Where there is an entry on the docket of the court, *28 made by counsel to the effect that no action shall be brought on the original debt, this discharges the surety, because it will be enforced by the court, and no such action will be permitted. It is therefore equivalent to a discharge of the debt by the creditor, which of course operates as a discharge of the guarantor. (k) Such an arrangement made with the principal debtor without the consent of the surety, although innocently done, may work an injury to the surety. It is obvious that a surety is discharged by indulgence to a principal, only when the creditor knows the relation of the parties. Hence if two or more are promisors of a note, and some are principals and others are sureties, but this does not appear on the note and is not known to the holder, and he gives time to the promisor who is principal, this does not discharge those who are sureties. (1) Any valid extension of the credit, made in such a way as to be binding on the creditor, and made without the assent of the guarantor, is held to discharge him. (m) 1 action." See also Strafford Bank v. Crosby, 8 Greenl. 191. But these cases seem to rest on the ground of usage of the bank, and that the same was known to the sureties, and acquiesced in by them. And it was accordingly held, in Crosby v. Wyatt, 10 N. H. 318, that if a note is made payable to a bank, where a regular usage exists to receive payment by instalments, at regular intervals, with the interest on the balance in advance, there is presumptive evidence of the assent of a surety that payment may be delayed, and received by instalments according to such usage, until the contrary is shown. But this principle cannot be held to apply to any delay beyond such regular usage, and no assent to any other course can be pre- (k) Fullam v. Valentine, supra. (m) Dubuisson v. Folkes, 30 Miss. 432; Shook v. State, 6 Ind. 113; Bangs v. Mosher, 23 Barb. 478. 1 A binding agreement with the principal extending the time of payment for however short a time discharges the surety. Swire v. Redman, 1 Q. B. D. 536; Byers v. Hussey, 4 Col. 515; Berry v. Pullen, 69 Me. 101; Smith v. Shelden, 35 Mich. 42; Wright v. Watt, 52 Miss. 634; Hosea v. Rowley, 57 Mo. 357; Howell v. Sevier, 1 Lea, 360. And see p. 26, note (h) and 1, ante. * But, though the time may be short it must be definite. King v. Haynes, 35 Ark. 463; Winne v. Colorado Springs Co. 3 Col. 155; Woolfolk v. Plant, 46 Ga. 422; Beach v. Zimmerman, 106 Ind. 495; Morgan v. Thompson, 60 Ia. 280. Within this rule it has been held that agreements were too indefinite to be binding, and hence too indefinite to discharge the surety, when made to give time "beyond the day of maturity," Ward v. Wick, 17 Ohio St. 159; or to forbear "a while longer," Jenkins v. Clarkson, 7 Ohio, 72; or "until some time in the summer," Miller v. Stem, 2 Pa. St. 286; or until "after harvest." Findley v. Hill, 8. Oreg. 247. Contra, Moulton v. Posten, 52 Wis. 169. Of course if the surety consent to the extension he is not discharged. Rockville Nat. Bank v. Holt, 58 Conn. 526; Briggs v. Norris, 67 Mich. 325; Rutherford v. Brachman, 40 Ohio St. 604. And even if the surety does not consent, if he afterwards, with full knowledge of the facts, promises to pay the debt, he is liable. Smith v. Winter, 4 M. & W. 454; Ellis SECTION VII. OF NOTICE TO THE GUARANTOR. A guaranty may be extinguished or discharged by the fact that the guarantee gives no notice to the guarantor of the failure of the principal debtor, and of the intention of the guarantee to enforce the guaranty. For a guarantor is entitled to reasonable notice of this. What the notice should be, or when it should be given, is not settled in the case of a mere guarantor as it is in the case of an indorser, but the reason and justice are the same in both cases, and equally require notice, in order that the guarantor may at once take what measures are within his power to secure *29 or indemnify himself. The question of reasonable time is * a question of law, and the cases are very few which would help us in determining what time would be reasonable. But from the authorities and the reason of the thing, we deduce these rules the guarantor is entitled to this notice, but cannot defend himself by the want of it, unless the notice and demand have been so long delayed as to raise a presumption of waiver or of payment, or unless he can show that he has lost by the delay opportunities for obtaining securities which a notice or an earlier notice would have given him. (n) 2 (n) Allen v. Rightmere, 20 Johns. 