Cornell University Library KF 1045.D29 1891 A treatise on the law of guarantees and 3 1924 018 848 568 Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018848568 A TREATISE ON THB LAW OF GUARANTEES AND OF fitinttpl & ^nn% BY HENEY Al^SELM ^COLTAR, OF THB HIDDLB TBMFLB, ESQInBB, BABBISTSB-AT-LAW From the Second English Edition, NEW YORK AND ALBANY BANKS & BROTHERS, LAW PUBLISHERS 1891 '^A'^c Xl^ OL' 3 3 ?^. Entered according to the Aotof Congress, in the year 1887, By the BLACKSTONB PUBLISHING COMPANY, 111 the offlee of the' Librarian of CcMgr^ss, at Washingrton, D. 0, (I2i0> TO THE EIGHT HONORABLE JOH]Sr DUKE,.BAEOI^ COLEEIDGE, OF OTTEEY ST. MAKY, IN THE COUNTY OF DEVON, ILotlr (E\iiti Justice of iBnglantr, &c. &c. &c. THIS TKEATISE IS, WITH HIS lordship's KIND PEEMISSION, MOST KESPECTFULLY DEDICATED. (1911) (V) PEEFACE. TO THE SECOND EDITION. The favourable reception accorded by the Profession to the First Edition of this Work has verified the opinion held by the Author, that there was room for a Treatise on the Law of Guarantees. Moreover, it is evident that the . want- of such a Treatise was not felt in this country alone ; for, shortly after the publication of the Author's Work in England, there appeared, but without his knowledge or permission, an American Edition. Since this Work was first issued, many important de- ' cisions have been given on the subject to which it relates. These, it is believed, are all referred to in the present Edition, which embraces altogether upwards of 1140 author- ities. This number not only comprises all the English decisions on the law of guarantees which have been pro- nounced since the publication of the First Edition, but, likewise, includes the principal Ieish and American cases on the same subject which have been determined during the past ten years. An endeavor has been made, in the present Edition, to simplify the arrangement of one or two of the Chapters into which the Treatise is divided; and it is hoped that the introduction of marginal notes throughout the text will prove of some assistance to the reader. That most important part of every legal text book — the Index^-has received special attention from the Author, and no pains have been spared by him to render it as complete as possible. (1213) Ti ' PKEFACE TO THE SECOND EDITION. The present Volume is necessarily somewhat larger than the original Edition of the Work, but it is believed that only essential additions have been made. The very great difficulty of the subject discussed in this Work will be generally admitted.^ The Author therefore hopes that this will be remembered^ by those to whom tbe present Treatise may appear to be, in some respects, defec- tive. H. A. de C. 4, Papbe Bttildings, Templb, E. C. Slat Oetober, 1885. (1214) (vii) PREFACE. TO THE FIRST EDITION. As a branch of Mercantile Law, the subject of Guarantees is the only important subject of our extensive Commercial System on which no generally-received Text-book now exists. Every other head of Mercantile Law appears to have been made the subject of a separate Treatise by one or more writers. Thus, the Law of Bills of Exchange and Promissory Notes has been dealt with by Mr. Chitty, by Mr. Justice Byles, and by Mr. Justice Story. The Law of Carriers is the subject Of several Treatises, both English and American. The Law of Shipping has not only been dealt with as a whole in more than one work, but its numer- ous and important sub- divisions — such as Bills of Lading, Charter-Par ties. Insurance and General Average — have all been discussed in separate books and by different authors. The Law of Fire Insurance and of Life Insurance have each also been made the subject of a separate Text-book by Mr. Bunyon, and also by more than one American writer. The relationship of Principal and Agent, too, have likewise fur- nished a subject which has been discussed by learned authors, American as well as English ; notably by the celebrated American jurist, Mr. Justice Story. Even the comparatively small subject of " Stoppage m Transitu''^ has received attention in a separate volume by Mr. Hous- ton, devoted to its consideration. But it is not -only as a portion of our Mercantile-Law that the subject of Guarantees claims attention from English