this doctrine distinctly and broadly were decided by courts — ■
those of Pennsylvania and Kentucky — which hold the contrary
view as to notice of after-occurring embezzlement.

Brandt, Sur. Sec. 365-368 ; JVaync v. Bank, 52 Pa. St. 344 ;;
Graves v. Bank, 10 Bush, 23; Bank v. Cooper, 36 Me. 179, 39,
Me. 542.

Our conclusion on this point is further supported by the^
cases of Railroad Co. v. Goic, and Telegraph Co. v. Barnes, supra^
which, without discussing this point, in effect hold that the omis-
sion of an officer of a corporation to notify a surety of the default
of his principal in a case like this, and the continuance by such
officer of the employment of the principal, will discharge the
surety as to all defaults arising during the subsequent service.
And in Nezvark v. Siout, 52 N. J. Law% 35, 18 Atl. 943, the New
Jersey court, while adhering generally to the doctrine we have
3

18 GUARANTY AND SURETYSHIP.

Ijccii criticising, yet held that if the default and dishonesty of a
municipal officer be brought to the attention of the city council,
which is clothed with the power to remove him, and he is allowed
to continue in the service without notice to and assent on the part
of the surety, the latter wdll be discharged from liability as to all
suljsequent defaults. It does not appear to have been so con-
sidered by that court; but it is manifest that this is a radical
departure from the doctrine held by the Pennsylvania, Kentucky,
Maryland, and other courts, and relied on l)y appellee here, and
goes strongly in support of the contrary rule, which we believe
to be the sound one. It is also to be noticed that much reliance
is had by the courts holding that a surety of one officer of a cor-
]X)ration is not discharged by the acts or omissions of another,
in the particulars under consideration, on cases decided by the
supreme court of the United States in respect of sureties of public
officers. Indeed, it would seem that this whole doctrine had its
inception in this class of cases. This can but be considered an
intirmative circumstance, going to the soundness as authority of
those cases which involve sureties of corporation officers. There
is a palpable and manifest distinction between the two classes of
cases bearing directly upon this question, which, while reiiuiring
the application of diis rule to public officers on the grounds of
public policy, and that laches should not be imputed to the gov-
ernment, does not require its application to officers of corporations.
We hold that if Walls, while acting for the corporation and
in the capacity of its agent, w itli respect to the matters and things
involved in Saint's contract, received notice of such a conversion
of its funds by Samt as amounted to embezzlement or involved
dishonesty, and, without imparting this knowledge to the sureties
and receiving their assent thereto, continued him in the service,
the sureties are not liable for Saint's subse([uent defaults. Charges
5, 9 and 7, requested for defendants, when referred to the evi-
dence, were correct expositions of the law, as w^e understand, in
this connection. The refusal of the court to give them involved
error which must work a reversal of the case. Most of the other
assignments of error are covered by the points considered in the
first part of this opinion. Such of die assignments as are not
discussed have been considered, and found to be without merit.
The judgment is reversed, and the cause remanded.

CASS VS. SHEW MAN. 19

Cass z'^\ Shew man (1891).
61 Hun. 472 ; 16 N. Y. Supp. 236.

Appeal from special term, Schuyler county.

Action by Marcus M. Cass against James Shewman to recover
on a guaranty to fulfill the conditions of a lease not complied with
by the lessee. Plaintiff demurred to defendant's answer. The
demurrer being overruled, plaintiff appeals. Reversed.

On the 3d April, 1888, the plaintiff' and one Jennie D. Shew-
man entered into a written agreement, by which the plaintiff' leased
to said Shewman his farm of no acres for the term of three years
from April i, 1888, at the annual rent of $125, payable on the ist
of March of each year. It was, among other things, provided that
Shewman, the party of the second part, should have "firewood and
privilege to cut and use posts for fencing on said farm, but shall
not cut standing timber until down timber is used up;" and the
partv of the second part agreed to carry on the farm in a good and
farmer-like manner. Upon the same occasion and in connection
w^ith said lease, the defendant executed and delivered to plaintiff
an instrument, of which the following is a copy :

"For a valuable consideration to me paid by M. M. Cass, the receipt
whereof is hereby acknowledged, I hereby agree to become security for
the fulfillment of the above lease l^y the party of the second part, hereby
agreeing to fulfill all the terms and conditions of said lease not fulfilled
by said party of the second part.

"Witness my hand this .3rd day of April, 1888.

"James Shewman."

In the complaint the lease and the guaranty of the defendant
are set out, and it is alleged that the lessee went into possession,
and that the year's rent of $125 that became due March i, 1891,
has not been paid. It is also alleged that the lessee has not carried
on the farm in a good and farmer-like manner, has committed
waste, has torn down and injured fences, has injured the buildings,
and has cut down and appropriated many standing trees, contrary
to the provisions of the agreement, thereby damaging the plaintiff
to the amount of $300, which, by the terms of the agreement, the
lessee is liable to pay, that in these respects the lessee has made
default, and has failed to fulfill the agreement. Judgment is de-
manded against the defendant for $425. In the fifth count or

20 GUARAXTV AXD SL'RETVSIIIP.

defense in the answer il is alleged l)y the (k-l'cndanl Uiat no demand
was made by plaintiff before the coniniencenient of this action of
said lessee for the payment of said rent, or for the performance
on her part of the conditions and provisions in said lease contained,
alleged in the complaint to have been broken and violated by her,
or for compensation in damages for such alleged breach, or for the
injury as alleged to the real prc^pert}- ; that plaintiff had taken no
steps and resorted to no legal remedy against the lessee to recover
the said rent, and for damages for a breach of perfomiance of the
conditions of the agreement, and had not exhausted his remedies,
legal or otherwise, against the lessee, in the seventh count or
defense the defendant alleged that the lease or agreement set forth
in the complaint was void, for the reason that it was not sealed,
acknowledged or witnessed. The plaintiff dennn-red to the fifth
and seventh defenses in the answer on the ground that each of said
answers is insufficient in law upon the face thereof, and neither
contains sufficient facts nor allegations to constitute a defense. The
court in its decision sustained the dennu'rer to the seventh defense,
giving the defendant leave to amend on payment of costs of the
demurrer, but overruled the demurrer to the fifth defense, and
directed an interlocutory judgment to that effect. The court at
the same term granted an order, which was entered July 2, i8yi,
directing that the demurrer to the fifth count Ije overruled, and that
"the defendant mav enter judgment herein, dismissing said com-
plaint with costs, which judgment shall stand upon the record until
the trial of the issue joined in this action, and, in case said action
shall be determined in favor of the defendant, said judgment, to-
gether with judgment for further costs, shall stand as the final
judgment in this action, otherwise to be of no force and effect."

This order and the judgment entered in pursuance thereof on
the 6th Jtily, 1891, are appealed from.

Argued before Hakdi.x, 1'. J., and .Martix and Mi:kwix, J. J.

M. M. Cass, Jr., for appellant.

Cole & BqIxcii, for respondent.

Merwin, J. No exceptions to the decisions of the court were
filed by the appellant, and the respondent therefore claims that the
appellant is not in a position to question the correctness of th'e
decision. The ca.ses cited to sustain this view of the practice relate
onlv to trials of issues of fact. 15y Sec. 992 of the Code of Civil

CASS VS. SHEW MAN. 21

Procedure it is provided that "an exception may be taken to the
ruling of the court or of a referee upon a question of law arising
upon the trial of an issue of fact." The manner in which such ex-
ceptions sliall bo taken is regulated by sections 994 and 995. We
are referred to no provision of the Code, m- tn anv authority, which
requires exceptions to be taken to the decision of the court on the
trial of an issue of law. Under the former Code, the practice, as
understood, did not require exceptions in such a case. 3 Wait, Pr.
232. We think none were necessary.

Upon the merits of the demurrer, the claim of the respondent,
as indicated by his points, is that he is not liable until a demand
is made upon the principal debtor, and that "it must be shown that
she refused to fulfill the covenants, and the surety must have pre-
vious notice, and a demand must also be made on him, so that he
may have knowledge of the breach, and an opportunity to fulfill
himself." To sustain this view the cases of McMitrray v. Noyes,
72 N. Y. 523; Tolcs V. Adcc, 91 N. Y. 562; Bank v. Livingston, 2
Johns. Cas. 409; Ins. Co. v. Ogdcn, i Wend. 137, are cited. In
the McMurray case the defendant, upon an assignment of a bond
and mortgage, covenanted that if, in case of foreclosure and sale
of the mortgaged premises, there should arise a deficiency, he
would pay the same on demand. In an action on this guaranty it
was held that the foreclosure and sale were conditions precedent,
to be performed with due diligence in order to establish the liability
of the guarantor. Tolcs v. Adcc was an action upon an undertak-
ing given upon the discharge of a defendant from an order of
arrest, and conditioned that the party discharged would at all times
hold himself amenable to process issued to enforce the judgment.
It was held that the entry of judgment and issuing of process
against the principal debtor were conditions precedent to the liabil-
ity of the surety, and that a neglect to perform such conditions with
due diligence discharged the surety. In Bank v. Livingston there
was an absolute guaranty of repayment of certain moneys advanced
to a committee. The only question raised was wdiether the commit-
tee should have been first sued, and it was held that this was not
necessary. In Ins. Co. v. Ogdcn the defendant had assigned to
plaintiff certain contracts, and covenanted that the sum set oppo-
site to each contract in a statement annexed was then justly due
thereon, and that "each and every sum should be well and truly
paid to the plaintifl;'s, with the interest on each respectively." It
was held that plaintiffs could not call on defendant for payment

22 GUARANTY AND SURETYSHIP.

without first making demand of those who signed the contracts, hut
that it was not necessary to bring suit against them. The first two
cases are clearly distinguishable from the present. In those some-
thins: was to be done bv the creditor before the liability of the
surety was determined. Here the liability attached and was deter-
mined the moment the lessee failed to perform his duly, and the
liability of the surety was as extensive as that of the lesee. i*oth.
Obi. 404. The case in i Wend, sustains somewhat the position
of the defendant, but other cases are in a ditlerent direction. In
Allan V. Rightinere, 20 Johns. 365, there was a guaranty l)y the
defendant of the payment of a note, and it was held not to be
necessary to make a demand of the maker before suing the defend-
ant ; it being said that the undertaking of the defendant was that
the maker should pay the note when due, or that the defendant
would pay it himself.

The doctrine of this case was followed and established l)y
the court of appeals in Broivn v. Cnrtiss, 2 X. Y. 225. In Mann v.
Eckford's Exrs., 15 Wend. 502, the obligation sued on was a bond
of defendant's testator, conditioned that one Gibbons "should punc-
tually satisfy and pay to the Aetna Ins. Co." the amount of a cer-
tain bond and mortgage executed by Gibbons, and upon which the
company had advanced the money, with interest as the same should
become due. It was held not to be necessary for the plaintiff fo
prove a demand upon Gibboiis for payment of the money and notice
to the obligator or to defendants, it being said that, if a person
make an unconditional engagement for the act of a third person,
the contract will be broken if that person fails to do the act. In
Douglas V. Hozi'land, 24 Wend. 35. there was an agreement be-
tween plaintifT and one Bingham, whereby, among other things,
Bingham agreed to pay the plaintiff such sum as should be found
due upon an accounting provided for in the agreement. Under-
neath the agreement the defendant executed an instrument by
which he covenanted that Bingham should "well and faithfully
perform on his part the above agreement," it was held that defend-
ant was not entitled to" notice before action of Bingham's default.
Among other cases there cited was the case of Brookbank v. Tay-
lor, Cro. Jac. 685, where the promise was that the defendant would
pay the plaintiff the rent due from another, if the latter did not pay
it, and it was held that the defendant must notice the non-payment
at his peril.

CASS VS. SHEW MAX.

In Bank v. Rogers, 7 Bosw. 493, the plaintiff made a loan to
one Chase, payahle in 60 days, and the defendant promised that,
if Chase failed to repay the amotmt, with interest, within 60 days,
"then and in such case the defendant will become answerable to the
plaintiffs for such repayment after 30 days' notice of such default."
It was held that a demand of the principal need not be made before
suit against the defendant.

In Clark v. Burdctt, 2 Hall, 217, there was a guaranty by
defendant of payment of bills of merchandise purchased or to be
purchased, and it was held that a demand of the purchaser and
notice to defendant were not necessary as conditions precedent to
the plaintiff's right of action.

In Tnrnurc v. Hohcnthal, 36 X. Y. Super. Ct. 79, where a
surety to a lease bound himself that, in case default should at any
time be made by his prhicipal in payment of rent and in the per-
formance of the conditions of the lease to be by him performed, he
would pay the rent in arrear. and all damages in consequence of the
non-perfomiance of the covenants, without requiring any notice of
such default, it was held that no demand was necessary to be made
of the tenant by the landlord for the rent before proceeding against
the surety, and that the landlord was under no obligation to attempt
to collect the rent or enforce the covenants against the tenant. A
like view was taken in McKcnzie v. FarrcU, 4 Bosw. 204, and ifi
Ducker v. Rap[>, 41 X. Y. Super. Ct. 235.

In Cordicr v. Thompson, 8 Daly, 172, one Ferrero executed
an instrument by which she agreed to return to plaintift"s intestate
a certain amount of money at a certain time, and the obligation of
the defendant was in the following form: "I guaranty the above
obligation." This was held to be a guaranty of payment, and that
neither demand on the principal nor notice to the guarantor of
default were prerequisite to an action on the guaranty.

Volts V. Harris. 40 111. 155, was an action upon a guaranty of
a lease, by which the guarantor became "security" that the lessee
would do and perform all the covenants contained in the lease, and
promised to pay to the lessors all rents and damages the lessors
might sustain by reason of the non-compliance with or non-fulfill-
ment of the stipulations of the lease by the lessee. It was held that
the liability of the guarantor was primary, and that he was not
entitled to notice of the non-performance of the stipulations.

In Ashfon v. Bayard, 71 Pa. St. 139, the obligation against
the surety was: "I hereby become the surety of S. Coulter for the

24 Gl'ARAXTV AXn STRKTYSIIIP.

fulfillment of the williin obligation.'" This referred to a dnc-bill
given by Coulter for certain shares of stock. This was held to be
an original undertaking by the surety, and a recovery iIktcou could
be had without proving diligence to pursue Coulicr. See also
Brandt, Sur. Sec. 86, 172.

In the present case, as against the lessee, no demand was
necessary. Jacksuii v. Biiiiis, 10 W'kly. Dig. 105; McMurphy v.
Minot, 4 N. H. 251.

His agreement was broken when ho failed to pay, and when
he violated the conditions of the lease. The defendant agreed to
fulfill all the terms and conditions not fulfilled by the tenant. This
was, in efifect, an agreement to pay if the lessee did not. When the
plaintiff shows a breach by the lessee, and udu-payment, or non-
fulfillment, then he shows all that by the terms of the contract he
is required to show in order to make the defendant liable. The
agreement of defendant was not that the lessee would pay on
demand or upon suit ])rought, Init it was absolute that he would
fulfill if the lessee did not. This, in substance, was a guaranty of
payment, and not of collection. The defendant, in his agreement,
required no demand or notice or exhaustion of remedies against
the tenant. No duty was im]:)osed on the lessor in the first instance
to take any steps against the debtor, and that is said to be the test
in order to examine whether a guaranty of payment or collection
exists. Tolcs v. A dec, siil>ra.

The contracts of sureties are to be construed like other con-
tracts, so as to give etTect to the intention of the parties. People v.
Backus, 117 N. Y. 201, 22 N. E. 759.

It is hardly to be assumed here, in the absence of an express
stipulation to that eiTect. that the intention of the parties was that
the les.sor should ])ursue the lessee to the end of an execution before
calling upon the surety. In fact, that does not now seem to be
claimed by the respondent's counsel, but he relies on the question of
demand and notice. This the defendant did not require by his
agreement, and he was not entitled to it, any more than in case of
an absolute guaranty of payment. This view is. I tliinlK, in accord-
ance with the current of authority, as illustrated by the cases above
referred to. Judgment and order reversed, with costs of appeal,
and interlocutory judgment ordered for the plaintifif upon the
demurrer, with costs, with leave to the defendant to answer in 20
days upon the ])ayment of the costs of the denuu-rer and of the
appeal. All concur.

CAMPBELL VS. STIER.MAN. 25

Campbell z'.!». Sherman (Hornet's Appeal) (1892).

151 Pa. St. 70: ,s. c. sub Jiom. in re Sherman's Estate (Appeal of

Hornet), 25 Atl. 35.

Appeal from eourt of eomnion pleas, Sullivan eounty ; Jubn
A. Sittser, Judge.

Contest between J. A. Homet, claimant, and other lien cred-
itors of Adam Sherman, upon distribution of a fund arising from a
sheriff's sale of the real estate of said Sherman. From a judgment
allowing Hornet's claim in part only, he appeals. Reversed.

I. C. Scoiiicn, for appellant.
E. M. Diiiihaiii, for appellee.

McCoLLUM, J. On the first of January, 1887, J. A. Homet,
the appellant, bought of Adam Sherman two judgments against
A. R. Robbins, on which there was then an unpaid balance of
$592.38. and they were duly assigned to him. At the same time he
loaned to Sherman $266.62. To secure the payment of the judg-
ments and the money loaned he received the bond of Sherman in
the sum of $859, on, which, by virtue of the warrant of attorney
contained therein, judgment was entered Jan. 3, 1887. On a dis-
tribution of the proceeds of a sale by the sheriff on the 13th of Sep-
tember, 1890, of the real estate of Sherman, the appellant claimed
to apply on his judgment the fund remaining after paying costs and
prior liens. The subsequent lien creditors of Sherman admitted that
the appellant was entitled to receive the sum loaned, with interest
thereon, but contended that Sherman was released from liability as
to the balance because of the appellant's failure to revive the Rob-
bins judgments. To this the appellant answered that his omission
to revive these judgments did not release Sherman, and that, if it
did, the creditors could not take advantage of it on distribution. The
conclusion reached by the learned auditor was that he could not. at
the instance of the lien creditors, set aside or disregard the judg-
ment on the showing before him, but that Sherman might, in an
appropriate proceeding, rely on the appellant's negligence as a de-
fense to it. The learned president of the common pleas thought that
this defense could be successfully made before the auditor by the
lien creditors, and the fund was accordingly awarded to them.

-(3 GUARANTY AND SURIiTVSHIP.

In reviewing- the dccisiun cf the cuurt below, the lirst import-
ant inquiry is whether the ol)lig-ation of Sherman in respect to the
Rol)binsjuclg-menlswas that of a surety or of a guarantor. If he was
a surety, he was not released from liability by the negligence of the
appellant, and the contention concerning the powers of the auditor
has nothing to rest upon. It is well settled that mere forbearance,,
however prejudicial to a surety, will not discharge him, and that
the failure of a creditor to revive a judgment does not release the
surety, unless there was an express agreement that it should be
kept revived for his benefit. If'infoii v. Little, 94 Pa. St. 64; U. S.
V. Simpson, 3 Pen. & W. 437.

We think the undertaking of Sherman was that of a surety.
His bond included the money loaned and the balance due on the
Robbins judgments, and by its express terms was to remain in
force until the whole sum was i)aid. '["he written conditions in the
bond define the liability of the obligor, and we cannot add to them
by implication a condition which would render them nugatorv. The
written condition applicable to this contention is that, if the judg-
ments "shall be paid :n full by the said A. R. Robbins, his heirs
and assigns, to the said J. A. Hornet, then this obligation to be void,,
otherwise to be and remain in full force and virtue."

The appellant ]jurchased the judgments on the agreement of
his vendor to pay them if l^obbins did not. It was a contract of
suretyship, and not of technical guaranty, on which he parted with
his money. On the failure of Robbins to pay the judgments at
maturity, he was at lilierty to proceed directly against the surety.
He was not bound to resort to legal proceedings against Robbins
or to show that they would have been unavailing in order to sustain
process upon the bond. He was under no legal duty to the surety
to revive the judgments, unless requested to do so, and, as no such
request was made, negligence in this particular cannot be imputed
to him. The law on this subject is stated by Agnew, J., in Rcigart
V. ll'liilc, 52 Pa. St. 440, as follows:

"A contract of suretyshiji is a direct liability to the creditor
for the act to be performed l)y the debtor, and a guaranty is a
liability only for his ability to perform this act. In the former the
surety assumes to perform the contract of the principal debtor if he
should not, and in tlu' latter the guarantor undertakes that his
principal can perform — that he is able to do so. l^rom the nature
of the former, the undertaking is immediate and direct that the act
shall be done which if not done makes the surety responsible at

DEOBOLD VS. OPPERMAN. 27^

once ; but, from the nature of the latter, non-abiUty, in other words
insolvency, must be shown."'

In Kraiiiph's Ex'x v. Hate's E.v'rs, Id. 525, Woodward, C. J.,
discussing the same subject said: "The contract of a guarantor iS'
to be carefully distinguished from that of a surety, for whilst both
are accessory contracts, and that of a surety in some sense condi-
tional, as that of a guarantor is strictly so, yet mere delay to sue
the principal debtor does not discharge a surety. The surety must
demand proceedings, with notice that he will not continue bound
unless they are instituted. Cupe v. Smith, 8 Serg. & R. 1 10.

By his contract he undertakes to pay if the debtor do not ;
the guarantor undertakes to pay if the debtor cannot. The one is
an insurer of the debt ; the other, an insurer of the solvency of the
debtor. It results as a matter of course out of the latter contract
that the creditor shall use diligence to make the debtor pay, and,,
failing this, he lets go the guarantor." The foregoing extracts
from the opinions of eminent Pennsylvania jurists draw with re-
markable clearness and precision the distinction between a contract
of suretyship and a contract of guaranty, and accurately define
the respective rights and obligations of a surety and a guarantor.
There has been no departure by this court from the principles
announced in them, and they sustain the contention of the appellant
that his omission to revive the Robbins judgment did not affect
Sherman's liability on his bond. It follows that it was error to
award the fund to the subsequent lien creditors.

Decree reversed, and record remitted to the court below, with
direction to distribute the fund in accordance with this opinion ;
the costs of this appeal to be paid by the appellees.

Deobold i's. Opperman ct al (1888).
IH N. Y. 531, 19 N. E. 94-

Appeals from Supreme Court, general term, First Department.

Actions by Philip Deobold, executor of the will of Maria
Deobold, deceased, against Frederick Opperman, Jr., and anotlier,
sureties on the bond of Louisa Deobold (now Rausch), adminis-
tratrix of Henry Deobold, deceased. In both cases judgments were

'28 GL'AKAXTV AND SURETVS II 1 1'.

rendered for l\\v plaintiri. and aftirnicd an appeal lu the general
term. DofendaiUs again ap])eal.

.-islibcl I'. Fitcli. for appellants.
George 1'. Laiigbeiii, fur respondent.

RrcKR, C.J. Tli's action was brought by the plaintiff as
•executor of the estate of his mother, Maria Deobokl, to recover
from the defendants as sureties upon the l)ond of Louisa Deobokl,
^iven upon her appointment as administratrix of the estate of her
husband, Henry Deobokl, a sum of money ordered by the surrogate
to be paid to Maria Deobokl as mother and next of kin to the intes-
tate, but which the admini-Stratrix refused or neglected to pay. The
trial court directed a verdict for the ijlaintitif, and the judgment
entered thereon was affirmed upon a])peal. The supreme court
having granted leave to appeal to this court, the matter comes here
for review. The record presents the following facts, the evidence
being practically undisputed: Prior to January 16, 1880, Henry
Deobokl. a resident of the city of New N'ork, iVwd possessed of per-
sonal property of about the value of $3,300, and leaving him sur-
viving his widow, Louisa Deobokl, his mother, Maria Deobokl,
and brother, I'hilip Deobokl, next of kin. On that day the surro-
gate of Xew York issued letters of administration upon the estate
to the widow, Louisa Deobokl, and tlie defendants became sureties
upon lier bond for the faithful performance of her duties as such.
On JJecember 9, 1882, upon a general accounting before the surro-
gate by the administratrix, he made a decree finally adjusting her
accounts, and discharging the administratrix and her sureties from
their bond. This decree purported to have been based u]X)n a writ-
ten waiver of notice of the settlement of the estate, signed by Maria
and Philip Deobokl, and a written assignment by them to the ad-
ministratrix of all their right, title and interest in the estate of the
deceased. Proceedings were thereafter begun by Maria and Philip
in the surrogate's court, on Jan. (), 1883 to set aside the decree ren-
dered on final accounting, u])on the ground that it was fraudulently
obtained, and that the assignment an<l waiver of citation were prb-
■cured from them b\ the administratrix through fraud and mis-
representation. Sucl; proceedings were thereupon had that the
surrogate, on i'cb. 20, 1883, made an order vacating, and in all
respects setting aside the decree, and the defendants were immedi-
ately thereafter served w ith a copy of such order. Subsequently,

DEonor-D vs. oim-kr.man. 29'

upon a further accounting-, the surrogate made an order directing
the administratrix to pay to Maria Deobold the sum of $200, aiid
she refusing to pay the same, the surrogate made a further order
directing tlie prosecution of the defendant's bond for the recovery
of the amount so ordered to be paid. This suit was brought in
pursuance of the latter order.

It further appeared that, before consenting to act as svireties
upon the bond of Louisa Deobold, the defendants recjuired her to
deposit with them the entire proceeds of the estate, to be retained
until they were discharged from liability upon the bond, and an
agreement to that effect was made between her and the defendants.
No security was given to the administratrix for the repayment "of
those moneys by the defendants, and by the understanding of the
parties they were to pay interest thereon, and were authorized to
use them in their business as brewers. Under this arrangement
the administratrix, at the time of the execution of the bond, depos-
ited with the defendants the sum of $3,300, the funds of the estate,,
which they employed in tbicir 1)usiness until Jan. 16, 1883, when it
was repaid by them, together with a loan of $2,900 and interest, to
Louisa Deo1:)old. This payment was made by the defendants after
an examination of the decree of the surrogate of Dec. 9, 1882, dis-
charging them from liability on the bond, and after an inspection
of the papers upon which such decree was founded. It did not
appear that the defendants had actual notice of the proceedings
previously instituted by Philip and Maria Deobold to set aside such
decree for fraud, or that they were made parties thereto. It further
appeared that, in actions instituted on behalf of Philip and Maria
Deobold against the administratrix in the court of common pleas
of New York, judgments had lieen obtained by the plaintiffs,
respectively, vacating and setting aside the assiguiuents before
referred to as fraudulent and void.

Two questions are presented by the appellants as grounds for
the reversal of the judgment "below, which may be briefly stated as
follows : (T ) That the surrogate could not reinstate the defendants
in their liability as sureties upon their bond in proceedings to which
they were not parties; and (2) that the agreement by which they
were made the custodians of the funds of the estate was binding
and lawful, and authorized them to retain them until after the dis-
charge of such bond. As the corollary of the latter proposition, it
is urged that, having the right to retain them, and having paid
them out relying upon the assignment, and decree of the surrogate-

50 CLARA \TV AND SURETYSHIP.

bascxl ihcrccjii, the dclciK Units were relieved frum the obligation
of repaying the same moneys in this action.

We are of the opinion that the claims of the defendants are not
maintainable. No question is made but that the surrogate had
ample power to set aside his decree for fraud, and require a further
.accounting by the administratrix as to the estate (Sec. i, c. 359,
Laws 1870) ; but the claim is that the sureties were not bound by
the subsequent adjudications of the surrogate, for the reason that
they (lid not have notice of the proceeding. The claim is clearly
untenable. The decree discharging the administratrix and her
sureties was, when made, assailable by any party thereby aggrieved,
either by motion to set it aside or by proceedings on appeal. In
neither case was it necessarv that the sureties should have notice
of the proceeding. The sureties are the privies of the adminis-
tratrix, and are ])recluded from questioning any lawful order made
by the surrogate in a proceeding wherein she is a party, if obtained
without collusion between such administratrix and the next of kin
or creditors of the estate. Scofichi v. Churcliill, /2 N. Y. 565;
Gcroitld v. Wilson, 81 N. Y. 583.

Their bond contemplates that they shall remain sureties as
long as the surrogate retains jurisdiction of the proceedings in
administration of the estate, and has power to make valid orders
therein affecting the property administered upon.

( )f course the sureties would not be bound by an order which
the surrogate had no jurisdiction to make; but so long as his
jurisdiction continues the liability of the sureties remains. The
very language of the bond provides for orders made in proceedings
i)itc)' alios and for the liability of the sureties for a non-perform-
ance by the administratrix of any decree or order made by the
surrogate's coiu't. The condition of the bond is that liability shall
follow her infidelity to her trust, or disobedience of any lawful
order or decree, whenever made in the proceedings. It was, w'e
think, never heard of in practice that sureties on an administrator's
bond should have notice of proceedings in the administration
of an intestate's estate. It could not be claimed that these sure-
ties were entitled to notice of an appeal from the surrogate's
decree, or that if an appeal was taken from a decree in favor of
an administrator, and the decree should be reversed, they would
not still remain liable upon their bond. Such bonds are similar
to those given in civil actions upon appeals and otherwise, and
have alwavs been held to abide the result of the action. * * * *

DEOBOLD \S. OI'l'ERMAN. 31

The bond in question was executed for the sole purpose of secur-
ing the persons interested in the property the achninistratrix was
about to receive, from an_\- loss which they might sustain through
her misconduct or dishonesty, and the defendants were well aware
of the character of the transaction. The defendants therel)y con-
tracted to become sureties for the faithful performance by her of
her duties as such administratrix, and the beneticiaries of the estate
thereupon became, under the theory of the law, entitled, not only
to the security afforded by the bond, but also to that of the funds
of the estate remaining in the hands of the administratrix. If
this transaction is sanctioned, one of the securities that the law
provides to such persons is entirely destroyed, and the funds of
the estate are merged in the personal responsibility of the sureties
alone, subject to the hazard and casualties which frequently attend
persons engaged in trade. -^ * * *

But it is claimed that the surrender, after the decree can
celing the administratrix's bond, of the funds of the estate held
by the defendants to the administratrix, operates as a defense
to this action. The principle upon which the appellants make
this point is not very clearly presented in their points, and we are
unable to see the exact theory upon which it is based. They do
not claim that the plaintiff is estopped from alleging the invalid-
ity of the assignment, or of the decree upon the faith of which
the payment was made. They claim, how^ever, that "of tw^o inno-
cent parties that one must suffer who puts it in the power of the
third person to do the act which caused the injury." This con-
tention is probably based upon the familiar maxim that, "When
one of two innocent parties must sustain a loss from the fraud of
a third, such loss shall fall upon the one, if either, whose act has
enabled such fraud to be committed." 8 Abb. N. Y. Dig. "^lax-
ims," 84, and volume 4, "Maxims," 382.

This maxim has been applied and illustrated in numerous
cases in this state, among which are the following: Spraights v.
Hazi'lcy, 39 N. Y. 441 ; Moore v. Bank, 55 N. Y. 41 ; Griszvold v.
Haven, 25 N. Y. 595 ; Bank v. Monteath, 26 N. Y. 505 ; Sand ford
v. Handy, 23 Wend. 268; Root v. French, 13 Wend. 572; Voorliis
V. Olnistead, 66 X. Y. 116.

These cases generally relate to the authority of agents whose
right to deal with the property of their principals was in dispute,
and the maxim has been applied by reason of various peculiar
circumstances which were deemed sufficient to preclude the prin-

32 GUARAXTV AXn SI'K1:TVSII 1 1'.

cipal from availing himself from the agent's want of nctnal author-
ity; but the general principle involved has been applied in many
cases where a loss has followed from the negligence of one party
which enabled a fraud to be committed upon another. We are of
the opinion that the maxim has no apj^lication to the case in hand,
for the reason that no actionable fraud has been shown to nave
been committed upon the defendants in this transaction, nor lias
any loss accrued to them in conseciuence of the surrender of the
money referred to. It is probably true that the defendants would
not have surrendered to the administratrix the funds of the estate
in their possession, or have repaid to her the debt which they
owed her, except for the decree produced for their inspection ',
but it is also very clear that they had no right to retain such funds
by virtue of their contract with the administratrix, and there was
no intention to commit a fraud upon them by the administratrix
in obtaining possession of the property to which she was legally
entitled. She was entitled to the repayment of her loan as a
matter of course, for she held a ])romissory note, therefor payable
on demand, and no possible defense could be made against its
collection. Neither as we have seen, could they have resisted a
claim made by her or others for the reclamation of the money of
the estate. They have done nothing -therefore in consequence
of the decree, except what they were itnder legal obligation to
do, and have therefore suffered no legal loss or injury from the
transaction.

The stu'render of the property in question would not even
have furnished a good consideration for a promise made by the
administratrix. Vandcrvilt v. Schreycr, 91 N. Y. 392.

It is of the ver\^ essence of an action of fraud or deceit that
the same should l)e accompanied by damage, and neither (ianimmt
absque injuria nor injuria absque daninuin by itself establishes a
good cause of action. Ihifcliins v. Ilufchins, 7 Ilill. 104: Michi-
gan V. Bank, 33 X. Y. 9.

Neither can a party claim to have been defrauded who has
been induced by artifice to do that which the law would have other-
wise compelled him to perform. Tlwnipson v. Menck, 41 N. Y.
82 : Story v. Conger, 36 N. ^'. 673 ; Randall v. Haaelton, 12 Allen,
412.

The defendants may jx)ssibly lose the money which they pay
in satisfaction of their bond, but this will result from their con-
tract, and the confidence reposed by them in their principal, and

DEOBOLD VS. OPPKKMAN. 33

not at all from the surrender of the property held by them. It is
not probable, however, that they will lose anything, as, for all that
appears, their principal is perfectly responsible, and liable to
indemnify them for any sums they may be obliged to pay on her
account. It affirmatively appears that in January, 1883, she not
only had in her possession all the funds of the estate, but also the
additional sum of upwards of $3,000, the result of her own savings
during the preceding two or three years, and being an amount
largely exceeding the liability of the defendants on their bond.

The main question in the case really seems to be, who shall
pursue the administratrix for the moneys of the estate improperly
retained bv her? We think it is the duty of the defendants, as
the object of their bond was to relieve the next of kin from the
necessity of resorting to the personal liability of a dishonest, neg-
ligent, or absconding administrator. We are further of the opinion
that the defendants are precluded from the benefit of the prin-
cipal contained in the maxim by reason of the obligations of their
bond. They are the privies of their principal, and the guarantors
of her fidelity in the administration of her trust. The decree under
which the defendants claim discharge from liability ^\•^s procured
by a fraud practiced upon the surrogate through the presenta-
tion of papers fraudulently obtained and used by her. It was
against the perpetration of such frauds that the defendant's bond
was intended to protect the beneficiaries of the estate. The de-
fendants had covenanted that the administratrix should faithfully
execute the trust reposed in her, and obey all lawful decrees and
orders of the surrogate's court. When she obtained, through
fraud, the order of the surrogate awarding the moneys of the
estate to her, and canceling her bond, she violated the obligations
of her trust, and the defendants became liable for the damages
flowing from such breach of duty. That the defendants were
deceived by the administratrix constituted no protection to them
for they had guarantied that she should deceive nobody in the
adminis'tration of her trust. The liability of the sureties is co-
extensive with that of the administratrix, and embraces the per-
formance of every duty she is called upon to perform in the course
of administration. It' is quite absurd to say that the very fact
which creates a cause of action against the sureties should also
operate as a defense to them. They cannot stand as innocent
parties in relation to an act which they have covenanted to the
plaintiff, and all others interested, should never be performed,.

34 guaraxty' axd surktvsiiip.

and the}- have sustained no legal loss when subjected to a liability
which they agreed to assume in the event which is now alleged
as the cause of their misfortune. We are therefore of the opinion
that the judgments below should be affirmed, with costs.

The decision in action No. 2, between the same parties, is
necessarily controlled l)y the determination in action No. i, and
the judgment in that case must therefore also be affirmed, with
costs.

All concur, except Earl and Peckham, ]]., dissenting.

Note. — That part of the Court's opinion holding invalid the agreement by which
the defendants were made custodian.s of the funds of the estate is omitted.

S.MITII VS. SllF.I.DKX FT Al.. ([876).

35 Mich. 42 ; 24 Am. Rep. 529.
C. & IV. N. Draper & C. I. IValkcr, for plaintiff in error.

Mcddaui^h & Driggs, for defendants in error.

Cuoi.EV, Ch. J. The legal questions in this case arise upon the
following facts :

Prior to June, 1867, Eldad Smith, Isaac Place, and Francis
P). Owen were partners in trade under the firm name of Place,
Smith & Owen, and as such became indebted to defendants in
error in the sum of $969 on book account.

In the month mentioned the firm was dissolved by mutual
consent. Place purchasing the assets of his copartners and agree-
ing to pay ofif the partnership liabilities, including that to the
defendants in error. On the second day of the following month
Place informed the defendants in error of this arrangement, and
that he had taken the assets and assumed the liabilities of the firm,
and tbev, without the consent or knowledge of Smith and Owen,
took from Place a note for the amount of the finn indebtedness
to them, payable at one day with ten per centum interest. They
did not agree to receive this note in payment of the partnership
indebtedness, l)ut they kept it and continued their dealings with
Place, who made payments upon it. The payments, however, did
not keep down the interest. Place, in 1872, became insolvent and

SMITH VS. SHELDEN. 35

made an assignment, and Smith was then called upon to make
payment of the note. This was the first notice he had that he was
looked to for payment. On his declining to make payment, suit
was brought on the original indebtedness and judgment recov-
ered.

The position taken by the plaintiffs below was, that as they
had never received payment of their bill for merchandise they
were entitled to recover it of those who made the debt, the giving
of the note which still remained unpaid being immaterial.

On behalf of Smith it was contended that, by the arrange-
ment between Place and his copartners, the latter, as between the
three, became the principal debtor, and that from the time when
the creditors were informed of this arrangement they were bound
to regard Place as principal debtor and Smith and Owen as sure-
ties, and that any dealing of the creditors with the principal to the
injury of the sureties would have the eft'ect to release them from
liability. And it is further contended that the taking of the note
from Place, and thereby giving him time, however short, was in
law presumptively injurious.

Upon this state of facts the following questions have been
argued in this court :

1. Was the note given by Place in the copartnership name
for the copartnership indebtedness, but given after the dissolution,
binding upon Smith and Owen?

2. If Smith and Owen were not bound by the note, were
they entitled to the rights of the sureties? And

3. Did the taking of the note given by Place discharge Smith
and Owen from their former liability?

On the first point it is argued in support of the judgment
that when a copartnership is dissolved the partner who is entrusted
with the settlement of the concern sht)uld be held to have implied
authority to give notes in settlement. On the other hand it is
insisted that in law he has no such authority, and that if he
assumes, as was done in this case, to give a note in the partnership
name, it will in law be his individual note only.

Whatever might be the case if the obligation which was given
had been a mere acknowledgment of the amount due, in the form
of a due bill or I O U, we are satisfied that there is no good rea-
son for recognizing iiijthe partner who is to adjust the business
of the concern any implied authority to execute such a note as was
o-iven in this case. This note was something more than a mere

36 GUARANTY AND SURETYSHIP.

acknou icd^mu'iit of iiulcbtcdness ; and il Injre interest at a large
rate. It was in every respect a new contract. The liability of the
parties ui)on their indcljtedness would be increased by it if valid,
and their rig-hts might be seriously compromised by the execution
of paper payable at a considerable time in the future if the partner
entrusted with the adjustment of their concerns were authorized
to make new contracts. It was assumed in J\ & M. Bank v. Kcr-
chcval, 2 Mich. 506-519, that the law was well settled that no such
implied authority existed, and we arc not aware that this has be-
fore been questioned in this state. See Pcnnoycr v. David, 8 Mich.
407. W'e think it much safer to require express authority when
such obligations are contemplated, than to leave one party at lib-
erty to execute at discretion new contracts of this nature, which
may postpone for an indefinite period the settlement of their con-
cerns, when a settlement is the very purpose for which he is to act
at all.

For a determination of the question whether Smith and Owen
were entitled to the rights of sureties, it seems only necessar>' to
point out the relative position of the several parties as regards
the partnership debt. Place, by the arrangement, had agreed to
pav this debt, and as between himself and Smith and Owen, he
was legally bound to do so. But Smith and Owen were also liable
to the creditors equally with Place, and the latter might look to all
three together. Had thev done so and made collections from
Smith and Owen, these parties would have been entitled to de-
mand indemnity from Place. This we believe to be a correct state-
ment of the relative rights and obligations of all.

Now a surety, as we understand it, is a person who. being
liable to pay a d.cbt or perform an obligation, is entitled, if it is
enforced against liim, to be indcnmihed by some other i)erson,
who ought liimself to have made payment or performed before the
surety was compelled to do so. It is immafcrial in what form
the relation of principal and surety is estalilished. or whether the
creditor is or is not contracted with in the two capacities, as iS
often the case when notes are given or bonds taken ; the relation
is fixed by the arrangement and equities between the debtors or
obligors, and may be known to the creditor, or wholly unknown.
If it is unknown to him, his rights are in no manner affected by
it; but if he knows that one party is surety merely, it is only just
to require of him that in any -subsequent action he may take
regarding the debt, he shall not lose sight of the surety's equities.

SMITH VS. SHELDEN. 37

That Smith and Dwen were sureties for Place, and the latter
was principal debtor after the dissolution of the copartnership,
seems to us unquestionable. It was then the duty of Place to pay
this debt and save them from being called upon for the amount.
But if the creditors, having a right to proceed against them all,
should take steps for that purpose, the duty of Place to indemnify,
and the right of Smith and Owen to demand indemnity, were
clear. Every element of suretyship is here present, as much as if,
in contracting an original indebtedness, the contract itself had
been made to show on its face that one of the obligors was surety
merely. As already stated, it is immaterial how the fact is estab-
lished, or whether the creditor is or is not a party to the arrange-
ment which establishes it.

This view of the position of the parties indicates clearly the
right of Smith and Owen to the ordinary rights and equities of
sureties. The cases which have held that retiring partners thus
situated are to be treated as sureties merely, have attempted no
change in the law. but are entirely in harmony with older author-
ities which have only applied the like principle to different states
of facts, where the relative position of the parties as regards the
debt was precisely the same. We do not regard them as working
any innovation whatever. The cases we particularly refer to are
Oakclcy V. PashcUcr. 4 CI. & Fin., 207; Wilson v. Loyd, Law R.,
16 Eq.'Cas., 60; and Millcrd v. Tlwni, 56 N. Y., 402.

And it follows as a necessary result from what has been
stated, that Smith and Owen were discharged by the arrangement
made by the creditors wdth Place. They took his note on time, with
knowledge that Place had become the principal debtor, and without
the consent or knowledge of the sureties. They thereby endan-
gered the security of the sureties, and as the event has proved,
indulged Place until the security became of no value. True, they
gave "but very short time in the first instance; but, as remarked by
the vice chancellor in Wilson v. Loyd, L. R., 16 Eq. Cas. 60. 71,
"the length of time makes no kind of difference." The time was
the same in Fellozvs v. Prentiss, 3 Denio, 512, where the surety
was also held discharged. And see Okie v. Spencer, 2 Whart.,
253. But that indulgence beyond the time fixed was contemplated
when the note was given is manifest from the fact that it was
made payable with interest. In a legal point of view this would
be immaterial, but it has a bearing on the equities, and it shows
that the creditors received or bargained for a consideration for the

38 GUARANTY AND SURETYSHIP.

very indulgence which was granted, and which ended in the in-
solvency of Place. When they thus bargain for an advantage
which the sureties are not to share with them, it is neither right
nor lawful for them to turn over to the sureties all the risks. This
is the legal view of such a transaction, and in most cases it works
substantial justice.

The judgment must be reversed, with costs, and a new trial
ordered. The other Justices concurred.

KiXGSLAND, ct ah, rs. Koeppe, et al. (1891).
137 111. 344:28 N. E. 48-

Tenney, Hawlcy & Coif ecu, for appellants.
S. P. Douthart, for appellees.

Craig, J. This was an action brought by Kingsland Bros.
& Co., the appellants, against Koeppe, Schwuchon, Klinge, and
Loring, to recover a balance due on certain promissory notes exe-
cuted by the Lake View Electric Light Company, and payable
to the plaintiffs. At the date of the execution of the notes by
the corporation, the four defendants wrote their names across the
backs of the notes, and they were sued in this action as guarantors.
On the trial in the circuit court, one of the defendants, Loring,
withdrew his pleas, and judg-ment was rendered against him by
default for the full amomU claimed by the plaintiffs. Nothing
need therefore be said_as to him at present. The other defendants
claimed that they were not guarantors of the notes, and offered
parol evidence to show what the contract was between them and
appellants at the time they placed their names on the backs of
the notes. The comt admitted the evidence and, in the proposi-
tions of law submitted, held that it was competent to prove by
p:\vo\ evidence wdiat the real contract between the parties was ; and
this ruling was approved in the appellate court. 35 111. App. 81.

^^'here the payee of a note indorses it by j^lacing his name on
the back of the instrument, a contract of indorsement is created ;
the liability assumed by the payee being established by the writing.

KINGSLAND VS. KOEPPE. 39

Parol evidence to change or vary the terms or conditions of a con-
tract is not admissible. Mason v. Burton, 54 111. 353; Johnson v.
Glover, 121 111. 283; 12 N. E. 257; Jones v. Albce, 70 111. 34;
IVoodivard v. Foster, 18 Grat. 200.

But where a person who is not the payee of a promissory note,
but a third party, places his name on the back thereof, a different
question arises. In such case the rule long established in this state
is that it may be shown by parol evidence what liability was in-
tended to be assumed. In an early case (Citshinaii v. Dement, 3
Scam. 497) where a third party wrote his name across the back of
a note, it was held that the indorsement w^as prima facie evidence
of a liability in the capacity of a guarantor, but the legal presump-
tion was liable to be rebutted by parol proof. In Boynton v. Pierce,
79 111. 145, where the obligation of a guarantor arose, it was ex-
pressly held that the presumption that a party, not the payee, who
places his name on the back of a note is a guarantor, may be re-
butted by parol evidence. In Stozcell v. Raymond, 83 111. 120,
where the question again arose, the same rule was declared. The
question again arose in Eberhart v. Page, 89 111. 550, and in decid-
ing the case it is said : The indorsement of a note in blank by a
third party raises a presumption only that it is intended thereby to
assume the liability of guarantor, which may be rebutted by proof
that the real agreement between the parties was different. From
the cases cited it is apparent that this court is fully committed to
the doctrine that, when a third party writes his name across the
back of a promissory note, the presumption from the indorsement
is that he assumed the liability of guarantor; yet parol evidence
may be introduced to prove what liability was in fact assumed.
It is conceded in the argument of appellants that the cases cited
fully establish the rule indicated ; but it is insisted that these cases
were virtually overruled by Johnson v. Glover, 121 111. 283, 12 N.
E. 257. This is a misapprehension of the force and effect of that
decision. In that case, Johnson, wdio was the payee of a note, in-
dorsed it in blank, and the note subsequently fell into the hands of
Glover, who sued Johnson as a guarantor; and it was held that he
was not a guarantor, but an indorser, and that parol evidence was
not admissible to vary or change the character of the liability he
had assumed. It is there said : The general rule is that the name
of the payee appearing on the back of the instrument is evidence
that he is indorser, and proves that he has assumed the liability of
an indorser as fullv as if the agreement was written out in words

40 . GUARANTY AND SURETYSHIP.

(citin<4 authorities). J'aro! evideiice is no more admissible to con-
tradict or vary this contract than any other written contract.

What was decided in this case, and whal was said, had. refer-
ence solely to the payee of a promissory note who had indorsed the
note in blank, and had no bearing whatever upon the rights or obli-
gations of a third party, who h.ad placed his name on the back of a
note. Moreover, it is manifest that there was no intention to over-
rule or modify the doctrine announced in Hoyiitoii v. Pierce, yg 111.
145 ; Stozvell v. Raymond, 83 111. 120; and liberhart v. Page, 89 111.
550, — from the ruling in Bank v. Nixon, 125 111. 618, 18 X. E! 203.
This case was heard and decided some time after Johnson v. Glover
had been decided, and the doctrine of Boynton. Stowell and Eber-
hart cases was approved, and those cases were cited as sustaining
the rule announced. We think therefore that the ruling of the cir-
cuit court, in tlie admission of evidence, that the defendants might
resort to j:)arol evidence to prove what contract was made between
the parties was correct. The signature of the defendants written
on the back of the notes was prima facie evidence that the defend-
ants assumed the liability of guarantors: but whether the evidence
introduced was sufficient to remove llie legal ])resuniption of guar-
anty was a question of fact for the trial court, who heard the cause
without a jury, which does not arise here, and upon which we ex-
press no opinion. Whether the propositions of law held or refused
bv the court are technically accurate it will not be necessary to
determine as the judgment will have to be reversed on otlier
grounds. What has already been said may l)e regarded as suf-
ficient on another trial to obviate any supposed error in this regard.

As was said in the first part of this opinion, judgment was
rendered against one of the defendants by default, and in the trial
the court found in favor of the other defendants, and judgment
was rendered in their favor against the ])laintiffs. The ])laintififs
now assign as error the rendition of judgment in their favor against
one of the defendants. This error is well assigned. Thayer v.
Pinlcy, 36 111. 262.

The action was brought on a joint contract, and the general
rule in such cases is that judgment must be rendered against all
or none. Davidson v. Bond, 12 111. 84; Claflin v. Dunne, 129 111.
248, 21 X. E. 834.

The judgments of the appellate and circuit courts will be re-
versed, and the cause remanded to the circuit court.

weinberg vs. the regents. 41

Weinberg z's. The Regents oe the University oe Michigan.

Impleaded, Etc. (1893),

97 Mich. 246; 56 N. W. 605.

Error to Washtenaw. (Kinne, J.)

Charles R. Whit man, for appellant.
Bogle & Marquardt, for plaintifif.

Montgomery, J. The plaintitT hroug-ht suit against the Re-
gents of the University of Michigan, James B. Angell, James H.
Wade and Charles R. Whitman to recover the value of materials
furnished to one Lucas, a subcontractor in the building of the
University Hospital. The right of action was claimed under Act
No. 94, Laws of 1883, as amended by Act No. 45, Laws of 1885
(3 How. Stat., Sec. 8411a). The declaration avers:

"That the Regents of the University of j\[ichigan is a public corpora-
tion organized and existing under the laws of the State of Michigan,
created for the government of the University of Michigan, which said
institution belongs to and is the property of the State of Michigan, and is
maintained at the expense of this State; that the. defendant James B.
Angell is President of the Regents of the University of ^Michigan and the
executive head of the University of Michigan; that the defendant James
H Wade is the Secretary; that the defendant Charles R. Whitman is a mem-
ber of the Regents of the University of Michigan; that on or about the
months of July and August, A. D. 1890, the Regents of the University of
Michigan advertised for proposals for the erection and completion of a
hospital building for the University of Michigan, which said hospital
building, so to be erected and completed, was to be and has been built at
the expense of this State; that afterwards, to-wit, on the first day of
October, A. D. 1890, in pursr.ance to said advertisement and proposals re-
ceived, the bid of one William Biggs, of the city of Ann Arbor, was accepted
and on or about the date aforesaid the Regents of the University of Mich-
igan entered into a contract with said William Biggs for the erection and
completion of said hospital, in consideration, of the sum of, lo-wit,
$78,556, which said contract was signed by the defendants James B. Angell,
James H. Wade, President and Secretary as aforesaid, and by said William
Biggs; that the defendant Charles R. Whitman was a member of the com-
mitee on buildings and grounds appointed by the Regents of the Univer-
sity of Michigan, which building committee was given full authority to act
for the said Regents of the University of Michigan until otherwise ordered;
that said Charles R. Whitman, as a member of said commitee, was prin-
cipally in charge of said undertaking of building said hospital ; that after-

42 (.UARAXTY AND SURETYSHIP.

wards the said William Biggs, by contract with one Jnhn Lucas, sublet a
portion of the job for the building and erection of said hospital; that the
plaintiff Julius Weinberg is a laborer and material man, engaged in the
business of buying, selling and furnishing stone, sand, and other material
to contractors and other persons engaged in bnihlini;, and other business
in which such materials are used ; that after the contract so made as afore-
said by the Regents to said Biggs, and by Biggs with said John Lucas,
said Lucas, subcontractor as aforesaid, applied to the plaintiff to furnish
stone for the use in said hospital building, for which said Lucas agreed
to pay plaintiff 85 cents for every 16 feet in length by one foot thick and
one foot high, as the same was laid in the wall of said building.

"And the plaintiff further says that the defendants, the Regents of
the L'nivcrsity of Michigan, James B. Angell, James IT. Wade and Charles
R. Whitman, were the board, officers and agents of the State of Michigan,
and made and entered into the contract for the erection of said hospital
for and on behalf of the State of Michigan, and had the same built at the
expense of this State; that it was the duty of said defendants as afore-
said, under Section S^iiia, as amended by Act No. 45, Public Acts of 1885,
and Sections 8411b and 8411c, Howell's Annotated Statutes, to require
sufficient security by bond for the payment by the contractors and all sub-
contractors for all labor i)erformed and materials furnished in the erection,,
repairing, or ornamenting of said hospital building."

The declaration further avers that plaintilt furnished the
material in question, relying on such hond, and also avers that he
has not received his pay, and concludes :

"And plaintiff further says that said defendants, in disregard of their
duty aforesaid, negligently and carelessly, and in disregard of the rights
of the plaintiff, neglected to require of said contractor the bond, aforesaid,
and permitted the said contractor to enter into said contract for the erec-
tion of said hospital building, and to enter upon the performance thereof,.
without giving security, by bond or otherwise, for the payinent by said
contractor and all subcontractors for the labor and materials furnished
hiin or any subcontractor, as required by said statute."

To this declaration the defendants demurred, and the plaintiff
joined in demurrer, the demurrer was sustained as to the individ-
ual defendants, and overruled as to the Regents of the University,
and the plaintiff was ])ermilt.'(l to amend as to the individual de-
fendants. The defendant the Regents of the University of Mich-
igan brings error. The jilaintiff has, however, amended his
declaration as against both defendants, and it is requested by both
parties that the (piestion of liability be here determined.

It is contended on behalf of the defendant that the statute
does not apply to the Regents of the I'niversity of Michigan ; that

WEINBERG VS. THE REGENTS. 43-

the University buildings are not built at the expense of the State^
nor are they contracted for on behalf of the State, within the mean-
ing of this statute ; that they are constructed by a constitutional
corporation, which may sue and be sued, and has power to take and
hold real estate for any purpose which is calculated to promote the
interests of the University.

The section, as amended by Act No. 45, Laws of 1885, pro-
vides :

"That when public buildings or other public works or improvements
are about to be built, repaired or ornamented under contract, at the ex-
pense of this state, or of any county, city, village, township, or school
district thereof, it shall be the duty of the board of officers, or agents, con-
tracting on behalf of the state, county, city, village, township or school
district, to require sufficient security by bond for the payment by the con-
tractor and all subcontractors for all labor performed or materials fur-
nished in the erection, repairing or ornamenting of such building, works
or improvements."^

We think the statute sufficiently broad to cover the contract •
in question. Act No. 145, Laws of 1889, appropriated —

"For the purchase of a site for, and the erection of, a hospital, for
the year 1S89, the sum of Twenty-Five Thousand Dollars, and for the
year 1890, the sum of Twenty-Five Thousand Dollars : Provided, how-
ever, That no part of the above-named appropriations for the purchase ot
a site for and the erection of a hospital shall be paid out of the Treasury
until the City of Ann Arbor shall have bound itself to contribute the sum
of $25,000 for the same purpose."

Section 2 provides for the assessment of taxes to pay this
appropriation. Certainly, then, the undertaking was at the ex-
pense of the State and of the City of Ann Arbor, the contribution
of the City of Ann Arbor, however, becoming State property upon

iThe statute (C. L. 1897 — 10743-10-45) quoted in pan. consists of three sections,
the second and third being as follow:

"(10744) Sec. 2. Such bond shall be executed by such contractor to the people
of the State of Michigan, in such amount, and with such sureties, as shall be approved
by the board, officers or agents acting on behalf of the state, county, city, village,
township or school district as aforesaid, and conditioned for the payment by such con-
tractor or any subcontractor as the same may become due and payable, of all indebted-
ness which may accrue to any person, firm or corporation on account of any labor per-
formed or materials furnished in the erection, repairing or ornamenting of such
buildings or works. Such bond shall be .deposited with and held by such board, officer
or agent, for the use of anv party interested therein.'"

"(10745) Sec. 3. Such bond may be prosecuted, and recovery had, by any per-
son, firm or corporation to whom any money shall be due and payable on account of
having performed any labor, or furnished any materials, in the erection, repairing or
ornamenting of such building or works, in the name of the people of this state, for the
use and benefit of such person, firm or corporation: Provided, That the people of this-
state shall, in no case brought under the provisions of this act, be liable for costs."

44 GUARANTY AXD SI 'RIITVS 1 1 I P.

its appropriation. W'c think it clear also thai the ive^ents who
actrd in the matter were agents contract inj^- on hehalf of the State.
They are otttcers elected hy the voters of the State, whose duties
relate to the control of ])ul)lic ])ro]iertv. It is altojj^ether tt:)0 tech-
nical to say that the Regents were contracting" on hehalf of the
University ; for, while this is in a sense true, it is also true that
they, hy the very contract in ([uestion, provided for the expendi-
ture of State money, and for the construction of a huilding which
it would. I think, he news to most residents of Michigan to learn
is not State ])ro])erty. This is as much so as in the case of a school
district. Amiitur General v. Reo^ents. 83 Mich. 467.

It is contended hv the defendant thai tlie liahility for neglect
to require this hond attaches to the individuals who represented
the State, county, city, village, township or school district in the
letting of the contract, and not to the State or county or coqiora-
tion of which they are directly the officers or agents. We think
the defendant is right in this contention. In Owen v. Hill, 67
Mich. 43, and Phnniner v. Kennedy. 72 id. 2^)=^, the action was
brought against the individuals composing the hoard. In Wells
V. Board of Education, 78 Mich. 260, it was lield that the officers
were personally liahle for materials on failure to take the required
hond. (jur attention has not heen called to any case in which
the municii)ality. in the case of a townshi]) or school district, or a
])ul)lic or </;/(/.s-/'-pul)lic corporation, has heen held liahle as such,
and it seems to us that there are insu]>erable objections to so
holding. The duty rests upon the officers of the State, as well
as cities, counties and school districts. Can it be intended that
the State, which must act through its public officers, is to be held
liahle as for a tort for a mere neglect to take the bond re(|uired
bv this statute? It is UWv that it is urged that the Board of
Regents is an agent of the State. This may be true in a certain
sense, hut we think the lx>ard, as a hoard, is not the agent con-
tem])lated by this statute, but tliat the officers who act directly
are the ones who, as individuals, fall within the purview^ of the
Act. It may he doubtful to what extent the hoard of managers
of a hospital, which is a public institution, like the one in ques-
tion, can be made liable for negligence; as to which sec McDon-
ald V. Hospital, 120 Mass. 432; Glavin v. Hospital, 12 R. I. 411.
We do not deem it necessary to decide whether, under such cir-
cumstances as are involved in those two cases, the board of man-
.agers of the hospital, as a corporation, may not be liable. In

WEINBERG VS. THE REGENTS. 45"

such a case it might \\ell be contended that it has undertaken
to perform certain duties, and estabhshed relations toward the
patients which impose upon the body in control certain duties.
But the ground of the plaintiff's right to recover at all in this
case is that this property is State property, and further that the
building is being constructed at the expense of the State, and
that the members of the board were acting for and on liehalf of
the State in making the contract. It could not be contemplated
that the State or the public corporation is to be made liable. The
individual guilty of the wrong or neglect of duty is the one
against whom the action should be directed. Cooley, Torts, 621.
The wrong is in the nature of a tort consisting of neglect of duty
owing to the public generally, for which the public corporation as
such is not liable, unless made so by statute.

It follows from the views expressed that the judgment should
be reversed, and the case remanded, that the plaintiff may proceed
against the individuals named in the amended declaration.

McGrath, J., concurred with Montgomery, J.

Grant, J. I concur in the opinion of my brother Mont-
gomery that under /\ct No. 94, Laws of 1883. as amended by Act
No. 45, Laws of 1885, the pulslic corporation cannot be made
liable, but only those officers or agents of such corporation to
whom is committed the duty of letting contracts for the erection
of public buildings or making public improvements. But I can-
not concur in holding that the statute applies to the corporation
known as '"The Regents of the UniA^ersity of Michigan." The
grounds, buildings and other property of all the other State insti-
tutions, penal, reformatory, charitable and educational, belong to
the State. These institutions are the creations of the Legislature.
They are under the exclusive control and management of the
State. The State which created them, may at any time repeal the
laws bv which they were established and sell the property. The
public buildings, public works and public improvements mentioned
in the statute, mean those over which the State has control. This
is evident from the language of the statute, which says :

"It shall be the duty of the board of officers, or agents, contracting
on behalf of the State, ***** j^ require sufficient security by bond," etc.

The Regents make no contracts on behalf of the State, but
solelv on behalf of and for the benefit of the University. All the

46 • GUARAXTV AND SURKTVSIIIP.

Other public corporations mentioned in the Constitution, which
have occasion to erect pul)Hc l)uildin<2;s or to make pubHc improve-
ments, are expressly included in this statute. Expressio iiniiis
est cxchisifl altcriiis. It expressly enumerates the state, counties,
cities, villages, townships and school districts. If the University
were under the control and management of the legislature, it
would undoubtedly come within this statute, as do the Agri-
cultural College, Normal Schodl, State Public School, asylums,
prisons, reform schools, houses of correction, etc. But the general
supervision of the University is, by the Constitution, vested in the
Regents. Const. Art. 13, §§ 7, 8.

"Sec. 7. The Regents of the University, and their successors in
office, shall continue to constitute the body corporate known by the name
and title of 'The Regents of the University of Michigan.'

"Sec. 8. The Regents of the University shall, at their first annual
meeting, or as soon thereafter as may be, elect a President of the Univer-
sity, who shall be ex-officio a member of their Board, with the privilege
of speaking, but not of voting. He shall preside at the meetings of the
Regents, and be the prin<-ipal executive officer of the University. The
Board of Regents shall have the general supervision of the University,
and the direction and control of all expenditures from the University
interest fund."

Section 2, Art. 13, is as follows:

"The proceeds from the sales of all buds that liave been or here-
after may be granted by the United States to the State for educational
purposes, and the proceeds of all lands or other property given by individ-
uals or appropriated by the State for like purposes, shall be and remain a
perpetual fund, the interest and income of which, together with the rents
of all such lands as may remain unsold, shall be inviolably appropriated
and annually applied to the specific obiects of the original gift, grant, or
appropriation."

Under the Constitution, the State cannot control the action
of the Regents. It cannot add to or take away from its property
without the consent of the Regents. In making appropriations
for its support, the Legislature may attach any conditions it may
deem expedient and wise, and the Regents cannot receive the
appropriation without complying with the conditions. This has
been done in several instances.

Property aggregating in value nearly or quite half a million
of dollars has been donated to the University by private individ-
uals. Such property is the property of the I'niversity. Tt is

WEINBERG VS. THE REGENTS. 47

not under the control of the State when it acts through its execu-
tive or legislative departments, but of the Regents, who are di-
rectly responsible to the people for the execution of their trust.
So, when the State appropriates money to the University it passes
to the Regents and becomes the property of the University, to be
expended under the exclusive direction of the Regents, and passes
beyond the control of the State through its legislative department.
The University and the school district are both provided for
in the same article of the Constitution. Why should the Legis-
lature mention the school district in this statute and leave out
the University, if it was its intention to include the latter? The
University is the property of the people of the State, and in this
sense is State property, so as to be exempt from taxation. Audi-
tor-General V. Regents, 83 Mich. 467. But the people, wdio are
the corporators of this institution of learning, have, by their
Constitution, conferred the entire control and management of its
afi'airs and property upon the corporation designated as "The
Regents of the University of Michigan," and have thereby ex-
cluded all departments of the State government from any inter-
ference therewith. The fact that it is State property does not
bring the Regents within the purview of the statute. The people
may, by their constitution, place any of its institutions or property
beyond the control of the Legislature.

This Court has refused to compel the Regents to comply with
certain provisions of acts of the legislature against their judgment
that they were not for the best interests of the L^niversity. Peo-
ple V. Regents, 4 Mich. 104; People v. Regents. 18 id. 469; People
V. Regejits, 30 id. 473. The Legislature w-as undoubtedly cog-
nizant of the above decisions, for the questions involved were of
considerable public interest.

These considerations lead me to the conclusion that the Re-
gents are not included in this act, and that the judgment should
be reversed, and judgment entered in this Court for the defendants.

Judgment entered accordingly.

Hooker, C. J., and Long, J., concurred with Grant, J.

48 GUARANTY AND SURETYSHIP.

United States, to use of Annjstox I'ipk & Foundry Co., vs.

X ATIOXAL SuRFTV Co. (1899).

92 Fed. 549 (Fis^hth, C. C. A.)

In error to the Circuit Court of the United States for the
Eastern District of Missouri.

Tliis suit was l)rou|L^ht liv the Anniston Pipe & h'oundry Com-
pany, the ])laintifif in error, in the name of the United States,
against the National Surety Company, the defendant in error,
on a hond executed hy the defendant on Jul}- 15, 1895, as surety
for T. J. I'rdsser. the hond having been executed pursuant to the
provisions of an act of congress approved August 13, 1894 (28
Stat. 278, c. 280), which is as follows:

"An Act for the protection of persons furnishing materials and labor for
file construction of pnlilic i\.'orks.

"Be it enacted," etc.. "lh;U hereafter any person or persons entering
into a formal contract w ith the United States for the construction of any
public l)uilding, or tlie proseciuion and completion of any public work or
for repairs upon any public building or public work, shall be required
before commencing such, work to execute the usual penal bond, with good
and sufficient sureties, with the additional obligations that such contractor
or contractors shall promptly make payments to all persons supplying him
or them labor -ind materials in the prosecution of the work provided for in
such contract ; and any person or persons making application therefor, and
furnishing affidavit to the deiiartnuut under the direction of which said
work is being, or has been prosecuted, tliat labor or materials for the pros-
ecution of such work has 1)een su|)i)lied by him or them, and payment for
which has not been made, shall l^e furnished with a certified copy of said
contract and bond, upon which said person or persons supplying such labor
and materials shall have a right of action and shall be authorized to bring
suit in the name of the United States for his or their use and benefit
against said contractor and sureties and lo prosecute the same to final
judgment and execiuion : provided, that such action and its prosecution
shall involve the United .States in no expense."

1. J. I'rosser, the princi])al in the hond, had entered into a
contract with Charles U. Thompson, assistant quartermaster of the
United States army, who acted for and in l)ehalf of the United
States of America, fur the conslructicjn of a l)oikr and i)ump house,
pumping machinery, and connections, water mains, steel trestle,
and water tank, etc., for the water-supply system for the new

U. S. vs. NATIONAL SiJRETY CO. 49

military post near Little Rock, Ark. ; and the bond contained a
condition, in substance, that if said Prosser, his heirs, executors,
and administrators, should in all respects duly and fully observe
and perform all and singular the covenants, conditions, and agree-
ments in and by said contract agreed to be observed and perfomied
by said Prosser, according to the true intent and meaning of said
contract, as well during any period of extension of said contract
as during the original term, and should make full pa^•ments to
all persons supplying him labor or materials in the prosecution
of the work provided for in said contract, then the obligation
should become void, but otherwise remain in full force and virtue.
The plaintiff company sued to recover of the defendant, as surety
in said bond, the sum of $842.98, with interest and costs, being
the value of certain water pipe which it had supplied to Prosser,
subsequent to the execution of the aforesaid bond and contract,
to enable him to execute the agreement with the government, and
which pipe so supplied he had actually used for that purpose,
but had not paid for. For a defense to the action the defendant
pleaded, and the trial court so found, that subsequent to the exe-
cution of the aforesaid bond, and the contract which it w^as given
to secure, the government had entered into a further agreement
with Prosser, modifying the terms of the original contract, or,
more accurately, the specifications thereto attached, in such a
manner that Prosser was required to lay only 1,866 linear feet of
six-inch water pipe in place of 3,850 feet, as specified in the origi-
nal contract, and that this change in the terms of the original
contract, or rather the plans for its execution, was made without
the knowledge or consent of the surety company. In view of the
change in the plans for the execution of the contract which less-
ened the amount of water pipe necessary to be supplied and used,
the trial court ruled that the plaintiff' could not recover. It ac-
cordingly rendered a judgment in favor of the defendant, to
reverse which the record has been removed to this court 1)}- a writ
of error.

Tnimaii A. Post, for plaintiff in error.

/. E. McKcighau (Shcpard Barclay, M. F. JTatts, and G.
A. Vaudc-c'ccr, on the brief), for defendant in error.

Before Caldwell, vSa?-juorn, and Tilwlr. Circuit Judges.

Thayer, C. J., after stating the case as above, delivered the
opinion of the court.

50 c;larantv and suretyship.

It is a familiar rule of law that the contract of a surety must
be strictly construed, and that it cannot be enlarged by construc-
tion, and that when a bond, with sureties, has been given to secure
the performance of a contract, and the principal in the Ijond and
the person for whose benefit it was given make a material change
in the contract without the consent of the surety, the latter is
thereby discharged, h'or present purposes, it may be conceded
that the finding of the lower court in the case at bar discloses
such a modification of the original contract between Prosser and
the United States as would fall within the rule last stated, and
release the defendant comi)any from its liability, if the United
States was suing for its own benefit for a breach of some provision
of the contract, the due performance of which the bond was in-
tended to secure. Such, however, is not the case. The suit is
not brought b\- the United States to recover any damage which
it has sustained ; neither is it brought to enforce any provision
of the contract which was entered into between the United States
and the principal in the bond. ( )n the contrary, the action is
one to enforce a stipulation found in the bond, and only in the
bond, which was intended solely for the protection of laborers
and material men who might furnish labor and materials while
the contract was being executed by Prosser. The United States
is merely a nominal i)laintifi^, and as such, under the provisions of
the act of congress, it cannot be held liable even for costs. The
real plaintiff is the corporation for whose use the suit was brought,
and it sues to enforce an obligation which congress required to be
inserted in the bond for its protection and for the protection of
others who might furnish labor or materials while the work was
in progress.

The real question to be considered, therefore, is whether the
act of congress under which the bond in suit was taken constituted
the United States the agent or representative of the persons who
supplied labor and materials after the contract and ])()nd were
executed, in such a sense that its action in consenting to a modifi-
cation (if the contract with Prosser nuist be imputed to the labor-
ers and material men, and held to deprive them, as well as the
government, of all recourse against the surety.

The act of congress of August 13, i<S(j4, does not authorize
the United States to bring suits of its own motion against the
obligors in such bonds as are therein provided for, to recover what
is due to laborers and material men. It is not empowered to act

U. S. vs. NATIONAL SURETY CO. 51

in their behalf in that respect, but such actions can only be brought
at the instance of persons who furnish labor and materials, who
are authorized, without previous leave being obtained from any
executive department, to sue in the name of the United States,
and control the litigation precisely as they might control it if
the suits were brought in their own name. It is also noticeable
that in its title the act professes to be one for the benefit "of
persons furnishing materials and labor," and that in the body of
the act the form of the condition to be inserted in the bond for
the benefit of the United States is not in terms prescribed, the only
provision in that regard being that the bond shall be "the usual
penal bond" ; meaning, evidently, such an obligation for the gov-
ernment's own protection as it had long been in the habit of exact-
ing from those with whom contracts were made for the doing of
public work. On the other hand, the condition for the benefit of
persons who might furnish materials or labor is carefully pre-
scribed. Obviously, therefore, congress intended to afi^ord full
protection to all persons who supplied materials or labor in the
construction of public buildings or other public works, inasmuch
as such persons could claim no lien thereon, whatever the local
law might be, for the labor and materials so supplied. There
was no occasion for legislation on the subject to which the act
relates, except for the protection of those who might furnish
materials or labor to persons having contracts with the govern-
ment. The bond which is provided for by the act was intended
to perform a double function, — in the first place, to secure to the
government, as before, the faithful performance of all obligations
which a contractor might assume towards it ; and, in the second
place, to protect third persons from whom the contractor obtained
materials or labor. Viewed in its latter aspect, the bond, by
virtue of the operation of the statute, contains an agreement be-
tween the obligors therein and such third parties that they shall
be paid for whatever labor or materials they may supply to enable
the principal in the bond to execute his contract with the United
States. The two agreements which the bond contains, the one
for the benefit of the government, and the one for the benefit of
third persons, are as distinct as if they were contained in separate
instruments, the government's name being used as obligee in the
latter agreement merely as a matter of convenience.

In view of these considerations, we are of opinion that the
sureties in a bond, executed under the act now in question, cannot

62 CrAUAXT^' AM) SURK'l'VSUII'.

claim cxcnipiiiin from lial)ilitv U) persons who have suppHcd labor
or materials to their principal to enable him to execute his con-
tract with the I'nited States, simply because the government and
the contractor, without the surety's knowledge, have made some
changes in the contract, subsequent to the execution of the bond
given to secure its performance, which do not alter the general
character of the work' contemi)lated 1)\- the contract or the general
character of the materials uhich are necessary for its execution.
When the government has executed the contract and taken and
approved the bond, it ceases to be the agent of third parties whom
the contractor em|)loys in the execution of the work or from whom
he obtains materials, and tlie rights of such persons under the
bond are unatfected by subsequent transactions between the gov-
ernment and the contractor. If ^uch were not the case, it would
be possible for the contractor and some officer of the United States,
by making some change in the contract or specifications, to deprive
laborers and material men of all recourse against the sureties
in the bond after they iiad supplied materials and labor of great
value in reliance upon its provisions, it is not probable that
such a result was contem])!ated 1)y the lawmaker. On the con-
trary, the act bears every evidence that it was intended to provide
a securitv for laborers and material men on which they could rely
confidently for protection, unless they saw fit, by their own deal-
ings with the contractor, to relin(|nish the benefit of the security.
We are confirmed in these views by the following authorities:
Dczvcy V. State 91 Ind. 173; Conn. v. Slate. 125 Tnd. 514, 25 N.
E. 443; Doll V. Cnime, 41 Neb. 655, 50 X. W. 806; Kaiifmaiiii v.
Cooper, 46 Neb. 644, 65 N. W. 796; Stetfcs v. Leiiikc, 40 Minn.
27. 41 \. W. 302. The first two of these cases are \-er_\- nuich
in point. Uonds were given to the state of Indiana as obligee for
the doing of public work, in i^ursuance of a statute of that state,
which bonds contained conditions rec|uiring — First, the faithful
performance and execution of the work undertaken by the con-
tractor; and. second, the |)rompl payment by the contractor of
all debts incurred b\- him in the prosecution of the work for labor
and materials supplied by third j^arties. It was held, in sub-
stance, that for any breach of the second condition of the bond by
the contractor the right of action was in the laborer or the mate-
rial man, and -that such right of action could not be defeated or
prejudiced by any act done by ihc obligee in the l)ond after the
bond had been taken and approved. It was accordingly rulcfl

GRIFFITH VS. RUXDLE. 58

that changes made in the contract 1»\- the parties thereto, to wit,
the contractor and the puhUc authorities, after the l)()nds had been
executed and accepted, would not deprive material men of their
right to recover against the sureties in the bond. It resuhsi from
what has Ijeen said that the judgment of the circuit court was
erroneous upon the facts found Ijy that court, and should be
reversed. It is so ordered, and that the case be remanded for a
new trial.

Griffith cf al. z's. Ruxdle ct al. (1900).
23 Wash. 4^3:55 L. R. A. 381 ; 63 P. 199.

Appeal In- defendants from a judgment of the Superior Court
for Spokane county in favor of plaintiffs in an action brought
to hold sureties on a contractor's bond liable for unpaid labor
and materials which went into the construction of the building.
Affirmed.

The facts are stated in the opinion.

Messrs. Hciilcy, KcUam, & Lindslcy and A. G. Avery, for
appellants.

Messrs. Lewis & Leicis, for respondents.

Reavis, J., delivered the opinion of the court :

In July, 1897, defendant Rundle entered into a contract with
the United States for the construction of certain buildings at the
army post near Spokane. At the time the contract was executed,
a bond was duly executed in accordance with the provisions of the
act of Congress approved August 13, 1894 (28 Stat, at L. p. 278,
chap. 280). The law is entitled "An x\ct for the Protection of
Persons Furnishing Materials and Labor for the Construction of
Public Works." Its provisions are substantially that any person
entering into a formal contract with the United States for the
construction of any public building shall be required, before com-
mencing, to execute the usual penal bond with good and sufficient
sureties, with the additional obligations that the contractor shall
promptly make payments to all persons supphdng him labor and
materials in the prosecution of the work provided for in the con-
tract; that any persons performing labor or furnishing materials

54 GUARANTY AND SURETYSHIP.

for such work shall Ijc furnished on application with a certified
copy of the contract and lx)nd upon which the person supplying
labor and materials shall have a right of action, and be authorized
to bring suit in the name of the United States against the con-
tractor and sureties, provided that such action shall involve the
United States in no expense. The defendants Henley and Snod-
grass were sureties upon the bond, the penal sum of which was
$10,000. While the contractor, Rundle, was engaged in the con-
struction of the buildings under his contract, materials were fur-
nished by plaintiffs to the contractor, and used by him in the work
of construction. Sulxsequently. and while the buildings were but
partially completed, the United States, in the exercise of the right
reserved in the contract, took the work out of the hands of Rundle,
and at the same time notified the sureties, Henley and Snodgrass,
of its action. Thereupon the sureties took up the work of con-
struction, and completed the buildings -according to l^undle's con-
tract, and the United States accepted their work as full perform-
ance of the contract. For defense to the action, after some denials,
the sureties set up the fact that Rundle did not complete the con-
tract, but the sureties, under its terms, made full perfomiance,
wdiich was duly accepted by the United States, and that in their
completion of the contract they were necessarily compelled to
expend sums in excess of $10,000, the amount of the penalty
in the bond.

