'jtfoosa. ■-J-'-'-L' ' ^a^cacz i+CO^JrvX)t**X!XDi fit.^ifSfifi:iti$f THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW X- /) %t'^' / -^ a^ifUA A -;/^-'-^ ^^^ J^~J^^ ^ cx r-^ lAyO*-^tA /J .^vV^ yC'C-t^'^i- ^- t ^ k^ ^ o L 7 i. ~h >- c ,£, / / /? /, 'Tf^t/cij^'L'/i "-C-oC-^ J n P\il^<.^f /W^-^o^o-^^C-^ -^ U^K \^ u --^ 7 ir iS~ L >^-. /:; ^/ ru ^^Z^t^ <-y^i C^^<^^ -41 / Kj^n~<^^^<^^ 9 << v^-^VIkAA-^ CASES ON 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. Copyright, 1902 By GEORGE WAHK T 1902. 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. VI 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. ON 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. 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. 23 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. l^ 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' 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 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, ierformance 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. 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. 87 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 >3 £? 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. 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 jl)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 ridi 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(.-mplatcun 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 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. 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 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 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 15 210 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. 4rot.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 e 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 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. ' 19 274 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. f\ LIST OF BOOKS published by Publisher and Bookseller to the University of Michigan, Ann Arbor. Any book in this list will be sent, carriage free, to any address in the world on receipt of price named. ANATOMY.— Ozd/ines of Anatomy, A Guide to the Dissection of the Human Body. Based on a Text-Book of Anatomy. By American Authors. 54 pages. Leatherette, 50 cents. The objects of this outline are to inform the student what structure are found in each region and where the description of each structure is found in American Text- Book of Anatomy. BOWEN. — A Teachers'' Course in Physical Training. By Wilbur P. Bowen, Director of Physical Training, Michigan State Normal Col- lege. A brief study of the fundamental principles of gymnastic training, designed for Teachers of the Public Schools. 183 pages. 43 illustrations. Cloth, $1.00. CHEEVER. — Select Methods in Inorganic Quantitative Analysis. By Byron W. Cheever, A.M., M.D., late Acting Professor of Metal- lurgy in the University of Michigan. Revised and enlarged by Frank Clemes Smith, Professor of Geology, Mining and Metallurgy in the State School of Mines, Rapid City, S. D. Parts I. and II. Third edition. i2nio. $1.75. The first part of this book, as indicated by the title, consists of Laboratory Notes for a Beginner's Course in Quantitative Analysis. It considers the subjects of Gravimetric and Volumetric Analysis, for beginners, by means of the chemical analysis of a set of substances, properly numbered, in each case giving the methods to be followed in such analysis; also the methods for calculating and preparing volumetric standard solutions, generally following the course offered by Professor Cheever to his students. It also considers the methods for the determination of the specific gravities of various liquids and solids. Although a number of the analyses contained in Part I. may be of only approxi- mate accuracy, and of small commercial value, such are yet included with a special purpose, to wit:— that they may supply the student with a wider range of work and a greater diversity of chemical manipulation. This was Professor Cheever's idea, and it is certainly a good one, especially since, in most cases, the work of the begin- ner simply serves to emphasize the necessity of careful scrutiny of details and methods for practical work in the future. Part I. is offered, then, for the use of schools and colleges, and it is intended to supply a'source of elementary information upon the subject of Quantitative Chemi- cal Analysis rarely offered in such form in works upon that subject.— Preface. The author was for many years Professor of Metallurgy in the University of Michigan, and the methods here presented are those mostly offered by hina to his students. As a beginner's book in quantitative analysis, it will be found eminently practical, and it can be honestly recommended to the student who desires a source of elementary information upon this branch of applied science. The book is divided into two parts, the first consisting of laboratory notes for beginners. The subjects of gravimetric and volumetric analysis are considered by means of the chemical analysis of a set of substances, properly numbered, in each case giving the methods to be followed in such analysis, and also the methods of calculating and preparing volumetric standard solutions, etc. Methods for the determination of specific gravities of various liquids and solids are also considered. Part II. contains a number of select methods in inorganic quantitative analysis, such as the analysis of limestone, iron ores, manganese ores, steel, the analysis of coal, water, mineral phosphates, smelting ores, lead slags, copper, arsenic, bismuth, etc. A chapter on reagents concludes the work. — P/iarmcMJeuttcal tlra. CLASSEN -HARRIMAN.—()?/rt«//A7//T'^ Analysis. By Alexender Classen, Director of the Laboratory of Inorganic Chemistry and Electro Chemistry in the Royal Technical School, Aachen. Author- ized Translation from the Fifth German Edition, with an Appendix Publications of George Wahr, Ann Arbor. on the Qualitative Analysis of Minerals, Ores, Slags, Metals, Alloys, Ktc, Including the Rare Elements, by Norman F. llarriman. Assist- ant 'in Chemistry in the University of Michigan. 79 Illustrations. Handsomely bound in half leather, S4.00. "QQiZVi. — Outlines of Case Taking as Used in the Medical Clinic of the Uni- versity of Michigan. By George Dock, A. M., M. D. Professor of Medicine, University of Michigan. 32 pages. Cloth, 25 cents. D • OOGE. —//«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 LOS ANGELES IlijJ; SOUTHERN REGIONAL UBR/SRYrAriliTY ^^ 000 718 212 ■noaoag^: