So in Massachusetts, the sureties on a cashier's bond are exonerated by an increase of the capital of the bank, from liability for default of the cashier made after the increase. (mm) * Anything, therefore, which operates as a novation, dis- 18 charges the surety. So if a new note be given in discharge of a former one: (n) and it has been adjudged, upon good reasons, that where a surety is in fact discharged by a novation, or by a material change of the debt, and in ignorance of his being thus freed from his liability makes a subsequent acknowledgment of his liability, he cannot be held thereon. (0) But the guarantor may assent to the change, and waive his right of claiming a discharge because of it. (p) * In general, a guaranty to a partnership is extinguished *19 by a change in the firm, although the copartnership name is not changed. (q) This has been held to be the effect of such v. McKean, 29 E. L. & E. 383, s. c. 10 Exch. 675, the plaintiffs, bottle manufacturers, appointed W. M. their agent for the sale of bottles, on commission, and received the following guaranty: "I hereby agree to guarantee my brother, W. M.'s intromissures, as your agent in Leith, to the extent of £500." The terms of the sale between the plaintiffs and W. M., at the time of the guaranty, were that the moneys received should be remitted from time to time, and an account of sales rendered at the end of each month, or when required, and an account current every three weeks. It was soon after agreed between the plaintiffs and W. M. that the account current should be rendered every six months, and subsequently, in pursuance of an agreement between them, W. M. from time to time gave his promissory notes to the plaintiffs, payable four months from date, for sums having no relation to the amount due, transmitted to W. M. the difference between the money then in his hands and the amount of the notes. The defendant had no knowledge of, and never inquired as to the original or subsequent terms of delivery. It was held (Pollock, C B., dissenting), that the alteration in the mode of accounting and paying did not discharge the surety. In Mitchell v. Burton, 2 Head, 613, it was held, that if two or more persons become the sureties of a third person to a bond, and the obligees and principal obligor erase the name of, and release one of the sureties, without the knowledge or consent of the co-sureties, or their subsequent ratification of the same, they are not bound on said bond. And further, that if, however, the obligation after such erasure is presented to other persons, who sign the same as sureties, they are bound by their undertak ing, although they may be ignorant of the circumstances of the erasure, and of the fact that the other sureties on the bond are released thereby. The erasure was visible, and they should have ascertained all the facts in reference thereto before signing the obligation, and not having done so, are bound by their act. See also General Steam Navigation Co v. Rolt, 95 Eng. C. L. 550. (mm) Grocer's Bank v Kingman, 16 Gray, 473. (n) Burge on Suretyship, b. 2, c. 5; Letcher v. Bank of the Commonwealth, 1 Dana, 82; Castleman v. Holmes, 4 J. J. Marsh. 1; Bell v. Martin, 3 Harrison, 167, Farmers' & Mechanics' Bank v. Kercheval, 2 Mich. 504. (0) Merrimack Co. Bank v. Brown, 12 N. H. 320, Fowler v. Brooks, 13 id 240. See also Roe & Harrison, 2 T. R. 425. (p) Fowler v. Brooks, 13 N. H. 240. In this case it was determined, that if a surety, with knowledge of the fact that an agreement for an extension of time has been made between the creditor and the principal, make a new promise to pay the debt, he cannot afterwards avail him self of the agreement as a discharge of his liability, notwithstanding there was no new consideration for his promise. And see Ex parte Harvey, 27 E. L. & E. 272. (9) See ante, p. * 5. Bellairs v. Ebsworth, 3 Camp. 52; Russell v Perkins, 1 Mason, 368; Weston v. Barton, 4 Taunt. 673 It was here held, that a bond conditioned to repay to five persons all sums advanced by them, or any of them, in * *20 change, although the guaranty given to the firm was expressly for advances by them, or either of them." The mere fact that the partnership is very numerous, does not seem to vary this rule, if the guaranty be given to the whole firm. But their capacity of bankers, will not extend to sums advanced after the decease of one of the five by the four survivors, the four then acting as bankers. Mansfield, C. J., observed: "The question here is, whether the original partnership being at an end, in consequence of the death of Golding, the bond is still in force as security to the surviving four, or whether that political personage, as it may be called, consisting of five, being dead, the bond is not at an end. . . . From almost all the cases, in truth we may say from all (for though there is one adverse case of Barclay v. Lucas, the propriety of that decision has been very much questioned), it results, that where one of the obligees dies, the security is at an end. It is not necessary now to enter into the reasons of those decisions, but there may be very good reasons for such a construction; it is very probable that sureties may be induced to enter into such a security by a confidence which they repose in the integrity, diligence, caution, and accuracy of one or two of the partners. In the nature of things, there cannot be a partnership consisting of several persons, in which there are not some persons possessing these qualities in a greater degree than the rest; and it may be that the partner dying, or going out, may be the very person on whom the sureties relied; it would therefore be very unreasonable to hold the surety to his contract after such change." See also Bodenham v. Purchas, 2 B. & Ald. 39. But in New Haven Coun. Bank v. Mitchell, 15 Conn. 206, the facts were as follows: The guaranty of A by its terms made him responsible to B, a banking institution, for such paper as should be indorsed by the firm of S. M. & G., and held by B, and bound A to save B harmless from all loss which B might sustain by reason of holding paper in dorsed by said firm. The partnership of S. M. & G. was afterwards dissolved, of which B had notice. The partners then executed a power of attorney to M, who had, previously to the dissolution, transacted nearly all the bank business of the partnership with B, authorizing him to sign and indorse notes which might be considered necessary in the management of the concern. M delivered the power to B; after which M, by virtue thereof, continued to use the name of S. M. & G., as drawers and indorsers of negotiable paper, which was discounted by B, and the proceeds credited to the firm, and applied in payment of their former indebtedness to B. By virtue of such power, M also signed, in the name of the firm, various other notes which were indorsed by A, with notice of the dissolution, and knowing that these notes were intended to be, as they were in fact, discounted by B, and the proceeds applied in payment of the debts and liabilities of the firm. In the course of these transactions, M, by virtue of said power, indorsed two notes which were discounted by B, and the proceeds credited to the firm. The parties to these notes having failed, B sought a remedy on the guaranty against A; and it was held, that the guaranty, by its terins, contemplated only such paper as should be indorsed by the firm of S. M. & G., as a firm, and during the continuance of the partnership, but that, for the purpose of settling the partnership concerns, the partnership relation between the partners continued to subsist after the dissolution, and the notes so indorsed by M were in legal contemplation indorsed by the firm; consequently they were embraced within the scope and true meaning of the guaranty. And in Staats v. Howlett, 4 Denio, 559, A gave B an undertaking in writing as follows: "I hereby obligate myself to hold you harmless for any indorsement you may make for, or have made for, the late firm of Peck, Howlett, & Foster." The firm had previously become dissolved by the death of one of its members. A note subsequently made by one of the surviving partners in the course of liquidating the business of the firm, and signed "S. R. Howlett, for the late firm of Peck, Howlett, & Foster," was indorsed by B. Held, that it was within the terms of the guaranty. The case of Pemberton . Oakes, 4 Russ. 154, illustrates the principle of the text. See further, that guarauties are to be construed strictly, and that if any partners be taken into or retire from a firm, the guaranty does not continue. Simson v. Cook, 8 J. B. Moore, 588; Kipling v. Turner, 5 B. & Ald. 261; Wright v. Russell, 3 Wils. 530; Barclay v. Lucas, 3 Dougl. 321; Penoyer v. Watson, 16 Johns. 100; Barker v. Parker, 1 T. R. 287; Dry . Davy, 2 Per. & D. 249; Place Delegal, 4 Bing. N. C. 426; Dance v. Girdler, 4 B. & P. 34; Myers v. Edge, 7 T. R 254. where the partnership was numerous, and seven of the members were trustees for the firm, and a bond was given to these trustees to secure the faithful services of the clerk of the company, and a part of the trustees died, there it was held that the surviving trustees might maintain an action on the bond, although it was shown that there had been changes in the company. (r) A guaranty may doubtless be a continuing contract, and be unaffected by a change of circumstances, as to the subject-matter, and also as to the parties for whose benefit it shall enure. It may provide, for instance, for the fidelity of a cashier in a bank, as long as it shall continue under its present charter, and under any extension or renewal thereof. So provision may be made for its validity to a partnership after a change of members, perhaps by adequate covenants, even without the intervention of trustees; although it would certainly be the better, if not the only safe way, to constitute trustees. But, from what has already been said, it will be obvious, that unless the contract of guaranty expressly provides for these changes, their occurrence discharges the guarantor from his obligation. (s) *The obligation of guaranty for good conduct does not *21 seem to be one which survives the obligee and passes over to his representatives. They may of course have their action for any liability of the guarantor incurred by the default of the party whose good conduct is guaranteed, during the life of the party receiving the guaranty. But when he dies, the guaranty dies also so far, that if the party for whose good conduct the guaranty is given, goes on with the same service as before, but now rendering it to the representatives of the deceased, they cannot hold the guarantor for the default of one who is now at work for them. Thus, a bond for the good conduct of a clerk, when the obligee (r) Metcalf v. Bruin, 12 East, 405. (s) The case of Barclay v. Lucas, 3 Dougl. 321; s. c. 1 T. R. 291, n. (a), although it has been doubted on some points (see Weston v. Barton, 4 Taunt. 681), is yet an authority for this principle, that if the terms of the contract show it was the intention of the parties that the liability should continue, such will be the case, although the names of the firm change. Such was evidently the court's understand ing of the bond in that case, for Lord Mansfield observed "The question turns, as Lord Chief Justice De Grey observes, in the case which has been cited, upon the meaning of the parties. In endeavoring to discover that meaning, the subjectmatter of the contract is to be considered. It is notorious that these banking-houses continue for ages with the occasional addition of new partners. In such establishments clerks are necessary, who now and then succeed as partners, an arrangement very proper and very beneficial to the clerks. The house requires security for their honesty. Now it seems to me to make no difference whether a new partner is introduced or not, for there is no doubt that it is a security to the house. I am glad that there is a distinction between this case and that decided in the Common Pleas; for I think that the plaintiffs are entitled to recover to the extent of the whole sum embezzled, or at all events to the extent of their own share." This principle was the foundation of the decision in Pease v. Hirst, 10 B. & C. 122. died, and the executor employed the same clerk in arranging and finishing the business of the obligee, was not held sufficient to maintain an action by the executor for misconduct of the clerk after the death of the obligee. (t) 1 In regard to the subject-matter, a guaranty to cover goods supplied to a certain amount, without restriction of time, continues until revoked; although even such continuing guaranty may be discharged by a change of the terms of credit. (u) If the guarantor means to limit his liability to a single transaction, he should so express it. (v) But as no special form or manner of expression is necessary, if this purpose may fairly be gathered from the whole contract, courts will so construe it. (w) (t) Barker". Parker, 1 T. R. 287. (u) In Barstow v. Bennett, 3 Camp. 220, A gave to B a written guaranty to the extent of £300 for any goods he might supply to C, provided C neglected to pay in due time. B supplied goods to C accordingly at two months' credit, and C paid in due time to an amount exceeding £300. The account having run for some time on these terms, and there being a balance due to B, a new account was opened on new terms of credit. Held, that the guaranty extended to all goods furnished while the term of credit remained unchanged, but not to those furnished after the term of credit was changed, and a new account opened. See Hatch v. Hobbs, 12 Gray, 447. (v) Merle v. Wells, 2 Camp. 413. In this case the guaranty was in these words: "Gentlemen, I have been applied to by my brother, William Welles, jeweller, to be bound to you for any debts he may contract, not to exceed one hundred pounds (with you), for goods necessary in his business as a jeweller. I have wrote to say by this declaration I consider myself bound to you for any debt he may contract for his business as a jeweller, not exceeding one hundred pounds, after this date. (Signed) John Wells." And Lord Ellenborough said: "I think the defendant was answerable for any debt not exceeding one hundred pounds which William Wells might from time to time contract with the plaintiffs in the way of his business. The guaranty is not confined to one instance, but applies to debts successively renewed. If a party means to be surety only for a single deal ing, he should take care to say s By such an instrument as this, a continuing suretyship is created to the specified amount. There must be, therefore, a verdict for the plaintiffs for £100." See Brown v. Bachelor, 1 Hurl & N. 255. (w) See Cremer v. Higginson, 1 Mason, 323, which is a leading case on this subject. In this case the letter of guaranty contained this clause: "The object of the present letter is to request you if convenient to furnish them" (Messrs. Stephen and Henry Higginson), "with any sum they may want, as far as fifty thousand dollars; say fifty thousand dollars. They will reimburse you the amount, together with interest, as soon as arrangements can be made to do it; and as our embargo cannot be continued much longer, we apprehend there will be no difficulty in this. We shall hold ourselves answerable to you for the amount." It was held, that this