to justify the creditor in suing for breach of the entire contract, the extent of the surety's liability is fixed. And if without the surety's consent the creditor permits the defaulting contractor to proceed with the contract, the limit of the surety's liability remains bounded by the damage which had occurred at the time of such a breach by the contractor as would justify the creditor in terminating performance. The surety may assent to an extension of time, but he may make this extension for a limited period.79

§ 1253. Surety's right to revoke a continuing guaranty.

Where a guaranty of a series of performances is made, it has not been doubted that neither revocation nor death of the surety could affect his liability for transactions already entered into in accordance with the terms of the guaranty,80 but it has been urged that as to future transactions, either express revocation or the death of the surety should prevent further liability from accruing. Some distinctions must be here observed. It is possible that the real consideration for the surety's promise is given once for all at the outset, although the performances guaranteed are to continue for a long or indefinite period. Here the surety having got the benefit of his bargain cannot withdraw (nor will his death relieve his estate) from the liabilities it imposes upon him, however long into the future

or

79 In Hunt v. Roberts, 45 N. Y. 691, the defendant had guaranteed the fulfilment of a builder's contract. The court said: "By the terms of the original contract, the work was to have been completed on the 15th of October. If not performed at this time, the defendant, had he not interfered in the transaction, consented to an extension of the time, Iwould have been entitled to have the matter closed. If the delay had been owing to the default of the plaintiffs, the defendant would have been discharged. If it was caused by Crossley, he had been guilty of a breach, and the defendant would have been entitled to insist upon the contract being terminated, and,

on such termination, would have been liable as guarantor for the work done up to that time, and for the damages sustained by the plaintiffs in not being allowed to complete the job." And added that "after a breach which will justify a termination of the contract, the surety has the right to require that the contract with the principal be terminated, and the claim against the surety confined to the damages then recoverable." See also McKecknie v. Ward, 58 N. Y. 541, 17 Am. Rep. 281, and supra, § 1250, ad fin.

80 See Baker v. Elliot, 73 Me. 392; Exchange Nat. Bank v. Hunt, 75 Wash. 513, 135 Pac. 224.

they may extend.81 From such cases are to be distinguished those where the guarantor without any present consideration guarantees a series of future sales or credits. If no seal is attached to such a writing, it has been held, and it seems rightly, that such a promise is in effect a series of continuing offers, which will be successively accepted as each credit of the contemplated series is given. Either express revocation or death, therefore, would terminate such of these offers as had not already been accepted, and it is so generally held.82 It has been suggested that the parties can provide effectively in the guaranty itself that a special notice of the guarantor's death is necessary in order to work a revocation.83 But if the guarantor's prom

ise is a continuing offer or series of offers, the fact that he says it shall not be revoked by a method which the law says does revoke offers, seems immaterial. Where, however, consideration is given for the guarantor's continuing promise, a provision that it shall be terminable only on notice is unobjectionable.84

The failure of some courts to observe the effect which a seal may have on such a guaranty is another source of confusion. It cannot be too emphatically insisted upon, that no matter what else an offer may be, it is a promise,85 and since at common law a seal made a promise binding according to its terms, whether the promise was conditional or not, a sealed guaranty in the form supposed should, wherever seals retain this effect, prevent revocation either expressly or by death, unless there is some especial principle in the law of guaranty permitting the surety to withdraw even from a completed contract.

Such a principle may perhaps be based on the difficulty of the guarantor's situation, so that even a sealed contract by him where he has not received the full consideration at the outset for his continuing promise may be revoked as to future transactions.86 Such a rule is particularly appropriate where

B. D. 42; and this suggestion was followed in Re Silvester [1895] 1 Ch. 573. See also Ascherson v. Tredegar &c. Wharf Co., [1909] 2 Ch. 401; Valentine v. Donohoe-Kelly Banking Co., 133 Cal. 191, 65 Pac. 381; Dodd v. Whalen, [1897] 1 Ir. 575.

84 In Egbert v. National Crown Bank [1918] A. C. 903, the guaranty was in consideration of the promisee "agreeing or continuing to deal" with the person whose obligations were guaranteed.

85 See supra, § 25. In Jordan v. Dobbins, 122 Mass. 168, 23 Am. Rep. 305, the instrument was under seal, but the court cited and professed to follow Offord v. Davies, 12 C. B. (N. S.) 748, though in that case the guaranty was not under seal, and the court refused to follow the contrary and earlier decision

of Bradbury v. Morgan, 1 H. & C. 249, where the guaranty was sealed. The Massachusetts court has followed its earlier decision in Hyland v. Habich, 150 Mass. 112, 22 N. E. 765, 15 Am. St. Rep. 174; and see cases in the following note; but a contrary view is taken in Rapp v. Phoenix Ins. Co., 113 Ill. 390, 400-401, 55 Am. Rep. 427. See also Shackamaxon Bank v. Yard, 143 Pa. 129, 137, 22 Atl. 908, 24 Am. St. Rep. 521.