lawyers, for guarantees are frequently given for the fidelity (1215) Yin PKEFACE TO THE FIRST EDITION. of persons holding public offices or places of trust ; Govern- ment servants and those in the employment of public cor- porations being in particular very often called on to furnish such guarantees. Indeed, so common has the custom be- come, that, within the last few years, public companies have been established, some of which make it their exclu- sive business to give guarantees, of the nature just men- tioned, while others, and some of the older Insurance Of- fices, unite this business with a General Insurance business. Its importance in this double character, both of a branch of Mercantile Law and also in connection with the holders of offices and places of trust, makes the subject of Guar- ■ antees one of great and daily practical interest. This alone would lead to the expectation that it would frequently fur- nish the subject for litigation ; and, added to this, the Courts of Equity have dealt with it, as well as the Courts of Law, and have laid down certain peculiar doctrines with respect to it. Consequently, the number of reported cases upon the subject is very large. It is almost impossible to take up a volume of modern Law Reports without finding in it some decision upon the subject of Guarantees. * ***** Under these circumstances it might have been expected that there must exist some received modern Text-book, — such, however, strangely enough, is not the case. Many years ago, indeed, the Treatises of Mr. Fell and of Mr. Theobald appeared at nearly the same time, and probably then exhausted the subject ; but the time which has elapsed since their publication has now rendered these works useless as practical Text-books. These considerations will, it is hoped, furnish a sufficient explanation for the appearance of the present Volume. They lead the Author to think that there is room for a book qn the subject, and have induced him to write the follow- ing pages. * ***** (1216) PBEFACE TO THE FIRST EDITION. IX. For the Work as a whole the Author can only say that he has endeavoured . to collect all the authorities on the subject treated of in the present Volume, and has spared neither time nor trouble. , The Author has great pleasure in acknowledging the able assistance rendered to him by his learned friend Mr. George Lewis, of the Western Circuit. The suggestions received by the author from Mr. Lewis have been invalu- able, and have rendered the present Treatise much more accurate and serviceable than > it otherwise would have been. The Author desires also to mention that he has derived considerable assistance from a Treatise on "The Validity of Verbal Agreements," by a learned American jurist, Mr. Throop. In one part of his Treatise Mr. Throop en- deavors, with infinite ingenuity, to aiTange the American and English Cases on the Law of Gruarantees according to principle. The Author has not, however, followed Mr. Throop'' s arrangement, but has adopted a simpler one more suited to a work which, like the present, deals only, or at least principally, with the English Law of Guaran- tees. He hopes, however, t"hat it will be found that his attempt to refer each decision on the English Law of Guarantees to some principle has not been altogether un- successful. The Author has, it is needless to add, consulted numer- ous works, both English and American. (1217) (xi) *TABLE OF CONTENTS. C*^"] Chapter I. [The paging refers to the [*] pages.] Of the foemation of the Conteact of Guarantee. PAGE definition of a Guarantee 1 Parties to 1 Requisites of a Guarantee 2 Mutual assent of two or more Parties 3 — 7 Competenej of Parties to contract 7 — 18 Valuable consideration, if not under seal 18 — 31 Evidence of Contract of Guarantee 31 At Common Law 31 By Statute 31—39 Chapter II. The Opeeation of the Statute of Feauds on Peomises to Guarantee. Introductory remarks on 2nd clause of 4th section of Statute of Frauds . 40 Meaning and scope of 4tli section of Statute of Frauds witli reference to Guarantees 40 — 147 A. "No action shall be Irought " Operation of 4th section as indicated by these words . . . 