366; Douglass v. Howland, 24 Wend. 35; Farrow v. Respess, 11 Ired. L. 170; Woodstock Bank v. Downer, 1 Williams, 539; Yancey v. Brown, 3 Sneed, 89; Dowley In this latter case a very v. Camp, 22 Ala. 659; Louisville M. Co. v. Welsh, 10 How. 461; Dunbar v. Brown, 4 McLean, 166; F. & M. Bank v. Kercheval, 2 Mich. 504; La Rose v. Logansport Bank, 102 Ind. 332. v. Bibb, 2 Stew. 63; First Nat. Bank v. Whitman, 66 Ill. 331; Williams v. Boyd, 75 Ind. 286; Porter v. Hodenpuyl, 9 Mich. 11; Bramble v. Ward, 40 Ohio St. 267. Contra is Walters v. Swallow, 6 Whart. 446. See also Warren v. Fant's Trustee, 79 Ky. 1. 1 A surety is not entitled to notice, Harris r. Newell, 42 Wis. 687; Central Savings Bank v. Shine, 48 Mo. 456; McMillan v. Bull's Head Bank, 32 Ind. 11; Atlantic, &c. Tel. Co. v. Barnes, 64 N. Y. 385; nor in some States a guarantor, Barhydt v. Ellis, 45 N. Y. 107; Gage v. Lewis, 68 Ill. 604; Gage v. Mechanics' Bank, 79 Ill. 62; Kauztman v. Weirick, 26 Ohio St. 330. If the liability, however, is contingent, there must be reasonable notice. March v. Putney, 56 N. H. 34. See Clay v. Edgerton, 19 Ohio St. 549; Furst, &c. Mfg. Co. v. Black, 111 Ind. 308. Thus in a continuing guaranty notice of the debtor's default and of the extent of the guarantor's liability should be given to the guarantor within a reasonable time after all transactions are closed. Davis Sewing Machine Co. v. Mills, 55 Ia. 543.- That reasonable notice is a question for the jury, see Craig v. Parkis, 40 N. Y. 181. — K. 2 In McMillan v. Bull's Head Bank, 32 Ind. 11, the rule is stated to be that a surety is not entitled to notice of the default of the principal, however such want of notice may, in fact, injure him; but that a guarantor should be given notice, in default of which he will be discharged, to the extent that he can prove that he has suffered damage. brief delay, of a day or two only, might be fatal to the claim of the guarantee, if it appeared that notice could easily have been given, and would have saved the guarantor from loss. The question would be, in such a case, was there actual negligence, causing actual injury. (0) We think that cases which appear to hold that no notice needs to be given to an absolute guarantor, (00) or to a guarantor of a note, (op) are to be interpreted in accordance with the principles above stated. A demand on the principal debtor, and a failure on his part to do that which he was bound to do, are requisite to found any claim against the guarantor; and notice of the failure, as we have said, must be given to him. (p) But if the guaranty is for the payment of a note, and is absolute and unconditional, it has been held that neither demand nor notice is necessary to charge the guarantor; (g) but we should have some question of this. If the guaranty be that the debt or note is collectible, legal proceedings against all the principals are requisite to make the guarantor liable, (r) because otherwise it cannot be certainly known that the note cannot be collected. *SECTION VIII. OF GUARANTY BY ONE IN OFFICE. *30 If a guaranty be made by one expressly in an official or special capacity, as attorney, executor, guardian, assignee, trustee, churchwarden, or the like; and the guarantor holds such office, and has a right to give the guaranty in his official capacity, then he is (0) Oxford Bank v. Haynes, 8 Pick. 423; Thomas v. Davis, 14 Pick. 353; Talbot v. Gay, 18 id. 534; Whiton v. Mears, 11 Met. 563; Farmers' & Mechanics' Bank v. Kercheval, 2 Mich. 504; Bickford v. Gibbs, 8 Cush. 154. (00) Voltz v. Harris, 40 Ill. 155; Gage v. Mechanics', &c. Bank, 79 Ill. 62; Barker v. Scudder, 56 Mo. 272; Gammell r. Parramore, 58 Ga. 54. (op) Bowman v. Curd, 2 Bush, 565. (p) Douglass v. Reynolds, 7 Pet. 114. But this demand and notice may be waived by the surety in his guaranty. Bickford v. Gibbs, 8 Cush. 154. (q) Read v. Cutts, 7 Greenl. 186; Breed v. Hillhouse, 7 Conn. 523; contra, Greene v. Dodge, 2 Hamm. 498; Beebe v. Dudley, 6 Foster (N. H.), 259. (r) Loveland v. Shepard, 2 Hill (N. Y.), 139; Van Derveer v. Wright, 6 Barb. 547. See also Blanchard v. Wood, 26 Me. 358; Day v. Elmore, 4 Wis. 190; Bosman v. Akeley, 39 Mich. 710. See French v. Marsh, 29 Wis. 649; Schmitz v. Langhaar, 88 N. Y. 503. Gaff v. Sims, 45 Ind. 262; Rockford Bank v. Gaylord, 34 Ia. 246. Notice need not be given if the principal is insolvent, Montgomery v. Kellogg, 43 Miss. 486; Brackett v. Řich, 23 Minn. 485; Bashford v. Shaw, 4 Ohio St. 263.