SURETYSHIP lateral. See 34 Barb. 208; 15 N. Y. 576; 33 Ala. N. s. 106; 6 Gray, 90. Such would be the guaranty of an infant's promise; 7 N. H. 368; and this is accordingly so held; 20 Pick. 467; 4 Me. 521; though a distinction has been made in the case of a married woman; 4 Bingh. 470; 84 Penn. 135; 43 Ind. 103; but the promise is collateral where the married woman has separate property which she can charge with the payment of her debts, and the credit is given exclusively to her; 6 Ga. 14. 691 So where the liability is unascertained at the time of the promise, the promise is original; as the liabilities must concur at the time of the undertaking to make a guaranty; Browne, Stat. Fr. § 196; 1 Salk. 27; contra, Ambl. 330. Under this head would come a promise to pay damages for a tort, there being no principal liability until judgment; 1 Wils. 305; or where the liability rests upon a future award; 2 Allen, 417; and liability upon indefinite executory contracts in general. The promise is clearly original where the promisor undertakes for his own debt. The rule is, unless the promisor himself or his property is ultimately to be made liable in default of the principal debtor, the statute does not apply; Browne, Stat. Fr. § 177. Thus, an engagement by one who owes the principal debtor to retain the principal debt, so that it may be attached by trustee or garnishee process, is not a collateral promise; 9 Pick. 306; 20 Conn. 486; 1 Bingh. N. R. 103; 63 Barb. 321; 50 Iowa, 310. So an agreement by a purchaser to pay part of the purchase-money to a creditor of the vendor is an agreement to pay his own debt; 55 Miss. 365; 2 Lea, 543; 49 Iowa, 574; or to pay a debt due a promisce by a third person out of moneys owing by a promisor to such third person; 32 Ohio, 415; 9 Cow. 266; 58 Ill. 233; or for the application of a fund due a promisor by a third party; 86 Penn. 147; 18 How. 31. Such an agreement is a trust, or an original promise. UNDER THE STATUTE OF FRAUDS. SURETYSHIP 457; though this is doubted in regard to future torts; 1 Wils. 305. Perhaps a guaranty against future torts might be open to objections on the ground of public policy. The doctrine that a future contingent liability on the part of the principal is not within the statute; 1 Salk. 27; 12 Mass. 297; is not tenable; and it is clear, both by analogy and on authority, that such a liability may support a guaranty, although such cases must be confined within very narrow limits, and the mere fact of the contingency is a very strong presumption that the promise is original; Browne, Stat. Fr. § 196, 6 Vt. 666; 88 Ill. 561. Where the promise is made to the debtor, it is not within the statute; 7 Halst. 188; 2 Denio, 162. "We are of opinion that the statute applies only to promises made to the person to whom another is answerable;" 11 Ad. & E. 446; 1 Gray, 391. The word another in the statute must be understood as referring to a third person, and not to a debt due from either of the contracting parties; 6 Cush. 552; 7 id. 136. False and deceitful representations of the credit or solvency of third persons are not within the statute; Browne, Stat. Fr. § 181; 4 Camp. 1. The English rule required the consideration to be expressed; 5 East, 10. It could not be proved by parol; 4 B. & A. 595. But by statute 19 & 20 Vict. c. 197, s. 3, no such promise shall be deemed invalid by reason only that the consideration does not appear in writing or by necessary inference from a written instrument; 7 C. B. N. s. 361. The rule varies in different states. In New York (amending Rev. Stat. 221), Massachusetts, Virginia, Indiana, Kentucky, there are statutes similar to the English statute. In Alabama, Wisconsin, Oregon, Nevada, Minnesota, and California, the consideration is required by statute to be expressed. Of other states where statutes are silent, some have accepted and some rejected the English construction of Statutes of Frauds in Wain v. Walters, 5 East, 10. "Memorandum" includes consideration, which must appear; 5 East, 10. So The courts lay hold of any language which implies a consideration; 21 N. Y. 315. where the guaranty and the matter guaranteed are one simultaneous transaction, both will be construed in connection, and the consideration expressed in the latter applied to the support of the former, if there are words of reference in the guaranty; 3 N. Y. 203; 36 N. H. 73. FORMATION OF THE OBLIGATION. At common law, a contract of guaranty or suretyship could be made by parol; but by the Statute of Frands, 29 Car. II. c. 3, "no action shall be brought whereby 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 party to be charged therewith, or by some person thereunto law- In