was not an absolute original undertaking, but a guaranty; that it covered advances only to Stephen and Henry Higginson (who were then partners), on partnership account, and could not be applied to cover advances to either of the partners separately, on his separate account; that the authority of the guaranty was revoked by the dissolution of the partnership, and no subsequent advances made by the party after a full notice of such dissolution were within the reach of the guaranty; that the letter did not import to be a continuing guaranty for money advanced, toties quoties from time to time, to the amount of $50,000, but for a single advance of money to that amount; and that, when once advances were made 1 A continuing guarantee also for advances, in the absence of express provision, is revoked as to subsequent advances by notice of the death of the guarantor. Coulthart v. Clementson, 5 Q. B. D. 42; Home Nat. Bank v. Waterman, 30 Ill. App. 535; Hyland v. Habich, 150 Mass. 112. *SECTION VI. * 22 HOW A GUARANTOR IS AFFECTED BY INDULGENCE TO A DEBTOR. A guarantor is entitled to a just protection. But this principle is not carried so far as to permit him to compel the creditor unreasonably to proceed against the principal debtor..(x)1 * to $50,000, no subsequent advances were within the guaranty; although, at the time of such further advances, the sum actually advanced had been reduced below $50,000 by reimbursements of the debtors. In Grant . Ridsdale, 2 Har. & J. 186, a guaranty in the following terms: "I will guarantee their engagements, should you think it necessary, for any transactions they may have in your house," was held an absolute and continuing guaranty, until countermanded. So where the defendant addressed a letter to the plaintiffs, stating that his brother wished to go into business, and promising to be accountable for such goods furnished by the plaintiffs as his brother should call for, from $300 to $500 worth in consequence of which the plaintiffs furnished him with divers parcels of goods; it was held, that this was a continuing guaranty to the amount specified, and was not limited to the bill of parcels first delivered. Rapelye v. Bailey, 5 Conn. 149. See also Clark v. Burdett, 2 Hall, 167.— A writing in these words: "I agree to be responsible for the price of goods purchased of you, either by note or account, at any time hereafter, to the amount of $100," is a continuing guaranty to that extent, for goods to be at any time sold before the credit is recalled. Bent v. Hartshorn, 1 Met. 24. Many of the cases seem to hold with Lord Ellenborough, in Merle v. Wells, 2 Camp. 413, that the guaranty will be understood to be continuing, unless expressly limited. But the contrary opinion was expressed in White v. Reed, 15 Conn. 457. In that case the defendant gave the plaintiff a 23 writing in these words: "For any sum that my son G. may become indebted to you, not exceeding $200, I will hold myself accountable." Held, that the terms of this instrument were satisfied when any indebtedness within the amount limited was incurred by G., and consequently that it was not a continuing guaranty. So in Boyce v. Ewart, 1 Rice, 126, the guaranty was in these words, "The bearer is about to commence business, to assist him in which he will need your aid, which, if you render, we will, in case of failure, indemnify you to the amount of $4,000." Held, that it was not a continuing guaranty, but applicable to the bearer's commencing in business, and that, as soon as the bearer had refunded $4,000, the guaranty ceased. In Fellows v. Prentiss, 3 Denio, 512, a guaranty in these words: "I hereby agree to guarantee to you the payment of such an amount of goods, at a credit of one year, interest after six months, not exceeding $500, as you may credit to A," was held, not to be a continuing guaranty, but it was held to be exhausted by a single purchase of goods to the amount of $500. See also Whitney . Groot, 24 Wend. 82; Lawrence v. McCalmont, 2 How. 26; Chapman v. Sutton, 2 C. B. 684; Tanner v. Moore, 11 Jur. 11; Allnut v. Ashendon, 5 Man. & G. 392; Hitchcock v. Humphrey, id. 559; Martin v. Wright, 9 Jur. 178; Johnston v. Nichools, 1 Č. B. 251; Farmers' & Mechanics' Bank v. Kercheval, 2 Mich. 504; Agawam Bank v. Strever, 16 Barb. 82. (x) It seems to be well settled that 1 The following cases hold or tend to show that if the creditor after request from the surety fails to sue a solvent principal, the surety is discharged if the principal afterwards becomes insolvent. Thompson v. Robinson, 34 Ark. 44; Martin v. Skehan, 2 Col. 614; Remsen v. Beekman, 25 N. Y. 552; Colgrove v. Tallman, 67 N. Y. 95; Equitable Life Ass. Soc. v. Bostwick, 100 N. Y. 628, 629; Strickler v. Burkholder, 47 Pa. 476; Fidler v. Hershey, 90 Pa. 363; See also p. 25 note (c) post. This doctrine seems to have originated with Pain v. Packard, 13 Johns. 174, cited in note (a) supra. But the weight of authority is otherwise, Dane v. Corduan, 24 Cal. 157; Gage Mechanics' Nat. Bank, 79 Ill. 62; Halstead v. Brown, 17 Ind. 202; Nichols v. McDowell, 14 B. Mon. 6; Ingels v. Sutliff, 36 Kan. 444; Frye v. Barker, 4 Pick. 382; |