-K. only bound in that capacity. or if he holds the office, but has no right to give the guaranty in that capacity, then he is personally liable, and such designation is merely surplusage, or words of description. (8) But if he does not hold such office, SECTION IX. OF REVOCATION OF GUARANTY. A promise of guaranty is always revocable at the pleasure of the guarantor by sufficient notice, unless it be made to cover some specific transaction which is not yet exhausted, or unless it be founded upon a continuing consideration, the benefit of which the guarantor cannot or does not renounce. If the promise be to guarantee the payment of goods sold up to a certain amount, and after a part has been delivered, the guaranty is revoked, it would seem that the revocation is good, unless it be founded upon a consideration which has been paid to the guarantor for the whole amount; or unless the seller has, in reliance on the guar anty, not only delivered a part to the buyer, but bound him*31 self by a contract enforceable at law to deliver the residue. And if the guaranty be to indemnify for misconduct of an officer or servant, this promise is revocable, provided the circumstances are such, that when it is revoked, the promisee may dismiss the servant without injury to himself on his failure to provide new and adequate sureties. (ss) 1 1 It seems, however, that a distinction is taken between the power of revocation, when the guaranty is given by parol contract, and when it is under seal. In the former case this power is very broadly asserted, but in the latter it is almost wholly denied. An eminent judge says, indeed, that there are no means or mode of revocation of guaranty under seal. (t) But whether this is strictly true may well be doubted. 2 (s) Redhead v. Cator, 1 Stark. 14; Hall v. Ashurst, 1 Cr. & M. 714; Burrell v. Jones, 3 B. & Ald. 47; Appleton v. Binks, 5 East, 148; Sumner v. Williams, 8 Mass. 162. (ss) This sentence was quoted, the law therein stated approved, and the case decided in accordance with it, in Phillips v. Foxall, L. R. 7 Q. B. 677. (t) Lord Ellenborough, in Hassell v. 1 That the guarantor of a servant's fidelity by a guaranty under seal may, by pay ing what is due on the discovery of his dishonesty, in equity, compel the delivery and cancellation of his bond, see Burgess v. Eve, L. R. 13 Eq. 450, per Malins, V. C." See Sanderson v. Aston, L. R. 8 Ex. 73. 2 There seems no reason for distinguishing a contract of guaranty from any other Long, 2 M. & Sel. 370. And see Bayley in a court of law a letter of revocation to the obligee would be of no avail, but that the proper court for relief was a court of equity. contract in respect to revocation further than by the equitable doctrine laid down on p. 31, notes (ss) and 1, ante. So long as there is only an offer, death or notice from the offerer revokes it. Offord v. Davies, 12 C. B. (N. s.) 748; Michigan Bank v. Leavenworth, 28 Vt. 209. Ordinarily when a parol promise is made, guaranteeing a single matter, it is but an offer till acted on, for till then there is no consideration. When it has been acted on, like every other binding contract, it can only be determined in accordance with its provisions or by mutual consent. Lloyds v. Harper, 16 Ch. D. 290; Hecht v. Weaver, 34 Fed. Rep. 111; Hightower v. Moore, 46 Ala. 387; Estate of Rapp v. Phoenix Ins. Co. 113 Ill. 390; Royal Ins. Co. v. Davies, 40 Ia. 469; Kernochan v. Murray, 111 N. Y. 306; White's Ex. v. Commonwealth, 39 Pa. 167. A continuing guaranty contemplates a series of transactions. As each takes place a separate obligation arises as to that, and to that extent what was a revocable offer becomes an irrevocable contract. As to the future, however, death or notice may revoke it. Offord v. Davies, supra; Coulthart v. Clementson, 5 Q. B. D. 42; Michigan Bank v. Leavenworth, supra. But, if the promise to guarantee is made for good consideration, or is under seal, there is a contract from the beginning, not merely an offer, and though notice of revocation is given before the guaranty is acted on it would seem ineffectual, for the guarantee has by contract the right to act on it. See cases cited above and in note (t), supra. In Jordan v. Dobbins, 122 Mass. 168, the court lost sight of this, and applying the same rule to a promise under seal which had been correctly applied in Offord v. Davies to a parol offer, held that death revoked the promise. A contrary decision, criticising Jordan v. Dobbins is Estate of Rapp v. Phoenix Ins. Co. supra. Hyland v. Habich, 150 Mass. 112, follows Jordan v. Dobbins. See also Harris v. Fawcett, L. R. 8 Ch. 866; Grange v. Mills, 19 Up. Can. C. P. 398; Fennell v. McGuire, 21 Up. Can. C. P. 134. Death of one co-surety of a continuing guaranty for future advances does not discharge the other. Beckett v. Addyman, 9 Q. B. D. 783. But where one co-surety had revoked his offer of guaranty before it had been accepted, failure by the guarantee to disclose this fact was held to discharge the other. Potter v. Gronbeck, 117 Ill. 404. VOL. II. 3 33 |