14 reason of this

is, that the guarantor may know distinctly his liability, and have the means of arranging his relations

than by performance, and in England it seems a guarantee or letter of credit would be treated in the same way. "A great number of the cases are of contracts not binding on both sides at the time when made. A guaranty falls under that class; when a person says, 'In case you choose to employ this man as your agent for a week, I will be responsible for all such sums as he shall receive during that time, and neglect to pay over to you,' the party indemnified is not thereby bound to employ the person designated by the guarantee; but if he do employ him, then the guarantee attaches, and becomes binding on the party who gave it." Kennaway v. Treleavan, 5 M. & W. 498, 501, per Parke, B. Suppose I say, if you will furnish goods to a third person, I will guarantee the payment, there you are not bound to furnish them, yet if you do furnish them in pursuance of the contract, you may sue me on my guarantee.' Morton v. Burn, 7 A. & E. 19, 23, per Pattison, J. See also In re Agra and Masterman's Bank, L. R. 2 Ch. 391; Boyd v. Snyder, 49 Md. 325.

Nor are the American cases which hold that notice of acceptance is necessary to the formation of the contract of guaranty consistent in their application of the rule. In Carman v. Elledge, 40 Ia. 409, the guarantor in order to induce delivery of a cow to the purchaser wrote, "I will sign the note with A for the cow bought of B." The court say, "There is a well recognized distinction between an offer or proposition to guarantee and a direct promise of guarantee. The former requires notice of acceptance and acting upon it, while the latter does not." It was held notice was not necessary in the case at bar. So in Case v. Howard, 41 Ia. 479, where the defendant wrote, “If A purchases a case of tobacco on credit, I agree to see the same paid in four months," notice was held unnecessary. In Sanders v. Etcherson, 36 Ga. 404, stockholders signed a paper guaranteeing all creditors who would forbear to sue the corporation for ten months. It was held that forbearance for ten months without notice of acceptance entitled a creditor to sue the guarantors. See also Wise v. Miller, 45 Ohio St. 388. And a similar decision was made in Wills v. Ross, 77 Ind. 1, where the guarantor wrote the creditor, "Give A a little more time, and I will see that you get your money." Contra are Gardner v. Lloyd, 110 Pa. 278; Duncan v. Heller, 13 S. C. 94. In all these cases, the guaranty was merely an offer to guarantee if the creditor would sell or forbear, and the decisions are inconsistent with the theory expressed that an offer to guarantee requires notice of acceptance.

The doctrine that such notice is necessary must therefore be supported, if at all, on the other ground suggested, that is, that from the peculiar knowledge of the guar antee is implied a duty to give notice to the guarantor as a condition of holding him liable, in order that he may know the extent of his liability and protect himself from loss. This doctrine seems as clearly established and its limits as carefully defined in Indiana as anywhere. It is there laid down that where "the guaranty is direct and certain, and the thing guaranteed is definite in its amount and known to the guarantor, or might have been known to him, by the exercise of ordinary care, at the time the guaranty was given, notice of the acceptance of such guaranty need not have been given in order to render it binding on the guarantor." Snyder v. Click, 112 Ind. 293, 297. See also Fisk v. Stone, 6 Dak. 35; Kline v. Raymond, 70 Ind. 271; Furst, &c. Mfg. Co. v. Black, 111 Ind. 308; Nading v. McGregor, 121 Ind. 465; Wright v. Griffith, 121 Ind. 478; Norton v. Eastman, 4 Greenleaf, 521; Tuckerman v. French, 7 Greenleaf, 115. In many States, however, the requirement of notice is not limited so closely as in Indiana. In Gardner v. Lloyd, 110 Pa. 278, it is conceded that notice is unnecessary "in all cases of absolute guaranty accepted when given whether for the extension of a present indebtedness or the creation of a new one," but "where the event is future and depends upon the will of the guarantee, he must give notice of acceptance to the guarantor before the latter becomes subject to any liability." pp. 284, 289.