construing the language of the confully authorized:" so that under the statute tract to decide whether it constitutes an oriall contracts of guaranty and suretyship must ginal promise or a guaranty, it is difficult to be in writing and signed. The words debt lay down a general rule: the circumstances and default in the statute refer to contracts; of particular cases vary widely. The word 2 East, 325; and debt includes only pre-ex- guaranty or surety may or may not indicate isting liability; 12 Mass. 297; miscarriage correctly the contract, and the circumstances refers to torts; 2 B. & Ald. 613. Torts are of the case may make an indorser liable as a accordingly within the statute, and may be guarantor or surety, without any words to inguaranteed against; 2 B. & Ald. 613; 2 Day,dicate the obligation; 24 Wend. 456. remedy, as postponement of a trial, or post- The contract of suretyship may be entered into absolutely and without conditions, or its formation may be made to depend on certain conditions precedent. But there are some conditions implied in every contract of this In general, if a promissory note is signed or indorsed when made by a stranger to the note, he becomes a joint promisor and liable on the note; 44 Me. 433; 9 Cush. 104; 14 Tex. 275; 20 Mo. 571; and this will be true if indorsed after delivery to the payee in pursuance of an agreement made before the delivery; 7 Gray, 284; 9 Mass. 384; but parol evidence may be introduced to show that he is a surety or guarantor; 23 Ga. 368; 89 Ill. 550. If the third party indorses after delivery to the payee without any previous agreement, he is merely a second indorser; 11 Penn. 466; 82 N. C. 313; and he is liable as a maker to an innocent holder; 20 Mo. 591. But it was held otherwise where the signa-kind, however absolute on its face. In the ture was on the face of the note; 19 N. H. 572; and the same is held where he signs an inception of the note, in pursuance of a custom, leaving a blank for the payee's signature above his name; 12 La. An. 517. In Connecticut, such an indorser is held to guaranty that the note shall be collectible when due; 46 Conn. 410; 25 id. 576. The time of signing may be shown by parol evidence; 9 Ohio, 139. It has been held that a third person indorsing in blank at the making of the note may show his intention by parol; 11 Mass. 436; 13 Ohio, 228; but not if he describes himself as guarantor, or if the law fixes a precise liability to indorsements in blank; 2 Hill, N. Y. 80; 4 id. 420. But this has been doubted; 33 E. L. & E. 282. In New York the cases seem to take the broad ground that an indorser in blank, under all circumstances, is an indorser merely, and cannot be made a guarantor or surety; 7 Hill, 416; 1 N. Y. 324; see 95 U. S. 90. case of bonds, as in other contracts of suretyship, it is essential that there should be a principal, and a bond executed by the surety is not valid until executed by the principal also. One case, 10 Co. 100 b, sometimes cited to the contrary, is not clear to the point. The argument that the surety is bound by his recital under seal fails, especially in all statute bonds, where one important requisite of the statute, that the bond should be executed by the principal, fails; 2 Pick. 24; 4 Beav. 383; 11 id. 265; 14 Cal. 421. Where the surety's undertaking is conditional on others joining, he is not liable until they do so; 4 B. & Ad. 440; 53 Ind. 321; 4 Cra. 219: contra, if the obligee is ignorant of the condition; 2 Metc. Ky. 608; 16 Wall. 1; 61 Me. 505. So the surety is not bound if the signatures of his co-sureties are forged, although he has not made his signature expressly conditional on theirs; 2 Am. L. Reg. 349; but see 8 id. N. s. 665. The consideration to support a parol pro- The acceptance of the contract by the promise to pay the debt of another must be such misee by words or by acts under it is often as would be good relating to the payment of made a condition precedent to the attaching that particular debt or of any other of equal of the liability of the surety. The general amount; 33 Md. 373. It need not be neces-rule is that where a future guaranty is given, sarily a consideration distinct from that of the principal contract. The giving of new credit where a debt already exists has been held a sufficient consideration to support a guaranty of the old and new debt; 15 Pick. 159; 15 Ga. 321; but the weight of authority would seem to require that there should be some further consideration; Browne, Stat. Fr. § 191; 5 East, 10; 1 Pet. 476; 3 Johns. 211; 20 Me. 28; 7 Harr. & J. 457. Forbearance to sue the debtor is a good consideration, if definite in time; 1 Kebl. 114; or even if of considerable, Cro. Jac. 683, or reasonable time; 3 Bulstr. 