40 — 47 B. "On any special Promise ' ' What kind of Promises indicated by these words of 4th sec- tion 47 — 49 sC. "To answer for the Debt, Default or Miscarriage of another " What kind of Liability indicated by these words of 4th sec- tion 49—147 Differences of liability indicated by words "debt, default, or miscarriage '\ •. 50 — 54 Eules for determining what are Promises ' ' to answer . for the debt," &c., within 4th section 54 Sule I. — Liability of a Third Person must (1) Exist, or (2) Be contemplated 55 — 109 Bwle II. — Promise must be made to the Creditor 110-7-116 Bule III. — There must be an absence of all liability on the part of the Promiser (the Surety) except such as arises from his express promises . . .116 — 129 Eule IV. — The main object of the Promise must be the payment of a debt or the fulfilment of a Duty by a Third Person 129 — 142 (1219) Xn TABLE OF CONTENTS. [The paging refers to the [•] pages.] FAOX C. 'To answer for the debt, &c. of another" — continued. Bute V. — The agreement must not amount to a Sale of a Debt or a transfer of a Security by the Promi- see to the Promiser (the Surety) 142 — ^147 Chapteb III. What is a supficient Memorandum in Writing to satisfy the require- ments OF THE 4th Section of the Statute of Frauds. Meaning |0f word "Agreement" used in 4th section of Statute of Frauds 148, 149 Written statement of consideration no longer required 150 Previous decisions as to whether written statement of consideration sufficient . . 151 — 157 ^ What must appear on face of Memorandum evidencing a Guarantee . . . 15T To whom a Guarantee should be addressed : 157, 1^8 What is a sufacient signing of the Memorandum 158 — 17S Who may sign .... 168 — 170 The position and character of the Signature 170 — ^173 At what time the Memorandum must be made 173 The kind of Memorandum that will satisfy Statute . 173 — 175 Of the Stamp necessary to the Memorandum 175 — 176 Chapter IV. The Liability of the Surety. General Eiiles for con.'itructiou of Guarantees I77 — 180 Doctrine as to admissibility of parol evidence to explain ambiguous Con- tract 180, 181 I. The nature of the Surety's liability 181 — 185- II. When does liability of Surety arise 185 197 III. How the liability of the Surety may be enforced I97 202 IV. The extent of the Surety's liability 203 275 (i.) As from what time a Guarantee operates and liability be- gins •,-.... 204,205 (11.) To what things a Guarantee extends 205 — ^210- (lll.) For how long a time a Guarantee continues 210 — 246 First. Ordinary Guarantees in Trade, &c 211 225 Examples of continuing Guarantees 211 220 ,, ,, Guarantees not continuing .... 221 — 225 Secondly. Guarantees for Persons in Offices, &c . . . . 225 246 1. After re-appointment to same Office . . 226 — 233 2. ,, appointment to another but similar Office 233—238 3. ,, change in duties of Office . . . 238 — 246 (iv.) Surety's liability for his ovm Fraud 246 248 (v.) Change in Persons to or for whom the Guarantee is given 248 271 (VI.) Effect upon Surety's liability of his own Bankruptcy . . 271 ^275- (1220) TABLE OF CONTENTS. XIU [The paging refers to the [*] pages.] Chaptee V. The Eights of the Stteety. y\^ Paob I. Bights of the Surety against the Principal Debtor 276 — 287 Eights existing before any payment by the Surety . 276, 277 Eights of Surety after payment made by biTn to Creditor, and before repayment, in respect of such payment made 277, 278 Eight of Surety to obtain repayment 278 — 287 When right arises 380, 281 How right enforced and what may be recovered 281, 282 Defences by Principal Debtor when sued by Surety . . . 283 Effect of Principal's Bankruptcy 283—287 II. Surety's Bights against Creditor 287 — 304 Before payment made by Surety ' . . 287 — 289 When called upon to pay 289 After payment 289—304 III. Bights of Surety against Co-sureties 304 — 322 Eight of Contribution 305—321 History of Eight 305—307 Principle it rests on 307, 308 When it arises 308-^WO- Against whom it is available > 3y)*-3l3 Jiiode of enforcing it .'313, 314 What is recoverable 314 — 316 How the right is lost 320, 321 Eight to benefit of all Securities held by a Co-surety 321, 322 Chapter VI. The Discharge of the Surety. Introductory Eemarks 323, 324 I. Matters invalidating the Guarantee db initio 324- — 344 1. Fraud 324—340 jlnteeede»< to Execution of Guarantee 325 — 339 Concealment 325 — 335 Misrepresentation 335, 339 Subsequent to Execution of Guarantee 339, 340 2. An alteration made in the instrument of Guarantee after its execution will sometimes discharge the Surety . . . 