I. The several assignments of error made by the appellants
may be grouped together, and stated as the refusal of the superior
court to admit testimony under the affirmative defense set forth
in the answer. The court excluded any evidence with reference
to the United States having demanded of the sureties the per-
formance of the contract or the payment of damages. It is main-
tained by counsel for appellants that the limit of iho liability of
the sureties was the penalty stated in the bond, $10,000; that, if
the sureties had not undertaken the perfonnance of the contract
of their principal, the entire damages to both the government
and the respondents and all of the other claimants for labor and
materials would have been liiiuidalcd by the payment of $10,000;
that the fact that the sureties necessarily expended more than that
sum in the completion of the contract, and over the contract price,
relieves them from further liability. It is also maintained that,
if the contract had not been completed, the government is a pre-
ferred creditor, and its claim would exhaust the penalty, and there

GRIFFITPT VS. KUNDr.E. 55

would be no funds left for the satisfaction of plaintiffs and other
claimants of like character; and counsel maintain that it is neces-
sar\- to detemiine the question of priority of rights as between
the government and these claimants. In a case involving these
facts, — United States use of Fidelity Nat. Bank v. Rundle, — in
the United States circuit court, judgment was entered in con-
formity with the contention of counsel here. But the cause was
afterwards reversed by the United States circuit court of appeals
(40 C. C. A. 450, 100 Fed. 400), and the appellate court observed:
"The undisputed facts of the present case are such that it is not
necessary to consider the question presented in the court below,
and argued here, whether if the United States had any cause of
action upon the bond in suit, its claim should be preferred to that
of the laborers and material men ; for, as has already been observed,
the United States received full performance of the contract, and
therefore has no cause of complaint." In the case of United States
use of Anniston Pipe & Foundry Co. v. National Surety Co., 34
C. C. A. 526, 92 Fed. 549, such a bond was under consideration
by the court, and it was there adjudged that the bond was intended
to perform a double function : First, to secure the faithful per-
fomiance of the contract to the government ; and, second, to pro-
tect third persons from whom the contractor might obtain labor
or materials in the prosecution of the work. In its second aspect,
the bond, by virtue of the statute, contains a separate and distinct
agreement between the obligors and such third persons as to which
the agency of the government ceases when the bond is given and
approved, and subsequent changes in the contract, agreed upon
between the government and the contractor, though without the
knowledge or consent of the surety, will not release the surety
from liability to persons who supply labor or materials thereunder.
The court observed of the statute under which the bond is exe-
cuted : "It is also noticeable that in its title the act professes to be
one for the benefit 'of persons furnishing materials and labor,'
and that in the body of the act the form of the condition to be
inserted in the bond for the benefit of the United States is not in
terms prescribed, the only provision in that regard being that the
bond shall be 'the usual penal bond :' meaning, evidently, such an
obligation for the government's own protection as it had long
been in the habit of exacting from those with whom contracts were
made for the doing of public work. On the other hand, the con-
dition for the benefit of persons who might furnish materials or

56 GUARAXTV AND SURRTVSIIIP.

labor is carefully prescribed. ( 'hxiwusly, therefore, Congress in-
tended to afford full protection to all persons who supplied mate-
rials of labor in the construction of i)ul)lic buildings or other
public works, iuasnuich as such persons could claim no lien thereon,
whatever the lucal law might be, for the labor and materials so
supplied. There was no occasion for legislation on the subject to
which the act relates, except for the protection of those who might
furliish materials t)r labor to persons having contracts with the
government. * * * Viewed in its latter aspect, the bond, by virtue
of the operation c^f the statute, contains an agreement betw^een the
obligors therein and such third parties that they shall be paid
for whatever labor or materials they may sujjply to enable the
principal in the bond to execute his contract with the United
States. The two agreements wliich the bond contains — the one
for the beneht of the government, and the one for the benefit of
third persons — are as distinct as if they were contained in sepa-
rate instruments, the government's name being used as obligee in
the latter agreement merely as a matter of convenience." In the
case of Dczi'cy v. Stale c.v rcl. McCoIhiiii, 91 Ind. 173, it was sub-
stantially held that for any breach of the second condition of such
a bond by the contractor the right of action was in the laborer
or the material man. and that such right of action could not be
defeated or abridged by anv act done by the obligee in the bond
after the bond had l)een taken and approved; and it was ruled
that changes made in the contract bv iIk- parties thereto — that is,
the contractor and the juiblic authorities — after the bonds had been
accepted would not deprive material ukmi of their rights to recover
against sureties in the bond. To the same eff'ect is Conn v.
State ex rel. StnlsiiKin. 125 ind. 514, 25 X. E. 443, and the same
principle is affirmed in Doll v. Cniiiie, 41 Neb. 655, 59 X. W. 806;
Kanfniann v. Cooper, 46 Xel). 644, 65 N. W. 796; Steffes v.
Leuike, 40 Minn. 27, 41 X. W. 302. Ilie practical eft'ect of the
statute, and others of similar character in a number of the states,
seems to be to confer a special lien in favor of such persons who
furnish labor and material, and to sul)stilute the l)ond in ])lace
of the public building as a thing upon which Uu- lien is to be
charged. Such liens evidently a])]iear, from an nispe;:tion of the
current legislation, to be favored, and the courts have usually
adopted a liberal rule of constructitoi in their enforcement.

2. It is ])ertinenl to suggest that in the i>erformance of the
unfinished contract by the sureties, if they had expended less than

UNION DANK \'S. COSTER. 9'

the amount to be paid by the goveniniont on the completion of tlie
contract, the excess or profit would have belonged to them, and,
if they undertook the completion of the contract and sustained a
loss, it would seem that it should fall upon them. As sureties
under the terms of the contract, they might elect to complete it
upon default of their principal, but such completion was not the
full performance of the contract by the principal himself. It sat-
isfied the sureties' contract with the government, but, as observed
bv the circuit court of appeals in United States use of Fidelity
Nat. Bank v. Riindle, 40 C. C. A. 450, 100 Fed. 400, the United
States is not a claimant here, and the question of priority of claims
to the amount due from the sureties under the terms of the bond
is not involved in this case.

The judgment of the Superior Court must be affirmed.

Dunbar, Ch. J., and Fullerton and Anders, J J., concur.

Union Bank of Louisiana z'j. Coster's Executors (1850).

3 N. Y. 203.

On the 29th of May, 1841, Heckscher & Coster, merchants
of the city of New York, executed and sent to Kohn, Daron &
Co., merchants in New Orleans, a letter of credit as follows:

'•New York, 29 May, 1841.
"Sir: We hereby agree to accept and pay at maturity any draft or
drafts on us at sixty days' sight, issued by Messrs. Kohn, Daron & Co. of
your city, to the extent of twenty-five thousand dollars, and negotiated
through your bank. We are respectfully, sir, your obd't serv'ts,

"Heckscher & Coster."

At the foot of the letter of credit was a guaranty executed at
the same time by John G. Co.ster, as follows :

"I hereby guarantee the due acceptance and payment of any draft

issued in pursuance of the above credit.

"John G. Coster."

On the faith of the above letter of credit and guaranty, the
Union Bank of Louisiana, in January, 1842, purchased two drafts
drawn by Kohn, Daron & Co. on Heckscher & Coster, amounting
to about $9,000, which were accepted and paid by the latter accord-

58 C.rARAXTV AXD SURETYSHIP.

ing to their agreement. Un tlie 14th of February, 1842. the bank,
under the same letter of credit, purchased another draft for $4,000,
at sixty days' sight, drawn l)y and upon the same parties; and on
the 26th of that month lliis draft was presented to lieckscher &
Coster, in New York, for acceptance, which they refused. On
the 9th of April, 1842, the attorney for the Union IJank gave
notice to John G. Coster that he had received the draft for col-
lection, and on the 2d of May, 1842, formal notice of the protest
of the draft for non-payment was served on Mr. Coster. In
August, 1844, John G. Coster died, and the Union Bank subse-
quently brought this suit in the superior court of the city of New
York, against his executors, upon the guaranty above set forth,
for the purpose of recovering the amount of the draft. On the
trial, in addition, to llie facts already stated, it appeared that prior
to any of the above mentioned transactions with the Union Bank,
the said letter of credit and guaranty had Ijeen held l)y the Cily
Bank of Xew Orleans, v/hich, upon the faith thereof, in Decem-
ber, 1841, had purchased a draft of $10,000 drawn by Kolin,.
Daron & Co. ui^n Heckscher & Coster. The letter and guaranty
were not addressed to any ])articular person or l)ank.

//';//. .1/. livarts, for appellants.

B. JV. Bonney, for respondents.

Pratt, J., delivered the opinion of the court. Contracts of
guaranty differ from other ordinary simple contracts only in the
nature of the evidence required to establish their validity. The
statute requires every special promise to answer for the deljt,
default or miscarriage of another, to be in writing subscriljed
by the party to be charged thereby, and expressing therein tlie
consideration; and no parol evidence will be allowed as a sub-
stitute for these requirements of the statute. But in other respects
the same rules of construction and evidence apply to contracts of
this character which apply to other ordinary contracts. Hence
the consideration, which will support a contract of this character,
as in other cases, may consist in some benefit to the promisor, or
some other per.son at his request, or some trouble or detriment to
the promisee. (20 Wend. 184, 201; Theobald on Pr. & Surety,
3, 4; 2 H. Bl. 312.) Nor is any particular form of words neces-
sary to be used for expressing the consideration ; but it is enough
if from the whole instrument the consideration expressly or l)y

UNION BANK VS. COSTER.

5»

necessary inference appears ; so that it be clear that such and no
other was the consideration upon which the promise was made.
(24 Wend. 35 ; 21 id. 628; 4 Hill, 200; 8 Ad. & El. 846; 5 Barn.
& Ad. 1 109.) And the rule allowing two or more instruments
given at the same time and relating to the same subject matter to
be construed together as one instrument, applies also to this class
of contracts ; so that when a guaranty is given at the same time
with the principal contract and forms a part of the entire transac-
tion, if the consideration be stated in the principal contract, though
none be stated in the guaranty, it will suffice. 8 John. 35 ; 9
Wend. 218; 18 id. 114. So also as in other cases, parol evidence
of the circumstances under which the contract was made may be
given, to aid the court in giving a true construction to ambiguous
terms therein, or to shov/ that separate contracts relate to the same
subject matter.

It should also be observed here, that our statute in terms only
requires the contract to express therein what it had been well
settled the statute of Elizabeth required it to contain, and the same
rules of construction should therefore be applied in cases under
both statutes. 24 Wend. 35.

With these observations in relation to the law governing cases
of this kind, we come to the consideration of the contract in ques-
tion.

The letter of credit of Heckscher & Coster is an original un-
dertaking on the face of it to accept any drafts to be drawn upon
them at sixty days by Kohn, Daron & Co. to the extent of $25,000,
and negotiated by the bank to v/hom it is addressed. The con-
sideration of their undertaking appears very plainly from the
instrument. It is an open proposition to the bank to wdiich it is
addressed, that if it will purchase the drafts drawn by Kohn,
Daron & Co. they will accept and pay the same. As soon there-
fore as the bank complied with the proposition the contract was
closed, and the rights and liabilities of the parties became fixed.
Upon this part of the contract there can be no question that a suffi-
cient consideration appears upon the face of the contract to
uphold it. But it requires no greater or different consideration
to support a guaranty than to support an original promise. The
only differenc'e in the two cases consists in the former requiring
the consideration to appear upon the contract itself, whereas the
consideration to support the latter may be proved by parol. The
question therefore in this case is whether the consideration of the

60 C.IAK.WTV AXD SURETYSII 1 1'.

iindertakiiii; t)f iIk- ikfcudants" tcstatdr appears upon the instru-
iiKiit itself, or rather whether the two instruments may lie read
tui^ether so that the -ame consideration shall support hoth.

The i^uaranty is without date and at the foot of the letter
of credit. Independent of the parol testimony it should he deemed
to have heen made at the same time. It is addressed U) the same
person and relates to the same suhject matter. It should there-
fore, within every rule of construction, he deemed ])art of the
same transaction, and the two instruments should he read together
as one contract. The two would read thus: ""In consideration
that you, the L'nion liank of Louisiana, will ])urchase any draft
or drafts to lie issued hy Kohn, Daron & Co. upon Heckscher &
Coster, at sixty days, not exceeding $25,000. we the said Heck-
scher & Coster will accept and pay the same; and I the said John
G. Coster agree that Heckscher & Coster shall accept and pay
the same." Xow it seems to me clear that such is the fair read-
ing of the two contracts taken together ; and although the con-
tract of John (i. Coster ma\- he deemed collateral, yet had the two
been drawn in the al)ove form no (|uestion could ha\-e heen raised
upon the statute of frauds. Hut what may he fairly inferred from
the terms of a contract .should he considered, for the purpose of
giving it effect, as contained in it ; and this rule applies as well
to collateral as to original undertakings. 5 I I ill, 147.

There is a wide difference between the guaranty of an exist-
inir debt and the guarantv of a debt to he contracted u])on the
credit of the guaranty. It is the difference between a i)ast and
future consideration. A ])ast consideration, unless done at the
re([uest of the j^romisor, is not sufficient to support any prom-
ise. ]*)Ut a ]:)romise to do an act in consideration of some act to
be done 1)\- the i>roiuisee implies a reipiest. and a compliance
on the part of thr latter closes the contract and makes it bind-
ing. And although it may he necessary from the nature of
the case to jjrove ])erformance b\ parol, yet such evidence is no
violation of the statute re(|uiring the consideration to he in writ-
ing. The consideration of the i)romise is expressed, and the
parol evidence is onlv u^■>^:^\ to show, not what the consideration
is, but that the act which constitutes that consideration has been
perfomied. Any other rule would i-eciuire every person to whom
a letter of credit is directed to accept the same in writing before
the drawer would he bound. For instance, a letter drawn in the
countrv and addressed to a merchant in the city, guaranteeing

UNION HANK \'S. COSTKK. 61

the responsibility of the person for whose benefit the same was
drawn for a i^iven bih of o-oods to be sold to him, would require
a written acceptance by the city merchant before it w-ould be bind-
ing upon the drawer. No such strict rule can be found sup-
ported by ail}- adjudication. I am therefore satisfied that the
consideration of the guaranty in the case at bar sufficiently appears
in the contract, and that the same was valid and binding upon
the defendants" testator. 1 have not been able to find a case in
our own or the English courts which would conflict with the doc-
trine above advanced; but on the contrary, the l)ooks are full
of cases similar in their circumstances to this case, where the
guaranty has been sustained. 8 John. 35; 11 id. 221 : 10 Wend.
218; S. C. in error, 13 id. 114; 12 id. 218; 24 id. 35; 4 Hill, 200;
4 Denio, 559; i Ad. & E. 57 ; 5 Bligh's N. R. i ; 7 Mees. & Wels.
410; 9 East, 348; I Camp. 242; 3 Brod. & Bing. 211 ; 4 C. & P.
N. P. 59 ; 8 Dowl. & Ryl. 62.

The next question raised in the case is as to notice of ac-
ceptance. We must hold the law to he settled in this state that
where the guaranty is absolute no notice of acceptance is neces-
sary. Judge Cowen in Douglass v. Hozviand (24 Wend. 35),
and Judge Bronson, in Suiith v. Dann (6 Hill, 543), examined
the cases at length upon this question, and they showed conclu-
sivelv that bv the common law no notice of the acceptance of any
contract was necessary to make it binding, unless it be made a
condition of the contract itself, and that contracts of guaranty
do not differ in that respect from other contracts. In this case the
only condition of Coster's undertaking w-as that the bank should
purchase the drafts to be issued by Kohn, Daron & Co.. and upon
complying with that condition the rights of the parties became
fixed, and the contract binding. There is nothing in the contract
from which we can infer that it was the intention of the parties
that notice should be given in order to fix the guarantor. No
more is required to make tine guarantor liable than to make
Heckscher & Coster, and the only notice to them necessary was
the presentment of the drafts for their acceptance within a rea-
sonable time. Allen v. Riglitmeir, 20 John. 365 ; Clark v. Bur-
dett, 2 Hall, 197; Cro. Jac. 287, 685; 2 Salk. 457; Vin. Ab.
Notice. A. 3: Com. Dig. Plead. C. 75 ; 2 Chitty, 403.

As to notice of non-acceptance and non-payment of the bills
by the d.rawees, that can only involve the subject of laches on the
part of the holders of the drafts, and all the cases, both in Eng-

4)2 GUARANTY AM) SUUiaVSllll'.

land and in this country, concur in holding that this defense can
only be set up to an action against the surety in cases where he
has suffered damage thereby, and then only to the extent of
5uch damage. 7 I'eters, 117; 12 id. ^nj ; 1 Mason, 323, 368;
I Story, 22; 13 Conn. 28; 5 Man. & Granj 559; 13 Mees. &
Wels. 452; 3 Kent's Com. 122. If, therefore, it were neces-
sary in this case to give any notice, no evidence has been given
showing that the defendants, or the guarantor, suffered any loss
in consequence of the want of such notice.

The only remaining question, therefore, worthy of consid-
eration in this case, arises out of the fact that another l)ank had
previously purchased drafts drawn in pursuance of the letter of
credit and guaranty. It is claimed that by such purchase the
contract became a fixed and binding contract ])etween stich bank
and the promisor, and thereby lost its negotial)le character, and
became located so that no other person or l)ank could purchase
drafts upon the credit of it.

The guaranty, in this case, was manifestly intended to accom-
pany the letter of credit, and is subject, in this respect, to the
same construction. If, therefore, it was competent for Kohn,
Daron & Co. to draw several drafts not exceeding the linnt in the
bill of credit specified, and to negotiate them at dift'erent banks,
and lleckscher & Coster would be bound by their letter of credit
to accept and pay them, the guarantor would also be liable to the
same extent. As a general rule the surety is liable to the same
extent as the principal, unless he expressly limits his liability.
(Theol)old on Prin. and Surety, 46.) it therefore only becomes
necessarv to examine the letter of credit, and ascertain whether
it was intended to be limited to one particular bank, or is a general
letter of credit to any anrl all persons who may advance money
upon it. It is somewhat singular that we find so few adjudica-
tions in our courts upon a class of commercial instruments which
enter so largely into the commerce and business of this country,
and of the world.

In England it seems to be at this time questionable whether
a party who advances money upon a general letter of credit can
.sustain an action upon it. Russell ct al. v. U'iggius, 2 Story,
214; Bank of Ireland v. Archer, 2 Mees. & Welsby. 383. The
reason assigned is that there is no privity of contract between
them. It is there assumed that it is only a contract between the
x:lrawer of the letter and the person for whose Iienefit it is drawn.

UNION HANK VS. COSTER. 63

But in this country the contrary doctrine is well settled. Letters
of credit are of two kinds, general and special. iV special letter
of credit is addressed to a particular individual by name, and is
confined to him, and gives no other person a right to act upon it.
A general, letter, on the contrary, is addressed to any and every
person, and therefore gives any person to whom it may be shown
authority to advance upon its credit. A privity of contract springs
up between him and the drawer of the letter, and it becomes in
legal effect the same as if addressed to him by name. Russell v.
Wiggins, 2 Story's Rep. 214; 12 Mass. 154; 2 Metcalf, 381; 12
Wend. 393 ; 12 Peters, 207 ; Burkhead v. Browii^ 5 Hill, 641 ;
Story on Bills ; See Beames' Lex. Mer. 444.

But these general letters of credit may be subdivided into
two kinds, those that contemplate a single transaction, and those
that contemplate an open and continued credit, embracing sev-
eral transactions. In the latter case they are not generally con-
fined to transactions with a single individual, but if the nature
of the business which the letter of credit was intended to facilitate,
requires it, different individuals are authorized to make advances
upon it, and it then becomes a several contract with each indi-
vidual to the amount advanced by him. Thus a general letter of
credit may be issued to a person to enable him to purchase goods
in the city of New York, for a country store. The very nature
of the business requires him to deal with different individuals
and houses in order to obtain the necessary assortment. It has
never, as I am aware, been questioned that the guarantor might
be bound to several persons who should furnish goods upon
the credit of the letter.

So letters are issued by commission houses in the city, to
enable persons to purchase produce in the western states. The
money is obtained from the local banks in those states by drafts
drawn upon those houses, and upon the faith of the letters of
credit. It may often happen that a single bank can not furnish
the requisite amount, or it may be necessary to use money in
different and distant localities. I am not aware of any question
ever having been raised as to the authority of different banks
to act upon the same letter of credit. It is absolutely necessary
that such should be the effect of them in order to facilitate the
commerce of the country, and to carry out the object of the parties
in issuing the letters of credit. Burkhead v. BroiKii. 5 Hill, 641 :
2 Story's Rep. 214.

64 GUARA.NTV AND SlKinVSJl IP.

The letter of credit in this case was evidently intended to be
jil^eneral : it did not conten;plate a sini^le transaction, or draft for
the whole amount. Init several drafts limited in the ag^r^R^te to
twenty-five thousand dollars. Although the address "sir," and
"vour hank." is in the singular nunil)er, yet I think it was intended
to he used in a distrihutive sense, and a|)ply to an\- hank or hanks
who should jHU-chasc the drafts. J can see no ohject which the
drawers .should have for liiuiting the party for whose benefit
the letter was issued to a single hank. It is said that it would
enable them more readily to revoke the authority. l>ut these let-
ters are not issued without either undoubted confidence in the
persons for whose benefit they are drawn, or ui)on ample security.
The idea of giving notice of revocation to any party but that for
whose benefit they are drawn, is never entertained by the guaran-
tors in cases of general letters. When they wash to provide
for any such contingency the letters are framed accordingly. Again,
in this case the parties themselves have treated this letter as not
limited to a single bank, for they accepted bills which had been
discounted by the plaintiffs.

I am, therefore, satisfied that the plaintifi:s were authorized
to purchase bills upon the faith of the letter and accompanying
guarantv, and that the previous purchase of bills by another bank
is no defense.

Whether the letters had been revoked with the knowledge
of the plaintiffs before the draft was discounted by them, was a
question of fact for the jurv. It would clearly constitute no de-
fense unless the plaintifl's liad notice of it. The judgment of
the su])erior coiu't must therefore he affirmed with costs.

Judgment affirmed.

The EvANSvii-Li-: Xatiox \i Hxxk of I-a-ansvillk. Ixdiama,
Respondent, 7',?. Adoi.imi Kaii- m.\.\x cl ai. .Vppellants (1883).

03 ^'- '^'- 2/,^

Appkai, from order of the General Term of the Su])reme
Court, in the first judicial (lei)artment, made May 25, 1881, which
reversed a judgment in favor of defendants, entered upon a re]:)ort
of a referee. Reported below, 2J, linn. 612.

EVANSVILLE BANK VS. KAUFMANN. 65

This action was broug-ht to recover the amount of two drafts
drawn by Bingham Bros., of Evansville, Ind., on A. Feigelstock,
of the city of New York, which were discounted by plaintiff at
Evansvihe, and forwarded to New York for acceptance and pay-
ment by the drawee, by whom they were dishonored.

Defendants were sought to be made hable under the follow-
ing letter of credit, which was delivered, to and left with defend-
ants, and upon the security of which they discounted the paper :

"New York, December 29, 1874.
"Messrs. Bingham Bros., Evansville, Ind. :

"Dear Sirs — Any drafts that you may draw on Mr. A. Feigelstock. of
our city, we guarantee to be paid at maturity.

"Truly yours,

"Kaufmann & Blun."
The further facts appear in the opinion.

Charles Edivard Souther, for appellants.

E. B. Crozvell and Asa Iglehart, for respondents.

RuGER, Ch. J. Guaranties are distinguished in the law as
being either general or special. Special guaranties being those
which operate in favor of the particular persons only to whom
they are addressed, while general guaranties are open for accept-
ance by the public generally. They are sometimes further classi-
fied into those limited to a single transaction and those embracing^
continuous or successive dealings. Gates v. McKee, 13 N. Y.
232; Church v. Brozvn, 21 id. 329.

The liability of the defendants in this case depends upon thc'
solution of the question to which of these classes the guaranty
in suit belongs. If it be regarded as a general guaranty, there
is no just defense to this action. If, however, it is a mere special
guaranty, although continuous in its character, other c[uestions
will arise for consideration. Many of the earlier cases arising
upon guaranties, both here and in England, were largely con-
trolled by the question of their negotiability ; and it was uniformly
held that no action would lie at the suit of an assignee upon a
special guaranty because no privity existed between such assignee
and the guarantor. Rohbius v. Buiglinin. 4 Johns. 476; IValsh v.
Bailie, 10 id. 180; Chitty on Bills, 2Jt^, 308 (ed. 1839) ; N'ezv-
coiiib V. Clark, i Denio, 226 : Birckhead v. Brozvn, 5 Hill, 634.
This obstacle was removed in this state by the Code of Porcedure,
which authorized any party acquiring an interest in a guaranty
to bring his action and recover thereon, provided a cause of action.

66 GUARANTY AND SURETYSHIP.

previously existed u])on the contract in favor of his assignor.
Tlic real party in interest in such contracts is now entitled to
maintain an action for damages arising from a breach of such
contract in his own name, although he was not originally privy
to it.

In other words the same effect is now given to an equitable
that forrtierly pertained to a legal assignment, and they are now
both equally cognizable in a court of law.

It follows that Bingham Brothers could assign to the plaintiff"
and the latter recover upon any cause of action accruing to them
under the letter of credit iii question existing against the defend-
ants at the time of the discount of the drafts in suit.

The true distinction between general and special guaranties,
as contained in letters of credit, is that upon the faith of a general
guaranty any person is entitled to advance money, or incur lia-
bility, upon complying with its terms, and can recover thereon the
same as though specially named therein. Union Bank of Louisi-
ana V. Coster^ 3 N. Y. 203.

In the case of a special guaranty, however, the liberty of
accepting its terms is confined to the persons to whom it is ad-
dressed, and no cause of action can arise thereon except by their
action in complving w'ith its conditions.

Such a guaranty contemplates a trust in the person of the
promisee, and from its very nature is not assignable until a right
of action has arisen thereon, w^hich may, like any other cause of
action arising upon contract, be then assigned.

The authority of the cases holding that no privity exi.'^ts
between the assignee of a guaranty and the guarantor sufficient
to enable the former to maintain an action thereon has thus
ceased by force of the provisions of the Code.

Though this be so, the common-law rule applies to contracts
of guaranty as w-ell as to other contracts ; that a consideration is
necessary to render them valid ; and that, unless such consideration
be acknowledged by the contract itself, it is still necessary to
prove one in order to recover thereon. Leonard v. Vrcdcnbnrgh,
8 Johns. 29; Bailey v. Freeman. 4 id. 280; Brandt on Surety-
ship, 7.

It was formerlv held that such contracts were void by the
statute of frauds unless their consideration was also expressed
upon the face of the instrument itself. Union Bank v. Coster,
Ex'r, 3 N. Y. 211 ; Nczveoinb v. Clark, i Denio, 226.

EVANSVILLE BANK VS. KAUFMANN. 67

Ikit this rule was modified by other cases holding that where
the nature of the consideration was fairly inferable from the con-
tract sued upon, or was contained in a written instrument con-
temporaneously executed and forming a part of the transaction,
it would satisfy the requirement of the statute. Gates v. McKee,
supra; Church v. Brozvn, 21 N. Y. 315; Douglass v. Hozvland, 24
Wend. 35 ; Leonard v. Vredenburgh, supra; Rogers v. Kneeland,
10 Wend. 218.

The cases of Brezvster v. Silence (8 N. Y. 207) and Draper v.
Snoiv (20 id. 331), holding a contrary doctrine, have been much
shaken, as authority upon this question, by the later cases above
cited.

The statute of frauds was amended in this State by chapter
464 of the Laws of 1863, omitting in its re-enactment the pro-
vision requiring the consideration of a promise to answer for
the debt, default or miscarriage of another, to be expressed in
the writing containing such promise.

The effect of this amendment was to dispense with the neces-
sity of such statement in the instrument itself (Speyers v. Lam-
bert, 6 Abb. Pr. [X. S.] 309), but it left it still indispensable that
a consideration in fact for the promise should exist in order to
entitle the promisee to recover thereon. Brandt on Suretyship, 90.

Regarding this case, therefore, as unaffected by the questions
referred to, its solution seems to depend upon the answer to be
made to these two propositions : First, as to whether the guaranty
in question is general or special ; and second, if -it be found to be
a special guaranty, whether any good cause of action arose there-
on in favor of the persons to whom it was addressed, wdiich has
been assigned to the plaintiff in this action. Besides a considera-
tion, it is essential tha<- a contract of this kind should be between
proper parties, viz. : a promisor or guarantor ; a principal and a
promisee ; and it is just as essential that such contracts should
describe or refer to these parties so as to identify them, either
individually or as a cla<?s.

It is always competent for a guarantor to limit his liability,
either as to time, amount or parties, by the terms' of his contract,
and if any such limitation be disregarded by the party who claims
under it the guarantor is not bound. It follows that no one can
accept its propositions or acquire any advantage therefrom unless
he is expressly referred to or necessarily embraced in the descrip-
tion of the persons to v/hom the offer of guaranty is addressed.

68 Cr A RAX TV AND SLKll'lVSH 1 1'.

Robbiiis V. Biiighaiii, supra; I'nion Bank v. Coster, supra;
Church V. Bronni, supra: Walsh v. Bailie, supra; Dodge v. Lean,
i^ Johns. 508; Brandt on Surci\ ship, 88; Bailey v. Ogden, 3
Johns. 3yy.

In the case of a special guaranty the consideration necessary
to support the promise may l)e either one furnished Ijy the prin-
cipal to the guarantor, or hy the promisee to either the principal
or some third person, according t(j the terms of the guaranty.

A general letter of credit is addressed to and invites people
generally to advance money, give credit, or sell property in reliance
upon it, and when this is done the contract is complete, and the
acceptor hecomes a part}' to it and may enforce it for his own
benefit.

In such case the ])romisee has, upon the re(|uest of the guar-
antor, furnished the consideration contemplated hy tlie guaranty
and brought himself v, ithin its terms and the re(|uirements of
law. Uiiiun Bank v. Coster, supra; Church v. Browii, supra;
Birckhead v. Bruwii, supra.

To come to the case in liand it will ])e foiuid that the guaranty
neither in its address n(.r contents refers either directly or indi-
rectly to any other persons than the immediate parties thereto.
Tliese ])arties are Kaufmann & Ulun. the guarantors, Feigelstock,
the princi])al, and Bingham Bros., the ]ir(jmisees.

It has been said that the allusion in the letter to the word
"drafts" implies the negotiation of these instruments to third
persons. This idea we think is not necessarily or generally con-
veyed by this expression.

Drafts, as used in the collection of debts, are not usually
negotiable. The ofhce of a draft is to collect for the drawer from
the drawee, residing in another ]:)lace, money to which the former
may be entitled, either (ju acctjunt of balances due or advances
upon consignments, ar.d although they may sometimes be used
for raising money, that is not the necessary or ordinary ])nr])ose
for whicli they are emj^loyed.

We might, therefore, well hold that no such doubt or uncer-
tainty appears u]x)n the face of this guaranty as entitles the plain-
tiff to furnish extrinsic evidence to determine its signification.

The plaintiff, however, claims the right to resort to such
evidence to show that the defendants intended or that it had tlie
right to infer that their guarant\- was intended for such per.sons
as should advance money upon liingham Bros.' drafts before their
acceptance by beigelstock.

EVANSVILLE BANK VS. KAUFMANN. 69

Some controversy appears by the cases to have formerly ex-
isted in respect to the rii! : governing the courts in the construction
of guaranties, whether that should apply which entitled a surety to
have his contract strictly construed, or that imposing upon a party
using the language the liability of having it interpreted most
strongly against him, l)ut the weight of authority now seems to
favor that construction which shall accord with the apparent in-
tention of the parties, in conformity with the rule governing the
construction of contracts generally. Riiidgc v. Jiidson, 24 N. Y.
70: Gates V. McKcc, supra: Dobbin v. Bradley, 17 Wend. 422.

But when the meanmg of the language used in a guaranty
is ascertained, the surety is entitled to the application of the strict
rule of construction and cannot be held beyond the precise terms
of his contract. Gates v. McKec, 13 N. Y. 232; People v. Chal-
mers, 60 id. 158; Kingsbury v. Westfall, 61 id. 356.

When, therefore, the language of a guaranty is ambiguous
and does not furnish conclusive evidence of its meaning, we
are entitled to look at all of the circumstances of the case and
arrive at the intention of the parties from these sources of inform-
ation. Agawavi Bank v. Strever, 18 N. Y. 502; Brandt on Sure-
tyship, 106; JValrath v. Thouipsou, 4 Hill, 200; Fell's Law of
Guaranty. 43; Gates v. McKee, supra; Keate v. Temple, i B. &
P. 158; Springsteen v. Samson, 32 N. Y. 703; Karuiuller v.
Krots, 18 Iowa, 352; Hasbrook v. Paddock, i Barb. 637.

Assuming, therefore, that there is an ambiguity in this letter
requiring explanation, we will examine the case in the light of
the general principles which have been stated.

The action is based upon two drafts made by Bingham Bros.,
of Evansville, Ind., upon A. Feigelstock, of New York, and pay-
able respectively, one for $5,000 sixty days after date, and one
for $2,500 fifteen days after sight. These drafts were discounted
by the plaintiff at its bank in Evansville, at their respective dates,
and the proceeds duly paid to Bingham Bros. Each of them was
afterward duly protested for non-acceptance and non-payment
by Feigelstock. These drafts belonged to a series of similar char-
acter discounted by the plaintiff for Bingham Bros., and were the
only ones remaining unpaid by Feigelstock at their maturity.

At the commencement of this course of business Bingham
Bros, produced to and left with the plaintiff the letter of credit
upon which this action is founded, and it was delivered as security
for the amount intended to be loaned upon such drafts. •

70 ' GUARANTY AND SURETYSHIP.

Xo bills of lading or consignments of property by Bingham
Bros, to Feigelstock accompanied the drafts, and that for $5,000
appeared upon its face to be an accommodation draft. No notice
of these transactions was ever given to the defendants, and it did
not appear that they had any knowledge of the several discounts.
The letter expressing the guaranty upon which the action is
brought is as follows :

"New York, December 29, 1874.
"Messrs. Bingham Bros., Evansville, Ind. :

"Dear Sirs — Any drafts that you may draw on Mr. A. Feigelstock, of
our city, we guarantee to be paid at maturity.

"Yours truly,

"Kaufmann & Blun."

While the letter will be seen to be couched in broad and
indefinite terms with respect to the number, amount and char-
acter of the drafts referred to, Bingham Bros, alone are addressed.
However general may be the description of the subjects guaran-
teed, the number of persons authorized to accept its terms is not
thereby enlarged.

The letter is subject to all of the limitations expressed there-
in, and also to such as may fairly be implied from its language,
and the natural course of business transactions between its sev-
eral parties. General letters of credit are, from necessity, deliv-
ered to the persons who expect to profit by their aid, and are
intended to be exhibited by them wherever and whenever assist-
ance is required. The fact of the possession of a letter of credit
by a person froin whom credit is sought militates against its gen-
erality. The absence in this letter of any assurance that the drafts
specified should be accepted on presentation seems to imply that
sight drafts alone were contemplated by the parties.

So too the absence of any reference to the consideration of
this guaranty is significant, and would seem to suggest to a
prttdent man the propriety of an incjuiry into the situation of
the parties, and the nature of the business in which the guaranty
was to be used before advancing largely upon the faith thereof.
Such an investigation would have enabled the plaintiff to see that
it was not justified in drawing the inference which it claims to
have done from the language of this instrument.

Bingham Bros, resided and were manufacturers of spirits at
Evansville, in the State of Indiana, remote from the guarantors
and the 'drawee of the drafts. Feigelstock was a merchant resid-

EVANSVILLE BANK VS. KAUFMANN. 71

ing in New York engaged in the business of receiving and selling
on commission, goods consigned to him by third parties.

The plaintiff was a bank doing business in the State of In-
diana, and the defendants were merchants in the city of New
York. At the date of the guaranty these various parties were
strangers to each other, except that the plaintiff and Bingham
Bros, resided at the same place, and had previously had business
transactions together. There is no evidence as to the relations
existing between the defendants and Feigelstock, but it is claimed
in the answer and was offered to be proved on the trial that they
were strangers to each other, and that the guaranty was given
by the defendants as a favor to a person who was in their empl6y,
and who was a relative of Feigelstock.

There would seem to be no motive reasonably inferable from
such a situation and relationship sufficiently powerful to induce
the defendants to lend their unlimited credit for the benefit and
advantage of Bingham Bros, alone. The contention of the plain-
tiff leads to the proposition that it had a right to infer that Bing-
ham Bros, were authorized by the defendants to go to any place
and with any person contract to bind the defendants for unlim-
ited sums. Under such a construction the defendants could never
revoke this authority, for it would be practicelly impossible to
reach by notice all of the persons who might be applied to for
advances vipon this letter.

To uphold this judgment we are required to hold that the
plaintiff had the right to infer from the language of the letter,
and the circumstances of the case, that the defendants, without
any apparent motive for so doing, had clothed Bingham Bros,
with irrevocable authority to use their names in borrowing money
at remote and multiplied points, for unlimited amounts and unre-
stricted periods of credit.

Certainly, if the plaintiff' believed this, it was not justified
in placing much reliance upon the continued responsibility of per-
sons transacting business in so reckless a manner.

A transaction of such a character would be so improvident
and unnatural that to establish it in any case should require the
strongest evidence, but especially so when it is claimed that such
powers have been conferred upon entire strangers.

The unnatural confidence in others, and the careless assump-
tion of obligations which such a course of business w^ould im-
ply, is so unusual as to justify the requirement that if such an

72 Gl'ARAXTV AXn SURRTYSIIIP.

authority was inimded to be conferred it should have l)een ex-
pressed in clear and unequivocal language.

It is obvious that neither Feigelstock nor Kaufmann & Bhm
could have derived any benefit or advantage from tlie discount
of bills whose proceeds were, as appears from the face of the
transaction, intended for the sole use of Ihngliam IJros.

Even if the relation of consignor and consignee existed
between Bingham Bros, and Feigelstock, we do not think the
usual course of business between such ])arties justifies the assump-
tion that the use of accommodation paper for either limited or
unlimited amounts is the necessary or usual accompaniment of
such a connection. ( )n the other hand, if we consider this letter
as intended to furnish a credit to Feigelstock with the manufac-
turers and consignors of property in which he dealt, it would sat-
isfy the apparent object of the letter, an.d the transaction would
assume a natural and reasonable character such as pertains to the
ordinary and usual course of business among commercial men.

There would necessarily be a limit to such a course of busi-
ness, and the liability of the defendants would be modified by
the transfer of property to correspond with the amount of tiie
obligation assumed, and creating a liability which might be safely
and reasonably incurred. Of course, if the defendants have
signed a guaranty, either general or special, upon a sufficient con-
sideration, by which thev have uncpialifiedly promised to become
liable for the ])ayment of all such drafts as Bingham Bros, might
thereafter draw on Feigelstock, their liabilty, however compre-
hensive, would not be aft'ected by its imprudence. But such is
not the contract under consideration.

We are, therefore, of the opinion, from the fact that the letter
was addressed to I'ingham Bros, alone, the absence of any allusion
to its consideration or the negotiability of the drafts therein re-
ferred to, and a consideration of the situation and relation of the
parties, that the intention could not fairly be imputed to the
defendants of making the guaranty contained in the letter general
and open for acceptance by any one who might choose to comply
with its terms.

We have been unable to find any case which cither requires
or authorizes the classification of this letter as a general guar-
anty. In each of the numerous cases cited in which the instru-
ment considered was held to be a general guaranty, it w^as either'
addressed generally or the guaranty contained inherent evidence

EVANSVILLE BANK VS. KAUFMANN. 73

that it was intended to be used in obtaining credit wherever it was
needed.

We have thus seen that no cause of action accrued to the
plaintiff upon the g-uaranty, for the reason that it is a special
guaranty upon which the party addressed alone could act and
acquire a cause of action. Some confusion has arisen in the
consideration of this case from an omission to regard the obvi-
ous distinction existing between a cause of action accruing to the
plaintiff in its own right, upon the discount by them of such
drafts, and one arising in favor of Bingham Bros, either prior
to or simultaneous with svich discount of which the plaintiff now
seeks to avail itself as their equitable assignee. Different consid-
erations are required to support these different contracts. The
court below reversed the judgment entered upon the report of
the referee in favor of the defendants upon the grounds stated in
the opinion as follows : "In the view insisted upon by the respond-
ent the letter of credit in question in this case was a special letter
or promise to Bingham Bros. In that view it was a valid contract,
for it would be so read by the law as to supply the consideration
so far as. necessary under the former statute of frauds. Tf you
will draw on him I will guarantee that any draft you may draw
on Mr. A. Feigelstock of our city will be paid at maturity,' or it
would be regarded an original promise under the case of Gates v.
McKee, 13 N. Y. 235, and the defendants held to the established
construction of such instruments."

The court here seems to imply that there are two grounds
upon which the action could be maintained, viz. : Ijecause the
promise was an original as distinguished from a collateral one,
and secondly, because a cause of action accrued to Bingham Bros,
upon making the drafts in suit, and that cause of action passed
to the plaintiff as their equitable assignee by the delivery of the
letter to them, and their discount of the drafts. We do not think
that either of these grounds can be sustained.

It is entirely immaterial whether this guaranty be regarded
as an original or collateral contract. Both equally required a
consideration to support them, and the distinction between theln
is important only as affected by the statute of frauds, a collateral
contract to pay the debt of another being required by that statute
to be in writing, while an original undertaking is valid even if
made l)y parol. No question arises respecting the validity of this

74 GUARANTY AND SURr-lTYSHIP.

promise, except in regard to its want of consideration. If, there-
fore, we could call this an original undertaking, the promise hav-
ing, as we have seen, been made to Bingham Bros, alone, it still
lacks the indispensable requirement of a consideration to sup-
port it.

This consideration must be proved, and a presumption of its
existence can no more be indulged in to support the action than
the presumption of any other fact material to the existence of
a cause of action. Commercial and business paper generally
specifies a consiaeration upon its face, and a defense thereto on
the ground of a want of consideration must be supported by
affirmative proof of such fact, but when the paper itself does not
state a consideration the omission must be supplied by affirmative
proof on the part of the holder, or he cannot recover thereon.
(I Parsons on Contracts, 175.) No consideration is referred to
in this letter, and tlie drafts are the act of Bingham Bros, alone,
and are evidence of no fact stated therein as against any one,
except the drav.ers. But even the drafts do not purport to be
drawn for value.

Jn ever}' aspect in which this transaction can be regarded
Bingham Bros, appear as the makers of the drafts for their own
accommodation, and as such personally liable to all who thereafter
become parties thereto.

We have no difficulty in regarding the plaintilT as the equi-
table assignee of any cause of action existing against the defend-
ants in favor of Bingham Bros. As has been already stated, if
any such cause of action arose, it was assignable and must be con-
sidered to have passed to the plaintiff by the delivery of the guar-
anty and the payment by it of the proceeds of the drafts to Bing-
ham Bros. It thereby became the equitable owner of such cause
of action and of such an interest in the letter of credit as would
enable it, under our Code, to maintain an action against the
defendants. But the question is presented, did any such cause of
action ever arise? We have been unable to discover any ground
upon which such a claim can be plausibly sustained. The letter
certainly contains no reference to any consideration received by its
writers, and the proof shows none advanced by Feigelstock to
them or by Bingham Bros, to either Feigelstock or the guarantors.

Upon the very face of the transaction Bingham Bros, drew
their drafts for their own benefit and contemplated the acceptance
by Feigelstock for their accommodation. Taking the strongest-

EVANSVILLE BANK VS. KAUFMANN. 75

view against the defendants which the case is susceptible of, they
occupied simply the position of proposed accommodation guar-
antors of the contemplated accommodation acceptor of Bingham
Bros." drafts; and it certainly cannot be claimed that they thereby
incurred any liability to the party for whose accommodation they
had guaranteed such obligations. Atkinson v. Manks, i Cow.
692; I Parsons on Contracts, 184; Tliuniiaii v. Van Brunt, 19
Barb. 409 ; Daniel's Negotiable Instruments, § 189. Even if the
letter of credit be read as paraphrased by the court below, it falls
far short of establishing a consideration moving to the defendants.
It cannot be seriously claimed that a proposition, either writ-
ten or oral, made by one person to another, agreeing to guarantee
the payment of any draft which the other might draw, furnished
a sufficient consideration for the promise. Such a request is im-
plied in all accommodation papers as between the parties thereto,
and if this were held to import a sufficient consideration, it would
destroy all distinction between accommodation and genuine busi-
ness obligations. But this letter of credit, as read by the court
below, would not confer a cause of action upon third parties, even
if it had been addressed to them, without proof that they had
parted with value upon its faith. In all of the cases cited where
guarantors have been held liable, even to third persons, upon such
instruments, the letter embraces either an express or implied re-
quest to such persons to advance value upon the faith of the paper
therein descrilDed, and it is because they have parted with value
upon such request that the liability of the promisor to them is
predicated. If no liability is incurrred in favor of a third party
unless he has parted with value, much less can it be claimed that
it is in favor of an original party to the contract, from whom, as
is shown affirmatively, no consideration whatever proceeded. We
are, therefore, of the opinion that the plaintiff is not entitled to
maintain this action.

The order of the General Term should be reversed, and the
judgment rendered upon the report of the referee affirmed.

All concur, except Danfortpi, J., not voting.

Order reversed, and judgment affirmed.

Note. — That part of the opinion commenting upon and distinguishing certain cases
is omitted.

76 GUARANTY AXn STRKTYSinP.

Singer Man'fc. Co. i's. Litti.kr ct al. (1881).
56 la. 601 : 9 X. W. 905.

Api^cal from Wapello circuit court.

Action at Law. The cause was tried to the court below
without a jury, and judgment was rendered for defendants.
Plaintiff a|)peals. The facts of the case appear in the opinion.

/;. F. Miller ixnd II. />. J IcwJrrshott, for appellant.
//'///. McXctf. for appellees.

Beck, j. 1. The action is upt)n a bond executed by Littler
as principal, and the other defendants as sureties, conditioned
that Littler shall pay to plaintiff all his indebtedness to it, existing
or afterwards to exist, whether upon notes, accounts, or in any
other manner. The petition alleges that Litder became agent of
plaintiff for the sale of sewing machines, and the bond in suit was
executed when he was appointed, to secure plaintiff from loss that
might accrue on account of his employment. The petition alleges
that Littler became delinquent in his payments and executed a
note to ])laintiff, uj^on which a judgment was aftenvard rendered
for the amount of his indebtedness. The sureties answered the
petition, alleging that Littler and the plaintiff entered into an
agreement whereby Littler became plaintiffs agent, and became
bound to pay to plaintiff money upon the sales of sewing machines,
or upon the indorsement of paper taken upon such sales, as stipu-
lated in the agreement. The agreement provides diat either party
may terminate the contract at their pleasure. Other conditions
need not be set out.

The answer further alleges that i)laintiif had terminated
Littler 's agency before the note was executed by him, and that
the defendants had no notice at any time that Littler was in de-
fault, or that any claim was made by plaintiff against them upon
the bond. Upon a demurrer to this answer, the court held that
the defendants were entitled to notice of the amount due from
Littler within a reasonal)le time after the settlement between him
and plaintiff. The court found iipnn the trial that no such notice
was given to the defendants, wherefore they suffered loss, and
that plaintiff', therefore, is not entitled to recover.

2. The controlling question in the case, and the only one
argued by counsel, involves the correctness of the court's ruling

SINGER MFG. CO. VS. LITTLER. ti

in holding that defendants are not hable for the reason that notice
was not given them of the extent of Littler's hability within a
reasonable time after his agency was terminated, and his indebt-
edness fixed by his settlement with plaintiff. The ruling of the
court, we think, is correct, and in accord with Davis Sczviiig
Machine Co. v. Mills, 8 N. W. 356. We held in that case, "where
the guaranty is a continuing one, and the parties must have under-
stood their liability thereunder would be increased and diminished
from time to time, and the guaranty is uncertain as to when it
will cease to be binding upon the guarantor, and when the party
indemnified has the power at pleasure to annul and put an end
to the contract guarantied, without the knowledge of the guaran-
tor, he is entitled to notice, within a reasonable time after the
transactions guarantied are closed, of the amount of his liability
thereunder." It will be observed, upon considering the statement
of the terms of the contract guarantied as above set out, that they
are within this rule, and diat under it the defendants in this case
are not liable, in the absence of the notice contemplated therein.

3. But counsel for plaintiff, in an ingenious argument, at-
tempt to distinguish this case from Davis Scicing Machuic Co. v.
Mills. They insist that while the contract in that case was a guar-
anty, in this case defendants are not guarantors, but are sureties
for Littler, and are jointly liable with him upon an original con-
tract. The error of this position is apparent. Littler was or
was about to become indebted to plaintiff" upon the coutract under
which he was appointed agent. Defendants were not bound upon
that contract. Neither were they bound upon the notes, accounts,
acceptances, or upon any contract upon which Littler became in-
debted to plaintiff'. They became first and only bound upon the
bond, whereb}- they guarantied that Littler would pay his indel^t-
edness to plaintiff' in whatever form it assumed. A guarantor
becomes bound for the performance of a prior or collateral con-
tract upon which the principal is alone indebted. A surety is
bound with the principal upon the contract under which the prin-
cipal's indebtedness arises. This is a familiar doctrine of the law.
Upon applying it to the facts of the case, it will be seen that de-
fendants are guarantors, and not sureties, for the performance of
the contract upon which Littler's indebtedness to plaintiff' arose,
Thev were therefore entitled to notice under the rule of Davis
Sewing Machine Co. v. Mills.

78 GUARANTY AND SURETYSHIP.

Jt nvAV be observed tbat guarantors are often called sureties.
We use the term "sureties" in ihe foregoing discussion, to describe
one who is bound by a contract with his principal — who joins
with his principal in the execution of the contract, and becomes
pecuniarly liable thereon. But, as we have seen, a guarantor —
the suretv in a contract of guaranty — is not primarily liable upon
the principal's contracts, and only becomes liable upon his default.
A guarantor, under this rule, is entitled to notice of the amount of
his liability within a reasonable time after that liability is deter-
mined by the transaction between the original debtor and creditor.

It is our opinion that the judgment of the circuit court ought
to be affirmed.

Tayt.or et al. z>s. Wl•.T^roRK et al. (1841),
10 Ohio 491.

This is an action of assumpsit from the county of Portage.

The declaration contains two special counts. In tlie first, it is
averred that one C. D. Farrar, on November 26, 1836, being
desirous of purchasing a general assortment of goods in the city of
Pittsburg, for a retail country store, on a credit, and being unknown
to the business men of said city, applied to the defendants, Messrs.
Wetmores, then doing business at Cuyahoga Falls, in Portage
county, for a general letter of credit, directed to some one or more
of their correspondents in the said city of Pittsburg, by means of
which the said Farrar might be enabled to make his purchases ; and
the said defendants upon such application, made and delivered to
Mr. Farrar a letter of credit, or written guaranty, addressed to
Messrs. A. D. McBride & Co., merchants in Pittsburg, in the w^ords
following : .

"CuvAHOG.A. Falls, November 26, 1836.
"Messrs. A. D. McBkioe & Co.

"Gentlemen: Mr. C. D. Farrar has concluded to purchase a few
goods; we have that confidence in Mr. l'"arrar, that we will say that we
will be responsible to the amount of $2,000 for goods delivered him.

"We are truly,

"C. W. & S. D. Wetmore."

TAYLOR VS. WETMORE. 79

And which said letter^ the plaintiffs aver was taken by Mr.
Farrar, and presented to Messrs. McBride & Co. at Pittsburg, who
retained it, as security for themselves and such other merchants in
the said city, as should, at that time and on the faith of said guar-
anty, sell goods on a credit to the said Farrar.

It is also averred that jMr. Farrar was unable to obtain a gen-
eral assortment of goods from the house of the Messrs. McBrides,
whose business was confined to that of grocers, and therefore he
made application to the plaintiffs, upon the strength of the said
guaranty, then in the hands of McBride & Co. referring the plain-
tiffs to the house of McBride & Co. and to the said guaranty ; that
the plaintiffs did in fact call upon McBride & Co., examined the
letter of credit, and being satisfied with their statements in regard
to the responsibility of the defendants, and of the guaranty, in con-
sideration thereof, sold and delivered to Mr. Farrar, upon a credit
of six months, a bill of dry goods, amounting to $760.75 ; of all
which the defendants had due and timely notice. The plaintiffs
then aver that the credit has expired, and that Farrar has omitted
to pay, etc.

The second count states that on November 6, 1836, etc., in con-
sideration that the plaintiff's at the special instance and request of
the defendants, would sell to said Farrar, on credit, all such goods
as said Farrar should have occasion for and require of said plain-
tiffs in their trade and business of wholesale dry goods merchants,
they, the defendants, undertook and promised to pay the plaintiffs
therefor ; this count then avers the sale and delivery of goods to the
amount of $760.75. on a certain credit, agreed upon between the
parties, that the credit had expired, that Farrar had not paid, of
wdiich the defendants had notice ; avers their liability, and breach
in the non-payment.

To this declaration the defendants filed tb.eir plea of the gen-
eral issue.

The testimony submitted on the part of the plaintiff's, proves :
I. The execution and delivery of this mercantile guaranty, as set
forth in the first count of the declaration ; and 2. That a few days
after its date, it was handed to the firm of McBride & Company,
who not being dealers in dry goods, the witness (who was a part-
ner of the last mentioned firm), went with Mr. Farrar to the plain-
tiffs, and the said guaranty was shown to ^Ir. Taylor, one of the
plaintiffs ; the witness stated to Mr. Taylor, that he had sold a bill
of groceries on the strength of the letter, and Mr. Taylor then said

80 GUARANTY AND SURETYSHIP.

he would sell a bill of j^oods on the strength dt the same, and Mr.
Farrar accordingly obtained the goods, 'ihe clerk and salesman
of the plaintiffs prove tlie amount of the goods sold to be $760.75,
and on a credit of six months.

The evidence on the part of the defendants proves that Farrar
was in business at Cuyahoga Falls from December, 1836, until
April or May, 1837, when he transferred all his goods to the de-
fendants, and closed his store. That he paid none of his debts n.
Pittsburg. That in September. 1837, the witness was present at a
conversation between Taylor, one of the plaintiffs, and C W. Wet-
more, one of the defendants, in which the defendant asked Taylor,
if he considered him responsible, either legally, morally, or honor-
ably, for the goods h^arrar had purchased of him. To which Taylor
replied he did not, but that the defendants had more goods in their
possession, received of Farrar, than they were holden to the house
of Mc Bride for; that the goods would amount to $500 or $700.
To this the defendant replied he did not know how that was ; that
there was also left with them, l)y b^arrar. notes and accounts to
the amount of about $200, and what they could not make up out
of them, must be made up out of the goods; and if there was any
balance, so far as he was concerned, that should go to the plain-
tiffs.

Richard, for the ])laintitls.

Wood. J. Under the averments in the declaration, and the
testimony submitted, are the jilaintiffs entitled to judgment? — and
I may here remark, in the outset, in ibis case, that 1 know of no
arbitrarv rule applicable to actions ft)unde(l ui)on mercantile guar-
anties, w hich creates obligations between the parties to w hich they
have neither expressly nor impliedly assented. Tn all actions
founded in contract, the agreement as set forth nnist be proved, or
the circumstances existing between the parties must be such as to
leave it clearly to be inferred. In enforcing them, courts of justice,
though thcv may sometimes be confined l)y technical rules, always
endeavor to ascertain ihe understandings and intentions of the
parties, and these are considered as the essence of their agreements
in carrving them into execution. Mercantile guaranties are either
general or special ; though a single letter of credit may bear upon
its face both of these distinctions. It may be general, as to the
whole world, to whom the bearer may be accredited, and to any
portion of whom, at his own option, he may make the guarantor

CLARK VS. KELLOGG. 81

a debtor, and special, as to the amount of the credit; or unlimited
or general in the amount, and special as to the parties.

The first inquiry which arises here, is, whether the guaranty
in question is not special as to persons. It is directed to the house
of McBride & Co., in the city of Pittsburg, and nothing upon its
face evincing an intention to give Farrar credit, or to incur respon-
sibility with any other house.

The counsel for the plaintiff here admit, that a surety can not
be held beyond the terms of his engagement, but they insist that|
although it is addressed only to AIcBride & Co. as it does not say
"we will be responsible to you/' it is a letter of credit to any other,
who will advance the goods. It seems to us, this reasoning is more
ingenious than sound. The guaranty being addressed to A. D.
A'IcBride & Co., it is to them the defendants speak when they sa\-,
"zve zvill be responsible to the amount of $2,000," and it contains
no general terms, by which either Farrar, or the house of McBride,
had the authority to transfer it to the plaintiffs, and they to make
the defendants their guarantors, without their assent, express or
implied.

Judgment for the defendants.'^

Clark et al. z's. Kellogg (1893).
96 Mich. 171 ; 55 N. W. 676.

Thomas A. IVilson, for appellants.

Blair & Wilson and Parkinson & Day, for defendant.

Montgomery, J. The plaintiff's sued the defendant, counting-
upon a breach of an agreement given on the occasion, and in con-
sideration, of the purchase by the plaintiffs from the defendant of
a stock of goods and a quantity of notes and accounts. That por-
tion of the agreement material to be considered in determining the
questions involved reads as follows :

"The said party of the first part * * * does covenant and agree * * *
that the annexed invoice is a true statement of the amount and value of
stock, merchandise, and property, and also guarantee, represent, and war-

'The other points touched upon in the opinion are omitted.
7

82 GUARANTY AND SURETYSHIP.

rant that there is in said stock goods to the value of $14,709.68; also that
the amount of $29,702.54 net shall be realized, without charging for the
personal services of the parties of the second part, nor other charges of
second parties, except incurred in suits, by the parties of the second part,
upon the accounts and notes herein conveyed. Tlie parties of the second
part shall use due diligence in their collection."

The declaration counted upon this agreement, and set out no
subsc([uent modification or waiver of its terms. On the trial the
plaintiffs sought to recover by showing that they had dealt with
the accounts as men of ordinary business judgment would, and also
sought to show that the defendant had, as to a large portion of the
accounts, directed the plaintiffs as to what he would require as
evidence of due diligence, and that the plaintiffs had C()m])licd with
the demands of the defendant in this regartl.

1. The circuit judge construed the original contract as amount-
ing to a guaranty of collection, and held that no showing of dili-
gence was sufficient whicli did not inchide ])r()of that the accounts
had each l)een put in judgment, and execution had been taken out,
and returned unsatisfied. This ruling was unquestionably right,
if the proper construction was placed on the contract. Bosnian v.
Alceley, 39 Mich. 710: Schcrincrhorn v. Conner, 41 Id. 374.

It is contended, however, that the contract in (picstion should
not l)e construed as a guaranty of collection of each individual
accottnt, reqtiiring resort to legal process in the collection of each,
but amounted to a warranty and representation that there should
be realized $29,702.54 from the total of the accounts ; and that the
fact that the amount guaranteed to be realized was much less than
the face of the accotmls negatives the idea that resort should be
had to suit np^m each account^ The infirmity of this con-
struction is that it ignores the sul)se(|uent language, "The parties
of the second part sliall use due diligence in their collection," or
accords to this language a meaning at variance with the settled sig-
nificance of the terms emi^loyed. What constitutes due diligence
is settled b\- the cases of Bosnian v. .Ikclcy and Sclwnncrlioni v.
Conner, snpra.

In the case of Kalfh v. Jildrcdgc, 58 Hun. 203, a similar qties-
tion was presented. Plaintiff and defendant were co-partners.
Defendant conveyed his interest to the ])laintiff' in the notes,
accounts and demands owing to the firm. The defendant at the

'Counsel cited Taylor v. Solder. 53 Midi. 06; Koch v. Mclhorn. 25 Penn. St. 89;
Stntthers v. Clark, 30 Id. _mo.

DOVER STAMPING CO. VS. NOYES. 83

same time executed to the plaintiff a bond with the condition tliat
defendant should pay to the plaintiff" one-half of the amount of the
notes, accounts, and claims of the late firm assigned by defendant
to plaintiff that should prove to be uncollectible, if any such there
should be. The court say :

"It seems to be settled in this state that a guaranty of collec-
tion is an undertaking to pay the sum of money guaranteed, pro-
vided the principal debtor is prosecuted to judgment and execution
with due diligence, and the same cannot be collected of him. * * *
The plaintiff' urges that the bond does not guarantee the collection
of these claims, but is only a contract to pay plaintiff one-half of
the amount of those which should turn out bad. But the bond
uses the word 'uncollectible,' and the question must be, what is
the legal meaning of that word? That word has a definite mean-
ing, as decided in the cases above cited ; and that meaning should
be here enforced."

The legal signification of the term "due diligence," as applied
to a guaranteed note or account, is well understood, and the parties
must be assumed to have contracted with reference to that meaning-.

2. The court rightly held that the alleged subsequent waiver
could not be shown under the pleadings in this cause. The con-
tract itself having fixed upon the plaintiffs a specific duty, the aver-
ment in the declaration that the plaintiff's did use due diligence
amounted, in effect, to an averment that they had pursued the
■course which the law imposes upon them in order to charge the
guarantor. If they relied on any excuse for failing to use due
diligence, this should have been counted upon in the declaration.
Aldrich v. Chubb, 35 Mich. 350.

Judgment afiirmed, with costs.

The other Justices concurred.

Dover Stamping Co. z's. Noyes (1890).

151 Mass. 342; 24 N. E. 53.

Appeal from Superior Court, Suffolk county.

Action by Dover Stamping Company against B. B. Noyes to
recover $210.20 and interest for goods sold and delivered by plain-

84 GUARANTY AND SURETYSHIP.

tiffs to ¥. W Field & Co., the payment of which plaintiffs claim
was guarantied by defendant. The guaranty relied on is contained
in the following correspondence:

"Boston, Mass., U. S. A., Nov. i8, 1887.
"Messrs. B. B. Noyes & Co.

"Gentlemen : We liave recently become acquainted and opened trade
with Messrs. 1\ P. Field & Co., who seem to be good fellows, without
much money, but claim to be backed by you. Will you kindly tell us if
this is so, — if we can consider you as having responsibility for their debts,
or intending to see that they are paid. Your truly.

"Dover St.ami'ing Co. C. D. F."

"Greenfield, Mass., Nov. 21, 1887.
"The Dover Stamping Co., Boston, Mass.

"Gentlemen : We have your favor of the eighteenth instant, relating
to the firm of F. P. Field & Co. As Mr. Noyes is away, writer cannot
say what arrangement he has made with them as to being responsible for
their bills, but should presume they would not misrepresent any arrange-
ment they may have with him. ^Ir. Noyes has helped this firm some in
starting, and considers them good, honest, hard-working fellows, who
will be likely to meet their bills. Yours respectfully,

"B. B. Noyes & Co. Jones."

"Boston, Mass., U. S. A., Nov. 22, 1887.
"Messrs. B. B. Noyes & Co.

"Gentlemen : Your favor of the twenty-first instant is at hand. We
are obliged to you for your attention to our request, and glad to hear
that Alessrs. F. P. Field & Co. stand so well with you. We would, how-
ever, like to hear from Mr Noyes on his return. It is needful for us to
know whether the statement of the young men is correct or not, as, leav-
ing out the question of misrepresentation, they evidently have not enough
of the 'sinews of war,' of their own, to carry on business successfully,
however competent and energetic they may be. Your truly,

"Dover .Stampixg Co. C. D. F."

"Greenfield, AIass., Nov. 28, 1887.
"Dover Stamping Co., Boston, Mass., North Street.

"Dear Sirs : Answering yours of 22d, I am assisting F. P. Field & Co.
in a small waj', financially, and in a measure directing their efiforts ; and
1 have advised them to pay their bills promptly at maturity, and. if they
find they are unable to do so at any time, to let me know. I think they
will follow my advice in your case. If they fail to. jilcase let me know,
and I will see that you are taken care of. B. B. Noyes."

"Boston, Mass., U. S. A., Nov. 29, 1887.
"Messrs. B. B. Noyes & Co.

"Gentlemen: Your esteemed favor from Mr. B. B. Noyes, in person,
is received. We are much obliged for x\u- assurance given us regarding

DOVER STAMPING CO. VS. NOYES. 85

Messrs. F. P. Field & Co., and, on the strength of it, will be glad to con-
tinue the trade. Yours truly,

"Dover Stamping Co. C. D. F."

There was judgment for plaintiff. Defendant appeals.

E. Mcnvin, for plaintiff.

Greene & Griszvold, for defendants.

Knowlton, J. The decision of this case depends on the
proper interpretation of the correspondence relied on hy the plain-
tiff corporation as showing a continuing guaranty by the defend-
ant that F. P. Field & Co. would pay at maturity any debts they
might contract in their dealings with the plaintiff'. If these letters,
fairly construed, authorized the plaintiff" to sell goods to Field &
Co. from time to time, to be paid for by the defendant if not paid
for by the purchasers, the plaintiff" is entitled to recover. The
plaintiff's first letter was manifestly written in reference to pos-
sible future transactions. It says that the corporation has recently
"opened trade" with Field & Co., and refers to their representation,
apparently made with a view to obtaining credit. The inquiry
relates to the subject of legal liability. The defendant is asked
whether he will be responsible for their debts, or will see that the
debts are paid. Upon receiving the letter of November 21st, writ-
ten by the defendant's clerk, in his absence, and containing a
recommendation of Field & Co., the plaintiff", by its letter of
November 22d, said, in effect, that it was not content with a recom-
mendation! but wanted an explicit answer to its former letter.
Thereupon the defendant wrote the letter of November 28th, stat-
ing that he was financially assisting Field & Co., and promising
to see that the plaintiff" was "taken care of," if notified that Field
& Co. failed to pay their bills promptly at maturity. This can
hardly be construed as anything less than a promise to pay if the
principal debtor did not. It also had reference to bills to be con-
tracted in the future ; for it was written in answer to the plaintiff's
questions, and Field & Co.'s possible inability to pay promptly was
spoken of as something which they might discover "at any time."
If it was necessary to give notice of the acceptance of a guaranty
g-iven in this way, which we do not intimate, the plaintiff by its
letter of .November 29th accepted it, and notified the defendant
that it would continue the trade on the strength of it. Here we
find all the elements of a valid, continuing guaranty ; and it is
agreed that on the faith of it the plaintiff' sold goods which never

86 GUARANTY AND SURETYSHIP.

have been paid for, of which the defendant has had due notice.
Upon the ai;-reed facts, the plaintiff's case is made out. Paige v.
Parker. 8 Ciray, 211; Beitt v. Hartsliorji, 1 Mete. 24; Jordan v.
Dobbins, 122 Mass. 170.

Judgment for the plaintiff.

E. A. Sherburnr vs. ]. W. Buti-F-k P.nprr Co. (i8gi).
40 Illinois App. 383.

E. A. Sherburne, pro sc.

Messrs. McClcUan fr Cummins and Lemuel II. Poster, for
appellee.

Waterman, J. The evidence in this case was that appellant
gave to appellee the following guaranty :

GUARANTY.

"In consideration of one dollar ($1.00) to me in hand paid by the
J. W. Butler Paper Company, of Chicago, Illinois, the receipt whereof is
hereby acknowledged, and for other good and valuable considerations, I
hereby guarantee to the said J. W. Butler Company the payment, at
maturity, of any bills of account due them for merchandise hereafter
from time to time sold ami delivered by them to the Eureka Roofing
Company, of Chicago, whether sold on open account or on notes to the
amount of $30, on twenty days' time.

"And 1 hereby authorize the said J. W. Butler Paper Company to
extend the time of payment in any manner that may be agreed upon be-
tween them and the said Eureka Roofing Company, without any notice
to me, and no such extension of time of payment shall affect my liability
on this guaranty.

"This said guaranty to remain in full force and effect until revoked
by me in writing.

"Witness my hand and seal at Chicago, this 9th day of December,
A. D. 1884.

(Signed) • "E. A. Sherburne, [seal]

"lis Monroe St."

That thereafter appellee deliveixd roofing fell lo the luireka
Roofing Co., and charged to it upon its books such goods to the
amount of $51.40.

Appellee also introduced, without objection, a letter, purport-
ing to be signed by a])pellant, stating that he had a note from Mr.

SMITH VS. VAN WYCK.

Fuller of the Roofing Co.. "to the effect that he had arranged that
$27.65 of the J. W. Butler Paper Co." The original entry book
of the Paper Company, showing the charges, was introduced with-
out objection. The bill had been repeatedly presented to the Roof-
ing Company.

The guaranty was a continuing one. It distinctly guarantees
the payment, not of one bill or specified bills, but of any bills to
the amount of $30. Brandt on Suretyship and Guaranty Sec. 130;
Loive V. Beckzvith, 14 B. Monroe (Ky. ) 150; Murray v. Raynor,
22 Pick. 223.

The only evidence of the payment of anything l)y the Roofing
Company was contained in the bill presented to it for payment.

The finding and judgment for $27.50 of the court below was
in accordance with the law and the evidence, and the judgment is
affirmed.

Judgment affirmed.

Smith et al., Appellant, vs. Van Wvck, Respondent., (1890),

40 Mo. App. 522.

Jcitkiiis & J Veils, for appellant.
C. O. Tichenor, for respondent.

Smith, P.J. * * * The plaintiffs sued defendant upon this

undertaking :

"Kansas City, Mo.. July, 1885.
"I hereby guarantee the payment of bills as they mature, purchased
by E. S. Mendenhall, of R. P. Smith & Sons, of Bloomington, Illinois,
to the amount of thirteen hundred dollars ($1,300).

"T. C. Van Wyck,
"1501 East Eighteenth Street."

For a bill of goods amounting to $1,240.60, sold by plaintiffs to
said Mendenhall. The facts and circumstances surrounding the
execution of the said undertaking, and the relation of the parties
thereto, and to each other, may be summarized thus: Defendant
had rented to Mendenhall a store and business house. Menden-
hall had placed with one of the plaintiff's, who were ^\•holesale
merchants, an order for goods amounting from thirteen hundred
to seventeen hundred dollars. The plaintiffs hesitated about fill-

88 GUARANTY AND SURETYSHIP.

ing the order, and one of them went to defendant and told him
that Alendenhall had placed with them an order for goods to
the amount stated, and that they did not like to fill the same
imless defendant would guarantee the payment thereof ; that if
defendant would give his guaranty for thirteen hundred dollars,
and if they sold Mendenhall more goods than that, on such excess
they would take their chances for collecting. That thereupon the
defendant signed the undertaking sued on. The plaintiffs deliv-
ered Mendenhall goods to the amount of the defendant's guaranty,
for the payment of which the defendant furnished part of the;
money. The plaintiffs thereafter continued to sell goods to Men-
denhall for ahout two years, amounting in the total to several
thousand dollars. Finally Mendenhall failed, owing the plaintiffs
on account of such sales the amount sued for. It may be well'
doubted whether any question of interpretation of the said under-
taking properly arises on the abstract of the record before us,
and at which alone we can look. But, waiving the consideratibn of
that question for the present, we may state that it appears to us
that if we interpret the language of the said undertaking in the
light of a knowledge of the relation of the parties, their antecedent
acts, and of the subject-matter of the same, as we have the right
to do; 2 Parsons on Contracts [7 Ed.] top p. 564; Edzvards v.
Sinifli, Adm'r, 63 Mo. 119; Bnnce, Adm'r, v. Bick's Ex'r, 43 Mo.
266 ; Hutchinson v. Bowkcr, 5 Mees. & W. 535 ; Black River
L. Co. V. IVarner, 93 Mo. 374, it l)ecomes quite obvious that it
cannot be held to be a continuing one, and this, too, in view of
the maxim, verba fortius accipiuntur contra proferenieui. It is
held in this state that when it is doubtful from the language con-
tained in the contract, whether the guaranty was for a single deal-
ing or a continuous one, the true principle of sound ethics is not
to set up a presumption for or against the guarantor, l)ut to give
the contract the sense in which the per.son making the promise
believed the other party to have accepted it, if, in fact, he did
accept it. Bochne et al. v. Murphy, 46 Mo. 57; Sliinc's Adm'r
V. Bank, 70 Mo. 524. Extrinsic evidence cannot be received to
contradict, add to, subtract from or var)- the terms of a guaranty,
but, as has been stated, when its meaning is doubtful, or obscurely
expressed, parol testimony in relation thereto, requisite to a clear
understanding of its j)urport, is admissible. The very language
of the instrument sued on negatives the idea that it was intended
to be a continuing guaranty. When the relation of the parties,

HENRY m'SHANE CO. VS. PADTAN. 89

-and the circumstances under which the guaranty in question was
entered into, are considered, its meaning becomes quite apparent.
The fact that plaintiifs had sold Mendenhall goods amounting to
thirteen hundred dollars, and that they would not deliver the
same to him without defendant would guarantee the payment
thereof, coupled with the further fact that this amount was in-
serted in the instrument, for which defendant bound himself for
"bills as they mature, purchased" — not to be purchased — con-
clusively shows that the transaction and undertaking related solelv
and entirely to the unfilled order, or orders, for goods plaintiff
had received of Mendenhall, at the time of the execution of the
contract, and not to subsequent sales and purchases. We think-
that upon the record before us the judgment of the circuit court
was for the right party. The exceptions to the rulings of the
court in respect to the introduction of evidence were not preserved
by a motion for a new trial, as appears by the abstract. But,
whether this is so or not. it is quite evident that none of these
adverse rulings of the court to the plaintiffs materially aft'ected
the merits of the case. Indeed, the plaintiffs, in their brief, make
no point in respect to th.at matter.

The judgment, with the concurrence of Judge Ellison,
Judge Gill not sitting, will be afhrmed.

Henry McShane Co., L't'd., vs. Padian (1894).
142 N. Y. 207 ; 36 N. E. 880.

Appeal from common pleas of New York city and county,
general term.

Action by the Henry McShane Company, Limited, against
William Padian. From a judgment of the general term affirm-
ing a judgment for defendant, plaintiff appeals. Reversed.

Thos. C. Ennever, for appellant.
IViUiaui J. Fanning, for respondent.

Bartlett, J. The plaintiff seeks to recover of the defend-
ant upon the following guaranty: "I, William Padian, hereby
euarantv to the Henrv McShane Company, Limited, the payment

90 GUARANTY AND SURETYSHIP,

by Jolin r. Wiegers, plumber, to thcni for any and all materials
wbicb they may deliver to John T. Wiegers, 1 not to be liable
for any balance exceeding five hundred dollars which may be-
come due. William Padian. Witness : Wm. H. Barth. Dated
New York, March 31st, '00." This case was tried before a referee,
who held that the guaranty was susceptible of two constructions,
and admitted, to quote from his opinion, "oral evidence of the
res gestae so as to arrive at the probable intention of the parties."
The evidence was admitted against the objection and exception
of plaintiff. Upon conflicting evidence, the referee found, sub-
stantially, that the guaranty had reference to certain goods sold
by plaintiff' to Johri P. WTegers, to be used in the performance
of a contract named, and that, before the commencement of this
action, Wiegers had paid for them. He further found that said
guaranty was not intended 1)\- the parties thereto as a running or
continuing guaranty, other than for the goods already referred to,
and dismissed the complaint, with costs. The general term of
the court of common pleas for the city and county of New York
affirmed a judgment for the defendant entered upon the report
of the referee. The (|uestion i)resented on this appeal is whether
the language of the guaranty is so ambiguous as not to furnish
conclusive evidence of its meaning, and entitles the defendant to
prove the circumstances under which it was executed, so that the
court can construe it in the light of all the facts. If this ambiguity
exists, the evidence of the circumstances surrounding the execu-
tion of this guaranty was properly admitted (Bivik v. Kaufman, 93.
N. Y. 281, and cases cited; Bank v. Myles, 73 N. Y. 341), and,
as the findings of the referee were made on conflicting evidence,
they are not reviewable in this court {Slicrn'ood v. Haiiser, 94 N.
Y. 626; fire Department of Nczc York v. Atlas S. S. Co., 106
X. Y. 578. 13 X. E. 329: Crim v. Starkzceather, 136 X. Y. 635. 32
X. E. 701 ). We are, however, unable to agree with the learned
court below in its construction of this guaranty. We regard its
language as clear, presenting no ambiguity, and as creating a con-
tinuing guaranty, which, by its terms, limits defendant's lial)ility
to any balance, not exceeding $500, which may become due, but
does not undertake to regulate the amount of John \\ Wiegers'
future transactions with the plaintiff'. The cases are numerous,
construing instruments of this character, and it is not always an
easy task to determine on which side of the line separating con-
tinuous from limited lial)ility they belong. In IVhitney v. Groot,.