86 In Beckett v. Addyman, 9 Q. B. Div. 783, Lord Coleridge said: "It is probable that the defendant could have terminated his liability by notice; for it seems to be clear that in the case of a continuing guarantee for goods to be supplied or money to be advanced, it is in the power of the guarantor to determine his liability; but if the surety takes no

surety by the terms of his promise has agreed to perform if the principal fails to make the stated payment or performance, however valid the reason for his failure; and, therefore, the surety's defence, if he has any, must be based on equitable grounds. But if the surety merely promises to answer for the principal's debts or defaults, a judgment in the principal's favor at the suit of the creditor conclusively shows that as between them there has been no debt or default, and the surety by the very terms of his promise can be under no liability, unless indeed the judgment was based on a personal discharge founded on bankruptcy or the statute of limitations or the like.96

97

Where the surety by the terms of his promise is liable, but the creditor has previously suffered an adverse judgment in an action against the principal, it has been said: "It is obvious that if the rule of res inter alios acta is applied to a case in which the principal has been discharged, there may be a judgment against a surety who will either have no indemnity against his principal, or if he has, then the principal will be indirectly subjected to a liability from which he had been legally discharged." " The solution of the difficulty is this. If the reason why judgment went against the creditor was due to the infancy, coverture, or discharge in bankruptcy of the principal, or to any other circumstances which actually existed and for which the creditor was not to blame, the surety has no equitable defence; but if in the later litigation with the surety, it is found as a fact that the principal was not an infant, a married woman, or discharged in bankruptcy, or did not have on the actual facts a defence to the action against him, the creditor must be deemed in fault for having suffered judgment to go against him, and

96 State v. Parker, 72 Ala. 181; Brown v. Bradford, 30 Ga. 927; Price v. Carlton, 121 Ga. 12, 24, 48 S. E. 721, 68 L. R. A. 736; Cook v. King, 7 Ill. App. 549; Baker v. Merriam, 97 Ind. 539; Stevens v. Carroll, 131 Ia. 170, 105 N. W. 653; Crum v. Wilson, 61 Miss. 233; State v. Coste, 36 Mo. 437; People v. Metropolitan Surety Co., 171

N. Y. App. Div. 15, 156 N. Y. S. 1027; Gill v. Morris, 11 Heisk. 614, 27 Am. Rep. 744; Sonnenthiel v. Trust Co., 23 Tex. Civ. App. 436, 56 S. W. 143. Most of these cases were suits on official bonds.

97 Gill v. Morris, 11 Heisk. 614, 621, 27 Am. Rep. 744.

In England, however, it has been held in chancery that giving time to the principal does not discharge a surety against whom judgment has already been given.92

§ 1255. Effect of prior judgment in favor of the principal on a subsequent action against the surety.

It may be supposed that in an action against the principal the creditor recovers judgment or that judgment goes against him. In either case, he may seek subsequently to make good a claim against the surety. It is sometimes said that judgment in favor of the principal "is the same as a release by the creditor or a payment by the debtor." 93 But it is obvious that such a statement is not universally true; for, as has been seen,94 a surety may frequently be liable where the principal never was liable, and where consequently judgment would necessarily go in his favor if he was sued by the creditor. If the principal and surety were joint contractors, the effect of a judgment for or against one of them has previously been considered; 95 but even though the liability is several, the distinction must be taken between a promise on the part of a surety to make good the principal's debts or defaults on the one hand, and a promise to pay a sum of money or perform some act defined in some other way than as a debt or default of the principal. In the latter case the

v. King, 9 Met. 511, 43 Am. Dec. 405; Moss v. Pettingill, 3 Minn. 217; Anthony v. Capel, 53 Miss. 350; Rice v. Morton, 19 Mo. 263; West v. Brison, 99 Mo. 684, 13 S. W. 95; Drexel v. Pusey, 57 Neb. 30, 77 N. W. 351; Westervelt v. Frech, 33 N. J. Eq. 451; Bangs v. Strong, 4 N. Y. 315, 7 Hill, 250, 42 Am. Dec. 64, 10 Paige, 11; Cooper v. Wilcox, 2 Dev. & B. Eq. 90, 32 Am. Dec. 695; Blazer v. Bundy, 15 Oh. St. 57; Manufacturers' Bank v. Pennsylvania Bank, 7 W. & S. 335, 42 Am. Dec. 240 (see Hagey v. Hill, 75 Pa. 108, 111, 15 Am. Rep. 583); Shelton v. Hurd, 7 R. I. 403, 84 Am. Dec. 564; Parker v. Nations, 33 Tex. 210 (statutory); Baird v. Rice, 1 Call, 18, 1 Am. Dec. 497; Shields v. Reynolds,

9 W. Va. 483. The case of Findlay's Ex'rs v. Bank of United States, 2 McL. 44, to the contrary is opposed to the current of authority.

92 Jenkins v. Robertson, 2 Drew. 351. More recently where judgment had been obtained against both principal and surety, it was held that they are in an equal position and that an agreement to give time to the former will not preclude the enforcement of the judgment against the latter. In re Debtor, [1913] 3 K. B. 11; In re Butten, 57 Solic. Jl. 579. Cf. In re E. W. A., [1901] 2 K. B. 642.

93 Ames v. Maclay, 14

281.

94 See supra, §§ 1214-1218.
95 See supra, § 330.

Iowa,