340 — 343 3. Failure of the consideration for which the Guarantee was • given discharges the Surety . . . , . . 343, 344 n. The Surety may be discharged by a revocation of Contract of Suretyship 344—350 (1) Eevocation by act of the Parties 344 — 348 (A) Eevocation of the old Agreement by notice given by Surety to Creditor 344^346 (B) Substitution of new Agreement for old one by mutual consent 346 — 348 (2) Eevocation by death of the Surety 348—350 (1221) V/ .x-c^ Xiv TABLE OF CONTENTS. [The paging refers to the [•] pages. ] ^-^ ■^ PAG* III. The Surety may be discharged by the conduct of the Creditor . 350-^95 (A) Variation of terms of original Contract • 350 361 MrsA — Variation of original Agreement between Prin- cipal Debtor and Creditor 351 — 358 1st. Where variation material 351 — 355 2nd. „ ,, not material 355 — 358 Secondly — Variation of original Agreement between Creditor and Surety _ • • 358 — 361 (B) Surety may be discharged by Creditor taking additional Security trom Principal Debtor in lieu of original Se- curity 361, 362^ (C) Surety, as a rule, discharged by discharge of Principalvji^ Vi/ Debtor .^6*^36S^ (D) Whether discharge of Co-surety releases Surety from liability 368, 369 (E) Surety, as a rule, and subje(;t to certain exceptions, is discharged by Creditor agreeing to give time to the Principal Debtor 369— S82 (F) Surety may be discharged by Creditor agreeing with Principal Debtor to give time to Surety himself . . . 382, 383 (G) Discharge of Surety by negligence of Creditor .... 383—395 (1) By laches of the Creditor : 383->s^}< (2) By loss of Se<3m-ities held by Creditor .■^^,^--595 IV. The fulfilment of object, which Guarantee was given to secure, cSm- pletely discharges Surety 395 — 404 (1) Payment by Principal Debtor 395—402 Simple Payments 395—397 What amounts to a Payment 396 — 397 Payment under Legal Process 397 Appropriation of Payments 397 — 402 General Principles and Roman Law 397 — 398 Instances where doctrine applied to Sureties . . 398 — 402 (2) Surety may be discharged by a Set-off existing between the Principal Debtor and the Creditor 402, 403 (3) The Surety may be discharged by payment made by him and accepted by Creditor in satisfaction of the Suretyship liar bility 403—404 V. The Surety may be discharged by the operation of the Statute of Limitations 404—407 APPENDIX. The Government Officers (Security) Act, 1875 409 410 Index 411—446 (1222) (xy) *TABLE OF CASES. [*xiii} [The paging refers to the [*] pages,] A. Abbott v. Hicks .... Ackerman v. Ehrensperger Adams v. Dansey . . V. Lindsell .... 284 . 209 48, 83 2 Adkins v. Farrington 318 Adney, Ex parte 271 Agacio V. Forbes 200 Agra Bank, Ex parte .... 343, 390 Agra & Masterman's Bank, Ee . 274 ildous V. Cornwell 342 Alhusen v. Prest - 21 Allan V. Inman 288 V. Kenning ....... 217 Allen, Ex parte 287 V. Bennet 174 V. Be Lisle 294 AUexander v. Vane 281 Allnutt V. Ashenden .... 179, 222 Alsop V. Price . 271 Alston, Ex parte 287 Almott V. Holden 273 Anderson v. Hayman 107 V. Thornton 241 Andrews v. Lawrence 342 V. Smith 71 Angrove v. Tippett 283 Anstey v. Harden . . 63, 91, 143, 144 Autrohus V. Davidson 276 Appleby v. Johnson 2 Aroedeckne v. Howard 312 -, In re, Atkins v. Aroe- deckne 315, 322 Archer v. Hall 370 V. Hudson 360 Ardem v. Rowney 125 Arlington v. Merricke 227 Axmitage v. Baldwin 294 Armstrong v. Cahill 201 Arundel Bank v. Lobbe 370 Ashbee v. Pidduck 368 Ashby V. Day 349 Ashlin V. White 34 Ashwell, Ex parte 193 Astlee V. Reynolds 12 PAGE Atlee V. Backhouse 12 Att.-Gen. v. Atkinson ... . 186 V. Resby 186 Augero v. Keen 233 Austen v. Baker 105, 108 Austin V. Howard 196 Backhouse v. Hall 205, 250 Backworth v. Young 172 Bacon v. Chesney 358 Badeock v. Samuel ....... 373 Badenall v. Samuel 370 Bagster v. Portsmouth (Earl) . . 9 Bailey v. Edwards 370, 377 V. Sweeting 172 Bain v. Cooper 183 Bainbridge v. Wade . . 151, 156, 157 Baker v. Cartwright ...... 8 V. Dening 171 V. Jarratt 209 Ball V. Dunsterville .... 170 Bamford v. lies 227 Bampton v. Paulin . 68, 70, 123, 146 Bank of British North America v. Cuvillier 179, 268 Bank of Hindustan, China and Japan, Re (see Harrison's case). Bank of Hindustan v. Smith . 