HENRY m'SHANE CO. VS. I'ADIAN. 91

24 Wend., at page 84, Chief Justice Nelson remarks: "It is, in
most of these cases, a nice and difificiiU question to determine
whether the guaranty is a continuing one or not. The intent of
the party, to be derived from the words, is the only sure guide ; and
therefore very little aid is to be derived from the adjudged cases,
as they turn upon the peculiar phraseology of the guaranty." In
Bank V. Myles, 73 N. Y., at page 341, Judge Earl says: "Pre-
cedents do not help much in the construction of such instruments."
In Gates v. McKee, 13 N. Y., at page 234, Judge Denio says : "The
cases are not entirely harmonious as to the principles of construc-
tion which ought to govern in this class of cases, but the weight of
authority is altogether in favor of construing guaranties by rules
at least as favorable to the creditor as those which courts apply to
other written instruments, irrespective of the consideration that
the guarantor is a surety." In the leading English case of Mason
V. Prit chard, 12 East, 227, the court said the words were to be
taken as strongly against the party giving the guaranty as the sense
of them would admit. The supreme court of the United States has
also expressed the same views. Dnimmond v. Frcstjiiaii, 12 Wheat.
515: Douglass V. Reynolds, 7 Pet. 113, 122; Latvrcncc v. McCal-
mont, 2 How. 426.

Applying these principles to the guaranty now under con-
sideration, it leads to the construction we have already indicated.
The usual and ordinary import of its language discloses an intent
on the part of the defendant to guaranty the purchases of Wiegers
from plaintiff of any and all materials, provided his liability was
not to exceed $500. or any balance which might become due. To
place upon this instrument the construction contended for by
defendant is to ignore its plain provisions, and import into the case
an entirely new contract. The defendant contends he was only
guarantying payment of $395 worth of specific materials which
were to be used in the performance of a certain building contract.
On the other hand, the plaintiff states that Wiegers was a young
man starting in business, and it was customary to require a guar-
anty in such cases. The evidence in the case shows that Wiegers,
after the execution of the guaranty, made purchases of plaintiff
aggregating between six and seven thousand dollars, and made
pa\ments of between four or five thousand dollars, and owed plain-
tiff a balance of twenty-two hundred dollars w^hen this action was
commenced. Wc hold, however, that parol evidence was inad-
missible as to surrounding circumstances to aid in construing this

92 GL^\R\XTV AXD SURETYSHIP.

guaraniy, and rest our decision upon the language of the instru-
ment solely. The answer *>t the defendant alleges that he was
induced to sign the guaranty l)y the false and fraudulent repre-
sentations of i)laintiff, made through its agents. The prooi failed
to establish this defense, and the referee matle no such linding.
The judgment appealed from must be reversed, and a new trial
ordered, with costs to abide tlie event. .Ml concur.
Judgment reversed.

Ar.iK)TT rs. Brown (1889),
131 III. to8, 22 X. E. 813.

Appeal from Appellate Court. First District.

AssmrpsiT by 1 lenry G. Abbott against John J_'>. Brown. The
circuit court rendered judgment for defendant, and the appellate
courr aftirnicd the judgment. Plaintiff appeals.

Osborne Bros. & Bnrgctt, for appellant.

Oshiint cr Lyiidc. for appellee.

Craig, J. On the ist day of July, 1876, Kirk B. Xewell,
being indebted to H. G. Abbott, the appellant, executed his ])rom-
is.sory note as follows :

"Chicago, Ills., July i, 1876.
"One day after date 1 promise to pay to the order of H. G. Abbott
two thousand dollars, with interest at the rate of ten per cent, per annum,
at First National Bank of Chicago. Value received.

(Signed) "Kirk B. Newell."

Indorsed on the back cjf the note was the following guaranty:

"For value received,. I hereby guaranty tlic payment of tlie within
'note at maturity, or at any time thereafter, with interest at ten per cent,
per annum until paid, and agree to pay all costs and expenses paid or
incurred in collecting the same, including attorney's fees.

(Signed) ^ "J. B. Brown."

This action was lirought by H. G. Abbott against Brown to
recover certain costs and attorney's fees which he paid out and
expended in the collection of the amount named in the note in an
action against Brown on his guaranty. The costs and attorney's
lees which the plaintiff sought to recover in the action w'ere not

ABBOTT VS. BROWN. 93^ ,

expended in attempting to collect the note which was executed by
Kirk B. Newell. No suit was ever brought on the note against
the maker, nor was any evidence offered to prove that any costs
or expenses were ever incurred in an attempt to collect the note.
But on the trial of the cause Abbott, who is appellant here, put in
evidence, showing that on July 3, 1882, he brought an action in
assumpsit against Brown "on the guaranty signed by him, indorsed
on the note, whereby he guarantied payment of the note," in which
he recovered judgment for the amount due on the note, $3,338.34;
that an appeal was taken by Brown to the appellate court, and
to the supreme court from the judgment of the appellate court
atfirming the judgment of the circuit court, and that upon the
affirmance thereof by the supreme court Brown paid appellant the
amount of the judgment ; that the firm of which witness was a
member was employed as attorneys to conduct this action, and ren-
dered services therein of the value of $1,500, and they had been paid
that sum by appellant for said services ; and, also, in the prosecution
of this action, appellant expended for printing and other neces-
sary expenses the sum of $26. On this evidence the circuit court
held, as a matter of law, "that the guaranty on which this suit
was brought is not an agreement to pay the costs or expenses or
attorney's fees, paid or incurred in a suit against Brown upon
said guaranty,'' and rendered judgment for the defendant.

There is no ambiguity in the contract of guaranty executed
by Brown. The terms of the contract are plain and easily imder-
srood. By the contract Brown agreed that the note should be
paid with interest at ten per cent, and he also agreed to pay all
costs and expenses incurred or paid, including attorney's fees, in
collecting the note. Obviously the meaning of the language used
was, if costs and expenses and attorney's fees were incurred in
the collection of the note and interest from the maker, then such
costs, expenses, and attorney's fees should be paid by Brown. If
the contract of Newell, the maker of the note, and the contract of
guaranty by Brown, was but one contract, the position of appel-
lant that the action on the guaranty was an action on the note
might be regarded more plausible ; but such is not the case. Dan-
iel, Neg. Tnst. § 1752, defines a contract of guaranty as fol-
lows : "A 'guaranty' is defined to be a promise to answer for the
payment of some debt or the performance of some duty in case
of the failure of another person who is in the first instance liable
to such payment or performance." 2 Pars. Cont. 3, says : "Guar-

94 GUARANTY AXD Sl-RETVSll 1 1'.

anty is held to lie the contract h\- which one person is hound to an-
other for the ckie fulliUnient of a pnjinise or engag-ement of a third
party." Story, Prom. Notes, § 457. says: "A guaranty, in its
legal and cc^iimercial sense, is an undertakini; l)y one person to he
answerahle for the payment of some debt, or the due performance
of some contract or duty, by another person, who himself remains
lialile to pay or perfomi tlic same." In Dickcrson v. Derricksoii, 39
111. 574, this court, in speaking of a guaranty, says: "The contract
of an absolute guaranty is that if the principal fails to pay, the guar-
antor will. If it were not so. it would not he a guaranty, but an in-
dependent undertaking." See, also. Rich v. UiillhVK'ay, 18 111. 548.
Here, Newell, as maker of the promissory note, agreed to pay a
certain sum of money at a certain time. By his contract he be-
came liable on the note ; but Urovvn, as guarantor, was not liable
with him. No joint liability existed. In Baylies. Sur. 389, the
author says: "In an action to enforce a contract of guaranty the
guarantor is the proper party defendant, and the principal debtor
should not be joined. As has been shown, all the parties to a
contract of suretyship may be joined as defendants ; but a guar-
antor cannot be sued with his ])rinci])al. for his engagement is
strictly an individual contract, and not an engagement jointly
with his principal."

Here Brown's engagement as guarantor was his individual
contract, under which he became liound to pay in case the maker
of the note failed to do so. When the maker of the note failed
to pay at maturity of the insirunient. the guarantor then, and not
before, became lial)le, on his contract of guaranty, to an action.
The liability of the maker of tlie note and the guarantor were
separate and distinct. To enforce the liability of the maker an
action should be brought on the note against him, while to enforce
the liabilitv of the guarantor an action could only ])e lirought on
the contract of guaranty ; and it seems jilain that an agreement to
pay costs and attorney's fees which might be incurred in one action
does not include costs and attorney's fees incurred in the other.
Here Brown, by the terms of his guaranty, l)ound himself to pay
costs and expenses, including attorney's fees, which might be in-
curred in an action to collect the note, but he .saw proper not to
ao-ree to jiay such cost'^ and expenses as might be incurred in an
action brought on the contract of guaranty: and in the absence of
such an agreement we are aware of no princii)le which would make
him liable. Had a suit liecMi hroughi on the note against the

m'm[jrray vs. noyes. 95

maker, under the contract of guaranty, Brown would have been
Hable for such costs and expenses, including attorney's fees, as
might have been incurred in that action ; but no such action was
brought, and there has been no breach of his contract so far as
costs and expenses are concerned.

One other question remains to be considered : On the trial
the appellant offered to show that he employed counsel to "watch
Brown from 1878 to 1882. and the business operations in which
he was engaged, to see when there was a reasonable prospect for
collecting the note out of him." Also that in April, May, June,
and July, 1882, his attorney had rxCgotiations widi Brown for the
settlement of his liability on the guaranty for which the services
of counsel were worth $50, and which sum appellant had paid. x\s
to those services the appellate court held if they were a proper
charge against appellee, they should have been included in the
former suit. \\> concur in the view of the appellate court, if any
liabilitv existed for those services, as they had been rendered be-
fore appellee was sued on die guaranty, they should have been em-
braced in that action. The judgment of the appellate court will
be affimied.

McMuRRAY ct al. vs. NovES (1878).
72 N. Y. 523.

Esck Coxvcn, for appellant.
Irz'iiicr Brozoie, for resoondent.

Rappallo. J. The guaranty on which this action is brought is
contained in an assignment of a bond and mortgage, and is in the
following form :

"I hereby covenant * * * that in case of foreclosure and sale of the
mortgaged premises described in said mortgage, if the proceeds of such
sale shall be insufficient to satisfy the same, with the costs of foreclosure,
I will pay the amount of such deficiency to the said party of the second
part, or its assigns, on demand.'"

On the part of the appellants, it is contended that this guar-
anty is subject to the rules applicable to guaranties of collection,
and thus laches in foreclosing the mortgage, after default, is a
defense. The respondents insist that it is a guaranty of payment,

96 GUARANTY AND SL'KKTVSHIP.

and that tlicx were umU'r no ol)ligation to use diligence in endeav-
oring- to collect the mortgage debt by foreclosure.

The fundamental distinction between a guaranty of payment
and one of collection is, that in the first case the guarantor under-
takes unconditionally that the debtor will pay, and the creditor
may, upon default, proceed directly against the guarantor, without
taking any steps to collect of the principal debtor, and the omission
or neglect to proceed against him is not (except under special cir-
cumstances) any defense to the guarantor; w'hile in the second case
the undertaking is that if the demand cannot be collected by legal
proceedings the guarantor will |)ay. and consequently legal pro-
ceedings against the principal debtor, and a failure to collect of
him by those means are conditions precedent to the liability of the
guarantor ; and to these the law, as established by numerous deci-
sions, attaches the further condition that due diligence be exercised
by the creditor in enforcing his legal remedies against the debtor.

These rules are well settled and are not controverted, and the
only question is to which class of guaranties the one now before
us belongs.

It is apparent upon the face of the instrument that the under-
taking of the defendant was not an unconditional one that the
mortgagor should pay, or that the guarantor would pay on default
of the mortgagor, but only that the guarantor would pay, in case
of a deficiency arising on a foreclosure and sale. The foreclosure
and sale were consequently conditions precedent, and the general
principle is, that wherever a condition precedent is to be performed
for the purpose of establishing the liability of a surety or guaran-
tor, such condition must be performed in good faith and with due
diligence. It is upon this principle that, in case of a guaranty of
collection, diligence is required of the creditor.

I am unable to see why this principle is not applicable to the
guaranty now in controversy. The respondents claim that it is an
undertaking to pav any deficiency which may arise, and is, there-
fore, a guaranty of payment of the mortgage debt to that extent,
and to be governed by the same rules as if it had been a guaranty
of payment of the whole mortgage. lUit the fallacy of this reason-
ing is that it is not an unconditional guaranty that the mortgagor
will pay the mortgage debt, or any part of it, but only that after
the remedy against the land has been exhausted, and the deficiency
ascertained bv foreclosure and sale, the guarantor will pay such
deficiencv. The only difiference l)etween this and an ordinary

M'^rURRAY VS. NOYES. 97

guaranty of collection is, that in the latter case the undertaking is
that after it has been ascertained by all such legal proceedings as
the case admits of. that the demand cannot be collected, the guar-
antor will pay ; while in the present case the only proceedings which
the creditor is bound to adopt are a foreclosure of the mortgage and
sale of the mortgaged lands. To that extent the condition prece-
dent exists alike in both cases, and the duty of exercising due dili-
gence attaches, there being nothing in the instrument qualifying
or dispensing with it.

The case of Goldsniifh v. Brozcii (35 I)arl). 484) is relied upon
by the respondents as sustaining their position. In that case the
covenant was, as construed by the court, to pay the deficiency upon
the mortgage debt whcncz'cr the remedy against the lands mort-
gaged should have been exhausted and the deficiency ascertained.
The decision in that case can only he sustained by construing the
covenant as waiving diligence in foreclosing, and binding the cov-
enanter to pay the deficiency without regard to the time of the fore-
closure. Nothing in the covenant now under examination has any
relation to the time of the foreclosure, or can be construed as waiv-
ing diligence required by the general rules of law in performing
the condition.

The delay in foreclosing in the present case was fourteen
months after the mortgage debt became due. During upward of
ten months of this time the property was a sufficient security, but
afterward the buildings thereon were destroyed by fire, and the
value was reduced below the amount of the mortgage debt. It
cannot be questioned that this delay was sufficient to constitute
laches. In Craig v. Parkis, 40 N. Y. 181, a delay of six months
in foreclosing a bond and mortgage was held to be laches which
discharged a guaranty of its collection.

The judgment should be reversed, and a new trial ordered,,
with costs to abide the event. All concur.

Judgment reversed.

98 guaranty and suretysiiu'.

Roberts vs. Hawkins (1888).
. 70 Mich. 566; 38 N. W. 575.

Error to Superior Court of Grand Rapids. Assumpsit.

Norris & Norris, for appellant.

J. C. FitcGcrald {Charles CliainUcr, of counsel), for plaintiff.

Long, J. January 12, 1884, one Lyman D. FoUett made his
promissory note as follows :

"$i,ooo.

Grand Rapids, Mich., January 12, 1884.
One year after date, I promise to pay to the order of Helen M.
Roljcrts one thousand dollars, with interest at eight per cent, per annum.
Value received. Lyman D. Follett."

And defendant signed an indorsement on the back thereof,
as follows :

"For value received, I hereby guarantee the payment of the within
Value received. L. E. Hawkins."

On the delivery of this note to plaintiff, she paid Follett
$1,000. January 8, 1885, seven days before this note became due,
Follett paid one year's interest ; and neither at that time, nor at
the maturity of the note, was the same presented to Follett or
defendant for payment. No notice of non-payment was given
defendant then or at any time prior to June 8, 1887. January 15,

1886, Follett paid the interest for the next year, and January 17,

1887, for the year following. About June 8, 1887, the note being
then two years and five months overdue, it was first presented to
defendant, and payment demanded and refused. August 13 this
suit was brought.

On the trial, plaintiff, having proved the note and guaranty,
and its non-payment, rested. Defendant then sought to make his
defense as pleaded, and offered to show —

T. That he was an accoinmodation guarantor, without con-
sideration or security.

2. That, at or about the maturity of the note, he incjuired of
the maker of the note if it was paid, and was told it was.

3. That neither at the niattn-it_\' of the note, nor at any sub-
sequent time, prior to June 8, 1887, was, any notice of the non-

ROBERTS VS. HAWKINS. 99

payment of this note given to defendant, nor any demand made
on him for the payment thereof.

4. That at the maturity of this note, and for some consider-
able time thereafter — at least a year — P'oUett, the maker of the
note, was solvent, and had property out of which defendant could
have procured him to pay the note or obtained security.

5. That when defendant, on June 8, 1887, learned of the non-
payment of this note, the maker was insolvent, out of the jurisdic-
tion, and that he could then obtain no security or payment.

The court directed a general verdict for plaintiff on all the
counts of the declaration. Judgment being entered on the verdict
in favor of plaintiff for the amount of the note and interest,
defendant brings the case into this Court by writ of error.

The declaration contains three counts. The first alleges the
guaranty, demand of the maker at maturity, non-payment, and
^ notice of said demand and non-payment to defendant at maturity.
O The second alleges the guaranty, the refusal by maker to

(^ pay at maturity, and notice to defendant, at maturity, of maker's
refusal.

The third is the common counts in assitiiipsit, with copy of
note annexed, and an alleged indorsement on back of L. E. Haw-
kins, without any guaranty over it.

The plea is the general issue, with notice of the defense of
release by plaintiff's failure to give notice of non-payment to
defendant, and the consequent damage and loss to him thereby.

It is claimed that the court erred in receiving the note and
guaranty in evidence under the third count in plaintiff's declara-
tion, for the reason that the note and guaranty offered were not
the note and guaranty set forth in that count ; that the contract set
out in plaintiff's third count was that defendant had indorsed his
name in blank on the back of the note, not payable to his order ;
and that this would make him a maker of the note, and liable as
such, while the note offered had a guaranty of payment indorsed
thereon. Defendant claimed that this was a variance, and that
the court should have excluded the guaranty under this third
count, and confined the verdict to a recovery under the first two
counts.

As we view the case, however, this objection has no force.
The plaintiff being entitled to recover under the first and second
counts of the declaration, the defendant was not prejudiced in the

£?
rt

100 GUARAXTY AND SURETYSHIP.

course taken hy the court in not witlulrawing- all consideration of
the case under the third cnunt. 'Die declarati.m wa'^ sufficient
in the first two counts to allow a recovery thereunder.

The chief error complained of is the exclusion of the entire
defense, and the direction of a verdict for plaintiff. On the trial
the plaintiff' proved hy a witness the application for the loan, the
loaning of the nu)ney. the S^iving of the note and guaranty, and,
after reading the note and guaranty in evidence, rested. The
defendant was then called and sworn as a witness in his own
behalf, and was asked by his coiunsel :

"Q. When that note became due. in January, 1885, — January 15, —
was any notice given you of ilie fad tliat it remained unpaid?"

To this question counsel for plaintiff' ol)jected, that the same
was irrelevant and immaterial ; that the defendant was not an
indorser nor guarantor of collection, but uf payment of the note.

Counsel for the defendant then offered to show by the witness
that he had no notice of the non-payment of the note prior to
June 8, 1887; that he was an accommodation guarantor without
security ; that, at or near the maturity of the note, he inquired
of the maker, and w'as informed that it was paid ; that, at the time,
the maker of the note was solvent, and for some considerable time
thereafter — ])robably a year — and that the defendant could, if he
had any knowledge of its non-payment, have secured himself, or
procured the maker to pay it ; that, when the defendant learned
of the non-payment of the note, the maker was insolvent, and out
of the State, and no security could have been obtained by the
defendant , ilie counsel then saying —

"That this, of course, is the line of defense marked out l>y the notice
in the pleadings. It is all covered by my brother'.s argument ; and, if we
have no right to show that defense, then, of course, there remains nothing
lint for the court to direct a verdict for the amount of the note, and
interest."

The court sustained the objection, and directed a verdict for
plaintiff'.

In considering the case, the defendant's offer to prove this
state of facts must be taken as true. Cloy, etc., Iiis. Co. v. Manu-
facturing Co., 31 Mich. 356. Under this offer by the defendant,
the issue is made: Is a person not being a party to a promissory
note, who at its date and before delivery, and for the purpose of
having a loan made upon the strength of his guaranty, guarantees

ROBERTS \'.S. HAWKINS. 101

the payment of such note, hable thereon in case the note is not
paid at maturity, without notice of non-payment having been
given to lum liy the holder at the maturity of the note, or witliin
a. reasonable time thereafter: or in case notice is not given, and
no proceedings taken to collect the note from the maker, and the
maker of the note, at the maturity thereof, was solvent, and sub-
sequently, and before suit is brought on the guaranty, becomes
insolvent, can such guarantor, when such action is brought against
him. set up such insolvengy as a defense? The defense being
based on plaintiiT's laches in not giving notice to the defendant
of the non-payment of this note at maturity, and the consequent
damage to defendant thereby, the correctness of the court's ruling
depends on whether or not there rested on the plaintiff the duty
to give such notice under any circumstances.

The defendant claims that his liability existed only on the
happening of a contingency and the performance of a condition ;
that whether or not that contingenc}- happened, or condition was
performed, was matter peculiarly within the knowledge of the
plaintiff, and not within his own ; and that if plaintiff' intended to
assert the performance of the condition, or the happening of the
contingency, whereby alone defendant was to become liable, it was
her duty to do so within a reasonable time, and, in any event,
before the maker of the note became insolvent and a fugitive ; that
her neglect to do so, and the damage to him thereby, has released
him from the obligation of his conditional contract.

The position, however, of a guarantor of payment, as between
him and the maker of the note, is that of a surety. It is a com-
mon-law contract, and not a contract known to the law-merchant.
It is an absolute promise to pay if the maker does not pay. and
the right of action accrues against the guarantor at the moment
the maker fails to pa}-. The guarantor would not be discharged
by any neglect or even refusal on the part of the holder of the
note to prosecute the principal, even if the maker was solvent^
at the maturity of the note, and subsequently became insolvent;
and the fact that no notice of non-payment was given the guar-
antor at tlie maturity of the note, or at any time before bringing
suit, would not aff'ect the rights of the holder of the note against
the guarantor. The guarantor's remedy was to have paid the
note, and taken it up, and himself proceeded against the maker.

A guaranty is hekl to be a contract by which one person is
bound to another for the due fulfillment of a promise or engage-
ment of a third party. 2 Pars. Cont. 3.

102 GUARANTY AND SURETYSHIP.

The contract or undertaking- of a surety is a contract by
one person to be answerable for the payment of some debt, or
the perfomiance of some act or chity, in case of the failure of
another person who is himself ]iriniarily responsible for the pay-
ment of such debt or the performance of the act or duty. 3 Add.
Cont. Sec. ittt : 3 Kent, Onnm. 121 ; IFrii^^ht v. Simpson, 6 Ves.

734-

In the case of Pain v. Packard, 13 Johns. 174 (decided in

1816), it was held that if the surety call upcn the creditor to col-
lect the debt of the principal, and he disregard that request, and
thereby the surety is injured, as by the subseciuent insolvency of
the principal, the surety was thereby discharged. A directly con-
trary decision was given by Chancellor Kent, upon argument and
full consideration, the following year. King v. Baldzvin, 2 Johns.
Ch. 554. Two years later the last decision was reversed by the
court of errors by castmg vote of the presiding of^cer, a lay-
man, and against the opinion nf the majority of the judges. King
V. Baldwin, 17 Johns. 384.

In the case of Brozvn v. Ciirfiss, 2 X. Y. 226 (decided in
1849), tbc action was brought against the guarantor of a promis-
sory note. On the trial it was admitted that there had been no
demand of the maker, nor any notice of non-payment, and the
note was dated April 2, 1838, and payable six months after the
date. The suit was lirought against the guarantor in September,
1845. The defendant offered to prove that, from the time the
note fell due until the latter part of 1843, the maker was able to
pay the note; that he then failed, and was insolvent at the time
of the commencement of the suit, and still remained so. This
evidence was objected to, and excluded, and verdict directed for
plaintiff. The court (at p. 227) says:

"The undertaking of the defendant was not conditional, like that of
an indorser; nor was it upon any condition whatever. It was an absolute
agreement that the note should be paid by the maker at maturity. When
the maker failed to pay, the defendant's contract was broken, and the
plaintiff had a complete right of action against him. It was no part of
the agreement that the pLaintiff should give notice of the non-payment, nor
thiL he should sue the maker, or use any diligence to get the money from
him. '-■ -"■■ * Proof that wiien tlie note l^ecamc due, and for several
years afterwards, the maker was abundantly able to pay, and that he had
since become insolvent, would be no answer to this action. Tlie defend-
ant was under an absolute agreement to see that the maker paid the note
at maturitv. * * *

ROBERTS VS. HAWKINS.

103

"If the defendant wished to have him sued, he should have taken up
the note, and brought the suit himself. The plaintiff was under no obliga-
tion to institute legal proceedings."'

The weight of authority, both in this country and in England,
sustains this doctrine, and we think with much good reason. Bel-
lozus V. LoTcll, 5 Pick. 310; Davis v. Huggins, 3 N. H. 231;
Page V. Webster, 15 Me. 249; Dennis v. Rider, 2 McLean, 451.

In Traill v. Jones, 11 Vt. 446, it is said:

"An absohite guaranty that the debt of a third person shall
be paid, or that he shall pay it, imposes the same obligation upon
the guarantor. In either case, it is an absolute guaranty of the
sum stipulated, and the creditor is not bound to use diligence, or
to give reasonable notice of non-payment." A^oyes v. Nichols,
28 Vt. 174.

In Bloom v. Warder, 13 Neb. 478 (14 N. W. Rep. 396),
which was an action against the guarantors of payment of a prom-
issory note, the court says :

"This is an absolute contract, for a lawful consideration, that
the money expressed in the note shall be paid at maturity thereof
at al! events, and depends in no degree upon a demand of pay-
ment of the maker of the note, or any diligence on the part of the
holder."

Mere passiveness on the part of the holder will not release
the guarantor, even if the maker of the note was solvent at its
maturity, and thereafter became insolvent. Breed v. Hillhouse, 7
Conn. 528: Bank v. Hopson, 53 Conn. 454 (5 Atl. Rep. 601);
Foster v. Tolleson, 13 Rich. Law, 33 ; Machine Co. v. Jones, 61 Mo.
409 ; Barker v. Scndder, 56 Id. 276 ; Norton v. Eastman, 4 Greenl.
521 ; Brozvn v. Curtiss, 2 N. Y. 225 ; Allen v. Rightmcre, 20 Johns.
365; Bank v. Sinclair, 60 N. H. 100; Gage v. Bank, 79 111. 62;
JJungerford v. O'Brien, 37 Minn. 306 (34 N. W. Rep. 161).

It follows that, this being an absolute undertaking on the part
of the defendant as guarantor to pay the amount of this note at
maturity in the event of the default of payment by the principal,
the guarantor could not demand any diligence on the part of the
holder of the note to collect the same froin the principal. It was
his dutv to perform his contract — that is, to pay the note upon
default of the principal ; and it is no answer for him to say that
the principal was solvent at the maturity of the note, and that the
same could then have been collected of him bv the holder, and that

104 GUARANTY AXD SURETYSHIP.

1k' has since become insolvent. It he wished to protect himself
against loss, he should have kept his engagement with the holder
of the note, paid it upon default of the principal, taken up the note,
and himself prosecuted the party for whose faithful performance
of the contract he became lial)le.

The court properly directed the verdict for the plaintiff ; and
the judgment of the court below must be affirmed, with costs.

The other Justices concurred.

Smith tx Mollesox (1896),
148 N. Y. 241 ; 42 X. E. 669.

Appeal from .Supreme Court, general term. First department.

IVilliain C. Bccchcr, for appellant.
Jacob F. Miller, for respondent.

O'Briex, J. The defendant has been held liable as surety
upon a bond given to secure the performance, by the con-
tract(jrs, of a building contract, dated November 1, 1888, in which
they agreed to furnish, cut. set and clean all the new granite work
for the enlargement of a public building in the City of New York.
The plaintiff agreed to pay the contractors for this work the sum
of $30,000, in monthly payments of not to exceed 80% of "the
estimated value of the work performed on the building," the bal-
ance, or final payment, to be made when the work was completed.
The work was to be done according to drawings and specifications
referred to in the contract, and the payments made upon the cer-
tificate of the i)]ainliA"s superintendent. The rights and obliga-
tions of the parties are specified in the contract with minute detail,
and, among other things, it was stipulated that, in case the con-
tractors failed to i)erform, the plaintitT might take possession of
the work and complete it at the contractors' expense. It is con-
ceded that they failed to perform and that the j)laintift' was obliged
to complete the work himself at an expense of several thousand
dollars more than the contract ])rice. It was agreed between the
plaintiff and the contractors that the latter should give to him a
bond to insure the faithful performance of the contract, and, in

SMITPI VS. MOLLESON. 105

pursuance of this agreement, the defendant, in behalf of the con-
t: actors, executed, under seal, and delivered, the instrument ui)i)n
which this action was brought. It bears date Dec. 27, 1888, and
was executed subsequent to the contract, and one of the conditions
is that the contractors should well and truly perform the contract
referred to, accordhig to its terms, in v.hich case the instrument
sliould be void and of no effect, but that, in case they failed to so
perform, the defendant would pay to the plaintifif his damages sus-
tained by reason of such non-performance, not exceeding a sum
named. ' It is conceded that the plaintiff sustained damages by
reason of the failure of the contractors to perform their contract,
and the recovery is within the limits of the bond. The defense is
that the bond was given without consideration, and that the defend-
ant became released from its obligations by reason of changes in
and departures from the contract guaranteed, without the defend-
ant's consent, by the parties thereto. At the trial a verdict was
directed for the plaintiff.

The plaintiff entered into the contract and bound himself,
according to its terms, upon the faith of the promise of the con-
tractors to give the bond, and it is admitted that if this was con-
current with the execution and delivery of the instrument, it would
constitute a sufficient consideration. But, since the bond was given
afterwards, and, as the defendant claims, subsequent to the time
that the contractors had entered upon the actual performance of
the contract, it is insisted that it required some new consideration.
If it be true that the evidence in the case would warrant a finding
by the jury that the contractors were engaged in the performance
of the contract when the bond was given, it would also be true that
this was by the grace and pleasure of the plaintiff', and not by
virtue of any right under the contract. Their right to insist iipon
performance, as against the plaintiff, and to receive the benefit of
the contract, was not perfected until the bond was given. What-
ever the contractors may have assumed to do before, it was only
upon the delivery of the bond that the contract became complete
and binding upon the plaintiff', and hence the mutual obligations
imposed upon the contractors at one time, and upon the plaintiff
at another, furnished a consideration for the bond. Bank v. Coit,
104 N. Y. 532, II N. E. 54.

The other defense rests mainly upon a construction of the
contract which the defendant claims to be the correct one. It
should be observed at the outset that the contract guaranteed is.

106 GUARANTY AND SURETYSHIP.

by reference, made a part of the bond, and tlierefore, in order to
determine the scope of the defendant's undertaking, the two instru-
ments must be read together. It is true, as the learned counsel for
the defendant contends, that the liability of a surety is strictissimi
juris. But that does not mean that a difit'erent rule must l)e applied
in the construction of contracts of suretyship than that which is to
1)e applied in the construction of contracts in general. Like all
other contracts, the undertaking of a surety must be construed
fairly and reasonably, anrl according to the intention of the parties.
If the surety has used ambiguous language, and the party sectired
has advanced his money on the faith of the interpretation most
favorable to his rights, that will, ordinarily, prevail, if the instru-
ment is open, reasonably, to such interpretation. It means that a
surety shall not be held beyond the precise stipulations of his con-
tract. He is not liable on any implied engagement, where a party
contracting for his own interest might be, and he has the right to
insist on the strict performance of any condition for which he has
stipulated, w'hethers others would consider it material or not. But
w^here the question is a? to the meaning of the written language
in which he has contracted, there is no difference, and there ought
not to be any, between the contract of a surety and that of any
other party. In this respect they are ordinary commercial obliga-
tions standing upon the same footing as other contracts. Gates v.
McKee, 13 N. Y. 232; Bennett v. Draper, 139 N. Y. 266, 34 N. E.
791. When the terms of the contract guaranteed have been
changed, or the contract, as finally made, is not the one ui)on which
the surety agreed to become bound, he will be released. Page v.
Krekey, 137 N. Y. 307, 33 N. E. 311. But in this case there is no
claim that the terms of the building contract to which the defend-
ant's bond related, have in any res]^ect been changed by the par-
ties to it. The most that is claimed is that, in its performance, the
parties have so far departed from its terms as to change the de-
fendant's condition, to her prejudice, and to deprive her of rights
and benefits under the contract, which, otherwise, she would be
entitled to by subrogation. Where the party -secured does some
act v.'hich changes the position of the surety to his injury or preju-
dice, the latter is no longer bound. Phelps v. Borland. 103 N. Y.
406, 9 N. E. 307; Bank v. Strecter, 106 N. Y. t86, 12 N. E. 706;
Lynch v. Reynolds, 16 Johns. 41 : Brozvn v. Jl'illiains, 4 Wend.
360; Navigation Co. v. Roll, 6 C. B. (N. S.) 550; Calvert v. Dock
Co., 2 Keen 638; IVarre v. Calvert, 7 Adol. & E. 143.

SMITH VS. MOLLESON. 107

The learned counsel for the defendant insists upon his con-
struction of the contract, that the plaintiff paid or advanced to the
contractors a larger portion of the contract price than he was re-
quired to by the contract, and that it was paid without any certifi-
cate. The contention rests upon the defendant's construction of the
building contract, which, in substance, is tliat the provision for
"monthly payments, not to exceed eighty per cent of the estimated
value of the work performed on the building," required the estimate
to be based only upon the work when actually set in the building,
whereas it was in fact based upon the work actually done under or
in pursuance of the contract, whether the granite was actually placed
in the building or not. This is the alleged departure from the
terms of the contract, which constitutes the principal ground of
the defense. Before the conclusion of the learned counsel for the
defendant can be adopted, we nmst assent to the premise from which
it is sought to be deduced, and that requires us to ascertain and
determine the true meaning and intention of the clause of the con-
tract above quoted. It must be given a fair and reasonable con-
struction, and the general situation will throw some light upon the
meaning of the written words. It appears that the granite required
was to be quarried in Nova Scotia, transported from the quarry to
a place in Connecticut, where it was to be dressed, and then trans-
ported to New York, and set in the building. The work involved
in the preparation and carriage of the material was by far the most
expensive part of the contract, and it appears that the contractors
had no means to meet this outlay, except the monthly payments,
so that if they could realize nothing until the stone was placed in
the building, they would be practically unable to perform the con-
tract at all. This would be an unreasonable construction, and
would, if acted upon, operate so oppressively as to place the con-
tractors at the mercy of the owner, a view that is always to be
avoided when possible. Russell v. Allerton, io8 N. Y. 292, 15
N. E. 391. It would deprive them of all right to monthly payments
except when and to the extent the granite had actually been placed
in the walls, however large tlieir outlay for procuring and pre-
paring the material may have been during the month. The parties
had the right to give to the expression "work performed on the
building" a broader meaning, which could very properly include
the value of any work done or materials procured under the con-
tract toward its erection, although the granite procured and pre-
pared had not yet been placed. Since no payments were made in

108 GUARANTY AND SURETVS 1 1 1 1'.

excess of 80% of the value of the work pcrfoniicd in ^citing the
stone, and in procurin.i,'- and preparino- them, and as all the material
so procured and prepared actually went into the Imilding, no ad-
vances were made by the plaintiff to the contractors beyond the
fair requirements of the contract. It is said that it cannot l)e sup-
posed that the plaintift' contracted to pay any part c^f the contract
price for material at the cpuirry. and at the place where it was to
be prepared, or for the work performed in preparing^ the same for
use, before it could be known that it would ever actually reach the
building. I'ut since the monthly payments were stipulated for the
purpose of enablino; tiie contractors to prosecute the work, and as
the operation of placing the granite in jjlace Vidien prepared was
the least part of it, we do not think that this view would be un-
reasonable or improbable, it gave to the plaintiff reasonable
assurance and protection against loss, and at the same time enabled
the contractors to prosecute the work. While the plaintiff' is
described in the contract as owner, he in fact had no interest what-
ever in the building, but was the general and immediate con-
tractor from the citv for the erection of the v;hole building, and
the defendant's ])r;iK-i])Ies were his sub-contractors for a particular
anrl specific part of the work, namely, the granite work. The
i:)laintift' was not entitled to his contract price from the city until
the building w^as com])leted. though the ofticers representing it had
discretion to make aflvances. ^Moreover, by a clause in the con-
tract, tlie ijlaintiff, in case the suljconlractors al)andone(l the work-
er failed to perform, could terminate the contract and go on with
the work himself, and in that event the material in process of
preparation should belong to him for the jiurpose of completing
the work, whether such material was at tliC building, at the quarry,
or at some other place. So that the plaintiff', in stipulating for
monthly i)aynients, estiinated upim the work actually performed,
whether in the building or not, assumed nothing more than the
ordinary and usual risks incident to all contracts of that character.
We do not think, therefore, that the meaning of the contract should
be made to depend upon the use of the words, "on the building,"
when we can see, from the situation of the parties, the nature of
the work and other provisions of the instrument, that the intention
was to make the advances as the work progressed. To give to it
the other construction would, in practice, disable the contractors at
the very outset from jjcrformance, and impose upon the defendant
a liability, inevitable from the beginning, and possibly in a much

SMITH VS. MOLLESON. 109

larger amount than has followed the construction adopted by the
parties themselves.

The objection that the payments were made without the cer-
tificate may be answered in the same way. The owner could dis-
pense v.dth it if he so elected, under the terms of the contract, if
not upon general principles, and since the payments made without
it were not greater in amount than, upon the true construction of
the contract, they sliould have been if it had been exacted, the omis-
sion of the owner to insist upon it did not prejudice the surety.
We are not dealing, now, with any actual change in the terms of
the contract, l)ut with acts or omissions of the plaintiff in the pei-
formance. whicli, in order to operate to release the surety, must be
of such a character that it can be said that her position was changed
to her prejudice. It should also be observed that there is a clause
in the contract the material part of which reads as follows : "Should
the owner, at any time during the progress of said work, request
any alterations, deviations, additions :jr omissions from the said
contract, he shall be at liberty to do so, and the same shall in no
wav affect or make void the contract." The defendant, having, by
reference, in eft'ect made the contract a part of the bond, must be
deemed to have assented to this provision, and to any changes or
deviations in j^ierformance from the building contract made under
it. She has, in eft'ect, guaranteed the perfomiance of a written
contract between other parties, which, by its terms, permitted the
parties to change it or deviate from it. While it is not important
to consider the real scope of this clause, since we prefer to dispose
of the questions in the case upon the ground that there was no
material departure from the contract, when properly construed, it
should be noted that she consented iw advance to changes of some
character which are permitted by the contract in language quite
broad and comprehensive. It would not be difficult to show that
the plaintiff might, under this provision at least, dispense with the
formality of a c^ertificate when called upon by the contractors, from
time to time, for some portion of the contract price, without dis-
charging the surety, even though it v/as more important to the
defendant's interest and protection than it appears to be. It is
manifest that the provision was intended for the benefit of the
owner alone, and he could waive it without affecting the defend-
ant's liabilitv.

The contractors having failed to complete the work, the plain-
tiff gave the notice required by the contract in order to terminate

110 GUARANTY AND SURETYSHIP.

il. The contract provides wlien and upon what contingencies the
plaintiff could terminate, and the manner of proceeding for that
purpose. The tinal act which was to ].ui an end to the contract
was taking possession of the premises by the plaintiff. The notice
niav have been a necessary step or formality in that direction, but,
of itself, it did not operate to bring the contract to an end. It was
clearly within the power of the plaintiff to recall it, after given, if
not upon general principles, then under the permission contained
in the contract. It appears that he was induced, subsequently, to
allow the contractors to go on, anrl they again attempted to com-
plete the work, and again failed. It is said that the loss which the
plaintiff sustained, and for which the recovery was had, occurred
under this permission, and the defendant's counsel treats this last
effort at performance as a new contract in regard to which the
suretv was not bound. Tt was manifestly nothing more than a
mere waiver or recall of the notice for the termination of the con-
tract, and the work was performed and payment made, not upon
a new contract, but upon the old one, up to the time that the final
notice was given, w^hen the plaintiff was obliged to take possession
.of the w^ork. The case w^as very fully considered in the court be-
low, and, as we have sufficiently indicated the ground of our con-
currence in the decision upon pohits that are controlling, it is
unnecessary to notice other and minor questions in the case. The
judgment should therefore be affirmed, with costs. All concur.

Judgment affirmed.

Ballard vs. Burton (1892).
64 Vt. 387; 16 L. R. A. 664, 24 Atl. 769.

Exceptions by defendant to rulings of the Franklin County
•Court made during the trial of an action brought to enforce the
.alleged liability of defendant for the amount of a certificate of
deposit which he had indorsed,' which resulted in a judgment in
favor of plaintiff. Judgment reversed.

BALLARD VS. BURTON, 111

The certificate of deposit which constituted the foundation for
the cause of action was as follows :

"No. 34S3.
First National Bank of St. Albans, St. Ale\ns, Vt., Jan. 14, 18S4.
I hereby certify that Joseph Ballard has this day deposited in this
bank nine hundred sixty-two dollars, payable to the order of himself on
return of this certificate properly indorsed, with interest at 4 per cent per
annum.

(Signed) A. Sowles."

and on the back thereof,

E. A. Sowles, A. Sowles, O. A. Burton, Surety.

Messrs. Farriiigton & Post, and Wilson & Hall, for defendant.
H. C. Adams and Ballard & Burlcton, for plaintifif.
Start, J., delivered the opinion of the court :

The defendant's motion for a verdict was properly overruled.
It appears from testimony, not controverted, that the defendant was
a stockholder and a director of the First National Bank of St.
Albans. The plaintifif and his sister had money deposited there,
evidenced by certificates of deposit. There was a run on the bank,
and the plaintifl: presented these certificates, and demanded the
money evidenced by them. There was a sufficient amount of monev
at hand to pay the sums demanded ; but the officers of the bank
desired to retain it, and asked the plaintiff to leave it. Thereupon
he told them he would accept of a new certificate signed by the
defendant : otherwise he wanted the money. They gave him such
a certificate, and he surrendered up to the bank the old certificates.
The plaintifif subsequently paid his sister the amount of her certifi-
cate, which was included in the new certificate. The cashier of
the bank understood the plaintiff" was to^ forbear for a reasonable
time the exercise of his right to draw his money, and the plaintiff*
did forbear until the bank closed its doors, and its funds went into
the hands of a receiver. At this time the bank was insolvent. The
evidence fails to show that a definite period of forbearance was
agreed upon, but no question is made but that the plaintiff did
forbear for a reasonable time. The uncontroverted evidence
clearly entitled the plaintifif to a holding by the court that there
was a sufficient consideration for the defendant's promise. The
request by the officers of the bank that the plaintiff' leave the
money, his reply, the giving of a new certificate, the surrender of

112 tlUARAXTV AXD sfRirrvsriTP.

the old t)iu-s, and tlie forbearance nt the plaintiff adniii of hut one
interi)retation. The i)laintift', in consideration of a new certiticate
signed l)y the defendant, surrendered the old certificates, and
agreed to and did forhear the exercise of a legal right to then draw
his own and his sister's money. In view of the uncontroverted
facts and circumstances in the case, any other construction of the
contract would !)(.■ meaningless. It is a rule, in construing con-
tracts, that they are to he so understood as to have a legal and
actual operation ; and a construction which would he senseless, in
view of the circumstances of the case, or wholly inapplicable, should
never be adopted. Story, Cont. § 640; Atzvood v. Cobb, 16 Pick.
22/: 26 Am. Dec. 657; Evans v. Sanders, 8 Port. (Ala.) 497, t,^
Am. 1 )ec. 2()7.

Words are not to be construed in a frivolous or ineffectual
sense, when a contrary exposition can be given them. They should
have a fjeasonaljle construction, according to the intent of the
l)arties. Chitty, Cont. 79. In Gunnison v. Bancroft, 1 1 Vt. 490,
it is held that language used Ijy one ])arry to a contract is to receive
such a construction as he at the time su])posed the other party
would give to it, or such a construction as the other party was
fairly justified in giving to it. In Judcz'ine v. Goodrich, 35 Vt.
19, where one, in reply to the request of another for a license to
do something in respect to the former's pro])erty. did not intend
to accede to the rec|uest, but purposely used language susceptible
of a double interpretation in this respect, with the intention that
the other ]jarlv should derive the impression that he did accede
to the request, and the other did derive such impression and relied
on it, it w^as held that he was bound to the .same extent as if he
had, in express words, granted the license. When the plaintiff
said to the officers of the liank. in re])]} to their requests that he
leave the money, that he would accept a new certificate signed by
the defendant, otherwise he wanted his money, they had the right
to understand him as offering to leave the money for a reasonable
time if such a certificate w-ere furnished. They accepted of his
offer, furnished the certificate, he accepted of it. and t'or])ore for a
reasonable time the exercise of his right to draw the money. All
parties seemed to have underst(X)d that such was his undertaking,
aiKl what was said and done admits of no other interpretation, and
such will be deemed to have been the contract.

It is insisted that the defendant's promise was without con-
sideration, because no time of forbearance was agreed upon. A

]:ALr.AKD vs. BURTON, 113

promise to forbear and give further time for the payment of a
debt, although no certain or definite time be named, if followed Iw
an actual forbearance for a reasonable time, is a valid and sufficient
consideration for a promise to pay the debt by a person other than
the debtor. King v. Upton, 4 Me. 387, 16 Am. Dec. 266; Elton v.
Johnson, 16 Conn. 253; Hozi'c v. Taggart, 133 Mass. 284; Prouty
v. Wilson, 123 Mass. 297; Robinson v. Gould, 11 Cush. 55; Moore
v. McKenney, 83 Me. 80. In Howe v. Taggart, supra, Field, J.,
in delivering- the opinion of the court, says: "It seems to have been
assumed in this commonwealth that an agreement to forbear bring-
ing suit for a debt due, even although for an indefinite time, and
even although it cannot be construed to be an agreement for per-
petual forbearance, if followed by actual forbearance for a reason-
able time, is a good consideration for a promise." In Moore v.
McKenney, supra, decided by the Supreme Court of Maine in
1890, the 'defendant wrote his name upon the back of the note
declared upon, intending thereby to guarantee its payment. He
did this in consideration of the plaintiff's promise to forbear and
give further time for the payment of the note ; no time of for-
bearance was agreed upon, and it was held that the court properly
ordered a verdict for the plaintiff'. Walton, J., in delivering the
opinion of the court, says: "If the promise is in general t'.-rms, no»
particular time being named, the law implies that the forbearance
shall be for a reasonable time. Such is the legal construction of
such a promise. The debtor, therefore, by such promise, does
obtain a right, not only to some delay, but to a reasonable delay ;
such as, under all the circumstances, he is reasonably entitled to."
In King v. Upton, supra, the promise counted on was to pay the
debt of another, in consideration that the creditor would "forbear
and give further time for the payment of the debt," naming no
time. The plaintiff averred that he did thereupon forbear, and
the consideration was held sufficient. In Calkins v. Chandler, 36
Mich. 320. 24 Am. Rep. 593, it is held that an agreement to pay
the debt of another in consideration that the creditor would forbear -
and give further time for payment is founded upon a good con-
sideration, although no definite time of forbearance is named. In
Hakes V. Hotchkiss, 23 Vt. 235, it is said: "If no agreement be
made as to the length of time during which the promisee will for-
bear, the law will presume that he undertakes to forbear for a
reasonable time, and this is sufficiently certain, and is a good con-
sideration." Parsons in his work on Contracts (vol. i, p. 442).'
9

114 GUARANTY AXD SURETYSHIP.

says: "Nor need the agreement to delay lie for a time certain, for it
may be for a reasonable time only, and yet be sufficient considera-
tion for a promise."

The Revised Statutes of the United States (sec. 5242, relating
to banks) provide, among other things, that all payments of
money made after the commission of an act of insolvency, or in
contemplation thereof, with a view to prevent the application of its
assets in the manner i^rovided in that chapter, (-i wiih a view to
the preference of one creditor to another, except in payment of its
circulating notes, shall be utterly null and void. It is insisted by
the defendant that a payment by the bank at the time the plaintiff
called for his money would have been void under this provision
of the statute ; that the plaintiff lost nothing by his agreement
and forbearance; and that neither the bank I'.or the defendant
were benefitted thereby, .\otwithstanding this statute and the
insolvency of the bank, the plaintiff' waived a legal right in con-
sideration of the defendant's promise, llefore he agreed to for-
bear, the certificates were not subject 10 any defense, and he could
have negotiated them, and they would have been payable on pre-
sentation at the bank, jjy surrendering them, and taking a new
certificate impaired by this agreement to forbear, he made his
claim subject to a defense that would be likely to aff'ect its nego-
tiability and value. Had the j^laintiff drawn his money, it is not
certain that the receiver would have called for it, or that he would
have recovered it by an action. A determination of the receiver's
right to the money might necessitate a trial of doubtful issues of
law and fact. The plaintitT had a right to draw, and to try and
hold the monc}'. 1 le waived this right in consideration of the
defendant's promise. J kit for tins promise he would have drawn
Ills money January 14, 1884. The receiver was not appointed
until some three months thereafter, during which time no one
could have rightfully called on him for the money ; and during
this time, at least, he waived his right to have and enjoy his
money. He may, or may not, have been damaged by waiving these
rights. He waived them in consideration of the defendant's prom-
ise, and that is sufficient.

Consideration does not necessarily depend upon whether the
thing promised results in a benefit to the promisee, or a detriment
to the promisor. It is enough that something is promised, or the
exercise of a present right is forborne. In Anson, on Contracts,
p. 62, it is said: "Courts will not inquire whether the thing which

BALLARD VS BURTON. 115

forms the consideration does, in fact, benefit the promisee or a
third party or is of any benefit to any one. It is enough that some-
thing is promised, done, forborne, or suft"ered by the party to whom
the promise is made, as a consideration for the promise made tq
him." The law will not enter into an niquiry as to the adequacy
of the consideration for a promise, but will leave the parties to be
the sole judges of the benefits to be derived therefrom, unless the
inadequacy of the consideration is so gross as of itself to prove
fraud or imposition. Judy v. Loudernian, 48 Ohio St. 562. In
general a waiver of any legal right, at the request of another
party, is a sufficient consideration for a promise, i Parsons, Cont.,
p. 444. Any damage or suspension or forbearance of a right will
be sufficient to sustain a promise. 2 Kent, Com. 12th ed., p. 465.
In Burr v. Wilcox, 13 Allen, 273, Wells, J., in defining "consid-
erations," says: "Any act done at the defendant's request, and for
his convenience, or to the inconvenience of the plaintiff', would be
sufficient." The exchequer chamber, in 1875, defined "considera-
tion" as follows : "A valuable consideration in the sense of the
law, may consist either in some right, interest, profit or benefit
accruing to the one party, or some forbearance, detriment, loss, or
responsibility given, suffered, or undertaken by the other." Any
act done by the promisee at the request of the promisor, however
trifling the loss to himself or the benefit to the promisor, is a suffi-
cient consideration for a promise made without fraud, and with
full knowledge of all the circumstances. Doyle v. Dixon, 97 Mass.
213, 93 Am. Dec. 80. Pollock, in his work on Contracts, p. 166,
says : "Consideration means, not so much that one party is profit-
ing, as that the other abandons some legal right in the present."
In Boyd v. Friese, 5 Gray 554, Shaw, Ch. J., says : "An agree-
ment, therefore, to forego one's legal right, or forbear collecting
a debt, or enforcing any other beneficial right, is a good consid-
eration for an express promise made upon it. Such agreement
may be expressed or implied by law."

There was evidence tending to show that the defendant was
a maker of the certificate, and, if such maker, his undertaking was
to pay the plaintiff the amount called for by the certificate when it,
properly indorsed, should be returned to the bank. The bank
having been closed, and a receiver appointed, a return of the cer-
tificate, properly indorsed, to the receiver, was all that was re-
quired. No other demand or notice was necessary before bringing
suit. There were no officers of the bank to whom the certificate

116 GUARANTY AND SURETYSHIP.

could be rL'turiK'd. The funds of the hinik were in the hands of
llie receiver, and, for tlie purpose of returning the certificate as
therein provided, the receiver was the bank. The plaintiff was
allowed to testify that he would not have left his money in the
bank if he had not understood that the defentlant was obligated
to pay it. I'he plaintiff was allowed to testify, without objection,
t'.al he went to the bank for the purpose of drawing his money;
and there was no errdr in all<i\\ing him to state that he would
have done what he proposed to do, but for the defendant's promise.
The defendant requested tlie court to instruct the jury "that if
Albert Sowles and Edward S. Sowlcs signed the certificate as in-
dorsers, with tlie right of demand and notice, then, under the
testimony, the defendant is not lialilc. We tliink from the testi-
mony, that, if Albert and Edward A. Sowles were indorsers, then
the defendant was an indorser: ])ut the nccessitv for such instruc-
tion w-as obviated by the instruction that, if the jury found that the
defendant was an indorser. then the plaintifY could not recover,
and it was not error to decline to give the instruction re(|nestc(].
Whatever may have been the relation of the signers of the certi-
ficate to each other, they were for the purpose of determining their
liability to the plaintiff, either makers or indorsers of the certificate.
The evidence showing the understanding between the signers of
the certificate as to their respective liability to the plaintiff, and
as between each other, was not withdrawn from the consideration
of the jury, and it was for them to say, from all the evidence,,
whether the undertaking of the defendant was that of a maker
or that of an indorser. The court told the jury that, if nothing
was said to the plaintiff to explain to him that their obligation on
the certificate was that of indorsers, and not makers, he had
the right to understand that they were makers and absolutely liable
upon it. It is insisted by counsel for the defendant that the affix-
ing of the word "surety" to the defendant's name was notice to the
plaintiff that the defendant intended to limit and restrict his lial)il-
itv. and that this fact should overcome the presum])tion of law laid
down by the court. The word "surety," affixed to the defendant's
name, only indicated to the plaintiff the fact that the defendant
was surety for the bank, and this was already known to him. He
knew that the bank had the money ; that the defendants E. A.
Sowdes and A. Sowles did not have it ; and that, in fact, they were
sureties for the bank: liut this fact did not change the under-
taking of the defendant from that of a maker to that of an in-

BALLARD VS. BURTON. 117

dorser entitled to demand and notice. A surety is an original
maker, and becomes primarily and absolutely liable, as much so
as the principal, to any person lawfully holding the paper. Bank
of Nezvbury v. Richards, 35 Vt. 284. The defendant was liable,
prima facie, as a maker of the certificate. A'ational Bank of
Belloii's Falls v. Dorset Marble Co., 61 Vt. 106, 2 L. R. A. 428;
.Strong V. Rikers, 16 Vt. 554. But this presumption was suscep-
tible of being controlled by evidence of the real obligation in-
tended to be assumed by the defendant, and known to the plaintiff.
The court made a proper application of this rule in admitting evi-
dence as to what transpired before and at the time of the execution
of the certificate of deposit, as affecting the liability of the defend-
ant, and told the jury that, if they found that the defendant was
an indorser, then the plaintiff could not recover. To justify the
verdict returned by the jury, they must have found that the defend-
ant's undertaking was that of a maker of the certificate. The court
told the jur}' that, if the defendant put his name upon the certi-
ficate for the purpose of stopping a run on the bank and tiding it
over its then exigency, this would be a sufficient consideration. If
this was not the true test of consideration, the defendant has no
reason to complain. Tt was not necessary that he receive a con-
sideration. As the evidence stood, the question as to whether he
received a consideration was an immaterial issue, and the defend-
ant was not prejudiced by the court's submitting such issue to the
jury. It appeared from the undisputed facts that his principal
received a sufficient consideration to support his promise. This
was all that was recjuired. Moore v. McKenney, King v. Upton
and Hozve v. Taggart, snpra. The court might have properly
held that a sufficient consideration was established by the uncon-
tradicted facts, and withheld this question from, the consideration
of the jury. The plaintifif concedes that there was error in the
pro forma ruling of the court upon the question of interest, and
offers to remit the excess of interest included in the judgment
rendered in the county court.

Judgment reversed.

Judgment for the plaintiff to recover $962, with interest to
be computed at the rate of 4 per cent per annum from the date of
the certificate to the date of the writ, and 6 per cent thereafter,
and his costs in the count}' court, less the dividends paid on the
certificate by the receiver, and the defendant's costs in this court.

118 GUARANTY AND SURETYSHIP.

Taft. J. On the 14th of January, 1884, the bank was hope-
lessly insolvent and the plaint i tit' had no right to withdraw his
money. J, therefore, while not dissenting, doubt on the subject
of consideration.

Davis Sewing Machine Comi-axv t'.s-. RiciiARns et. al. (1885)-
115 L". S. 524; L. Ed'n Book 29, 480.

In error to the Supreme Court of the District of Columbia.

Mr. James G. Payne, for plaintiff in error.

Mr. IV. A. Cook and Mr. C. C. Cole, for defendants in error.

Gray, J. This was an action, brought in the Supreme Court
of the District of Columbia, upon a guaranty of the performance
by one John W. Poler of a contract under seal, dated December
17, 1872, between him and the plaintiff corporation, by which it
was agreed that all sales of sewing machines which the corporation
should make to him should lie upon certain terms and conditions,^
the principal of which were that Poler should use all reasonable
efforts to introduce, supply and sell the machines of the corpora-
tion, at not less than its regular retail prices, throughout the Dis-
trict of Columbia and the Counties of Prince George and Mont-
gomery, in the State of Maryland, and should pay all indebtedness
by account, note, indorsement or otherwise, which should arise
from him to the corporation under the contract, and shotild not
engage in the sale of sewing machines of any other manufacture;
and that the corporation, during the continuance of the agency,
should sell its machines to him at a certain discount, and receive
payment therefor in a certain manner ; and that either party might
terminate the agency at pleasure.

The guarantv was upon the same paper with the above con-
tract, and was as follows :

"For value received, we hereby guarantee to the Davis Sewing Ma-
chine Company, of Watertown, New York, the full performance of the
foregoing contract on the part of John W. Poler. and the payment by
said John W. Poler of all indebtedness, by account, note, indorsement of
notes (including renewals and extensions) or otherwise, to the said Davis

DAVIS SEWING MACHINE CO. VS. RICHARDS. 119

Sewing Machine Company, for property sold to said John W. Poler,
under this contract, to the amount of Three Thousand C$3,000) Dollars.
"Dated Washington, D. C, this 17th day of December, 1872.

"A. ROTHWELL.

"A. C. Richards."

Under the guaranty were these words: "I consider the above
sureties entirely responsible. Washington, Dec. 19. 1872. J. T.
Stevens."

At the trial the above papers, signed by the parties, were given
in evidence by the plaintiff, and there v.as proof of the following
facts: On December 17, 1872, at Washington, the contract was
executed by Poler, and the guaranty was signed l^y the defendants,
and the contract and guaranty, after being so signed, were deliv-
ered by the defendants to Poler, and by Poler to Stevens, the
plaintiff's attorney, and by Stevens afterwards forwarded, with
his recommendation of tlie sureties, to the plaintiff at W^atertown
in the State of New York, and the contract there executed by the
plaintiff'. The plaintiff afterwards delivered goods to Poler under
the contract, and he did not pay for tliem. The defendants had
no notice of the plaintiff's execution of the contract, or acceptance
of the guaranty, and no notice or knowledge that the plaintiff had
furnished any goods to Poler under the contract or upon the faith
of the guaranty, until January, 1875. when payment therefor was
demanded bv the plaintiff' of the defendants and refused. At the
time of the signing of the guaranty, the plaintiff had furnished no
goods to Poler, and the negotiations then pending between the
plaintiff' and Poler related to prospective transactions between
them.

The court instructed the jury as follows: "It appearing, at
the time the defendants signed the guarant}' on the back of the
contract between plaintiff and Poler, the plaintiff had not executed
the contract or assented thereto, and that the contract and guar-
anty related to prospective dealings between the plaintiff and Poler,
and that subsequently to the signing thereof by the defendants the
attorney for the plaintiffs approved the responsibility of the guar-
antors and sent the contract to Watertown, New York, to the
plaintiff, which subsequently signed it, and no notice having been
given by the plaintiff to the defendants of the acceptance of such
contract and guaranty, and that it intended to furnish goods there-
on and hold the defendants responsible, the plaintiff cannot recover,
and the jury should find for the defendants."

120 GUARANTY AND SURETYSHIP.

A verdict was returned for the defendants, and judgment ren-
dered thereon, which on exceptions Uy the plaintiff was alTfirnied
at the Cieneral Term, and the plaintitit sued out this writ of error,
penchng which one of the defendants died and liis executor was
summoned in.

The decision of this case depends upon the apphcation of the
rules of law stated in die opinion in the recent case of Dazis v.
Udells, 104 U. S. 159. in \\liich the earlier decisions of Uiis court
upon the subject are reviewed.

Those rules may be stmimed up as follows: .\ contract of
guarant}', like every other contract, can only l)e made by the
mutual assent of the parties. If the guaranty is signed by the
guarantor at the request of the other party, or if the hitter's agree-
men to accept is contemporaneous with the guaranty, or if the
receipt from him (if a valuable consideratitni, however small, is
acknowledged in the guaranty, the mutual assent is proved, and
the delivery of the gttaranty to him or for his use completes the
contract. Btit if the guaranty is signed b\- the guarantor with-
out an\- previous request of the other party, and in his absence,
for no consideration moving between them except future advances
to be made to the principal debtor, the guaranty is in legal efifect
an offer or proposal on the part of the guarantor, needing an
acceptance by the other party to complete the contract.

The case at bar belongs to the latter class. There is no evi-
dence of any request from the plaintiff" corporation to the guaran-
tors or of any consideration moving from it and received or ac-
knowledged by them at the time of their signing the guaranty.
The general words at the beginning of a guarant}-, "value re-
ceived," without stating from wdiom, are quite as consistent with
a consideration received by the guarantor from the principal debtor
only. The certificate of the sufficiency of the guarantors, written
by the plaintiff's attorney under the guaranty, bears date two days
later than the guarantv itself. The plaintiff's original contract
with the principal debtor was not executed by the ]:)laintiff" until
after that. The guarantors had no notice that their sufficiency
had been approved, or that their guaranty had l)een accepted, or
even that the original contract had been executed or assented to
by the plaintiff, until long afterward, when payment was de-
manded of them for goods supplied by the plaintiff to the principal
debtor.

Judgment affirmed.

GANG VS. FARMERS RANK. 1-1

«Gano z's. FAR^n-:Rs' Bank of Kfntuckv at Georgetown (1898)

103 Ky. 508; 45 S. W. 519.

Appeal from Circiii*: Court, Scott county.

Jas. 7 . Kcliy and Geo. E. Prc-d'itf, for appellant.
Ozvens & Fiiincll, for appellee.

Hazelrigg, J. The appellant, Gano, and nine others executed
a writing to the end that one P. T. Pullen might obtain the sum of
$io.coo with which to run a milling business in Georgetown, Ken-
tucky. The appellee bank, on the strength of this writing, fur-
nished $5,000, which was used to pay off a debt then owing the
bank by Pullen, and also $5,000 which was used in the business.
After a time, Pullen being insolvent, the bank called on the obligors
in the writing for a discharge of their undertaking. All seemed
to have paid their respective shares demanded by the writing, ex-
cept the appellant, who tendered certain issues of law and fact in
defense of the action which followed liis refusal to pay his share.
The writing which forms the basis of action is as follows :

"P. T. Pullen, of Georgetown, Kentucky, contemplating the leasing
of the Thompson mills, and carrying on the milling business, and being in
need of capital with which to buy stock and run the same as it should be
run successfully : Now, in order to aid him, we. W. E. Pullen, George
Carley, George V. Payne, T. T. Hedger, J. M. Penn, James W. Craig,
Buford Hall, Daniel Gano, S. ?>. Triplett, and Warren C. Graves, whose
names are hereto signed, agree to become his surety to an amount not
exceeding ten thousand dollars in the aggregate. After this instrument
of writing had been signed by all of us (ten in number), it may be used by
the said P. T. Pullen in the nature of a collateral for a sum or sums not
exceeding ten thousand dollars in the aggregate, and we, the said signers,
shall be bound jointly and severally as sureties upon any note or notes not
exceeding in the aggregate said sum to which said Pullen shall sign his
name and deposit this as collateral. In case the money is borrowed of more
than one party, the lenders can agree upon who shall hold this writing for
the benefit of all. Said Pullen agrees to mortgage all property he now has
to us in order to secure us by virtue of obligations assumed in this instru-
ment, and renew said mortgage from time to time when required, upon
any and all property he may have. This instrument of writing to con-
tinue in force for three years from the first day of July, 1891, and no
longer, and if at any time any one or more of the signers hereto should
die or become insolvent, said Pullen is to either pay off his or their por-
tion of the money that may be borrowed, or furnish other good and
: solvent surety or sureties in his or their stead. Said Pullen agrees to

122 GUARANTY AXD SCRKTYSHip.

keep all grain and llour he may have on hand insured in some good in-
surance company for the benefit of the signers hereto, and his books are
at all times to be open to the inspection of any one or all of the said sign-
ers, either in person or by an expert of their selection. Given under our
hands this 15th day of July, 1891.

(Signed) George V. Payne,"

And others named in the writing.

The paper, as we have already indicated, was taken by Pullen
to tlie appellee, to whom Ptillen was then indebted in the sum of
$5,000, evidenced by Pullen's note with his brother as surety. A
new note was then executed to the bank for $5,000, and this note
was then discounted l)y the bank, and the proceeds taken to pay
off this pre-existinc^ debt. It is therefore insisted for the appel-
lant that the principle announced in Russell v. Ballard, 16 B. Mon.
205, is applicable here and, when applied, the surety stands dis-
charged. It was there said: "If a note be purchased by a party,
with notice that one of the obligors is surety merely, and that the
sale and purchase will defeat the purpose for which it was exe-
cuted by him, or will violate any understanding or agreement
between him and his principal, then the purchaser will be affected
by such notice, and cannot hold the stirety liable on the note to
compel him to pay it."' Here the bank had notice that Gano was
surety merely on the writing taken as collateral by the bank to
secure the new note, and it had notice that the sale and purchase
of this new note and application of its proceeds to pay off the
old debt would defeat the sole purpose for which the writing was
executed by the surety, namely, "to raise the sum of ten thousand
dollars, buy stock and run the same." This would seem sufficient
to bring the case within the principle announced in the cited case,
for it is manifest that, if one-half the capital needed to carry on
the milling business and "run the same successfully" was to be
taken to pay off an old dcl)t, the business must suffer, and likely
not be run successfully. But this is not all. The bank had notice
that the sureties looked to the property which this money — all of
it — would buy as an indcninity by way of mortgage; and b\ what-
ever amount the actual cash furnished Pullen for his business was
lessened, by that amount the value of their indemnity would be
lessened. This is also in line with the general doctrine so often
announced by the textwriter and by this court for the protection
of sureties. We might assume without proof-^l)Ul the evidence
is conclusive on the point — that appellant would not have entered

GANG VS. FARA'tERS BANK. 1^3

into this contract had it been disclosed to him that this "letter of
credit", as the writing may be termed, was to be used to pay off
the large debt due the bank, and therefore it was incumbent on
the bank to disclose to the surety all the facts material to the risk
before it could divert the fund intended to be raised by the col-
lateral to purposes of its own. The rule is thus stated by Mr.
Story in his Equity Jurisprudence: "The contract of suretyship
imports entire good faith and confidence between the parties in
regard to the whole transaction. Anv concealment of material
facts, or any expressed or implied misrepresentation of facts, or
any undue advantage taken of a surety by his creditor, either by
surprise or by withholding proper information, will undoubtedly
permit sufficient grounds to invalidate the contract." Section 324.
And further: "Thus if a party taking a guaranty from a surety
conceals from him facts which increase his risk, and suffers him
to enter into the contract under false impressions as to the real
state of facts, such concealment will amount to a fraud, because
the party is bound to make the disclosure, and the omission to
make it under such circumstances is equivalent to an affirmation
that the facts do not exist." Sections 214, 215. See Com. v.
Berry, 95 Ky. 443, 26 S. W. 7, and cases cited. Other obligors,
who lived in or about Georgetown, the scene of this transaction,
seem either to have had knowledge of these material facts at the
time, or obtained it shortly afterwards, and, having that knowledge,
still paid off their shares ; but the appellant was an old man, some
85 years of age, living quite a distance from the town, and visiting
there only a few times within a year. There is no doubt of his
entire ignorance of the material facts indicated. He was not even
apprised of the fact that the writing had been used by Pullen with
the bank or anyone else, and money obtained thereby. It seems
to be clear that he was entitled to this notice. He had merely
offered his name with that of others as surety to whomsoever
might accept the offer and loan of money. He was therefore
entitled to notice of acceptance. In Steadman v. Guthrie, 4 Mete.
(Ky.) 148. it was held that: "When the off'er is to guaranty a
debt for which another is primarily liable in consideration of some
act to be performed by the creditor, mere performance of the act
is not sufficient to fix the liability of the guarantor ; but the credi-
tor must notify the guarantor of his acceptance of the offer or of
his intention to act upon if." That the guarantor might, by inquiry
from the person in whose favor the guaranty was given, have

124 • GUARANTY A\D SURETYSHIP.

learned what had passed iDeluccn the grnarantees ami himself, does
not dispense with notice. A person tiius proposing to become
surety for another is not bound tn inquire as to the acceptance of
his proposal. The creditor who intends to hold him responsible
for the debt of another must show reasonable notice of such inten-
tion. See, also, Khicheloc v. Holmes. 7 B. ]\Ion. 5 ; Lozcc v. Beck-
zvitli, 14 B. Mon. 189; Thompson v. Glover. 78 Ky. 195 It is
true in this case that the record does not show that the bank's old
debt on l\illen was in danger of being lost. Jt was secured by the
brother of the debtor, who was solvent, although his property was
in the main covered by mortgages, and he was already indebted
to the l)ank in a considerable sum. Still it may be said he
was solvent. We think this, however, makes no difference. It
niav show more conclusively — what is already apparent enough —
that there was no actual fraud intended by the bank, or any of its
officers, in the transaction ; but this does not change the legal
status of the parties on the point involved. It further appears that
the brother of the principal debtor, who was surety on an old debt,
had a mortgage on certain stock and property belonging to the
debtor to indemnify him in his suretyship; and this was released,
and a mortgage taken in favor of the obligors in the writing in
question. But it further appears that the value of this property
was quite insignificant, and that appellant had no knowledge even
that this had been done. The writing, the contents of which the
bank had notice of, because they accepted and acted on it. entitled
the ol)ligors to have a mortgage on all the property the debtor had
or might acquire ; and we do not see that, because one was in fact
•executed of which no notice whatever was given to the ai)pellant,
this can take the place of the notice to which we have said appel-
lant was entitled when his offer was accepted and acted on by
the bank. Actual notice is what the law requires, and notice or
knowledge of this new mortgage might have been sufficient, but
this the appellant did not have. We think the plaintiff's petition
should have been dismissed, and the judgment is reversed for pro-
ceedings cojisistent with this opinion.

GIBBS VS. BLANCIIARU. 125'

GlBBS ET AL. VS. lU.ANCHARD ( [867).

15 Mich. 292.

The facts and the exceptions to the ruhngs and the charge of
the court are stated in the opinion.

M. J. Smiley, for plaintiff in error.
H. F. Sez'ci'ciis, for defendant in error.

Christinacy^ J. The main question in this case is whether"
the promise of Gibbs (one of the defendants below) comes within
the second clause of the second section of our statute of frauds,
as a "special promise to answer for the debt, default, or misdoings"
of Daily, the other defendant.

The declaration contains a special count upon the contract,
and the common counts for goods sold and delivered. The special
count sets forth that, "in consideration that said plaintiff agreed
to sell to the said Daily a certain horse which the plaintiff' then and
there had, of the value of sixty dollars, undertook and promised the
said plaintiff to make, sign and deliver their promissory note to
said plaintiff or bearer, in the sum of sixty dollars, for the pur-
chase price of said horse, which said promissory note was to be
payable thereafter, in six months from date." It further alleges
that the plaintiff, relying upon said promise of said defendants,
and in consideration thereof, did sell and deliver the horse to said
John Daily, for the price of sixty dollars. The breach alleges the
failure and refusal to make and deliver the note, as well as the
refusal to pay the money.

It was clear, from the evidence, that the horse was bought for
the benefit of, and delivered to Daily, and that the plaintiff' would
not have sold the horse on the credit of Daily alone. But upon
the question, whether Daily and Gibbs were to give a joint note,
or whether the latter was only to indorse the note of the former,.
or to become his guarantor, the evidence was conflicting.

There was evidence from which the jury might have found a
joint promise, or, in other words, a promise by both to execute and
deliver to the plaintiff a joint note for the price ; and from the cir-
cumstances and subsequent acts of the parties, the jury might have
been authorized to find that the note was to be made payable in six

126 GUARANTY AND SURCTVSllii'.

months, though they might also have found that no particular
time was mentioned or expressly agreed upon for whicli the note
was to run.

The evidence tending to shOw that the promise was joint, or
that a joint note was tt) be given, was substantially this: Gibbs
and Daily called upon the plaintiff together, and Gibbs asked
plaintiff' if he wanted to sell his mare. Plaintiff" said he did. Gibbs
inquired the price, and being told sixty dollars, wanted to know if
plaintiff' would take Daily's note if he, Gibbs, would sign it and see
it paid; to this plaintiff' assented. The mare not being present,
and Gibbs, being anxious to get home, said Daily might go with
plaintiff and see the mare, and if the mare suited him he might
fetch her back with him and draw up a note and Daily might sign
it, and the first time he, Gibbs, went to town he would sign it.
The mare was delivered to Daily, who signed a note for it at six
months, which was afterwards endorsed by Gibbs on Sunday.
This note was produced on the trial and tendered back to defend-
ants.

The court charged the jury that "if it was the understanding
of the parties that Daily was the purchaser, and that he should
give his note to the plaintiff for the price, and that Gibbs should
so sign as only to be liable as indorser, the plaintiff must fail. If
however, the understanding of the parties was, at the time, that
Gibbs and Daily were the buyers of the mare, and that both were
to be liable as purchasers for the purchase price, and, accordingly,
should Ijecome joint makers of a promissory note for its payment,
though Daily was less relied upon by die plaintiff than Gibbs, and
though, in ])oint of tact, it was understood that the mare, when
bought, should belong to Daily, the plaintiff is entitled to recover.
That the principle in this class of cases is. that if the agreement
be such that two persons, in the purchase of goods, do at the same
time become co-debtors to the seller for the price, then both are
purchasers, and the case is not w itliin the statute of frauds, and no
memorandum in writing is necessary. But if \^ be such that one,
at the time, becomes debtor to the seller, and the other security
onlv for the debt, it is within the statute of frauds, and the under-
taking of the security is void unless a memorandum of it in writing
is made."

Though the f|uestion is one requiring some accuracy of dis-
crimination, I have come to the conclusion, after a careful exam-
ination of the authorities, that the charge of the court was not only

GIBBS VS. ELANCIIARD, 127

correct, but that it expresses the true rule of law applicable to the
question with remarkable clearness.

No question can arise as to the sufficiency of the consideration
for the undertaking of Gibbs, whether original or collateral, with-
in or without the statute. Without his promise, the plaintiff would
not have parted with his property. The consideration, therefore,
is equally as good in law as a sale of the horse to him alone would
have been for his sole promise to pay the price.

The plain ordinary meaning of the language used in this
clause of the statute would seem sufficiently to indicate that the
class of special promises required to be in writing includes only
such as are secondary or collateral to, or in aid of the undertaking
or liability of some other party whose obligation, as between the
promisor and promisee, is original or primary. If there be no
such original or primary undertaking or liability of another party,
there is nothing to which the promise in question can be secondary
or collateral, and tne promise is, therefore, original in its nature,
and not within the statute. In other words, the statute applies
only to promises which are in the nature of guaranties for some
original or primary obligations to be performed by another. This
has been settled by a remarkably uniform course of decision since
the passage of the statute (29 Car. II., ch. 3, Sec. 4), which does
not essentially differ from our own and those of most of the states
of the Union. So numerous and so uniform have been the deci-
sions upon this point, that it would savor of affectation to cite
them. They will be found cited in most of the elementary treatises :
See Browne on Stat. Frauds, cli. 10 ; Chitty on Cont., p. 442, et seq. ;
2 Pars, on Cont., 4th ed., 301. And though the terms original ana
collateral have i)een criticised, yet when used, the one to mark
the obligation of the principal debtor, the other that of the person
who undertakes to answer for such debt, they are strictly correct,
and give the true view of this clause of the statute : Mallory v.
Gillctt, 2T N. Y. 412, 414; Elrowne on Stat. Frauds, ch. to. Sec.
192.

' As a result of this principle, that one must be held originally
or primarily, and the other only collaterally, or in default of the
former it follows that the statute only applies to such promises
made in behalf or for the benefit of another, as would, if valid,
create a distinct and several liability of the party thus promising,
and not a joint liability with the party in whose behalf it is made.
For if one be bound in the first instance and at all events, and the

128 GUARANTY AND SURETYSHIP.

Other only contingently, or on default of the first, the liahility
could not he j<iinl. ( )n the other hand, if ihr ])i-(iniise ny tlie «>l)h-
gation of the two he joint, as hetvveen th.ein, on the one side and
the promisee on the other, then neither is collateral to the other,
and such jcjint ])roniise is original as to hoth. Hence it has heen
held in England that an agreement^ to convert a separate into a
jtiint deht is not w illiin the sta'uti, : ihe effect heing to create a new
deht, in consideration of the- fornv.r heing extinguished: Ex parte
Lane, i De Gex. 300; llrowne on Stat, of hYauds. 193.

