Section 191. [DEFINITIONS AND MEANING OF TERMS.] In this act, unless the context otherwise requires, Acceptance means an acceptance completed by delivery or notification. "Action" includes counterclaim and set-off. "Bank" includes any person or association of persons carrying on the business of banking, whether incorporated or not. "Bearer" means the person in possession of a bill or note which is payable to bearer. "Bill" means bill of exchange, and "note" means negotiable promissory note. "Delivery" means transfer of possession, actual or constructive, from one person to another. "Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. "Indorsement" means an indorsement completed by delivery. "Instrument" means negotiable instrument. "Issue" means the first delivery of the instrument, complete in form, to a person who takes it as a holder. "Person" includes a body of persons, whether incorporated or not. "Value" means valuable consideration. "Written" includes printed, and "writing" includes print. Section 192. [PERSON PRIMARILY LIABLE ON INSTRUMENT.] The person 66 primarily " liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are "secondarily" liable. Section 193. [REASONABLE TIME, WHAT CONSTI principle thus expressed. Rockfield v. First Nat. Bank, 77 Oh. St. 311, 83 N. E. 392, 14 L. R. A. (N. S.) 842; Downey v. O'Keefe, 26 R. I. 571, 59 Atl. 929; Thorpe v. White, 188 Mass. 333, 74 N. E. 592; Toole v. Crafts, 193 Mass. 110, 78 N. E. 775, 118 Am. St. Rep. 455; Gibbs v. Guaraglia, 75 N. J. L. 168, 67 Atl. 81; Baumeister v. Kuntz, 53 Fla. 340, 42 So. 886; Farquahar Co. v. Higham, 16 N. D. 106, 112 N. W. 557; Vander Ploeg v. Van Zuuk, 135 Ia. 350, 112 N. W. 807, 13 L. R. A. (N. S.) 490, 124 Am. St. Rep. 275. TUTES.] In determining what is a "reasonable time" or an "unreasonable time," regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case. Section 194. [TIME, HOW COMPUTED; WHEN LAST DAY FALLS ON HOLIDAY.] Where the day, or the last day, for doing any act herein required or permitted to be done falls on Sunday or on a holiday, the act may be done on the next succeeding secular or business day. Section 195. [APPLICATION OF ACT.] The provisions of this act do not apply to negotiable instruments made and delivered prior to the [taking effect] hereof. Section 196. [CASES NOT PROVIDED FOR IN ACT.] In any case not provided for in this act the rules of [law and equity including] the law merchant shall govern.' Section 197. [REPEALS.] All acts and parts of acts inconsistent with this act are hereby repealed. Section 198. [TIME WHEN ACT TAKES EFFECT.] This [act] shall take effect on 19 18 Section 196 as drafted reads "In any case not provided for in this Act the rules of the law merchant shall govern." The words in brackets [law and equity including] were inserted in many States to harmonise the section with the Uniform Sales Act (Section 73), the Uniform Warehouse Receipts Act (Section 56), the Uniform Transfer of Stock Act (Section 18) and the Uniform Bills of Lading Act (Section 51). The object of sections such as these, is to clearly point out that no one of these acts pretends to be a complete codification of the whole law upon each topic but that there are cases not provided for in each of the statutes. Another purpose is to leave room for the growth of new usages and customs so that none of these acts should put the law merchant in a straight jacket and thus prevent the further expansion of the law merchant. 19 Section 198 as drafted uses the word "chapter." In many States this term is inappropriate; therefore the word in brackets [Act] has been inserted in lieu of the word "chapter." CHAPTER XXXIV CONTRACTS OF SURETYSHIP. THE SURETY'S LIABILITY AND DEFENCES Suretyship defined.... Capacity to become surety. 1211 1212 The principal's non-liability as a defence to the surety. 1213 The principal's non-liability as a defence to the surety's promise to pay a fixed sum... 1214 Discharge in bankruptcy of the principal debtor. 1215 Discharge of the principal in bankruptcy may prevent performance of a condition of the surety's liability...... 1216 Illegality of the contract with the principal as a defence to the surety..... 1217 Duress or fraud practiced on the principal. 1218 Payment of the debt discharges the surety. 1219 Release of the principal discharges the surety. 1220 Whether an executory accord with the principal discharges the surety. 1221 Giving time to the principal discharges the surety.. 1222 Surety's consent to extension of time...... 1223 Agreements with third persons to give time to the principal... 1224 Reasons for discharge of surety when time has been given to the principal... 1225 Certainty of time for which extension is promised.. 1226 Extension of time for an illegal or usurious consideration. 1227 Acceptance by the creditor of a confession of judgment at a future day by the principal..... 1228 A promise to give time supported by an oral counter-promise within the Statute of Frauds..... 1229 Reservation of rights against the surety... 1230 Delay in enforcing the claim against the principal does not discharge the surety...... 1231 Surrender of security by the creditor discharges the surety pro tanto. 