учебный год 2023 / Child, Handbook of the law of suretyship and guaranty

damages only for a breach of his contract, the measure of damages, however, being determined by the amount due upon the note which the principal failed to pay; so that, practically, when .the object of the contract is the payment of money, the liability of a surety and of a guarantor is almost the same, the chief distinction being in the remedy for a breach of the contract. The surety would be compelled to pay the note. The guarantor would be compelled to pay damages because the principal did not pay, the amount of damages being equal to the amount due upon the note.

DDTDI'OTIOl!fSBETWEEl!f A 811RETY PROPER Al!fD Al!f

DIDORSER.

18. A •lD'etJ' proper b not eDtitled to haTe dem.&Dd made u-p- - the principal at maturit7 of the debt, nor to notice of the principal'• default. He la Uable upon the original oontract. AD indoner makes an iD.depend• ent contraet, which entitles him to have demand made upon the principal at maturltJ', and to notice of the principal'• default.

The distinctions between a surety in the narrow sense and a regular indorser of a negotiable instrument are of considerable importance, as an indorser makes a conditional contract implied by law," which entitles him to have demand made upon the principal at maturity of the debt and to be given notice of the default of the principal ; 11 otherwise, he is discharged from all liability, both on the instrument and upon the original consideration. A surety, however, is liable upon his original contract along with the principal. He is not entitled to have demand made upon the principal, nor to notice." It is his debt, and he must ascertain for himself whether it has been paid.

OLASSIFIOATIOK OF GtJABA.KTIEB.

23.Guazoantiea are claaaUI.ed - followa1

(a)o-tmahaa or OpeD, aDd KoDcoDtmublc or Liaited.

(b)Abaolute, OoDclltioDal, aDd OoDtillceDt.

(c)GeDeral aDd Special.

(d)ReYocable aDd lrreyocable.ee

(e)Commercial aDd KoDcommercial.

24.A coDtiD.umc OS' opeD guar&Jlt7 b oDe which ooyen a

oourae of dealhag for &Jl iDdebite time, or coDtem• platea a IIUcceaaloD of orecllta.

25. A limited OS'. DODCODtinumr; gua:r&Jlty cOYer• a aillr;le tra.D.aa.otioD, aDd b tempora:1'7.

26. All abaolute cuar-tJ' b &D unquaUfled prombe that the principal will pa7 or perform.

27. A coDclltiollal cuar-tJ' b oDe which require• the performaDce of aome condltioD b7 the creclltor before the eu&r&Jltor will become Hable.

28. A contiDr;ent cuar-tJ' Ia oDe ill whlch the cua:r-tor will Dot be Hable, except up - the happeniDc OS' Dot hap• pellillc of aome e"VcDt.

29. A r;eneral paranty b oDe addreaaed to the public, eDtl• tlinr; _,. peraoD to act up - it.

30. A apecial guaranty Ia one addreaaed to a particular peraoD or peraoDa.

31. A reYocable guaraDt,. Ia one which O&D be termillated b7 the guar&Dtor without the conaeDt of the other party.

32. AD irreYocable guar&Dt,. b one which caDDot be teraiDated b7 the cuar-tor without the coDaeDt of the other party.

33. A commercial gua:raDt7 Ia oDe whlch relate• to trade.

341. A DODcommercial guar&Dt,. b oDe whlch doea Dot pertam to trade.

As will be seen from the above, guaranties are capable of numerous classifications, and the rights and liabilities of the parties to them differ accordingly.

Guaranties may extend to past or to future dealings, or to both. If the object of the guaranty is to enable the principal to have credit over an extended time, and to cover sue-

u NATIONAL EAGLE BANK v. HUNT, 16 R. I. 148, 13 Atl. 115.

Filing Official Bond.

Sometimes a statute requires that the bond of a public officer shall be filed within a certain time, and provides that the office shall be deemed vacant if the bond has not been filed within that time. Such statutory provisions, however, are regarded as directory merely, ar.d not mandatory, and default as to the time of filing may be waived by the authorities, and sureties upon bonds filed after the time specified would be nevertheless liable.11

SIGl!I'IKG ON OOIC'DITIOIC'.

4.2. DeUTeJ.7 of - iD•tnuaent, whloh ha• been dped 1J)' a •uret7 on condition, and the condition ha• not beea CJOmpUed with, will bind the nret;r if the obUgee o:r c:redito:r haTe no notice, actaal or co..truotiTe, of •nch oondition.

IC'OTIOE OF OOIC'DITIONS.

4.3.Oon.t:ructiye notice a:ri•e-

(a)Where deUTeJ.7 b made h7 a •t:raDge:r.