Where the question arises (as it lias in almost all the cases)
as one of the several liahility of the party promising in hehalf of
another (as for the price of goods sold to another), the true rule
undoul)tedl\' is. tliat if tlie lait^r (to wlioiii the goods are sold)
he liable at all. then the promise of the former is collateral, and
must he in writing; because, from the very nature of such a case,
the part}- to whom the goods are sold, and in whose behalf the
promise is made, is the principal debtor, and l^ccause it would be
manifest] \- tnn-easonable to hold that both were in such cases
severally liable as principals, as upon several original undertakings
at the same moment. See Ilctficld ct al. v. Doiv, 3 Dutcher, 440;
Dixon V. F razee, 1 1*^. 1). Smith, 32. y\nd this rule applies e(|ually
when the promise is made in reference to a pre-existing lialjility of
another, if the plaintifif in accepting the promise does not release the
I)rincipal. In reference to all such cases tlie aiuhorities may be said
to be entirel\- uniform. But the rule thus estal)lished as to cases
where the question is one of the several Uabilitv of the i)aiiv making
the special ]>romi.se, can, I think, have no application to the f|uestion
of a joint liability upon a joint promise of the two. Tlie only intima-
tion to the contrary which 1 have seen is to be found in a dictmn of
Judge Catron in Mctlheh.'s v. Mlllnii, .\ N'crg. 576, a case in which
no sucli question was involved, there l)eing no evidence tending to
show a joint j^romise. To say that when the party originally owing
the debt, or for whom goods are ptu'chased and to whom they are
delivered, is liable at all, no other ])erson can be lield severally
liable' unless the promise be in writing, is merelv sa\ing tliat such
promise is collateral, and. therefore, within the statute. lUit to
say that they cannot both become jointly liable tipon their joint
promise, not in writing, to pay such debt or the i)rice of such
gO(Kls. if the i)ariy originally cnving the deljl or receiving the
goods be at all liable, is btit another form of declaring that it is
not compeicul for botli to become original promisors, as between

GIBBS \S. BLANCIIARD. 129

them and the promisee, unless both are under an equal obligation,
as betzveen tbeiitselves, for the ultimate ];iayment of the debt. Such
a proposition, it seems to me, can not be maintained either upon
principle or authority. Such an objection to a joint promise seems
rather to have reference to som*" supposed defect of consideration
(a question entirely distinct from the statute) than to the promise.
And, if the party promising jointly with another to whom goods
are furnished, can not be bound jointly with the latter, because,
as between the two promisors, he, not having received the goods,
is under no obligation to pay ; then the same reason ought to op-
erate with still greater force against his scz'cral promise to pay the
zi'Jwlc price of goods received by the other. But the law in the
latter case is well settled the other way.

It was very correctly remarked by Whelply, J., in Hcfficld
et al. V. Dozv, above cited, that, "'tO' settle the rights of promisor^'
inter sesc, to ascertain as betzveen tiieni who is to pay the debt
ultimatel}-. is no part of the object of the act. It by no means
follows that he who by the arrangement between the promisors
ultimately may be bound to pay the debt is. as to the promisee, the
principal debtor. That does not concern him." This view, it
seems to me, rests upon sound reasons — reasons which must nat^
urally enter into the consideration of business men, in the ordinary
transactions of business. Where a partv has been willing to put
himself in the position of an original promisor (either jointly or
severally) to a vendor for goods purchased for the benefit of. or
delivered to, another, the vendor has a right conclusively to pre-
sume that such relations or arrangements exist between the two
as to make it the duty of the party or parties promising, as between
themselves, to pay according to the promise. And to allow the
contrary to be shown to defeat the promise would operate as a
fraud upon the vendor.

The question of a joint promise appears to have been seldom
raised for adjudication in connection with the statute of frauds;
but the following cases fully sustain the proposition that a joint
promise of two, whether to pay the pre-existing debt of one of
them, or a debt contracted at the time for his benefit (as for goods
bought for and delivered to the one), does not come within the
statute, but it is an original promise, as between them and the
promisee, and valid without writing: Ex parte Lane, i De Gex,
300; Wainzvright v. Straw, 15 Vt. 2r5; Stone v. Walker. 13 Gray,
613; and Hetfield v. Dozv, 3 Dutcher 440. See also b}' analogy

130 . GUARANTY AND SURKTYSHIP.

Batson v. King, 4 H. & N., 739. The same doctrine is laid down
by Mr. Browne in his p.hle treatise on the statute of frauds : Ch. 10,

Sec. 197.

It is true that in IVaimur'ght v. Straiv, which most resembles
the present case, the decision is placed in part upcm ihc ground
that the sale was made to both. The facts were that Straw and
Cunnin^^ham both went to plaintiff's store and said they wished
to .buy a stove for Straw, but that both would be responsible. Now,
I can see no diti'crence in legal effect between the case where A
and B say to a merchant, "We want to buy a stove for B, and both
of us will be responsible." and the case where A says, "B wishes
to purchase a stove, but we will both be responsible." Siibstan-
tiolly, the transaction is the same; in both cases alike it is a sale
for the benefit of the one on the joint credit of the two, and the
real question in both cases is, whether the credit was given to both
jointly. I do not think tlie court, in JJ'aiimright v. Strain', based
their decision upon tlie narrow and merely verbal ground of the use
of the first person plural, showing merely who wanted the stove, but
upon the broad ground above stated, that it was sold upon their
joint credit. And in all such cases where the sale is upon the
joint credit and promise of the defendants, though the property
is purchased for and delivered to but one of *hem, I think the
legal efifect of the transaction constitutes, as between them and the
vendor, a sale to the two jointly. The sale as between the vendor
and the vendee is to the party or parties to whom the credit is
given for the price, without reference to the question for whose
use it is purchased, or who, as between the promisors, is to be its
owner when bought.

This brings us to another point in the case. The sale (if upon
the joint credit and promise of the defendants) was a joint sale
to lioth, as between them and the plaintiff. But in the special
count of the declaration it is alleged as a sale to Daily only. The
plaintiff cannot, therefore, recover upon the special count.

But upon the count for goods sold and delivered, the sale
having been made to both, the plaintiff would be entitled to re-
cover, if the facts be such as would warrant a recovery upon a sale
made for the joint benefit of, and the property delivered to both.

I think there was no error in the charge or proceedings of
the court below, and that the judgment should be affirmed, with
costs.

Note— The concurring opinion of Camphell, !., and that part of the opinion of
Christiancy, J., relating to questions other than the statute of frauds, are omitted.

MANLEY VS. GEAGAN. * 131

Manley, i\dm'strix, z's. Geagan (1870).
105 Mass. 445-

Contract by the administratrix of Edwin Manley upon an
oral promise to pay the following order:

"Fall River, October 9, 1868.
■"Nicholas T. Geagan.

"Sir: Please to pay Edwin Manley thirteen hundred and fifty- four
"dollars for work on your house, corner of Bedford and Twelfth streets, and
charge the same to account of H. B. Borden & Co."

The answer denied all the plaintiff's allegations, and pleaded
want of consideration, and the statute of frauds.

The trial was in the superior court, without jury, before Pit-
man^ J., who made the following report of the case for the deter-
mination of this court :

"The plaintiff proved that her intestate, in whose favor the
order was drawn, did work as a stone mason on a block of build-
ings belonging to the defendant, and which he was then erecting,
prior to the time of drawing this order. It appeared that the
whole contract was taken by H. B. Borden & Co., who employed
the plaintiff's intestate to do the mason work, and that there was
no contract between the plaintiff's intestate and the defendant,
and no employment by the defendant ; that after the work was
done the defendant sent word to the plaintiff's intestate to get an
order from Borden & Co. on him, adding, T am going to pay all
off on the loth, and am not going to trust Borden & Co. to pay it;
I am going to see the help all paid ;' and that this was communi-
cated to the intestate ; that the next day he procured the order in
suit and presented it to the defendant ; that the defendant took
it, read it, said it was all right, and that he would accept it, and
pay it on Monday ; that on Monday he could not be found, was
gone out of town for a week, and has since refused to pay it. The
defendant who was called as a witness by the plaintiff, testified
that he owed H. B. Borden & Co. nothing at the time when this
order was presented ; and I find as a fact that 'it is not proved
that he actually did owe them anything. The defendant offered
no evidence.

"Upon the above, the court ruled that the promise of the
defendant, being an oral promise to pay the debt of another, and-
beine: also without anv consideration, no action could be main-

132 • tiL'AUANTV AND SU KKTVSilii'.

taiiicd on it. and thereupon found for the defendant. Tf this
ruhng is wrong, a new trial is to he had; otherwise, jnd.^nent on
the venhct."

/. C. BlaisdcU. for llu' plaintilT.

/. .1/. Morton, Jr., for the dffcndant.

(Jrav, J. The promise of the defendant was to i)ay for work
already done hv the intestate for Uorden & Company, without any
previous eontract with or i.iii])loynient l)y the defendant. I he
defendant owed I'.orden & Company nnihin--, and received no
consideration, either from Borden & Company or from the intes-
tate for his promise. The intestate neither did any work nor paid
any money u])on the faith of this ])romise. nor gave uj) any right
or security against Borden & Company. 'I'heir original liahility
to him was not altered or a.ffected 1)\ the defendant's ])romise.
This promise was therefore clearly a promise to answer for the
deht of another, and, not heing in writing, was within the statute
of frauds. Gen. Sts. c. 105, § i, cl. 2. Stone v. Symiiics, 18
Pick. 467; Curtis v. Brown. 5 Cush. 4S8 ; Furbish v. Goodnow^
98 Mass. 296; Browne on St. of Frauds, §§ 172-174-

Judgment on the verdict for the defendant.

KiKKliAM T'.S-. M ARTKK, ( 1819),

2 Barn. X: .\ld.. 613.

This was an action on an oral promise. The plaintiff declared
that one T. E. Marter, hefore the making of the promise of
defendant, had without the leave or license of the plaintiff, wrong-
fuUv rid<len a horse of the plaintifl"s, in consequence whereof the
horse died ; that the plaintiff had threatened to commence an action
against said T. E. Marter for the recovery of such damages as
I)laintiff had sustained hy reason of the premises; and thereupon,
in consideration of the premises, and that the plaintiff, at die re-
quest of the drfcndani. would ni>i hring any action against the
said T. h^. Marter for the cause aforesaid, and that thf ])laintiff^
would he crtntent to take, for and on accouiU of said horse, what

KIRKHAM VS. MARTER. 133

should be agreed upon between the defendant and one A. B.,
defendant promised to pay plaintiif what should be agreed upon
between defendant and said A. B. for and on account of said
horse. Plaintiff further declared that he had brought no action
for the cause aforesaid, and that he was willing to take, for and
on account of the horse,, what had been agreed upon between the
defendant and A. B.. and that defendant and A. B. did agree that
defendant should pay plaintiff fifty guineas for the said horse,
and the bill due for the maintenance and keep of the said horse.

Breach : The non-payment of the said several sums.
Plea : General Issue.

On the trial of the cause the plaintiff proved an oral contract
as laid in the declaration. Abbott, C. J., thought this an under-"
taking for the default or miscarriage of another within the statute
of frauds, and consequently that the promise ought to have i^een
in writing, and the plaintiff' was non-suited.

Plaintiff moved for a new trial.

Abbott, C. J. This case is clearly within the mischief in-
tended to be riemedied by the statute of frauds, that mischief
being the frequent fraudulent practices which were too commonly
endeavored to be upheld by perjury ; and if it be within the mis-
chief I think the words of the statute are sufficiently large to com-
prehend the case. The words are these: "No action shall be
brought to charge a defendant upon any special promise to answer
for the debt, default or miscarriage of another person.'"' Now the
word "miscarriage'' has not the same meaning as the word "debt"
or "default" ; it seems to me to comprehend that species of wrong-
ful act for the consequences of which the law would make the
party civilly responsible. The wrongful riding the horse of an-
other, without his leave and license, and thereby causing its death,
is clearly an act for which the party is responsible in damages and
therefore, in my judgment, falls within the meaning of the word
"miscarriage." The case of Reed and Nash (i Wilson, 305), is
very distinguishable from this : The promise there was to pay a sum
of money as an inducement to withdraw a record in an action of
assault, brought against a third person. It did not appear that
the defendant in that action had ever committed the assault, or
that he had ever been liable in damages ; and the case was ex-
pressly decided on the ground that it was an original, and not a
collateral promise. Here the son had rendered himself liable by

134 GUARANTY AND SURETYSHIP.

his wrongful act, and the promise was expressly made in consid-
eration of the plaintiff's forbearing to sue the son. I therefore
think that the nonsuit was right.

i\ulc refused.^

Note— The concurring opinions of judges are omitted.

The People of the State of New York. Respondent, vs.
Backus et al., Appellants (1889).

117 X. Y. 196; 22 N. E. 759.

Appeal from judgment of the General Term of the Supreme
Court in the Third Judicial Department, entered upon an order
made February 5, 1889, which affimied a judgment in favor of
plaintiff, entered upon the report of a referee.

This action was brought by the people against tlui defend-
ants as guarantors upon the following bond or contract of the
National Bank of Auburn, to-wit :

"Whereas certain moneys of the State of New York have been and
are proposed to be deposited in the First National Bank of Auburn, under
the direction of the comptroller of the state, by the agent and warden of
Auburn prison, to the credit of the treasurer of the state, for safekeeping
and for interest.

"Now, therefore, the said First National Bank of Auburn, in consider-
ation of such deposits and for vahie received, does hereby agree to pay on
demand, to the order of the state treasurer, or other officer of the state
having lawful authority to demand the same, such deposits, and any and
all parts thereof, together with interest on daily balance, at the rate of
three per cent.

"Witness the seal of said Bank and the signature of its president and
cashier, this 14th day of Tune, 1880."

The guaranty was as follows:

"In consideration of the making the deposits by the people of the
State of New York in the First National Bank of Auburn, in the agree-
ment mentioned, and for value received, we, the undersigned, Clinton T.
Backus, Manson F. Backus, James Kerr and William E. Ilughitt, do

'To the same effect are: Turner v. Hubbell, 2 Day, 457; Baker v. Mor-
ris, 33 Kan. 580, s. c. 7, P. 267.

PEOPLE, ETC., VS. BACKUS. 135

hereby jointly and severally guarantee the full and punctual performance
of the condition of said agreement on the part of said bank, and that all
such deposits and interest shall be fully paid on legal demand. The said
guarantors may serve upon the comptroller a written notice, terminating
or limiting their liability under this guaranty, after a date to be specified
in said notice, which shall not be less than ten days after the service of
said notice."

The agent and warden was by law the official manager of
the state prison at Auburn, and was requested to deposit all moneys
credited by him each week to the credit of the treasurer of the state,
in a bank located at Auburn, and send to the comptroller weekly a
statement showing the amoimt so received, and from whom or
where received and deposited, and the days on which such de-
posits were made, such statement to Ije certified by the proper
officer of the bank receiving such deposits. The agent and war-
den was required to verify by his affidavit that the sum so de-
posited was all the money received by him from whatever source
of prison income during the week and up to the time of the
deposit, and all moneys so deposited by him were subject to the
quarterly drafts of the treasurer of the state. The law required
that any bank in which deposits should be made should, before
receiving any such deposit, file a bond with the coirqDtroller of
the state, subject to his approval, for such sum as he should deem
necessary. § 50, Chap. 460, Laws of 1847, as amended
by Chap. 58, Laws of 1854, and Chap. 599, Laws of i860. By
section 6 of Chapter 177 of the Laws of 1877, it was provided
that "The system of labor in rhe state prisons shall be by contract
or by the state or partly by one system and partly by the other,
as shall in the discretion of the superintendent be deemed
best." From the time of the execution of the bond until Decem-
ber, 1884, the business of the Auburn state prison was carried
on under what was known as the contract system. By chapter
21 of the Laws of that year, the renewal of the then existing con-
tracts, or the making of new contracts for convict labor, was
prohibited and after that the prisoners were employed in manu-
facturing on state account. The bank was incorporated under the
National Bank Act of 1863. on the 31st day of December of that
year, and by its articles of association it was provided that it
should conjtinue until the 25th day of February, 1883 unless
sooner dissolved by the act of a majority of the stockholders
thereof. By the Act of Congress, passed July 12, 1882, (U. S.

136 GUAKAXTV AND SUKKTYSlIll'.

Stats, at Large, Vol. 22. p. 162,) National Banks were authorized
to extend their corporate existence; and in January, 1883, such
proceedings were taken under that act as to extend the charter of
the hank and its corporate existence until the 24th day of Feb-
ruarv, 1903 By section 4 of that act it is provided thai "any
association so extending the period of its existence shall continue
to enjoy all the rights and privileges and immunities graiUed. and
shall continue to he subject to all the duties, liabilities and restric-
tions imposetl by the Revised Statutes of the United States, and
other acts having reference to national l)anking associations, and
it shall continue to be in all respects the identical association it was
before the extension of its ]x'riod of existence."

After the giving of the bond by the bank and the guaranty
by the defendants, the agent and warden of the prison made
deposits in the l)an1<. from time to lime, down to i'^ebruar}-, 1888,
on which dav there was upward of $65,000 on deposit in the bank,
which il refused and neglected to pay up(^n the draft of the State
'i'reasurer. it ha\ing become insolvent, and this action was brought
against the defendants, as sureties, to recover the amount remain-
ing on deposit.

William F. Cogs7i'cll, for a])pellant.

Clhvics P. Tabor, attorney-general, for respondent.

Earli:, J. Xo citation of authorities is needed to show that
the contracts of sureties are to be construed like other contracts
' so as to give effect to the intention of the parties. In ascertain-
ing that intention we are to read the language used by the parties
in. the light of the circumstances surrounding the execution of the
instrument, and when we have thus ascertained their meaning
we are to give it effect. lUit when the meaning of the language
used has been thus ascertained, the responsiljility of the surety is
not to be extended or enlarged by implication or construction,
and is strictissiini juris.

After the contract system in t'u' stati' prisons was abolished,
and manufacturing therein could be done only on state account,
the amount of money deposited in this bank by the agent and
warden largely increased, and it is now claimed on behalf of the
defendants that their responsibilitv as sureties was largely ex-
tended bevond what was coiit(.-mplatc<l at the time of the execu-
tion of their guaranty, and that they are therefore discharged.

PEOPLE, ETC., VS. BACKUS. 137

By the statutes in force at the time of the execution of the
bond and guaranty, the agent and warden of the prison was re-
quired to deposit all the moneys received by him from any source
in the bank. It is not reasonable to suppose that the sureties,
when they signed their guaranty, had in mind the particular source
from which the agent and warden received the money. They
must have known that they became responsible for all the moneys,
from whatever source, coming into his hands to be deposited. It
cannot l)e supposed that they had in mind that the system of lalior
then in force at tlie prison would remain unchanged for an indefi-
nite time, or that they cared anything about it. Much stress is laid
upon the words in the bond, "certain moneys," which had been
and ^^•ere proposed to be deposited. We think those words have
reference to the moneys to be deposited by the agent and warden
of the prison, as distinguished from other moneys of the state.
They were intended to point out the source from which the moneys
of the state to be deposited should come; and the words "such
deposits," used later in the bond, have reference to the deposits
to be made by the agent and warden of the prison. So, the bond,
in the most general terms, covers and applies to all the money
to be deposited in the bank, under the direction of the comptroller
of the state, by the agent and warden of the prison. The words
"certain moneys" and "such deposits" do not indicate that the
parties then had in mind the source from which the agent and
warden should receive his money, or the particular moneys which
he had theretofore deposited. But they manifestly have reference
to all the moneys wdiich, under the direction of the Comptroller,
he might deposit in the bank. The bank desired to get all the
deposits it could, and the defendants, who were directors and
ofificers of the bank, desired to secure all the deposits. It cannot
be supposed that they contemplated, at the time they signed their
guaranty, that their lial)ility was to be limited or restricted to
the amounts which had been previously deposited, or that those
amounts had any influence whatever upon their action. They
must therefore be held to the plain language of their guaranty,
and in holding that it covers moneys deposited subsequently to
1884. we do not extend their responsibility by implication or
construction, but simply hold them to the responsibility plainly
expressed in the language of the bond and the guaranty.

It is still further claimed, on the part of the defendants, that
they are discharged from any liability on their guaranty on

138 GUARANTY AND SURETYSHIP.

account of the extension of the existence of the corporation in
1883, hefore any default on the part of the bank, and for this
contention the learned counsel for the defendants cites Thompson
V. Young, 2 Ohio, 334; Union Bank v. Ridgcley, i H. & G. 324;
Bank of IVasliington v. Barringlon, 2 Pa. 27; Brown v. Latimore,
17 Cal. 93. None of those cases are precisely like this in their
circumstances, but so far as they uphold the contention of the
defendants we are quite unwilling; to follow them. The contrary
doctrine was held in Exeter Bank v. Rogers, 7 N. H. 21 ; and
we think our decision in Ahitional Bank of Fonghkeepsie v. Phelps,
97 \. V. 44, is ample authority for the maintenance of this re-
covery, notwithstanding extension of the corporate existence of
the bank. ]n the latter case, under the provisions of the National
Banking Act and of chapter 97 of the Laws of 1865, the state
bank was transformed into a national bank, and it was held to be
but a continuance of the same body under a changed jurisdiction;
tha.t between it and those who had contracted with it, it retained
its identity and might, as a national bank, enforce contracts made
with it as a state bank ; that wdiere a state bank, at the time of its
change to a national bank, held a continuing guaranty of loans
made by it upon the strength of wdiich it had made loans, and
after the change had made further advances, an action was main-
tainable by the national bank upon the guaranty, and that the guar-
antor was liable for the loans made, both before and after the
change. Here a new corporation was not formed ; but there was
a -mere prolongation of the existence of the same corporation
whose corporate identity was not changed or lost. The bank
which defaulted was the same bank for w'hich the defendants be-
came bound. There were not two banks in succession, but all
the time one bank. Its charter was amended so as to extend its
existence; and in the original national banking act (§ 67),
it was provided that Congress could, at any time, "amend, alter
or repeal this act." Tt would certainly be a very inconvenient
rule to hold that all the contracts of sureties to the bank, and of
sureties by the bank, to other persons should be destroyed by
every material change or alteration in its charter. The contract
was entered into by the sureties with knowledge of this law, and
it became a ])art of their contract as if they had stipulated that
the changes or alterations might be made. The act of 1882 was a
mere amendment or alteration of the previous banking act.

jaBBiy E. O&rm

STARR VS. MIT.LTKTN.

139

We do not deem it important to consider the effect that should
be given to the fact that these various defendants, as officers of
the bank, procured the extension of its existence, of which they
now seek to take advantage.

For the reasons we have already given, and those so well
expressed in the opinion of the learned referee before whom the
case w^as tried, we think the' judgment should be affirmed, with
costs.

All concur.

Judgment affirmed.

Starr et al. vs. Milltkin (1899),
180 111.458; 54 N. E. 328.

Appeal from the Appellate Court for the Third District;—
heard in that court on appeal from the Circuit Court of Macon
county; the Hon. Edward P. Vail, J., presiding.

LeForgcc & Lcc, and Mills Bros., for appellants.

/. A. Buckingham and Hugh Crca, for appellee.

Mr. Justice Phillips delivered the opinion of the court :

Suit was brought in the Circuit Court of Macon county by
William H. Starr and Isaac R. Mills, for the use of William H.
Starr, against James Millikin, upon the following contract:

"Whereas, Murray G. Millikin has purchased of Starr & Mills lot
sixteen (16) and fifteen feet ofif of the east side of lot fifteen (15), in
block three (3), in Starr' & Mills' addition to the city of Decatur, for
the sum of $800; and whereas, the said Murray G. Millikin has given to
the said Starr & Mills his certain promissory notes to secure the payment
of said consideration, together with a mortgage upon said premises; and
whereas, the said Murray G. Millikin is a minor under the age of twenty-
one years but is desirous of having the deed to said lots so purchased
made to him :

"Now, therefore, in consideration of the premises and in considera-
tion of the making of the deed direct to the said Murray G. Millikin, I,
James Millikin, do hereby guarantee that the said Murray G. Millikin
will ratify said purchase and the giving of said notes upon his arrival at

140 GUARANTY AND SURETYSHIP.

the age of lULiuy-onc years, in such maiiiKT as will iiiak.,- him personally
liable on said notes so given for said purchase money, and in the event
that said Murray G. Millikin sliali repudiate or refuse to pay said notes
I hereby agree to pay the same to the said Starr & Mills, or their assigns.
"Dated at Decatur, Illinois, this jOih day of June, A. 1). 1893.

James Mii.i.ikin."

A verdict was re'tiinird in tlic trial c<>un ai,'-aiiisl appellee for
$1076.88. Jtulgnient was rendered on this verdict, l)ut on appeal
to the Ai)pellate Cotirt for the Third District tlie jiidi^-ment was
reversed witliout remanding, the A]i])ellate Court at the same time
making a finding of facts to be recited in its final order.

The Appellate Court found from 'Aw evidence in the case that
James Millikin undertook, in the contract above mentioned, to pay
the sum of money therein mentioued upon condition, only, that
}ilurray (i. Millikin, a minor, upon his arrival at the age of twcntv-
one years, would fail to ratify the notes in controversy in such
manner as would make him personally liable, or if the minor should
repudiate or refuse to pay the notes on account of their having been
executed during his minority. This finding of facts was the re-
sult of the legal construction given the contract by the Appellate
Court. That court also found as a fact arising out of the evidence,
that u])on his arrival at the age of majority Murray G. Millikin did
ratif\ the notes made by him, thus making himself personally
liable, and that he did not repudiate or refuse to ])ay theiu on ac-
count of their having been executed during his minority. As this
record is presented to us, therefore, only one question is involved.
This is conceded by cotmsel for appellants, as they say that the
construction to be ])laced ui)on this contract is the only real ques-
tion involved in the litigation in this court, and that this question,
when determined, ends the controversy.

The finding ])y the Appellate Cottrt as to the legal construction
to be given tlus contract is not such a finding of fact is is binding
upon this court. The construction to be given a contract is one
of law, rather than of fact. However, that is not material in this
case, as we in nowise dift'er from the A])pellate Court as to the
legal construction to be given the contract. Starr & Mills were
conveying some property to Muri-ay (i. Millikin, a minor. h>om
the fact that upon his arrival at his majority he would have the
right, in law, to repudiate the notes or refuse paymeiU on account
of their having been executed during his minority, this separate
coiUract was exectited to guarantee tliere should be no such re-

D.W'IS VS. PATRICK. 141

fusal or repudiation. The entire controversy occurs over the last
clause of tlie Contract, wh.ich reads: "In the event that said Murray
G. Millikin shall repudiate or refuse to pay said notes I hereby
agree to pay the same to said Starr & Mills, or their assigns." This
clause, however, when taken in connection with all the circum-
stances of the case and the recitals in the contract preceding this
clause, to the elTect that Murray G. Millikin was a minor under
the age 'of twenty-one years and that he was desirous of having
the deeds to the lots made to him, and that appellee guaranteed
Murray G. Millikin would ratify such purchase and the giving of
said notes uix)n his arrival at the age of rwenty-one years, tends to
establish, without question, that the only purpose of the execution
of this contract was that the notes should not be repudiated or pay-
ment refused on account of the age of the maker. It is evident
that there was no intention on the part of James Millikin to per-
sonally guarantee the payment of this indebtedness. The parties
connected with the transaction were all business men. — one a
banker, another a lawyer, — and if the intention had been to per-
sonally guarantee this indebtedness such guaranty would have
been on the back of the note, or as a joint maker, or in some other
manner much less cumbersome than as shown by this record.

The construction given this contract by the Appellate Court
was the correct one, and the judgment of that court will be
affirmed.

Judgment affinned.

Davis z'.?. Patrick (1891).
141 U. S. 479; L. Ed'n, Bk. 35 826.

The case w^as stated by the court as follows :

This case was commenced on the 24th day of November,.
1880. by the filing of a petition in the District Court of Knox
county, Nebraska. Subsequently it w'as removed to the Circuit
Court of the United States, and at the May term, 1883. of that
court a judgment was rendered in favor of the plaintiff. That
judgment was reversed by this court, at its October term, 1886.
Davis V. Patrick, 122 U. S. 138. A second trial in January, 1890,
resulted in another verdict and judgment for the plaintiff, and

142 GUARANTY AND SURETYSHIP.

again the defendant alleges error. The petition counts on two
causes of action. No question is made by counsel for plaintiff in
error with respect to the first count or the rulings thereon — the
only error alleged being in reference to the second count. That
count is for the transportation of silver ore from the Flagstaff
mine, in Utah Territory, to furnaces at Sand} , in the same Terri-
tor}-. In the first trial it was claimed that Davis, the defendant,
was the real owner of the Flagstaff mine, and therefore primarily
responsible for all debts contracted in its w^orking. The relations
between Davis and the Flagstaff Mining Company were disclosed
by a written agreement, of date December i6, 1873. By that
agreement it appeared that Davis, on June 12, 1873, had advanced
to the Company £5,000. at the rate of 6% interest, a sum then
due; that it had sold to Davis and agreed to deliver at the ore-
house of the Company, free of cost, 5,195 tons of ore, of which it
had only then delivered 200 tons, although Davis had paid in
full for the entire amount. The agreement also recited that Davis
was to advance an additional amount, if needed, not exceeding
i 10,000. It then provided that the mine should be put under
the sole management of J. N. H. Patrick, to be worked and con-
trolled by him until such time as the ore sold had been delivered
and the sums borrowed had been repaid, with interest. This
control was irrevocable, save at the instance of Davis. Coupled
wath this agreement was a full power of attorney to Patrick.
This court held that such contract established between Davis and
the Mining Company simply the relation of creditor and debtor,
and did not make him in an) trite sense the owner. For the
erroneous rulings of the trial court in this res])ect, the judgment
was reversed, in the second trial, this construction of the rela-
tions of Davis to the Flagstaff Mining Company was followed by
the court, and die jury instructed that the contract put in evidence
between Davis and the Mining Company created simply the rela-
tions of creditor and (lel)tor, and did not make the former liable
for expenses created in working and operating the mine; and the
trial proceeded upon the theory that during the time the services
sued for were being rendered. Davis was the party mainly and
pecuniarily interested in the workings of the mine, and that he
assumed to Patrick a personal resixinsibility for such services;
and the real question tried was whether Davis' ])romises were col-
lateral undertakings to pay the debts of another, and void because
not in writing.

DAVIS \'S. TATRICK. 143

(In the opinion of the court, post, 485-487, some of the
material evidence at the last trial is set forth.)

Mr. J. M. Wookvorth, for plaintiff in error.

Mr. John L. IVebster, for defendant in error. Mr. Nathaniel
Wilson was with him on the brief.

Mr. Justice Brewer, after stating the case, delivered the
opinion of the court :

That Davis was interested in having the ore transported
to the furnaces is clear. He was interested in two respects : First,
as to the 4,995 tons to be delivered to him at the ore-house, it
being his property when thus 'delivered, any subsequent handling
was solely for his benefit ; and in respect to the balance, as the
transportation was one step in the process of converting the
product of the mine into money, it would help to pay the debt of
the Company to him. Davis, therefore, was so pecuniarily inter-
ested in, and so much to be benefited by, the prompt and success-
ful transportation of the ore, that any contract which he might
enter into in reference to it, was supported by abundant considera-
tion. We proceed, therefore, to inquire what he said and did.
After the execution of the papers, the newdy appointed manager
took possession of the mine ; and in the fore part of 1874 the
plaintiff commenced the transportation of the ore under contract
with the agent of the manager. The business was carried on in
the name of the Mining Company. The plaintiff understood that
Davis was interested in the matter, though not informed as to
the extent of the interest, or the terms of the agreement beween
him and the Mining Company. In the fall of 1874 Davis came
to Utah to examine the property. He was introduced by the
manager to the foreman of plaintiff, in the latter's presence,
as the boss of the mine, to which Davis assented. After this,
plaintiff, who had not received his pay in full for the services
already rendered, had an account made up showing the balance
due him, and presented it to Davis. His testimony as to the
conversation which followed is in these words: 'T showed it to
Mr. Davis and told him I was not getting my money, and Mr.
Davis said mv account was all right and he would be personally
responsible to me for the money, and for me to go on as I had been
doing and draw as little money as I could get along with to pay the
men and the running expenses, and he would see that I got every

144 GUARAX'JV AXD SUKKTYS HI P.

dollar of my money." The plaintiff's cashier, who was present at
this conversation, j^ives this as his recollection of the ctMiversa-
tion :

"O. In that conversation state what ]\lr. Davis said about
being responsible to A. S. Patrick for that account.

"A. He stated to Mr. Patrick in my presence that he would
personall}- be responsil)le for that account. He says, 'You know,.
AL, I practically (i\' n ihi> nnni', Init money is scarce and we must
get what you can out of the mine." He says we are making large
expenditures for improvements, and he says you shall have all
the money you want to pay your men and expenses, but you
must wait for the balance, and I will see that you are paid.

"O. What did he say in that connection to A. S. Patrick
about continuing on in the hauling of the ores?

"A. He requested him to continue in llu' hauling of the
ores. He requested him to do it.

"O. In res]:)onse to Mr. Davis t(T that request what did Mr.
I'atrick say?

"A. He said to Mr. Davis, if he would guarantee him to be
paid he would continue to work, and Davis said he would see him
paid."

After this, the ])laintiff continued the work of transportation
until the fall of 1875, receiving such payments from time to time
as to extinguish the amount due him at the date of this conversa-
tion, and leaving a balance more than covered by the work done
in 1875, and it is only for work done after these promises that
this recovery was had and in respect to which the questions pre-
sented and discussed arise. The jilaintiff testified to another con-
versation, in September, 1876, in the city of New York. His
account of that conversation is given in these words: "Plaintiff
told Davis that his brother and himself were hard up for money,
and wanted to know if Davis would not give them some money on
the 'b^lagstaff' account, for hauling the ores. Plaintiff had his
account with him and showed it to Davis. Davis said the whole
of the account was all right, and he ])roi)osed to pay the account,
and said he would pay the plaintiff. Plaintiff" said to Davis that
if he would give him some money on the account it would help
him out. Davis said he had some securities in London which he
was going to sell, and would have some money in a few days
and wouUl give plaintiff $5,000 on the account. Plaintiff said

DAVIS VS. PATRICK. 145

if the money was going to be there in a few days he would wait
for it, but Davis said, 'Xo; you go home and 1 wiU pledge you
my word that I will telegraph the money to you to the First
National Bank by the first of October.' "'

And, again, he testified to an interview in 1877 with Davis, in
the city of Omaha, in the presence of other parties, in which he
said : "Davis, you promised all along to pay me that money," and
Davis replied, "I believe I did."

This testimony of plamtiff as to conversations with defend-
ant is corroborated by other witnesses and contradicted by none.
It must therefore be accepted as presented the facts upon which
this case must be determined. Were these promises binding upon
Davis, or of no avail to the plaintiff because not in writing?
Were it not for the Statute of Frauds there would be no question,
for obviously there was both promise and consideration. Defend-
ant relies upon that provision of the Statute of Frauds which for-
bids the maintenance of an action "to charge the defendant upon
any special promise to answer for the debt, default or miscarriage
of another person, unless the agreement upon which such action
shall be brought, or some memorandum or note thereof, shall l^e
in writing," etc. The purpose of this provision was not to effect-
uate, but to prevent, wrong. It does not apply to promises m
respect to debts created at the instance and for the benefit of
the promisor, but only to those by which the debt of one party is
sought to be charged upon and collected from another. The rea-
son of the statute is obvious, for in the one case if there be any
conflict between the parties as to the exact terms of the promise,
the courts can see that justice is done by charging against the
promisor the reasonable value of that in respect to which the
promise was made, while in the other case, and when a third
party is the real debtor, and the party alone receiving benefit, it
is impossible to solve the conflict of memory or testimony in any
manner certain to accomplish justice. There is also a temptation
for a promisee, in a case where the real debtor has proved insolv-
ent or unable to pay. to enlarge the scope of the promise, or to
torture mere words of encouragement and confidence into an
absolute promise: and it is so obviously just that a promisor re-
ceiving no benefits should be bound only by the exact temis of
the promise, that this statute requiring a memorandum in writing
was enacted. Therefore, whenever the alleged promisor is an
ab.solute stranger to the transaction, and without interest in it.

146 GUARANTY AND SURETYSHIP.

courls strictly uphold the obligations of this statute. But cases
sometimes arise in which, though a third party is the original
obligor, the primary debtor, the promisor has a personal, imme-
diate and pecuniary- interest in the transaction, and is therefore
himself a party to be benejited by the performance of the prom-
isee. In such cases the reason which underlies and which
prompted this statutory provision fails, and the courts will give
effect to the promise. As said by this court in liuierson v. Slater,
22 How. 28, 43: "Whenever the main ])urpose and object of the
promisor is not to answer for another, ])ut to subserve some
pecuniary or business purpose of his own, involving either a bene-
fit to liimself or damage to the other contracthig party, his
promise is not within the statute, although it may be in form a
promise to pay the debt of another, and although the performance
of it may incidentally have the effect of extinguishing that lia-
bility." To this may be added the observation of Browne, in his
work on iItc Statute of I'Vauds, Sec. 165: "The statute contem-
plates tla: mere promise of one man to be responsible for another,
and cannot be interposed as a cover and shield against the actual
obligations of the defendant himself." The thought is, that there
is a marked difference between a promise which, without any inter-
est in the subject matter of the promise in the promisor, is purely
collateral to the obligation of a third party, and that which, though
operating upon the debt of a third party, is also and mainly for
the benefit of the promisor. The case before us is in the latter
category. While the original ])n)misnr was the mining company,
and tlie undertaking v.as for its beneht, yet the performance of
the contract inured equally to the benefit of Davis and the mining
company. Performance helped the mining company in the pay-
ment of its debt to Davis, and at the same time helped Davis to
.secure the payment of the mining company's debt to him ; and as
the mining company- was apparent I y destitute of any other proji-
erty, and the payment of its de1)t to Davis therefore dependent
upon the continual and successful working of this mine ; and as the
control and working of the mine had been put in the hands of
Davis so that he might justly say, as he did: "1 am practically
the owner," it follows that he was a real, substantial party in inter-
est in the ])erformance of this contract. Tlis promise was not one
purely collateral to sustain the obligations of the mining company,
but substantially a direct and personal one to advance his own
in'erests. While the mining company was ultimately to be bene-

DAVIS VS. PATRICK. 147

fitcd, Davis was primarily to be benefited by the transportation of
ihe ore, for thereby that debt, which otherwise could not, would
be paid to him. He, therefore, in any true sense of the term, occu-
P'Vd not the position of a collateral undertaker, but that of an orig-
inj.I promisor, and it would be a shadow on justice if the admin-
istration of the law relieved him from the burden of his promise
on the ground that it also resulted to the benefit of the mining
company, his debtor.

Counsel for Davis placed .stress on the form of expression
attributed by Patrick to Davis, to-wit: "I will be personally respon-
sible ; I will see you paid ;" and contends that the import of such
language is that of a collateral promise. There is force in this
contention, as it implies that someone else was also bound, but the
real character of a promise does not depend altogether upon the
form of expression, but largely on the situation of the parties ;
and the question always is, what the parties mutually understood by
the language, whether they understood it to be a collateral or a
direct promise. Patrick declares he understood it to be a direct
promise, and acted on the faith of it. That Davis understood it
in the same way, is evidenced not only from the circumstances sur-
rounding the parties at the time, but from the fact that in a sub-
sequent interview, when charged to have always promised to pay
this debt, he admits that he believes that he did. The plaintiff, be-
lieving that Davis was, as he said, practically the owner, the party
primarily to be benefited by the conversion of the products of the
mine into money, understood that Davis was making an original
promise to pay for the w^ork which he might do, and upon such
promise- he might surely rely as an original promise, at least for
any work done thereafter.

The merits of the case, therefore, as disclosed by the testi-
mony, were with Patrick, and the judgment in his favor was right.
It is objected that the court in its instructions spoke of Davis as
an original promisor, as one promising to pay the debt, and not
as one promising to be responsible for the debt, or to see it paid.
But as Davis, in the second conversation, promised to pay, and in
the third admitted that he had always promised to pay the debt,
we cannot think that the court misinterpreted the scope and effect
of his words. It is not probable that the parties to this transaction
understood the difference between an original and a collateral
promise. We must interpret Davis's promise in the light of the
surroundings and of his subsequent admissions, and in that light

148 GUARANTY AND SURETYSHIP.

we cannot think that the court crrcd in its construction thereof;
and if tlie jury beHeved that he luid made such promises, we can-
not doubt that the verdict should have been as it was.

It is also objected that the court erred in u< <[ directing a ver-
dict for defendant upon the ground of a departure from the allega-
tions of the petition. That counts on an original emi^loynient by
Davis, in 1873, while the testimony shows that the original employ-
ment was by the mining company, and that the promise of Davis
was made in the fall of 1874. and after I'alrick had been at work
for months for the mining company. As no ol)jection was made
to the admission of testimony on this groinid, and as an amend-
ment of the petition to correspond with the proof would involve
but a trilling change, we cannot see that there was an\- error in
the ruling of the court. If objection had been made in ilie hrst
instance, doubtless the court would, as it ought to have done, have
permitted an amendment of the petition. There was no surprise,
for the facts were fully develo])ed in the former trial.

Tpon the record as presented, we think that the verdict and
judgment were right, and as no substantial error appears in the
proceedings the judgment is

Affirmed.

The Chikf JrsTiCK, .Mr. Justice r>u. \l)l.l■:^■ and Air. Justice
(JI^\^■ did not hear the argument nor take part in the decision of
this case.

Hooker ct a!.. Respondents, vs. Russell, Appellant (1886).
67 Wis. 257 ; 30 X. W. 358.

Appeal from the I'ounly Court of Fond du Lac County.

Suthcvland & Sitihcrhuid. for a])i)ellant.

lili Hooker and C. li. Hooker, for respondents.

The facts will sufBciently appear from the opinion.

Ortox, J. In 1883 the village board of the village of Bran-
don, in l•^)nd dn Lac county, determinc<l that no license for the sale
of intoxicating liquors in said village should be granted during

HOOKER VS. RUSSELL. 149

the ensuing year, and passed an ordinance prohibiting such sale
and providing for the punishment of those who should violate the
same. Certain persons continued to sell intoxicating liquors in
said village notwithstanding, and in violation of said ordinance,
and in July, 1883, said village board, by resolution, employed the
.said plaintiffs and respondents to act as tlie attorneys of the village
in the prosecution of such offenders, llie respondents, as such
attorneys of the village, commenced several prosecutions under
such employment, and rendered therein legal services, amounting
in value to $173.66, up to and including September 7, 1883. when
on that day an injunction was served upon said village, at the suit
of one David Whitton, a taxpayer of said village, restraining the
village board from appropriating or paying out of the treasury
any money for the payment of attorneys' fees in the prosecution
of criminal actions theretofore or thereafter had for the violation
of the excise laws of the state, and from appropriating or paying
any money for expenses incurred in such prosecutions. Notwith-
standing said injunction, the respondents continued to render legal
services for said village in such prosecutions up to and including
the 26th day of Januar}', 1884, the value of which then was the
sum of $657.34, including the above amount of $173.66. The bill
for these services was presented to and filed with the village board
as a claim against the village, and the respondents brought suit
against the village therefor, which suit is still pending.

The seventh finding of fact, which must be received as a verity
in the case as neither party has excepted thereto, is as foUow^s :
"That on or about the 8th day of September, 1883, and subsequent
to the service of such in junctional order upon said village, the
defendant, George A. Russell, requested the plaintiff to continue
said prosecutions notwithstanding said injunction, and promised
and agreed to pay them for their past and future services therein
in case of their inability to collect their claim therefor from said
village." It was on this promise that this suit was brought against
the appellant, and on which the respondents recovered in the county
court. There can be no question but that this special promise of the
appellant, not in writing, to answer for the debt of the village of
Brandon, is void by the statute of frauds (R. S. sec. 2307, subd. 2).
The services of the respondents were rendered for the village, and
under a contract with the village. They have presented their
claim to, as being against, the village, and have sued the village
as being liable therefor. "So long as the oiiginal debt remains

ir)0 GIJARAXTV AND SURETYSHIP.

payable b_\- the debtor to his creditor, any arrang-einent whatever
by which another party promises to pay that debt is within the
very letter of tlie statute, no matter from what souce the considera-
tion of the latter promise is derived." liuicrick v. Sanders, i Wis,
jy ; Cotter ill v. Stevens, lo Wis. 422 ; Cook v. Barrett, 15 Wis. 596,

Ag-ainst the operation of the statvite upon this promise it is
claimed (i) that it has been judicially determined, in the injunc-
tion suit against the village, that the village is not liable for such
services. It is sufficiently answered that nriihcr of these parties
was a party to that suit, and therefore not bduiid liy the judgment
therein. But, again, it was a suit in equity, and there might have
been other reasons for the injunction than that the village was
not legally liable on the contract to pay their attorneys for their
services in the prosecutions. (2) It is claimed that for future
services of the respondents the credit was given to the appellant.
All the services were performed under one contract with the vil-
lage. It is so alleged in the complaint, and the respondents not
only so testify, Init they have preferred their claim against the
village, and brought suit against the village for it. The village
has never been released from any part of it. (3) It is claimed
that the appellant originally promised to pay for such future serv-
ices on a new considerati'on of benefit or advantage to himself as a
citizen and officer of the village, having an interest in enforcing
the laws against the sale of intoxicating liquors. His zeal in the
cause of temperance, and his interest in enforcing the laws in
common with all other citizens, would scarcely be a good or valu-
able consideration for a promise to pay. But the above finding is
sufficient to show that the same promise embraced the payment
for the past and future services alike.

We shall not decide in this case whether the village of Bran-
don is lialjlc to the respondents on its contract, although the county
court found, as a conclusion of law, that the village was not liable
and had no authority to make the contract. The village is not a
party to this suit, and has not denied its liability in this suit. The
village is presumptively liable, for it has the capacity to contract.
It will be in time to decide the question of the liability of the
village on this particular contract when the action of the respond-
ents against the village to enforce it is on trial.

Are the respondents bound by the finding in this case that
the village is not liable? It can only be determined whether the
respondents are able to collect their claim against the village, when

SUTTON VS. GREY.

151

their suit for that purpose, now pending, shall be tried. In any
view that can be properly taken of this promise, it is a collateral
one and void.

By the Court. — The judgment of the county court is reversed,
and the cause remanded for a new trial.

Sutton & Co. vs. CtRev (1893).
I O. B. Div. (T894). 285.

Appeal by the defendant against the judgment of Bowen,
L. J., at the trial of the action without a jury.

The plaintiffs were stockbrokers and members of the London
Stock Exchange. The defendant was not a member of the Stock
Exchange. The plaintiiTs had, as they alleged in their statement
of claim, in January, 1891, entered into an oral agreement with the
defendant that he should introduce clients to them, and that they
should transact business on the Stock Exchange for the clients
thus introduced, upon the terms, as between the plaintiffs and the
defendants, that he should receive one-half the commission earned
by the plaintiff's in respect of any transactions by them for and on
behalf of such clients as were introduced h\ the defendant, and
that the defendant should pay to the plaintiff one-half of any loss
which might be incurred by the plaintiffs in respect of those tran-
sactions.

The plaintiffs claimed from the defendant half the loss which
they had incurred in Stock Exchange transactions which they had
entered into on behalf of a client named Robertson, who had been
introduced to them by the defendant in pursuance of the oral
agreement.

By his statement of defence, the defendant pleaded that Sec.
4 of the Statute of Frauds had not been complied with ; that the
contract alleged by the plaintiff's was, within the meaning of Sec.
4 of the Statute of Frauds (29 Car. 2, c. 3), "a special promise to
answer for the debt of another person" ; and that, consequently,
as it was not in writing, an action upon it could not be maintained.

Stevenson, for defendant.

Rufits Isaacs, for the plaintiffs, was not called upon.

l.")!^ GUARANTY AND SURETYSHIP.

LuKi) Msiii:k, M. I\. In inv upiniun lhi> api)cal slioukl l>e
dismissed, I think thai the judgment of Bowen, L. J., was in
every respect rig-lit . I do not think iliat the relation between the
plaintiffs and the defendant was that of ])artnership. They had
no intention to become partners, and. as the law now stands, a part-
nership can not be constituted without such an intention. In my
opinion the true relation between the plaintiffs and the defendant
was this: The plaintiffs being- brokers upon the Stock Exchange,
of which the (U'fendant was not a meiuhcr, they agreed together
diat the ])laintift's should carry out transactions upon the Stock
Exchange t\jr the mutual benefit of themselves and the defendant.
The defendant could not himself transact business upon the Stock
Exchange, and the plaintiffs made this agreement with him: "If
yi)U will find persons who \vish to operate u])on the .Stock Exchange
and will introduce llutii to us as clients, we will, on l)eiialf of the
persons whom you thus introduce to us, transact the ordinary
business of a broker on the Stock Exchange, and make ourselves
personally responsible according to its tules on these terms — that
our brokers' commission on the Stock Exchange .shall l)e divided
between us and you, just as if y(;u were our ])artner and a member
of the Stock Exchange, and tliat, if ihere should be a loss in
respect of the transactions, you shall indemnify us against half the
loss." The defendant verballv agreed to Uiis, but diere was not
any contract or memorandum in writing. The contract, in my
opinion, is one which regulated the jjart which the defendant was
to take in the transactions which were contemplated, and, if he
was to be an agent for the plaintiffs, the contract regulated the
terms of his agenc}. Again, before the transactions were entered
into, the terms were regulated by the agreement, and they were
such as to give the defendant an interest in the transactions. The
transactions were to be entered into by the plaintiffs parUy for
their own benefit and ])artly for the benefit of the defendant. Is
such a contract a simple contract of guarantee — "a special promise
to answer for the debt or default of another person" — so as to
bring the case widiin Sec. 4 of the Statute of Erauds. or is it a
contract of indemnity? Whether any contract is the one or the
other is often a ver\- nice (jui'stion. liut certain tests have been
laid down to guide the Court in determining under which head
any particular contract comes. The principal case in English law
which aff'ords such a guide is Courtier v. Hastic, 8 Ex. 40. In
that case a test was given l)v Parke, B., who delivered the judg-

SUTTON \'S. GRF.Y. 15^

:ment of himself and Ai.derson, 1>. (from whom Pollock, C. L'>..
dififered as to the construction of the contract). The learned
Judge said (at p. 53): The other and only remaining point is,
whether the defendants are responsible by reason of their charging
a del credere commission, though they have not guaranteed by
writing signed bv themselves. We think thev are. Doubtless if
they had for a percentage guaranteed the debt owing, or per-
formance of the contract by the vendee, being totally unconnected
with the sale" (I would read that "totally unconnected with the
transaction"), "they would not be liable without a note in writing
signed by them; but, being the agents to negotiate the sale" (that
is, as I read it, "being connected with the transaction" ). "the com-
mission is paid in respect of that employment : a higher reward is
paid in consideration of their taking greater care in sales to their
customers, and precludmg all questions whether the loss arose
from negligence or not and also for assuming a greater share of
responsibility than ordinary agents, namely, responsibility for the
solvency and performance of their contracts by their vendees. This
is the main object of the reward being given to them : and, though
it may terminate in a liability to pay the debt of another, that is
not the immediate object for which the consideration is given."
There the test given is, whether the defendant is interested in the
transaction, either by being the person vho is to negotiate it or in
some other w-ay, or whether he is totally unconnected with it. If
he is totally unconnected with it, except by means of his promise
to pav the loss, the contract is a guarantee ; if he is not totally un-
connected with the transaction, but is to derive some benefit from
it, the contract is one of indemnity, not a guarantee, and Sec. 4
does not apply. The rule thus laid down has been adopted as a
test in subsequent cases. In Fitzgerald v. Dressier, 7 C. B.
(N. S.) 374, CocKP.URX, C. J., said (at p. 392) : "The law upon
this subject is, I think, correctly stated in the notes to Forth v.
Stanton, i Wms. Saund. 21 le, where the learned editor thus sums
up the result of the authorities : 'There is considerable difficulty in
the subject, occasioned perhaps by unguarded expressions in the
reports of the dififerent cases ; btit the fair result seems to be that
the question whether each particular case comes within this clause
of the statute (Sec. 4) or not depends, not on the consideration for
the promise, but on the fact of the original party remaining liable,
coupled with th-e absence of any liability on the part of the defend-
ant or his property, except such as arises from his express prom-

154 GUARANTY AND SURETYSHIP.

ise.' I quite concur in ihat view of the doolriue. provided the
proposition is considered as embracing tne ciuaUtication at the
conclusion of the passage ; for, though I agree that the considera-
tion alone is not the test, but that the party taking upon himself
the obligation upon which the action is brought makes himself
responsible for the debt or default of another, still it must bd
taken with the qualification stated in the note above cited, viz.,
an absence of prior liability on the part of the defendant or his
property, it being, as I think, truly stated there as the result of the
authorities, that if there be something more than a mere under-
taking to pay the debt of another, as, where the property in con-
sideration of the giving up of which the party enters into the un-
dertaking is in point of fact his own, or is property in which he
has some interest, the case is not within the provision of the stat-
ute, which w^as intended to apply to the case of an undertaking
to answer for the debt, default, or miscarriage of another, where
the person making the promise has himself no interest in the
property which is the subject of the undertaking. I, therefore,
agree with my learned brothers that this case is not w'ithin the
Statute of Frauds." The learned Judge there used die words,
"has himself no interest in the property which is the subject of
the undertaking," because he was dealing with a case of property ;
but if his words be read, as I think they should be. "has no inter-
est in the transaction," he is adopting that interpretation of
Couturier v. Hastie, 8 Ex. 40, which I think is the right one. Then
again, in Fleet v. Mitrton (Law Rep. 7 Q. B. at p. 133), Black-
BURX, J., quotes the passage which i have read from the judgment
of Parke, B., in Cunturicr v. Hastie (8 Ex. 40). and thus inter-
prets it: "He says that it is neither a guaranteeing nor a contract
for sale, and tliat consequently the Statute of Frauds is out of the
question. It seems to me, therefore, as Mr. Cohen said, that this
custom must be taken as merely regulating the tenns of the em-
ployment." If in the present case the agreement is taken as regu-
lating the terms of the defendant's employment, it is not within
Sec. 4 of the statute; on the other hand, if the transaction
is looked at as entered into partly for the benefit of the plaint-
iffs and partly for the benefit of the defendant, it comes within
the rule laid down by Parke, B., in Couturier v. Hastie, and
adopted by Cockburn, C. J., in Fitagcrald v. Dressier. The
contract is not a guarantee with regard to a matter in which the
defendant has no interest except by virtue of the guarantee ; it is

SUTTON VS. GRKY. 155

an indemnity with regard to a transaction in which the defendant
has an interest equally with the plaintiffs. In my opinion, Bowen,.
L. J., was right in holding that the agreement is not within the
statute, and his decision ought to be affirmed.

Lopes, L. J. I am of the same opinion. Bowen, L. J., has
adopted the view of the plaintiffs, that the contract was one of
indemnity, and I think he was right in so holding. The defend-
ant says that the contract amounts to "a special promise to answer
for the debt or default of another person," and is therefore within
the statute. The true test, as derived from the cases, is, as the
master of the Rolls has already said, to see whether the person
who makes the promise is. but for the liability which attaches to
him by reason of the promise, totally unconnected with the tran-
saction, or whether he has an interest in it independently of the
promise. In the former case, the agreement is Vv'ithin the statute ;.
in the latter, it is not. In the present case, it appears to me be-
yond all question that the defendant had an independent interest
in the transaction, because it was entered into for the mutual
benefit of the plaintiff's and himself. In another view, the contract
was to regulate the terms of the defendant's employment by the
plaintiffs. In my opinion, the decision of Bovv^en, L. J., was right,
and the appeal must be dismissed.

Kay, L. J. According to the report which I have of the judg-
ment of Bowen, L. J., he said, 'M have come to the conclusion that
the plaintiffs are correct in saying that it was arranged between
them and the defendant that he should contribute to any loss that
might occur to them upon Robertson's transactions." I agree that
this arrangement hardly comes up to a partnership, though it is
verv near it. The commission received in respect of any transaction
might not be all clear profit ; the expenses of th.e office establish-
ment would have to be provided for; and therefore the contract
with the defendant was not that he should share the profit what-
ever it might be. On the whole I think it would be going too far
to say that the contract was that the defendant sliould share in the
profits and losses of the transactions. But then comes in the prin-
ciple of the decision, that a contract to employ a del credere agent is
not within the statute and need not be in writing, because its main
object is to regulate the terms of the agent's employment, and,
though in the result the agent may have to indemnify the prin-
cipal against losses, that is not the main object of the contract.
The present case, however, is not strictly that of a del credere

156 Gl'ARWTV AXn SURETYSHIP.

agx'iit, am! the (|ucslitiii is, wIu'iIut iIk' cxcc'plion frnin the statute
which has been establislu-il in the case of a del crcdcrc agent ap-
plies to the present case. 1 can not see any (hfficuhy in holding
that it does, when 1 look at the reasons given by I'arki:, T. , for
the decision in Couturier v. Ilastie (8 K.\. 40), when a man simply
agrees to assnnu' lial)ility for the deljt of another, he has no inter-
est whatever in the transaction, except 1)\ virtue i4 the guarantee.
In the present case the defendant lias an independent interest
in the transactions. Another distinction is this, that the contract
is one which regulated the terms upon which the defendant was
t© be employed by the i)laintiffs. 1 agree with HowiiN, L. J., that
"this is really a contract which regulates the terms of the agency,
and the defendant's liability to answer f(-r the del)t of another is
onlv an ulterior conse(iuence of the terms in which the contract is
framed." I agree that the appeal nuist he dismissed.

Appeal dismissed.

Solicitors: I/arold .1. Faniiaii,

lildred & Bignold.

The Fn<ST Natiu.nal JJank, Respondent, zx Chalmers et al.,

Appellants (1895).

144 N. ^■. 432; 39 N. E. 33T.

Appeal from judgment of the Cieneral Term of the Supreme
Court in the Second Judicial Department, entered upon an order
made at the May Term, 1893, which affirmed a judgment in favor
of the plaintiff, entered upon a decision of the C'ourt on trial al
Circuit without a jury.

A lucui. of the case on a former appeal appears in 120 N. Y.
658.

This action was l)rouglit upon an alleged agreement made by
defendants for a valuable consideration, to jiay to plaintiff the
amount of an indebtedness of the firm of Charles Spruce & Co.
to it.

On October 30. 1882, said firm, being financially embarrassed,
confessed judgment to defendants for various sums due them and
for amounts owing to other parties. The statement on wdiich the

FIRST NATIONAL BANK VS. CHALMERS. 157

judgiiient was entered, under the head of "Liahihties assumed,"
set forth, among other items, the following: "Money due by
Charles Spruce & Co. to First National Bank of Sing Sing on
overdraw account, $1556.47.''

The court found that defendant made an absolute, uncondi-
tional promise to pay plaintiff's debt.

Further facts are stated in the opinion.

Calrin Frost, for appellants.
Francis Larkin, for respondent.

Finch, J. What constitutes an original promise, upon which
the Statute of Frauds does not operate, and which therefore may
be valid and eft'ectual without a waiting, is fairly settled in one
direction at least. Wherever the facts show that the debtor has
transferred or delivered to the promisor, for his own use and ben-
efit, money or property in consideration of the latter's agreement
to assume and pay the outstanding debt, and he, thereupon, has
promised the creditor to pay, that promise is original, upon the
ground that by the acceptance of the fund or property under an
agreement to assume and pay the debt the promisor has made that
debt his own, has become primarily liable for its discharge, and has
assumed an independent duty of payment irrespective of the liabil-
ity of the principal debtor. Acklcy v. Parmcnter, 98 N. Y. 425 ;
VVhitc V. Rintoul, 108 id. 222>. In such a case the debt has become
that of the new^ party promising ; his promise is not to pay the debt
of another, but his own ; as between him and the primary debtor
the latter has become practically a surety entitled to require the
payment to be made by his transferee. The consideration of the
primary debt, by the transfer of the money or property into which
that consideration had been in effect merged, may be said to have
been shifted over to the new promisor, who thereby comes under a
dutv of payment as obvious as if original consideration had passed
directly to him.

The question before us therefore is whether the promise of
the defendants, made to the bank, to pay the delit due it from Leary
& Spruce, was founded uix)n such a transfer of property as I have
above described, and thus was original, or whether it was not so
founded, and must be for that reason deemed collateral.

We are bound to assume upon the findings that the promise
to pay was absolute, and clean of condition or contingency. The

158 GUARANTY AND SURETYSHIP.

question whether it was made at ah was sevcrel\- Htigated, and
depended upon the conclusion to be drawn from testimony full of
violent contradictions, and we are not at liberty to review the deter-
mination of fact which affirms that the promise to pay was in truth
made, and was absolute in its terms as sworn to by the witnesses
on die part of the plaintiit. As to the substance of the agreement
between the defendants and the primary debtors, there is also con-
tradiction. The former assert that their assumption of the debt
went no further than a consent to pay it out of the proceeds of the
debtor's property after the discharge of their own debt, or in other
words, that their agreed liability was to pay plaintiff only out
of proceeds when realized, and even then out of any possible excess
remaining over and alnnc their own debt, if that is true, they
were under no present duty to pay the bank when the promise was
made ; the debt had not become theirs ; might never become theirs ;
and so their verbal promise to the bank was purely collateral and
to answer for the del:)t of another. That proposition was quite
distinctly held in Ackley v. Parmcnter, supra, and upon the author-
ity of Belknap v. Bender, 75 N. Y. 446, which disclo.sed an agree-
ment simply to pay out of proceeds when realized, and so far as
sufficient. On this branch of the case the inquiry turns upon the
facts, and the findings fail to disclose any such agrement, but
establish the contrary. They determine diat for a valuable con-
sideration, and by an agreement with Leary and Spruce, the de-
fendants agreed to pay the plaintiff the debt due to it. This find-
ing is free of any conditions, and imports an absolute agreement to
pay at once and in full, and so negatives the defendants' version of
the facts. Tt is sustained by the testimony of the plaintift''s wit-
nesses, and is stronglv corroborated by the form of the confession
of judgment which the defendants' attorney drew, which they
.accepted, upon which they issued an execution, and which provides
for an assumption of the liank dd)t absolutely and without condi-
tion. All the re(iuisites of an original promise, unaffected by the
Statute of Frauds, were thus explicitly embraced in the findings,
^xcei)t one. It is not in ternis or expressly found that the consid-
eration, described simply as valuable, was, beyond that, such a
■consideration as would avoid the statute because it consisted of a
transfer to the defendants for their own use and benefit of the
■debtors' property. That fact is involved in the finrlings. since it
is essential to the legal conclusion, which cannot stand without it.
W't may look into the evidence, therefore, to see whether it would

FIRST NATIOTSTAr, RANK VS. CIIAI. THIERS. 159

have sustained such a finding if it had been expHcitly made, and
thereupon assume the fact in support of the judgment. {Ogden v.
Alexander, 140 N. Y. 356.)

I can find in the proof no express agreement in words trans-
ferring the real and personal estate of the firm to the defendants,
but that there was such a transfer in fact is abundantly established
and beyond any reasonable doubt. The situation appears to have
been this. Leary and Spruce were manufacturers of files. The
defendants in New York were the regular purchasers at established
rates, of their whole product. The manufacturers became seriously
indebted to their vendees in the progress of the business, and as
security therefor had given to them a mortgage on their real
estate for $2,500, dated in 1876, and payable in one year; a second-
mortgage on the same land for $5,000, dated in April, 1882, and
payable in one year ; and, as collateral to the last-named security,
a chattel mortgage for $5,000 covering all machinery and personal
property used in the manufacture of files. The stock on hand and
the equity of the mortgagors still remained to them. There was
due, or to become due, on these securities about the sum of $7,400
at the date of the final arrangement of October, 1882, assuming
that all the debt created prior to their dates was protected by the
mortgages. But an added indebtedness, not covered by the securi-
ties, had later accrued in the form of two notes and one indorse-
ment, amounting to about $4,200, no part of which had matured
on October 30, 1882. On that day the debtors announced to the
defendants their inability to pay. Of course the statement created
alarm. Xone of the mortgages secured future advances, and the
defendants found themselves unsecured creditors to the amount
of over $4,000. The chattel mortgage was not due and contained
no danger clause permitting an immediate seizure. The whole
stock on hand, manufactured and unmanufactured, was encum-
bered by no lien, and that and the equity under the mortgages be-
longed to the debtors, was open to attack and could be disposed of
by the firm. They estimated the entire value of their property at
$16,000, which was the footing of their last preceding inventory,
and claimed it to be sufficient, not only to pay the defendants in
full but also the bank and certain other creditors whom they wished
to protect. They were talking of an assignment, but assured the
defendants that they were ready to give them a bill of sale of all
their propertv. or any other security, provided that the bank and
other named creditors were protected. The defendants agreed to

160 GUARAXTV AXD SURKTVSIIIP.

assume and pay those debts, and chose instead of a l)ill of sale to-
take a confession of judgment. In thai the debtors swore that
they were justly indeljted to the defendants in a sum made up of
the total debt to the latter, and of the debts to other named cred-
itors, which the defendants had assumed and agreed to jiay. Had
the transaction stopped at this ])oint it would be difficult to support
the promise to the bank, unless upon the ground of an intended
purchase by the defendants of the debtor's assets, the price of
which was secured by the confession of judgment. lUit it did not
stop there. The defendants could at once have levied upon the
whole pc^rsonal property, and advertised a sale of the real estate,
but all that was needless, "because the debtors at once turned over
•the whole property to the defendants, and put them in entire and
complete possession, for their own use and benefit. Leary aban-
doned it utterl\- and went away. Spruce remained as the hired
servant of the defendants, working for wages which they cut down
at their pleasure, obeying their orders, shipping the whole manu-
factured product to them in New York, drawing on them for the
pay roll, and treating the property in all respects as theirs. Not a
vestige of it ever came back to the debtors. The latter were willing
to transfer it, as their offer of a bill of sale proves ; they did trans-
fer it, and in the light of the confession of judgment and the prom-
ise to the bank, it is impossil)le not to see that it w-as in considera-
tion of an agreement b\- the defendants to pay the specified debts.
I have not failed to consider the attempted explanation of
Chalmers and the argument about it of his counsel. The former
sought to put himself in the attitude of a tenant under Spruce as
landlord, to claim that his wages of $20 a week were in part for
rent, and to show that the goods were sold to him by Spruce as
before the failure. I'.ul the latter, though unwillingly, contro-
verterl the theon-, and Chalmers' own version of the facts does not
harmonize with the explanation made. The claim that Spruce was
to remain owner and work out the debts does not account for
Leary's abandonment of the ])ossession, nor Spruce's service for
wages, still less for the instant assumption and payment of all
expenses and exercise of complete control by the defendants. They
took all the products, and if they continued to keep the accounts
in the old wav it was but a natural measure of convenience in order
to separate the factory business from their own, and be able to
ascertain its ultimate resitlts. They took the confession of judg-
ment as a gtiard and protection against other creditors, and as a

FIRST NATIONAL UAXK VS. CIIAL.MERS. 161

defense of the transfer made to tlieni. They issued no execution
at once because that was needless to attain possession, but (Hd issue
it later when their title was threatened. That all this was done
upon an under.standing and agreement in accord widi the facts
seems to me a natural and necessary inference.

Nor have I overlooked the fact that the confession of judg-
ment was set aside on the motion of a junior creditor. The defend-
ants' attorney, after a consultation with his clients, accepted short
notice of the motion, and then suffered it to be granted by default.
The probabilities are that the proceeding was collusive, but if not,
it was one of the risks which the defendants assumed and is imma-
terial to the result.

1 have reached my conclusion without reliance upon the pre-
vious decision of this court on the first appeal (120 N. Y. 650),
and without any reference to the doctrine of Laurence v. Fo.\%
which has played some part in the discussion. The opinions of the
second division on the former appeal in the case indicate that a
majority of the court did not agree upon any one proposition dis-
cussed. I should treat that judgment as decisive if it had decided,
but the only authoritative determination was the order for a new
trial. I do not deem the doctrine of Lazvrcnce v. Fox involved in
this controversy. That doptrine applies where no express promise
has been made to the party suing, but he claims the right to rest
upon a promise between other parties having respect to the debt
due to him and as having been made for his benefit. It struggles
to obviate a lack of privity upon equitable principles, but is need-
less and has no proper application where the privity exists, and a
direct promise has been made upon which the action may rest.
Here we have the promise, and if it is valid the wdiole problem
is solved.

I think the promise proved and found rested not only upon a
valuable consideration, but one of such character as to make the
promise original and save it from the condemnation of the Statute
of Frauds.

The judgment should be affirmed, with costs.

All concur, except Haight, J., not sitting.

Judgment affirmed.

162 GUARANTY AND SURKTVSHIP.

Morris ct al. vs. Osterhout axd Hughart (1884).
55 Mich. 262; 21 X. W. 339.

, Assumpsit. Defendants bring error. Affirmed.

T. J. O'Brien, for appellants.
Cooper & Winsor, for appellees.

Sherwood, J. The plaintiffs, who are millers residing at
Reed City, brought their action of assumpsit against the defend-
ants, who are engaged in the lumber business and reside at Grand
Rapids, to recover for a quantity of flour and mill-feed, amount-
ing to the sum of $482.92. James H. Carey had a contract with
defendants whereby he was to do sawing and make shingles for
them at Careyville, in Lake county, where the defendants had a
quantity of pine timber. 'Die tlour and feed was purchased by
Carey and used b}- him while doing the sawing for defendants,
and when he made the purchase he told the plaintiffs that the
goods were for the defendants ; that he was at work for them, and
that they had ordered him to get the goods for them. The plaint-
iffs seek to hold the defendants liable under the authority, which
was verbal, thus claimed to have l^een given Carey to make the
purchase, and a subsequent promise claimed to have been made
by Hughart to pay for the goods, which, however, is denied by
the latter. The defendants claim that by the terms of their agree-
ment with Carey they were under no obligation to supply the goods
or to make advances to Carey, and that they never authorized him
to make the purchase on their account.

The questions at the circuit were mostly those of fact, and
were submitted to the jury, who, under the rulings and charge of
the court, rendered their verdict for the plaintiffs for the amount
claimed. The defendants bring error, and the rulings and charge
of the court are now before us for review.

At the close of the trial the defendants' counsel asked the
court to direct a verdict for the defendants. The request was
refused.

We do not think the record presents a case for the instruc-
tion asked. Carey swears, in substance, that the defendants gave
him authority to make the purchase on their credit, and the credi-
bilitv of his testimonv was for the iurv. If he stated trulv the

MORRIS VS. OSTERIIOUT. 163

direction sworn to by him as coming from defendant Hughart,
the jur)' would be warranted in finding that the defendants au-
thorized the purchase. The promise would be by defendants and
not by Carey, and therefore not within the Statute of Frauds.
It would be a debt contracted upon their own promise, and not a
liability for the debt of another.

It is alleged as error that the court refused to give defend-
ants' second, eighth and ninth requests to charge, which requests
were as follows :

"Second. If the jury finds from the evidence that the goods
were charged, shipped and billed to Carey; that no bill was ever
sent to the defendants ; that the plaintiffs took an order on the
defendants for the amount of the bill, and afterwards presented
this order and requested its acceptance and payment, and still
retain this order — such evidence is inconsistent with the claim
now made by the plaintiffs, and they cannot recover in this action."

''Eighth. Under the undisputed facts in this case, it appears
that Carey is still liable to the plaintiffs for the amount of the
^oods in question, and the plaintiffs cannot recover in this action."

"Nuitli. It is not sufficient for the jury to find that Hughart
authorized Carey to buy in their name and upon their credit. They
must also find from the evidence that the credit was given to
Osterhout and Hughart and not to James H. Carey. And in
arriving at a conclusion on this point they should consider all the
acts and conduct of the plaintiffs : such as the entry in their books,
the shipping of the goods, the taking of the order, their repeated
efforts to collect it, and their present possession of it."

The second and eighth requests, we think, were properly
refused. The facts stated in the second request exclude the idea
that the inconsistency claimed for them is susceptible of explana-
tion, but such is not the law. The eighth request seeks to have
the court state what the undisputed facts show. What they show
was a question for the jury, and in this case cannot be considered
disconnected with the other testimony in the case bearing on the
same point.

The circuit judge in his charge stated to the jury that the
first proposition for the plaintiffs to establish was that Carey was
authorized by defendants to purchase the goods for them ; and
second, that plaintiffs, when Carey made the purchase, relied en-
tirely upon defendants, and not upon Carey, for the pay ; and if
they found in the affirmative of these propositions the plaintiffs

16-i CUARAXTV AXD SUKl' 'IN SU 1 1*.

would be entitled to recover; if not, the defendants must prevail.
He further told them that, in solving these propositions, they must
take into consideration all the testimony in the case, including the
actions of the parties. We think ihcsc charges sufficiently cover
the substance of the defendants' ninth request.

We have carefully examined tlir remainder of the charge
excepted to by the defendants' counsel and do not find any error
therein. The facts were for the jury, and whether the court
below or this court would or would not have come to the conclu-
sion reached upon the testimony is not for our consideration. We
find no error in the record committed by the court, and here our
duty ends.

The judgment must be affirmed.

The other Justices concurred.

B.\i.o\\i.\ xx Huiks (1884).
73 ^^a. 739.

L. S. Baldwin brought suit against Charles Hiers, and John
A. Hiers, as guarantor, in a justice's court, on March 22, 1881.
The account attached to the summons was in the name of Charles
Hiers. The justice entered judgment for the plaintiff, an appeal
was entered, the jury found for the plaintiff, and a certiorari was
sued out by the defendant, John A. lliers. The evidence for the
plaintiff on the trial in the justice's court was. that Charles lliers
was the minor son of John A. lliers; tliat the latter told ])laintiff
to let Charles and another son have goods and charge them to the
one who purchased them ; to let them have goods and he (John A.)
would see that the plaintiff got the money for them ; and the goods
were furnished accordingly.

Defendant, lolni A., denied any such agreement, or that he
owed tile account, and testified that the son worked for himself
during the year. The son denied the correctness of the account,
and asserted that he purchased most of the goods charged, but
that some of the account was really for whisky, though charged
under other names.

The court sustained the certiorari and ordered a new trial.
Plaintiff excepted.

MEAD VS. WATSON. 165

T. H. Pickett, by brief, for plaintiff in error.

G. IV. Warzmck; L. C. Hoylc, by R. J. Jordan, for defendant.

Br,ANDFOR», Justice.

(t) The plaintiff sued the defendant in a justice's court as
g-uarantor, and obtained a verdict in his favor. The evidence
sliowed that the son of the defendant wished to purchase goods
from the plaintiff", and the defendant agreed if plaintiff would let
defendant's son have the goods he, defendant, would see it paid.
This was an original and not a collateral undertaking. If the
premise had been that he would pay the debt if his son did not,
then '?uch a promise would be void unless reduced to writing; it
would be a promise to answer for the debt, default or miscarriage
of another; but an undertaking that if plaintiff would let de-
fendant's son have goods, he would see it paid, or would pay it him-
self, is an original undertaking, founded on a sufficient considera-
tion, and is good and binding on defendant.

(2) And the defendant being sued in a justice's court as
guarantor would make no difference, as there are no pleadings in
that court.

(3) We think the evidence was sufficient to sustain the ver-
dict and judgment in the justice's court, and would have been sat-
isfied if the court below had allowed the same to stand, but as the
court thought proper to reverse and set aside the judgment of the
justice's court, we will not interfere, as this is equivalent to the
first grant of a new trial. The court below is nearer the parties
and witnesses than we are. The testimony is conflicting, and we
will let the judgment of the court below stand.

Judgment affirmed.

Mead, Mason & Co. v. Watson (1885).
57 Vt. 426.

Assumpsit. Heard on a referee's report, December Term,
1884, Taft, J., presiding. Judgment for the plaintiffs. The referee
found, that the plaintiffs were dealers in doors, windows, and ma-

166 GUARANTY AND SURETYSHIP.

terials for house furnishing; that ilic defendant, who was known
to be responsible, introduced Cameron to the plaintiffs ; that the
house, for which the articles were purchased, was situatec,! on the
defendant's land ; that the understanding was, that when the house
was completed, it was to be deeded to Cameron's wife ; that Cam-
eron abandoned the house before it was completed, and it was
finished by the defendants, who retained the title ; that the de-
fendant's contract with the plaintiffs was by parol. The other
facts are sufficiently stated in the opinion.

S. A/. Pingree, for the plaintiff's.
T. 0. Scavcr, for the defendant.

The opinion of the court was delivered by

Powers, J. The referee says the plaintiffs understood "that
whatever Cameron ordered for said house for the plaintiffs the
defendant would guarantee the payment of," and the plaintiffs-
"would not have sold said articles to Cameron except for this un-
derstanding, that the payment was guaranteed by the defendant."
Later on he says, "Those articles were all charged to Cameron on
plaintiffs' books ; and plaintiffs understood that they were to col-
lect the same of said Cameron, if possible, and that the defendant
was only liable to pay the same in case the plaintiff's were unable
to make collections of Cameron.

The contract of the defendant therefore was collateral to the
contract of Cameron.

It is true that no debt existed against Cameron when the
defendant's promise was made. But the defendant only promised
to be responsible for a future, debt. His promise could only attach
to the principal obligation of Cameron, when that obligation came
into force. The defendant did not promise to pay primarily, but
only in case the plaintiff failed to collect of Cameron.

If the future primary liability of a principal is contemplated
as the basis of the promise of a guarantor, such promise is within
the Statute of Frauds, precisely as it would be if the liability ex-
isted when the promise was made. Brandt, Sur., § 6i ; Browne,
St. Fr., § 162; Matson v. Wharaui, 2 Term, 80.