341 of Ireland v. Bergsford , . . 370 of Montreal v. Munster 5, 178, 179 of Scotland v. Christie . . 257 Barber v. Fox . . ... 109 Barclay v. Lucas 252, 255 Bardswell v. Lydall , . 206, 210, 304 Barker v. Parker 252, 255 Barned's Banking Co. , Re Stephens 274 Barnes & Co. u Toye 15 Barnstaple Second Annuity So- ciety, Re 151 Barren v. Trussell 19, 146 Barry v. Maroney 196 313 Bartlett v. The Att.-Gen .... 239 (132a) XVl TABLE OF CASES. [The paging refers PAGE Barwick v. English Joint Stock Bank . 38, 247 Bastow V. Bennett 217, 345 Batard v. Hawes .... 305, 307, 312 Batchelor v. Lawrence 296 Bateman v. Phillips . . 104, 156, 158 Bateson v. Gosling . . . 363, 366, 367 Batson v. King 48, 84 V. Spearman .... 188, 189 Bauman v. James 174 Beardmore v. Outtenden .... 298 Beattie v. Ebury (Lord) .... 338 Beavan v. Macdonnell 8, 9 Bechervaise v. Lewis . . 289, 290, 402 Beckett v. Addyman .... 348, 349 Beer v. Poakes 22 Behn v. Kemble 34 Belfast Banking Co. v. Stanley . 188, 373, 390 Bell V. Bament 32 V. Banks 370 V. Free 316 V. Walsh 26, 27 Bellairs v. Ebsworth . . 266, 269, 359 Belshaw v. Bush 279 Benson v. Duncan 48 Bentham v. Cooper .... • . . 155 Beresford, Ex parte 3 Beulah Park Estate, In re, Sar- good's Claim 281 Bevan, Ex parte 300 Bingham v. Corbett 381 Bird V. Boulter 162 V. Gammon 76 Birkmyr v. Darnell . . 51, 56, 57, 58, 97, 104 Birmingham Brewing, Malting, and Distillery Co., Limited, In re . . 183 Bishop, Ex parte, In re Fox, Walker & Co 279, 315 Black V. Ottoman Bank .... 372 Blackie v. Osmaston 313 Blake v. White .... 370, 371, 372 Blest V. Brown . . . 288, 336, 358, 370 Blewitt, In re goods of 172 Blore V. Sutton ...... 159, 172 Bloxam, Ex parte 3 Bluck V. Gompertz 174 Boaler v. Mayor .... 361, 362, 379 Bodenham v. Purchase 400 Boehm v. Campbell 157 Bonar v. Macdonald 240 Bonser v. Cox 194 Booth, In re, Browning v. Bald- win 170, 221, 399, 401 Booth V. Turle 32 Borne County v. Jones 182 to the [•] pages.] fAsk Boultbee v. Stubbs . 287, 362, 372, 379 BoTill V. Turner 223 Bowker v. Bull 292 Bowyear v. Parsons 403 Boyd V. Brooks • ■ 278 V. Moyle 19, 24 V. Robins 273, 345 Bradbury 1). Morgan 349 Bradford v. Eoulston 173 Brandon v. Brandon 290 Brayshaw v. Eaton 15 Brettel v. Williams .... 166, 173 Brickwood v. Anniss 370 Brooks ^. Eogers 284 V. Stuart 347 Broom v. Batchelor . 20, 25, 26, 27, 151, 180 Brown & Co. v. Brown 190 V. Joddrell 8 D. Lee 305, 307 V. WUkinson 338 Browne v. Carr 364, 370 Browning v. Stallard 91, 94 Brunton v. Dallas 60 Brutton v. Burton 169 Bryant v. Christie 283 Buckmyr 1). Darnell (see Birkmyr V. Darnell). Bullock V. Lloyd . *. 81 Bunn V. Guy 18 Burbridge v. Child 191 Burgess v. Eve . 215, 288, 340, 345, 386 Buighart v. Angerstein 14 Burke's case 362, 365 Burke v. Rogerson 340 Bum V. Burn 170 Burton v. Gray 190 Bushell V. Beavan . . 48, 77, 79, 157 Butcher v. Stewart .... 27, 28, 89 Butler V. MulinhiU 10 Buxton V. Rust 173 Byrne v. Muzio . . 288, 340, 387, 388 Caballero v. Slater 154 Caldbeck v. Boon 209 Calvert v. Gordon 345 V. London Dock Co. . 352, 376 Campbell v. Rothwell .... 291 Capel V. Butler 391 Carne, Ex parte 300 (1224) Carpenter, Ex parte 284 Carpenter v. Solicitor to the Treas- iiry 225 Carr v. Brown j^gg TABLE OF CASES. xvu [The paging refers to the £*] pages, j Carr v. Wallachian Petroleum Co., Limited 178 Carrington v. Roots 32 Carshore v. N. E. Eail. Co. . . . 314 Carstairs, Ex parte 362, 369 Carters. White 383, 390, Caryl). Dawson 318 Castling v. Aubert . 65, 114, 115, 121, 130, 133, 141, 143, 145 Castrique v. Buttigieg 42 Caton V. Caton 171, 172 Chalmers v. Victors . 178, 179, 181, 222 Chambers v. Manchester and Mil- ford Eail. Co 170 Champion v. Plummer 157 Chandelor v. Lopus 34 Chapman i). Beckington . . . 258 V. Sutton 24 Chater v. Becket . . 44, 46, 47, 61, 75, 144 Chatfield d. Cox 175 Cheetham v. "Ward 369 Chichester v. Cobb 171 Christie v. Borelly 192 City Discount Co. v. McLean . . 401 Clancy v. Piggott . 105, 119, 120, 147 Clark V. Alexander . .... 37 Clarke 1). Green 360 V. Heuty 361, 370 V. Wilson 370 Clayton's case 397, 399, 400 Cleman v. Cooke 159 Clements v. Langley 318 Clerk V. Devlin 380 Close V. Close 379 Coates V. Coates 391 Cockran, In re 295 Cocks V. Nash . 