206. But there must be an actual forbearance, and the creditor must have had a power of enforcement; 4 East, 465; Willes, 482. But the fact that it is doubtful whether such a power exists does not injure the consideration; 5 B. & Ad. 123. Forbearance has been absolute and definite in amount, no notice of acceptance is necessary; but if it is contingent and indefinite in amount, notice must be given; 4 Me. 521; 1 Mas. 324, 371; 8 Conn. 438; 16 Johns. 67; but the promisee has a reasonable time to give such notice; 8 Gray, 211. And see, on this last point, 21 Ala. N. s. 721. A distinction is to be made between a guaranty and an offer to guaranty. No notice of acceptance is requisite when a guaranty is absolute; 3 N. Y. 212; 2 Mich. 511; but an offer to guaranty must have notice of acceptance; and till accepted it is revocable; 12 C. B. N. s. 784; 6 Dow. H. L. C. 239; 32 Penn. 10; and where acceptance is required, it may be as well implied by acts as by words; as, by receiving the written guaranty from the promisor; 8 Gray, 211; or by actual knowledge of the amount of sales under a guaranty of the purchase-money; 28 Vt. 160. EXTENT OF OBLIGATION. held sufficient consideration even where there was no well-grounded claim; 18 L. J. C. P. 222; 34 Penn. 60; contra, 3 Pick. 83. Α The liability of a surety cannot exceed, in short forbearance, or the deferment of a any event, that of the principal, though it may be less. The same rule does not apply to the remedies, which may be greater against the surety. But, whatever may be the liability imposed upon the surety, it is clear that it cannot be extended by implication beyond the terms of the contract. His obligation is strictissimi juris, and cannot be extended beyond the precise terms of the contract; 10 Johns. 180; 2 Penn. R. 27; 15 Pet. 187. The rule is thus laid down by the United States supreme court: sureties are never held responsible beyond the clear and absolute terms and meaning of their undertakings, and presumptions and equities are never allowed to enlarge, or in any degree to change, their legal obligations; 21 How. 66. And this rule has been repeatedly reaffirmed; 11 N. Y. 598; 29 Penn. 460; 6 How. 296; 2 Wall. 235. The remedies against the surety may be more extensive than those against the principal, and there may be defences open to the principal, but not to the surety,-as, infancy or coverture of the principal,-which must be regarded as a part of the risks of the surety; 30 Vt. 122. The liability of the surety extends to and includes all securities given to him by the principal debtor, the converse of the rule stated below in the case of collateral security given to the creditor; 26 Vt. 308. Thus, in Missouri, a creditor is entitled in equity to the benefit of all securities given by the principal debtor for the indemnity of his surety; 18 Mo. 136; 19 Ala. N. s. 798; 22 Miss. 87. If the surety receives money from the principal to discharge the debt, he holds it as trustee of the creditor; 6 Ohio, 80. In general, the obligations of a surety are the same as the obligations of the principal, within the scope of the contract; but the principal may be under obligations not imposed by the contract, but yet coming so close as to render the distinction a matter of some difficulty. The obligation must, therefore, be limited as to its subject-matter in time, and in amount may be limited in its operation to a single act, or be continuous, and may include only certain liabilities. SURETYSHIP by including past or future liabilities, must clearly appear, and the condition of the bond in this particular is sometimes restrained by the recital; 4 B. & P. 175. Generally the recital cannot be enlarged and extended by the condition; Theob. Surety, 66, n. [b]. And where the recital sets forth an employment for twelve months, this time is not controlled by a condition, "from time to time annually, and at all times thereafter during the continuance of this employment," although the employment is actually continued beyond the year; 2 Camp. 39; 3 id. 52; 2 B. & Ald. 431; 7 Gray, i. So the obligation may cease by a change in the character of the office or employment, as where the principal who has given a bond for faithful discharge of the duties of clerk, is taken into partnership by the obligee; 3 Wils. 530; but an alteration in the character of the obligees, by taking in new partners, does not necessarily terminate the obligation; 10 B. & C. 122. But where an essential change takes place, as the death of the obligee, the obligation is terminated, although the business is carried on by the executors; 1 Term, 18. Where one becomes surety for two or either of them, the obligation is terminated by the death of one of the principals; 1 Bingh. 