(b)Where the wt:rument b iDClomplete upon It• face.

One of the defenses which is frequently made by a surety is that he signed the instrument on conditions which never were complied with. If the creditor or obligee have notice of these conditions, he cannot hold the surety.n This notice

u City ot Chicago v. Gage, 95 Ill. 593, 35 Am. Rep. 182; State, to Use ot Mayor, etc., of Town of Peru, v. Porter, 7 Ind. 204; State ex rei. Attorney General v. Churchill, 41 Mo. 41; People v. Holley, 12 Wend. (N. Y.) 481.

u Evans v. Daughtry, 84 Ala. 68, 4 South. 502; Crawford v. Foster, 6 Ga. 202, 50 Am. Dec. 327; Belleville Sav. Bank v. Bornman, 124 Ill. 200, 16 N. E. 210; Barber v. Ruggles, 87 S. W. 785, 27 Ky. Law Rep. 1077: Clements v. Cassllly, 4 La. Ann. 880; Sebool Dlst. No. 80 v. Lapping (Minn. 1907) 110 N. W. 849; Golf v. Bankston. 85 Miss. 518; Hill v. Sweetser, 5 N. H. 168; Bronson v. Noyes, 7 Wend. (N. Y.) 188; Cowan v. Baird, 77 N. C. 201; Miller v. Stem, 12 Pa. 888; Smith v. Doak, 8 Tex. 215; Fletcher v. Austin, 11 Vt. 447, 34 Am. Dec. 698; Klng v. Smith, 2 Leigh (Va.) 157; United States v. Hammond, 4 Blsa. 283, Fed. cas. No. 15,29'2· 40 Cent. Dlg. col. 1682.

of suretyship, the consideration is of the latter kind. A surety, for illustration, who reluctantly signs a promissory note for the accommodation of his friend, may be compelled to pay it, although he has never received one cent of the money for which the note was given, and, if the principal be insolvent, the surety may have no practical means of recovering the amount paid. The consideration for the contract of suretyship is clearly no benefit received by the surety; but the payee of the note would not have parted with his money to the principal had he not been given the promise of the surety, and the consideration is that the creditor has suffered the disadvantage of having parted with his money.111 Although, as above stated, a consideration is not necessary in a sealed instrument, and a surety who has become a party to a deed will not be al-

Conover v. Stillwell, 34 N. J. Law, M; UNION BANK OF LOUISI· ANA v. COSTER'S EX'RS, 3 N. Y. 203, 53 Am. Dec. 280; Pennsylvania Coal Co. v. Blake, 85 N. Y. 226; BALLARD v. BURTON, 64 Vt. 387, 24 Atl. 769, 16 L. R. A. 664; Colgin v. Henley, 6 Leigh (Ya.) 85. Thls rule Is sometimes worded that the consideration moving to the principal Is sufficient to support the contract of the surety. Kennedy & Shaw Lumber Co. v. s. S. Co., 123 Cal. 584, 56 Pac. 4.57; Gay v. Mott, 43 Ga. 252; Hlppach v. Makeever, 166 Ill. 136, 46 N. E. 790; Favorite v. Stidham, 84 Ind. 423; Winans v. Gibbs, 48 Kan. 777, 30 Pac. 163; Union Bank of Louisiana v. Beatty, 10 La. Ann. 378; True v. Harding, 12 Me. (3 Fairf.) 193; Heyman v. Dooley, 77 Md. 1G2, 26 Atl. 117, 20 L. R. A. 257; Lennox v. MUrphy, 171 Mass. 370, 50 N. E. 644; D. M. Osborne & Co. v. Gullikson, 64 Minn. 218, 66 N. W. 965 ; Wren v. Pearce, 4 Smedes & M. (Miss.) 91 ; Robertson v. Findley, 31 Mo. 384; Savage v. Fox, 60 N. H. 17; McNaught v. McClaughry, 42 N. Y. 22, 1 Am. Rep. 487; Erie Co. Sav. Bank v.

v. Moore, 3 McLean, 387, Fed. Cas. No. 1,202.

111 Parkhurst v. Vall, 73 Ill. 343; Clopton v. Hall, 51 Miss. 482; McNaught v. McClaughry, 42 N. Y. 22, 1 Am. Rep. 487; Green v. Thornton, 49 N.C. 230; UNDERWOOD v. STANEY,l Cases In Chan. 77. The same rule applies In the case of a guaranty given at the tlme a note Is transferred. Worden v. Salter, 90 Ill. 160; Gllllghan v. Boardman, 29 Me. (16 Shep.) 79. Or a guaranty of the payment of goods sold. GIBBS v. BLANCHARD, 15 Mich. 292; Lamb v. Briggs, 22 Neb. 138, 34 N. W. 217; Beakes v. Da Cunha, 126 N. Y. 293, 27 N. E. 251, atl\nnlng 58 Hun, 609, 12 N. Y. Supp. 351; Young v. Brown, 53 Wis. 333, 10 N. W. 394.