1232 1233 Whether surrender of security of less value than the claim ever totally discharges the surety.. 1234 Creditor's refusal of tender by the principal discharges the surety. 1235 1236 A surety is not entitled to notice of the principal's default. . 1237 1238 Variation or alteration of the contract between creditor and principal if it 1239 1240 A change in the terms of the contract between principal and creditor may discharge the surety though not affecting the terms of his contract..... 1241 A variation of the contract between creditor and principal impliedly authorized by the original contract between them will not discharge a surety.. 1242 The creditor's variation in the performance of his contract with the principal may discharge the surety. . . . . 1243 When non-compliance with a condition on which a contract is delivered by a 1244 1245 If the creditor is party to the fraud or has notice of it from the form of the instrument he cannot recover. 1246 Surety is bound by the principal's filling of blanks though in violation of instructions.... 1247 Fraud or duress of the principal inducing the surety's promise will not excuse him..... ... 1248 Failure of the creditor to disclose material facts at the time the surety's contract is made.. 1249 Retention of a dishonest employee excuses from further liability a surety for his fidelity... 1250 The surety's right to set off a claim of the principal against the creditor... 1251 Termination of surety's liability... 1252 Surety's right to revoke a continuing guaranty. 1253 It is immaterial that the surety's obligation has been reduced to judgment.... 1254 Effect of prior judgment in favor of the principal on a subsequent action against the surety.. 1255 Effect of prior judgment against the principal on a subsequent action against the surety.... 1256 Equity will give relief against the surety in case of accident or mistake.... 1257 Injurious action by the creditor will discharge a surety, though the creditor when the obligation was created was ignorant of the suretyship relation. 1258 At common law a party to a negotiable instrument apparently a principal but in fact a surety will be discharged by the creditor's inequitable conduct if the creditor knows of the true relation of the parties. ... Effect of the Negotiable Instruments Law. . . . 1259 1260 When accommodation parties on negotiable paper are co-sureties... Liability of accommodation indorsers on negotiable instruments is presumably successive.. 1261 1262 Release or inequitable dealing with one co-surety partially discharges others.. 1263 § 1211. Suretyship defined. "Whoever is liable to pay the debt of another, whether for value, as in the case of the broker who receives a commission for incurring liability, or gratuitously as between himself and the person primarily liable, is a surety." "1 Whether one is a surety, therefore, depends not on his relation to the 1 Per Jessel, M. R., in Imperial Bank v. London, etc., Docks Co., 5 Ch. Div. 195, 200. creditor but on his relation to the principal debtor. 3 Conse quently, an agreement for sufficient consideration between principal and surety, by which the latter assumes the debt, transposes the surety into a principal and the principal into a surety. In some American cases a narrower meaning is given to the word surety. It is confined to one who makes a direct and unconditional promise to the creditor as distinguished from a guarantor who makes a collateral promise to pay the debt if the principal debtor fails to do so. In some American cases, also, a peculiar definition is given of guaranty which confines its meaning to an engagement that the principal debtor is solvent; 5 but there is no propriety in popular usage or in ordinary legal usage in this restriction. A promise to pay if the principal debtor does not is the ordinary form 2 In Dearing v. Veal, 25 Ky. L. Rep. 1809, 78 S. W. 886, 887; McGraw v. Union Trust Co., 136 Mich. 521, 99 N. W. 758; Wendlandt v. Sohre, 37 Minn. 162, 33 N. W. 700, and Reissaus v. Whites, 128 Mo. App. 135, 106 S. W. 603, 605, the court defined a surety as any person "who, being liable to pay a debt, or perform an obligation is entitled if it is enforced against him, to be indemnified by some other person who ought himself to have made payment or performed before the surety was compelled to do so." See also the use of the word in Davis v. Wells, 104 U. S. 159, 26 L. Ed. 686; Thayer v. Braden, 27 Cal. App. 435, 150 Pac. 653; Townsend v. Sullivan, 3 Cal. App. 115, 84 Pac. 435; Singer Mfg. Co. v. Littler, 56 Ia. 601, 9 N. W. 905; Watriss v. Pierce, 32 N. H. 560; People v. Backus, 117 N. Y. 196, 22 N. E. 759; Gagan v. Stevens, 4 Utah, 348, 9 Pac. 706. 3 Crim v. Fleming, 123 Ind. 438, 24 N. E. 358; United States Bank v. Stewart, 4 Dana, 27; Williams v. Selly, 37 N. Y. 375; Rhea v. Preston, 75 Va. 757; Bailey v. Griffith, 40 U. C. C. B. 418. 4 J. R. Watkins Medical Co. v. Lovelady, 186 Ala. 414, 65 So. 52; 4 W. T. Rawleigh Medical Co. v. Tar- 5 McIntosh-Huntington Co. v. Reed, 89 Fed. 464; J. R. Watkins Medical Co. v. Lovelady, 186 Ala. 414, 65 So. 52; Manry v. Waxelbaum, 108 Ga. 14, 17, 33 S. E. 701; Northern State Bank v. Bellamy, 19 N. Dak. 509, 514, 125 N. W. 888, 31 L. R. A. (N. S.) 149; Reigart v. White, 52 Pa. 438. |