452; but this is where the obligation is essentially personal; and where a bond for costs was given by two as "defendants," the surety was not discharged by the death of one; 5 B. & Ald. 261. So a surety for a lessee is not liable for rent after the term, although the lessee holds over; 1 Pick. 332. If the law provides that a public officer shall hold over until a successor is appointed, the sureties on the official bond are liable during such holding over; 37 Miss. 518; 2 Metc. Mass. 522: contra, in the case of officers of corporations; 7 Gray, 1. And this provision is not controlled by an alteration of the law extending the term but leaving the provision intact; 15 Gratt. 1. But when the term of an office created by statute or charter is not limited, but merely directory for an annual election, it seems the surety will be liable, though after the year, until his successor is qualified; 9 Am. L. Reg. N. s. 365 (Del. Chanc.). See 10 W. N. C. (Pa.) 146. If In the common case of bonds given for the faithful discharge of the duties of an office, it is of course the rule that the bond covers only the particular term of office for which it is In bonds, the penalty is the extreme amount given, and it is not necessary that this should of liability of the surety; but various circumbe expressly stated; nor will the time be ex-stances may reduce the liability below this; 2 tended by a condition to be bound during South. 498; 3 Cow. 151; 6 Term, 303. all the time A (the principal) continues," if the engagement of the surety is general, the after the expiration of the time A holds over surety is understood to be obliged to the same merely as an acting officer, without a valid extent as his principal, and his liability exappointment; 3 Sandf. 403. The circum-tends to all the accessories of the principal stances of particular cases may extend the obligation; 14 La. An. 183. strict rule stated above, as in the case of officers annually appointed. Here, although the bond recites the appointment, if it is conditioned upon his faithful accounting for money received before his appointment, the surety may be held; 9 B. & C. 35; 9 Mass. 267. But the intention to extend the time, either A continuing guaranty up to a certain amount covers a constant liability of that amount; but if the guaranty is not continuing, the liability ceases after the execution of the contract to the amount limited; 3 B. & Ald. 593. A guaranty may be continuing or may be A bond for faithful performance of duties renders the sureties responsible for ordinary skill and diligence, as well as for integrity; 12 Pick. 303. The contracts of guaranty and suretyship are not negotiable or assignable, and in general can be taken advantage of only by those who were included as obligees at the formation of the contract; 3 McLean, 279; 4 Cra. 224. Accordingly, the contract is terminated by the death of one of several obligees; 4 Taunt. 673; or by material change, as incorporation; 3 B. & P. 34. But where a bond is given to trustees in that capacity, their successors can take advantage of it; 12 East, 399. The fact that a stranger has acted on a guaranty does not entitle him to the benefits of the contract; 20 Vt. 499; and this has been held in the case of one of two guarantees who acted on the guaranty; 3 Tex. 199. exhausted by one act; but in drawing dis-own, the guarantor is liable to the amount of tinctions on this point, each case must rest the part-performance; 12 Gray, 445. upon its own circumstances. The general principle may be thus stated: when by the terms of the undertaking, by the recitals in the instrument, or by a reference to the custom and course of dealing between the parties, it appears that the guaranty looked to a future course of dealing for an indefinite time, or a succession of credits to be given, it is to be deemed a continuing guaranty, and the amount expressed is to limit the amount for which the guarantor is to be responsible, and not the amount to which the dealing or whole credit given is to extend; 7 Pet. 113; 3 B. & Ald. 593. Thus, a guaranty for any goods to one hundred pounds is continuous; 12 East, 227; or for " any debts not exceeding," etc.; 2 Camp. 413; or, "I will undertake to be answerable for any tallow not exceeding,' ," etc., but without the word any it might perhaps have been confined to one dealing;" 3 Camp. 220. The words, "I do hereby agree to guaranty the payment of goods according to the custom of their trading with you, in the sum of £200,” are held to constitute a continuing guaranty; 6 Bingh. 