Thus a guaranty written on a draft of a contract, "I hereby guarantee the fulfilment of the within contract and the faithful performance of the above instructions," though certain and absolute, was held not to be binding without notice of acceptance because the acceptance of the contract guaranteed depended on the will of the guarantee. Coe v. Buckler, 110 Pa. 366. Other cases applying somewhat strictly the rule requiring notice in order to bind the guarantor, are Lee v. Dick, 10 Pet. 482; Adams v. Jones, 12 Pet. 207; Lawson v. Townes, 2 Ala. 373; Walker v. Forbes, 25 Ala. 139; McCollum v. Cushing, 22 Ark. 540; Craft v. Isham, 13 Conn. 28; Taylor v. McClung, 2 Houst. 24; Bell v. Kellar, 13 B. Mon. 381; Lowe v. Beckwith, 14 B. Mon. 184; Howe v. Nickels, 22 Me. 175; Mussey v Rayner, 22 Pick. 223; Allen v.

as he would with the party in whose favor the guaranty is given, and take from him security or indemnity. From the reason of the thing we may state the rule to be, that every guarantor must have this opportunity; and unless the transaction is such that of itself it gives him all the knowledge he needs, at a proper time, then this knowledge must be given him by specific notice. The principle which underlies the whole law of guaranty is that this contract, like every other, must be known to the parties to it. Still, this knowledge need be only a reasonable knowledge; and we understand the courts which hold that notice of acceptance is not always necessary to mean only, that where an offer to guarantee is absolute, and contains in itself no intimation of desire for specific notice of acceptance, it may be supposed that the offerer has a reasonable knowledge that his guaranty is accepted and acted upon, unless he is informed to the contrary.

As to the manner of the notice, no cases have prescribed *15 any special form, (f) nor is the time precisely determined. But the notice must be given with sufficient distinctness, and in a reasonable time; and that time will be reasonable which secures to the guarantor all rights and means of protecting himself. (g)

(f) It is immaterial how the notice is given to the guarantor, whether by the party accepting the guaranty, or him in whose favor it is given. Reasonable knowledge on the part of the guarantor that his guaranty is accepted is sufficient. Oakes v. Weller, 16 Vt. 63; s. c. 13 Vt. 106; Menard v. Scudder, 7 La. An. 385. An acknowledgment by the guarantor of his liability, and a promise to pay, supersedes the necessity of proving notice. Peck v.

Barney, 13 Vt. 93. But see Reynolds v.
Douglass, 12 Pet. 497.

(9) See Central Bank v. Shine, 48 Mo. 456; Montgomery v. Kellogg, 43 Miss. 486. What is a reasonable time, the facts not being in dispute, seems to be entirely a question of law, and not proper to be submitted to the jury. Craft v. Isham, 13 Conn. 28; Howe v. Nickels, 22 Me. 175; Lowry v. Adams, 22 Vt. 160.

Pike, 3 Cush. 238; Montgomery v. Kellogg, 43 Miss. 486; Taylor v. Shouse, 73 Mo. 361; Beebe v. Dudley, 26 N. H. 249; Kellogg v. Stockton, 29 Pa. 460; King v. Batterson, 13 R. I. 117; Lawton v. Maner, 9 Rich. L. 335; Sollee v. Meugy, 1 Bailey, L. 620; Duncan v. Heller, 13 S. C. 94; Mayfield v. Wheeler, 37 Tex. 256; Oaks v. Weller, 13 Vt. 106; (compare Maynard v. Morse, 36 Vt. 617; Kastner v. Winstanley, 20 Up. Can. C. P. 101.)

In a few well-considered cases it has been decided that notice is ordinarily unnecessary, the contract of guaranty becoming complete on performance of the act requested. Farmers' Bank v. Kercheval, 2 Mich. 504; Crittenden v. Fiske, 46 Mich. 70; Wilcox v. Draper, 12 Neb. 138; (see also Klosterman v. Olcott, 25 Neb. 382;) Douglass v. Howland, 24 Wend. 35; Union Bank v. Coster, 3 N. Y. 203, 212. (See also City Bank v. Phelps, 86 N. Y. 484; Evansville Bank v. Kaufmann, 93 N. Y. 273;) Powers v. Bumcratz, 12 Ohio St. 273; (see also Wise v. Miller, 45 Ohio St. 388;) Bright v. McKnight, 1 Sneed, 158; Wadsworth v. Allen, 8 Gratt. 174

15

SECTION V.