367 Coe V. Duffield 173 Colbourn v. Dawson ... 26, 151, 173 Coldham v. Showier 174 Cole V. Dyer 156 Coleman v. Eyles 59 Coles V. Pack .... 27, 211, 214 V. Strick 28 V. Trecothick . . . 158, 172, 181 Collen V. Wright 161 Collins V. Owen 361 V. Prosser 201, 341 Colvin V. Buckle 209, 405 Combe v. Woulfe 369, 376 Conkey v. Hopkins 139 Connerat u. Goldsmith 86 Conoland v. Leylaud 16 Cooke V. Lister 279 Cooke V. Clayworth 10 V. Oxley 2 Cookney, Ex parte 3 fa&e: Coope V. Twyman 311 Cooper V. Evans 195, 323 V. Jenkins 301 V. Joel 343 Cooth V. Jackson 32 Copis V. Middleton 294 Coplestone, Ex parte 285 Corbett v. Brown 34 Coulthart v. Clementson .... 348 Couturier v. Haatie . . . 137, 140, 142 Cowell V. Edwards . . . 305, 307, 310 Cowper V. Smith . . 362, 365, 366, 380 Coyte V. Elphick 192, 194 Cragoe v. Jones 364 Crawford v. Stirling .... 166, 202 Craythorne v. Swinburne . . 290, 305, 308, 309, 310, 311, 312 Creighton v. Eaukin 373 Cresswell v. Wood . 48 Crick V. Warren 192 Cripps V. Hartnoll 48, 113 Crisp, Ex parte 290 Croft V. Smallwood 107 Crosby v. Wadsworth 32 Cross V. Sprigg 372 Crossleyi). Maycock 2 Croydon Commercial Gas Co. v. Dickenson .... 245, 358, 372, 381 Crystal Palace Gas Co. v. Smith . 55 Cumberlege v. Lawson 196 Cumming v. Ince 13 Curling «. Chalklen . . . . 230,231 Currey v. Armitage 366 Curry v. Edensor 175, 385 Cutler V. Southern 189 Cuxon V. Chadley 91, 92 D. Dallas V. Walls . . 170, 196, 307, 311, 315 Dally V. PooUy 180 Dance v. Girdler 265 Dangerfield v. Thomas 183 Darnell v. Tratt 87 Davey v. Phelps 360 V. Prendergrass 371 Davidson v. Cooper 341, 342 V. M'Gregor 362 Davies v. Humphreys . . 279, 280, 283, 305, 309, 320, 321 V. Otty 32 V. Stainbank 370 Davis V. Kirkwall V. London and Provincial Marine Ins. Co. . . . 325, 330, 335 Dawson v. Bank of Whitehaven . 278 (1225) XVIU TABLE OF CASES. Dawson v. Lawes . De Bert v. Thompson . . . . . . 174 Defries v. Smith 383 Denton v. Great Northern Rail. Co 2 Deriu'gu Winchelsea . . 305,308,311 DevauxiJ. Steinkeller 36 Dimmock v. Sturla 193 Dixon V. Broomfield 160 V. Hatfield 72, 103 Dobel] V. Hutchinson . . , . . 174 Dobie V. Mayor of Berwick (see Oswalde v. Mayor of Berwick. ) Dr. Leyfield's case .... . 183 Dodge V. Pringle 196 Done V. Whalley 321, 368 Douglass V. Howland .... 182, 197 Dowbiggan v. Bourne . . . 294 Dowden v. Lewis; . . , . ... 382 Drew V. Lockett . . . 297 Dry V. Davy 264 Duifield V. Scott 282 Duffy V. On . . 362 Dugdale v. Lovering 48 Duncan v. Lowndes .... 165, 167 , Fox & Co. V. North and South Wales Bank 290 Duncombe v. Tickridge ... 85 Dunlop V. Higgins .... 3 Diinmore (Countess of) v. Alex- ander 3 Dunn V. Slee 305, 321 Dutchman v. Tooth 28 [The paging leterB to the [*] pages. ] PAGE 339, 372, 385 Ellis V. Emmanuel 206, 304 V. Wilmot 364 Elliston V. Berryman 24 Elworthy v. Maunder ... . 190 Ely (Marchioness), In re ... . 2 Emmerson v. Heelis 158 Emmet v. Dewhurst . 62, 91, 195, 348 Emmett v. Kearns .... 155, 157 English «. Darley 370,392 Enright v. Falvey 388 Era Life Insurance Society, Ee' . 170 Evans v. Beattie 182, 197 V. Bremridge .... 194, 368 V. Duncombe 41 V. Earle 180 V. "Whyle 177, 359 Ewart V. Latta 296 Ewin V. Lancaster 370, 377 Exall V. Partridge . . . 278, 279, 281 Eyre v. Bartrop 370 V. Everett .... 323, 361, 372 P. Fairlie v. Denton 91, 92 Fallowes v. Taylor 18 Farebrother v. Simmons .... 162 V. Wodehouse . 292, 293 Farmer v. Robinson 160 Fay V. Burditt 9 Fell v. Goslin 201 Fish V. Hutchinson 76 Fisher v. Bridges 18 V. Val de Travers Asphalte Paving Co 209 Fishmongers' Co. v. Maltby . . . 333 Fitzgerald v. Dressier . . 48, 116, 121, 122, 124, 143 E. Eager v. Commonwealth .... 283 Earle «i. Oliver 265, 266, 301 East and West India Dock Co. v. Hill 184 Eastern Union Rail. Co. v. Coch- rane 265, 266 Eastwood V. Kenyon . . 20, 29, 30, 53, 83, 110, 112, 114, 115, 139 Eden v. Weardale Iron and Coal Co 314 Edgar v. Knapp 306 Edge V. Frost 101, 198 Edmunds v. Wallingford .... 48 Edwards v. Baugh 28 V. Brown 338 V. Jevons . . 26, 27, 151, 156, 180 V. Kelly . . . 67, 68, 70, 118, G. 146 Egerton v. Matthews 149 I Gall v. Comber I37 Elkins «. Heart 21, 79, 132 I Gammon ». Stone ..'.'