244; so of the words, "I agree to be responsible for the price of goods purchased at any time, to the amount of," etc.; 1 Metc. Mass. 24. The words "answerable for the amount of five sacks of flour" are clearly not continuous; 6 Bingh. 276. See 6 Maule & S. 239. : Where the surety is bound for the acts of the principal in a certain capacity or office, the obligation ceases, as we have seen above, on the termination of the office. But, besides being limited in point of time to the duration of the particular employment, it is essential, to bind the surety, that the liabilities of the principal should be of such a character as may fairly be covered by the contract. In official bonds, the liability of the surety is limited to the acts of the principal in his official capacity e. g. a surety on a cashier's bond is not liable for money collected by the cashier as an attorney-at-law, and not accounted for to the bank; 4 Pick. 314. So also where one was surety, and the bond was conditioned on the accounting by the principal for money received by him in virtue of his office as parish overseer, the surety was held not liable for money borrowed by the principal for parochial purposes; 7 B. & C. 491. On the other hand, a surety on a collector's bond is liable for his principal's neglect to collect, as well as failure to pay over; 6 C. & P. 106. As the surety is only liable to the obligations fairly intended at the execution of the bond, he cannot be held for a breach of new duties attached to his principal's office; Theob. Surety, 72; 4 Pick. 314; or if any material change is made in the duties; 2 Pick. 223. If one guarantees payment for services, and the promisee partly performs the services, but fails of completing them from no fault of his It is held that a guaranty addressed to no one in particular may be acted on by any one; 22 Vt. 160; but the true rule would seem to be that in such cases a party who had acted on the contract might show, as in other contracts, that he was a party to it within the intention at the making; the mere fact that no obligee is mentioned does not open it to everybody. ENFORCEMENT OF OBLIGATION. As the surety cannot be bound to any greater extent than the principal, it follows that the creditor cannot pursue the surety until he has acquired a full right of action against the principal debtor. A surety for the performance of any future or executory contract cannot be called upon until there is an actual breach by the principal. A surety on a promissory note cannot be sued until the note has matured, as there is no debt until that time. All conditions precedent to a right of action against the principal must be complied with. Where money is payable on demand, there must have been a demand and refusal. But it is not necessary that the creditor should have exhausted all the means of obtaining his debt. In some cases which will be treated of in detail, it may be requisite to notify the surety of the default of the debtor, or to sue the debtor; but this depends upon the particular conditions and circumstances of each case, and cannot be considered a condition precedent in all cases. Even where the creditor has a fund or other security to resort to, he is not obliged to exhaust this before resorting to the surety; he may elect either remedy, and pursue the surety first. But if the surety pay the debt, he is entitled to claim that the creditor should proceed against such fund or other security for his benefit; 4 Jones, Eq. 212; 33 Ala. N. s. 261. And if the creditor, having received such collateral security, avail himself of it, he is bound to preserve the original debt; for in SURETYSHIP equity the surety will be entitled to subrogation; 38 Penn. 98. A judgment against the principal may be assigned to the surety upon payment of the debt; 1 Metc. 489; 4 Jones, Eq. 262. But an assignment of the debt must be for the whole: the surety cannot pay a part and claim an assignment pro tanto; 39 N. H. 150. 695 In general, it is not requisite that notice of the default of the principal should be given to the surety, especially when the engagement is absolute and for a definite amount; 14 East, 514. The guarantor on a note is not entitled to notice as an indorser; 33 Iowa, 293; 74 Penn. 351, 445; 56 Mo. 272. Laches in giving notice to the surety upon a draft of the default of the principal can only be set up as a defence in an action against the surety, in cases where he has suffered damage thereby, and then only to the extent of that damage; 3 N. Y. 203; it is no defence to an action against a surety on a bond that the plaintiff knew of the default of the principal, and delayed for a long time to notify the surety or to prosecute the