OF THE CHANGE OF LIABILITY.

The guarantor cannot be held to any greater extent than the original debtor either in point of amount or of time. (h)1 Nor can this liability be extended or enlarged by operation of law or by statute (hh) without his consent. This would appear to be a plain and certain principle of law, although there are some cases which seem to oppose it. (i) If one becomes bound for the fidelity of an officer in a corporation created by a statute for a limited period, and after that expires, the charter is renewed, but no

new bond given, and no confirmation of the old one, it has * 16 * been held in New Hampshire that the surety is still bound. (j) But this question has been decided differently,

A

(h) Walsh v. Bailie, 10 Johns. 180; Tunison v. Cramer, 2 Southard, 498; Clark v. Bush, 3 Cowen, 151; United States v. Boyd, 15 Pet. 187; Fisher v. Salmon, 1 Call, 413; Grant v. Smith, 46 N. Y. 93. The liability of the guarantor will be deemed coextensive with that of the principal, unless it be expressly limited. Curling v. Chalklen, 3 M. & Sel. 502. guarantor is not bound beyond the fair import of the actual terms of his engagement. Miller v. Stewart, 9 Wheat. 680, 720; Wardens of St. Saviour's v. Bostock, 5 B. & P. 175; Borden v. Houston, 2 Tex. 594. One bound for a clerk appointed for a year was held not to be liable for the wrong-doing of the clerk after that year, and while he continued in office. Kitson v. Julian, 4 E. & B. 854; Kingst. Mut. Ins. Co. v. Clark, 33 Barb. 196.

(hh) Fielden v. Lahens, 6 Blatch. 524. (i) Thus, in Reed v. Fullum, 2 Pick. 158, where a surety became bound for a poor debtor," that he would not depart without the exterior bounds of the debtor's liberties," and at the time the bond was given the "debtor's liberties" extended through the whole county, but they were subsequently reduced to much

more narrow limits, it was held, that the surety was liable for the escape of the debtor, beyond the last mentioned limits, although he had not passed beyond the liberties as they existed when the bond was given.

() Exeter Bank v. Rogers, 7 N. H. 21. The facts were that the Exeter Bank was incorporated by an act of the legisla ture, in the year 1803, to continue for the term of twenty years from January 1, 1804. In 1822 an additional act of the legislature was passed, which provided that the first act should remain and continue in force for a further term of twenty years from January 1, 1824; that there should be no division of the capital stock without the consent of the legislature, and that the bank should not have in circulation at any time bills exceeding in amount the capital stock actually paid; any cashier or other officer violating these provisions to forfeit not less than $1,000, nor more than $10,000. R. was appointed cashier of the bank in 1809, gave a bond with sureties for the faithful discharge of the duties of the office, and continued cashier until 1830. It was held, that the bond covered all the time during which R.

1 A release of A. from his debt by a composition deed, "in like manner as if A. had obtained a discharge in bankruptcy," discharges a surety on A.'s bond for the debt. Cragoe v. Jones, L. R. 8 Ex. 81. A statutory increase of duties not germane to the office discharges the sureties on an official bond, as where a sheriff was also made a tax-collector. White v. East Saginaw, 43 Mich. 567. See further, as to discharge of sureties on official bonds by changes in the duties of the office, Gaussen v. U. S. 97 U. S. 584; People v. Tompkins, 74 Ill. 482; Preckett v. People, 88 Ill. 115; Lafayette v. James, 92 Ind. 240; State v. Stevens, 103 Ind. 55; State v. Swinney, 60 Miss. 39; Territory v. Carson, 7 Mont. 417; Manufacturers' Bank v. Dickenson, 41 N. J. L. 448; Board v. Clark, 92 N. Y. 391; People v. Backus, 117 N. Y. 196; Brown v. Sneed, 77 Tex. 471; Com. v. Holmes, 25 Gratt. 771.