.".![ 294 (1226) Fitzmaurice v. Bayley 159 Fleetwood v. Chamock 305 Fletcher v. Grover 321 Forbes v. Jackson 291, 292 Ford V. Beech 180 Forth V. Stanton 116, 118 Foster v. Charles 34 V. Mackinnon 338 Frank v. Edwards 227, 243 Fraser v. Jordan 374 Freeman v. Cooke 7 French v. French 19 20 Fricker v. Tomlinson 32 TABLE OF CASES. XIX [Tlie paging refers to the [*] pages.] FAGB Gardom, Ex parte, 149, 153, 164, 168, 271 Garrard v. Lewis 342 Gai-rett v. Handley . . 158, 180, 356 V. jull ... 42 Gaunt V. Hill . . ... 3 Gedge v. Mattson 294 Gee V. Pack 205, 206, 210 General Steam Navigation Co. v. Eolt .351 Gibbons v. M'Casland . 30, 176 Gibson v. Holland 158, 172 Gifford, Ex parte, 305, 309, 314, 362, 368, 369, 370, 379 Gillett V. Eippon . 209, 282 Glegg V. Gilbey 365 Glendinning, Ex parte 362, 370, 379 Glover v. Haokett . . . 175 V. Halkett 150 Glyn V. Hertel 179, 356 Gobell V. Arcber 159 Gobrie V. Woodley 171 Goddard v. Vanderheyden . . . 284 V. Whyte . . 290 Godwin v. Francis 173 Goldshede v. Swan 26, 28, 151, 156, 180 Good, Ex parte. In re Armitage 369 li. Cheesman . . 77, 88 Goodman v. Chase ... 89, 149 V. Litaker ... . 378 Goodwin v. Gray .... 290 Gopel V. Swindon . 310 Gordon v. Calvert . . ... 361 ' V. Martin . . . 103, 105 V. Rae 179, 205 Gore V. Gibson ... . . 10 Goring v. Edwards . . . 372 Gosbell V. Archer ... . 172 Grant u. Campbell 3 Graves v. Bulkley 182 Gray v. Seckham 170, 206, 301, 304 Gray i: Warren . . 9 Greaves, Ee 41 Green v. Cresswell . . 47, 48, 113, 114 V. Wynn 366 Greenough v. M'Clelland 42, 370, 378 Gregory !;. Williams 110 Guardians of Lichfield Union v. Gree^ 396 Guardians of Mansfield Union v. Wright 383, 386 Guardians of Portsea Island Union V. Whillier 233 Guardians of Stokesley Union v. Strother 334 Gull V. Lindsay 119, 120 Gwynne v. Burnell 908 H. Haigh V. Brooks 27, 28, 151, 155, 175, 179 V. Kaye 32 368 322 42 185 329 174 15 173 184 . 394 ... 173 . . 178, 220 110, 111, 113, 114, 115 . . 15 348, 349 . 85 Hall V. Hutchons V. Eobinson V. Wilcox .... Halliwell v. Counsell . . Hamilton!;. Watson .... Hammersley v. Baron de Biel . . Hands v^ Slaney Harding, Ex parte. In re Smith . ■V. Preece . Hardwick v. Wright Hare v. Richards . . . Hargreave v. Smee . . Hargreaves u. Parsons Harris v. Fane . . . V. Fawcett . V. Huntbach V. Venables . Harrison's case Harrison v. Jackson . V. Seymour . Hart J). Alexander . Hartland v. Jukes Hartley v. O'Flaherty Harvey, Ex parte . . V Kay Hasleham v. Young Hasloek v. Ferguson Hassell v. Long . . Hastie v. Couturier . , Hawes v. Armstrong Hawkins v. Bone . . Hawkins v. Holmes Hawkshawt). Parkins Hawtaine v. Bourne Haye^ v. 'Ward Haymen v. Gover Head v. Diggon Hearn v. Cole . Heath v. Key . Hebb's case . . Heffield v. Meadows Hemming v. Perry V. Trenery Henniker v. Wigg Heyman v. Dubois Higgins V. Senior Hill V. Nutall . . Hirschfield v. L. B. Co Hitchcock V. Hicks V. Humfrey . Hitchman v. Stewart . Hoad V. Grace & S, 21, 22 206 . 169 . 358 . 400 406 . . 312 . . 368, 379 .... 169 167, 168 . . 34 320, 345 140 155 . 10 . . . . J72 288, 323, 370 .... 168 187, 276, 287 . . 7 . . 2 370 370 .... 3 180, 181, 212 . . 173 . . .191 . 221 . 287 159 191 C. Rail , . 338 go 188, 189, 220 315 (1227) 27, 151, 180, 221 XX TABLE OF CASES. [The paging refers to the [•] pages.] FAGK Hoare v. White .284 Hobsoa V. Bass 206, 298, 304 Hodgeson v. Anderson . . 91, 93, 126 ■!). Shaw 279, 290 Hoffham V. Foudiinier 271 Holbrow V. Wilkins .... 188, 189 Hole V. Harrison 315 Holl v. Brown 389 . V. Hadley 186, 373, 376, 377, 405 Holland w Eyre 2 ». Lea 204, 236, 243 V. Teed 259 Holme V. Brunskill . . 221, 356, 370 Holmes, Ex parte 206 V. Mitchell . 151 Home Insurance Co. v. Holway . 334 Home Savings Bank v. Traube 238, 243 Hooper v. Marshall 363 Hope, Ex parte . . I/, Cust .... Horlor v. Carpenter Hornby v. Lacy . . Home V. Eamsdale Hornsby v. Slack Horsey v. Graham . Hotham v. Stone . Hough V. Warr . . Houlditch V. Milne Houston, Ex parte . Howard v. Lovegrove Howell V. Jones . Howes v. Martin . . Huber v. Steiner . Hubert i;. Moreau . V. Treherne . Hjdghes V. Palmer . Hulme V. Coles . Hunt V. Bate .... Hunter v. Walters . . . Huntingdon v. Huntingdon Huntley v. Sanderson Hussey v. Horne-Payne Hutchinson v. Sydney Hyde ii. Johnson . . . V Wrench . . . 272, 301, 302 . 162 . . 221 . . 138 196 208 . . 174 290, 294 345 65, 117, 120, 144 . . 300 . . 209 370, 375 81 43 171 171 365 380 20 338 129 279 175 202 37 3 Ikin 1>. Brook 193 Imperial Bank v. London and St. Katharine's Dock Co. . 