Judgment reversed, and judgment on the report for defendant-

JONF.S VS. BACON. 167

Jones, Appellant, 'i's. LIacon, as Surviving Executor, etc.,

Respondent (1895),

145 N. Y. 446; 40 N. E. 216.

Appeal from juclg-ment of the General Term of the Supreme
Court in the fifth judicial department, entered upon an order made
October 3, 1893, which denied a motion for a new trial and ordered
judgment in favor of defendant entered upon an order non-suiting
plaintiff.

This action was brought to recover damages for a breach of
an oral contract alleged to have been made by James McKechnie,
defendant's testator, to indemnify him in case of his indorsement
of certain notes made by one Kingsbury.

Upon the trial plaintiff called Kingsbury as a witness to prove
the alleged promise. His testimony on that subject was objected
to by defendant's counsel on the ground that the witness was in-
competent to testify in regard thereto under section 829 of the Code
of Civil Procedure. Plaintiff' thereupon produced and proved and
gave in evidence an instrument executed by plaintiff' under seal, by
the terms of which, in consideration of the sum of one dollar, he
released Kingsbury from "all liability, responsibility or damages"
sustained or which might thereafter be sustained by him by reason
of his indorsement. This release was by an amended answer set
up as a defense.

The further material facts are stated in the opinion.

VVilliam H. Smith, for appellant.

Henry M FieJd and Frank Rice, for respondent.

Andrews, Ch. J. The oral promise of the defendant's tes-
tator to the plaintiff was, in substance, a promise of indemnity in
case the plaintiff would become indorser on the note of Kingsbury
to the banking firm of McKechnie & Co. for a debt of Kingsbury
to the bank. Tlie plaintiff thereupon indorsed the note of Kings-
bury to the bank, and has been compelled, to pay thereon the sum
of about $16,000, Kingsbury having made default and being in-
solvent. This is a statement of the facts in the simplest form, and
the question arises whether the oral promise by the defendant's
testator to indemnify the plaintiff' was void under the Statute of
Frauds, as being a promise to "answer for the debt, default or mis-

168 GUARAXTV AND SUR1:TVS1I1J.'.

carriage of another person." (2 Rev. St. 135, Sec. 2, Sub. 2.)
This is no longer an open question in this state. It was decided in
Cliapiii V. Merrill, 4 Wend. 657, that a promise by one person tO'
indemnify another for becoming a guaranty for a third is not within
the statute and need not be in writing, and that the assumption of
the responsibihty was a sufficient consideration for the promise.
The doctrine of Cliapin v. Merrill was approved in Mallory v. Gil-
lett, 21 N. Y. 412, in Sanders v. Gillespie, 59 id. 250, and Tighe v.
Morrison, 116 id. 263, and in other cases in this court. The same
doctrine now prevails in the English courts. Thomas v. Cook,
8 Barn. & C. 728; Reader v. Kingham, 13 Com. Bench, X. S. 344;
Wildes v. Dudlow, L. R. 19 Eq. Cas. 198. We do not deem it
proper to reopen the discussion or to refer to cases where a different
view has prevailed. The court below considered the subject at
large, and the al)le opinion of Bradley, J., refers to many of the
cases on the subject.

The plaintiff was, therefore, entitled to maintain an action
except for his act in releasing Kingsbury from his liability for the
money he was compelled to pay on account of the indorsement.
The release was probably essential in order to enable the plaintiff
to make any proof of the agreement for indemnity, since he could
establish the promise only by Kingsbury, the plaintiff himself not
being a competent witness by reason of the death of the promisor
McKechnie, and there being no other person cognizant of the tran-
saction. By the release Kingsbury was discharged from all respon-
sibility to the plaintiff. The plaintiff having paid the debt in part
out of his property, could, prior to the release, have maintained an
action against Kingsbury to recover the sum so paid. Butler v.
Wright, 20 Johns, 367 ; Huni v. Aniidon, 4. Hill, 345. The indem-
nitor of the plaintiff", on restoring to him this sum in performance
of the contract of indemnity, would be entitled to be substituted to
the claim of the plaintiff' against Kingsbur}-. This stands upon the
most obvious principles of natural justice. The money paid by the
plaintiff was at the request of Kingsbury, implied from the legal
liability as indorser assumed by him, and Kingsbur_\- was bound to
reimburse the plaintiff. But, l)y an independent contract between
the plaintiff and his indemnitor, McKechnie, the latter was also
bound to save the plaintiff' harmless. On performance of this obli-
ofation bv the indemnitor, he would be entitled to stand in the shoes
of the plaintiff as to his right to call upon Kingsbury. By equit-
able substitution the indemnitor would take the right which the

HARTLEY VS. SANDFORD. 169

plaintiff had against Kingsbury. There was no privity of con-
tract between the indemnitor and Kingsbury, but there was between
the plaintiff and Kingsbury. On paying the plaintiff what he had
been compelled to pay for Kingsbury, pursuant to the contract of
indemnity, the indemnitor would stand as the equitable assignee
of the plaintiff of the obligation of Kingsbury to him. Kingsbury
had no equity to be relieved from his obligation, because the plain-
tiff had recourse against AIcKenzie. The plaintiff, though not
strictly such, had the equities of a surety against Kingsbury, and
the equities by operation of law would pass to McKechnie on his
performing his contract of indemnity, except for the release. The
release of Kingsbury by the plaintiff materially changed the rights
and remedies of the defendant against Kingsbury. It barred any
claim against Kingsbury in behalf of the estate of the indemnitor,
to recover as the representative of the rights of the plaintiff against
him, in case the plaintiff' should prevail in the action. Such an
interference plainly operates to discharge the estate of the indem-
nitor

L'pon the ground that the release defeated the right of action,
the judgment should be affirmed.

All concur, except Haight, J., not sitting.

Judgment afffrmed.

Hartley vs. Sandford (1901).
66 N. J. L. 627; 55 L. R. A. 206; 50 Atl. 454.

Eiror to the Supreme Court to review a judgment in favor of
plaintil'i" in an action brought to enforce a promise to indemnify
plaintiff for payments which he had been compelled to make as a
srirety for defendant's son. Reversed.

The facts are stated in the opinion.

Mr. Jolui B. Humphreys, for plaintiff in error.
Mr. Zebulon M. Ward, for defendant in error.

Dixon, J., delivered the opinion of the court.

The material facts in this case, as disclosed by the record,
are that the defendant's son was indebted to M., who desired addi-

170 GUARANTY AND SURETYSHIP-

tional security ; that thereupon the defendant appHed to the plain-
tiff to become surety for the son, and promised him that, if he was
compelled to pay the debt, he (the defendant) would reimburse
him; that accordingly the plaintiff' became surety for the son, and
subsequently was obliged to pay the debt. This suit was brought
upon the promise, which was oral only. It appears that at the trial
in the Passaic circuit the jury were instructed to find for the plain-
tiff if they were satisfied the promise had been made ; but the ques-
tion as to the legal sufficiency of the promise w^as reserved and
certified to the supreme court, which afterwards advised the circuit
that the promise was valid, and thereupon judgment was entered
on the verdict.

In this court error has been assigned on the charge at the cir-
cuit, as well as on the advisory opinion of the supreme court ; but,
there being no bill of exceptions presenting the charge, the assign-
ment of error respecting it is futile, and must be disregarded. The
assignment upon the opinion of the supreme court is legal, and
presents the only question now before us, which is whether the
plaintiff's suit can be maintained, in view of our statute, "that no
action shall be brought to charge the defendant upon any special
promise to answer for the debt, default, or miscarriage of another
person, unless the agreement upon which such action shall be
brought, or some memorandum or note thereof, shall be in writing
and signed by the person to be charged therewith or some other
person thereunto by him or her lawfully authorized." The advice
of the supreme court was based upon its opinion that under the
adjudications in this state the promise of one person to indemnify
another for becoming surety of a third is not within the statute.
The cases cited in that opinion to support this view are Apgar v.
Hiler, 24 N. J. L. 812; Cortclyon v. Hoagland, 40 N. J. Eq. i;
and Warren v. Abbeft (N. J. L.) 46 Atl. 575. Of these, the only
one of controlling authority here is that of Apgar v. Hilcr, which
is a decision of this court. That decision does not sustain the broad
proposition for which it was cited. This court there held merely
that, between two persons who had signed the same promissory
note as sureties for another signer, the oral promise of one surety
to indemnify the other was valid. I'his promise was deemed out-
side of the statute, because by signing the note the promisor had
himself become a debtor, and so his promise to indemnify was to
answer for his own debt. In Cortelyon v. Hoagland several stock-
holders and directors of a corporation had promised to indemnify

HARTLKV VS. SANDFORD. 171

another stockholder and director for indorsing a corporate note,
and IVarren v. Abbctt was of similar character. In the Cortelyou
Case the chancellor rested his decision on Apgar v. Hiler, which,,
as above stated, was essentially different, and on Thompson v,
Coleman, 4 N. J. L. 216, which was a promise to indemnify a con-
stable for selling under execution goods claimed by an outside
party, — a case where the promisee had no redress except on the
promise, and therefore clearly outside of the statute. If the deci-
cisions in Cortelyou v. Hoagland and IVarren v. Abbett are to be
supported on prior New Jersey adjudications, such support must
be found in the doctrine that where the consideration of a promise
to answer for the debt, default, or miscarriage of another is a sub-
stantial benefit moving to the promisor, then the statute does not
apply. This rule was recognized in Kutsmeycr v. Ennis, 27 N. J.
L. 371, and Cowenhoven v. Hozvell, 36 N. J. L. 323. To support
those decisions on this rule, it must be held that the payment of a
corporate debt is substantially beneficial to the stockholders or
directors of the corporation, — a proposition which seems to be
denied in other tribunals. Browne, Stat. Fr. § 164. In the prom-
ise now under consideration there was no such element, and no
case has been found in our Reports involving the present question.
We should therefore decide the matter on principle, or as nearly
so as related adjudication will permit. Looked at as res nova, it
seems indisputable that the defendant's promise was wathin the
statute. It was to respond to the plaintiff m case the defendant's
son should make default in the obligation which he would come
under to the plaintiff" as soon as the plaintiff' became surety for
him, — an obligation either to pay the debt for which the plaintiff
was to be surety, or to reimburse the plaintiff' if he paid it. In this
statement of the nature of the promise there is, I think, every
element which seems necessary to bring a case within the purview
of the statute. The parties, in giving and accepting the promise,
contemplated ( i ) an obligation by a third person to the promisee ;
(2) that this obligation should be the foundation of the promise,.
i. e., that the obligation of the son to the promisee should attach
simultaneously with the suret}'ship of the plaintiff, and thereupon
should arise the obligation of the promisor for the fulfillment of the
son's obligation; and (3) that the obligation of the promisor
should be collateral to that of the son, /. e., if the latter should per-
form his obligation, the promisor would be discharged, while, if
the promisor was required to perform his obligation, that of the

172 GUARANTY AND SURETYSHIP-

sun \vt)uKl not he (lischari;v<l. hut (july shiftctl from the promisee
to the promisor. An examination of the cases will show that not
many of them are in conHict with this view, when they are free
from (lirt'erentiatino- circumstances. In the leading case of 'riiomas
V. Cook, 8 Barn. & C. 728, such a circumstance appears in the fact
that the promisor was himself a signer of the bond against which
he promised to indemnify the promisee, and thus the promise was,
in a reasonable sense, to answer for that which, as to the promisee,
was the promisor's own debt. On this difference may be explained
the decisions in Jones v. Letcher, 13 B. Alon. 363; IJoiii v. Bray,
51 Ind. 555, 19 Am. Rep. 742; Barry v. Ransom, 12 X. Y. 462;
Sanders v. Gillespie, 59 X. \. 250: Ferrell v. Maxivell, 28 Ohio
St. 383, 22 Am. Rep. 393 ; and others, — resting on the rule applied
in Apgar v. Hiler, 24 X. J. L. 812. The remark of Bayley, J., in
Thomas v. Cook, that a i)roniise to indemnify was not within either
the words or the policy of the statute, has caused much of the con-
fusion existing on this subject, but is more than counterbalanced
by the observations of Lord Denman in Green v. Cressii'ell, 10
Ad. & El. 453, and Pollock, C. B., in Cripps v. Hartnoll, 4 Best &
S. 414, to the effect that a promise to indemnify may be also an
undertaking to answer for the debt or default of another, and that
when it is it comes within the operation of the statute. Another
circumstance taking cases out of the simple class with which we
are now concerned is that mentioned in Kutsvieyer v. Ennis, 27
N. J. L. 371, 376, viz., the existence of a new consideration bene-
ficial to the promisor, or, as it is soinetimes expressed, moving to
the promisor. Such cases are Sniilh v. Sayivard, 5 Me. 504; Lucas
V. Chamberlain, 8 B. Mon. 276; Mills v. Brozvn, 11 Iowa, 314;
Reed v. Holcomb, 31 Conn. 360; Smith v. Delaney, 64 Conn. 264,
29 Atl. 496; Potter v. Brozvn, 35 Mich. 274; Comstock v. Norton,
36 Mich. 277 ; Harrison v. Saivtcll, 10 Johns. 242, 6 Am. Dec. 337 ;
Sanders v. Gillespie, 59 X. Y. 250; Tiiihc v. Morrison, 116 X. Y.
263, 5 L. R. A. 617, 22 N. E. 164. Cases of still another charac-
ter are sometimes cited in support of the statement that contracts
to indemnify are outside of the statute, such as Cripps v. Hartnoll,
4 Best & S. 414; Reader v. Kingham, 13 C. B. X^. S. 344; Ander-
son v. S pence, y2 Ind. 315, 37 Am. Rep. 162; Keesling v. Frazier,
119 Ind. 185, 21 X'. E. 552; Beaman v. Russell, 20 Vt. 205, 49 Am.
Dec. 775. But these judginents rest on the same idea as Thomp-
son v. Coleman, 4 X'. J. L. 216, — that there existed no other liabil-
ity to the promisee than that of the promisor, and so manifestly

HAUl'LKY VS. SANDIORD. 173

the statute was not applical)le. On the other hand, there is suiifi-
cient judicial authority for the proposition that an undertaking to
indemnify a person for hecoming surety for another is, in the
absence of any modifying fact, a promise within the statute.
Green v. Cresswell, lo Ad. & El. 453 ; Siinpson, v. Nance, i Speers,
L. 4; Brozcji V. Adams, 1 Stew. (Ala.) 51, 18 Am. Dec. 36; Kcl-
sey V. Hibbs, 13 Ohio St. 340; Clement's Appeal, 52 Conn. 464;
Bissig V. Britton, 59 ]\Io. 204, 21 Am. Rep. 379; Nugent v. Wolfe,
III Pa. 471, 56 Am. Rep. 291, 4 Atl. 15; Draughan v. Bunting,
31 N. C. (9 Ired. L.) 10; Hurt v. Ford, 142 Mo. 283, 41 L. R. A.
823, 44 S. W. 228; and May v. Williams, 61 ]Miss. 126. 48 Am.
Rep. 80, — were decided on this basis. In the case last mentioned,
Cooper, J., stated the true rules very clearly and concisely. Xo
doubt, there are opposing cases which cannot be explained on any
distinguishing circumstances. Such seem to be Chapin v. Merrill,
4 Wend. 657; Jones v. Bacon, 145 N. Y. 446, 40 N. E. 216;.
Dunn v. Jl'cst, 5 B. Mon. 376; Vogel v. Melms, 31 Wis. 306, 11
Am. Rep. 608 ; and Wildes v. Dudloiv, L. R. 19 Eq. 198. But
some of these cases merely follow Thomas v. Cook, 8 Barn. & C.
728, without noticing the distinction which later discussion has
justified, while others appear to have been induced by the injus-
tice of a refusal to enforce a promise on the strength of which
the promisee incurred his liability, rather than by a read}' purpose
to execute the will of the legislature.

Xo doubt, injustice may result fom the enforcement of the
statutory rule ; but that rule sprang from a conviction that its
adoption would prevent more wrong than it would permit, and
its enactment in England and perhaps every state in this Union
indicates the generality of this assurance. Said ^Ir. Justice Ster-
rett in Nugent v. JVolfe. 11 1 Pa. 471, 56 Am. Rep. 291. 4 Atl. 15:
"The object of the statute is protection against 'fraudulent prac-
tices commonly endeavored to be upheld by perjury,' and it should
be enforced according to its true intent and meaning, notwith-
standing cases of great hardship mav result therefrom." With
more detail did Chief Justice Shaw, in Nelson v. Boynton, 3 Mete.
396, 37 Am. Dec. 148, say: "The object of the statute, manifestly,
was to secure the highest and most satisfactory species of evidence
in a case where a party, without apparent benefit to himself, enters
into stipulations of suretyship, and where there would be great
temptation on the part of a creditor, in danger of losing his debt
by the insolvency of his debtor, to support a suit against the friends

174 GUARANTY AND SURKTVSII II'-

or relatives of a debtor, — a father, son, or brother, — l)y means of
false evidence, by exaggerating words of recommendation, en-
couragement to forbearance, and requests for indulgence into posi-
tive contracts."

Our conclusion is that the promise proved at the trial was
insufficient to^ sustain the action, that tlie jiidgiiiciii for the plaintiff
should be reversed, and that, in accordance with the reservation at
the trial, a verdict and judgment should be entered in favor of
the defendant.

Eastwood vs. Ken yon (1840).
II Adol & El. 438; 39 E. C. L. 245.

In this term, (January i6th,) the judgment of the court was
delivered by

Lord Den MAN, C. J. The first point in this case arose on
the fourth section of the Statute of Frauds, viz., whether the prom-
ise of the defendant was to "answer for the debt, default, or mis-
carriage of another person." Upon the hearing we decided, in
conformity with the case of Bntteinere v. Hayes, 5 Mee. & W.
456, that this defense might be set up under the plea of Non
Assumpsit.

The facts were that the plaintiil was liable to a Mr. Black-
burn on a promissory note; and the defendant, for a consideration,
which may for the purpose of the argument be taken to have been
sufficient, promised the plaintiff to pay and discharge the note to
Blackburn. // the promise had bcoi made to Blackbur)i, doubt-
less the statute would have applied : it would then have been strictly
.a promise to answer for the debt of another ; and the argument
on the part of the defendant is, that it is not less the debt of
another, because the ijromise is made to that other, viz., the
debtor, and not to the creditor, the statute not having in terms
stated to whom the promise, contemplated by it. is to be made.
But upon consideration we are of oj^inion that the statute applies
only to promises made to the person to whom another is answer-
able. We are not aw^are of any case in which the point has arisen,
or in which any attempt has been made to put thai construction

ALGER VS. SCOVILLE. 175

upon the statute which is now sought to be cstabhshed, and wliich
we think not to be the true one.^

Rule to enter verdict for defendant discharged.

Alger vs. Scoville (1854).
I Gray (Mass.) 391.

Assumpsit. The facts are sufficiently stated in the opinion.

C. N. Emerson {I. Siinincr was with him), for the defendant.

D. D. Field (of Xew York) and /. E. Field, for the plaintiff.

Sha\\', C. J. In order to have a clear view of the question
discussed in the present case, which is assumpsit on a special
promise, made by the defendant, it is necessary to understand
precisely the facts on which it arises. It appears that when the
contract was made, of which the promise sued on was a part, the
plaintiff", being the owner of 145 shares in the capital stock of
an incorporated company, known as the Duchess County Iron Co.,
being a major part of the whole stock, and the defendant being
the owner of a farm in Monroe county, N. Y., with the stock
thereon, the parties agreed to make an exchange of property. At
the same time plaintiff' held a promissory note against the Duchess
County Iron Co. for $3,350, and had indorsed the notes of the
Company, which had been discounted at various banks and the
money received thereon, to the amount of about $4,000, which
would all come to maturity and fall due within four months from
the time of the contract. The agreement was that the plaintiff
should assign and transfer his shares in the stock of the Company,
and also indorse over his note against them to the defendant, and
that the defendant should, by a good warranty deed, convey the
farm in Monroe county, with the stock thereon, to the plaintiff,
and indemnify the plaintiff and save him harmless against his
said endorsements. This was one entire contract for one entire
consideration, the transfer of the shares and the company's note
to the defendant, on the one side, being a consideration for the
conveyance of the farm and the promised indemnity bv the de-

^Everything except the opinion on the one point is omitted.

176 C.UAKAXTV AND SUKETYSllH'-

feiulant to the plaintitT, on ilic hiIkt. This contract was executed
as far as it could l)c at the time, hy the transfer of the shares and
the dcHvery of tlie note to the defenchiut, and a conveyance of the
farm and stock by the defendant to the plaintiff ; but the promise
to indemnify tlic ])laintiiTf against the notes then outstanding was
something to be dcme in future, and was necessarily executory.
Afterwards, when the notes outstanding at lianks became due,
the plaintiff was called on. as indorser. to pay them, and paid
them accordingly ; and this action is brought on the defendant's
promise to indemnify him and save him harmless from his liability
on these notes.

The ground of defense is. that this was a promise to pay the
debt of another, and so, by force of the Statute of Frauds, no
action can be tnaintained upon it unless proved by a promise in
writing, signed by the party promising. This is the question.

The precise provision in our statute is as follows: "No action
shall be brought to charge any person ui)on any special promise
to answer for the (\c])i, default or misdoings of another, unless the
promise, or some memorandum or note thereof, shall be in writ-
ing and signed by the party to be charged therewith, or by some
person thereunto by him lawfully authorized." Rev. Sts. c. 74,
§ I. This enactment is in nearly if not precisely the same
terms with that of 29 Car. 2 c. 3; so that adjudications on the
construction of the one apply v.-ith equal force to the other.

It is not objected that the case is within the other branch of
the Statute of Frauds, on the ground that it was part of one
entire transaction, a part of which was for the conveyance of
real estate, and on that account the promise could not be given
in evidence to support an action, not being in writing. All that
part of the contract, looking to the conveyance of real estate, hav-
ing- been executed, it stood onlv as a consideration for the execu-
tory undertaking relied on in support of this action ; and no part
of the contract remains unperformed, except the defendant's prom-
ise to indemnify the plaintiff against the payment of the out-
standing note, which is the subject of this suit.

In regard to the clause of the statute relied on, the court
are of the opinion that the promise is in no sense, in which these
terms are used in the Statute of Frauds, a promise to pay the
debt of another: ])Ut it is a promise to the plaintiff, on a consid-
eration moving from the i)laintiff to the defendant, to indemnify
the plaintiff against a contingent liability, which he is under,

ALCER VS. SCOVILLE.

177

as indorser, to certain lianks, to pay certain notes given by the
Duchess County Iron Co. as promisors, if they should fail to
pay them at maturity. The Iron Company were not then indebted
to the plaintiff, nor would they become indebted to him, until
the happening- of the contingency of their not paying the notes,
and his being called on to pay them.

There being no debt due to the plaintiff from the Iron Com-
pany or anybody else, on account of those notes, the promise of
the defendant was not a suretyship or guaranty, or responsibility
to the plaintiff for any debt or duty due to him, but a mere con-
tract of mdemnity against a possible liability. Suppose, instead
of a contingent liability, it had been an absolute one, a debt due
from himself to a third person, a promise to him, made by a third
person, on a valuable consideration moving from him, to pay
that debt and save the plaintiff" harmless, is hot a promise to pay
the debt of another, but a promise to pay the plaintiff"s own debt,
which is equivalent to a promise to pay the money to him, by
which he himself could discharge the debt. The promise of the
defendant to the plaintiff was, that he should not be called on
as indorser to pay the notes, and to save him hamiless from such
call ; and the promise was broken, and the cause of action accrued,
when the defendant failed to take up the notes of the Company
as thev fell due. and permitted the plaintiff to be called on and
compelled to pay them.

In a case m the Queen's Bench, comparatively recent, the
Court sav: "We are of opinion that the statute applies only to
promises made to the person to whom another is answerable."
Eastii'ood v. Kcnyon, ii Ad. & El. 446, and 3 P. & Dav. 282.

The same principle has been adopted in several cases in this
commonwealth.

A promise to pay the public taxes which may be levied on an
estate sold by A to B. made by the seller, as one of the terms of
sale, need not be in writing, not being a promise by A to B to
pav a debt due to B from another person, but to pay a sum which
would otherwise be a charge upon the promisee. Preble v.
Baldzvin. 6 Cush. 552.

The distinction between the common case, where the promise
is designed to secure the debt of another person to the promisee
and so a guaranty, and where the promise is made for another and
different purpose, is stated, and the cases on the subject are cited,,
in Nelson v. Boyiitoii. 3 ]\Iet. 396.
13

178 GUARANTY AND SURETYSHIP-

That llie promise to one to pay his due clelH. a debt due from
him to another, is not widiin ihe Statute of Frauds, and need not
be in writing, was decided in Fikc v. Broz^'ii, 7 Cush. 136.

(2) iUu there is another ground on which we are of
opinion tliat this promise was not within the Statute of Frauds,
supposing it could be construed to be a promise, the effect of
which if performed would amount to a guaranty that the Iron
Company, as promisors on the outstanding notes, should pay
those notes, and so save the plaintifT from his liability thereon
as indorser, and so, although not a promise to pay the debt of
another, yet it might Ije construed to be a special promise to
answer for the default of another, to-wit : the Iron Company.

From the earliest period after the statute was passed in Eng-
land, the judicial construction there, has been, not merely that
there must be a good consideration (diat is required by the com-
mon law to give legal effect to all contracts) ; but to require the
higher species of evidence, that of writing, where guaranty or
suretyship has been the leading or apparent object. But it has
been held at the same time that when the leading and obvious
object of the promisor was to induce the promisee to forego som.e
lien interest, benefit or advantage, held by him, and to transfer
that interest, or confer that or some equivalent benefit on the
promisor, although the effect may be to discharge another person
from an obligation, still it is a new, independent and original con-
tract between the parties, and is not within the Statute of Frauds
required to be in writing. The leading case is JVilliains v.
Leper. 3 liurr. 1886, where the landlord, having a lien on his
tenant's goods for arrears of rent, which -goods had been assigned,
and were alx)ut to be sold by the assignees, entered to distrain,
when the broker and agent promised the landlord to pay him his
rent if he would forbear distraining. Though the effect would
be to discharge the debt of the tenant, it was held not to be within
the Statute of Frauds requiring a note in writing. To the same
effect is Castling v. .hibcrt, 2 East. 325.

This doctrine is fully sustained 1)y the New York cases. It
is the third class of cases mentioned by Kent. C. J., in Leonard v.
Vredenhurgh, 8 Johns. 39. This third class of cases is, "when
the promise to pay the debt of another arises out of some new
and original consideration of benefit or harm moving between the
newly contracting parties." This class is not within the Statute.

ALGER VS. SCOVILLE. 179

This point is confinncd and the cases are fully reviewed by
Savacje, C. J., in Farley v. Cleveland, 4 Cow. 432.

The same doctrine is recognized in this commonwealth. The
case of Nelson v. Boynton, 3 Met. 402, after stating the distinc-
tion is summed up thus: "That cases are not considered as coming
within the vStatute, when the party promising has for his object
a benelit which he did not before enjoy, accruing immediately to
himself ; but where the object of the promise is to obtain a release
of the person or property of the debtor, or other forbearance or
benetit to him, it is within the Statute." One of the last cases
on the subject substantially afifirms the same principles. Curtis v.
Broum, 5 Cush. 488.

Supposing this rule to be well established, we are then to
look at the facts of the present case to see whether it applies.

We have already stated, that we consider the whole as one
entire transaction, the conveyance of the farm and the promise
of indemnity by the defendant, on the one side, were the con-
sideration of the transfer of shares in the Iron Company and
the assignment of the note due the plaintiff from the Iron Com-
pany, on the other. Then, what were the relations of the parties
before and after the making of this contract? The plaintiff pre-
viously was the beneficial owner of more than one-half of the entire
property and capital of the company, and the only two other
shareholders held together an amount of the stock less than that
held by the plaintiff'. I believe it was stated in the argument that
the plaintiff' was president, treasurer or principal manager of
the affairs of the company. But this is not material. His large
interests would give him a large influence, if not a controlling
power, over the funds and affairs of the company, and whilst
holding such interest, he would have a powerful voice, if not a
decisive direction, in seeing that the funds of the company should
be applied to the payment of its notes, of which he was indorser.
Is it to be supposed that, acting on ordinary motives, he would
put his power entirely out of his control, and yet leave himself
liable to the payment of these notes, as their indorser?

Again ; the evidence shows, to use the significant figure of the
witnesses, that in regard to the Iron Company the defendant was
to step into the plaintiff's shoes. Was he to take the plaintiff's
large interest in the stock and property of the Iron Company, con-
stituting a natural fund out of which these indorsed notes were
to be paid, without taking it subject to the incumbrances? Pay-

180 GUARANTY AND SURETYSHIP-

iiii; the debts of tlic company, after the defendant liad become a
shareholder of more than half, would in effect, and ii> the extent
of his interest in those shares, inure to his own direct l)enetit.

We are therefore of opinion, that this was a new and original
contract between these parties, originating in a new consideration
moving from the plaintiff to the defendant, in effect placing the
funds in the hands of the defendant, out of which these notes, in
due course of business, would be expected to l)e ])aid. The prom-
ise was part of a larger transaction constituting an entire con-
tract, and we have no reason to believe, and have no authority
to declare, that the i^laintiff would have parted with his interest
in the company without a simultaneous obligation U) Ix- indem-
nified against his liabilities for the company. For these reasons,
we are of opini<in that this ])roniise was not within the statute, and
that an action will lie u])on it, though not made in writing.

(3) It was urged, on the part of the defendant, that this
promise of indemnity against the outstanding notes was without
consideration, because the exchange of property was effected
independent of this promise, and that the promise was subse-
quent and gratuitous.

We have again recurred to the facts stated in the report,
and can perceive in them no color for such an argument. Both
witnesses speak of it as one bargain, made at one time, and exe-
cuted as far as it could th.en be executed. (Jne of them says,
the bargain then made was, that Scoville was to take the interest
Alger had in the Company, saving bini hanuless from 3JI liability,
■ or, in other words, to steji into his shoes, as far as Alger was
in any way interested in the Company; the indorsed outstanding
notes were referred to, and it was then agreed between the parties
that Scoville was to pay and take up all said notes as they sev-
erallv fell due. Another witness, present at the same time, testi-
fied to the same facts. The use of the present participle, "saving
liini harniless," iiumediately after the words "taking his interest
in the compau}," couples the two things inseparably together as
one bargain. The one was a consideration for the other. It was
a material and essential part of the entire contract, for which the
transfer of the .shares and the assignment of the company's note
were the consideration. The court :ivv therefore of opinion, that
the instruction given to the jury was right, and that judgment be
entered upon the verdict for the plaintiff.

judgment on the verdict.

BUCKMYR vs. DARNAI.l,. 181

BUCKMVR T'^-. DaRXAI.I, ( T 704. ) ,

2 Lord Raymond 1085 ; 5 Mod. 248 ; Salk.27 ; 3 Salk. 15 ; Holt 606.

An action upon the case wherein the plaintifif declared that
the defendant, in coiisideration the plaintiff, at his request locarct
et dclibcrarct ciiidaiii Josepho English a gelding of the plaintiff's
ad cquitanduin ct itiiicnmditiii nsqiic ad Reading in comitatii
Berks, assumpsit ct promisit the plaintiff, quod the said Joseph
and Charles the said gelding to the plaintiff rcdcliberarent, etc.
Upon }io)i assumpsit pleaded, this cause came to trial before Holt,
Chief Justice, at Westminster Hall ; and the counsel for the defend-
ant insisting that the plaintiff ought to produce a note in writing of
this promise, within the statute of frauds, 29 Car. 2, c. 3. s. 4; and
the Chief Justice doubting of it, a case was made of it and ordered
to be moved in court, to have the opinion of the other judges. And
now it was argued this term by Sci-gcaut Daniall for the defend-
ant and Mr. Raymond for the plaintiff. And it was insisted for
the defendant that this case was within the statute of frauds.
29 Car. 2, c. 3, s. 4, for it was a promise to answer for the default
and miscarriage of the person the horse was lent to. The very
letting out and delivery of the horse to English implies a con-
tract by English to re-deliver him, and he is bound by law so to
do, and consequently the defendant is to answer for the default
of another. In a case, 2 Will. & Mar., your Lordship settled this
rule, that where an action will lie against the party himself, there
an undertaking by J. S. is within the statute; and where no action
will lie against the party himself, there it is otherwise. And there-
fore I agree this case, that a man should say to another, "Do you
build a house for J. S. and I will pay you," that case is not withint
the statute, because there J. S. is not liable. But this case is not
more than this, if a man should say, "Do you let J. S. have goods,
and if he does not pay you T will," and this is within the statute,
because an action wall lie against J. S. for the money for the
goods. Or. if a man should say, "Take J. S. into your service, and
if he does not serve you faithfully, or if he wrongs you, I will be
responsible," that is also withni the statute.

To this it was answered for the plaintiff, that here the credit
was wholly given to the pefendant; that, that rule of the sergeant's
must be understood, where an action does or does not lie against
the party himself on the contract, and not where an action does

182 GUARANTY AND SURETYSHIP-

or does not lie against i'iim upon collateral respects. And there-
fore in this case, for an actual conversion, or for refusing to re-
deliver the horse, English may be charged in trover or detinue,
yet. he being not chargeable upon the contract, the case is not
within the statute. This contract cannot be said properly to be a
promise to answer for the default or miscarriage of another, un-
less English were liable by the first contract.

Upon the first motion and arguing this case, the three judges
against Powys seemed to be of opinion that this case was not
within the statute, because English v^'as not liable upon the con-
tract ; but if any action could be maintained against him, it must be
for a subsequent wrong in detaining the horse, or actually convert-
ing it to his own use. And Powrli., Justice, said that that rule, of
what things shall be within the statute, is not confined to those
cases only, where there is no rem.cdy at all against the other, but
where there is not any remedy against him on the same contract.
This case is just like tlie case where a man says, "Send goods to
such a one, and I will -pay yoii." that is not within the statute, for
the seller does not trust the person he sends the goods to. So here
the stablekeeper only trusted the defendant, and an action on the
contract will not lie against English, but for a tort subsequent he
may be charged in detinue, or trover and conversion, which is a
collateral action.

Powvs, Justice, said that there was a trust to English, for
the very lending of the horse necessarily implies a trust to the
person he is lent to, and consequently the defendant in this case is
to answer for the default of another, and is within the statute.

Powell, Justice, agreed, that if a man should say, "Lend
J. S. a horse, and I will undertake he shall pay the hire of it,"
or, "Send J. S. goods, and I will undertake he shall pay you," that
those cases would be within the statute ; and agreed with Powys,
that if any trust were given to English, then the case would be
within the statute. But he and the Chief Justice and Gould held,
that here was no credit given to English, and the Chief Justice
agreed with him, that if there had, this promise would have been
but an additional security, and within tlie statute. And the Chief
Justice said, that if a man should say, "Let J. S. ride your horse
to Reading, and I will pay you the hire," that is not within the
statute, no more than if a man should say, "Deliver cloth to J. S.,
and I will pay you." He said also, that a bailee of an horse for
hire is not bound to re-deliver him at all events, but if he be

MEASK VS. WAGNER.

183

robbed of him without fraud in him, he is excused. x-\nd so it
was ruled in the case of Coggs v. Bernard, 2 Stra. 916.

The last day of the term the Chief Justice delivered the opin-
ion of the Court. He said that the question had been proposed at
a meeting of judges, and that there had been a great variety ot
opinions between, them, because the horse was lent wholly upon
the credit of the defendant; but that the judges of this court were
all of opinion that the case was within the statute. The objection
that was made was, that if English did not re-deliver the horse,
he was not chargeable in an action upon the promise, but in trover
or detinue, which are founded upon the tort, and are for a matter
subsequent to the agreement. But I answered that English may-
be charged on the bailment in detinue on the original delivery,
and a detinue is the adequate remedy, and upon the delivery Eng-
lish is liable in detinue, and consequently this promise by the
defendant is collateral, and is within the reason and the very words
of the statute ; and is as much so as if. where a man was indebted,
J. S., in consideration that the debtee would forbear the man,
should promise to pay him the debt, such a promise is void unless
it be in writing. Suppose a man comes with another to a shop to
buy, and the shopkeeper should say, "I will not sell him the goods
unless you will undertake he shall pay me for them," such a prom-
ise is within the statute ; otherwise, if a man had been the person
to pav for the goods originally. So here detinue lies against Eng-
lish the principal; and the plaintiff having this remedy against
English the principal, cannot have an action against the defendant
the undertaker, unless there had been a note in writing.

Mease vs. Wagner (1821).
I McCord (S. Car.) 395.

This was an action for the articles furnished the funeral of
Mrs. Bradley, at the request and by order of the defendant. Mrs.
Bradley was the widow of Dr. Bradley, who left her his estate
during life, remainder to his nephew, John Bradley. Mrs. Brad-
ley, prior to her death, expressed a wish to be buried in a particu-
lar manner. As soon as she expired, the defendant was
sent for as a friend of the family, and she undertook to procure

184 GUARANTY AND SURETYSHIP-

the articles necessary to such a funeral as the deceased had desired.
She proceeded lo the shop of the plaintiff, where she selected the
articles required, saying they were for Mrs. Bradley's funeral.
She was asked "by whom they were to he paid for?" She re-
plied, "charge them to the estate of Dr. JJradley. and as soon as his
nephew comes to town he will pay for them, or I will." The
articles furnished were such as were suitable to the condition in
which Mrs. liradley had lived.

Un the arrival of the nephew in the city, the account was pre-
sented to him, and he refused to \ydy it, .saying that the defendant
had no authority to procure the articles at his expense. The de-
fendant was then ap])lie(l to. and she refused payment. Some
time after this refusal, one of the witnesses remonstrated with the
nephew on the impropriety of his conduct, when he said he would
pay it, but did not. It appeared that a Miss Teabout adminis-
tered upon the estate of Mrs. Bratlley.

The counsel for the defendant contended that she was not
responsible, as it v.as a collateral and not an original undertaking.

The court charged the iur\' that it was an original, and not
a collateral undertaking, and that the defendant was liable.

A verdict was accordingly rendered for the plaintifif. A mo-
tion was now made for a new trial, on the ground that the court
misdirected the jury.

Mr. justice Huger delivered the o])inion of the court.

It has been regarded as settled doctrine ever since the case
of Buckmyr v. Daniall, (2 Lord Raymond, 1085 ; Rolit. on Frauds,
218). that when no action will lie against the party undertaken
for. it is an original promise. If -V promise 1> that in considera-
tion of his doing a particular act, C shall pay him such a sum,
and if C do not ])ay liiui, he. A, will i)ay the same; this is said to
be no collateral undertaking on the i)art of A unless C was privy to
the contract, and recognized himself as a debtor also. (Fitzgib-
bon. 302: Robt. on I'raufls. 223.) Tn the case before me. the
defendant undertook for the representative of Dr. Bradley, against
whom no action could lie for the articles furnished for the funeral
of Mrs. Bradley. And there was no privity of contract betw^een
the plaintiff and the nephew^ of Dr. llradley. But it has been
urged, that the subsequent promise of the nephew^ had a retro-
active operation, and rendered him liable ; but if he were not liable
before the promise was made, he could not be so afterwards. It
was not in writing, and was nudinn pad inn. Had the defendant

WELCH VS. MARVI.V.

185

undertaken for the state or legal representative of Mrs. Bradley,
who was legally bound to pay the expenses of her funeral, it
would have been a different question ; but she unfortunately under-
took for one who was not responsible, and who was so far from
being privy to the contract, or acknowledg-ing himself a debtor,
refused payment and denied the authority of the defendant to ren-
■ der him responsiV)le.

I am of opinion, therefore, that the motion must be refused.

NoTT, Johnson, Richardson and Colcock, JJ., concurred.

Mr. Justice Gantt dissented.

Kin^, for the motion.

Hunt, contra.

Welch Tvs\ Marvin (1877).
36 Mich. 59.

Error to Ionia Circuit.

Sessions & Striekland and .i. B. Morse, for plaintiff in error.
Lemuel Clute, for defendant in error.

Marston, J. Alarvin, who was plaintiff below, brought an
action of assumpsit to recover the value of a certain meat furnished
by him to be used in a boarding train upon the D., L. & L. ]\I. R. R.
It appears from the testimony that one Hiram Cook, who was
engaged in keeping such boarding car, had obtained his supply
of meat from the plaintiff, and in June, 1875, was owing him for
meats furnished $117.78; that about the T4th of June he refused
to trust Cook any longer or furnish him with any more meat, unless
some diff'erent arrangements were made ; that Welch, who had
been supplying Cook with groceries, went to see Marvin, in
company with Cook, to make some arrangement about this matter.
Marvin testified that he (Welch) then said: "This pay is
now assigned over to me from the railroad company, and I
am going to liecome responsible for the meat, and T want meat
to run this train, and what meat you let Cook have from now, I
will pay you for." Marvin then told Welch that Cook had got

186 GUARAXTY AND SURETYSHIP-

meat there from the middle of April up U) the first of June, that
had not been paid for, and that he would not let any more meat
go until he was paid for that; that Welch replied, " Well, you get
an order on me from Cook and I will accept that order, and pay
you as fast as the money comes into my hands to pay that." The
next morning an order was drawn up for $117.78; this
order was accepted by Welch, providing money enough came into
his hands from the compan_\- to pay his own account first, the bal-
ance to be paid on this order. Different amounts were paid by
Welch, in all amounting to two hundred and fifteen dollars ; but it
does not appear that any other orders were given. It also appears
from plaintiff's testimony that he, in September, received an order
from Cook on the railroad company for one hundred dollars, which
he endeavored to collect. After the arrangement made with Welch,
plaintiff' continued to charge the meats thereafter delivered to
Cook, in the same manner he had previously done, no change hav-
ing been made on his books in the manner of keeping the account.
There was considerable conflicting evidence, as is usually expected
in such cases, as to what the agreement really w'as, as to the reason
of continuing to charge the meat to Cook upon plaintiff's books,
and the ett'orts made to collect the amount.

The courts, in charging the jury, very properly left it to them
to find what the agreement between the parties actually was, and
the conclusion to be drawn from such finding. Defendant's coun-
sel requested the following instructions to be given: "If the jury
find that Marvin sold meat to Cook and charged the same to Cook,,
and that Welch became responsible for it, in order to take the
promise out of the Statute of Frauds, and make Welch legally
liable, they must also find that Marvin thereupon absolutely dis-
charged Cook from lialiility, and looked only to Welch for pay."
Other instructions havmg a similar tendency were requested to be
given. These requests were refused, the jury being merely in-
structed that the manner of keeping the account, and efforts to
collect from Cook, were facts capable of explanation, and might
be considered by the jury. We are of opinion that defendant was
entitled to have the jury instructed as requested. Under no theory
of this case could Cook and Welch both be responsible to plaintiff,
severally, at his option. If Cook was liable for the meats fur-
nished after the arrangement with Welch was made, then clearly
Welch's liability could not be an original one. It is equally clear
that if Welch's promise was an original promise, and the delit his-

KIMBALL VS. NEWELL. 187

debt, then Cook could not be held liable thereon. The parties
might have made an agreement under which they would have
been jointly liable, which is not claimed in this case. But they
could not, under the circumstances, be severally liable, at
plaintiff's option. We know of no better test than this, in a case
like the present. Bresler v. Pendell, 12 Mich. 224; Gihbs v.
Blanchard, 15 Mich. 21)2; Corkins v. Collins, 16 Mich. 480.

The judgment must be reversed, with costs, and a new trial
ordered.

The other justices concurred.

KiMEALL vs. Newell (1845).
7 Hill (N. Y.) 116.

On error from the superior court of the city of New York,
Newell brought an action of covenant against Kimball in the
marine court of the city of New York, claiming to recover certain
rent due on a lease to one Theodosia Knowlton, for whom the
defendant had become surety. On the trial, the plaintiff gave in
evidence the following instruments :

"This is to certify that I have hired and taken from Daniel Newell
the house in Nassau street, etc., for one year, to commence on the first
day of May next, at the yearly rent of four hundred and fifty dollars,
payable quarterly. And I do hereby promise to make punctual payment
of the rent, in manner aforesaid, and quit and surrender the premises,
at the expiration of the term, in as good state and condition as reasonable
use and wear thereof will permit, damages by the elements excepted.
Given under my hand and seal the 3rd day of March, 1840.

Mrs. T. Knowlton, [L. S.]"

"In consideration of the letting of the premises above described, and
for the sum of one dollar, I hereby become surety for the punctual pay-
ment for the rent, and performance of the covenants, in the above written
agreement mentioned, to be paid and performed by Mrs. Theodosia Knowl-
ton, and if any default should be made therein, I do hereby promise and
agree to pay unto the said Daniel Newell such sum or sums of money as
will be sufficient to make up such deficiency, and fully satisfy the conditions
of the said agreement, without requiring any notice of non-payment, or
proof of demand being made. Given under my hand and seal the 3d day
of March, 1840.

"M. T. C. KiMEALL, [L. S.]"

188 GUARANTY AND SURETYSHIP-

It appeared that Mrs. Knowiton occupied under the lease,
and that a balance of rent, amounting to 553 1 .94, remained due the
plaintiff. It further api)eared that Mrs. Knowiton was a married
woman at the time the lease was executed ; and the defendant
contended that, inasmuch as her covenant was void by reason of
coverture, his was also void. The marine court held otherwise,
however, and rendered judoment in favor of the plaintiff, which
was afterwards affirmed ])y the superior court on certiorari, and
the defendant brought error.

R. II. Slianiioji, lor the plainiilT in error.
Hozi'ard & Oudcnionk, for the defendant in error.

Nelson. Ch. J. The defendant having consented to become
bound as surety for the rent of the premises leased to Mrs. Knowi-
ton, it is but reasonable to presume that, if he was not well
acquainted with her situation before, he then made some enquiries
into her circumstances and condition, and thus became fully pos-
sessed of the facts which he now sets up as a ground of discharge.

But conceding that the cjcfendant had no knowledge of the
social condition of Mrs. Knowiton. and that he supposed she would
be legally holden for the rent as it accrued, I am still of the opin-
ion that he is liable on his contract. Th.e doctrine for which his
counsel contends is thus stated liy Theobald: "The obligation of
the surety being accessor}- to the obligation of some person who is
the principal debtor, it is of its essence that there should be a valid
obligation of a principal debtor. The nullity of the principal
obligation necessarily induces the nullity of the accessory."
( Theob. Prin. & Sur. 2.) This is undoubtedly correct as a general
rule ; but it has its exceptions, and the case before us is one of them.

Mr. Chitty says: "Tlie rule that a party can not l)e liable upon
a contract of guarantee, unless the principal has incurred a legal
responsibility, is true, in some instances, in form or words, rather
than in substance." (Chitty on Contr.. 499.) He adds: 'Tn the
case of a guarantee to answer for the price of goods to be supplied
to a married w'oman, or goods (not necessaries) to be sold to an
infant, or other persons incompetent to contract, no doubt the
party guaranteeing, though professedly contracting only in the
character of surety, would be responsible." ( Id.) He refers to
the case of Mage^s v. Ames (4 Bing. 470). which was an action
against the defendant as surety for a married woman. There the

fleniT E. OKvf^f

KI.MBAI.I. VS. XKWTJ.r,.

189-

question was wliether the uiulertakiiii^ of the defenuant was an
original one, so as not to require it to be in writing. The court
held that it was collateral, and therefore should have been in writ-
ing. But neither the counsel nor court supposed that the defend-
ant would not have been bound, if the contract had been in writing.
On the contrary, that was assumed. In the case of White v.
Cuyler (6 T. R. 176), it w^as impliedly at least conceded by Lord
Kenvon, that a "[uarantor or suretv for a feme covert would be
liable on his contract. ( .See also Chitty on Contr., 515 ; Pitman on
rVin. and Surety. 13; Biickuiyr v. Bar vail (2 Ld. Raym. 1085) ;
Harris v. HitncJiback (1 Burr. 373) ; Chapiii v. Lapluiui (20 Pick.
467).

The doctrine of the civil law is very clear and satisfactory on
this subject. It is as follows : "Ahhough the obligation of a surety
be only an accessory to that of the principal debtor, yet he who has
bound himself surety for a person who may get himself relieved
from his obligation, such as a minor, or a prodigal who is inter-
dicted, is not discharged from his suretyship by the restitution of
the principal debtor : and the obli^-ation subsists in his person ;
unless the restitution were grounded upon some fraud, or other
vice which would have the efifect to annul the right of the cred-
itor." ( Dom. B. 3 tit. § I, art. to, Strahan's ed.) Again: If the
principal obligation was annulled only because of some personal
exception which the principal debtor had, as if it w-as a minor,
who, in consideration of his being under age, got himself relieved
from an engagement by which he suffered some prejudice, and
that there had been no fraud on the creditor's part ; the restitution
of the minor would have indeed this eft'ect, that it would annul
his obligation to the creditor, and his engagement to save harmless
his surety, if he desired to be relieved from it. But the said resti-
tution of the minor would not in the least invalidate the surety's
obligation to the creditor. For it was only to make good the
obligation of the minor, in case he should be relieved from it on
account of his age, that the creditor took the additional security
of a suretv." (Id., B. 3, tit. 4, § 5, art. 2 ; and see i Ev. Poth. on
Obi. 237.)

I am satisfied that the decision of the court below was right,
and that the judgment should be affirmed.

Be.\rdsley, J. I diink the defendant was estopped from
denying the competency of Mrs. Knowlton to bind herself by the
covenant she assumed to execute. The defendant by his covenant

190 GUARANTY AND SURETYSHIP-

admits she was thus bound, and he shall not be allowed to gainsay
it by alleging her incapacity to make a legal contract. Had she
been induced to enter into this engagement by fraud or imposition,
or upon a usurious consideration, the case might have been other-
wise; but the defendant, although a surety, cannot be permitted,
on the ground now set up, to deny the legal existence of a covenant
which is explicitly conceded by his own deed. (Co. Litt. 352, a,
note 306; I Stark. Ev. 302, Am. cd. of 1830; Greenl. Ev., §§ 22
to 26, and the notes.)

The judgment of the court below is right, and should be
affirmed.

Judgment affirmed.

Dexter vs. Blanchard (1865),
II xA.llen 365.

Contract brought upon an oral promise by the defendant to
pay to the plaintiff a bill for the hire of horses and carriages, and
for injury to a wagon.

At the trial in the superior court, before Morton, J., the
plaintiff offered to prove that the horses and carriages were hired
and the injury done by the defendant's minor son, to whom the
credit therefor was given ; and that not long after the date of the
last charge the defendant's son became sick, and while so sick
the plaintiff several times demanded payment of him, and there-
upon the defendant verbally promised to pay the plaintiff's bill if
the plaintiff would not trouble his son any further; to which
the plaintiff' agreed. The son afterwards died. It was admitted
that the bill was not for necessaries.

The judge ruled that upon these facts the action could not
be maintained, and a verdict was returned accordingly for the
defendant. The plaintiff alleged exceptions.

E. L. Shcnuan. for the plaintiff*.
JV. Brighain, for the defendant.

Btgelow, C. J. The ruling of the court was in accordance
with well established |)rinciples. The defendant's promise, al-

DEXTER VS. B[,ANCHARD. 19l

though it nniy have been made on a good consideration as to the
plaintiff, was nevertheless a promise to pay the debt of another,
and no action can be maintained upon it. Gen. Sts., c. 105, § i. The
fallacy of the argument urged in behalf of the plaintiff lies in the
assumption that there was in fact no debt due from the son of
the defendant, because he was a minor at the time he undertook
to enter into a contract with the plaintiff'. A debt due from a
minor is not void ; it is voidable only; that is, it cannot be enforced
by a suit at law against the contracting party, on plea and proof by
him of infancy. But it is voidable only at the election of the
infant, and until so avoided it is a valid debt. Nor can a third
person avail himself of the minority of a debtor to obtain any
right or security or title. Infancy is a personal privilege, of which
no one can take advantage but the infant. Kendall v. Lawrence,
22 Pick. 540; Nightingale v. JVifhiiigton, 15 Mass. 274; McCarty
V. Murray, 3 Gray, 578.

The effect of the doctrine contended for by the counsel for the
plaintiff would be that a verbal agreement to answer for the debt
of another would be valid, if it could be shown that the original
contracting party could have established a good defence to the
debt in an action brought against him. We know of no principle or
authority on which such a proposition can be maintained. It cer-
tainly would open a wide door for some of the mischiefs which
the statute of frauds was designed to prevent.

The case for the plaintiff derives no support from the argu-
ment based on proof of an agreement by the plaintiff to forbear
to sue the defendant's son, in consideration of the' promise of the
latter to pay the debt. It is perfectly well settled that it is not a
sufficient ground to prevent the operation of the statute of frauds,
that the plaintiff has relinquished an advantage or given up some
lien or claim in consequence of the defendant's promise, if that
advantage or relinquishment did not also directly enure to- the
benefit of the defendant. It is only wdien such relinquishment or
surrender operates to transfer to the defendant the right, interest
or advantage which the plaintiff gives up, or to create in the
defendant some title or benefit derived from that which 'the other
party surrenders, that the promise can be regarded as an original
undertaking, and not within the statute. Cwfis v. Brozcn, 5 Gush.
488, and cases cited.

Exceptions overruled.

192 guaranty am) suretyship.

'Leez's. Van dell, et al. (1887),
69 Tex. 34.

This suit was brought b}- appellant against 'i'andcll, ajjpellee,.
and \V. A. Gray and A. M. Waldrup, on a i)romissory note, joint
and several upon its face, l)ut which it was a.llcged in the answer
that Gray and \Valdrup signed as sureties. The answer alleged
that Yandell was non compos mentis when the note was made and
that there was no consideration therefor.

Charles I. Evans, for appellant.
IV. II. Cozcaii. for appellees.

^Malthii'-., J. The third charge is as follows:

■'Jf }()u find from the evidence that the defendant, Yandell,.
at the time he signed the note sued on, was of unsound mind to
such an extent as to be unable to comjirehend the nature, meaning
and effect of his act in signing such note, you will return a verdict
for defendants."

This was also assigned as error ; and, being the only instruc-
tion given in reference to Y^andell's sanity, it should be considered
in the light of all the facts proven on the trial in reference to that
subject. While it must be regarded as an imperfect presentation
of the law of the case, as a general projx»sition it can not be said
to be incorrect ; and the plaintiff not having called the attetition of
the court to other phases of ihe ([uestion by asking appropriate in-
strticticns, ordinarily there would not be error in the omission.
(Parqiihar v. Dallas, 20 Texas, 200 ; Gallagher v. Bozvic, 66 Texas,
265.) In this case, however, two other persons signed said note as
sureties, and^ under the charge, the jury found in favor of said
sureties as well as the principal. Yandell.

As a general proposition, whenever a ])rincii)al on a note is
discharged, his sureties will be also ; but to this rule there are cer-
tain well established exceptions. For instance, the note of a mar-
ried wonic'in is generally held to be void; but if persons, not them-
selves under disability, sign the note of a married woman, without
the payee having been guilty of fraud or deceit in procuring the
signature of sudi married woman, the sureties would be liable
though the principal be discharged. (2 Daniel on Neg. Tnst., par.
1306a; Daz'is V. Staaf^s, 43 Ind. 103; Allen v. Bcrryhill, 27 Iowa
531 ; Hicks V. Randolph, 3 Baxter 352.)

RUSSELL VS. ANNA15LE. 193

The same principle has been extended to sureties on notes ex-
ecuted by infants ; and it is beheved that no vahd reason can be
given why sureties of a person of unsound mind should not be held
liable under like circumstances, though the principal be discharged,
especially so, when the payee of the note is ignorant of the fact
that the principal is a lunatic ; as in such case a recovery might be
had even against the lunatic, if the payee acted in good faith.
(Pomeroy's Equity, volume 2, page 946.) The contract of a surety
is, that if the principal does not pay, he will, and sound policy as
well as the plainest principles of justice demand, that when there
is a valid consideration, and the payee has done nothing to deceive
or mislead either principal or surety, and the principal is held to Dc
not liable, on account of some disability existing at the time of the
making of the contract, whether such disability be coverture, in-
fancy or unsoundness of mind, the surety should be held to the
terms of his contract. The reason given in some of the cases why
the surety of a married woman is held, is that the payee and the
surety knew at the time that the contract was made that the mar-
ried woman might refuse to pay, or that the contract was made in
reference thereto, the surety binding himself to pay in case she
should avail herself of her legal rights. In case of a lunatic ii
might be presumed that if the payee knew of the disability, the
sureties being his close friends, would also know of it, and that
the contract was made in reference to that state of facts. There
was no evidence that Lee had in any manner deceived, overreached
or defrauded Yandell in procuring him to sign the note. Hence
we are of opinion that the charge of the court should have been
limited to Yandell. and the question submitted as to the liabilities
of the sureties on the principles herein enunciated.

Reversed and remanded.

Opinion adopted November i, 1887.^

Russell vs. Annable (1871).
109 Mass. 72.

Contract, brought August 3, 1870, against one of the sure-
ties in the following bond given under the Gen. Sts. c. 123, §104,.
to dissolve an attachment :

•The opinion on other questions is omitted.

194 GUARANTY AND SURETYSHIP-

"Know all men by these presents, that Erastus Dennett and Chas. R.
Pottle, of Boston in the county of Suffolk, as principal, and George M.
Stevens, of Cambridge, and John F. Annable, of Somerville, in the county
of Middlesex, as surety, are hnldon and stand firmly bound and obliged
unto Arthur W. Russell, of Cambridge in said Middlesex, in the full and
just sum of two hundred dollars, to be paid unto the said Russell, his
executors, administrators or assigns, to which payment, well and truly
to be made, we bind ourselves, our heirs, executors and administrators,
jointly and severally, firmly by these presents, sealed with our seals, dated
the twenty-second day of July in the year of cur I.oid one thousand eight
hundred and sixty-nine. l"hc condition of this obligation is such, that,
whereas the said Russell has caused the goods and estate of said Dennett
& I'ottle, to the value of two hundred dollars, to be attached on mense
process in a civil action, by virtue of a writ bearing date the 2ist day of
July, A. D. 1869, and returnable to the superior court for civil business
to be holden at said Boston within and for the county of Suflfolk on the
first 'I'uesday of October next, in which said writ the said Arthur W.
Russell is plaintiff, and the said Erastus Dennett and Charles R. Pottle the
defendants, and whereas the said defendants wish to dissolve the said
attaclimenl according to the provisions of the General Statutes in such
cases made and provided ; Now, therefore, if the above bounden Russell
shall pay to the plaintiff in said action the amount, if any, which he shall
recover therein, within thirty days after the final judgment in said action,
then the above written obligation shall be null and void, otherwise to
remain in full force and virtue.

"Dennett & Pottle, [seal]
"George M. Stevens, [seal]
"John F. Annable, [seal]"
"Signed, sealed and delivered
in presence of

"Edward Raymond."

The declaration alleged diat the plaintiff at said October term
1869 of the superior court duly entered the action named in the
bond, and such proceedings were had therein that he obtained
judgment against said Dennett & Pottle at April term 1870 for
$110 damages and $21.49 t'osts, and no part of said judgment
had been paid, though the defendant had often been requested to
pav the same, and the defendant owed him the amount of said
judgment and the costs subsequently accrued thereon. The an-
swer denied each and every allegation of the plaintiff.

Trial in the superior court before Scudder, J., who by con-
sent of the parties reported the following case before verdict:
''This was an action on a bond, of which a copy is annexed. It
appeared that Erastus Dennett and Charles R. Pottle were co-
partners, under the firm name of Dennett & Pottle, and that the

RUSSELL VS. ANNABLE. 195

execution of the bond, as to the principal, was by one of them.
It was contended by the defendant that the bond was void upon
its face ; also that there was no legal execution of it by the prin-
cipals, and therefore it was void as to the defendant. If these
objections are valid, then judgment is to be for the defendant; if
invalid, then judgment for the plaintiff, $138.83. with interest
from June 24. 1870, being the date of original judgment and
costs. The officer's return on the original writ and judgment
may be referred to. The execution of the bond by the defend-
ant was admitted." The return of the officer thus referred to,
certified that the property attached by him for dissolution of which
attachment the bond was given, was property of Dennett & Pottle,
and that he took the bond '"of said Dennett & Pottle, with George
M. Stevens and John F. Annable as sureties."

/. S. Abbott, for the plaintiff".
C. C. Read, for the defendant.

Ames, J. It is well settled that one partner cannot bind his
associates by affixing his signature, in the name and style of the
firm, to an instrument under seal. To make such a transaction
binding it must appear that there was either a previous authority,
or a subsequent ratification on the part of the other partners,
adopting the signature as binding upon them. Cady v. Shepard,
II Pick. 400; Van Deusen v. Blunt, 18 Pick. 229; Swan v. Sted-
nian, 4 Met. 548; Dillon v. Broivn, 11 Gray, 179. The report in
this case presents no evidence of any previous authority or sub-
sequent ratification, and it follows that the bond is not so exe-
cuted as to bind the members of the firm.

The bond purports to be the joint and several contract of cer-
tain persons named therein as principals, and the defendant and
George M. Stevens as sureties. The defendant's undertaking is
only that the principal obligors shall fulfill the obligation which
by the terms of the bond they have assumed. But if the bond
was not binding" upon both Dennett and Pottle, (as it was not,
for want of due and proper execution of the instrument on their
part,) they assumed no obligation, and it was not binding upon
the sureties. It was essential to the bond that the principals
should be parties to it ; it is recited that they are so, and the
instrument is incomplete and void without their signature. The
remedy of sureties against their principals might be greatly em-

196 GUARANTY AND SURETYSHIP-

barrassed, if sucli an instrument as this should be held binding.
There is nothing- to estop any member of the firm, who did not
sig^i it, from denying- that he was a party to it, and it w^as no
part of the defendant's contract that he should be surety for one
member of the firm, and no{ for both. The instrument is incom-
plete without the signature of each partner, or proof that the sig-
nature affixed had the assent and sanction of each of them. The
sureties on a bond are not holden, if the instrument is not executed
by the person whose name is stated as the principal therein. It
should be executed by all the intended parties. Bean v. Parker,
1/ ]^Iass. 591; Wood V. IVaslibiuii, 2 Pick. 24.

The instrument, being found incapable of taking efifect as
a specialty, cannot operate as a simple contract. Cases have in-
deed arisen, in which a bond, dulv executed, expressing a contract
which the parties had a right to make, has been held to be valid
at common law. although not made with the fomialities, or exe-
cuted in the mode, provided by a statute under which it jnirports to
have been given. See Sweetser v. Hay, 2 Gray, 49, and cases there
there cited. But we find no case in which it has been held that a
written instrument, purj)orting to be a specialty, and plainly in-
tended by the parties to have all the incidents and charlacteristics of
a bond in the strict and technical sense of that word, has ever been
transmuted l)y the court into a simple contract, for the reason that
it has not been properly executed to take effect as a contract under
seal.

It is therefore held Iiy a majority of the court, that there
.should be judgment for the defendant.

Note. — The dissenting opinion of Wells, J., is omitted.

Weare t'.y. Saw^yer (1862).
44 N. H. 198.

Assumpsit upon a promissory note of which the following is
a copy: (IVeare v. Sehool District, 44 N. H. 189.)

"$725.

Weare, Nov 10, 1855.

For value received, we, John Jepson, prudential committee, and

Paige E. Gove, clerk of School District No. 16 in Wcare, duly authorized

WEARE VS. SAWYEK. 197

to liire money in the name of said district, for the purpose of building a
schoolhouse, and John W. Chase, Moses Sawyer, Allen Sawyer, Daniel
Sawyer, Peter C. Gove, L. W. Gove, Lewis Greenleaf, J. P. Adams, Amos
Chase, I\I. F. Currier, D. G. Chase, A. H. Emerson, and D. S. Stanley, as
sureties, jointly and severally promise to pay the town of Weare, or order,
seven hundred and twenty-five dollars, on demand, with interest annually,
it being a part of the ministerial fund belonging to said town of Weare,
now in the hands of Hiram Simonds, to take care of said fund in behalf
of the town.

John Jepson, Prudential Committee.

Paige E. Gove, Clerk.

John W. Chase (and others), sureties."

Morrison, Stanley & Clark, for defendant.

Fowler & Chandler, on same side.

/. IV. Smith, for plaintififs. Perley, on same side.

Bellows, J. It has already been decided, in IV care v. School
District, and Weare v. Gove, reported in this volume, that the vote
to borrow money was not passed at a meeting duly called for that
purpose; and, therefore, as the agents of the district had no au-
thority to put its name to the note, they are themselves bound;
and the remaining ground of defense proposed to be set up is, in
substance, that at the time of the making of the note it was agreed
that the defendants" undertaking should extend no farther than
to insure the performance of such contract as had been legally
entered into by the school district, whereas the defendants' con-
tract to pay the money is on its face absolute.

The general rule would, undoubtedly, exclude such parol
evidence ; and we are not aware of any exception by which it
could be admitted.

It is true that parol evidence may be received to prove that
one of the makers is but a surety ; although nothing of the kindi
appears upon the face of the instrument. Bank v. Kent, 4 N. H.
221. This, however, is not for the purpose of varying the obli-
gation as originally entered into, but is admitted in connection
with proof of indulgence to the principal, to show a subsequent
discharge of such surety, by substituting a new contract, to which
he was no party.

The case of Hoyt v. French, 24 N. H. 198, is in point. There
it was proposed to show by parol that when the surety signed the
note it was agreed that the first money paid by the principal

198 GUARANTY AND SURETYSHIP-

should be applied thereon, and that money had been so paid, but
not applied ; and it was held that the evidence was not admissible,
as the effect would be to vary the terms of the note. Of the same
character is Lang v. Johnson, 24 N. H. 302.

It is said, also, that the hability of the surety is coextensive
only with that of the principal, and that the school district must
be regarded as the principal here. As a general proposition it
may be true that, in the contract of guaranty, there must be a
principal who is also liable. It would be true in all cases where
the guarantor stipulated to guaranty the performance of the prin-
cipal's engagement.

But in that large class of cases where the contract is to pay
a specific sum of money, there, we apprehend, the guarantor or
surety is, in the absence of fraud, bound by the terms of his
contract, although his principal, by reason of coverture, infancy,
or want of authority in the person assuming to act for him, is
not bound.

So it is laid down (Chit, on Cont., 9 Am. Ed. 441) in respect
to infants, married women, and other persons incompetent to
contract; and we see no reason why the same doctrine does not
apply to the case of a want of authority. In fact it appears to
have been so applied in the case of a surety for a partnership,
w^here the name of the firm w^as affixed to the note wdthout au-
thority. Steivarf v. Boclini, 2 Watts, 356; 3. U. S. Dig. 496,
sec. 154.

The same principle is recognized in Conn v. Coburn, 7 N. H.
368-373, where a surety for an infant upon a promissory note,
given for necessaries, having paid the note, was permitted to re-
cover the amount of the infant; Parker, J., holding, that as the
surety w^as bound, as the debtor, to pay the note, he had a right
to do so, and call upon the infant. Such, also, is the doctrine of
St. Albans Bank v. Dillon, 30 Vt. 122, where the principal was
a married woman. Pars, on Cont. 194.

Beside, in the case before us, the agents, who used the name
of the district without authority, are themselves bound as prin-
cipals, and it is not competent to show as a defense that the sure-
ties supposed the district to be the principal. Had they been
misled bv fraudulent representations of the town, a remedy might
be found for them ; l)ut as the case stands, they, acting upon their
own understanding of the law and the facts, have promised to pay
the sum loaned, and we think they are bound by it.

HAZARD VS. GRISWOLD. 199

It is suggested, also, that, in case of a mistake in this respect,
it may be shown and corrected, but we think it can not be done
in this fomi, but only by bill in equity.

In accordance with the agreement of the parties, there must
therefore be

Judgment for the plaintiffs.

Hazard et al. z's. Griswold (1884),
21 Fed. 178.

Action of Debt on Bond.

Edivin Metcalf, for plaintiffs.

Sam'l R. Honey and Arnold Greene, for defendant.

Before Gray and Colt, J.J.

Gray, Justice. This is an action of debt, commenced in the
Supreme Court of the State of Rhode Island, on March 3, 1883,
by four citizens of Rhode Island against a citizen of New York, on
a bond dated August 24, 1868, and executed by Thomas C. Durant
as principal, and the defendant and S. Dexter Bradford as sure-
ties, binding them jointly and severally Ic the plaintiff's in the sum
of $53,735, the condition of which is that Durant "shall on his part
abide and perform the orders and decrees of the Supreme Court of
the State of Rhode Island in the suit in equity of Isaac P. Hazard
and others against Thomas C. Durant and others, now pending
in said court within and for the county of Newport."

The breach assigned in the declaration is that Durant has not
performed a decree by which that court, on December 2, 1882,
ordered him to pay into its registry the sum of $16,071,659.97.
(That part of the opinion preceding consideration of fifth plea
is omitted.)

The fifth plea alleges that Durant, at the time and place of
the making of the supposed writing obligatory, "was unlawfully
imprisoned by the said plaintiff's and others in collusion with them,
and then and there detained in prison, until, by the force and
duress of imprisonment of him, the said Thomas C. Durant, he,
with the said defendant as surety, made the said writing, signed
and sealed and delivered the same to the said plaintiffs as their

200 GUARANTY AND SURETYSHIP-

deed." To this plea the plaintiffs have demurred, because it does
not allege that the writing was executed by the defendant under
force and duress of imprisonment of himself, nor that he did not
voluntarily execute it as surety with knowledge that it was exe-
cuted by Duraiil as ])rincipal under force and duress of imprison-
ment, as alleged in the plea. This plea docs not set forth facts
enough to make out a defense. Duress at common law. where no
statute is violated, is a personal defense, which can only l)e set up
by the person subjected to the duress; and duress to the principal
will not avoid the obligation of a surety ; at least, unless the surety,
at the time of executing the obligation, is ignorant of the circum-
stances which render it voidable by the principal. Thompson v.
Lockzvood, 15 Johns. 256; Fisher v. Shattuck, 17 Pick. 252;
Robinson v. Gonhi, 11 Cusli. 55; Bonnnan v. liiller, 130 Mass.
153; Harris v. Cannody. 131 Mass. 51; Griffith v. Siti^rcaz'cs, 90
Pa. St. t6i. The case of JIazccs v. Marcliant, i Curtis 136, in
this court, was not a case of duress at common law, but of oppres-
sion by the illegal exercise of official i)ower in excess of statute
authority, and was decided upon that ground.^
Demurrers sustained.

Etsing 7'.9. Andrew.s (1895),
' " 66 Conn. 58: 50 Am. St. R., 75; 33 Atl. 585.

Action on a bond "iven bv the defendant's testator as surety,
brought to the Superior Court in Fairfield county and tried to the
court, Thayer, J.; facts found and judgment rendered from the
plaintiff, and ap])eal 1)\ tlie defendant for alleged errors of the
court. Xo error.

The case is sufficiently stated in the opinion.

Howard B. Scott, for the appellant (defendant).

Lyman D. Brei^'stcr and JoJin 11. ferry, for the appellee
(plaintiff).

ANOkF.ws, C. j. Tlic plaintiff is tlie only living partner of the
late firm of E. Rising & Co. The defendant is the sole surviving

'The remainder of tlic opinion is omitted.

RISING VS. ANDREWS.

201

executor nf the will of Thonias F. Fay, late of Danbury, deceased.
In his lifetime, Fay had become obligated in a bond as surety for
one Thomas F. Rowan, as princi]:)al, for which he bound himself,
his heirs, executors and administrators, joindy and severally with
the said Rowan, in the ]ienal sum of two thousand dollars to the
■said E. Rising & Co., conditioned that the said Rowan, who had
been employed by the said firm as salesman and collector, "shall
well and faithfully discharge his duties as such collector and agent,
and shall also account for all moneys, property and other things
which may come into his possession or control by reason of his
appointment and employment as such agent and collector." Fay
died on the 25th day of June. 1892. On the fifth day of July next
thereafter, the Court of Probate for the District of Danbury lim-
ited and allowed six months from said date for the presentation of
claims against his estate. After Fay's death, and between June
25th, 1892, and August 26th, 1893, Rowan received as such col-
lector and agent from the customers of E. Eising & Co. more than
tw^o thousand dollars of money which belonged to the plaintiff, but
which he appropriated to his own use — of which amount the sum
of $739.41 was misappropriated by Rowan after May 26th, 1893.
This defalcation of Rowan was by him fraudulently concealed from
the plaintiff, and was not discovered by the plaintiff until the first
day of September, 1893. He then made demand of Rowan that
he should account for and pay over to the plaintiff the said amount
which he had misappropriated, but Row^an has at all times neg-
lected and refused so to do. He was then and at all times since
continues to be wholly insolvent.

The plaintiff' notified the defendant of such defalcation on the
26th day of September, 1893, and presented to him, as such ex-
ecutor, the claim of said partnership on said bond ; and on the i8th
day of November, 1893, made demand on him for the amount of
the said bond, but the defendant refused to pay it. This suit was
brought on the 21st day of November, 1893.

The defendant claimed as matter of law, that upon these
facts the plaintiff was barred by the statute of limitations from re-
covering in this action for any sums of money misappropriated by
Row^an prior to May 26th, 1893. And that the fraudulent conceal-
ment b}- Rowan of his misappropriation did not prevent the statute
of limitations from running in favor of the defendant, nor postpone
the time of the arising of the cause of action upon the IxDnd until
the plaintiff discovered tl.e misappropriation. The court did not so

202 'GUARANTY AXD SURirrvSHIp.

hold, but rendered judgment for the plaintiff for the amount of
the bond with interest from the date of the demand. The defend-
ant appealed to this court.

The bond on which this suit is brought contains two condi-
tions : first, that Rowan should faithfully discharge his duty as
agent and collector for the said co-partnership ; and second, that he
should account for all moneys, property, or other thing that should
come into his hands, possession, or control, by reason of his em-
ployment as such agent and collector. A breach of each of these
conditions is alleged in the complaint, and the facts found by the
court show that each had been broken by Rowan.

Section 581 of the General Statutes — being a statute concern-
ing the estates of deceased person.s — provides that "when a right
of action shall accrue after the death of the deceased, it shall be ex-
hibited within four months after such right of action shall accrue" ;
and tliat unless exhibited within such time the creditor shall be
forever debarred of all right to recover the claim.

The breach of the second condition named in the bond' took
place, and the right of action thereon accrued, not earlier than the
first of September, 1893, and within four months next before the
claim was exhibited to the defendant. The Superior Court might
well have rendered its judgment entirely on the breach of that
condition in the bond. McKim v. Glover, 161 Mass. 418. And
there is nothing in the case to show that it did not. Counsel for
the defendant does not dwell on this part of the case.

Under the statute above recited the defendant admits that the
plaintiff is entitled to recover the sum of $739.41, that being the
amount of money misajipropriated by Rowan within the four
months next before the claim was exhibited to him. And he in-
sists that because of that statute the plaintiff cannot recover for
any moneys wrongfulh' appropriated by Rowan \)V\ov to the said
four months. If that statute stood alone it is more than likely that
this action would never have been contested. It is another statute
which causes the dispute. Section 1389 enacts that: "If any per-
son, liable to an action by another, shall fraudulently conceal from
him the existence of the cause of such action, said cause of action
shall be deemed to accrue against said person so liable therefor,
at the time when the person entitled to sue thereon shall first dis-
cover its existence." Applied to a cause of action, the term to
accrue means to arrive ; to commence ; to come into existence ; to
become a present enforcible demand. And the true meaning of this

EISING VS. ANDREWS.

203^

statute is, that in cases to which it is appHcable, the cause of action
does not come into existence until it is discovered by the person
entitled to sue tliereon. The effect of this statute upon the present
case is that no cause of action came into existence by reason of
Rowan's defalcation until it was discovered by the plaintiff.

It is admitted by the defendant that this is the effect of the
statute, if limited to Rowan himself. But the defendant says that
the fraudulent concealment by Rowan does not prevent the accru-
ing of a cause of action against him, the defendant. He says that
fraudulent concealment of a cause of action prevents the running
of the statute of limitations only in favor of the very party who
commits the fraudulent concealment. He cites Wood on Limita-
tions (2d Ed.), page 139, and the cases there referred to, as author-
ity. Stated in somewhat different language the claim of the de-
fendant is, that although the accruing of a cause of action was by
reason of the last quoted statute suspended, as against Rowan, until
the defalcation was discovered, yet the accruing of a cause of action
was not suspended against this defendant; that as against him,,
this defendant, the cause of action arose when Rowan committed
the defalcation ; and as it appears by the case that all of the defal-
cation, except the sum of $739.41, was committed more than four
months before the claim was exhibited to him, he cannot be made
liable for that part.