and more in accordance with the principles of the law of contracts, in Maryland. (k) There the surety was held to be discharged, on the ground that his liability was exactly 17 defined when he assumed it, and could not be enlarged or

varied without his consent, either by the party receiving the guaranty or by the operation of law. In England it has been held that the surety on the bond of a clerk of a railroad company,

which was dissolved and united with another railroad company. also dissolved, by a statute providing that all such bonds should remain in force, was responsible for the default of the clerk after the union. (1)

The Supreme Court of the United States have taken strong ground upon this point. They have decided that the surety is discharged not merely by payment of the debt or a release of the principal, but by any material change in the relations between the principal and the party to whom he owes a debt or duty, and that the surety cannot be held in such case by showing that the change was not injurious to him. For he had a right to judge for himself of the circumstances under which he was willing to be liable, and to stand upon the very terms of his contract. (m)1

(1) Eastern Union R. Co. v. Cochrane, 9 Exch. 197.

(m) Miller v. Stewart, 9 Wheat. 680. In this case a bond was given, conditioned for the faithful performance of the duties of the office of deputy collector of direct taxes for eight certain townships, and the instrument of the appointment, referred to in the bond, was afterwards altered, so as to extend to another township, without the consent of the sureties. The court held, that the surety was discharged from his responsibility for moneys subsequently collected by his principal. See also United States v. Tillotson, 1 Paine, C. C. 305; United States v. Hillegas, 3 Wash. C. C. 70; Postmaster-General v. Reeder, 4 id. 678; Chute v. Pattee, 37 Me. 102. In Mayhew v. Boyd, 5 Md. 102, it was held, that any dealings with the principal debtor by the creditor, which amount to a departure from the contract by which a surety is bound, and which by possibility might materially vary or enlarge the latter's lia bility without his assent, discharges the surety. In the case of Bonar v. McDon

ald, 3 H. of L. Cas. 226; s. c. 1 E. L. & E. 1, in the House of Lords, the facts were, that in a bond by cautioners (sureties) for the careful attention to business and the faithful discharge of the duties of an agent of a bank, it was provided "that he should have no other business of any kind, nor be connected in any shape with any trade, manufacture, or mercantile copartnery, nor be agent for any individual or copartnery in any manner or way whatsoever, nor be security for any individual or copartnery in any manner or way whatsoerer." The bank subsequently, without the knowledge of the sureties, increased the salary of the agent, he undertaking to bear one fourth part of all losses which might be incurred by his discounts. Held, affirming the decision of a majority of the court below, that this was such an alteration of the contract, and of the liability of the agent, that the sureties were discharged, notwithstanding that the loss arose, not from discounts, but from improper conduct of the agent. And see Small v. Currie, 27 E. L. & E. 304. But in Stewart

1 Any change in the contract without the surety's consent releases him, Calvo v. Davies, 73 N. Y 211; Locke ». McVean, 33 Mich. 470; Thomas v. Stetson, 59 Me. 229 and it is immaterial whether he is injured or benefited, Paine v. Jones, 76 N. Y. 274; unless he assents to the change, Sage v. Strong, 40 Wis 575. The following alterations have been held to release a surety the furnishing a more powerful engine and boiler for a higher price than the agreement called for, Grant v. Smith, 46 N. Y. 93; the addition of another joint maker to a note, Hamilton v. Hooper, 46 Ia. 515; the addition of "surety," Robinson v. Reed, 46 Ia. 219: or erasure, Lamb v Paine, 46 Ia. 550, or that interest should be payable "annually," Marsh v. Griffin, 42 Ia. 403; or "semi-annually," Fulmer v. Seitz, 68 Penn. St. 237, or where a creditor without the surety's consent disposes of a security for the debt in a manner different from that provided in the original contract, the surety is discharged, Polak v. Everett, IQ B. D. 669 see Holme v. Brunskill, 3 Q. B D. 495, or if a creditor parts with property pledged for a debt without the knowledge or against the will of surety, he will lose his claim against the surety to that extent, Kirkpatrick 2. Howk, 80 Ill. 122. Payment by the principal maker of a promissory note to the payee, and accepted by the latter in good faith and without notice, which is afterwards avoided as a fraudulent preference, will not operate as a satisfaction of the debt so as to discharge the surety Petty v. Cooke, L. R 6 Q. B 790. — K.