Contracts of suretyship, like contracts in general, may be entered into by a surety through an agent, and the agency may be established in the same manner as any other agency. Generally, the authority need not be in writing. Neither the creditor nor the principal can act as agent for the surety.su

Scope of Authority.

An agent may have express authority, or it may be implied in some cases; but, in any event, he must keep strictly within the scope of his authority.sn Authority may be implied from previous course of dealing. Where the signature of a surety is followed by descriptive words, such as "cashier," the obligation will be binding upon him personally, unless he shows that he had authority to bind a person for whom he was acting.u7

Ratification.

The general rules of agency in regard to ratification apply in contracts of suretyship.u 8 Ratification may be inferred from acts; ue but the burden is ·upon the creditor to prove ratification.

Partners as Agents of the Firm.

The power of a partner to bind his copartners is very similar to that of an officer of a corporation to bind the corporation. The act must be done in the course of the finn busi-

tu Robinson v. Garth. 6 Ala. 204, 41 Am. Dec. 47; Ennis v. Waller, 3 Blackf. (Ind.) 472; Bent v. Cobb, 9 Gray (Mass.) 397, 69 Am. Dec. 2W; Brent v. Green, 6 Leigh (Va.) 16. The principal can act as agent of the surety for the purpose of delivery. See ante, note 53. And for the purpose of filling blanks. See ante, note 75.

uo Bryan v. Berry, 6 Cal. 394; E'armlngton Savings Bank v. Buz. zell, 61 N. H. 612; Stovall v. Commonwealth, 84 Va. 246, 4 S. E. 379.

UT Gardner v. Cooper, 9 Kan. App. 587, 58 Pac. 230, 60 Pac. 540. us State v. Hill, 50 Ark. 458, 8 S. W. 401; Smyth v. Lynch, 7 Colo.

App. 383, 43 Pac. 670: Colquitt v. Smith, 76 Ga. 709: Hefner v. Vandolah, 62 Ill. 483, 14 Am. Re-p. 106; Hall v. State, 39 Ind. 301; Crawford v. Stirling, 4 Esp. 207. See Tlll'any, Agency, p. 46.

1u Lynch v. Smyth, 25 Colo. 103, 54 Pac. 634; Sweetser v. French, 2 Cush. (Mass.) 309. 48 Am. Dec. 600; Kidder v. Page, 48 N. H. 380: Ool!krott v. Claf!ln, 64 Barb. (N. Y.) 464; Drakeley v. Gregg, 8 Wall.

(U. S.) 242, 19 L. Ed. 409. Where the name of a surety has been forg- . ed, and he takes no steps after being Informed by the principal, he may become liable. State ex rei. McCarty v. Pepper, 31 Ind. 76; State ex rei. Brown v. Baker, 64 Mo. 167, Z1 Am. Rep. 214.

promised to become a surety for that debt, and thus a dishonest creditor could collect his debt from an innocent third party who was in no wise concerned in the transaction.1 This led to great abuses ; and with a view to correcting the evil, and the "prevention of many fraudulent practices which are commonly endeavored to be upheld by perjury and subornation of perjury,'' the English Parliament passed a statute (St. 29 Car. II, c. 3), commonly known as the "Statute of Frauds," which went into effect June 24, 1677. That part of the statute which concerns our subject is found in the fourth section, and reads as follows: "Noe Action shall be brought * * *

whereby to charge the Defendant upon any speciall promise to answere for the debt default or miscarriages of another person * * * unlesse the Agreement upon which such Action shall be brought or some Memorandum or Note thereof shall be in Writeing and signed by the partie to be charged therewith or some other person thereunto by him lawfully authorized." This statute has been re-enacted in substance in most of the United States, and contracts of suretyship must be evidenced by writing.1

1 "The reason 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 nny manner certain to accomplish justice. There is also a temptation for a promisee, In a case where the real debtor has proved Insolvent or unable to pny, 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 receiving no benefit should be bound by the exact terms of his promise that this statute requirIng a memorandum In writing wns enacted." Brewer, J., In DAVIS v. PATHICK, 141 U. S. 479, 12 Sup. Ct. 58, 35 L. Ed. 826.

Mass. 445; Goodman v. Felcher, 116 Mich. S48, 74 N. W. 511; Lorn·