It seems to us that there is a fallacy — or rather it is a fatal
error — in this argument. It conflicts with the most essential fea-
ture of the law relating to surety and principal. The plaintiff seeks
to recover damages on account of the defalcation of Rowan. The
argument of the defendant assumes that a cause of action for such
defalcation could exist against him before any cause of action
therefor against Rowan had accrued. But the law relating to
principal and surety forbids this. The rule is that a cause of
action cannot exist against a surety, as such, unless a cause of
action exists against his principal. Ordinarily the liability of such
a surety is measured precisely by the liability of the principal.
Brandt on Suretyship, § 121 ; Seiwer v. young, 16 Vt. 658; Boone
County V. Jones, 54 Iowa 709 ; Patterson's Appeal, 48 Pa. St. 345 ;
McCabe v. Raney, 32 Ind. 309. So long as no cause of action ex-
isted against Rowan, the principal, no cause of action existed
ajjainst the defendant or his suretv. And the statute of limitations
does not begin to run in favor of any person, until there is a cause
of action. The obligation of a surety is an obligation, accessor^' to

204 GUARAXTV AND SUUETYSIITP.

that of a i)riiici])al debtor, and it is of the essence of this obUj^ation
that there should lie a vaHd obhp^ation of some principal. Thus,
where one ag'recs to become responsible for another the former
incurs no obligation as surety, if no valid claim ever arises against
the principal. Chitty on Contracts ( iitli Ed.j, 788. If the prin-
cipal is not holden, neither is ihe surety; for there can be no acces-
.sory if there is no principal. De Colyar on I'rinci])al and Surety,
Amer. Ed. 39; Addison on Contracts, § 1 i i i. The existence of a
principal debtor is a condition precedent to the operation of the
^contract of a surety. Ha-card v. fra'iii, 18 Pick. 95 ; Swift v. Beers,
3 Denio 70; MontitstepJ'en v. Lakcnum, L. R. 7 O. B.. 202; Mal-
let v. Batemaii, L. K. i C. P., 163. This is only in accordance
w ith the general law of contracts, which prevents a contract from
becoming operative unless and until all conditions precedent are
fulfilled. Brandt on Suretxshij). § 214; farmers and Mechanics'
Bank v. Kingsley, 2 Doug. ( Alich.) 379. So too, whatever dis-
charges the principal debtor discharges the surety. The liability of
a surety on a claim wliich is good as against the principal, ceases
•as soon as the claim is extinguished against the principal. The
nature of the undertaking of a surety is such that there can be no
obligation on his part, unless there is an obligation on the part of
the principal. "It is correctly laid down, in Chitty on Contracts,
that the contract of a surety is a collateral engagement for an-
other, as distinguished from an original and direct agreement for
the party's own act : and, as stated in Theobold on Principal and
.Surety, * ''' * it is a corollary from the very' definition of the
contract of suretyship, that the obligation of the surety, being
accessory to the obligation of the principal debtor or obligor, it
is of its essence that there should be a valid obligation of such a
principal, and that the nullity of the ]irinci])al obligation necessarily
induces the nullity of the accessory. Without a principal, there
•can be no accessory. Nor can the obligation of the surety, as
such, exceed that of the principal. * * " It would be most unjust
and incongruous to hold the surety liable, where the princi])al is
not bound." Storrs, J., in Ferry v. Bnrchard, 21 Conn. 603. The
.same general doctrine is held in many other cases in this State.
Willey v. Paulk, 6 Conn. 74; Deforest v. Strong, 8 id. 522; Bull
V. Allen, 19 id. loi, 106; Glas:ier v. Douglass, 32 id. 393; Candee
V. Skinner, 40 id. 464.

It follows, then, that the fraudulent concealment by Rowan,
the principaUas it prevented the statute of limitations from rumiing

\-II.I..\RS VS. J'ALMKR, 205'

in his favor, also s!.op])e(l it from running- in favor of the defenda-
ant, his surety. Bradford v. McConnick, 71 Iowa 129; Boone'
County V. Jones. 54 id. 6Cm)\ Charles v. Hoskins, 14 id. 471.

There is no error.

In this opinion the other judges concurred..

ViLLARs vs. Palmer, Adm'r, ct al (1873).
67 111. 204.

This was a hill in chancery, hy William Villars, against Levin
T. Palmer, administrator of the estate of Guy Merrill, deceased,
and John G. Leverich, to enjoin proceedings at law by Palmer as
administrator of the estate of Merrill, for the use of Leverich,
upon a promissory note, given by one George W. Taylor as prin-
cipal, and signed by the complainant as surety, and payable to said
Guy Merrill as master in chancery. The bill showed that the
estate of Taylor was solvent, and that the debt could have been
made if the claim had been presented before it was barred by the
two years limitation. The court below dismissed the bill, and the
complainant appealed.

Messrs. Toiciiscnd & Young, and Mr. E. S. Terry, for the
appellant.

Mr. 0. L. Davis and Mr. /. B. Maun, for the appellees.

Sheldon, J. The claim on the part of the surety in this
case is, that, as by the neglect of the creditor to present his claim
against the estate of Taylor, the principal, all remedy in respect
to the debt has been lost against the estate of the principal, that
should operate to discharge the surety.

The complaint is of mere delay, not of any affirmative act on
the part of the creditor, whereby the surety has been affected.
But it is the well established principle, that mere delay on the part
of the creditor to proceed against the principal does not discharge
the responsibility of the surety.

In cases of this sort, there is not any duty of active diligence
incumbent on the creditor. All that the surety has the right to
require of the creditor, in the absence of anv statute provision, is.

^06 GUARAXTY AND SURETYSHIP.

that no affirmative act shall be done that will operate to his preju-
dice. It his business to see that the principal pays.

The law furnished the surety here with ample remedies for
his protection. He might have paid the debt according to his un-
dertaking, and have sued the principal himself; or he might have
gone into a court of equity after the debt became due, and obtained
a decree that the principal should pay it; or he might, under the
statute, have given to the creditor written notice to put the note
in suit, and thus have compelled him to sue the principal.

If he has seen fit to lie by, and the neglect to proceed against
the principal in his life time, or against his estate after his decease,
has been the means of depriving the surety of his indemnity, he
-must abide by the loss, and cannot throw it upon the creditor.

Without more, we need but to refer to the cases of The People
V. White et al. ii 111. 342, and Taylor v. Beck, 13 id. 376, where
the subject is fully considered and the authorities cited. In the
former case, the very point made by the surety here is decided
adversely to him.

Under the statute of March 4, 1869, Sess. Laws 1869, p. 305,
where the principal maker of a joint note has departed this life,
it is made the duty of the holder of the note to present the same
against the estate of the decedent for allow^ance, to the proper
.court, within two years after the granting of the letters of admin-
istration. Rut that statute is too late to afifect the present case.

The decree of the court below dismissing the bill is affirmed.

Decree affirmed.

AucHAMi'AUGH, Adm'r, vs. .Schmidt (1886).
70 Iowa 642; 27 X. W. 805.

Action upon a promissory note purporting to be executed as
a joint note by one Charles Leipold and the defendant. The note
was executed in Illinois, where Leipold lived, and still lives. It
became due May 23, 1871, and this action was commenced Jan-
uary 28, r885. The defendant pleaded that he signed the note
merely as surety ; that under the law of Illinois the note became
barred as against Leipold by the statute of limitations ; and that,
being barred as against Leipold, the principal, it was barred as

AUCHAMPAUGH VS. SCHMIDT. 207

against his surety, the defendant. There was a trial to a jury, and
a peremptory instruction given to find for the plaintiff. Verdict
and judgment were rendered accordingly, and the defendant
appeals.

Woodzvard & Cook, for appellant.

E. E. Hasncr and Daniel Smyser, for appellee.

Adams, J. The note was executed to one Schneider, the
plaintiff's intestate. The fact that the note was signed by the
defendant as surety was proven only by the defendant's wife. An
objection was raised to her testimony on the ground that she was
an incompetent witness to prove such fact as against an adminis-
trator. The court overruled the objection, and the evidence was
admitted, and no question is now raised as to the correctness of
that ruling. If we should be of the opinion that she was incom-
petent, and that there was no proper evidence that the defendant's
relation to the note was that of surety, we could not affirm upon
that ground, because we do not know that the defendant might
not have introduced other evidence upon the point if his wife's
testimony had been excluded.

We come, then, to the question raised by the answer and the
admitted evidence of suretyship, and that is as to whether a claim
which is barred by the statute of limitations, as against the prin-
cipal debtor, is by reason thereof barred also as against a surety.
In answer to this question, we have to say that we think that it is.
Nc authority has been cited upon either side which is direcUy in
point. Ordinarily, we may presume that, where the statute has
fully run as against the principal, it w^ould happen that it had fully
run as against the surety. But the case before us has this peculiar-
ity: The defendant, when the note was executed, resided in Illi-
nois. Before the note was barred by the statute of that state he
removed to Iowa, and before the statute of this state had fully
run the action was commenced. If, then, the defendant were a
principal debtor, the note wQuld not be barred as against him, how-
ever it might be as against Leipold. He must therefore rely solely
upon the fact that he is surety upon the note, and upon the bar as
against Leipold. Such being the case, it is perhaps not surpris-
ing that no authority should be cited that is precisely in point. It
becomes our duty, therefore, to attempt to determine the case on
principle. It would not be denied that a surety upon a note may

208 GUARANTY AND SURETYSHIP-

set up any meritorious defense which ilic principal, if sued, might
set u]) in Iiis own behalf. Now, when the statute of limitations
has run as against the principal, the law excuses him from setting,
up any meritorious defense which he may have, and allows him
to rely upon the technical defense of the statute alone. The theory
is that he was not under ol)ligations to preserve any longer the
evidence of his meritorious defense if he had any, and so the court
will not inquire whether he had such defense or not. The statute
has been very properly denominated the statute of repose. As the
surety is allowed to set up any meritorious defense which the prin-
cipal might have set up, we are not able to see why he should be
required to preserve the evidence of stich defense after the prin-
cipal was not bound to do so. Again, when a surety pays a debt,,,
it is his right to look to the principal for reimbursement. But a
surety ])aying a debt, after it had become barred as against the
principal, would be remediless. Now, w^e do not think that a
creditor, by his own dilatoriness, should be allowed to put the
surety in such position. It is not a full answer to say that a surety
might have protected himself. Jt may be conceded that he might.
But, practically, sureties often overlook their obligations if their
attention is not called to them, and we do not think that the just
protection of the rights of the creditor requires that we should
hold so strict a rule against them as that fur which the plaintiff
contends.

It is said, however, that the defendant, if he is allowed to
plead the l)ar of the statute at all as against the principal, should
have averred and shown that no judgment in fact had been ren-
dered against the principal. But we think that we would be jus-
tified in assuming, from the plea made, that judgment had not
been rendered until it was averred and shown by the plaintifif to
the contrary.

Reversed.

Guild vs. Butler (1877).
122 Mass. 498.

Contract u])on a promissory note made by the (kfendant pay-
able to Robert W. Dresser & Co. or order, and by them indorsed
to the plaintifl.

GUILD VS. BUILER. 209

At the trial in the Superior Court, before Pitman, J., it ap-
peared that the note was made by the defendant for the accom-
modation of Dresser & Co., who at the same time ^ave him an
agreement in writing that they would themselves pay the note
at maturity ; that the plaintiff did not know this when he took
the note, but, after learning it, and after the commencement of
this action, united with other creditors of Dresser & Co. in a
petition in bankruptcy against Herman D. Bradt, the surviving
partner of that fimi, (Dresser, the other partner, liaving died,)
and afterwards voted for and signed a resolution of composition
imder the provisions of the act of Congress of June 22, 1874, §
17, by which the plaintiff' with the other creditors c>f Dresser &
Co. agreed to take, in full settlement, twenty per rent of their
claims, to be paid in three equal installments, in ten days, three
months and six months from the acceptance of that resolution,
which was approved by the court in bankruptcy and recorded.

The judge instructed the jury that, if the note sued on was an
accommodation note, and the defendant, as between him and
Dresser & Co., was but a surety, and the plaintiff knew that it
was an accommodation note when he entered into the resolution
of composition, the fact of his entering into that resolution would
constitute a defence to this action. The jury returned a verdict
for the defendant ; and the plaintiff alleged exceptions.

P. H. Hntchiiisoji, for the plaintiff'.
R. Stone, Jr., for the defendant.

Gray^ C. J. By the existing acts of Congress upon the sub-
ject of bankruptcy, a bankrupt's estate may be settled, and the
bankrupt discharged, in either of three ways :

First. The estate may be administered in the ordinary man-
ner by assignees appointed for the purpose, and a certificate of
discharge be granted by the court, with the assent, in some cases,
of a certain proportion of the creditors who have proved their
claims. Any person liable as surety for the bankrupt may, upon
paying the debt, even after the commencement- of proceedings in
bankruptcy, prove the debt, or stand in the place of the creditor
if he has proved it ; or, the debt not having been paid by him nor
proved by the creditor, may prove it in the name of the creditor or
otherwise. U. S. Rev. Sts. § 5070. Mace v. IVells, 7 How. 272 ;
Hiiiif v. Taylor, 108 Mass. 508. But the surety's lial:)ility to the

210 GUARANTY AND SL'Ri:TYSriIP-

creditor is not affected by any ceriiticaie of discharge granted to
the principal. U. S. Rev. Sts. § 51 18. Plagg v. Tyler, 6 Mass.

33-

Second. The estate may be wound up and settled by trustees

nominated by the creditors, upon a resolution passed at a meet-
ing for the purpose by three-fourths in value of the creditors
vy^hose claims have been proved, and conhrmcd by the court, and
upon the signing and filing, by such proportion of the creditors,
of a consent in writing that the estate shall be so settled; in
which case such consent and the proceedings under it bind all
creditors whose debts are provable, even if they have not signed
the consent nor proved their debts ; the trustees have the rights
and powers of assignees ; the winding up and settlement are
deemed proceedings in banla-uptcy ; the court may summon and
examine on oath the bankrupt and other persons, and compel
the production of books and papers ; and the bankrupt may obtain
a certificate of discharge in the usual manner. U. S. Rev. Sts.

§ 5'03-

Third. The creditors, at a meeting ordered by the court.

either before or after an adjudication of bankruptcy, may resolve
that a composition proposed by the debtor shall be accepted in
satisfaction of the debts due them from him. Such resolution, to
be operative, must be passed by a majority in number of the cred-
itors whose debts exceed fifty dollars in value, and by a majority
in value of all the creditors, and must be confirmed by the signa-
tures of the debtor, and of two-thirds in number and one-half in
value of all his creditors The debtor is required to attend at the
meeting to answer inquiries, and to produce a statement of his
assets and debts and of the names and addresses of his creditors.
The resolution, with this statement, is to be presented to the
court; and if the court, after notice and hearing, is satisfied that
the resolution has been duly passed and is for the best interest of
all concerned, the resolution is to be recorded and the statement
filed, and the provisions of the composition shall be binding on all
the creditors whose debts, names and addresses are shown on the
statement, and may be enforced by the court on motion and rea-
sonable notice, and regulated by rule of court, or may be set aside
by the court for any sufficient cause, and proceedings in bank-
ruptcy had according to law. U. S. St. June 22. 1874, § 17. This
section, providing for a composition under the supervision of the
court, is taken from and substantially follows § 126 of the Rng-

GELLESPIF VS. TORRANCi:. 211

lish bankrupt act of 1869, St. 32 and 33 Vict. c. 71. See Ex
parte Jeivctt, 2 Lowell, 393 ; Re IVIiipple, 2 Lowell, 404.

It has been determined in England, by decisions of high
authority and upon most satisfactory reasons, that a creditor, by
participating in either of the three forms of proceeding, w^hether
by assenting to a certificate of discharge, or by consenting to a
resolution, either for a winding up through trustees, or for the
acceptance of a composition proposed by the debtor, does not
release or affect the liability of a surety. Bronnie v. Carr, 2
Russ. 600; 5 AIo. & P. 497, and 7 Bing. 508. Megrath v. Gray,
L. R. 9 C. P. 216. Ellis V. Wilmot, L. R. lo Ex. lo. Simpson
V. Henning, L. R. lo Q. B. 406. Ex parte Jacobs, L. R. 10 Ch.
211, overruling Wilson v. Lloyd, L. R. 16 Eq. 60.

The proceedings for a composition under the statute, depend-
ing for their validity and operation, not upon the act of the par-
ticular creditor, but upon the resolution passed by the requisite
majority of all the creditors, binding alike on those who do and on
those who do not concur therein, (if their debts are included in
the statement filed by the debtor,) and finally confirmed and estab-
lished by the court upon a consideration of the general benefit of
all concerned, differs wholly in nature and effect from a volun-
tary composition deed, which binds only those who execute it.
Oakeley v. Pasheller, 4 CI. & Fin. 207; 5^. C. 10 Bligh N. R. 548.
Bailey v. Edwards. 4 B. & S. 761 ; Bateson v. Gosling, L. R.- 7
C. P. 9 ; Oriental Financial Corporation v. Overend, L. R. 7 Ch.
142; Cragoe v. Jones, L. R. 8 Ex. 81; Gilford v. Allen, 3 Met.
255 ; Phoenix Cotton Mamif. Co. v. Fuller, 3 Allen, 441.

Assuming, therefore, that this defendant, having signed the
note for the accommodation of the indorsers, was to be consid-
ered as a surety for them, and that the plaintiff, after acquiring
knowledge of that fact, stood as if he had known it when he took
the note, yet no defence is shown to this action.

Exceptions sustained.

Gillespie et al. vs. Torrance (1862).
25 N. Y. 306.

Appeal from the Superior Court of the city of New York.
Action upon a promissory note against the indorser only. De-

212 -crAKAXTV AND SURETYSHIP-

fcnsc, that the iiidurscnicnt was fur ihc acconuiiodaliuu uf the
maker ; that tlie note was one of several j^iven for oak timber sold
to the maker by the pkaintiffs ; that the timl)er was a raft in the
Hudson river, opposite the city of New York, and that, on making
the sale, the plaintiffs produced certificates of inspection showing
that there were 29,441 feet of first quality oak, for wdiich \'an Pelt,
the maker of the notes, agreed to pay 27^2 cents per foot, and
5,523 feet of second quality or refuse oak. for which \'an Pelt
agreed to ])ay i3;}4 cents per foot; that, by the usage of the timber
trade in New York, the seller is deemed to warrant that the tim-
ber sold corresponds in quantity and ([uality with the description
in such inspection certificates ; that \'an iY-lt gave his notes, in-
dorsed by the defendant, for various sums, amounting in the aggre-
gate to $9,000. the ])rice of the timber as computed from the
inspection certificates, and all of which notes had been paid exce])t
the one in suit; that after the delivery of the timber it was dis-
covered that the inspection certificates were erroneous in this, that
of the timber of first quality there was 15,000 feet less than the
certificates stated, and an ecjual excess in the refuse timber ; that
if the prices had been correctly computed according to the fact,
instead of being computed according to the certificate, it would
have amounted to less than $5,000; that the plaintiffs had, there-
fore, been over])aid, and there was no consideration for the note
in suit. On the trial, the judge, under exception by the defendant,
excluded evidence as to the f|uantity of the timber of the dift'erent
qualities ; declined to permit an amendment of the answer alleging
an express warranty : and excluded evidence of the usage set up
in the answer, making a sale by certificate equivalent to a warranty.
The other facts stated in the answer were substantially proved or
admitted. The ])laintiffs had a verdict and judgment, which hav-
ing been affirmed at general term, the defendant appealed to this
court.

Charles A. luifallo, for the appellant.
JVilliaiii Stiiiilcy. for the respondents.

Selden, J. The defense in this case is not founded on a
failure of the consideration of the note, otherwise than by a defect
in the quality of the timber for which it was given. That being
so, if there was neither warranty nor fraud in the sale of the tim-
ber, the defect in finality constitutes no defense. Seixas v.

GILLRSinr. vs. TORRANCR. 213

Woods, 2 Caines. 4<S; Sweet v. Col^afe, 20 Johns. 196; Welsh v.
Carter, i Wend. 185. Jotiusov v. Titus, 2 Hill, 606. The answer
does not alle.s^e fraud in the transaction, and unless it shows a
warranty of the c[uality of the timber, it presents no defense to
the note, either partial or total. The aro-ument of the ap])ellant's
counsel, to maintain the position that the defense rested upon a
failure of consideration, and not upon a claim for damages on a
breach of warranty, is very ingenious ; Init the answer and the
proof show that all the timber contracted to be delivered to Van
Pelt, and for which the notes were o^iven, was in fact delivered,
and the real ground of complaint is. that a much larger proportion
of it than was shown by the inspector's certificates, upon the faith
of which the purchase was made, proved to be of inferior quality.
The law being well established that such defect of quality, in the
absence of fraud or warranty, constitutes no defense to the note,
or to any part of it. and there being no pretence of fraud, it fol-
lows that the defense, if there is any, rests upon a breach of war-
ranty.

The question then arises, whether the plaintifif, an accommo-
dation indorser upon a note given by Van Pelt to the plaintiffs
for the timber, can avail himself of a breach of the contract of
warranty in regard to the quality of the timber, made by the plaint-
iffs to Van Peh, on the sale to him. To decide this question, it is
necessary to ascertain the ground upon which such defenses, by
way of recoupment, as they were denominated prior to the adoption
of the Code, now, partially, if not wholly, merged in the much
broader term, counter-claim, were admitted. If we regard such
defenses as resting upon a failure of the consideration of the con-
tract on which the plaintiff's action is founded, then unquestionably
the defendant could avail himself of the breach of warranty in this
case, because an indorser or surety may always, where the con-
tract has not been assigned, show a failure, partial or total, of con-
sideration of his principal's contract which he is called upon to
perform. But if such defenses are regarded as the setting off. of
distinct causes of action, one against the other, then it is clear,
as will be shown hereafter, that this defendant could not avail him-
self of such defense.

The subject of the precise ground on wdiich a defendant is
allowed to reduce a recovery against him, in an action upon a
contract, by alleging and proving fraud, or breach of warranty —
whether the contract where there is fraud, is regarded as de-

1'14 GUARAXTV AND SUUKTVSITTP.

stroyed, and the recovery had on a qiiantnin meruit, or whether the
reduction of tlie plaintiffs' claim rests upon a partial failure of
consideration, or upon the setting off of distinct claims against each
other — has often hecn discussed, but without any general concur-
rence of opinion on the question. Rcab v. Mc.lUistcr, 4 Wend.
90, et scq.; S. C. in error, 8 id. 109; Batter man v. Pierce, 3 Hill,
171, 177; Ives V. Van Epps, 22 Wend. 155; Nichols v. Dusen-
bury, 2 Comst. 286; Van Epps v. Harrison, 5 Hill 66; Barber v.
Rose, id. 78; Boston v. Butler, 7 East. 479; Withers v. Greene, 9
How. U. S. 213.

A careful examination of the subject, I think, must lead to the
conclusion, that wherever recoupment, strictly such, is allowed,
distinct causes of action are set off against each other. This would
seem to follow from the right of election, which all the cases admit
the defendant has, to set up his claim for damages by way of de-
fense, or to resort to a cross-action to recover them. Ivcs v. Van
Epps, 22 Wend. 157; Battennan v. Pierce, 3 Hill, 171 ; Britton v.
Turner, 6 N. H. 481; Halsey v. Carter,, i Duer, 667; Barber v.
Rose, 5 Hill, 81 ; Stever v. Lamoure, Lalor's Supp. 352, note a.

Tn many cases the defendant's damages would exceed the
amount of the plaintiff's claim, which shows conclusively that such
damages do not rest upon a mere failure of consideration. Where
there is fraud, the party deceived, on discovering the fraud, may
rescind the contract ; but if he does not do that, the contract on
his part remains entire, not liroken and not modified, and he is
bound to perform it fully according to its terms ; he has, how-
ever, arising from the fraud, a distinct cause of action, the amount
of which he may set oft' against any liability on his part growing
out of the transaction in which the fraud was perpetrated. As
was said by Bronson, J., in Van Epps v. Harrison: "When sued
for the price, the vendee may in general recoup damages ; but while
he retains the property he cannot treat the contract as wholly void,
and refuse to pay anything. By retaining the property he afHrnis
the validity of the contract, and can be entitled to nothing more
than the damages which he has sustained by reason of the fraud."
The same principle is applicable to cases of warranty, except that
the breach of warranty gives no right to rescind, unless there is
an express contract to that eft"ect. Street v. Blay, 2 Barn. & Ad.
456; Voorhces v. Earl, 2 Hill, 288; Gary v. Grunian, 4 id. 625;
Midler v. Eno, 14 N. Y. 597; Thornton v. Winn, 12 Wheat. 183;
Lattin v. Davis, Lalior's Supp. 16. Tn ordinary cases of breach

GILLESPIE VS. TORRANCE.

215

of warranty, therefore, both contracts remain binding to their full
extent, and where recoupment is allowed, damages for a breach
on one side are set off against like damages on the other side. The
"cross-claims arising out of the same transaction compensate one
another, and the balance is recovered." 8 Wend. 115; 22 id.
156; 3 Hill, 174; 2 Comst. 286.

It has always been optional, as is suggested above, since the
doctrine of recoupment has gained a foothold in the courts, with
a party who has sustained damages by fraud or breach of warranty
in the' purchase of goods, when sued for their price, to set off or
recoup such damages in that action, or to reserve his claim for a
cross-action; and when he elected to recoup he could not, under
die Revised Statutes, have a balance certified in his favor, nor
could he maintain a subsequent action for such balance. Sickles
V. Pattison, 14 Wend. 257; Battcrman v. Pierce, 3 Hih, 171;
Wilder v. Case, 16 Wend. 583 ; Stcver v. Lamoure, Lalor's Supp.
352, note a ; Britfon v. Turner, 6 N. H. 481.

Under the Code of Procedure, doubtless a balance might be
recovered (Code, §§ 150-274; Ogden v. Coddington, 2 E. D.
Smith. 317) ; but the right of election to set up a counter-claim in
defence, or to bring a cross-action for it, still exists. Halscy v.
Carter, 6 Duer, 667"; Wekli v. Hadctmi, 14 How. Pr., 97. Now
it is not easy to reconcile with these established principles, the
right of the defendant in this suit to avail himself of the claim
which A^an Pelt may have against the plaintiffs on a breach of war-
ranty. I. Such damages constitute a counter-claim, and not a
mere failure of consideration, and not being due to the defendant,
cannot be claimed by him. Code, § 150; Lemon v. Tridl, 13
How. Pr., 248; 16 id. 576, note. 2. \'an Pelt has a right of
election wdiether the damages shall be claimed by way of recoup-
ment in the suit on the note, or reserved for a cross-action.
The defendant cannot make tiiis election for him. 3. If the
defendant has a right to set up the counter-claim, and have it
allo\\ed, in this action it must bar any future action by Van Pelt
for the breach of warranty ; and as no balance could be found in
defendant's favor, he might thus bar a large claim in canceling a
small one. If the right exists in this case, it would equally exist
if the note was but $100 instead of $1,800. 4. Supposing the
other notes given for the timber to have been indorsed by dift'er-
ent persons, for the accommodation of Van Pelt, and all to re-
main unpaid, each of the indorsers would have the same rights as

216 GUARANTY AND SURETYSHIP-

the defciulanl. ll llicy were to set up the same defence, how would
the conflictinfj claims he reconciled?

In the case whicli was shown on the trial, there would seem
t( be a strong equity in favor of the defendant to have the note
canceled or reduced, by applyinj:;^ towards its satisfaction the dam-
ages which appear to be due to \'an I*elt for the breach of war-
ranty. It is. however, an equity, in which \'an Pelt is interested
to as great, and possibly to a greater, extent than the defendant,
and cannot l)c disposed of witliDUl having liim before the court,
so that his rights, as well as those of the defendant, may be pro-
tected. That remedy may be open to the defendant still, notwith-
standing the judgment; especially if the insolvency of the parties
renders that course necessary for his ]>rot.ection. 14 Johns., 63,
17 id., 389; 2 Cow., 261 ; 2 Paige, 581 ; 6 Dana. 32; 8 id., 164;
2 Stor\''s Vj[. Jur., §§ 1446, a, I437- My conclusion is, that the
court below was right in holding that the defendant could not set
up the breach of warranty in defence, partial or total, to the suit
on the note ; and as the warranty presented the only ground on
which there could be a claim of defence under the answer, there
is no necessity for considering the other (|uestions presented in
the case.

The judgment should be affirmed.

All the judges concurring.

Judgment affirmed.

Peakf. T'.!.-. Deacon (1857),
24 Beav. 186.

Mr. R. Palmer and Mr. Bcrir, for plaintiff.
Mr. Sekcyn and .1//-. A'. W. lUUs, for defendants.

The Masti:r oi- tiii: Rolls.

I retain the opinion expressed by me yesterday. The facts
are shortly these: — Mr. Pearson applied to the defendants, who
are brewers at Windsor, for a loan of 250/., to enable him to take
a public-house, called The Carpenters' Arms. They said we will
do so if you will get a good surety for the amount, and assign
over your pension and furniture. That was agreed to ; Pearson

PEARL VS. DEACON.

217

^.offered the plaintiff as his surety for half the amount, and Castles
,as surety for the other half; the defendants accepted them, and
on the 16th of November, 1852, two joint and several promissorv
notes were triven to the defendants, one l)v Pearson and the plain-
tiff, and the other by Pearson and Castles. Six days afterwards,
viz., on the 23rd of November, Pearson assiii^ned his pension and
all the goods and chattels to secure this debt of 250/. ( )n this
transaction, the first point which was raised by the i)laintift', in my
opinion, fails. He says that this arrangement was a variation of
the contract of suretyship, and that it discharged the plaintiff, be-
cause the money was made payable on the i6th of November,
1858, or six years after the date of the mortgage. If the case
had rested here, the plaintiff would probably have been success-
ful, Imt the deed goes on, "or at such earlier or other time" as tUc
defendants should appoint for the payment thereof "in and by a
notice in writing." I do not think that this was such a variation
in the terms of the security as to discharge the surety; but the
• question is of litde importance, as I am of opinion, on the evi-
dence, that the plaintiff had notice of this assignment and of the
terms of it.

The only other facts important to be stated are these : — The
defendants were landlords of The Carpenters' Arms, and in the
year 1856, four years after this transaction, Pearson's rent being
considerably in arrear, the defendants distrained and put a broker
in possession of the furniture under the distress; on this, by
arrangement, instead of selling the goods, they took them at a
valuation for 116/.

The question is this: — The furniture having been expressly
mortgaged for the 250/., was it within the power of the defendants,
to the iniur\^ of the surety, to give up the security on the furni-
ture for the 250/., and take it in discharge of another and different
debt due to themselves? I am of opinion that they could not do
so. It was said, that this security was not within the scope of the
Plamtiff's contract, and that a surety cannot go beyond it. That
is a mistake with respect to the relation betw^een a principal and
surety. Lord Eldon expressly stated, in Craythorne v. Swin-
burne, 14 Ves. 169, that the rights of a surety depend rather on a
principle of equity than upon contract; there may be a quasi con-
tract, but it arises out of the equitable relation between the parties,
to be inferred from the knowledge of an established principle of
quity. The same gloctrine is also stated in Mayhezv v. Crickcft, 2

218 GUARANTY AND SURETYSHIP-

Swan. 191, and it is laid down distinctly, that sureties are en-
titled to the benefit of every security which the creditor has against
the principal debtor, and that whether the surety knows of the
existence of those securities or not is immaterial. If the creditor
makes available any of his securities, the surety is entitled to the
benefit of it.

The case of Capel v. Butler, 2 Sim. & S. 457, is a distinct
authority for this proposition. Mr<. Ellis soug-ht to distinguish that
case by saying, that, in that case, there was a recital of all the
securities, but that here there was none. The answer, however, is
this : — That there was notice to the suretv of the whole transaction,
and being so, the reciting it is immaterial. Lord Eldon distinctly
laid down in Mayhew v. Cricket! , 2 Swan. 185, that it is a matter
of perfect indifiference, whether the surety is aware of another
security having been taken by the creditor or not.

In the judgment of Vice-Chancellor Wood in Newton v.
Charlton, 10 Hare 651, there is a statement, in ever\- word of which
I concur. He says, as regards, the creditor, '"He is bound to give to
the surety the benefit of every security which he holds at the time
of the contract, — every security which he then holds; and he is
net allowed, in any way, to vary the position of the surety with
reference to those securities ; that has been decided most dis-
tinctly in Mayhew v. Crickett by Lord Eldon, where there was a
warrant of attorney in the hands of a creditor put into operation
by the creditor, and a judgment obtained, from which he after-
v/ards discharged the principal debtor. Lord Eldon held it utterly
immaterial, whether the warrant of attorney was known to the
surety at the time he entered into the contract or not. The surety
had a complete right to the benefit of it, and if the benefit were losi
to him, he was at once discharged."

It is argued that this was a security for a separate and dis-
tmct debt ; but I am of opinion that it was not taken for a separate
and distinct debt, but for the debt of 250/.

I am of opinion, therefore, that if the defendants enforce pay-
ment of the rent due to them out of the furniture, and then seek to
compel the plaintifif to pay the debt for which he became surety,,
the plaintifif is entitled to say to them, "'you must give me the bene-
fit of the security on the furniture and pension which were mort-
gaged to you for this debt."

What the defendants have done is this : — They have thought
fit to apply the produce of the furniture to a different and distinct

PAIN VS. PACKARD.

219

debt, contrary to the original arrangement, on the terms of which,
it is to be assumed, the surety consented to become Hable. I am
therefore of opinion, that whatever the defendants have received
ought to be appUed rateably in discharge of the whole debt, and
that the plaintiff is only liable to pay half of the balance.

If it were otherwise, the result would be this : — That if a man
advanced i,ooo/. to another on a mortgage of an estate, and had
the security of ten sureties, each of wdiom was liable for lool, he
might release or reassign the mortgage, and then sue the ten
sureties. This is a proposition impossible to be sustamed.

If the defendants have received anything from Castles, it
must not be taken into account; but with respect to the money
received from Pearson, it ought to be taken as a discharge for the
debt.

As to the pension, either they have received it or they have
not; if they have, it was distinctly applicable to the payment of
their debt; if they have not, they must show why they did not
make that securitv available.

Pain vs. Packard et al. (1816).
13 Johns. 174.

This was an action of assumpsit on a promissory note made
by Packard & Munson, in which Packard alone was arrested, the
other defendant being returned not found. The defendant, Pack-
ard, pleaded: i. Non assumpsit 2. That he signed the note
which was for $100, payable on demand, as surety for Munson ;
that he urged the plaintiff to proceed immediately in collecting the
money due on the note from Munson who was then solvent; and
that, if the plaintiff had then proceeded immediately to take meas-
ures to collect the money of Munson, he might have obtained pay-
ment from him; but the plaintiff' neglected to proceed against
Munson until he became insolvent, absconded and went away out
of the state, whereby the plaintiff was unable to collect the money
of ^lunson. 3. The third plea was like the second, except that
the defendant alleged a promise, on the part of the plaintiff, that

.220 GUARANTY AXD SURETYSHIP-

he Wdiild immediately proceed to collect the money of Munson, and
a breach of that promise, by wiiich tlie defendant was deceived
and defrauded, and prevented from oljtainins;' the money from
Munson, etc.

There was a demurrer to the second and third pleas and a
joinder in dennuTer, which was submitted to the court without
argument.

Per Curiam. The facts set forth in the plea are admitted by
tlie demurrer. The jirinciples laid down in the case of The Peo-
ple V. Jaiiseii (7 Johns. 336) will warrant and support this plea.
W'c there say a mere delay in calling on the principal will not
discharge the surety. The same i)rinci])le was fully and explicitly
laid down by the court m the case of Taihnadge v. Brushy But
this is not such a case. Here is a special request, l)y the surety,
to proceed to collect the money from the j^rincipal : and an aver-
ment of a loss of the money as against the principal, in conse--
quence of such neglect. The averments and facts stated in the
plea are not repugnant, or contradictory to the terms of the note.
The suit here is l)y the ])ayee against the makers. The fact of
Packard having lieen security only is fairly to be presumed to
have been known to the plaintiff. He was, in law and equity,
therefore bound to use due diligence against the principal in order
to exonerate the surety. This he has not done. There can be
no substantial objections against such a plea. It may be said, the
surety might have paid the note and prosecuted the i)rincii>al : but
although he might have done so, he was not bound to do it. If
he had a right to expedite the plaintiff in proceeding against the
principal and choose to rest on that, he might do so. In the case
of Trent Naz'. Co. v. Harlcy (10 East. 34) the plea was similar
to the present and not demurred to.

The defendant must, accordingly, have judgment upon the
(leniurrer.

Judgment for the defendant. -

^Not reported. . , ,, , ■ , i-

Hn the courts of some states the doctrine of this case is followed without quah-

fication; in others, with these qualifications-

a. The request of the creditor that he sue the principal debtor must be accom-
panied by notice that the surety will not continue to be liable if his request be ignored.

b. The request must be accompanied with an offer on the part of the surety to pay
the costs of the suit or to indemnify the creditor for such costs.

c. If made before the maturity of the debt, the request will be ineffective.
The doctrine of this case is, however, repudiated by the courts of most of the
states. '

natiox al uaxk \s. i'eck. 221

National MaiiaiwI': I'.axk z's. Peck (1879).
127 Mass. 298.

Contract on a promissory note for $500, dated December 29,
1875, signed "Jos. A. Benjamin, Treas." payable to the order of
the defendant in forty-five days after date at the plaintiff bank,,
and indorsed by the defendant. Trial at June term 1878 of the
superior court, without a jury, before Rockwell, J., who re-
ported the case for the determination of this court, in substance
as follows :

Benjamin kept an ordinary banking account with the plaintiff
bank. At the time of giving the note in suit, he was treasurer
of the town of Egremont, and the bank gave him for this note
a draft to be used for the payment of a tax due from the town.
The note and the proceeds of it were not made a part of his
account with the bank, and the bank regarded the note as an
official or town matter.

On Februar}- 15, 1876, when this note matured, all things
necessary to charge the defendant as indorser were done. On
that day, and ever since, the bank held a note, made by Benja-
min, which it had discounted, signed "Jos. A. Benjamin," dated
November 13, 1875, for $1500, payable in three months after ^
date at the plaintiff bank to one Callender, and indorsed by Cal-
lender. And on said February 15, there stood to the credit of
Benjamin, as his balance of account, the sum of $381.10, and
the same continued so to stand on the books of the bank until
about six weeks before the trial, when it was indorsed as of
February 16, 1876, on the note for $1500.

On February- 16, 1876, the day of the maturity of the note
for $1500, the president of the plaintiff' bank and its principal
financial manager, during business hours, told the cashier, if the
$381.10 standing to Benjamin's credit was not drawn out by his
checks before the close of business hours, to apply it on the
$1500 note; and at the close of the bank for that day, it being
found that Benjamin had drawn no checks on said balance, he
again directed the cashier to apply it on the $1500 note.

On Februarv 19, 1876. during business hours, the defendant
brought to the bank a check of Benjamin, made and handed to-
defendant on that dav, and which was as follows :

222 GUARANTY AND SURETYSHIP-

"South Egremont, Mass., Feb. 15, 1876. >5.38i. National Mahaiwe
Bank pay to the order of J. A. B., Treas.. note 15th inst., three hundred
and eighty-one dollars. Jos. A. Benjamin."

The defendant at the same time, acting at the request of
Benjamin, tendered to the cashier of the plaintiff bank this
check and $120 in money in payment of the note in suit, and
demanded the note. 'I'he money had been furnished the defend-
ant by Benjamin, Ixit it did not appear that he informed the
cashier of the bank of this fact. The cashier decHned to receive
the check and money, and told the defendant he could nut accept
the check, because he had been directed to apply the balance of
Benjamin's account on another claim held by the bank, meaning
the Si 500 note. After this refusal, the cashier did, at the request
of the defendant, receive the $120 and indorse the same on the
note in suit, it being at the time understood that neither party
intended thereby to waive his rights in reference to the check.
1'he v$i2o have been retained by the bank.

It is not the practice of tlie bank to charge over-due notes
held by it to the account of a depositor until he has sufficient
credits to pay the note. Benjamin became a bankrupt in the
spring of 1876, and died in July or x'Vugust of that year.

Upon tlie foregoing facts, the defendant contended, as a
matter of law, that the plaintiff was not entitled to recover ; and
'the judge so ruled, and found for the defendant. If this ruling
was correct, judgiiient was to be entered for the defendant; but
if the plaintiff was entitled to recover, judgment was to be entered
for him for the sum of $381.10, and interest frum February 16,
1876.

/. Deivey, for the jilaintiff.
M. Wilcox, for the defendant.

Gray, C.J. Money deposited in a bank does not remain the
property of the depositor, upon which the bank has a lien only;
but it becomes the absolute property of the bank, and the bank
is merely a debtor to the depositor in an e(|ual amount. Foley v.
HiU. I I'liillips, 399, and 2 II. L. Cas. 28. Bank of Republic v.
Millard. 10 Wall. 152; Can v. National Security Bank, 107
Mass. 45. So long as the balance of account to the credit of the
depositor exceeds the amount of any debts due and payable by
him to the bank, the bank is bound to honor his checks, and liable

NATIONAL BANK VS. PECK. 223

to an action by him if it does not. When he owes to the bank
independent debts, already due and payal^le, the bank has the
right to apply the balance of his general account to the satis-
faction of any such debts of his. But if the bank, instead of so
applying the balance, sees fit to allow him to draw it out, neither
the depositor nor any other person can afterwards insist that it
should have been so applied. The bank, being the absolute owner
of the money deposited, and being a mere debtor to the depositor
for his balance of account, holds no property in which the deposi-
tor has any title or right of which a surety on an independent
debt from him to the bank can avail himself by way of subroga-
tion, as in Baker v. Briggs, 8 Pick. 122, and American Bank v.
Baker, 4 :\Iet. 164, cited for the defendant. The right of the bank
to apply the balance of account to the satisfaction of such a debt
is rather in the nature of a set-off, or of an application of pay-
ments, neither of Avhich. in the absence of express agreement or
appropriation, will be required by the law to be made as to benefit
the surety. Glacier v. Douglass, 32 Conn. 393; Field v. Hol-
land, 6 Cranch, 8, 28; Brewer v. Knapp, i Pick. 332; Uphani v.
Lefavour, 11 Met. 174; Bank of Bengal v. Radakissen Mitter, 4
Moore P. C. 140, 162.

The general rule accordingly is, that where moneys drawn

out and moneys paid in, or other debts and credits, are entered,

by the consent of both parties, in the general banking account of

a depositor, a balance may be considered as struck at the date

of each payment or entry on either side of the account ; but where

by express agreement, or by a course of dealing, between the

depositor and the banker, a certain note or bond of the depositor

is not included in the general account, any balance due from the

banker to the depositor is not to be applied in satisfaction of that

note or bond, even for the benefit of a surety thereon, except at

the election of the banker. Clayton's case, i Meriv. 572, 610;

Bodenhani v. Purchas, 2 B. & Aid. 39, 45 ; Simpson v. Ingham, 2

B. & C. 65: S. C. 3 D. & R. 249; Pemberton v. Oakes, 4 Russ.

154, 168 ; Pease v. Hirst, 10 B. & C. 122 ; S. C. 5 Man. & Ryl. 88 ;

Henniker v. Wigg, Dav. & Meriv. 160, 171 ; S. C. 4 O. B. 792,

795 : Strong v. Foster, 17 C. B. 201 ; Martin v. Mechanics Bank, 6

Har. & Johns. 235, 244; State Bank v. Armstrong, 4 Dev. 519:

Commercial Bank v. Hughes, 17 Wend. 94; Allen v. Culver, 3

Denio, 284. 191 ; Voss v. German American Bank, 83 111. 599.

In the decision in McDozvell v. Bank of JVilmington & Brandy-

224 GUAKAXTV AXD SURIHTVSIIIP.

unnc, I llarringt. (Dcl.j 369. and in llic dicta in Dazusoii v.
Real Estate Bank, 5 Pike, 283, 298, cited for the defendant, this
distinction was overlooked or disre<^ar(lcd.

Jn many of the cases, indeed, the money appears to have
been deposited after the debt to the bank matured, so that the
case was analogous to the ordinary one of a payment, which,
not being appropriated l)y the debtor, might be appropriated by
the creditor. I'.nt where the balance of account is in favor of the
depositor when his debt to the l)ank becomes payable, it is a case
of mutual debts and credits, which, except in proceedings in bank-
ruptcy or insolvency, neither the depositor nor his surety has the
right to require to be set off against each other. Judge Lowfll,
in allowing money on deposit to the credit of a bankrupt to be set
off in bankruptcy against the aggregate debt due from him to the
bank, said: "This deposit, though it operates as security and as
payment, was not intended for either, but is made so by the bank-
ruptcy of the debtor." /// re North, 2 Lowell, 487. See, also,
Deiiiinoii V. Boylstoii Bank, 5 Cush. 194; Strong v. Foster, ly
C. B. 217.

In Strong v. Foster, a depositor gave to his bankers a prom-
issory note with a surety, which was not entered in his general
banking account ; and it was held, that the surety, when sued
by the bankers on the note, could not set up, either as payment
or by way of e(|uitable defense, that shortly after the note matured
the balance of account was in favor of the depositor to a greater
amount, and the plaintift"s did not apply that balance in discharge
of the note, or inform the defendant for three years afterwards that
the note remained unpaid. But the reasoning of the court applies
quite as strongly when the balance in favor of the depoistor exists
at the time when his debt becomes payable, as when it is created
by subsequent deposits. Chief Justice Jervis said: "Here the
note was never entered in the account at all : the rule as to adjust-
ing balances therefore does not apply." "It would be essentially
alternig the position of parties, to estaljlish that, because a banker,
wdio holds a note of a third person for a customer, has a lialance
in his hands in the customer's favor at the mattirity of the note,
such third person is thereby discharged, if it turns out that the note
was given by him as surety. There is no aitthority in equity for
any such position, and none certainly in law." 17 C. B. 216. 217.
And -Mr. Justice Willes observed: "As to wdiat was said on the
part of the defendant, that, if a set-off arises between the creditor

DAVIS VS. WELLS FARGO & CO. 225

and the principal debtor, the liability on the surety of the note is
extinguished ; that doctrine would lead to singular results. These
securities are often given to increase credits of bankers to their
customers If the liability of the maker were to depend upon the
state of the customer's account at any one moment, he might never
undergo the liability contemplated at all. The security is given
without any reference to the other side of the account. This is
the first time, I believe, that it has ever been suggested, that when
a note given under circumstances like these falls due, and there is
a balance in favor of the customer at the time, that balance must of
necessity be applied to the discharge of the note." ly C. B. 224.
Even the usual inference from the entry of such a note in the
account may be controlled by other circumstances. City Discount
Co. v McLean, L. R. 9 C. P. 602.

In the case at bar, it appears that the consideration received
by Benjamin from the plaintiff bank for the note in suit was to be
used by him in his official capacity as town treasurer, the note was
regarded by the bank as an olihcial or town matter, and neither the
note nor its consideration was ever made part of his general bank-
ing account ; and that, when the check in favor of the defendant
was drawn by Benjamin and presented at the bank, the bank held
a personal note of Benjamin, overdue and exceeding in amount
the balance of account is in his favor at the time, the president of
the bank had directed the cashier to apply this balance to the latter's
note, and the cashier so informed the defendant when he presented
the check. Under these circumstances, neither Benjamin, the
maker, nor the defendant, the indorser, has the right to insist that
this balance of account should be applied to the satisfaction of the
note in suit, rather than of the other note of Benjamin ; and,
according to the terms of the report, there must be

Judgment for the plaintiff.

Davis et al, Plft's. in Err., vs. Wells, Fargo & Company (1881).
104 U. S. 164; L. Ed'n, Book 26, 686.

In error to the Supreme Court of the Territory of Utah.

Mr. .hnncs M. JJ'oolworlh, for plaintiffs in error.

Messrs. Shellabarger & Wilson, for defendants in error.

]Tlr. Justice Matthews delivered the opinion of the court:
16

226 GUARAXTY AND SURETYSHIP-

The action below was broug-ht by Wells, Farg'o & Co., against
the plaintiffs in error, upon a guaranty, in the following words :

"For and in consideration of one dollar to us in hand paid by Wells,
Fargo & Co. (the receipt of which is hereby acknowledged), we hereby
guarantee unto them, the said Wells, Fargo & Co., unconditionally at all
times, any indebtedness of Gordon & Co., a firm now doing business at
Salt Lake City, Territory of Utah, to the extent of and not exceeding
the sum of ten thousand dollars ($10,000) for any overdrafts now made,
or that may hereafter be made, at the bank of said Wells, Fargo & Co.

1 his guaranty to be an open one, and to continue one at all times
to the amount of ten thousand dollars, until revoked by us in writing.

Dated, Salt Lake City, iilli November, 1874.

In witness whereof we have heretmto set our hands and seals the
day and year above written.

'Erwin Davis. [seal]

J. N. li. Patrick, [seal]

Witness: J. Goiuio.v "

The answer set up, by way of defense, that there was no
notice to the defendants from the plaintiffs of their acceptance
of the guaranty, and their intention to act under it ; and no notice,
after the account was closed, of the amount due thereon; and no
notice of the demand of payment upon Gordon & Co., arid of their
failure to pay within a reasonable time thereafter.

Ijut there was no allegation that by reason thereof any loss
or damage had accrued to the defendants.

On the trial it was in evidence that this guaranty was exe-
cuted by the defendants l)clow and delivered to Gordon on the day
of its date, for delivery by him to Wells, b^argo & Co., which
took place on the same day ; that Ciordon & Co. were then indebted
to the plaintiffs below for a balance of over $9,000 on their bank
account; that their account continued to be overdrawn. Wells,
Fargo & Co. permitting it on the faith of the guaranty, from that
time till July 31, 1875, when it was closed, with a debit balance
of S6,200 ; that the account was stated and payment demanded
at that time of Gordon & Co., who failed to make payment ; that
a formal notice of the amount due and demand of payment was
made by Wells, Fargo & Co., of the defendants below, on May
26, 1876, the day before the action was brought. There was no
evidence of any other notice having been given in reference to
it ; either that Wells, Fargo & Co. accepted it and intended to
rely upon it, or of the amount of the balance due at or after the
account was closed ; and no evidence was oft'ered of any loss or

DAVIS VS. WEI.LS FARGO & CO. 227

damage to the defendants by reason tliereof, or in consequence of
the delay in giving the final notice of Gordon & Co.'s default.

The defendant's counsel requested the court, among others
not necessary to refer to, to give to the jury the following in-
structions, numbered, first, second, third and fifth :

1. If the jury believes from the evidence that the guaranty
sued upon was delivered by the defendants to Joseph Gordon,
and not to the plaintifl:, but was afterwards delivered to the latter
b}" Joseph Gordon, or b}' Gordon & Co., it became and was the
dut)- of Wells, Fargo & Co. thereupon to notify the defendants
of the acceptance of said guaranty, and their intention to make
advancements on the faith of it, and, if they neglected or failed
so to do, the defendants are not liable on the guaraiiity, and your
verdict must be for the defendants.

2. If Wells, Fargo & Co. made any advancements to Gordon
& Co. on overdrafts on the faith of said guaranty, it became and
was the duty of plaintiff to notify the defendants, within a rea-
sonable time after the last of said advancements, of the amount
advanced under the guarantv, and if the plaintiff failed or neg-
lected so to do, it cannot recover under the guaranty, and your
verdict must be for the defendants.

3. What is a reasonable time in which notice should be given
is a question of law for the court. Whether notice was given is
•one of fact for the jury. The court, therefore, instructs you that
if notice of the advancements made under said guaranty was not
given until after the lapse of twelve months or upward from the
time the last advancement was made to Gordon & Co., this w^as
not, in contemplation of law, a reasonable notice, and your ver-
dict, if vou so find the fact to be, should be for the defendants.

5. Before any right of action accrued in favor of plaintiff
tinder said guaranty, it was incumbent on it to demand payment
of the principal debtor, Gordon & Co., and, on their refusal to
pay, to notify the defendants. If the jury, therefore, find that
no such demand was made, and no notice given to the defend-
ants, the plaintiff" cannot recover upon the guaranty.

The court refused to give each of these instructions, and the
defendants excepted.

The following instructions were given by the court to the
jury, to the giving of each of which the defendants excepted:

228 GUAKAXI^- AXD SURETYSHIP-

1. You are instructed that the written guaranty offered in
evidence in this case is an unconditional guaranty by defendants,
of any and all overdrafts, not exceeding in amount $10,000, for
which said Gordon & Co. were indebted to the plaintiff at the date
of the commencement of this suit. If the jury believe from the
evidence that said guaranty was by said defendants, or by any
one authorized bv them to deliver the same, actuallv delivered
to plaintiff', and that plaintiff accepted and acted on the same, such
delivery, acceptance and action thereon by plaintiff' bind the de-
fendants, and render the defendants responsible in the action for
all overdrafts upon plaintiff made by Gordon & Co., at the date
of and since the date of said delivery of said guaranty, and which
were unpaid at the date of the commencement of this suit, not ex-
ceeding $10,000.

2. The jury are instructed that the written document under
seal, offered in evidence in this case, implies a consideration, and
constitutes an unconditional guaranty of whatever overdraft, if
any, not exceeding $10,000, which the jury may find from the
evidence that Gordon & Co. actually owed the plaintiff at the
date of the bringing of this suit ; and further, if you believe from
the evidence that an account was stated of such overdraft between
plaintiff and J. Gordon & Co., then the plaintiff' is entitled to inter-
est on the amount found due at such statement, from the date
thereof, at the rate of ten per cent per annum.

■ These exceptions form the basis of the assignment of errors.

The charge of the court first assigned for error, and its re-
fusal to charge upon the point as requested l)y the plaintiff's in
error, raises the question whether the guaranty becomes operative
if the guarantor be not w'ithin a reasonable time informed by the
guarantee of his acceptance of it and intention to act under it.

It is claimed in argument that this has been settled in the
negative by a series of well considered judgments of this court.

It becomes necessary to inquire precisely what has been thus
settled, and what rule of decision is applicable to the facts of the
present case.

In .[dams v. Jones, 12 Pet. 213, Mr. Justice Story, delivering,
the opinion of the court, said : "And the question which, under
this view, is presented, is w'hether, upon a letter of guaranty,
addressed to a particular person or to persons generally, for
a future credit to be given to the party in whose favor the

DANIS VS. WKLLS FARGO & CO. 229

guaranty is drawn, notice is necessary to be given to the guar-
antor that the "person giving the credit has accepted or acted upon
the guaranty and given the credit on the faith of it ; we are all of
the opinion that it is necessary and this is not now an open (|ues-
tion in this court, after the decisions which have been made in
Ritsscll v. Clark, 7 Cranch, 69 ; Edmonston v. Drake, 5 Pet. 624 ;
JJoHglass V. Reynolds, 7 Pet. 113; Lee v. Dick, 10 Pet. 482; and
again recognized at the present term in the case of Reynolds v.
Douglass, 12 Pet. 497. It is in itself a reasonable rule, enabling
the guarantor to know the nature and extent of his liability, to
exercise due vigilance in guarding himself against losses which
might otherwise be unknown to him, and to avail himself of the
appropriate means in law and equity to compel the other parties
to discharge him from further responsibility. The reason applies
wath still greater force to cases of a general letter of guaranty,
for it might otherwise be impracticable for the guarantor to know
to whom and under what circumstances the guaranty attached,
and to what period it might be protracted. Transactions between
the other parties to a great extent might from time to time exist,
in which credits might be given and payments might be made,
the existence and due appropriation of w^hich might materially
affect his own rights and security. If, therefore, the questions
were entirely new, we should not be disposed to hold a dift'erent
doctrine ; and we think the English decisions are in entire con-
formity to our own."

In Reynolds v. Douglass, 12 Pet. 504, decided at the same
term and referred to in the foregoing extract, Mr. Justice McLean
stated the rule to be "That, to entitle the plaintiffs to recover on
said letter of credit, they must prove that notice had been given
in a reasonable time after said letter of credit had been accepted
by them, to the defendants, that the same had been accepted" ; and
added, "This notice need not be proved to have been given in
writing or in any particular form, but may be inferred by the jury
from facts and circumstances which shall warrant such inference."

There seems to be some confusion as to the reason and foun-
dation of the rule and, consequently, some uncertainty as to the
circumstanlces in which it is applicable. In some instances it
has been treated as a rule, inhering in the very nature and defini- _
tion of every contract, which requires the assent of a party to
whom a proposal is made to be signified to the party making it,
in order to constitute a binding promise; in others it has been

230 GUARANTY AND SUUETYSHIP-

considered as a rule springing from the peculiar nature of the
contract of guaranty, which reciuires, after the formation of the
obhgation of the guarantor, and as one of its incidents, that
notice should be given of the intention of the guarantee to act
under it as a condition of the promise of the guarantor.

The former is the sense in which the rule is to be under-
stood as having been applied m the decisions of this court. This
appears very plainly, not only from a particular consideration of
the cases themselves, but was formally declared to be so by Mr.
Justice Nelson, speaking for the court in delivering its opinion in
the case of Manufacturing Co. v. U clcli, lO How. 475, where he
uses this language :

"He (the guarantor) has already had notice of the accept-
ance of the guaranty and of the intention of the party to act under
it. The rule requiring this notice within a reasonable time after
the acceptance is absolute and imperative in this court, according
t(j all the cases ; it is deemed essential to an inception of the con-
tract : he is, therefore, advised of his accruing liabilities upon the
guaranty, and may very well anticipate or be charged with notice
of an amount of indebtedness to the extent of the credit pledged."

And in lyUds v. Saz'age, i Story, 22, Mr. Justice Story, who
had delivered the opinion in the case of Douglass v. Reynolds, 7
Pet. 113, after stating the rule requiring notice by the gaiarantee
of his acceptance, said : "This doctrine, however, is inapplicable
to the circumstances of the present case ; for the agreement to
accept was contemporaneous with the guaranty, and, indeed, con-
stituted the consideration and basis thereof."

The agreement to accept is a transaction between the guar-
antee and guarantor, and completes that mutual assent necessary
to a valid contract between the parties. It was, in the case cited,
the consideration for the promise of the guarantor. And where-
ever a sufficient consideration of any description passes directly
between them, it operates in the same manner and wnth like effect.
It establishes a privity between them and creates an obligation.
The rule in question proceeds upon the ground that the case in
which it applies is an offer or proposal on the part of the guar-
antor, which does not become effective and binding as an obliga-
, tion until accepted by the party to whom it is made ; that until
then it is inchoate and incomplete and may be withdrawn liy the
proposer. I'requently the only consideration contemplated is, that
the guarantee shall extend the credit and make the advances to the

DAVIS VS. WELLS FARGO & CO. 231

third person, for whose performance of his obHgation on that ac-
count, the guarantor undertakes. But a guaranty may as well be
for an existing debt, or it may be supported by some consideration
distinct from the advance to the principal debtor, passing directly
from the guarantee to the guarantor. In the case of the guaranty
of an existing debt, such a consideration is necessary to support
the undertaking as a binding obligation. In both these cases, no
notice of assent, other than the performance of the consideration,
IS necessary to perfect the agreement ; for, as Prof. Langdell has
pointed out in his Summary of the Law of Contracts (Langdell
Cas. on Cont., 987), "Though the acceptance of an offer and the
performance of the consideration are different things, and though
the former does not imply the latter, yet the latter does necessarily
imply the former ; and as the want of either is fatal to the promise,
the question whether an offer has been accepted can never, in
strictness, become material in those cases in which a consideration
is necessary ; and for all practical purposes it may be said that the
offer is accepted in such cases by giving or performing the con-
sideration."

If the guaranty is made at the request of the guarantee, it
then becomes the answer of the guarantor to a proposal made to
him, and its delivery to or for the use of the guarantee completes
the communication between them and constitutes a contract. The
same result follows, as declared in IVilds v. Saz'ogc, supra, where
the agreement to accept is contemporaneous with the guaranty,
and constitutes its consideration and basis. It must be so wherever
there is a valuable consideration, other than the expected advances
to be made to the principal debtor, which passes at the time the
undertaking is given from the guarantee to the guarantor, and
equalh' so where the instrument is in the form of a bilateral con-
tract, in which the guarantee binds himself to make the contem-
plated advances, or which otherwise creates, by its recitals, a privity
between the guarantee and the guarantor. For in each of these
cases, the mutual assent of the parties to the obligation is either
expressed or necessarily implied.

The view we have taken of the rule under consideration, as
requiring notice of acceptance and of the intention to act under
the guaranty, only when the legal effect of the instrument is that
of an offer or proposal, and for the purpose of completing its
obligation as a contract, is the one urged upon us by the learned
counsel for the plaintiff in error, who says, in his printed brief:

232 GUARANTY AND SURETYSHIP-

"For the ground of the doctrine is not that the operation of the
writing is concHtional upon notice, l)Ut it is, that until it is accepted
and notice of its acceptance given to ll.c guarantor, there is no
contract lietvveen the guarantor and tlie guarantee ; the reason
being that the writing is merely an .)fl'er to guaranty the debt of
another, and it must be accepted and notice thereof given to the
party offering himself as security before the minds meet and he
becomes bound. L'ntil the notice is given, there is a want of mu-
tuality ; the case is not that of an obligation on condition, but of
an offer to become bound not accepted; that is, there is not a con-
ditional contract, but no contract whatever."

It is thence argued that the words in the instrnnient which is
the foundation of the present action — "we hereby guarantee unto
them, the said Wells, Fargo & Co., unconditionally, at all times,
etc." — cannot have the effect of waiving the notice of acceptance,
because they can have no effect at all except as the words of a
contract, and there can l)e no contract without notice of acceptance.
And on the supposition that the terms of the instrument constitute
a mere offer to guaranty the debts of (lordon & Co., we accept the
conclusion as entirely just.

But we are unable to agree to that supposition. We think
that the instrument sued on is not a mere unaccepted proposal. It
carries on its face conclusive evidence that it has been accepted by
Wells, Fargo & Co., and that it was understood and intended to
be, on delivery to them, as it took place, a complete and perfect
obligation of guaranty. That evidence we find in the words — "for
and in consideration of one dollar, to us paid by Wells, Fargo &
Co., the receipt of which is hereby ackii'.jwledged, we hereby guar-
antee," etc. How can that recital be true, unless the covenant of
gtiaranty had been made w ith the assent of Wells, Fargo & Co.,
communicated to the guarantors? Wells, Fargo & Co. had not
only assented to it, but had paid value for it, and that into the very
hands of the guarantors, as they by the instrument itself acknowl-
edge.

It is not material that the expressed consideration is nominal.
That point was made, as to a guarantee, substantially the same as
this, in the case of Lawrence v. McAluiont. 2 Flow. 452, and was
overruled. Air. Justice Story said:

"The guarantor acknowledged the receipt of the one dollar
and is now estopped to deny it. If she has not received it, she
would now be entitled to recover it. .V valuable consideration,

DAVIS VS. WELLS FARGO & CO. 233

however small or nominal, if given or stipulated for in good faith,
is, in the absence of fraud, sufficient to support an action on any
■parol contract ; and this is equally true as to contracts of guarantee
.as to other contracts. A stipulation in consideration of one dollar
is just as effectual and valuable a consideration as a larger sum
stipulated for or paid. The very pouit arose in Diitchinaii v.
Touth, 5 Bing. ( N. C), 577, where the guarantor gave a guaranty
for the payment of the proceeds of the goods the guarantee had
consigned to his brother, and also all future shipments the guar-
antee might make in consideration of twO' shillings and sixpence,
paid him, the guarantor. And the court held the guaranty good,
and the consideration sufficient."

It is wortliy of note that in the case from which this extract
is taken the guarantv was substantial! v the same as that in the
present case, and that no question was made as to a notice of
acceptance. It seems to have been treated as a complete contract
by force of its temis.

It does not aft'ect the conclusion, based on these views, that
•the present guaranty was for future advances as well as an existing
debt. It cannot, therefore, be treated as if it were an engagement,
in which the only consideration was the future credit solicited and
expected. The recital of the consideration paid by the guarantee
to the guarantor shows a completed contract, based upon a mutual
assent of the parties ; and if it is a contract at all, it is one for all
the purposes expressed in it. It is an entirety and cannot be sep-
arated into distinct parts. The covenant is single and cannot be
subjected in its interpretation to the operation of two diverse rules.

Of course the instrument takes effect only upon delivery. But
in this case no question was or could be made upon that. It was
admitted that it was delivered to Gordon for delivery to the plain-
tiffs below, and that Gordon delivered it to them.

But if we should consider that, notwdthstanding the com-
pleteness of the contract as such, the guaranty of future advances
was subject to a condition implied by law that notice should be
given to the guarantor that the guarantee either would or had
acted upon the faith of it, we are led to inquire, what effect is to
be given to the use of the words which declare that the guarantors
thereby "Guarantee unto them, the said Wells, Fargo & Co.,
unconditionally, at all times, any indebtedness of Gordon & Co.,
^etc, to the extent and not exceeding the sum of $10,000, for any

234 GUARANTY AXD SLRKTVSl 1 IP-

overdrafts now made, or that hereafter may be made, at the bank
of said Wells, Fargo & Co."

Upon the supposition now made, the notice alleged to be
necessary arises from the nature of such a guaranty. It is not,
and cannot be, claimed that such a condition is so essential to the
obligation that it cannot be waived. We do not see, therefore,
what less effect can be ascribed to the words quoted than that all
conditions that otherwise would qualify the obligation are by
agreement expunged from it and made void. The obligation l:»e-
comes thereby absolute and unqualified ; free from all coi^ditions
whatever. This is the natural, obvious and ordinary meaning of
the terms employed, and we cannot doubt that they express the
real meaning of the parties. It was their manifest intention to
make it unambiguous that Wells, Fargo & Co.. for any indebted-
ness that might arise to them in consequence of overdrafts by Gor-
don & Co., might securely look to the guarantors without the per-
formance on their part of any conditions precedent thereto what-
ever.

It has always been held in this court that, notwithstanding
the contract of guaranty is the obligation of a surety, it is to be
construed as a mercantile instrument in furtherance of its spirit
and liberally to promote the use and convenience of commercial
intercourse.

This view applies with equal force to the exceptions to the
other charges and refusals to charge of the court below. These
exceptions are based on the propositions :

1. That if W'ells, Fargo & Co. neglected to notify the defend-
ants below of the amount of the overdraft within a reasonable-
time after closing the account of (Gordon 8z Co. ; and

2. That if they failed within a reasonable time after demand
of payment made upon Gordon & Co., to notify the defendants of
the default, the plaintiffs could not recover upon the guaranty.

For, if the necessity in either or l)oth of these contingencies
existed, to give the notice specified, it was because the duty to do
so was, by construction of law, made conditions of the contract.

But by its terms, as we have shown^ the contract was made
absolute, and all conditions waived.

It is undoubtedlv true, that if the guarantee fails to give rea-
sonable notice to the guarantor of the default of the principal
debtor, and loss or damage thereby ensues to the guarantor, to-

HUNGERFORD VS. o'P.RIEN. 235

that extent the latter is discharged ; but l)f)th the laches of the
plaintitT and the loss of the defendant must concur to constitute a
defense.

If any intermediate notice, at the expiration of the credit, of
the extent of the liability incurred is requisite, the same rule
applies. Such was the expressed decision of this court in the case
of Manufacturing Co. v. Welch ( supra). An unreasonable delay
in giving notice, or a failure to give it altogether, is not a bar, of
itsell.

There was a question made at the trial, as to the meaning of
the word "overdrafts." as used in the guaranty; and it was con-
tended that it would not include the debit balance of accounts
charged to Gordon & Murrav. and assumed bv Gordon & Co., as
their successors, before the guaranty was made, nor charges of
interest accrued upon the balances of Gordon & Co.'s account,
which were entered to the debit of the account. The reason alleged
was, that no form?! checks were given for these amounts. The
point was not urged in argument at the bar, and was very prop-
erly abandoned. The charges were legitimate and correct, and
the balance of the account to the debit of Gordon & Co. was the
overdraft for which they were liable. There could be no doubt
that it was embraced in the guaranty.

We find no error in the record, and the judgment is afhrnied.

HuNGERFORD VS. O'Brien, impleaded, etc., (1887).
37 Minn. 306; 34 N. W. 161.

The plaintifif brought this action in the district court for Otter
Tail county upon a promissory note made by the defendant
Charles J. Saw^bridge, the payment of which was guarantied by
the defendant O'Brien. Tb.e action was tried before Baxter, J.,
and a jury, and a verdict directed for plaintiff. Defendant O'Brien
appeals from an order refusing a new trial.

Razi'son & Houpt, for appellant.
E. E. Corliss, for respondent.

Dickinson, J. The defendant Sawbridge made his negotiable
promissory note, which was indorsed to one Gage, who indorsed it

.236 GUARANTY" AXD SURETYSHIP-

in blank to the defendant O'Brien, and he, before maturity, trans-
ferred it for vahie to the ])laintit¥. indorsing upon the note and
signing this guaranty: "l-'or vakie, I hereby guaranty the payment
of the within note to Cassie Hungerford or l)earer." The note
was not paid. Nothing was done by the plaintiff at the maturity
of the note to fix the liability of the indorser Gage. The defendant
O'Brien had no notice of the non-payment of the note until more
than a year after its maturity. Upon the trial of the issue raised
by the answer of the defendant O'brien, evidence was presented
tending to show that the maker of the note w'as solvent at the time
of its maturity, l)ut has since become insolvent ; and that the in-
dorser, (jacfe, w-as also solvent. The court directed a verdict for
the plaintiff.

The nature of the obligation of the guarantt)r is affected by
the character of the principal contract to which the guaranty re-
lates. The note expressed the absolute obligation of the maker to
pay the sum named at the specified date of maturity or before. The
guaranty of "the pa}ment of the within note" imported an uncTer-
taking, without condition, that, in the event of the note not being
paid according to its terms, — that is, at maturity,— 7the guarantor
should be responsible. The non-payment of the note at maturity
made absolute the liability of the guarantor, and an action might
at once have been maintained against him wdthout notice or de-
mand. Such was the effect of the unciualified guaranty of the pay-
ment of an obligation which was in itself absolute and perfect and
certain as respects the sum to be paid, and the time when payment
should be made, — all of which was known to the guarantor, and
appears upon the face of the contract. The liability of the guar-
antor thus becoming absolute by the non-payment of the note, the
neglect of tlie holder to pursue such remedies as he might have
against the maker (the guarantor not having required him to act)
would not discharge the already fixed and absolute obligation of
the guarantor, nor would neglect to notify the guarantor of the
non-payment have such effect. Broiv'n v. Curtiss, 2 N. Y. 225 ;
Allen V. Rightmere, 20 John. 365, (11 Am. Dec. 288); New-
comb V. Hale, 90 N. Y. 326; Read v. Cults, 7 Greenl. 186, (22
Am. Dec. 184) ; Breed v. HUlhoiise, y Conn. 523 ; Campbell v.
Baker, 46 I'a. St. 243 ; Roberts v. Riddle, 79 Pa. St. 468 ; Bank v.
Sinclair, 60 N. H. too; Heaton v. Hnlbert, 3 Scam. 489; Dicker-
son V. Derrickson, 39 HI. 574; Penny v. Crane Mfg. Co., 80 111.
;244; Clay v. Edgertun, 19 Ohio St. 549; Wright v. Dyer, 48 Mo.

HUNGERFORD VS. o'nRlEN. 237'

525. See, also, J^iiial v. Richardson, 13 Allen 521. modifying,
former decisions of the same court.

It follows that the fact that the maker had heconie insolvent
since maturit}', or that a mortgage security had become impaired
by depreciation in the value of the property, was no defence ; nor
was it a defence that the guarantor was not notified of the non-pay-
ment of the note. We are aware that the position here taken is
opposed by some decisions. Xo valid agreement was shown be-
tween the maker and the plaintiff extending the time of payment.
From the position above taken, it logically follows that the neglect
of the guarantee to take the steps necessary to fix the liability of
the indorser, Gage, did not discharge the guarantor. The latter,
by his unqualified guaranty of *:he payment of the note, took it
upon himself to see that the note was paid, and was therefore not
entitled to notice of its non-payment. (Authorities above cited.)
For the same reason, the plaintiff did not owe to the guarantor the
duty of taking the steps necessarv^ to fix the contingent liability of
the indorser by demand and notice of dishonor. PhUbrooks v. Mc-
Ezven, 29 Ind. 347; Lang v. Brevard, 3 Strob. Eq. (So. Car.) 59;
Pickens v. Finney, 12 Smedes & AI. 468; 2 Lead. Cas. Eq., notes
to Recs V. Berringfon. No such obligation is involved in this con-
tract of guaranty. Even in the case of an ordinary indorsement,
the holder, at maturity, is under no obligation to his indorser to
give notice of dishonor to prior indorsers or parties. The last in-
dorser becomes liable when he alone is notified, and he in turn
may fix the liability of prior parties by giving notice to them.

Order affirmed.

Mitchell. J., (dissenting). I am unable to concur in the
proposition that the plaintiff' owed no duty to O'Brien to take
steps, at the maturity of the note, to fix the liability of Gage, the
indorser. It does not seem to me that the fact that O'Brien's
guaranty of payment was unconditional and absolute is at all deci-
sive of the question. As between the parties to this action. O'Brien
occupied the position of surety, who, in case he had to pay the
note, would have recourse against Gage, the indorser, provided
steps were taken to fix the liability of the latter. The question,,
therefore, is to be determined by the equitable principles which
govern the relative rights and duties of creditor and surety.

It is a well-settled rule of equity that any laches by the creditor
in the care or management of collateral remedies or securities, if
loss ensues, will discharge the surety pro fanto. Nelson v. Munch,.

238 '■ GUARANTY AND SURKTYSIUP-

28 Minn. 314. 322 (9 X. W. Rep. 863). As a surety, on payment
of the debt, is entitled to all the securities of the creditor, if,
throug-h the negligence of the creditor who has them in his posses-
sion and under his control, a security, to the benefit of which the
surety is entitled, is lost or not properly perfected, the surety, to
the extent of such security, will be discharged. IVuiff v. Jay, L. R.
7 Q- ^'- 75^- -^^'^'^ ^^'C ean see no difference in this respect whether
the security is chattel or personal. This is not a case of mere pas-
siveness by the creditor in not taking steps to enforce collection
of the (lel)t at maturity, but an omission to take steps to perfect
and fix the liability of the indorser, which amounted to positive
negligence. He had possession and control of the note on the day
of its maturity, and consequently was the only person who could
present it for payment, or who would know whether or not it was
paid, and hence was the only person in position to give notice to
the indorser in case of its non-payment. To require him to ao this,
would. I think, be both good business morals and good law.

Tin-: State, use of Holmes County, ix Swi.xney ct al. (1882).

60 Miss. 39.

Appeal from the circuit court of Holmes count}-.

Hon. C. H. Campp.et.l, J- On the 13th of March, 1882, an
action was brought in tlie name of the State, suing for the use of
Holmes County, against J. S. Hoskins and his sureties, on his
bond as tax collector of tliat county, for two several sums of
money, for the years 1876 and 1877 respectively, which, it was
declared, he had collected and failed to pay over to the treasurer
of the county as the law reciuux'd of him and as he was bound by
the terms of his bond to do.

The third plea set up the defence that, "after the signing of
said bond by said defendants, the said plaintitf, without the con-
sent (jf the said defendants, on the twelfth day of January, 1877,
by an act of the Legislature of the State of Mississippi, approved
on said day and entitled 'An act to provide for the collection of
the outstanding revenue for the fiscal year 1876,' altered, changed,
and extended the time for the collection of taxes due the State of
.^Mississippi ,and the county of Holmes, and the time for the pay-

m'connell vs. poor. 239

ment thereof l)y the said Hoskins to the State and county treas-
uries ; whcreljv said defendants were released as sureties on said
bond."

The fourth plea contained the same defence as the third, ex-
cept that the act of the legislature relied upon in the latter as
releasing the defendants as sureties on the bond was an act en-
titled : "An act in relation to the public revenue and for other pur-
poses," approved February i, 1877. To the third and fourth pleas
demurrers were filed and they, too, were overruled. The plaintiff
declined to plead over and appealed to this court.

C. V. Gzvin, for the appellant.
H. S. Hooker, for the appellees.

Campbell, C. J., delivered the opinion of the court.

We decline to follow the courts of Illinois, Tennessee and
Missouri, in their views that sureties on the bond of a tax col-
lector are discharged by an act of the legislature passed after the
execution of the bond, without their consent, giving further time
for the collection of taxes and settlement by the officer, and
we embrace and declare the more just and politic doctrine of
the courts of Virginia, Maryland, and North Carolina, and hold
that the official bond of the tax collector is given with a full
knowledge of the right of the legislature to alter the dates fixed
by law for the collection of taxes and the setttlement of the col-
lector, and subject to the exercise of that right at the pleasure of
the legislature, without the assent of the sureties. The Coinnwn-
z^'ealth V. Holmes, 25 Graft. 771 ; Smith v. The Commomvealtli,
25 Graft. 780 ; The State v. Carleton, i Gill, 249 ; Prairie v.
Worth, 78 N. C. 169. See also Smith v. Peoria, 59 111. 412;
Bennett v. The Auditor, 2 W. Va. 441 ; Cooley on Tax, 502.

The demurrer to the third and fourth pleas should have been
sustained.

McCONNELL vs. PoOR (I9OI). O

113 Iowa, 133; 84 N. W. 968; 52 L. R. A. 312.

Appeal by plaintiff' from a judgment of tlie district court for
Des Moines County in favor of defendant in an action brought
upon a contractor's bond. Affirmed.

240 GITARAXTV AND SURETVSIII T-

Statement by Lado, J. Evans entered into a contract witb
plaintiff, July 14, 1891, to construct a dwelling house for him, and
on the same day executed a bond with defendant as surety con-
ditioned "that, if the said Evan E. Evans shall duly perform said
contract, then this obligation is to be void, but, if otherwise, the
same to be and remain in full force and virtue." The house was
built and in 1892 Evans began an action against the plaintiff for
a balance due. ^NlcConnell filed a cross petition in which he
averred several breaches of the contract and prayed for damages.
The result was a judgment against Evans for $943, to recover
which this action was brought against the defendant as surety on
the bond. By way of defense, he pleaded alterations in the con-
tract in four particulars : ( i ) That the work was done under the
direction of McConnell, instead of Sunderland, the architect, as
agreed: (2) the broken ashlar work was constructed with close
joints, instead of being tuck pointed, as stipulated; (3) the in-
creased cost occasioned by this change was not estimated at the
rate at which the work' was taken, and added to the amount to be
paid as exacted by the terms of the contract; and (4) other
changes were made without estimating the increased cost, as re-
quired in the agreement. To these defenses the plaintiff pleaded
adjudication in Evans against McConnell as an estoppel. The
defendant also answered that he had advanced, in payment of
labor and material, with McConnell's knowledge and consent, a
large amount of money, and was released from liability on the
bond to that extent. Trial to jury and from judgment on a verdict
against him, the plaintiff appeals.