bond; 1 Zabr. 100. If after a joint judgment against a principal and his surety on their joint and several bond, the surety die, the obligee has no remedy in equity against his executor; 9 How. 83. DISCHARGE OF OBLIGATION. SURETYSHIP Fraud or alteration avoids a contract of suretyship. Fraud may be by the creditor's misrepresentation or concealment of facts. Unless, however, the contract between the debtor and creditor is unusual, the surety must ask for information; 12 Cl. & F. 109; 26 Ga. 241; 15 W. Va. 21. The creditor has been held bound to inform surety of debtor's previous default; 33 Penn. 358; L. R. 7 Q. B. 666; contra, 21 W. R. 439; 91 Ill. 518; though not of his mere indebtedness; 17 C. B. N. s. 482. But to receive a surety known to act on belief that there are no unusual circumstances increasing his risk, knowing that there are such, and neglecting to communicate them, is fraud; 36 Me. 179; 31 N. Y. 518. Any material alteration in the contract without the assent of the surety, or change in the circumstances, will discharge the surety. Such are the cases where the sureties on a bond for faithful performance are released by a change in the employment or office of the principal; 6 C. B. N. s. 550; and it makes no difference whether the change is prejudicial to the surety or not; 30 Vt. 122; 32 N. H. 550; 3 B. & C. 605; 9 Wheat. 680; Paine, 305; 3 Binn. 520; 3 Wash. C. C. 70. But it seems that an alteration by the legislature in an official's duties will not discharge surety as long as they are appropriate to his office; 36 N. Y. 459. If the principal and obligee change the terms of the obligation without the consent of the surety, the latter is discharged; 4 Wash. C. C. 26. If the creditor, without the assent of the surety, gives time to the principal, the surety is discharged; Mer. 272; 2 Bro. C. C. 579; 3 Y. & C. 187; 2 B. & P. 61; 7 Price, 223; 8 Bingh. 156. So where he agrees with the principal to give time to the surety; L. R.7 Ch. App. 142. But not where a creditor reserves his rights against the surety; 16 M. & W. 128; 4 H. L. C. 997. The rule applies where a state is a creditor; 75 N. C. 515. The obligation may be discharged by acts of the principal, or by acts of the creditor. Payment, or tender of payment, by the one, and any act which would deprive the creditor of remedies which in case of default would enure to the benefit of the surety, are instances of discharge. In the first place, a payment by the debtor would of course operate to discharge the liability. The only questions which can arise upon this point are, whether the payment is applicable to the payment in question, and as to the amount. Upon the first of these, this contract is governed by the general rule that the debtor The contract must be effectual, binding the can apply his payment to any debt he chooses. creditor as well as the debtor; and it is not The surety has no power to modify or direct enough that the creditor merely forbears to the application, but is bound by the election press the debtor; 2 Ad. & E. 528; 5 Gray, of the principal; 2 Bingh. N. c. 7. If no such 457; 15 Ind. 45. See, also, 17 Johns. 176; election is made by the debtor, the creditor 1 Gall. 35; 2 Caines, Cas. 30; 2 White & T. may apply the payment to whichever debt he L. C. Eq. *974; 9 Tex. 615; 9 Cl. & F. 45. sees fit; 7 Wheat. 20; 9 Cow. 409, 747; 1 The receipt of interest on a promissory Pick. 336. This power, however, only ap- note, after the note is overdue, is not suffiplies to voluntary payments, and not to pay-cient to discharge the surety; 8 Pick. 458; ments made by process of law; 10 Pick. 129. A surety on a promissory note is discharged by the payment, and the note cannot be again put in circulation; 12 Cush. 163. Whatever will discharge the surety in equity will be a defence at law; 7 Johns. 337; 2 Ves. 542; 2 Pick. 223; 16 S. & R. 252; 5 Wend. 85. A release of the principal debtor operates as a discharge of the surety; though the converse is not true; 17 Tex. 128; unless the obligation is such that the liability is joint only, and cannot be severed. See, on this point, Fell, Guar. c. ii. ; 8 Penn. 265. 6 Gray, 319; nor is taking another bond as collateral security to the original, having a longer time to run; 41 N. Y. 474. And as a requisite to the binding nature of the agreement, it is necessary that there should be some consideration; 2 Dutch. 191; 30 Miss. 424; but a part payment by the principal is held not to be such a consideration; 31 Miss. 664. Pre-payment of interest is a good consideration; 30 Miss. 432; but not an agreement to pay usurious interest, where the whole sum paid can be recovered back; 10 Md. 227; though it would seem to |