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by the bank unless it acted negligently in making payment.

25. Sometimes checks are post-dated—that is, on a later day than the one on which they were actually written. The object of thus dating them is to obtain delay in making payment, as the drawer simply undertakes to have the money in the drawee's possession on the day specified. A bank that pays an altered postdated check before its true date cannot charge the amount against the drawer. In no case can a check that is paid before the time specified be charged to the drawer's

account.

26. Sometimes a rule exists among clearing-house banks that checks received through the institution for payment may be examined and returned by a specified time. Wherever this rule exists entries of them made by the receiving bank previously to that time or cuts or other marks on the checks, will not prevent their return, nor operate as an acceptance or payment.

§ 7. CONTRACT OF GUARANTY

1. Guaranty defined.

2. The promise must be to pay another's debt.

3. What language must be used to describe a guaranty. 4. It must be accepted.

5. The claim must be presented against the debtor before proceeding against the guarantor.

6. The limit of the guarantor's liability.

7. When he can revoke his guaranty.

1. A contract of guaranty is an acknowledgment or promise for another. An obligation is created to pay if the person who is guaranteed, called the principal, is unable to recover the money due from the debtor. He must, therefore, bring an action within a reasonable time after the maturity of his claim against the primary debtor, and duly prosecute it, except in cases wherein nothing could be recovered were the attempt made.

2. By the statute of frauds a guaranty must be in writing. The promise to pay must be proved by clear and satisfactory evidence. But it is not always easy to decide whether a promise relating to the debt or liability of a third person is, or is not, such an one as the statute requires should be in writing. When the promissor's chief purpose is, not to be responsible for another, but to serve his own purpose, his promise need not be in writing, though the promise in form is to pay another's debt.

3. What language ought to be used to describe a guaranty? On one occasion Chief Justice Gibson declared that warranty and guaranty signified the same thing, "the one usually, but not always, denoting a covenant in a conveyance, and the other denoting a parol promise." "I hereby guarantee the payment of the within certificate," is a guaranty; so is the form, "I hereby guarantee payment of the within note without protest." But "for a consideration I hereby agree to become security for the faithful performance," etc., is a contract of surety. And an order directing a person to give the bearer goods to a specified amount on the subscriber's account would render the person who gave

it liable as a principal, and not as a guarantor. A stipulation in an agreement for the sale of goods, that a part of the purchase money shall be paid in "good notes," is no guaranty of the solvency of their makers.

4. To become binding a guaranty must be accepted, and notice of acceptance must be given to the guarantor unless the act of guaranteeing is followed by an immediate acceptance. Likewise, a guarantor of future credit is entitled to notice from the party giving the credit that he has been accepted, unless the creditor's offer and the guarantor's acceptance are concurrent acts. But a direct promise to guarantee future indebtedness does not require an acceptance. For example, a guaranty of existing and future indebtedness, "unconditionally at all times," and a promise to sign a note for a purpose that is mentioned. Another guaranty of this character requiring no notice was thus expressed: "If A purchases a case of tobacco on credit, I agree to see the same paid in four months." And on another occasion the guarantor wrote: "Give A a little more time and I will see that you get your money."

5. The law implies the due prosecution of the claim against the debtor by the party holding the guaranty, and failure to collect of him before the prosecutor can call on the guarantor. In other words, before the creditor can enforce his guaranty he must show that he has exercised due diligence to obtain payment from the principal. Whether he has been reasonably diligent or not is a question of fact that must be determined like any other whenever it arises.

6. A guarantor cannot be held for a larger amount or

longer time than the original debtor. When his liability ceases so does that of his guarantor. Nor can his liability be extended in any manner without his consent.

7. Often, but not always, a guaranty can be revoked, unless it relates to an unfinished transaction. Nor can a guarantor do so when he has received a consideration for guaranteeing what he retains. But a person who has guaranteed the payment of goods to a specified amount, and, after a portion has been delivered, desires to revoke his guaranty for the remainder, can do so unless he has been paid for guaranteeing the entire amount. There may be cases in which he could not do this regardless of the consideration received. If a seller, for example, relying on a guaranty, had ordered goods specially, and was liable for them, he could insist on delivering them and require the guarantor to fulfil his contract.

§ 8. CONTRACT OF SURETYSHIP

1. Distinction between guarantor and surety. 2. Distinction is sometimes difficult to understand. 3. Surety ought to know the nature of his undertaking. 4. Creditor is not required to give surety notice of non-payment.

5. Note must be due before surety can give notice to collect.

6. Notice should be in writing.

7. When notice has been given creditor should not delay to collect.

8. If more time is given to debtor the surety is discharged.

9. Rights of parties to a security for the surety's benefit. 10. Liability of a surety incurred through an agent. II. Tender of more than the money due.

1. The contract of suretyship is an original undertaking, and the person who guarantees or becomes a surety is called by that name, while the person for whose benefit the contract is made is called the principal. The surety is bound to the full extent of the principal's liability. The contract of a surety in one respect is similar to a guarantor's, but differs from that of an indorser. The latter undertakes to pay after he has received notice of a demand and non-payment by the maker, while no demand and notice are required to hold a guarantor or surety. But a guarantor's liability does not become absolute until the creditor has exhausted legal means to collect of the debtor; while a creditor to whom one has become a surety is not obliged to resort to any legal means against the debtor, unless he is notified to do so by the surety, to establish his right to proceed against the surety himself. It is true that the creditor usually seeks first to collect of the debtor, but he may first proceed against the surety. Again, the creditor is always excused from proceeding against the debtor whenever nothing could be recovered from him, for the law does not require the prosecution of a useless action.

2. While there is a difference between the liability of a surety and that of a guarantor, it is not always easy to determine by the agreement which liability is assumed. On one occasion the owner of a judgment "guaranteed

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