Ladd, J., delivered the opinion of the court:

A. M. Anlrobiis and Sccrlcy cr Clark with C. L. Poor, in
propria persona for appellee.

Ladd, J., delivered the opinion of the court.

How^ far will a surety on a bond be bound by a judginent
against his. principal alone? There is no little confusion in the
language or the courts on this subject, and entire harmony does
not prevail in the decisions. This has resulted sometimes in treat-
ing such a judgment as res judicata in an action against the
surety, rather than passing on the character of the contract, and
simply holding him to its perfomnance. It is a fundamental prin-
ciple in jurisprudence that every man shall have his day in court.

m'connell vs. poor. 241

and shall be heard in his own defense, and of this right he may
not, under the constitution and laws of this state, be deprived.
For this reason, judgment against the principal may never fore-
close investigation of the surety's liability, unless by virtue of the
latter's undertaking, he has obligated himself directly or by impli-
cation to be bound thercb>-. \\diere, by the terms of the tond,
the surety is to be bound by the litigation to which he is not
a party, the courts decide, not that the judgment is an adjudica-
tion, because of the connection, but that he must perform the con-
tract as it is written. Shenandoah Nat. Bank v. Reed, 86 la. 136, 53 N.
W. 96. The only ground on which sureties on official bonds gen-
erally may be regarded as bound by the j udgments against their prin-
cipals is that the sureties by the terms of the bond agree, expressly
or impliedly, to abide the result of litigation against their prin-
cipals. This principle is well stated in Stephens v. Shafcr, 48
Wis. 54, 33 Am. Rep. 796, 3 N. W. 835. "The nature of the
contract in official bonds is that of a bond of indenniity to those
who may suffer damages by reason of the neglect, fraud, or mis-
conduct of the officer." The bond is made with the full knowledge
and understanding that, in many cases, such damages must be
ascertained and liquidated by an action against the officer for
whose acts the sureties make themselves liable, and the fair con-
struction of the contract of the sureties is that they will pay all
damages so ascertained and liquidated in an action against their
principal. See also Masscr v. Strickland, 17 Serg. & R. 354, 17
Am. Dec. 668. This court held in Charles v. Hoskins, 14 la. 471,
83 Am. Dec. 378, that judgment against a sheriff might be re-
ceived in evidence as fixing, prima facie, the liability of the surety.
True, other reasons for so holding than here suggested were as-
signed. But the doctrine of stare decisis has no application to the
reasons given for reaching the conclusion ; it is limited to the
very point decided. The fallacy in the reasoning of that case,
as well as Lowell v. Parker, 10 -Met. 309, 43 Am. Dec. 436, on
which it was based, lies in supposing that, because the surety may
claim, the benefit of a judgment in favor of his principal, it fol-
lows that he is concluded by one against him. But the surety is
discharged by a finding for his principal, not owing to the creditor
being estopped, but for that it establishes the absence of liability
of the principal ; and, if he is not liable, the surety cannot be, as
his obligation is merely incidental to that of the principal. Besides^
17

2-i- GUARANTY AND SURETYSHIP-

the discharge of the principal does not always release the surety.
If the former he an infant when executing an instrument, and is
discharged on that ground, the surety may yet he held. Keokuk
County State Bank v. Hall, io6 la. 540, 76 X. \\\ 832. To the
point is this language, found in Jackson v. Griszvold, 4 Hill, 528:
"No doubt''' '•' * * -•' -^ a decision against the debt would dis-
charge him [the surety]. That, however, is not on the ground
that he is a party, but because the judgment or decree extinguishes
the debt ; and, the principal thing being thus destroyed, the inci-
dent — the obligation of the surety — is destroyed with it. The
effect is the same as a release by the creditor or a payment by
the debtor."

It is sometimes urged that as the surety has become respon-
sible for the debt or good conduct of the principal, judgment
establishes the fact on which the surety's liability rests. A com-
plete answer to this is that the fact has not been established against
the surety, because he has been afforded no opportunity to litigate
the question. Under the civil law, the surety was permitted to
defend, and even allowed to prosecute an appeal from the judg-
ment against the principal, thotigh not a party to the judgment.
As he was given his day in court, there appears no serious objec-
tion to binding him by the litigation. Mtich of the confusion in
the decisions seems to have resulted from the attempt to apply
the rule of the civil law l)inding the surety by the litigation against
the principal, without allowing the former the participation there
accorded. \\Y' have called attention to the inapplicability of the
doctrine of estoppel in such cases, as the appellant, with much
propriety, has insisted that, if applicable at all logically, it must
extend to bonds in private transactions. The better opinion and
the voice of authority is the other way, and a judgment against
the principal is entitled to no consideration as against the surety,
unless by the terms of the contract the surety is to be bound
thereby. Giltinan v. Strong, 64 Pa. 244 ; Fletcher v. Jackson, 23
Vt. 581, 56 Am. Dec. 98; Arrington v. Porter, 47 Ala. 714; Doug-
lass v. Howland, 24 Wend. 35 ; De Greiff v. Wilson, 30 N. J. Eq.
437; Firemen's Ins. Co. v. McMillan, 29 Ala. T47; Jackson v.
Griswold, 4 Hill, 528; 2 Van Fleet, Former Adjudication, § 567;
2 Black Judgm. § 592.

In Fletcher v. Jackson, 23 Vt. 581, 56 Am. Dec. 98, the court,
speaking through Redfield, J., said : "The general rule undoubt-
edly is that, in a collateral undertaking l)y way of guaranty, where

M''CONNELL VS. POOR. 243

a suit is necessary to fix the liability of the guarantor, the first
judgment is prima facie evidence of the default. But, where the
guarantor is lialjle without suit against the principal, the judg-
ment against him is regarded as strictly matter inter alios. The
judgment of eviction, in order to show a breach of the covenants
of warranty, is a case of the first class. The judgment of evic-
tion is a necessary step in making out the liability of the warrantor ;
that is, the casus foederis. So, too, generally, I apprehend, when
anyone undertakes to indemnify against the consequences of a
suit, or that a suit brought shall be effectual, the judgment in
either case, being the casus foederis, is prima facie evidence of
the liability. And. on the other hand, where the suit may, in the
first instance, be brought directly against the guarantor, the judg-
ment against the principal, without notice to the guarantor, is not
evidence ; and so, too, if the guarantor have notice of suit against
the principal, he is not obliged to conrern himself in its defense,
but may await a suit against himself and then insist upon the
right to contest the whole ground.

The defendant in the case at bar was not a party to the con-
tract, nor could he have insisted on being made a party to the
action between Evans and McConnell thereon. The latter might
have brought suit against both principal and surety on the bond,
hut he chose, as was his right, to base his action on the contract
alone. Even if these might have been regarded, for some pur-
poses, as one instrument, the appellant elected to treat them as
distinct and separate by basing his suit against Evans solely on
the contract, and that against Poor on the bond. The surety may
require the principal to defend, for this is his duty ; but the surety
owes no such duty to the principal, and is under no obligation to
defend him. Poor was not a party to the action on the contract,
for he could neither appear and control the suit nor appeal from
the decree. Nor was he privy to that action. Privity, says Green-
leaf, denotes mutual or successive relationship to the same* right
of property. Privity in law involves the right of representation,
and certainly the principal, in an action against himself alone,
may not represent the surety. As was said in Giltinan v. Strong,
64 Pa. 244: "The privity of the surety with his principal is in
the contract alone, and not in the action." For the acts or
omissions of the principal to wdiich the surety pledges himself in
hiis contract he is bound, and it is only in this respect the principal
represents the surety. This is the criterion of the competency of

244 GUARANTY AND SURETYSHIP-

the principal's declarations and admissions. W licrc these form a
part of the acts or omissions of the principal lor which the surety
is bound, they constitute portions of the res gestae, and may bet
evidence against the surety. But beyond this line clearly the
surety cannot be affected by the acts or admissions of his prin-
cipal, for he is not represented by him. True, i'oor was the
attorney for Evans in the suit on the contract, contested it with
zeal and persistency, and was charged with notice thereof. See
Evans v. McCoinicll. 99 Iowa. 332, 63 N. W. 570, 68 N. W. 790.
But as surety he could make no defense to the action on the con-
tract. His client might have revoked his authority at any mo-
ment. He could have gone further, and dismissed the action, or,
rather, withdrawn his defense to the cross petition, without con-
sulting the surety. See Jackson v. Griszvold, 4 Mill, 528. For
the reasons stated we are of opinion th.c district court did not err
in holding the defendant not Ixnuid l)v the findings against his
principal in the former action.

2. The appellant insists the contract permitted changes, and
this is true. But the manner of making diem is specifically
pointed (jut. "The value of svtch changes or alterations, without
additions or deductions, will be estimated according to the rate at
wliich the w^ork has been taken, and the amount added to or de-
ducted from the amount hereinafter specified." This precluded
the parties from en.tering into arrangements for additional work,
or that of a different character, without compensation correspond-
ing relatively to the contract price. If this were not so, an entirely
different building from that stipulated might have been erected
at the surety's cost. Thus, the alleged change in the broken
ashlar work alone occasioned an additional expense of $1,600 or
more, — more than the balance claimed. While the plaintiff had
the option of making alterations, he might not do so without pay-
ing therefor at the rate fixed by the contract.

3. The evidence was in conflict on every issue submitted to
the jury, and sufficient to support the verdict. The instructions
in the respects criticised were clear and accurate, and included
those requested, in so far as correctly stating the law.

Affirmed.

^IORRISo^^ \'s. arons. 245

Morrison ct al. I's. Arons ct al. (1896).
65 Minn. 321 ; 68 N. W. 33.

Action in the district court for Ramsey county. The case
•was tried before Kelly. J., who ordered judgment against defend-
ant Arons for $801.43. and against defendants Williams and Hall
for $559.50, with interest. From an order denying a motion for
.a new trial defendants Williams and Hall appealed. Reversed.

Fred N. Dickson^ for appellants.

Frank A. Hutson and JVantcr, Richardson & Lawrence, for
respondents.

Collins, J. Plaintiffs entered into business as co-partners,
and employed defendant Arons as general manager, salesman, and
collector. According to the written contract, the employment was
to continue as long as mutually agreeable. Arons was to receive
as compensation for his services a sum equal to one-half the net
profits of the business, and these profits were to be ascertained as
follows :

"During the existence of the employment of said party of the second
part, once each month, commencing with December i, 1892, a just and
true inventory of the assets and liabilities of said firm shall be taken, and
all accounts which are considered bad shall be charged to profit and loss,
and from the residue of the accounts due said firm shall be deducted five
per cent, of the aggregate amount thereof as a reserve to cover bad debts,
and the excess of the assets over the liabilities and the capital stock of said
firm shall be determined and agreed upon as the net profits of said busi-
ness, and a sum equal to one-half of such excess shall then and there be
credited to said parly of the second part as and for his compensation,
and be considered an expense of said business. That when the relation
between said firm and said party of the second part is extinguished, then
the actual amount of profit or loss, as the case may be, of the business of
said firm, shall be determined, and, if there has been a net profit, a sum
equal to one-half thereof shall be allowed said party of the second part,
and anj' errors in estimating the net profits at the previous stated periods
shall then and there be rectified, and, if said party of the second part shall
have withdrawn more money from said firm than he is entitled to, he shall
then and there forthwith repay the same ; and. if there is any amount due
him on account of his compensation, it shall then and there forthwith be
paid him."

Arons, as principal, and defendants Williams and Hall, as
.sureties, entered into a bond, in which plaintiffs were obligees,

246 GUARANTY AND SURETYSHIP-

which, after reciting that Arons was about to enter plaintiffs'
employ as general manager, salesman, atid collector, provided,,
and was conditioned, that :

"If iho said Charles T. Arons shall faithfully and honestly perform
all the duties of his said employment, and shall keep just and true accounts
of all moneys received and expended and all property bought and sold for
or on account of said firm by him or under his direction, and shall faith-
fully and fully, and as often as required, account for and pay over to said
firm any and all moneys belonging thereto collected or received by him,
or which in any manner come into his hands in the course of his employ-
ment by said firm ; and shall forthwith and on demand repay to said firm
any and all moneys he shall have withdrawn therefrom for his own use
in excess of the compensation due him for his services under the terms of
his agreement with said firm in that behalf (whether such moneys shall
have been so withdrawn with the consent of said firm or otherwise), as
often as it shall be determined that such overdraft has been made, then
the above obligation to be void ; otherwise to remain in full force and
virtue."

Ihis action was brought to recover an amount of money said
to be due on the bond, and the trial was by the court. Xo evidence
was introduced tending to sliow any other settlement or account-
ing than that had when Arons' term of employment ended. In
fact plaintiffs admitted that they never ascertained, and could not,
at the time of the trial, ascertain, what the respective monthly
profits of the business had been. At the conclusion of the plain-
tiffs' case and again at the conclusion of the entire case, the defend-
ant sureties moved the court to disiniss the same as to thcni tijjon
the ground that, as it affirmatively appeared from the evidence
and admissions that no monthly settlements or accounting had
been had as provided for in the contract of employment, the sure-
ties upon the bond had been released from liability. These mo-
tions were denied, and th.e cotirt made its findings of fact and con-
clusions of law ordering judgment in plaintift"s' favor.

^lie court found the allegation in the complaint that no settle-
ment or accounting was had between the parties until after Arons'
employment ceased, to be true. We agree with the court below in
its construction of the contract, but we cannot concur in its hold-
ing that the sureties were not discharged by the failure and omis-
sion to have monthly accountings and settlements between Arons
and plaintiffs. The former was to have advanced to him $ioo each
month for personal cx])enses and on account of his compensation
under an agreenuni that, if this amount, with other sums of
money uhicli came int.) his possession, exceeded one-half of the

AETNA INS. CO. VS. FOWLER. 247

net profits of the business, the excess should be promptly refunded.
What the profits were, and the sum due to plaintifi:'s, if anything,
were to be provisionally ascertained each month ; and, had this
been done, it is quite certain that plaintififs would have discovered
before the expiration of 13 months that the business was not
profitable, while Arons would have learned that he was far from
earning a living out of it. The natural result would have been
for both parties to terminate their contract relation, and avoid
further loss. It is evident that there would be much less hesita-
tion on the part of a person called upon to become a surety upon
a bond given for the faithful performance of a contract with such
conditions than if the real situation was not to be ascertained for
months. The condition in the employment contract whereby
monthly accountings and settlements were agreed upon was an
exceedingly beneficial one for all concerned. It was an essential
feature of the contract whereby Arons agreed to conduct plaintiffs'
business enterprise for an indefinite period of time, his compen-
sation to be determined by the net profits. The contract of
suretyship was departed from and varied when this provision was
wholly disregarded, and the case is brought directly within the
rule that, if an essential condition of such a contract is not com-
plied with, a surety is not bound. A new^ trial must be had.

Order reversed.

Followed in Fidelitv Mutual Life ^"Iss'n v. Dez^'cv (1901), 83 Minn.
389; 86 N. W. 423; 54 L. R. A. 945.

Aetna Ins. Co. z's. Fowler ct al (1896).
108 Mich. 557, 66 N. W. 470.

Error to Saginaw; Wilber, J. Submitted January 15, 1896.
Decided March 11, 1896.

Assumpsit by the Aetna Insurance Company against Charles
G. Fowler, Chester Brown, and Gustavus H. Fuerbringer upon
an indemnity bond. From a judgment for plaintiff on verdict
directed by the court, defendants Brown and Fuerbringer bring
error. Reversed.

Wood & Joslyii, for appellants.
W.eadock & Ptircell, for appellee.

-4rt GU.\R.\^•T^■ Axn s^RET^•SITT^.

MoxTGOMF,RV, J. Actioii on tlie bond of an insurance agent.
Defendant Fowler was employed as the agent of the company at
Saginaw, and in December, 1883, executed a ])ond, with his co-
defendants as sureties, the conditions being as follows:

"The condition of this obligation is such that whereas the above-
named Charles G. Fowler has been appointed agent of the Aetna Insur-
ance Company in Saginaw, Saginaw county, Slate of Michigan, who will
receive as such agent sums of money for premiums, payments of losses,
salvages, collections, or otherwise, for goods, chattels, or other property
of the said insurance company, and is to keep true and correct accounts
of the same, pay over such money correctly, and make regular reports of
the business transacted by hiin, to the said Aetna Insurance Company,
and in every way faithfully perform the duties as agent, in compliance
with the instructions of the company through its proper officers, and at
the end of the agency, by any cause whatever, shall deliver up to the
authorized agent of said company all its money, books, and property due
from or in possession. Now, then, if the aforesaid agent shall faithfully
perform all and singular the duties of the agent of the Aetna Insurance
Company, then this obligation shall be null and void."

The instructions to agents were to send statements of all luisi-
ness transacted during the previous month as early as the 12th of
each month. The testimony shows that for three months prior to
September i, 1893, the defendant Ix^wler failed to send remit-
tances, and it was shown that it was not the custom of the com-
pany to insist u])on absolute promptness in remittance, l)ut that
after three months" delay it was the custom of the company to dis-
charge the delin(|uent agent. 1'he testimony further shows that
in the^ latter part of July or tlie first of August, 1893, the special
agent of the company, a Mr. Xcal. visited Saginaw, and, as he
described it, found the agenc\ in a "rocky condition ;" and. while
counsel were disagreed as to the effect of his testimony, we think it
is at least open to the construction that he then learned that Fowler
had misappropriated the funds of the company, and invested them
in realty. The circuit judge directed a verdict for the plaintiff'.
The recovery included a shortage in accounts before August ist,
and a shortage of $344.16 arising from the August business.

Two contentions are made : Firsl. that it was the duty of the
company to notify the sureties of any delay in the reiuittance, at
once, and that the continuance of the agent after failure to remit
in accordance with the instructions of the com])any to agents re-
leased the sureties as to future transactions: and, second, that the
company, on the discovery of the misappropriation of funds,

AETNA I\S. CO. VS. FOWLF.U.

249

August 1st. was liound to discharge the agent, or. at least, the
.sureties were not bound to respond for his future defalcations,
unless, after being informed of his previous acts of dishonesty,
they consented to his retention.

We think that the court below correctly ruled that the mere
fact that the company had knowledge that the agent had failed to
remit did not imi^ose upon it the duty to notify the sureties or
discharge the agent. JVatertuzvn Fire Ins. Co. v. .Simmons, 131
Mass. 85 (41 Am. Rep. 196) : Atlantic, etc., Tel. Co. v. Barnes,
64 N. Y. 385 (21 Am. Rep. 621). The duty which the company
owed to the sureties was not a duty of active vigilance, to ascer-
tain whether the agent had been guilty of fraud (the sureties'
undertaking: was a guarantv of his fidelitv), but what was due
from the employer was good faith to the sureties. Just as it would
have been a fraud to withhold knowledge of previous dishonesty
-of the agent presumably not known to the sureties, but possessed
by the company, so it would be a breach of good faith for die
company to continue the agenr in a place of trust after discovering
his dishonesty or defalcation, which is presumptively and in fact
unknown to the sureties, and without notifying the sureties of the
facts, and giving them an opportunity to elect as to whether they
will continue the risk. This is the doctrine of the leading case of
Phillips V. Foxall. L. R. 7 O. B. 666. The cases of Watertown
Fire Ins. Co. v. Sinimons and Atlantic, etc., Tel. Co. v. Barnes are
not inconsistent with this. The substance of the holding in each of
these cases is that the mere failure of remittance does not neces-
sarily amount to notice of dislionesty on his part, and that applies
to the present case as regards the charges occurring before August.
There is no evidence that prior to August the company had actual
notice that Fowler had converted any of the funds to his own use,
or was more than negligent in remitting or collecting the premi-
ums ; but as to the transactions in August the case is dilTerent.
Under section 9191, 2 How^ Stat., it is made an olTense for an
insurance agent to receive and invest money of the company with-
out its assent: p.nd, as we before stated, we think there was testi-
mony tending to show notice to the company about the ist of
August that Fowler had invested the funds of the company in
realty. If the company, through its special agent, then knew this
fact, it cannot be said not to have had notice of the dishonesty of
the agent : and. if it had such notice, it was the duty of the com-
pany not to longer trust its funds with the agent until the sureties

250 GUARANTY AND SURETYSHIP-

had consented, with knowledge of the facts, to be held responsible
for the acts of a dishon.est agent. See, further, 2 Brandt. Sur.
§ 423 ; Conneciicut Mnt. Life Jus. Co. v. Scoit, 81 Ky. 540.

Judgnicnt reversed, and :> new trial ordered.

The other Justices concurred.

BuTiER z's. United States (1874).
21 Wall. (88 U. S.) 272; L. Edn. Bk. 22, 614.

In error to the Circuit Court of the United States for the
Eastern District of Tennessee.

This was an action of debt in the court below, on a joint and
several internal revenue bond executed by Benjamin B. Emery, as
principal, and by Roderick R. Butler, Ethan A. Sawyer and Wil-
liam Choppin as sureties, in the sum of $15,000. Butler defended
on the ground that, at the time he signed and affixed his seal to the
bond, it was a mere printed form, with blank spaces for the names,
dates and amounts to be inserted therein : and that the l)lanks were
not filled, and there was no signature thereto, except Emery's ; that
Emery promised, if Butler would sign the bond, he would fill up
the blanks with the sum of $4,000, and would procure two addi-
tional securities in the District of Columbia, each of whom was to
be worth $5,000; and that the bond was delivered to Emery with
the understanding and agreement that the bond otherwise was not
to be binding on the defendant, but was to be returned to him ; that
the defendant never after ratified or acknowledged the validity of
the bond ; that the other sureties did not reside in the District of
Columbia, and were wholly insolvent and worthless ; and that
Emery obtained the signature by false and fraudulent representa-
tions. The circuit judge ruled that this was no defense to the
action ; a verdict was taken for the plaintiffs, and the defendant
excepted and brought this writ of error.

Messrs. S. ShcUahargcr, H. Maynard and /. M. JJllsori, for-
plaintiff in error.

Mr. C. H. Hill, Asst. Atty.-Gen., for defendant in error.

Mr. Chief Justice Wwn-. delivered the opinion of the court:

BUTLER VS. U. S. 251

We cannot distinguish this case in ]^rinciple from Dair v. U. S.,
i6 Wall,, I (83 U. S., XXL. 491 ). The printed form, with its
blank spaces, was si^ied by Butler and delivered to Emery, with
authority to fill the blanks and perfect the instrument, as a bond to
secure his faithful service in the office of Collector of Internal
Revenue. He was also authorized to present it, when perfected,
to the proper officer of the Government for approval and accept-
ance. If accepted, it was expected that he would at once be per-
mitted to enter upon the performance of the duties of the office
to which it referred.

It is true that, according to the plea, this authority was accom-
panied by certain private understandings between the parties,
intended to limit its operations, but it was apparently unqualified.
Every blank space in the fonn was open. To all appearances, any
sum that should be required by the Government might be desig-
nated as the penalty, and the names of any persons signing as co-
sureties might be inserted in the space left for that purpose. It was
easy to have limited this authority by filling the blanks, and the fill-
ing of any one was a limitation to that extent. By inserting, in the
appropriate places, the amount of the penalty or the names of the
sureties or their residences. Butler could have taken away from
Emery the power to bind him otherwise than as thus specified.
This, however, he could not do. Instead, he relied upon the good
faith of Emery, and clothed him with apparent power to fill all the
blanks in the paper signed, in such appropriate manner as might be
necessary to convert it into a bond that would be accepted by the
Government as security for the performance of his contemplated
official duties. It is not pretended that the acts of Emery are
beyond the scope of his apparent authority. The bond was ac-
cepted in the belief that it had been properly executed. There is
no claim that the officer who accepted it had any notice of the pri-
vate agreements. He acted in good faith, and the question now is,
which of two innocent parties shall suffer. The doctrine of
Dair's case is that it must be Butler, because he confided in Emery
and the Government did not. He is, in law and equity, estopped
by his acts from claiming, as against the Government, the benefit
of his private instructions to his agent.

The judgment is affinned.

:252 GUARANTY AND SURKTYSHTP.

StONF.R 7'i-. MlI.LIKIN, ft ill. (1877).
85 111. 2i8.

Mr. Harvey Pasco, for the a])])rl];uil.
Mr. A. B. Biiiiii, for the appellees.

Mr. Ciiikf Ju.sticf. Shkldon delivered the opinion of the
'Court:

At the February term. 1874. of the county court of Macon
■ county, a judgment was entered by confession, in favor of Millikin
& Co., against Thomas L.ec, John Lee and Andrew J. Stoner, for
$453.33, upon a promissory note witli a warrant of attorney
attaclicd, purporting to be executed liy the three latter, dated the
2.]th day of June, 1873, payable ninety days after date to 11 Crea,
and assigned l)y him without recourse.

An execution, issued upon the judgment, was levied upon
personal properity of John Lee, sufficient in value to satisfy it.
Afterward, by direction of Millikin & Co., the sheriff released the
property of John Lee from the levy, and levied the execution upon
•certain real estate of Stoner, and the l)ill in this case was filed by
Stoner to enjoin the sale of his property vmdcr the execution.

The court below, upon final hearing on proof, dismissed the
bill, and the complainant appealed.

The chief ground relied upon in sui)port of the l)ill is, that the
signature of the name of John Lee to the note is a forgery. The
note is a joint and several one, the signature of Stoner being last
upon the note. He testifies that ^'homas Lee applied to him to
sign the note as his security ; ihat he refused to do .so unless Lee^
w'ould first get his brother, Jolin Lee, to sign the note; that Lee
went away saying he would go and get John to sign it; that the
next day he came back, saying that he had got John to sign it, and
presented the note with the signature of John Lee appearing to it,
and witness then signed it, supposing the signature of John Lee to
be genuine, knowing him to be rcs]X)nstble, and had he not sup-
posed the note to have been signed by John Lee, he would not
have executed it. Thomas Lee had made the arrangement before-
hand with ^lillikin & Co.. to lend him the money. H. Crea, the
payee of the note, was but nominally such, Millikin & Co., being the
real payees, and on presentment of the note, with Crea's indorse-

STONEli VS. MILI.IKIN. 253'

nient on it, by Thomas Lee to Millikin & Co., who were l)ankers,
they discounted the note, paying the proceeds to Thomas Lee.

The bill alleges, the way |ohn Lee's property came to be re-
leased was, that he made an affidavit that he never signed the note
and that his signature to the same was a forgery, and that upon the
making of such affidavit Millikin & Co. caused his property to be
released from the levy. Although it is this forgery which is mainly
relied on for the discharge of Stoner, it is yet objected, as against
the release of John Lee's property and the levy on Stoner's, that
there is no proof of the forgery, more than this affidavit. Upon an
examination of the bill, we take that, as alleging the fact of the
forgerv ; and the answer of Millikin & Co. and the sheriiT admits
the same. By the pleadings, the forgery must be considered an
admitted fact in the case. The confession of judgment, then,,
against John Lee, was unauthorized, and a nullity, and his property
was righth' released from the lew under the execution.

Why should this forgery operate in discharge of Stoner, and
entitle him to have his property exempted from sale on the
execution ?

It may have been a wrong toward him, and have caitsed him
to incur a greater extent of liability than he expected ; and the
supposed obtaining of the execution of the note by John Lee may
have been the sole condition upon which he signed his name to the
note. Yet, on satisfactory evidence to himself, in that respect, he
did place his name unconditionally to the note as a maker thereof,
and left it with Thomas Lee to deliver to Millikin & Co., knjbwing
that on the faith of his, Stoner's, promise to repay it, they would
part with their money to Thomas Lee. There is no just reason
why this promise to Millikin & Co. should not be kept.

Whatever of wrong there was to Stoner, was perpetrated by
his co-maker, Thomas Lee. Millikin & Co. were wholly innocent
in the matter ; they had no notice of anything which had been trans-
piring among the makers of the note, as between themselves. Nor
was it incumbent upon Millikin & Co. to exercise care over the
interest of the surety in the note, look to the inducement which led
him to become such, and see that it should not fail. They had but
to watch over their own interest, and see that the secitrity offered
was a sufficient protection for them. For the lack of the vigilance
they failed to exercise in this respect, they suffer the full conse-
quence in the loss of the security cf the name of John Lee. What-

:254 GUARANTY AND SURETYSHIP-

ever of fraud and deception the co-makers of the note practiced
toward one another, was their own sole concern, and the conse-
quence, so far as may affect them in their relation to each other,
should be borne by themselves alone. There is no justice in re-
quiring" Millikin & Co. to assume the risk of such conduct, and no
sound principle upon which they should be made to suffer loss
because of it, not being privy thereto.

York County M. F. Insurance Co. v. Brooks, 51 Me. 506, and
Selscr v. Brock, 3 Ohio St. 302, arc direct authorities to the point
that such a forgery of the name of a prior surety will not discharge
a subsequent surety. See Young et al. v. Ward, 21 111. 223.

We regarcJ the language of Loud Holt, in Hern v. Nichols, i
Salk. 289, as applicable, that "Seeing that somebody must be a loser
by this deceit, it is more reason that he that employs and puts trust
and confidence in the deceiver should be a loser, than a stranger."

The case of Seely v. The People, 27 111. 173. is departed from
so far as it conflicts with the principle of the present decision.

We are satisfied with the decree, and it is affirmed.

Decree affirmed.

Deering vs. Moore (1893).
86 Me. 181 : 29 Atl. 988.

Geo. C. Hopkins, for plaintiff.

C. P. Mattocks and /.. Burton, for defendants.

Haskell, J. Debt l)y an obligee against a surety upon two
bonds, given l)y a collector of taxes for the years 1884 and 1885,
respectively. The last bond was not signed by the principal. Each
surety bound himself severally, and not jointlv. in the sum of
$5,000. The obligee received from two sureties a sum of money,
"in full discharge from liability upon each bond." Two questions
are presented :

I. Did the failure of the principal to sign the last bond render
it void? We think not. The bond was conditioned that the prin-
cipal should faithfully perform official duty. This he was bound
by law to do, just as effectually as if he had covenanted to do it

DEERING VS. MOORE. 255

by signing' tlie Ixmd. The engagement of the surety, therefore,
rested upon the legal obligation of the principal alrleady incurred.
It is not lik'e the cases, often referred to, where no obligation
attaches to the principal, outside of the bond itself. In those cases,
the principal not being bound, it would be unjust to hold the
surety. Nor is it like the case of bail, where the sureties have
peculiar rights flowing from the stipulation agreed to by the prin-
cipal. The bond must be held good at common law. Howard v.
Brozim. 21 Maine, 385; Scarborough v. Parker, 53 Maine, 252;
Goodyear Co. v. Bacon, 148 Mass. 542.

II. Did the discharge of two sureties release the defendant,
another surety ? No. The defendant was one of six sureties,
who bound themselves severally and not jointly, each in the sum
of $5,000. Their relations to each other are precisely the same as
if each one had executed a separate bond. They are neither neces-
sarily joint debtors, nor joint sureties. Had the principal executed
the bond, he would have bound himself in the sum of $30,000. The
sureties, instead of standing in jointly for that amount, divided it
equally among them, and each one became severally bound for his
aliquot share. They are sureties for the principal, and may or may
not be called upon to bear a common burden, as circumstances may
require. If they are, (that is, if the whole liabilit}^ be less than
the aggregate amount assumed by all of them, it becomes a com-
mon burden, not by reason of any contract or engagement to in-
demnify each other, but on the principle of equity, that a common
burden shall be equally borne by all,) they become co-sureties, and
stand in relation to each other as joint debtors, and are bound to
contribute to each other, so that they shall all fare alike. In cases
of this sort, of course, none can be charged beyond the amount that
he has stipulated for. Warner v. Morrison, 3 Allen, 567. It fol-
lows, therefore, that the release of one would work the release of
all. That is based upon the presumption of payment, the seal
being conclusive evidence of complete and ample consideration. To
work the discharge of a debtor, the agreement must be made upon
sufficient consideration, and that pays the debt. At common law,
the part payment of a debt is not sufficient consideration for its
discharge. Bailey v. Day, 26 Maine, 88 ; Potter v. Green, 6 Allen,
442. If the discharge be by a sealed instrument, it is of no con-
sequence what the actual consideration may be, for the seal is con-
clusive evidence of sufficient consideration. By the statute of this
State, passed in 185 1, c. 213, R. S., c. 82, § 45, the settlement of a

256 GUARANTY AND SURETYSHIP-

demand upon the receipt of money or other vaUial)le consideration,.
however small, will bar an action njxjn ii. It should be observed.
that the demand must be settled, in order to elifectuate that result.
Tlie discharfre of a debtor from liability upon a demand that is to
remain outstanding- will not so opea'atc. This distinction applies
where one or two joint debtors is discharged upon the considera-
tion of part ])ayment, leaving the demand outstanding against the
other. Such discharge will not bar an action against both ; nor can
it be pleaded by the other in an action against him, if the liability
be several. Bank v. Marshall, 73 ^Nlaine, 79; Driiikwatcr v. Jo}--
dau, 46 Maine, 432: McAllcsier v. Spragiic, 34 i\Iaine, 296.

In the case at bar, the attempted discharge of some of the
sureties is not pretended to have been by a sealed instrument. Had
it been, it would have w-orked a discharge of all the sureties, for
they stand in the relation to each other of joint debtors, being co-
sureties for the payment of the same debt. Xor does it pretend to
have discharged the whole debt, as provided for by statute. It
simply presumes to discharge some sureties from a liability or debt
that was to remain outstanding", and, therefore, not being upon
sufficient consideration that would have paid the debt, or so much
of it as they had engaged to pay by their covenant, nor evidenced
by a sealed instrument, it was inefifectual to discharge any one.

The result is, damages upon the last bond should be assessed
in a sum equal to the existing default of the i)rincipal, with inter-
est from the time it accrued, leaving the defendant to such claims
for contrilnUion as shall ])rovc just.

Defendant defaulted. Damages to be assessed below.

DoDD vs. WiXN (1858).
27 Mo. 501.

This was an action in favor of Levi Dodd against Isham O.
Winn on a i)romissory note executed by David C. Glascock, M.
McDonald, R. I''. Richmond, Minor J. Winn. James G. Caldwell
and said Isham ( ). Winn. The jury found the following special
verdict: "We, the jury, find a special verdict as follows: On the
6th day of April, 1849, the plaintiff Dodd sued Minor J. Winn,
on the same note now sued on, before the recorder of the city of

DODD VS. WINN. 257

Hannibal, the said Minor being one of the obHgors in tlie note.
Said Dodd recovered a judgment before said recorder against said
Minor on the 6th day of April, 1850; and an execution was issued
by said recorder on said judgment on the itth day of April, 1850,
and placed in the hands of the marshal of said city, and by him
levied on a house in said city as the property of Minor J. Winn;
that said marshal advertised said house for sale underj said execu-
tion, but did not sell the house, being ordered by the plaintiff's
counsel to tear down the advertisements and return the execution
"no property found;" which he did; and no execution has since
issued on said judgment by the recorder. The jury further find as
follows, that when the marshal levied on the house as aforesaid, a
part of said house was owned bv said ]Minor J. Winn, which part
so owed by him was worth the sum of $137.50. Said house was
standing on a piece of gromnd owned by Jeremiah Strode, who ha.l
leased it to said Minor J. Winn, with the privilege of taking off
wdien he pleased any house he might erect thereon. Minor J.
Winn had built the house in question on said lot, but had sold a
part of it before the execution was levied as before stated. The
jury further tind that David O. Glascock was the principal in the
note sued on, and that Minor J. Winn and Tsham O. Winn were
each securities for said Glascock."

The court rendered judgment on this verdict in favor of
plaintiff' for eighty dollars debt (four-fifths of the amount of the
original note sued on), and assessed the damages for the detention
thereof at seventy-six dollars.

Lamb & Lakcnaii, for plaintiff in error.
Porter & Harrison, for defendant in error.

Richardson, Judge, delivered the opinion of the court.

The law is well settled that a valid agreement between the
creditor and the principal debtor to extend the time of payment,
or any improper initerference by the creditor with the process of
law after the commencement of a suit, by which the suretv may
be injured or subjected to greater risk, or be delayed in the right
on payment of the debt to proceed against the principal, if made
or done wdthout the assent of the surety, will discharge him from
his liability; (24 Mo. 333; 26 Mo. 243;) and the relation of prin-
cipal and surety or of co-sureties is not extinguished bv judgment.
Rice V. Morton, 19 Mo. 263. A release of the principal will dis-
18

258 GUARANTY AND SURETYSHIP-

charge the surety, but one surety ina\ he discharg-ed. without
prejudice to an action against the others, to the extent that they
would be hable in a suit for contribution between themselves.
Ronton v. Lac\, 17 Mo. 3gij. The creditor can not, b\' discharging
one, increase the liability of the other; and he will n(A be allowed,
bv discharging one, to impose on the other a greater proportion of
a common burden than, in equity he ought to bear. .\t law. if there
are several sureties and one is in.solvcnt and another pays
the whole del)t, he can only recover against the solvent
sureties their pro rata ])art as if all of them were .solvent; but the
rule in equity is mure just and reasonable, and the insolvent's
share is apportioned among those who are .solvent, i Story Eq.
§ 498. The eighth section of our statute concerning securities
provides that one sr.rcty at the suit of another shall not be liable to
pay more than h.is due proportion of the original demand, but what
is his due proportion will vary according to the circumstances.
Thus, if there are three sureties, and all of them are solvent, and
one pays the debt, each of the others will be liable to him for one-
third of the amount only: but if one of ihem is insolvent, the other
will be liable for one-half.

Tn this case it seems that Glascock was the principal debtor,
and that the other five parties to the note were sureties. Now if
all the sureties were solvent, and the defendant paid the debt, he
could only recpure AI. J. Winn to contribute one-fifth part of it,
and therefore could only ask to have one-fifth abated, and could
only complain of the conduct of the plaintift' in releasing the levy
of the execution to that extent. But if the other sureties are insol-
vent, M. J. Winn would be bound to contribute to the defendant
one-half instead of one-fifth of the debt; in which case, if the
plaintifi^ had released Al. j. Winn, \\c could only demand of the
defendant the other luoiety : and, on principle, the same result must
follow if he could have made half the debt but for his improper
interference with the execution. These questions can not be deter-
mined from the meagre statement of facts in the special verdict.
It does not appear whether the other sv;reties were solvent or not.

The statute authorizes this court to remand a cause when
the facts in a special verdict are insufticiently found; (2 R. C.
^'^5.S' P- 130I' § 35!) and the judgment then will be reversed and
the cause remanded; Judge Xapton concurring. Judge Scott not
sitting.

prior vs. williams. 259

Prior vs. Williams (1866.)
3 Abb. App. 624.

Horace Prior and James Prior, as executors of Henry Prior,
deceased, brought an action, in the New York superior court,
against GibsonT Williams, Harriet H. Chamberlin and William
B. Chamberlin, in which they asked, as subsequent mortgagees,
to be allowed to i^edeem certain premises in the city of Buffalo,
owned by Harriet H. Chamberlin, from the lien of a mortgage
held by Williams. They also asked that the mortgage under
which they claimed might be reformed.

The facts of the case were, that William B. Chamberlin, son
of Harriet Chamberlin, being a member of the firm of Prior, Hol-
comb & Co, doing business in New York, had induced his mother
to indorse certain notes in blank, upon the agreement that they
were to be signed by the firm and used in their business. One of
these notes, for fifteen hundred dollars, at three months, he
(William H. Chamberlin) signed with his own individual name,
and negotiated to Henry Prior, brother of the Horace Prior of his
firm. On the note falling due, Henry Prior agreed to extend the
time for payment to one year, provided he were secured by a mort-
gage on Mrs Chamberlin's property in Buffalo, A mortgage was
accordingly made by Mrs. Chamberlin to meet the wishes of Henry
Prior. By a mistake, however, the mortgage was made to Horace
Prior, and the note, to secure the payment of which the mortgage
was made, was described as being payable "one year after the date
thereof/' instead of three months after date. The false descrip-
tion of the note was not noticed, and the mortgage was assigned
by Horace Prior to Henry Prior, and held by him up to the time
of his death, and after that by his executors, until the property on
which it was given being about to be sold under the foreclosure
of a prior mortgage, they brought this action to be allowed to
redeem, and to have their mortgage reformed by having the words
•'one year after date thereof," in the description of the note, stricken
out, and the words "three months after date thereof" inserted.

The referee reported in favor of plaintiffs, and the judgment
thereon was affirmed by the court at general term. Defendants
appealed to this court.

/. D. H. Chamberlin, for defendants, appellants.
rVilliani Dorsheiuier, for plaintiffs, respondents.

260 GUARAXTV AND SURETVSIITP.

Peckham. /. The only point made by the appellants re-
quiring examination is, whether this mistake in this mortgage can
be corrected by the court, as the mortgagor was a mere surety.

The appellant docs not urge that the mortgage is already
sufficient, as perhaps she might. See Jackson v. Boivcn, 7 Cow.
13, and cases cited.

Counsel referred to the remarks of the chancellor of Ofiiario
Bank v. Muniford, 2 Barb. 596, at 613. It is true the chancellor
used language which the case, as finally disposed of, did not
require. He remarked that a bond could not be reformed as
against a surety, "even though it was his intention to bind himself
at the time the bond w'as executed. For the statute of frauds
requires an agreement in writing to bind a surety, and if the surety
has not already executed a valid agreement to answer for the debt
or default of his principal, this court cannot compel him to execute
such an agreement, ui)on the ground that he has attempted to do
so, but has failed of accomplishing his object by mistake or inad-
vertence."

With deference, I do not think it an answer to a bill for the
refonnation of an instrument, that it would have been invalid if
not in writing, and that, therefore, it cannot be refonncd. Upon
such a doctrine, a deed of land or a mortgage could not be reformed
even against a principal, because either is invalid if not in writing.

A party sells a fami of one hundred acres, l)ut by a mistake
of tne scrivener the (\(:iq(\ convevs but fiftv. The mistake is not
discovered until after the deed is accepted and the money paid by
the grantee. This doctrine would prevent the reformation of that
deed. The right to grant relief in stich a case will scarcely be
denied. But the proof of the case must be entirely clear and sat-
isfactory.

In Phelps V. Garrow, 8 Paige, 322, where one Smith had pur-
chased goods of the plaintiffs under an agreement to give Gar-
row's indorsement on their' draft on .Smith therefor, payable to
Garrow's order, the draft was made and indorsed accordingly.
Garrow took up the draft and then brought his action against the
plaintiffs as drawers. They then filed their bill against Garrow
to restrain the further prosecution of that suit, not to refonn the
draft. The court dismissed the com])laint, holding that Garrow
was not liable either at law or in equit}-, though he admitted that
he intended to become liable by indorsing the draft.

The courts now would hold him liable under such facts at law.

PRIOR VS. WILLIAMS. 261

There, however, was no mistake of fact, and courts have frc-
C'uently recog;nized the force of a distinction between a mutual
mistake of law and of fact, althou,c;h, as a general rule, there is
little ground for the distinction. In most cases there is as good
ground for relief when both parties have acted under a mistake of
the law, as there is where the mistake is confined to the fact.

The mistake found here is one of fact. The other cases cited
b}- the appellants of Walsh v. Bailie, lo Johns, i8o; Dobbin v.
Bradley, ly Wend. 422; JViiig v. Terry, 5 Hill, 160; Birckhead v.
Brown, Id. 634, only illustrate the extreme strictness with which
contracts of sureties are construed, and that they will not be
extended beyond their letter. They have no pertinence to the
question.

The power of a court of equity to reform an instrument as
against a surety is fully recognized and declared in Story Eq. vol.
1, § 164.

In IViser v. Blaeh.lcy, i Johns. Ch. 607, where a bond given
by a surety f3r tlie guardian of an infant was taken by the surro-
gate in the name of the people, instead of the infant, the court cor-
rected the mistake, — the chancellor remarking that he had no
ditificulty in saying that it was within the ordinary jurisdiction of
that court to correct such a mistake by holding the party acord-
ing to his original intentions. That was in harmony with good
morals as well as with sound law.

So in W caver v. Shyrock, 6 Serg. & R. 262, 964. Tilgh^ian,
Ch. J., affirmed the same doctrine as against a surety.

Many cases mav be conceived where the grossest injustice
would result if courts had no power to corrdct mistakes as against
sureties. Mistakes are as likely to occur with them as with others,
and there is no sound principle that prevents their being com-
pelled to act justly and honestly. Where the surety is aware of
and assents to the pur'pose to which his obligation is to be applied,
and it is so used, though without consideration except that ad-
vanced to the principal, equity will reform any mistake of fact so
that the obligation shall fulfill its purpose.

In the case at bar, from the facts disclosed, the testator would
probably have been able to collect his note at maturity had he not
relied upon the mortgage. Upon the mortgage nine months'
longer time was procured with the knowledge of the mortgagor.
It was given by her for that precise purpose, and so accepted by
the mortgagee. If by mistake in the description of the note or by

262 GUARANTY AND SURETYSHIP.

an}- oilier mistake therein misleading the mortgagee, it has failed to
execute its purpose, the courts have the power, and we think it
their duty to reform the instrument so as to carry out the intent
of the parties.

Tlie judgment of the court below should be affirmed.

Note— The concurrini,' opinion of Wri(;ht, J., is omitted.

Em.mert 1's. Tiio.Mi'.soN (1892).
49 Minn. 386; 52 N. W. 31.

Appeal from district court, Nobles county; Brown, Judge.

Action by Joseph Emmert against Peter Thompson and
others. From a judgment for defendants, plaintitl appeals.
-Affirmed.

Daniel Rolircr, for appellant.

Warner, Richardson & Lazvrencc and (7. ]V. Wilson, for
respondents.

Collins, J. When the loan of money was made by defendant
Cornwell to defendant Afarr, to secure which, as agreed upon, the
latter mortgaged his entire farm, consisting of 240 acres, it was
for the stipulated purpose of relieving one tract (160 acres) from
the trust deed held by Ormsby, the balance (80 acres) from the
Hayes mortgage, and the entire farm from delinquent taxes. The
trust deed, the mortgage last referred to, and the taxes w^ere repre-
sented to l)e, and in fact were, first liens upon the pr*emises ; and
Cornwell believed, and it A\as implied from what Marr stated wdien
applying for the loan — there were no other incumbrances, and that,
with these paid oft" and discharged, his mortgage w^ould take their
place, and become the first and only charge upon the property. The
taxes and the amounts due on the incumbrances, aggregating
$1,434.82, were paid out of the proceeds of the loan, in accordance
with the agreement under wdiich it was made. l'ro]:)cr releases
and discharges were procured and at once recorded, in the mistaken
belief on the part of Cornwell, and the agents who transacted the
business, that there was no other or prior charge upon the prem-
ises. P"or some time thereafter they remained in ignorance of the

EMMERT vs. TIIOMPFON. 263

fact that ])laintiff's mortg-a^^e was in existence and of record when
the one in question was executed, and hy their acts had, of record,
hecome the senior Hen. As Alarr was and is insolvent, and plain-
tiff's niortgag-e, with costs and dishursements of foreclosure, now
exceeds in amount the value of the farm as found by the trial court,
the seriousness of the situation is quite apparent. The court be-
low subordinated the plaintiff's claim to that of defendant Corn-
well, to the extent of the payments made for taxes, and to satisfy
and extinoahsh the incumbrances, reinstating the liens, in effect ;
and its right and power sO' to do is the principal question now be-
fore us.

It has been well said that the doctrine of subrogation has been
steadily growing and expanding in importance, and becoming more
general in its application to various subjects and classes of per-
sons. It is not founded upon contract, but is the creation of equity
— is enforced solely for accomplishing the ends of substantial jus-
tice ; and, being administered upon equitable principles, it is only
when an applicant has an equity to invoke, and where innocent per-
sons will not be injured, that a court can interfere. It is a mode
which equity adopts to compel the ultimate payment of a debt by
one who in justice and good conscience ought to pay for it, anid is
not dependent upon contract, privity, or strict suretyship. Stevens
V. Goodenough, 26 Vt. 676; Ilanisberger v. )\vtccy. 33 Grat. 527;
SiiiitJt V. Fornii. 43 Conn. 244. That in this way a court, luider a
great variety of circumstances, may relieve one who has acted
under a justifiable or excusable mistake of fact, is readily conceded
by appellant ; but he invokes and seeks to have applied to respond-
ents' case the general rule that the doctrine of subrogation w'ill not
be exercised in favor of a volunteer or a stranger who officiously
intermeddles, such as a person who pays without any obligation so
to do, or one who, without any interest to protect, liquidates the
debt of another. There are a very respectable number of cases,
several having been cited, in which relief has been refused under
circumstances precisely like those now before us, where one who
has loaned and used his money in good faith, and for the express
purpose of relieving a debtor from a pressing obligation, and his
real property from a specific lien for the amount of the same, under
a genuine but excusable misapprehension as to the rank and posi-
tion of security taken by him on the same property, has been
treated and characterized as a volunteer, a stranger, and an officious
intermeddler, and denied the rights of an equitable assignee. But

-04 GUARANTY AND SURETYSHIP.

of laic years, with the developnicnt of the ])rincii)ks on which the
doctrine is foundcih the courts have been taking' a l)roader and
more coniinendahle view of the situation of such a party, and at
this time very httle is left of the views expressed in the earlier
cases. The l)etter opinion now is that one who loans his money
upon real estate security for the express pur^x^se of takin>; up and
discharg-ing liens or incumhrances on the same property has thus
paid the del)t at the instance, request, and solicitation of the debtor,
expecting- and believing, in good faith, that his security will, of
record, be substituted, in fact, in ])lace of that which he discharges,
is neither a volunteer, stranger, nor intemieddler, nor is the debt,
lien, or incumbrance regarded as extinguished, if justice requires
that it should be kept alive for the benefit of the person advancing
the money, who thereby becomes the creditor. Of the many
authorities on this, we cite Association v. 'riioinpson, 32 N. J. Eq.
T33 : Gans v. Tliiciuc, 93 N. Y. 225 ; Sidcncr v. Pavcy, yj Ind. 241 ;
McKenzic v. McKciizic, 52 Vt. 271 ; Cobb v. Dyer, 69 Ale. 494;
Levy v. Martin, ^8 Wis. 198, 4 N. W. Rep. 35; Insurance Co. v.
AspinwaU, 48 Mich. 238, 12 X. W. Rep. 214; Crippcn v. Chaj;^-
pci 35 Kan. 495, II Pac. Rep. 453; 3 Pom. Ju|. jur. 1212: Har-
ris. Subr. 81 I, 8i6; T^ixon. Subr. 165.

Tt is contended by ajipellant that Cornwell must, under the
circumstances, be declared culpably negligent when taking his
security and discharging of record the Onnshy and Hayes liens;
and, further, thai, as the plaintiff's mortgfage was then of record,
he had notice of it, in contemplation of law, and could not have
l)een misled or mistaken. Marr's application for a loan was for
the avowed purpose of taking up and discharging the Ormsl)y and
Hayes liens, and was well calculated to convey the impression that
these were the only incumbrances. Pie intentionally or otherwise
concealed the truth, omitting to state the existence of a junior in-
cumbrance in a large amount, a knowdedge of which would have
ended at once all negotiations with Com well's agents. It was
misleading, and the persons last named were not negligent because
they, to some extent, relied upon and w^ere misled by it. See
Nezi'cU V. Randall, 32 Minn. 171, 19 N. W. Rep. 972. It is a com-
mon thing for courts of equity to relieve parties who have by mis-
take discharged mortgages upon the record, and to fully protect
them from the consequences of their acts, when such relief will not
result prejudicially to tliird or innocent persons. Gcrdine v. Men-
age, 41 Minn. 417, .43 N. W. Rep. 91. Paraphrasing slightly a

EMMERT VS. xriOATPSON. 265

remark made in the opinion therein, it may l)e said that, consider-
ing this case as it stands between the appellant and respondent
Cornwell, it is obvious that it would be most unjust and inequitable
not to place the parties ;';; statu quo with respect to the amounts
paid out upon liens which were superior to that held by plaintiff,
now being foreclosed. It is true that at the outset the mistake grew
out of an error in the abstract books kept by Cornwell's agents;
but later, when examining the records in the office of the register
of deeds, the error was unnoticed and the mistake undiscovered.
It was a mistake of fact, and, in our judgment, not of such a char-
acter as to bar the respondents' claim to equitable relief. That, in
a proper case of mistake of fact, such relief may be afforded not-
withstanding the intervening mortgage was of record when the
error was committed, is well settled. Grih v. Reynolds, 35 Minn.
33 T, 28 N. W. Rep. 923. Cornwell misunderstood, and was justi-
fiabl}- ignorant of, the facts, and acted, through his agents, upon
the assumption that he and they knew the true state of the title
when the liens which liis nionev had <lischarged were satisfied of
record, and plaintiff's mortgage advanced to the position of the
senior* incumbrance, without a single act of his, and to the very
great detriment of the person who had brought it about. The
■court was riglit in applying the principle of subrogation, or "equit-
able assignment,"' as it is frequently called.

Judgment v/as entered below, directing that the premises be
sold, on foreclosure of plaintiff's mortgage, as one farm, and that,
out of the net proceeds, there be first paid to respondent Cornwell
the sums of money which he paid out as taxes, and to take up and
satisf)- the incumbrances before mentioned. The appellant's coun-
sel distinctly approves that part of the judgment which requires
a sale of the premises as an entirety, but makes the point, in case
we affirm the action of the trial court on the main question, that the
farm should have been sold subject to the subrogator's lien for a
specific sum on the 160 and for another specific sum on the 80
acre tract, and thus tliere would have been avoided the possibility,
which he now suggests, of having shifted over upon one of these
tracts, to some extent, a burden which ought to wholly rest upon
the other. It is evident from the record that the attention of the
trial court was not called to this point, and hence the order that
the sale be of the v/hole as one body of land. But we are unable
to see how the result now suggested by counsel would have been
avoided by the adoption of his plan without selling the tracts sep-

266 GUARAXTV AND SURRTVSTIir.

arately, keeping the funds derived from each chstinct. and apply-
ing- the same tn the Hquidation of the hens, so far as they might
go. Counsel does not contend that the two tracts of land should
have been sold separately, but, as before stated, indorses the judg-
ment directing a sale oi masse. He is concluded on this point by
his position as to the manner of sale.

Judgment affirmed.

jMorgan z.'s. Woudell (1901).
178 Mass. 350; 55 L. R. A. 33; 59 X. E. 1037.

Api'j:al by plaintiff from a judgment of the Superior Court
for Bristol county in favor of defendant upon an agreed state-
ment of facts to determine the lial)ility of defendant for a deb't
which he owed to the bankrupt. Judgment for defendant.

WordcU and Dillon were members of a partnership engaged
in the dry goods business. The partnership was dissolved by
an agreement under which Dillon purchased the interest of the
copartners and agreed to pay the debts of the firm. Some of
these debts he failed to pay. After the dissolution of the firm
Wordell bought of Dillon goods for the purchase price of which
this sction was brought. After Dillon's bankruptcy, defendanL
paid claims against the partnership to an amount exceeding that
which he owed to Dillon. The amount so paid he sought to set
off against the claim of the trustee for the purchase price of the
goods.

Further facts appear in the opinion.

Messrs. Williain M. Mori^cm and Jlciiry T. Richardson, for
appellant.

Messrs. John IV. Ciiiiunings and Charles A'. Ciuiiniings, for
appellee.

lloLAiES, Ch.J., delivered the opinion of the court:

This is a suit by a trustee in bankruptcy against a debtor
of the bankrupt. The debtor claims a set-off on the ground that
since the bankruptcy he has paid debts due from a former partner-

MORGAN VS. WORDKr.L. 267

ship consisting- of himself, the bankrupt, and one McGuire, from
which debts the bankrupt had covenanted to save his partners
harmless. It is objected that the covenant runs to the two other
partners jointly, but it is sufficiently plain that there are several
covenants to each. The more serious objection is that the prin-
cipal debt paid is one which has been disallowed by final judg-
ment when offered by the creditors, H. B. Claflin & Co., for proof
against the estate, on the ground that they received a preference,
and that a claim oft'ered in the defendant's name in respect of
the payment also has been disallowed.

As it was assumed on both sides that the provision in § 68^
of the United States bankruptcy act concerning set-oft' is more
than a rule of procedure, and governs in this court as well as in
the courts of the United States, we shall make the same assump-
tion for the purposes of this case, without argument. See Hunt v.
Holmes, i6 Nat. Bankr. Reg. iot, 105. Fed. Cas. No. 6,890;
Partridge v. Phoenix Mut. L. Ins. Co., 15 Wall. 573. 580, 21 L.
ed. 229, 239. We shall assume further, as a corollary, that if a
set-off is to be maintained it must be brought within the words
of the section referred to. Those words are: "A set-off or coun-
ter-claim shall not be allowed in favor of any debtor of the bank-
rupt which (i) is not provable against the estate." These words
are universal in fomi, and we do not see how a set-off can be
claimed in this case outside of them.

If, then, the defendant claims by virtue of the rights of a
quasi surety [Fisher v. Tiift, 127 Mass. 313, 314) who has paid
and therefore is subrogated to the claim of a joint creditor of
himself and the debtor (§ 57') > the trouble is that he has to take
the claim of Claflin & Co. as he finds it, and he finds it a claim
which is not provable against the estate, because Claflin & Co.
have received preferences which have not been surrendered. Sec-
tion 570^. It seems hard that a matter between Claflin & Co. and
the bankrupt, with which the defendant had nothing to do, should
bar rights arising out of a payment which he was compelled to
make. But we do not feel at liberty to give the language of sec-
tion 57/ other than its most natural meaning, or to interpret the
subrogation there provided for as a subrogation free from the dis-
abilities attached to the creditor, or as a subrogation to the credi-
tor's rights independent of the effect of the preference upon them.
One result of such an interpretation would be to allow the claim
without a surrender of the preference, contrary to § 570-.

268 GUARANTY AND SURETYSHIP.

Jt is sugg-ested tliat tlio adjudication against Claflin & Co. is
res niter alios, and iIktc is no other evidence that they accepted a
preference. But the defendant's claim l)y sul)rogation is affected
by the judgment as it is by the preference, and for the same reason.
He stands in the shoes of Claflin & Co., succeeds to their place, in
the language of th.e Roman law, and is the same person with them
for this purpose, a notion frequently recurring in the law. Der-
nusson, Sul)rogation, 3d ed. chaj). 1, Xo. 7; Sheldon, subrogation,
2; 4 Masse, Droit Commercial, 2(1 ed. chap. 60, No. 2,125, D. 20,
4, 12, § 9, D 4, 12, 16. See Day v. Woreesier, N. & R. R. Co., 151
Mass. 302. 307. 308, 23 N. E. 824.

The defendant also claims a set-off by virtue of his covenant.
We assume that it has been adjudicated between the parties in the
district court that the defendant lias not a claim which he could
prove in his own name, and that this decision carries with it the
corollary that he could not prove his claim on the covenant against
the estate. If, therefore, the prohibition of a set-off of a claim
"which is not provable against the estate" is to be taken with simple
literalness as applying to any claim that could not be proved in the
existing bankruptcy proceedings, the defendant's set-off cannot be
maintained. lUit we are of opinion that the seemingly simple
words which we have quoted must be read in the light of their
history and in connection with the general provision at the begin-
ning of § 68 for a set-off of mutual debts "or nuttual credits," and
that so read they interpose no obstacle to the defendant's claim.

riu' provision for the set-oft' of mutual credits is old. Stat. 4
Anne, chap. 17, § 11 ; 5 Geo. II.. chap. 30, § 28; 46 Geo. III., chap.
1 35' §3 ; Cjibson v. Bell, i Bing. x\. C. 743. 753 ; Ex Parte Prescott,
I Atk. 230. It was adopted in the United States (Acts 1800,
chap. 19, § 42, Acts 1841, chap. 9, § 5, and Acts 1867, chap. 176,
§ 20). I hit while the ])rovision as to nuitual credits was thought
to be more extensive than that as to nuitual debts {Atkinson v.
Elliott, 7 T. R. 378, 380), it was held that even the broader phrase
did not extend to claims which, when the moment of set-off ar-
rived, still were wholly contingent and uncertain, such, for in-
stance, as the claim upon this covenant would have been if the
defendant had not yet been called upon to pay anything upon the
original partnership debt. Abbott v. Hicks, 5 Bing. N. C. 578;
Robson, JJankr. 7th ed. 374. But the moment when the set-off
was claimed was the material moment. The defendant's claim
might have been contingent at the adjudication of bankruptcy,

MORGAiN' VS. WORDia.L.

269

and so not proval^le in the absence of special provisions such as
are to be found in the later bankrupt acts in England and in the
United States act of 1867, although not in the present law, and yet
if it had been liquidated, as here by payment, before the defendant
was sued, he was allowed without question to set it off. Smith v.
Hodsoii, 4 T. R. 21 1 Ex parte Boyle, Re Shepherd, i Cooke, Bank-
rupt Laws. 8th ed. 561 ; E.v parte ITagstaff, 13 Ves. Jr. 65; Marks
V. Barker, i Wash. C. C. 178, 181, Fed. Cas. No. 9,096.

The limitations worked out liy these decisions were expressed
in the section of the act of 1867 cited above, in the words "but
no set-off shall be allowed of a claim in its nature not provable
against the estate." These words, as it seems to us, following the
cases, refer yet to the nature of the claim at the moment when it
was sought to set it off, not to its nature at the beginning of the
pending bankruptcy proceedings, and did not prevent a set-off of
a claim which was liquidated at the later moment merely because,
when the bankruptcy proceedings began, for some reason it did
not admit of proof. The present statute leaves out the words "in
its nature," but we can have no doulit that it was intended to con-
vey the same idea as the longer phrase in the last preceding act,
from which in all probability its words were derived. "Provable"
means provable in its nature at the time when the set-off is claimed,
not provable in the pending bankruptcy proceedings.

The right to set off the claim when liquidated after the begin-
ning of the bankruptcy proceedings was based upon its being a
mutual credit, not upon the claim being provable, which it was not
until the later bankruptcy statutes. Russell v. Bell, 8 Mees. & W.
277, 281. Conversely, of course the exclusion of a set-off. when
the claim still was contingent and the defendant had made no pay-
ment, did not stand on the ground that the claim was not provable
in the existing bankruptcy proceedings, but on the ground that it
was not provable in its nature, and that there was no machinery
available to liquidate it. If we are right in supposing that the act
of 1867 meant merely to codify a principle, or rather a limitation
developed by the courts, and that tlie words of the present act mean
no more than those of the act of 1867, it follows that, although
the defendant's claim could not have been proved against die
estate, still it is a mutual credit and may be set oft' when he is
sued.

Judgment for defendant.

27U GUARANTY AND SURETYSHIP.

Thayer z's. I )a x i els ( 1 872 ) .
110 Mass. 345.

Contract. The declaratiun allecfed iliai the defendant as
principal, and the plaintifif as surety, signed a note fur $500,
dated Septeniher 28, 1861, and pa^ahle on demand to Nathan
George or order, with interest ; that the plaintift' signed as surety
without consideration, and for the accommodation of the defend-
ant ; that the defendant failed to pay the note ; and that the
plaintiff had lo pay to Cieorge the ])rincipal of the note to take it
up. The answer denied the allegations of the declaration, and
also set up the statute of limitations, and a discharge of the de-
fendant in insolvency.

At the trial in the superior court, before Bacon, J., it appeared
that the plaintiff executed the note without any consideration,
and for the accommodation of the defendant; that the defendant
on h'ebruary 1 1, 1862, tiled his petition for the benefit of the in-
solvent law ; that a warrant was duly issued ; that at the third
meeting of the creditors George proved the note against the de-
fendant's estate ; that a small dividend was then declared ; that
afterwards, in August, 1862, the defendant was duly discharged
from his debts; and that on May i, 1865, the plaintiff' paid to
George on the note $500, which was less than the amount then
due upon it, and took it up. The defendant asked the judge to
rule that the statute of limitations began to run against the
plaintiff's cause of action from the time the note fell due; and
that the discharge in bankruptcy was a bar to the action ; but
the judge refused so to rule, and ruled that on the foregoing facts
the plaintiff was entitled to recover. The jury returned a verdict
for the plaintiff, and the defendant allegxxl exceptions.

P. E. Aldricli, {S. A. Burgess with him,) for the defendant..
T. G. Kent, for the plaintift".

Ames, J. There was an implied promise, on the part of the
defendant, as principal, to indemnify the surety, and to repay to
him all the money that he might be compelled, in consequence of
his liability as surety, to pay to the creditor. Until the surety
has been compelled to make such payment, there is no breach of
this implied promise. The cause of actiun accrties then for the

tiiavi:r vs. daniels. 271

first time, and the statute of limitations then begins to run. (Jf
course the exception that the claim of the plaintiff is barred by
that statute cannot be maintained Apl^lcion v. Bascom, 3 Met.
169; Hall V. Thayer, 12 Met. 130.

At the time when the defendant petitioned for the benefit of
the insolvent law, the plaintiff's cause of action against him had not
accrued. Nothing was due at that time from die insolvent to the
plaintiff', and \\hether anything would become due depended upon
the contingency of his being compelled to pay, and actually pay-
ing, the note, in whole or in part. If the plaintiff' had taken up
the note, or made a payment upon it, at any time before the
making of the first dividend, his claim for the money so paid
would have been provable against the estate of the insolvent,
under the Gen. Sts. c. 118, § 25, and would therefore have been
barred by the discharge. But it appears from the report that no
money was paid by the plaintiff' as surety, and no cause of action
accrued to him against the insolvent, until long after the first and
only dividend was paid from his estate.

The case of Mace v. IVells, 7 How. 272, which is relied upon
by the defendant, arose under the bankrupt act of 1841, a stat-
ute which diff'ered from our insolvent law, in allowing sureties
and other parties under a contingent liability to prove such con-
tingent liabilities as claims upon the estate, and "when their debts
and claims become absolute," to have them allowed.

The defendants also insist that the debt itself was provable
and was therefore discharged; but this is not true as to the con-
tingent claim of the surety. He had no claim that was provable
under the statute, at the date of the discharge.

Two other cases relied upon by the defendant, Wood v. Dodg-
so)i, 2 M. & S. 195, and Vaiisandaii v. Corsbie, 8 Taunt. 550,)
were decided under English statutes which in express terms make
the contingent liability of a surety a provable claim against the
bankrupt's estate. In the first of these cases the court say that
the statute was intended to benefit the sureties, by allowing them
to share in the dividend before the estate is all gone, and before
the actual payment of their liabilities. Neither of these deci-
sions is applicable to a case under our insolvent laws.

Exceptions overruled.

272 guaranty and suretyship.

Lansdale vs. Cox (1828).
7 B. Mon. (.Ky.) 401.

Mayes & Chapcac, for plaintiffs.
Hardin & Darby, for defendants.

Opinion of the court by Chief Justice Bir.n.

Richard Lansdale and James Cox were the sureties of Shanks,
in an injunction bond to Summers, who sued Cox, the surviving
obhgor, and had judgment for $730.24, beside costs, which was
paid by Cox's surety in a replevin bond, and afterward paid by
Cox to his surety. These proceechngs were in the Nelson circuit
court.

Cox thereafter, uix)n motion against the heirs of Shanks
[402] the principal, (stating that there was no executor or ad-
ministrator of Shanks,) had judgment, and execution, upon which
the sheriff made a small part of the judgment, (about $35.19,)
and returned that he could find no estate whereof to satisfy the
residue.

Cox then sued his motion against the heirs and administrators,
jointly, of his co-security, Lansdale, for contribution, and recov-
ered judgment ; to which the defendants prosecute this writ of
error.

The whole doctrine of contribution between securities origi-
nated with courts of equity. There is no express contract for
contribution ; the bonds, obligations, bills, or notes, created liabili-
ties from the obligors to the obligees. The contribution between
co-sureties results from .the maxim, that equality is equity. Pro-
ceeding on this, a surety is entitled to every remedy which the
creditor has against the principal debtor ; to stand in the place of
the creditor ; to enforce every security, and all means of payment ;
to have those securities transferred to him, though there was no
stipulation for that. 'Jdiis right of a surety stands upon a prin-
ciple of natural justice. The creditor may resort to ]M-incipal, to
either of the securities, for the whole, or to each for his proportion,
and as he has that right, if he, from partiality to one surety, or
for other cause, will not enforce it, the court of equity gives the
same right to the other surety, and enables him to enforce it. Nat-
ural justice says that one surety having become so with odier

LANSDALE NS. COX. 278

sureties, shall not have the whole debt thrown upon him by the
choice of the creditor, in not resorting to remedies in his power,
without having contribution from those who entered into the
obligation equally with him. The obligation of co-sureties,
to contribute to each other, is not founded in contract between
them, but stood upon a principle of equity, until that principle of
equity had been so universally acknowledged, that courts of law,
ni modern times, have assumed jurisdiction. This jurisdiction of
the courts of common law^ is based upon the idea, that the equitable
principle had been so long and so generally acknowledged, and
enforced, that persons, in placing themselves under circumstances
to which it applies, may be supposed to act under the dominion
of contract, implied from the universality of that principle. For
a great length of time, equity exercised its jurisdiction exclusively
and undividedly ; the jurisdiction assumed by the courts of law is,
comparatively of very modern date; and is attended with great
difficulty where there are many sureties ; though simple and easy
enough where there are but two sureties, one of whom brings his
action against the other upon the implied assumpsit for a moiety.

The action at law, then, by one surety against his co-security,
arises out of an implied undertaking, not by force of express con-
tract, and consequently the heirs can not have been expressly bound
by the ancestor. So that the action at law, by one surety against
the representatives of a deceased co-surety, must, by the principles
of the common law, be against the executor or administrator. To
reach the heirs in a suit at law, the remedy given by our statute
in such cases, must be jointly against the executors or adminis-
trators and heirs, not against the heirs alone. The remedy in
equity by substitution of the co-security in place of the creditor,
and so allowing the one surety his redress against his co-surety
or co-sureties for contribution, still remains ; the remedy at law,
by a regular action jointly against the heirs and executors or ad-
ministrators, by force and operation of the statute of 1792, may
be pursued.

Reversed, with directions to lower court to dismiss motion.^

'That part of the opinion dealing with the statute and practice thereunder is
omitted. '

274 guaranty and suretyship.

Easterly vs. Barker (1876).
66 N. V. 433.

There were two appeals in this case, the one l)y plaintiff
from an order of the general term of the supreme court in the
fourth judicial department denying motion for a new trial and
directing judgment on a verdict, the other by defendant from
the judgment entered upon such order.

The action was brought ])y plaintiff as third indorser of a
promissory note to recover the amount thereof of the second
indorser.

The note in question was made by the Stevenson ]\Ianufac-
turing Company, payable to the order of one Knight, who in-
dorsed it. Defendant was second indorser, plaintiff' third, and
one MacDougall the fourth. Defendant alleged in his answer
that the note was given and discounted for the benefit of the
maker, in which company all the four indorsers were stockholders ;
that they indorsed for the accommodation of the company under
an agreement that as between themselves they should be co-sure-
ties, and share and contribute equally to the amount all or either
should be obliged to pay thereon.

Upon a former trial plaintiff' recovered a judgment for one-
fourth the amount of the note. It appeared on such trial that the
two other indorsers were insolvent. The general term reversed
the judgment and ordered a new trial on the ground that plaintiff
v/as entitled to judgment for one-half the amount. 3 N. Y. S. C.
( T. & C.) 421."

Upon the second, parol evidence was received to prove the
allegations of the answer, which was received under objection
and exception. The evidence tended to show that the note in suit
was a renewal of a former note ; that the agreement was made in
reference to the original note, which was renewed from time to
time. The testiniou}- was conflicting as to whether any thing
was said in reference to the liability as co-sureties at the time of
the indorsements of the note in suit.

Plaintiff was allowed to prove, under objection and excep-
tion, the insolvency of the other two indorsers, Knight and Mac-
Dougall. Evidence was given on the part of defendant tending
to show that the bank which discounted the note brought suit

EASTERLY VS. BARBER. 275

Ihereon against plaintiff alone at defendant's request upon his
giving security to indemnify the bank.

As to the agreement, the court charged, in substance, that
if the jury found that the agreement was made as claimed by
defendant, plaintiff was entitled to judgment for one-half the
amount of the note, to which defendant's counsel duly excepted.

The court also charged as follows: "If former notes have
been given under this agreement, with the understanding that they
were to stand with a joint, instead of a separate liability, and that
note was carried along until it came to this one, and they signed
this note with the arrangement and understanding resting upon
their minds, you will have no doubt in coming to the conclusion
ihat this agreement attaches to this last note;" to which plaintiff's
counsel duly excepted. Exceptions were ordered to be heard at
first instance at general term.

E. H. Avery, for the plaintiff.
Francis Kernan,-ior the defendant.

Miller, J. The first question presented upon these appeals
is, whether it is competent in an actiou by one indorser against
a prior indorser for the defendant to prove by parol an agreement
between all the indorsers that they were, as between themselves,
co-sureties where they are accommodation indorsers. In Barry v.
Ransom (12 N. Y. 462) it was held that an agreement made be-
tween parties prior to or contemporaneously with their executing a
written obligation as sureties, by which one promises to indemnify
the other from loss, does not contradict or vary the terms or legal
effect of the written obligation, and it may be proved by parol
evidence. It was said by Denio, J., in the opinion, that an agree-
ment among the sureties, arranging their eventual liabilities among
themselves in a manner different from wdiat the law would pre-
scribe, in the absence of an express agreement, would not contra-
dict any of the terms of the bond. It was also held, that the en-
gagement among themselves had no necessary place in, the instru-
ment between them and the other contracting parties. The case
cited referred to a joint and several bond, where the obligors were
equally liable upon its face. No reason exists, however, why the
same principle is not applicable to notes and bills of exchange.
'1 he- terms of the contract contained in instruments of this charac-
ter, which are within its scope to define and regulate, cannot be

276 GUARANTY AND SURETYSHIP.

chang'ctl by parol ; Init the uiKlcrstancling between the indorsers
i^ a distinct and separate subject, an outside matter, which may
be properly proved independent of and without any reg'ard to the
instrument itself. This rule is distinctly established in reference
10 joint makers of promissory notes ; and although the previous
decisions had been somewhat uncertain it has been recently deter-
mined liy the decision of this court that where a person signed,
as surety, a joint and several promissory note, and it did not appear
by (lu instrument itself that such relation existed, he might prove
such fact by parol, and that such proof did not tend to alter the
terms of the contract. Hubbard v. Gtirney, 64 N. Y. 457. It is
not apparent that any such difference exists between the two classes
of cases which prevents the application of the same principle tc
both of them.

An attempted distinction is sought to be maintained because
the relation of indorsers to each other are fixed by law- ; while
the relations and obligations of sureties and obligors are not fixed.
As between the principal and the sureties they are fixed quite as
much as between indorsers, and can only be settled as between
sureties where the contract does not show the fact by parol proof
of the same. In support of the same views is the case of Philips
V. Preston (5 How. [U. S.] 278, 292), where the doctrine is laid
down that proof of a collateral contract, by parol, may be given
to show the liability of indorsers as between themselves. See, also,
McDonald v. Magrudcr, 3 Peters. 470; Aiken v. Barkl\\ 2 Speers,
747; Edelen v. White, 6 Bush. (Ky.), 408; Davis v. Morgan, 64
N. C. 570. The indorsements upon bills of exchange or promis-
sory notes rest upon the theory that the liability of indorsers to
each other is regulated by the position of their names, and that
the paper is transferred from the one to the others by indorse-
ment. But this rule has no practical application to accommodation
indorsers, where neither of them has owned the paper and no such
transfer has been made. It is easy to see that the application of
the rule contended for, in many cases, would work the most serious
injustice. Suppose a person sign as accommodation maker of a
promissory note, and the payee for wdiose benefit it is made in-
dorses it and pays the note, and afterwards sues the maker to
recover back the money, would it be seriously contended that
proof could not be given to show that he was merely an accom-
modation maker? Clearly not; and yet such evidence would
contradict the written instrument (luite as tnuch as it would to

ICASTF-l^lA' \'S. HARPER.

277

prove an agreement between indorsers in regard to their lial)ility
as between each other. Cases frequently arise wliere it is com-
petent to prove that the indorsement is made for the accommoda-
tion of the maker; and a drawee may show, after acceptance, that
he has no funds (3 N. Y. 423) in his hands, and that he was
merely an accommodation acceptor. GrlffitJi v. Reed, 21 Wend.
502. The cases to which we have been referred by the plaintiff's
counsel do not, we think, sustain the position contended for ; that
parol proof cannot be given to show an arrangement between
accommodation indorsers different from that which appears by
the legal effect of the instrument, and a particular examination
of them is not required. The uniform practice in this State has
been in conformity to the views expressed in reference to proof
of tliis character, and it would be establishing a new rule at this
time to hold that such testimony was incompetent. There was,
therefore, no error committed by the judge in the admission of the
evidence to which objection was taken.

There is no force in the objection made by the plaintiff's
counsel tliat the evidence failed to establish the agreement alleged
in the answer to have l>een made in reference to the note in suit.
It was purely a question of fact what the agreement actually
made was. No request was made to take the case from the jury,
and sufficient was shown to submit the question raised to their
consideration. There is no ground for claiming that the defend-
ant was estopped from setting up the verbal agreement alleged
to have been made as a defense. The arrangement of the defend-
ant wdth the bank for the prosecution of the note and the collection
of the same of the plaintiff", and the security given thereupon do
not contain the elements of an estoppel. The defendant was not
the actual party in the suit, and the most which can be said in
regard to it is, that the defendant preferred to have it collected
of Easterly instead of himself, and to compel Easterly to sue him
for the proportion which he was lawfully liable to pay. There
was no assum.ption in this, we think, that estops the defendant.

We are also of the opinion that there was no error in that
portion of the charge wlierein the court instructed the jury that
if former notes had been given under the agreement with the
understanding that they were to stand with a joint instead of a
separate liability, and they were carried along until they came to
this one, which, if it was signed wnth the arrangement and under-
standing resting upon their minds, they would have no doubt

278 GUARANTY AND SURETYSHIP.

in coming- to the conclusion that this agreement attaches to the
last note. This was a necessary result of the facts proved and
clearly right. The requests to charge upon this branch of the
case in' this connection were properly refused, as the propositions
presented were sufficiently covered in the charge which had al-
ready been made. The discussion had, leads lo the conclusion that
sufficient grounds are presented on the plaintitT's appeal for a
reversal or modification of the judgment.

Other questions arise upon the defendant's appeal, which
should be considered. It is claimed that an action at law by a
surety for contribution must be against each of the sureties sepa-
rately for his proportion, and that no more can be recovered, even
where one or more are insolvent. In the latter case, the action
must be in e(juity against all the co-sureties for contributions,
and, upon proof of the insolvency of one or more of the sureties,
the payment of the amount will be adjudged among the solvent
parties in due proportion. The principle stated is fully sustained
by the authorities. It is thus stated, in Parsons on Contracts
(vol. I, page 34) : ''At law, a surety can recover from his co-
surety an aliquot part, calculated upon the whole number, without
reference to the insolvency of others of the co-sureties : but in
equity it is otherwise." See, also, Brozvne v. Lee, 6 Barn. & Cress.
689, 13 Eng. C. L. 394; Cuiccll v. Edzvards, 2 B. & Pull. 268;
Bcainan v. Bloncliard, 4 Wend. 432, 435 ; Story's Eq. Juris., § 496;
I Chitty on Con. (5th Am. ed.), 597, 598; Willard's Eq. Juris.,
108. There seems to be a propriety in the rule that where sure-
ties are called upon to contribute, and some of them are insolvent,
that all the parties should be brought into court and a decree made
upon equitable principles in reference to the alleged insolvency.
There should be a remedy decreed against the insolvent parties,
which may be enforced if they become afterwards able to pay",''
and this can only be done in a court of equity and when they are
parties to the action. The action here was not of this character;
nor were all the proper parties before the court. It was clearly
an action at law, and in that point of view, as we have seen, the
plaintiff could only recover for one-fourth of the debt for which
all the sureties were liable. The distinction 1>etween the two
classes of actions is recognized by the decisions.

The remedies, the parties and course of procedure are each
different. In the one, a jury trial is a matter of right ; w bile in
the other the trial is bv the court. The costs are also in the dis-

MOORE VS. P.RUNER. 279

cretion of the court. (Code, §§ 253, 306; 13 N. Y. [supra\,
498.) As the judgment could not require each of the parties
to pay his aliquot share and furnish a remedy over against those
who were insolvent and the rights of the parties be finally deter-
mined and fixed, it was under the facts proven clearly erroneous.
Although in many cases under the Code the pleadings, if neces-
sary, may be made to conform to the facts, and the case disposed
of upon the merits, the defects here are so radical as to strike
at the very foundation of the action, and cannot thus be remedied.
Besides, the proper parties are not before us, and cannot be
brought in, except on motion in the court below. As the claim
was alleged in the complaint, there was no such defect of parties
apparent as required the defendant to take the objection by de-
murrer or answer.

It follows that the judgment must be affirmed upon the plaint-
iff's appeal with costs of appeal to be paid by the plaintitT upon
the final termination of the action, if the defendant succeeds; and
if the plaintilT succeeds, to be set ofif against the plaintiff's costs.
And the judgment must be reversed upon the defendant's appeal,
with costs of the appeal in this court, and costs in the supreme
court to abide the event.

All concur, except Church, Ch. J., dissenting.

Ordered accordingly.

Moore e'.y. Bruner (1889).
31 111. App. 400.

Mr. C. L. V. Mulkey, for plaintiff in error.
Messrs. Courtney & Helm, for defendant in error.

Green, P. J. It is averred in the declaration in this case
that plaintiff, Bruner, and Moore, the defendant, together with
McCammon and Gray, became sureties on the bond of the guard-
ian of Barnes ; that the guardian died owing his ward, and after-
ward judgment was rendered in Massac probate court against
the estate of the guardian in favor of the ward for $500, but the
estate being insolvent no part of this judgment was paid ; that
afterward suit was brought in the Massac circuit court upon the

280. GUARANTY AND SURETYSHIP.

bond against Bruner and AlcCannnun, and judgment was there
recovered against them for $500 and costs; that ]^IcCammon is
insolvent and Gray died insolvent ; that plaintiff Bruner dis-
charged said judgment in full, wherefore defendant became liable
to pay him $269.45 by way of contribution. A count for money
paid out by plaintiff for defendant is added. The cause was tried
by the court. Judgment was rendered in favor of the plaintiff
for $260 and costs, to reverse which defendant sued out this writ
of error.

The cause of action set out in this declaration, is the payment
made by Bruner in satisfaction of the judgment recovered against
himself and McCammon as sureties upon said guardian's bond,
one-half of which amount so paid, instead of one-fourth, Bruner
insists is the proportion plaintiff' in error as a co-surety is legally
lialMe to contribute, because of the insolvency of the two other
co-sureties, McCammon and Gray. This was the view of the
trial court and in accordance therewith the judgm'ent against
plaintiff' in error was rendered. The court erred in so holding.
At law the amount of damages which plaintiff w^as entitled to
recover from defendant as a co-surety was one-fourth of the whole
debt paid, with interest from tlie time of payment. There were
four sureties, each of whom, as between themselves, became liable
at law to contribute an aliquot portion of the sum paid by Bruner,
and this aliquot portion is to be ascertained upon the basis of the
number of sureties, without regard to their solvency. Such we
understand to be the law in this state.

It is said in the opinion in Sloo v. Pool, 15 111. 48, "Sureties
are individually liable to the creditor, but one is as much bound
to discharge the debt as another. If the creditor endeavors to-
enforce payment from them, it is, as between themselves, the
duty of each to pay an aliquot portion of the debt. If that is not
done, and one is compelled to pay the whole, he is entitled to
contribution from the others iti the same proportion. The law
implies an agreement between them when they become responsible
to the creditor, that if one shall be compelled to pay the debt
the others will contribute so as to make the burden equal. If
one pays the whole debt he has a cause of action against the others
to recover their just proportion, as so much money paid to their
use. His right to contribution is complete as soon as he pays the
debt, and he may at once call on his co-sureties to bear the common
burden with him. At law he can not sue two or more jointly,

RE WALKER, ETC., VS. t'LAVTON. 281

but he must sue each separately, and he can only recover from
one an aliquot portion of the debt, to be ascertained by the num-
ber of sureties, without regard to their solvency. In equity, if
one is insolvent the loss is apportioned among the others." In
I Parsons on Cont., 35, the rule is stated thus: "At law a surety
can recover from his co-surety only that co-surety's aliquot part, cal-
culated upon the whole number, without reference to the insolvency
of either of the co-sureties, but in equity it is otherwise." We have
examined the case of Golden v. Brand, 75 111. 148, cited on behalf
of appellee, and do not understand the court either did, or intended
to, abrogate or modify the rule announced in Sloo v. Pool, supra.

For the errors indicated the judgment is reversed and the
cause remanded.

Reversed and remanded.

Re Walker; Sheffield Banking Co^iPANY vs. Clayton

(1892.)

66L. T. R.315.

The following are the only facts material to the present re-
port : —

The testator in the year t886 gave to the London and York-
shire Bank two guarantees for the sum of 1000/. each to secure
the overdraft of Arthur Spencer and Reuben Spencer trading as
Spencer Brothers.

At the same time Agnes Spencer, the wife of Arthur Spencer,
gave to the testator as security for anything he might be called
upon to pay under the guarantees, two equital:)le mortgages created
by memoranda of deposit of title deeds. The memoranda were
dated respectively the 5th July and the i8th Aug., 1886.

Subsequently to these .transactions Spencer Brothers trans-
ferred their account from the London and Yorkshire Bank to the
Sheffield Banking Company.

On the 9th Sept., 1887, the. testator gave to the Sheffield Bank-
ing Company a guarantee to secure the repayment of all moneys
then owing, or which might become owing to them by Spencer
Brothers either on their current account or on any other account
to the extent of 2000/.

282 GUARANTY" AND SURETYSHIP.

In the nKintli of May, 1880. Spencer Brothers went into liquid-
ation.

The testator died on the 4th Nov., 1888, leavin*^ a will hy
which he apixjinted the defendants his executors. The will was
proved hy the defendants on the 24th Jan., 1889.

The plaintiff company then commenced a creditor's action for
the administration of the testator's estatc\ An administration judg-
ment was given in that action on the 25th April, 1890.

The testator's estate was insufficient for payment of debts,
including the liability of the testator under the guarantee given
to the plaintifif company.

The plaintift company now claimed to be entitled to the ben-
efit of the equitable mortgages given to the testator by Agnes
Spencer.

The defendants, on the other hand, contended that the plain-
tiffs were not so entitled, but could only rank as creditors pari
passu with the other creditors of the estate.

Graham Hastings, Q. C, and Curtis Price for the plaintiffs.
Buckley, O. C, and Ingle Joyce for the defendants.

Stiklinc;, J., stated the facts and continued: — The plaintiffs'
contention was founded upon two cases. The first is an old case
of Maiire v. Harrison (ubi sup.)'' It is reported ver\- shortly as
follows : "A bond creditor shall in the (Jourt of Chancery have the
benefit of all cotmter-bonds or collateral security given by the prin-
cipal to the surety; as if A. owes LI. money, and he and C. are
bound for it, and A. gives C. a mortgage or bond to indemnify him,
B. shall have the benefit of it to recover his debt." That case was
decided in Michaelmas, 1692. The plaintiff also relied upon a
dictum of .Sir William Grant in IV right v. Morley (ubi sup.)'''
which nuis thus : "I conceive that, as tlie creditor is entitled to the
benefit of all the securities the principal debtor has given to the
surety, the surety has fully as good an equity to the benefit 6i all
the securities the principal gives to the creditor.'' As to the latter
{X)rtion of the sentence, there is no (|uestion at all. It is well estab-
lished at this date that the surety, on paying the debt, is entitled
to stand in the place of the principal creditor, and to have the ben-
efit of all the securities which the princijjal creditor had. Now
these two cases were verv much discussed in the well-known case-

1. I Eq. Cas. .'Vhr. 93; 20 Vin. Abr. p. 102.

2. n Ves. 22.

RK WALKER, FTC, VS. CLAYTON.

283

of Ex parte Waring (ubi sup.)", before Lord Eldon. That case
is most fully reported perhaps in Glyn & Jameson's Reports. It
appears from that report that, in the c(3urse of the arg-ument, Lorfd
Eldon spoke somewhat disparagingly of the case of Maitre v. Har-
rison. He said this : "I have never heard this case relied upon as a
governing case at this day." Tn the judgment as reported in 19
Vesey, p". 348, he puts it thus. "The prayer of the first of these
petitions has been supported upon this ground, that the short bills
and the mortgage * * * having been placed with Brick wood and
Co. as a security against their acceptances, the holders of those bills
have an equity to have that security applied specifically to the dis-
charge of those acceptances upon the general ground that, upon
a transaction of this kind, a person holding the bills which are the
subject of indemnity has a right to the benefit of the contract be-
tween the principal debtor and the party indemnified, and, though
not himself a party to that contract, to say that he, who has con-
tracted for the payment of certain debts out of those pledges, is
liable in equity to the demand upon the part of those whose de-
mands are to be so paid for that application, and a case was cited
{Manre v. Harrison) which goes that length. With regard to that
case, or cases in general, I desire it to be understood that I forbear
to give my opinion upon that point." Then he goes on to say that
he decides not on Ex parte Waring but on another ground. The
result of these two cases, namely the dictum of Sir W. Grant in
Wright v. Morley and the judgment and observations of Lord
Eldon in Ex parte Waring, seems to me to be that Sir W. Grant
and Lord Eldon were not of the same mind on the point. Under
these circumstances I was ver>- anxious to discover what was really
done in the case of Maure v. Harrison, which it so shortly reported
in Eq. Gas. Abr. The registrar has been kind enough to make
search for that case. No decree was drawn up, but the entry of
the case has been found in the registrar's book, and the pleadings
have been discovered, and I am indebted to the learned reporter
of this court, Mr. Knox, for having made a summary of them for
my use, the pleadings themselves being somewhat lengthy. From
them and the notes in the registrar's book it is tolerably easy to dis-
cover what the case was. The plaintifif was Thomas Maure, the
defendants were William Harrison and William Morley and Mary
his wife. Thomas Maure was the father of the first wife of Will-
iam Harrison, the father of William Harrison the defendant. By

3. 2G. & J.. 404; 19 Ves. 3<5.

284 GUARANTY AND SURETYSHIP.

that first marriage William Harrison the father had three children,
viz., William, the defendant, Thomas, and Margaret. The first
wife having died, \\'illiam Harrison, the father, married his second
wife Mary, the defendant, then the wife of William Maure, and
afterwards he died intestate leaving this widow and three children
by the first wife tliC persons entitled to his personal estate under
the statute of distribution. Aflministration was taken out by his
widow, and the shares of the three children in the intestate's prop-
erty amounted to 120/. It appears that the plaintiff, Thomas
Maure, the grandfather of William Harrison the defendant, was
very anxious that William Harrison, his grandson, should con-
tinue the business of a fanner which had been carried on by Will-
iam Harrison the father, but for that purpose it was necessary that
the sum of 120/. which fomied the portion of the intestate's estate
belonging to the tliree children should be paid over to W^illiam
Harrison the son, and that was accordingly done. The two other
children being infants, Thomas Maure the father and the plaintiff
in the action gave a bond to the defendant Mary IMorley, the legal
personal representative of the intestate, to indemnify her against
all claims by those children. It appears that at this time W'illiam
Harrison, the defendant, was an infant, but the money was paid to
him. He attained twenty-one, and carried on the farm for some
time. After attaining twenty-one he repudiated the transaction
and began to press William Morley and Mary his wife for pay-
ment of his sharfe of his father's estate, which he had already
received in point of fact, though apparently an infant. There-
upon William Morley gave liini a bond for payment of his share,
and William Morley and Mary his wife began to sue the plaintiff
Thomas Maure in the Coiu-t of Exchequer for payment under the
bond which had been given by him. Thereuix^n the plaintiff insti-
tuted this suit in eciuitv to restrain the action, and to obtain delivery
up of the bond which had been given by him. Now, of the other
children who were interested in the intestate's estate, Thomas had
died an infant and intestate, and Margaret was still an infant, and
was not a party to the suit. Tlie argument is stated in the regis-
trar's book. It is to be observed that the bill is by the person who
gave the bond to be relieved of it, and the result is thus stated in
the registrar's book: "By the Court; l^o declare that the defendant
William is well ])aid, and he must deliver up the bond to the other
defendant." That is the bond (as I read it) which had been given
bv \\'illiam Morlev to the defendant William Harrison for pay-

RE WALKKR, ETC., VS. CI AVTOX. 285

ment of his share. Whether that relief oui^ht to have heen in-
serted in the decree may he a question, because that would be relief
between co-defendants. Then it goes on, "stay all proceedings at
law on the plaintiffs' lOo/. bond" — that is a mistake, for 120/. as
clearly appears from the previous passage in the registrar's note,
where it is corrected in the margin, but the correction is omitted
here — "till Margaret doth release, and when the plaintiff hath pro-
cured ^largaret. who is not a party to the action, to release that
bond, then that Ixrnd to be delivered up" and so forth "but then
the plaintiff's bond to be at .niit for the recovery of Margaret's
nioietv of 120/." So that all that was decided in that action was
that the plaintiff', who had given his bond of indemnity, was not
entitled to have it delivered up to be cancelled till all claims had
been settled. Under these circumstances it appears that the point
for which it w'as cited in Eq. Cas. Abr. could not have been decided
in that case, and that at most the repoTited statement amounts to a
dictum in the course of the argument. It is now nearly two hun-
dred years since this case was decided, and the sole authorities on
a point which must have been of frequent occurrence are a dictum
in 1692, a dictum early in this century by Sir William Grant in
the year 1805, and what appears to me to be the contrary opinion
of Lord Eldon a little later. Under those circumstances it seems
to me that there is no authority for the proposition in question.
Upon principle I cannot see why a surety who takes from the prin-
cipal debtor a bond or indemnity at once becomes a trustee of that
for the principal creditor. That is really the contention of the
plaintiffs. Of course the other doctrine is well established, viz.,
that the surety who pays the debt is entitled to stand in the place
of the principal creditor ; but this doctrine rests entirely on those
dicta which I have mentioned. It seems to me that under these
circumstances I cannot give effect to the contention of the plain-
tiffs, and that they must simply be left to prove against the estate
of the testator for wdiat is due, without having the exclusive bene-
fit of these securities in respect of which payments have been made
to the estate.

Solicitors for the plaintiff company, Pilgrim and Phillips.

Solicitors for the defendants, Fczu and Co., agents for Johm
James, W^irksworth.

286 GUARANTY AND SURETYSHIP.

Trimble z'^-. Rudy (1901).
. . Ky ,53 L. k. A. 353 ; 60 S. \\\ 650.

Appeal In plaintiff from a jud^iienl of the rircuit Court
for Henderson county in favor of defendant in an action to en-
force a promise l)y defendant to reimlnirse plaintiff's assignee for
the amount which he had paid as surety for defendant's husband.
Affirmed.

The facts are stated in the opinion.

My. R. II. CiDuiingham, for appellant.
Mr. Montgomery Mcrritt, for appellee.

O'Rear, J. While ap]xdlee was a married woman, and be-
fore the enactment of our i:>resent married women's act, appellant
H. S. Holloway, who was her kinsman, executed to the Planters'
Bank a note for $2,500, and one to the Farmers' Bank for $900,
as surety of appellee's husl^and. Appellant claims that he was
induced to incur these liabilities by appellee's personal assurances
or promises of indemnity against loss, and that he would not have
done so but for his reliance upon her agreement to keep him from
loss on that account. The husband died in 1893, after appellant's
liability had been assumed, and left an estate totally insolvent.
After the husband's death appellee wrote a])pellant asking him to
pay off the notes in question, and again promising to indemnify
him against loss. Appellant did pay off these notes, because, he
says, of this solicitation and promise. Appellee declining to com-
ply with her agreement to repay the surety these sums paid by
him, he sued her on the last-named or written promise to pay.
Other allegations were contained in the petition, but were denied,
and, there being a total failure of proof as to those that were
denied, we are to determine whether the trial court's peremptory
instruction to the jury to find f(;r the defendant was proper. The
determination of that question involves the one whether the prom-
ise of a married woman, made while under the disability of cover-
ture, inducing another to become bound as the surety of her hus-
band, is a sufficient consideration to support a promise of indem-
nity made to the surety after the removal of such disability.

It is argued for appellant that her original promise was based
upon facts imposing upon her a moral obligation, and that al-

TRIMBLE VS. RUDY. 287

though not legally binding because the law prohibited her
from legally binding herself, upon the law's restrictions being
removed the original moral obligation was enough to support
a new promise to pay. While formerly extensively held that
a moral obligation was a sufficient consideration to uphold a con-
tract between competent parties, it has lately come to be denied,
until it may now be seriously doubted whether the ancient rule
longer obtains. EHshop, Contr. 44, and cases cited ; Parsons,
Contr. 432. 435, and notes. It has been held in this state that a
moral obligation, where it has also been a legal one, might be the
consideration of a new contract {Montgomery v. Lampton, 3
Met. 520; Muir v. Gross, lo B. Alon. 282) ; but we are not aware
that the rule has been extended further, and, in the light of the
trend of the later cases, we are disinclined to so extend it.

We have repeatedly held that the contract of a married
woman, not with reference to her separate estate, and where not
especially allowed by statute, was void, and that her subsequent
promise to pay such an obligation, made after discoverture, was
likewise void, — the first, because she was not competent to make
the contract ; the second, because there was no consideration to
support it. Robinson v. Robinson, ii Bush, 179; Jennings v.
Crider, 2 Bush, 322, 92 Am. Dec. 487 ; Russell v. Rice, 19 Ky. L.
Rep. 1613, 44 S. W. no: Cltaney v. Flyiin. 2 Ky. L. Rep. 417;
and others.

Wc think the fair deduction from the foregoing line of de-
cisions is that, without reference to what may have been the merit
of the consideration of the original promise, the new contract, to
be binding, must be based upon a new consideration, legal and
sufficient of itself, and independent of the original one. That
the surety paid off these notes upon the faith of the appellee's letter
was not such new consideration ; for he assumed no new condi-
tion, and did nothing he was not already legally bound to do.

Tt follows that the giving of the peremptory instruction was
proper, and the judgment is therefore affirmed.

28S (HIARAXTV AND SUUIiTYSHIP.

Vah, z's. Fostkr ('/ al. (1850).
4 N. Y. 312.

Varlck & Eldridge, for appellants.
^F. /. Street, for respondents.

Rroxson, Ch. J. The case is shortly this. The i)laintiffs
sold land to Alorgan, who, instead of giving his bond and mortgage
to the plaintiffs to secnre the pnrchase money, got Flagler to give
his note to the plaintiffs for the amount, payable in one year ; and
Morgan gave a bond and mortgage to Flagler for his indemnity,
for the same amount, and payable at the same time with the note.
Before the crcflit expired Flagler liecame insolvent and the plain-
tiffs seek relief, either on the ground of an equitable lien on tlie
land for the purchase money, or by reaching the mortgage to
Flagler, and having it foreclosed for the payment of the debt.

By taking the security of a third person for the purchase
money the plaintiffs have lost their equitable lien on the land, and
can not have relief in that form, as has been very clearly shown by
the vice-chancellor in his opinion. And I agree in most that he has
said upon the wdiole case. But there is one point on which. I think
the supreme court was right in reversing the vice-chancellor's
decree, and directing a foreclosure of the mortgage for the benefit
of the plaintiffs.

It is a settled rule in equity, that the creditor shall have the
benefit of any counter bonds or collateral securities w hich the prin-
cipal debtor has given to the surety, or person, standing in the situ -
ation of a surety, for his indemnity. Such securities are regarded
as trusts for the better security of the debt, and chancery will
compel the execution of the trusts for the benefit of the creditor.
Manrc v. Harrison, i Eq. Cas. .\b. 93, K. 5 ; Curtis v. Tyler, 9
Paige, 432; Wright v. Morlcy, m Ves. 22; Bank of Aitbuni, v.
Throop, 18 John, 505 ; 4 Kent, 307, 6th ed. ; i Story's Eq. §§ 502,
638. This principle covers the case : and the plaintiffs are entitled
to the mortgage which Morgan, the principal debtor, gave to
Flagler, the surety, for his indemnity.

But it is said that Morgan is not a debtor \o the plaintiff's, and
consequently that the relation of principal and surety does not
exist between him and Flagler. It is true that Morgan did not
unite with Flagler in making the note, nor did he come under any

DOBIE VS. IMD. & CAS. CO. 289

Other express oliligation to the plaintiffs. But he was originally a
debtor to the plaintiffs for the price of the land : and although the
plaintiffs afterwards took the note of Flagelr in lieu of the bond
and mortgage of Alorgan, they took it as a security only for the
purchase money, without agreeing to receive it in satisfaction of
the debt. Taking the note of a third person for an existing debt
is not payment, unless the creditor agrees to receive it in payment ;
and I find no such agreement in this case. Morgan is still liable
to the plaintiff's for the purchase money, and nuist of course be
regarded, as the principal debror ; for it is entirely clear, upon the
pleadings and proofs, that l^lagler gave the note at the request, and
as the surety of Morgan, with.out having any personal interest in
the matter. We have then the ordinarv case of creditor, principal
and surety, to whicli the rule in question has been applied ; and the
mortgage which the principal del:itor has given to the suretv nnist
be considered as a trust for the better security of the debt, which
a court of equity will enforce for the benefit of the creditor.

Foster &- Co. under their creditor's bill, took the eft'ects of Flagler
subject to this equity ; and there is no bona fide purchaser in the
case.

I am of opinion that the decree of the supreme court is right,
and should be affirmed.

Decree affirmed.

DoBiE z's. Fidelity & Casualty Co. of Nfav York (1897).
95 Wis. 540 : 70 N. W. 482.

Suit by David Dobie against the Fidelity & Casualty Company
of New York to compel defendant to exonerate plaintiff' from lia-
bility on an appeal l^ond. From a judgment for plaintiff' on the
pleadings, defendant appeals. Affirmed.

One Knute Anderson obtained a judgment against M. C.
Burke and John Burke. The action was for personal injuries.
The Fidelity & Casualty Company was an insurer of the Burkes
against such claims, and was defending the action. It procured
Dobie and Tennis to become sureties on the appeal, and gave them
its own bond in the sum of $7,000 to indemnify them, conditioned
20

290 GUARANTY AND SURETYSHIP.

to "answer for all damages, interest and costs, if any, that shall be
adjudged" against the appellant, and "to save Tennis and Dobie
hannless from all costs and damages on account of their obligation
as sureties." Judgment was against the appellant on the appeal,
and Tennis and Dobie became liable on their undertaking. No
part of the judgment has been paid. The plaintiff brings this
action to compel the defendant, the Fidelity & Casualty Company,
to pay the judgment, and so exonerate the plaintiff from liability.
The plaintiff' had judgment upon the pleadings, according to the
demand of his complaint, and ihe defendant appeals.

Ross, Dzvycr & Hanitch, for appellant.
Thorson & Crazuford, for respondent.

Newman, /. (after stating the facts). The question pre-
sented is whether the complaint states a cause of action] The
action is by a surety to com])el his principal to pay the debt for
which both are liable, for the exoneration of the surety. It is
ultiniatclv the defendant's liability. That party is the principal
debtor, \\ho is ultimately liable for the debt. The question is
whether a smx-t}- can, in equity, compel his principal to exonerate
him from liability , by extinguishing the obligation, without having
first paifl it himself. It seems to be well settled that a surety against
whom a judgment has been rendered may, without making pay-
ment himself, proceed in equity against his principal to subject the
estate of the latter to the pa}-ment of the debt, in exoneration of the
surety. 2 Beach, Ec|. Jur. § 903 ; 3 Pom. Eq. Jur.§ 1417 ; Will. Eq.
Jur. 110: United Xctc Jersey Railroad & Canal Co. v. Long Dock
Co., 38 X. J. E((. 142: Beaver v. Beaver, 23 Pa. St. 167; Gibbs v.
Mennard, 6 Paige, 258; Warner v. Bcardsley, 8 Wend. 194; 7 Am.
& Eng. Enc. Law, 486, cases in note. The judgment of the
superior court of Douglas county is affirmed.

ganyB-**^'*

INDEX.

Acceptance, guarantor entitled to notice of, when, 8, 123.

notice of, when necessary, 61, 120.

when necessary to complete contract, 120.
Accommodation Indorser, breach of warranty, recoiipement, or

counter claim no defense in favor of, 215.
Action^ cause of. accrues as against surety when, 270.

for contribution, against whom, 48.

for contribution arises from implied undertaking, 274,

for indemnity when accrues, 48.

not maintainable on oral promise when, 191.

when lies against principal, promise of third person within
statute, 183.

when none lies against party undertaken for, promise of
third person, within statute, 184.
Adjudication^ against principal, effect upon surety, 241.
Aliquot-part, measure of recovery, 278-279.

basis of determining in actions for contribution, 280-281.
Alteration, of principal's contract, effect on surety, 50, 106, 137,
244, 246.

of bond, when a defense, 251.

of bond by act of legislature, 239.
Another Person, promise to answer for debt of void if not in
writing, 149.

promise to pay debt of, made to creditor, 174.

debt of, oral promise to pay within statute, 132.

debt of, promise to pay, 162-163.

Bank, right of to apply depositor's account to satisfaction of his
debt, 222-4. .17/

absolute owner of money deposited, 222. .oho£

a debtor to depositor, 222. noiioR

Blanks in bond, authoritv to fill, 251. ^ vJilidBif

Bond, form of, 194. ' ' -^^"^ V'^^}'['''^^

form of condition, 248. '''^^^ *5' "'S"^

blanks in, authority to fill, 251. 'l^" '"^"^.^ ^^^"^^"^

alteration of by statute, effect on sur^J^^(^f^^'^'^"^'^'^
alteration of w'hen a defense, 245, 251; '^fcji'"! gamiM-js-oO -
official, right of legislature to alter '^3t/:J<' no'nvdhino'j j

,j^/:)c. ufifjocl ?.3i1'i-!u?. nsriv/
/)«rrf ?.i orto rr^rlv/ io vJilidBrf

292 INDEX.

Bon d — Continued.

signer hound to know conlLiils. unless iMX-vcnlcd by fraudu-
lent device, 199.
for security for public work, statute concerning, function of.

48.

required of contractors for public works, 43.
penalty of. as limit of liability, 55.

Collateral, see promise.

Collection, guaranty of what amounts to, 82.

Composition, of debt secured, affects surety how, 210-211.

Concealment, of material facts ground for invalidating contract,

Condition, of bond, form of, 248.
Consideration, must be proved, 74.

what constitutes, 58.

failure of may Ix* shown by surety, when, 213.

mutual obligations of parties as, 105.

what is sufficient, 111-112.

of guaranty, 58.

whether moral obligation is sufficient, 286-287.

Construction, of guaranty, 58, 106.

rule of, as to wdiether guaranty is for single or continuous
dealing, 88.

relation of parties and circumstances enter into, 88.

to give effect to intention of parties, 24, 136.
Contract, of guaranty collateral, 2.

of suretyship direct, 2.

of surety and guarantor contrasted, 2, 6-8, 22-24, 26-27.

Contractor, for public work, bond required of, 48.
Contribution, measure of recovery in action at law, 280.

when right to accrues, 280.

action for arises from implied undertaking, 272.

action for arises not by force of express contract, 272.

liabilitv for, in action at law% 278.

liability for, suits in equity, 278.

origin of doctrine of, 272.

results from maxim that equality is equity, 272.

co-sureties entitled to, 255.
Co-sureties, indorsers may be, iiitcr-scsc, 275.

contribution between, of equitable, origin, 2^2.

when sureties bound severally are, 255.

liability of when one is insolvent, 258.

INDEX.

293

Creditok, entitled to benefit of collateral securities, when, 288.
dealings of with continuing- partner discharges surety, when,

36-37.
how bound to respect rights and equities of surety, 36.
failure to use money within his control in payment of his

claim, effect of, 223.
diligence required of, 96-97.
must show notice of acceptance, when, 122-123.
failure of, to sue debtor at surety's request, 219.
bound to diligence to exonerate surety, 220.

Debt of another, promise to pay. within the statute, 132, 171, 174.
of another, promise to answer for, 145.
of another, promise to answer for, rules for determininur

what is, 145-146.
of another, promise to answer for not dependent upon form

of expression, 147.
future, guaranty of within statute, 166.
none against principal, none against surety, 207-208.
Debtor, transfer of property to third person in consideration of

agreement of debtor to pay the debt, 157.
Defalcations, future, liability of surety for, 249.
Default of Another, promise to answer for within statute, 182.

Defense, based on absence of liability of principal debtor to cred-
itor, 187-190, 192, 193, 196, 199-200.

based on extinguishment of liability of principal to creditor,
205, 206, 208.

based on principal's right of counter claim against creditor,
211.

based on loss or surrender of securities by creditor, 216.

based on refusal to sue debtor, 219.

based on lack of notice to guarantor of acceptance of guar-
anty, 225.

based on creditor's failure to use money in his control to pay
debt, 221.

based on lack of notice to guarantor of principal's default,
235.

based on alteration of contract, 238, 239, 245.

based on retention of employee after knowledge of his dis-
honesty, 247.

based on fraud of principal, 250, 252.

based on dealings between creditor and co-surety, 254-256.

breach of warranty recoupement or counter-claim not avail-
able as, to accommodation indorser, 213.

294 INDEX.

Demand upon principal when necessary, 21, 22.
Diligence, exercise of by creditor required, when, 96, 97.

of creditor cannot be demanded, when, 103.
Duress a personal defense, 199-200.

to principal will not avoid obligation of surety, 200.

Employee, retention of after knowledge of his dishonesty, 249.
Equities, surety's must be respected, 36.
Exoneration of surety may be compelled, when, 290.

Forbearance, effect of upon surety, 26.

a sutficient consideration, iii.
Fraud of principal towards surety, 251-252.

of principal when no defense to surety, 253.
Future Liability, guaranty of within statute, 166.

Guarantee, neglect of to fix lial)ility of indorser does not dis-
charge guarantor, when, 237.
Guarantor, may limit his liability, 67.

notice to, when necessary, 80.

liability of, distinct from principal's, 94.

engagement of, individual contract, 94.

cannot be sued with his principal, 94.

of collection, obligation of, discharged when, 96.

discharged by laches, when, 97.

of payment, position of that of surety, loi.

of payment contrasted with guarantor of collection, 96.

distinguished from surety, 77-78.

entitled tc notice, when, 123.

entitled to notice of liability within reasonable time after tran-
sactions are closed, ']'j.

contract of, contrasted with surety's, 2.

and surety, difference betw^een, 7.

of payment, 24.

absence of notice to, of acceptance of guaranty, 232.

Guaranty, defined, 93.

special, consideration necessary to support, 66.

special, a trust in the promisee. 66.

special, not assignable, 66.

special, as to persons, 80.

general, 66.

limited, 67.

limited as to amount, 90.

INDEX. 295

•Guaranty — Continued.

continuing, 65, 225.

continuing, what amounts to, 85-86.

continuing, what doe* not amount to, 88.

absohite, defined, 94.

absolute instrument amotmting to, 234.

absoktte, form of, 98.

notice of, when necessary, 78.

of collection, what amoimts to, 83.

of collection distinguished from guaranty of payment, 96.

when obligation matures. 82, 96. ^

for single dealing, forn) of. 87.

construction of, rules governing, 91, 140.

of payment, form of, 92, 98.

of payment defined, 96.

of payment, scope of, 94.

of payment not discharged by principal's failure to take pro-
ceedings against creditor, 236.
nor by neglect to fix liability of indorser, 237.

of payment an undertaking without condition, 236.

of payment distinguished from guaranty of collection, 96.

undertaking of, contrasted with that of surety, iot.

contract of, incomplete without acceptance, 120.

contract of, made onl}' by n.mtual assent of parties, 120.

an offer or proposal, when, 120.

distinguished from indemnity, 153.

not enlarged by construction, 106.

contract of, collateral, 2.

contract of, differs hew from other contracts, 58.

right to revoke, 3.

construction of, 58.

when unaccepted proposal, 230.

when a complete obligation, 230.

and suretyship, distinction in form, 7.

Implication, nothing can be added by way of, 26.
Indemnity, action for, when accrues, 270.

whether moral obligation is sufficient to support promise of,
286.

promise of, must be supported by valid consideration, 287.

securities taken for, trusts, 288.

retiring partner's right to, 36.

distinguished from guaranty, 153.

rmplied promise of, 286.

oral promise for, valid when, [70.

296 iNUKx.

TxDORSERS, liability of infcr-scsc shown by parol. 276.

contrasted with guarantors. 39.
Ixi-AXT, contract of, voidable only at election of. 191.

promise to answer for debt of. kji.

snrety on contract of, liable, 193.
Intkrkst in transaction as attectm^ character of pn>niisr. 145.

JuDGMKXT against principal, liuw far binds sm-etv. 240.

Laijorers, bond for protection of, 53.
Letter of Credit, g-eneral, defined, ('18.

special, defined, 63.
I/fABiLiTV, absience of, of principal deljlc^r lo creditor, 195.

of surety not aflfected by composition of debt, when, 209.

third person must be discharged from, to take promise out
of statute. 186.

penalty named in bond, limit of, 254.
Lunatic, surety on contract of, lialjle. 193.

Married WoM'AN, surety on contract of. liable, 188-189.

contract of. void where not allowed by statute. 287.

promise of. made after discoverture void, when, 287.

promise of, mu.st l)e (in new consideration, 287.
M \ti:rt \i. Mi:x, bond for protection of, 53.

Miscarriage of another, promise to answer for collateral. 133.

meaning of term, 133.
Misconduct of principal, how affects surety, 251, 253.
Moral Odligation as sufficient consideration to support promise

of indemnity, 286.
MuNIC!l'Al.IT^■, surety on obligation of. liable wlien. 197-198.

XoTiCE of acceptance, when necessary, 61.
to guarantor of principal's default. 100.
to guarantor of acceptance of guaranty, 228.
absence of, when defense to giiar.nitor, 234.
necessary, when, 230.
necessary, why, 230.
guarantor entitled to, when, y/, 123.

Om.iGATKJN of surety not avoided ])y duress ui principal, 200.

none implied against surety, 136.
Orae Promi.se to answer for deljt of another, 149.

invalid when debt reniains payable by debtor, 149.

INDEX. 297

Original UNDKKTAKk\G basis of collateral or secondary prom-
ise, 127, 186.

Payment by surety not new consideration, 270.

guaranty of, 24.
Partner retiring, surety when, 36.

retiring cannot give note in partnership name after dissolu-
tion, 35.
retiring entitled to indemnity, 37.
continuing, dealings of creditor with, discharges surety.

when, 37.
continuing bound to indemnify retiring partners, T^y.
signing as principal without authority of firm, 195.
binds co-partners as sureties, when, 195.
Penalty stated in bond limit of liability, 54, 67, 255.
Principal, demand upon, when necessary, 21.

absence of liability of to creditor, defense to surety, 195.

judgment against not res judicata against surety, 240.

compelled to exonerate surety, ^vhen, 290.

irnplied promise of, to indemnify surety, 270.

retention of, in service after knowledge of his dishonesty.

249.
duty of, to exercise good faith toward surety, 249.
fraud on part of, to withhold knowledge of employee's pre-
vious dishonesty, 249.
fraud of, towards surety, 25; 1-253.
Promise, original, when, 127.

original and collateral contrasted, 162, 165, 186.

collateral, within statute, 184.

to indemnify one for becoming guarantor whether or not

within statute, 167.
consideration for, what sufficient, 168.
not within statute when leading object is to benefit promisor,

206.
for reimbursement within statute, 170.
to indemnify one for becoming surety for another, 170.
to pay for goods furnished another, 186.
to answer for debt of another must be made to creditor to be
within statute, 65.
Promissory Note indorsed by third person presumption of liabil-
ity, 39-
indorsement by payee liability of. 38.

Recovery on guaranty of collection, when, 83.
Reformation of bond when descried as against surety, 290.

298 INDEX.

Security required for labor and materials in public works, 43.

Special Promise to answer for debt of another, void if not in

writing, 149.
Stkictissimi Juris, meaning of, 106.

Statute of Frauds, promise to answer for miscarriage of an-
other, within, 133.
joint promise to pay debt of one, 126.
secondary or collateral promises, within, 127.
promises, within, 127.

oral promise to answer for default of another, within, 132.
oral agreement to share commissions and losses, not within,,

promise not within, when, 157.

not applicable to promise of third person who receives money

or property of debtor, 157.
promise to pay for goods to be supplied to third persons, not

within, 176.
promise for reimbursement, within, 171.
applies only to promises made to a person to whom anotlier

is ans-werable, 174.
promise within, unless third person is discharged from lia-
bility, 186.
promise to answer for default of another, within, 149.
promise within, when debt remains payable by debtor. 149.
promise to answer for debt of infant, within, 191.
Statute of Limitations, debt barred as to principal barred as.
to surety, 207-208.
when runs upon surety's claim upon principal debtor, 270.
begins to nm, when, 270.
Statute of Mich., providing security for public works, 43.
Statute of U. S., providing security for public works, 48.

Subrogation, definition of, 263.

not founded upon contract, 263.

the creation of equity, 263.

volunteer or stranger not entitled to, 263.

surety not entitled to, when, 267.
Surety, definition of, 36, T17.

contract of, direct, 2.

contract of, contrasted with guarantor's, 2.

and guarantor, difference between, 7.

discharge of, by change in contract without his consent, lO.

contract of, construction of, 21.

not discharged by delay to sue, 26.

INDKX.

291)

SuRETV — Contimii'd.

retirin,<4 partner, when is, 36.

equities of, must be respected. 36.

liahilily of. co-extensive with principal's. 30.

not Ixnuid unless principal is, 195.

how atfected by alteration of principal's l)on(l, 1}^k).

not released by statutcvry change, 239.

obligation of, not avoided by duress of principal, 200.

how^ affected by principal's loss or surrender of securities.

217.
entitled to benefit of securities taken by creditor, 218.
how affected bv creditor's failure to use money within hi>

control in payment of his claim, 223.
how aft'ected by bank's failure to apply depositor's account

on principal's debt. 223.
released by variation of contract, 247.
how far bound by judgment against prmcipal, 241.
fraud of principal tcnvards. 25r-253.
how affected by misconduct of principal, 251^253.
several obligation of. 255.
liabilitv of, amount stipulated the limit. 255.
discharged, when. 257.
discharged l)y release of princijial, 257.
discharged to what extent by release of co-surety. 258.
quasi right of, to subrogation. 267.
not released bv creditor of bankrupt consenting to conqiosi-

tion, 211.
release of, by change in contract. 50.
contract of. strictly construed, 50.
right of, to indemnitv. 270.
claim of. against principal debtor not barred by hitter's dis

charge in insolvency, 271.
how affected if principal fails to sue, 220.
right of. to expedite proceedings against princii)al, 220.
collateral securities taken Ity, are for benefit of creditor.

when. 288.
reforming instrument as against. 260.
may compel principal to exonerate him. 2c_)o.
entitled to remedies of creditor against princi])al debtor. 272.
entitled to stand in place of creditor. 272.
contrasted with indorser, 39.

undertaking of. contrasted wdth that of guarantor, lot.
when released by act of. parties secured. 105.
entitled to securities held by principal. 282.
contract of. not enlarged by construction. 136.

'600 INDEX.

Surety — Coniinued.

entitled to stand in place of principal creditor on paying the
debt, 285.

concealment of facts will discharge, when, 123.

on bond for public work, liability of, 54.

debt of, barred if debt of principal is barred by statute of lim-
itations, 207.

entitled to notice of employee's dishonesty, 249.
Suretyship^ joint contract indicates, 7.

contract of, when becomes binding, 8.

construction of contract of, 21, 105.

Third Person, promise to pay for goods supplied to, 162.
Variation of surety's risk, 239, 247.

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Astronomy and Director of the Observatory at the University of
Michigan, President of the University of Washington, and Wm. J.
Hussey, Assistant Professor of Astronomy in the Leland Stanford,
Jr. University. 8vo. 294 pages. $3.50.

The determination of the motions of the heavenly bodies is an important problem
in and for itself, and also on account of the influence it has exerted on the develop-
ment of mathematics It has engaged the attention of the greatest mathematicians,
and, in the course of their not altogether successful attempts to solve it, they have
displayed unsurpassed ingenuity. The methods devised by them have proved use-
ful, not only in this problem, but have also largely determined the course of advance
in other branches of mathematics. Analytical mechanics, beginning with Newton,
and receiving a finished clearness from Lagrange, is especially indebted to this
problem, and in turn, analytical mechanics has been so suggestive in method as to
determine largely both the direction and rapidity of the advancement of mathemat-
ical science.

Hence, when it is desired to illustrate the abstract theories of analytical mechan-
ics, the profundity of the mathematics of the problem of the motions of the
heavenly bodies, its powerful influence on the historical development of this
science and finally the dignity of its object, all point to it as most suitable for this
purpose.

This work is intended not merely as an introduction to the special study of
astronomy, but rather for the student of mathematics who desires an insight into the
creations of his masters in this field. The lack of a text-book, giving, within moder-
ate limits and in a strictly scientific manner, the principles of mathematical astron-
omy in their present remarkably simple and lucid form, is undoubtedly the reason
why so many mathematicians extend their knowledge of the solar system but little
beyond Kepler's law. The author has endeavored to meet this need, and at the
same time to produce a book which sliall be so near the present state of the science
as to include recent investigations and to indicate unsettled questions.

Publications of George Wahr, Ann Arbor.

FARRAH DWYER.— Grjcj on the Law of Htisharui and Wife. By
Albert J. Farrah, Dean of the Law Department of the John B.
Stetson University, Deland, Florida, and John W. Dwyer, author of
Cases on Private International Law, and Instructor of Law in the
Department of Law of the University of Michigan. 8vo. 488
pages. Buckram, $2.50.

FLORER. — A Guide for the Study of A'ieh/'s Burg Neideck and von
Jage»iiitin\<: German Syntax. By Warren Washburn Florer, Uni-
versity of Michigan. 88 pages. Pamphlet. 30 cents.

FLORER, ^79/(^//Vrt/ Selections for Beginners in German. With word
list. By Warren Washburn Florer, University of Michigan. Cloth.
88 pages. 40 cents.

FLORER. — Guide for the study of Biblical Selection. Containing questions
for conversation and grammar drill. By Warren Washburn Florer,
University of Michigan. In press.

FLORER.—^/ Guide for the Study of Ileyse's V Arrabbiata. With
Questions for Grammar Review. By Warren W. Florer, University
of Michigan. Pamphlet. 20 pages. 20 cents.

FLORER. — Heyse's L' Arrabbiata. With word list and questions for gram-
mar review. By Warren Washburn Florer, University of Michigan.
Cloth, 80 pages. 35 cents.

FORD.— 77/t' Cranial Nerves. 12 pairs. By C. L. Ford, M.D., late
Professor of Anatomy and Physiology in University of Michigan.
Chart, 25 cents.

FORD. — Classification of the Most Important Muscles of the I/umnn
Body, IVith Qrigin Insertion, .Vervotis Supply and Principal Action
of Each. By C. L. Ford, M.D., late Professor of Anatomy and
Physiology in the University of Michigan. Chart, 50 cents.

FRANCOIS. — Les Aventures Du Dernier .4bencerage Far Chaieaubri-
,iiiU, Edited with Notes and Vocabulary. By Victor E. Francois,
Instructor in French in the University of Michigan. Pamphlet, 35
cents.

GRAY. — Outline of Anatomy. A Guide to the Dissection of the Human
Body, Based on Gray^s Anatomy. By S. M. Yutzy, M. D., Instructor
in Osteology and Demonstrator of Anatomy in the University of
Michigan. 54 pages. Leatherette, 50 cents.

The objects of the outline are to inform the students what structures are found
in each region and where the description of each structure is found in Gray's Ana-
tomy. — Fifteenth edition, dated 1901.

GREENE. — The Action of Materials Under Stress, or Structural Me-
chanics. With examples and problems. By Charles E. Greene,
A.M., M.E., Professor of Civil Engineering in the University of
Michigan. Consulting Engineer: Octavo. Cloth, $3.00.

Contents. — Action of a Piece under Direct Force. Materials. Beams. Tor-
sion. Moments of Inertia. Flexure and Deflection of Simple Beams. Restrained
Beams: Continuous Beams. Pieces under Tension. Compression Pieces:— Col-
umns, Posts and Struts. Safe Working Stresses. Internal Stress: Change of
Form. Rivets: Pins. Envelopes: Boilers, Pipes, Dome. Plate Girder. Earth
Pressure: Retaining Wall: Springs: Plates. Details in Wood and Iron.

Publications of George Wahr, Ann Arbor.

HERDMAN-NAGLER.— ^ Laboratory Manual of Electrotherapeutics.
By William James Ilerdman, Ph.B., M.D., Professor of Diseases of
the Nervous System and Electrotherapeutics, University of Michigan,
and Frank W. Nagler, B.S., Instructor in Electrotherapeutics, Uni-
versity of Michigan. Octavo. Cloth. 163 pages. 55 illustrations.
$1.50.
It has been our experience that the knowledge required by the student of medi-
cine concerning electricity and its relation to animal economy is best acquired Dy
the laboratory method. By that method of instruction each principle is impressed

sitv of Michigan. Every form of electric modality that has any distinctive physio-
logical or therapeutical effect is studied in the laboratory as to its methods of gen-
eration, control and application to the patient. We believe this to be the only
practicable way for imparting the kind of instruction required for the practice of
electrotherapeutics, but in our attempt to develop a naturally progressive and at the
same time complete and consistent course of laboratory instruction we have tound it
a thing of slow growth. . . • , . ■ „„

This laboratory manual is the final result of our various trials and experiences,
and while we do not claim for it either perfection in the arrangement of matter or
completeness in detail, we feel that the time has come for putting our plans in a torm
that will permit for it a wider usefulness as well as gain for it in the intelligent criticism
of the experienced workers to the field which it seeks to cultivate. -i*'rom Pre/ace.

HILDNER-DIEKHOFF.— ^/i'rw'.f Immensee. Edited by Hildner

and Diekhoff, University of Michigan. Cloth. 70 pages. 35

cents.
HILDNER-DIEKHOFF.— Z^^V/rfl'^i'w zu Storms Immensee. Von

Hildner und Diekhoff, University of Michigan. Pamphlet. 16

pages. 15 cents.

HILDNER-DIEKHOFF.— /^r^y/rtg- die Joumalisten. With notes and
questions. By Jonathan Hildner and Tobias Diekhoff, University of
Michigan. Cloth. 174 pages. 60 cents.

YiQ'\N'^\A^.— Directions for Laboratory Work in Physiology for the Use
of Medical Classes. By W. H. Hovi'ell, Ph.D., M.D., Professor of
Physiology and Histology. Pamphlet. 62 pages. 65 cents.

YiXS'&^'R.— Directions for Work in the Histological Laboratory. By G.
Carl Huber, M.D., Assistant Professor of Histology and Embry-
ology, University of Michigan. Third edition, revised and enlarged.
Octavo. 204 pages. Cloth, $1.50.

It is adapted for classes in medical schools and elsewhere where it is desired to
furnish the class with material already prepared for the demonstration of structure
rather than to give instruction in the technique of the laboratory. Provision tor the
latter Is made, however, by the addition of a section of about 50 pages on the meth-
ods for laboratory work. This section includes methods of macerating, hardening
and fixing, decalcifying, impregnation, injecting, embedding, c:aining, and methods
for preparing and staiiving blood preparations. The last is accompanied by an ex-
cellent plate of blood elements. The selection of methods has in the mam been
judicious. The expositions are both clear and concise.-Joumat of Comparative
V^ pitvfilcifixi

In this little book Dr. Huber has given us a model manual of microscopical tech-
nique in the laboratory study of histology. The subject matter is divided into con-
venient chapters, commencing with the cell and cell division (karyokinesis) in plant
and animal life, and gradually developing, by easy stages, the most complex tissues
of the animal and vegetable organism. Between each lesson blank pages are inter-
leaved, to be used by the student for drawing the objects s^en by him with a pencil
or crayon— a most excellent plan as nothing fixes the appearance and characteristics
of objects more firmly on the mind than drawing them, either free-hand or with a
camraa lucida (the former being preferable, as it educates the hand and eye). With
each subject is given the source and origin, the best methods for obtaining and pre-
paring it. and attention is called to the most noteworthy or characteristic points tor
examination.

Publications of George Wahr, Ann Arbor.

The second part of the book is devoted to methods for laboratory work: soften
iiig, hardening, decalcification, etc., of the matter in gross; embedding, sectioning,
staining and mounting, etc. The best stains, with methods of preparing the same,
and, in short, a general formulary for the various reagents, etc., concludes the work,
which is intended, as stated, as an aidt memoire supplementary to a course of lec-
tures on histology.

We congratulate Dr. Huber on the skill with which he has developed the idea,
and the didactic methods which he has employed. Such a book cannot but prove a
great help to both student and teacher, and it should be more widely known — St.
Louis Medical and Suroeon's Journal.

Dr. Carl Ruber's Laboratory Work in Histology is an excellent manual, and if
the medical students of Michigan University are conscientiously put through it they
must be extremely well taught. Dr. Huber puts the methods of embedding, staining,
etc., in a clear tabular form, and gives full practical instructions in all those minute
details which can only be given by a man who has a masterly knowledge of his sub-
ject. The American student, according to the evidence of this textbook, lias the
work of cutting and staining done for him, and has only to mount sections affixed to
coverslips. By this plan he must gain an excellent collection of slides. — British
Medical Journal.

JOHNSON. — Elements of the Law of Negotiable Contracts. By E. F.
Johnson, B.S., LL.M., formerly Professor of Law in the Department
of Law of the University of Michigan. 8vo., 735 pages. Full law
sheep binding. $3.75.

Several years of experience as an instructor has taught the author that the best
method of impressing a principle upon the mind of the student! sto show him a prac-
tical application of it. To remember abstract propositions, without knowing their
application, is indeed difficult for the average student. But when the primary prin-
ciple is once associated in his mind with particular facts illustrating its applica-
tion, it is more easily retained and more rapidly applied to analoi,'ous cases.

It is deemed advisable that the student in the law should be required, during his
course, to master in connection with each general branch of the law, a few well-se-
lected cases which are illustrative of the philosophy of that subject. To require each
student to do this in the larger law schools has been found to be impracticable, ow-
ing to a lack of a sufficient number of copies of individual cases. The only solution
of this difficuhy seems to be to place in the hands of each student a volume contain-
ing the desired cases. In the table of cases will be found many leading cases printed
in black type.— From Preface.

KIRN.— AV/^.o'/,7« a Rational Demand. By Rev. G. J. Kirn, M.A., Ph.D.
230 pages. i2nio. $1.00.

It is really a fascinating theme, particularly to thoughtful and intelligent people.
The chapter on Materialism is alone worth the cost of the book.— Evangelical Mes-
senger.

The style is remarkably clear and terse. — Christian Harvester.

Dr. Kirn has done the cause of religion a great service by writing this book. —
Church Advocate.

The argument is well sustained : every point is met with candor and fairness,
and the conclusions are clear and strong if not \\nan'i\\era.b\e.—Alethodist Protestant.

LEVI-FRANCOIS. — Questions Based on Levi and Francois' Reader
37 pages. Pamphlet. 25 cents.

LEVI-FRANCOIS- — --/ I-'remh Reader for Begiwters, wilh iVoles and
V'ocat'ulayy. By Moritz Levi, Assistant Professor of French, Univer-
sity of Michigan, and Victor E. Francois, Instructor in French, Uni-
versity of Michigan. 12 mo. 261 pages. $1.00.

This reader differs from its numerous predecessors in several respects. First,
being aware that students and teachers in the French as well as in the German de-
partments of high schools and colleges are becoming tired of translating over and
over again the same old fairy tales, the editors have avoided them and selected some
interesting and easy short stories. They have also suppressed the poetic selections
which arc never translated in the classroom. Finally, they have exercised the great-
est care in the gradation of the passages chosen and in the preparation of the vocab-
ulary, every French word being followed not only by its primitive or ordinary mean-
ing, but also by the different English equivalents which the text requires. After
careful examination, we consider this reader as one of the best on the American
market.

Publications of George IVa/ir, Ann Arbor.

LLOYD. — Philosophy of History. An Introihiction to the Philosophical
Study of Politics. By Professor Alfred H. Lloyd, University of
Michigan. i2mo. 250 pages. Cloth, $1.00.

Philosophy of History. — "Professor Lloyd has already outlined his conception
of history in a volume entitled Citizenship and Salvation (1897). The present ex-
position is at the same time more definite and more comprehensive. About a third
of the book is devoted to a philosophic study of the data of history; and this is
followed by an analysis of the social unit, the group, and by a systematic account of
the formula of history as it appears to the philosopher. The last four chapters are
essays in which such topics as "Good and Evil" and "The Great Man" are treated
from the historical point of view which is expounded in the main part of the vol-
ume. In these chapters as well as in the second part of the book acute and valua-
ble comments 011 different phases of historical development abound. The first part
of the volume, however, discussing Time. Causation, the Individual and Nature as
data of history [is the most] valuable." — The Philosophical Review, March, /poo.

"The Philosophy of History is a meritorious attempt to connect the facts of
history with the causes wnich have influenced the social evolution of the human
race. Most writers are satisfied with the visible, immediate and direct causes of

the rise or fall of nations but Professor Lloyd wants us to go deeper

yet, [but] whatever be the mental attitude of the readers with regard

to the positions advocated in the book all will admit that it is written with great
keenness of perception and with a sincere desire to reconcile, so far as possible, all
intellectual and moral differences. If the author has not succeeded in accomplish-
ing the task [of reconciliation], it is because there are differences that can not be
reconciled, even by benevolence and ingenuity combined." — Annals of the Ameri-
can Academy of Political and Social Science, March, igoo.

LYMAN-HALL-GODDARD.— ^/^^<5r^. By Elmer A. Lyman, A.B.,
Edwin C. Goddard, Ph.B., and Arthur G. Hall, B.S., Instructor
in Mathematics, University of Michigan. Octavo. 75 pages. Cloth,
90 cents.

MATTHE\A^S. — Syllabus of Lectures oh Pharmacology and Therapeu-
tics in the University of Michigan. Arranged Especially for the
Use of the Classes Taking the Work in Pharmacology ana 7 kera ■
peutics at the University of Afichigati. By ?. A. Matthews, M.D.,
Assistant in Pharmacy and Therapeutics, University of Michigan.
l2mo. 114 pages. $1.00.

McCANDLESS.— 7rt/;?//rtr Aiialysis of the Law of Real Property,
follozoing Blackstone. Arranged by L. W. McCandless. 19 charts.
Quarto. Cloth, $1.50.

This analysis follows Book II of Blackstone, and will prove a very valuable aid
to students. The critic remembers that in the dim and hoary past when he was
a student himself, he prepared an analysis of Bispam's Equity. He certainly en-
deavored to do complete justice to that learned work and the result was a sheet
some lx-1 (yards) in dimensions. Acting according to the advice of some intimate
friends he hung it up, on a shade roller, but somehow, never could persuade any-
body to read it completely through. In fact, the aforesaid critic was afraid to
attempt it Itself when the " magnum opus " was once finished and the fearful and
wonderful document still remains filed away somewhere among his dusty papers.
This little incident of a past career is mentioned not that we would discourage the
reader of Mr. McCandless's work or in any way compare his learned production with
the superficial synopsis which we had ourselves compiled. It has long been a source
of wonder to us why real estate law has not hitherto been "chartered," for there seems
to be no branch of jurisprudence so well adapted to such a form of presentation.
The author's work gives a bird's eye view of real property principles and as pre-
viously stated will prove of great value to the student, particularly around examina-
•tion time for he can tell at a glance what would otherwise force him to spend much
valuable time in searching through Blackstone. Take it all in all, the author is to
be heartily commended and we would like to see his work used as a text book in
not only the University of Michigan but in all the leading law schools of the country.
For the benefit of them who have not had the pleasure of perusing it we can state
that it is a series of some nineteen large charts each about 2 feet by i^, handsomely
bound so that the entire subject may be embraced in series of sweeping glances. —
Law Journal, N. V.

Publications of George IVahr, Ann Arbor.

MEADER. — Chronological Outline of Roman Literature. By C L
Moader, A.B., Instructor in Latin in University of Michigan
Chart, 25 cents.

MICHIGAN "QQOYi.— The U. of M. Book. A Record of Student Life

and Stiidiiit Organizations in the Uniz'crsity of Michigan. Articles
contributed by members of the Faculty and by prominent Alumni.
Si. 50.

MONTGOMERY-SMITH.— Zrt^^rrt/^ry Manual of Elementary Chetn-
tsiiy. liy Jabc/ Montgomery, Ph.D., Professor of Natural Science,
Ann Arbor High School, and Roy B. Smith, Assistant Profes-
sor in Chemical Laboratory, Ann Arbor High School. 12 mo. 150
pages. Cloth, $1.00.

This Work is intended as a laboratory guide to be used in connection with a good
text-book or course of lectures, and in its arrangement and scope it is based upon
the practical experience of two instructors in the Ann Arbor High School. It is
therefore restricted to such work as may be done by the average high school pupil.
The experiments which are directed are given more to enable the student to compre-
hend the methods of analytical chemistry than to acquire particular proficiency in
the work of chemical analysis. The work is characterized by minuteness of explan-
ation, a feature which will be appreciated by the beginner. — Pharmaceutical tira

NETTO. — T/te Theory of Substitutions and its Application to Algebra.
By Dr. Eugene Netto, Professor of Mathematics in the University of
Giessen. Revised by the author and translated with his permission,
by F. N. Cole, Ph.D., formerly Assistant Professor of Mathematics
in the University of Michigan, Professor of Mathematics, Columbia
University. 8 vo. 301 pages. Cloth. $3.00.

NOVY. — Laboratory Work in Physiological Chemistry. By Frederick G.
Novy, Sc.D., M.D., Junior Professor of Hygiene and Physiological
Chemistry, University of Michigan. Second edition, revised and
enlarged. With frontispiece and 24 illustrations. Octavo. Cloth,
$2.00.

This book is designed for directing laboratory work of medical students, and in
showing them how to study the physics and physiology of the digestive functions of
the blood, the urine and other substances wliich the body contains normally, or
which it speedily eliminates as effete material. The second edition has appeared
within a very short time after the publication of the first. The first chapters deal
with the facts, the carbohydrates and proieids. Then follow others upon the saliva,
the gastric juice, the pancreatic secretion, the bile, blood, milk, and urine, while the
closing chapter deals with a list of reagents.

While the book is manifestly designed for the use of Dr. Novy's own students, we
doubt not that other teachers will find it a valuable aid in their work. At the close
of the volume are a number of illustrations of the various sedimentary substances
found in the urine, taken from the work of von Jaksch. — The ThtrapeuUc Gazette

This book, although now in its second edition, is practically unknown to British
readers. Up to the present, anyone wishing to find out how a particular analytical
method in physiological chemistry ought to be carried out, had of necessity to refer
to a German text-book. This comparatively small book— for it only covers some
three hundred pages — gives as good a general account of ordinary laboratory methods
as any teacher or student could desire. Although the author refers in his preface to
help derived from the works of Salkowski, Hauunarsten and others, it is but fair to
say that the book has undoubtedly been written by one who has worked out the
methods and knows the importance of exact practical details— Kdi»l^ury?i 3/ed.
Jour., Scotland,

Physiological chemistry is one of the most important studies of the medical curri-
culum. The cultivation of this field has until recently been possible to but few.
The rapid development of this department of science within a few years past has
thrown much and needed light upon physiological processes. It is from this quarter
and from bacteriological investigations that progress must chiefly be expected. The
rapid growth of this branch of cliemistry is attended by another result. It necessi-
tates the frequent revision of text-books. The present edition of Dr. Novy's valu-
able book is almost wholly re-written. It is representative of the present state of

Publications of George IVahr, Ann Arbor.

knowledge and is replete with information of value alike to student and practitioner..
Few are better prepared to write sucli a book than Dr. Novy, who has himself done
much original work in this field.— T/ie Medical BuUetin. Phtladflphia.

This is a greatly enlarged edition of Dr. Novy's work on Physiological Chemistry,
and contains a large amount of new material not found in the former edition. It is
designed as a text-book and guide for students in experimental work in the labora-
tory, and does not therefore cover the same ground as the works of Gamgee, Lea,
and other authors of books on physiological chemistry. As a laboratory guide it
should be adopted by our medical colleges throughout the country, because it is an
American production, contains only such directions and descriptions as have been
verified by actual practice with students, and because it is clear, concise and definite
in all its statements. Its first ten chapters treat of fats, carbohydrates, proteins,
saliva, gastric juice pancreatic secretion, bile, blood, milk, and urine. Chapter xi.
is devoted to the quantitative analysis of urine, milk, gastric juice, and blood, while-
chapter xii. gives tables for examination of urine and a list of reagents. ^ — A.m,
Medico- Surgical Bulletin, iV. Y.

NOVY. — Laborato-y Work in Bacteriology. By Frederick G. Novy, Sc.
I)., M.D., Junior Professor of Hygiene and Physiological Chemistry,
University of Michigan. Second edition, entirely re-written and
enlarged, 563 pages. Octavo. $3.00.

As a teacher of bacteriology, the author has had extensive experience, and the
second edition of his book will be highly prized by students for its practical service
and thoroughness. The methods of investigation described are mainly those which
have been employed in the hygienic laboratory or the University of Michigan, and
they have stood the test of practical demonstration and usefulness. One of the
most interesting parts of the book is the chapter on the chemistry of bacteria, and
the general reader cannot fail to obtain from it a clear understanding of the com-
plex changes induced by these minute organisms. The functions of the various
ferments are also very cleverly discussed. An enumeration of the chapter headings
will serve to show the scope of the work: Form and Classification of Bacteria; Size
and Structure of Bacterial Cell ; Life History of Bacteria ; Environment of Bacteria ;
Chemistry of Bacteria; the Microscope; Cultivation of Bacteria; Non-Pathogenic
Bacteria; Bouillon, Agar, Milk and Modified Media, the Incubator and Accessories;
Relation of Bacteria to Disease — Methods of Infection and Examination; Patho-
genic Bacteria; Yeasts, Moulds and Streptotrices; Examination of Water, Soil and
Air; Special Methods of Work. To the latter subject, two chapters are devoted,
in which are very fully outlined various special methods of value to advanced
siadent?,.— Pharmaceutical Era, N. Y.

This book is intended for the student and seems admirably to subserve the pur-
pose for which it has been written. The arrangement of the subject-matter con-
forms closelv to that followed in the Hygienic Laboratory of the University of
Michigan. Those methods only are described that have withstood the test of prac-
tical experience. Many of the methods and some of the apparatus are original.
Illustrations of bacteria and descriptions of cultural peculiarities have been
omitted, inasmuch as the student is expected to learn these from personal observa-
tion. The work is divided into 15 chapters under the following headings : Form and
classification of bacteria; size and structure of the bacterial cell ; the life-histoiy of
bacteria; the environment of bacteria; the chemistry of bacteria; ihe microscope;
the hanging drop; simple staining; gelatin and potato media; cultivation of bac-
teria; the nonpathogenic bacteria; bouillon, agar, milk, and modified media; the
incubator and accessories; relation of bacteria to disease, methods of infection and
examination; the pathogenic bacteria; yeasts, moulds, and streptothrices : examina-
tion of water, soil and air; special metQods of vioiV..— Philadelphia Medical
Journal.

REED-GUTHE. — A Alanual of Physical Measurements. By John O.
Keed, Junior Professor of Physics, University of Michigan, and
Karl E. Guthe, Assistant Professor of Physics, University of Michi-
gan. 185 pages, 89 illustrations: Octavo. $1.50.

REED. — College Physics. For Students in Academies and Colleges.
Physics I. Mechanics — Sound — Light. By John O. Reed, Junior
Professor of Physics University of Michigan. Octavo. Cloth. 300
pages. Si. 50.

ROOD.— //;//('rA?«/ English Statutes. Edited by John R. Rood, Uni-
versity of Michigan. 8vo. 24 pages. Imitation leather, 25 cents.

Publications of George Wahr, Ann Arbor.

This pamphlet contains the Statute of Frauds (29 Car. II. c. 3) complete, also
toid Campbell's Act, ihe Mandamus Act of q Anne, and the Victorian Wills Act.
The intention is to furnish students a copy of all those important EuKlish statutes
which have been generally re-enacted in the Americau statutes and are therefore
prominent in his courses of study.

ROOD. — On Attaclniievts, Garuishnwnts, Judnnioits, and Executions. By
John K. Rood, University of Michigan. The table of contents,
table of cases, and text cover 183 pages. The leading and illustra-
tive cases and notes cover 514 pages. A very full index has been
compressed into 36 pages. Total 733 pages. The two books
bound as one, in buckram, for one price. $3.00. Octavo.

The text is not claimed to be exhaustive upon any point. To make it so would
defeat the very purpose for which it was written r» tree is not complete without all
its foliage, but the outline of the branches cannot be clearly seen till the leaves have
fallen. In the present discussion, details have been similarly omitted so that the
more important matters can be seen. Anson on Contracts may be said to cover all the
matters treated in the elaborate works on particular contracts, such as sales, agency,
partnership, suretyship, deeds, mortgages, etc In like manner this manual is
intended to explain all the matters covered by the extensive treatises on jurisdiction,
judgments, res judicata, attachment, garnishment, and executions. It is not de-
signed to trespass on the field occupied by any of these books, but to give what
none of them do or can — a clear outline of the whole, without that cloud of details
and the confusing review of inconsistent decisions upon them, which the writer of a
complete text must give. In this way, it is hoped that a compreliensive view of
broad fundamental principles may be obtained, with a clear vision of the relations
between each part and all the others, and of the successive steps in each pro-
ceeding from beginning to end.

SOLIS. — 77/1? Diagnosis of Diseases of the Cord, Location of Lesions.
By Dr. Grasset. Translated by Jeanne C. Solis, M.I)., Demon-
strator of Nervous Diseases and Electrothereapeutics in the Uni-
versity of Michigan. gS pages. Cloth, 65 cents.

STRUMPELL. — Short Guide for the Clinical Examination of Patients.
Co:n[)iled for the Practical Students of the Clinic, by Professor Dr.
Adolf Striimpell, Director of the Medical Clinic in Erlanijen. Trans-
lated by permission from the third German edition, by Jos. L. Abt.
Cloth, 39 pages, 35 cents.

Preface to the Second Edition. — The second edition of this book has been
improved by me in several parts, and particularly the sections treating of the exam-
ination of the stomach and nervous system have been slightly extended. The author
trusts that the book may also fulfill its purpose in the fuiure in assisting the student
to learn a systematic examination of the patient, and to impress on him the most
important reijiiisite means and methods.

SUNDERLAND. — (>«<? Upward Look Each Day. Poems of Hope ana
Faith. Selected by J. T. Sunderland. Third Edition, 16 mo
White Binding. 30 cents; Cloth, 40 cents; Full morocco, 75 cents.

SUNDERLAND— G'/-rt;«.y of Gold. Some Thoughts and a Brief Prayer
Ear Each Day of the Months. Designed as Daily Llelps in the
Higher Life. Compiled by J. T. Sunderland. White Binding, 35
cents.

WARTHIN.— /"rfffZ/Vrt/ Pathology for Students and Physicians. A
Manual of Laboratory and Post-Mortem Technic, Designed Espe-
cially for the Use of Junior and Senior Students in Pathology at
the University of Michigan. By .Mdred Scott Warthin, Ph.D., M.
D., Instructor in Pathology, University of Michigan. Octavo. 234
pages. Cloth, $1.50.

We have carefully examined this book, and our advice to every student and prac-
•titioner of medicine is— buy it. You will never regret having invested your money in

Publications of Geori:;e Wahr, Ami Arbor.

and you will acquire such a large fund of information that the study of pathology
will become a pleasure instead of the drudgery which it so unfortunately seems to
be in many cases.

Part 1. of this book, embracing some 103 pages, deals with the materials, which
includes the proper examination and notation of the gross changes which have
occurred in every part of the body. In fact it is a complete expos6 of what a com-
plete and accurate autopsy should be, the observance of which is oftener followed
in the breach than in the actuality. Part II., which includes 134 pages, deals with
the treatment of the material. This is a very itnportant part of the work, as it gives
explicit directions in regard to the instruments to use, stains and staining methods,
drawing, the preservation of specimens, nardening methods, in fact, of all those
technical points connected with practical pathological microscopy. The examina-
tion of fresh speciinens. injections, methods fixing specimens as well as special
staining methods are taken up. In fact, space forbids us to give the entire, which'
are most valuable in every detail.— yt. I/juw Medical and Suryical Journal.

WARTHIN.— .-^ Blank Biwk for Autopsy Protocols. Second Edition.

By Aldred Scott VVarthin, M.D., Ph.D., Assistant Professor of

Pathology in the University of Michigan. Bound in Full Canvass,

50 cents.

The medical student at the University of Michigan is expected to attend twenty
autopsies during the last two years of his studies, and this book is designed to
facilitate the keeping of a careful protocol, which he is required to make in every
case. The book is of a convenient size and can accommodate the autopsy protocols
of ten cases. Each autopsy is allowed ten pages, carefully ruled for the various
organs.

WATSON. — Tables for the Calculation of Simple or Compound Inte7 est
and Discount and the Averaging of Accounts. The Values of
Annuities .^ Leases, Interest in Estates and the Accumulations and
Values of Investments at Simple or Compound Interest for all Rates
and Periods ; also Tables for the Conversion of Securities and Value
of Stocks and Bonds. With full Explanation for Use. By James
C. Watson, Ph.D., LL.D. Quarto. Cloth, $2.50.

A book most valuable to bankers, brokers, trustees, guardians, judges, lawyers,
accountants, and all concerned in the computation of interest, the division and set-
lement of estates, the negotiation of securities, or the borrowing and lending of
money, is the above work of the late Professor James C. Watson, formerly Director
of the Observatories and Professor of Astronomy at the Universities of Michigan
and Wisconsin, and Actuary of the Michigan Mutual Life Insurance Company.

It contains, in addition to the usual tables for the calculation of simi^le or com-
pound interest and discount, many tables of remarkable value, not found elsewhere,
for the averaging of accoutn-, the values of annuities, leases, interests in estates,
and the accumulations and values of investments; also tables for the conversion of
securities, and the values of stocks and bonds.

There are also given very full and clear explanations of the principles involved in
financial transactions, and a great variety of miscellaneous examples are worked
out in detail to illustrate the problems arising in interest, discount, partial payments,
averaging of accounts, present values, annuities of different kinds, annual payments
for a future expectation (as in life insurance), or for a sinking fund, conversion of
securities, values of stocks and bonds, and life interests.

This book was issued from the press under the author's careful supervision.
Professor Watson was noted for his clear insight into problems involving compula-
tions, and also for his wonderful ability in presenting the method of solution of such
problems in a plain and simple manner. The varied array of practical examples
given in connect on with his "Table" shows these facts in a remarkable manner.
This book provides, for those least expert in calculations, the means of avoiding
mistakes likely to occur ; and for the man engrossed in the cares of business, the
means of making for himself, with entire accuracy, the calculation which he may
need, at the moment when it is needed.

WRENTMORE-GOULDING.--.'/ Text-Book of Elementary Mechan-
ical Dra7c>iiig for Use i)i Office or School. By Clarence G. Wrent-
morc, B.S., C.E., and Herbert J. Goulding, B.S., M.E., Instructors
in Descriptive Geometry and Drawing at the University of Michigan.
Quarto. 109 pages and 165 cuts. $1.00.

This book is intended for a beginners course in Elementary Mechanical Drawing
for the office and school. Illustrations have not been spared, and the explanations-

Publications of Gcory;e IVahr, Ann Arbor.

have been made in a clear and concise manner for the purpose of bringing the stu-
dent to the desired results by the shortest route consistent with the imparting of an
accurate knowledge of the subject.

The first chapter is devoted to Materials and Instruments; the second chapter,
Mechanical Construction; third chapter, Penciling. Inking, Tinting; fourth chap-
ter. Linear Perspective; fifth chapter, Teeth of Gears.

WRENTMORE.— /Yrtw Alphabets for Offiice and SJiooL Sriected by
C. G. Wrcntniore, B.S., C.E., Instructor in Descriptive Geometry
and Drawing, University of Michigan. Oblong. 19 plates. Half
leather, 75 cents.

REV. J. T. \0\}liQ, —'' Mormonism: Its Origin, Doctrines, and

Dan^^c'?-s.^' Paniphlet. 72 pages. 25 cents.

This brochure of seventy pages in paper covers is a sharp attack on the Mormon
system, showing iliat its beginnings were in fraud and villainy, that its doctrines
are debasing, and that its continuance in the United States is a political and reli-
gious menace. If Mormonism is one-tenih as bad as this booklet represents, the
marvel is that the viper life was not crushed out long ago. — The Standard. Chicago.

Souvenir of the University of Michigan, Ann Arbor. Containing 38
]>hoto-gravures of President James B. Angell, prominent University
Buildings, Fraternity Houses, Churches, Views of Ann Arbor, Etc.,
I-"tc. Done up in blue silk cloth binding. Price, 50 cents, postpaid.

Physical Laboratory Note Book. — A .Vote Book for the Physical Lab-
i^ratory. Designed to be used in connection with any Physical
Laboratory Manual. Contains full directions for keeping a Physical
Laboratory Note Book. 112 pages of excellent ledger writing paper,
ruled in cross sections, Metric System, size 7x9^ inches. Bound in
full canvass, leather corners. Price, by mail, 30 cents. Special
prices to Schools furnished on application.

Botanical Laboratory Note Book. — A Note Book for the Botanical Lab-
oratory. 200 pages of best writing paper, ruled with top margins.
Pocket on inside of front cover for drawing cards. Bound in sub-
stantial cloth cover and leather back. Size 6xg^. Price, by mail,
35 cents. Special prices to schools furnished on application.

Engineering Laboratory Note Book. — A Note Book for the Engineering
Laboratory, University of Michigan. Full sheep binding. Size
5 j4 X 8. Contains 200 pages. (With general directions. Cross sec-
tion ruled). Price 75 cents.

"Field Engineering Note Book, Surveying. — 200 pages. Cross section
ruled. Full .Sheep binding, 50 cents.

jjjQgjy K. Carter

LAW LIBRARY

UNIVERSITY OF CALIFORNIA

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