1, 277, 298 International Contract Co., Ee . 283 Isaac V. Daniel 370 Israelii. Douglass ....... 91 J. FAGS Jackson v. Lowe VH^, 174 ... 298 Jacob «. Kirk 171 Jacobs, Ex parte, In re Jacobs 364 , James v. Isaacs 279 V. Williams 154, 155 Jarmain v. Algar .... 74, 113, 134 Jarvis v. Wilkins 154 Jay V. Warren 375 Jenkins 1). Morris 8 V. Reynolds 156 V. Robinson . . . 380, 381 Jephson v. Howkins 207 Johnson, Ex parte . . . 286, 298, 304 V. Barratt 363 V. Dodgson 171 V. Gilbert 139 V. King 2 V. Medlicote 11 V. Nicholls ... 20, 25, 28 V. Whitchoott 21 Jones V. Broadhurst 279 ^ V. Cooper 95, 96 V. Davis 294, 295 V. Fleming 198 V. Williams 174 Jupp V. Richardson 190 K. Kay V. Groves 224 Kearsley v. Cole .... 362, 366, 379 Keate v. Temple 105 Kelner v. Baxter 161 Kemp V. Balls .......... 279 V. Finden 305, 315 (1228) Kendall, Ex parte 289 Kennaway v. Treleaven . . 3, 25, 155 Kennedy v. Lee 2 Kepp V. Wiggett 204, 205 Ker V. Mitchell 189 Keyles v. Elkins 363 Kimball v. Newell 86 King V. Baldwin 287 ■ V. Cole . 185 V. Norman 207 Kinnaird v. Webster . . . 397, 399 Kipling V. Turner 263 Kirby v. Duke of Marlborough 224,400 Kirk V. Bell jvo Kirkham v. Marter 52, 75 Kirkwood, In re 292 Kitson V. Julian 228 Kittier v. Raynes 285 Knight V. Crockford ...... 171 v. Hughes 314, 315 TABLE OP CASES. •XTI [The paging refers to t^e [*} pages.] Lacy V. M'Neile 92 Lancaster v. Walsh 2 Lane, Ex parte 90 V. Burghart 89 Langdale v. Parry 364 Laurie v. Scholefield . . 181, 205, 211 Lavery v. Turley 42 LaWder «. Simpson 333 Lawrence v. Walmsley . . .190, 377 Lawson v. WrigM 310, 316 Layer v. Nelson 306 Laythoarp v. Bryant . . 32, 149, 158 Leadley v. Evans . . . 230, 249, 260 Leathley v. Spyer 181, 268 Le Blanche v. Wilson ... .282 Lee V. Brook 276 V. Jones 327, 333, 335 -. 1). Muggeridge 28, 29 Leigh V. Taylor 207 Leith Banking Co. v. Bell . . . 333 Leroux v. Brown ' 32, 41, 43 Levrick v. Meigs Le'vy V. Baker . Lewis, Ex parte . . Lewis V. Hoare . . V. Jones . . V . Nicholson V. Smith . . 138 .272 193 . 184, 338, 369 .... 161 .... 208 45, 46, 47, 65 ... 11 Lexington v. Clarke Lightfoot V. Heron . Lilly V. Hewett 188 Lincoln v. Wright : . 32 Littlefield 1). Shee 29 Littlejohn, Ex parte 272 Liverpool Borongh Bank v. Logan 299 Liverpool Borough Banking Co. v. Ecoles 158 Liverpool Marine Credit Co. v.. Hunter 12 Liverpool Waterworks v. Atkin- son . 227 Liverseig v. Broadhent ...... 92 Lloyds Banking Co. v. Ogle . . . 199 Lloyds V. Harper . . 185, 345, 346, 349 Lohh V. Stanley 171, 172 Lockhart v. Barnard 2 V. Reilly . ... 296 Loder's case .... .... 275 London Assurance Co. v. Bold . . 359 V. Buckle 370, 372 London, Brighton and South Coast Eail. Co. V. Goodwin 265 London & N. W. Eail. Co. v. Whin- ray , 246 London Guarantee Accident Co. v. Fearnley 191 Longfellow v. Williams . . 32,158, 176 FAGE 280 Loosemoore v. Badford . . . Lovatt V. Tribe 8 Love's case .... 69, 115, 144, 145 Loveland v. Knight 208 Lowiy V. Lumhermere's Bank . . 283 Lyde v. Barnard 33, 34, 36 Lyon V. Holt 374 V. Lamb 20; 152 Lysaght v. Walker 25, 155 M. M'Blain v. Cross M'Dougal V. Baton M'Gahey v. Alston ... M'lvor V. Richardson M'Millan, Ex parte Macdonald v. Whitfield . 170, 305, Mackey v. Commercial Bank of New Brunswick Mackintosh v. Wyatts . . . Mackreth v. Walmsley . . 320, Maclean v. Dunn 173 285 249 3 271 ' 308 42, 132, 339, 372. 38 323 329 159 173 385 3 . . 386 . . . 88, 90 . . . . 377 .... 337 48, 49, 77, 181 237 366 Macrory v. Scott . . Mactaggart v. Watson Mactier v. Frith . . . Madden «. M'Mullen Maggs V. Ames . Maingay v. Lewis . Maitland v. Irving . , Mallet V. Bateman . , Mailing Union v. Graham Maltby v. Carstairs . Manbyt). Scott Manly v. Boycott . Mapes V. Sidney Margetts v. Gregory Marryatts v. White Marshall, Ex parte Martin v. Brecknell V. Marshall . V. Mitchell ■ V. Wright 175, Mason v. Pritchard . . . 178, 217, Masters v. Marriott Mathews v. Baxter Matson v. Wharam Maxoudoff, Ex parte (see Oriental Commercial Bank) . May V. Thompson . . Mayer v. Isaac . . Mayhew v. Crickett . 31, 290, 291, 372, 380, Mayor of Berwick v. Murray . . V. Oswald . 241 285, 95, 96, 177, Mayor of Birmingham v. Wright . Mayor of Cambridge v. Dennis 377 21 392 398 272 402 n 3 218 224 129 11 104 299 175 220 311, 392 315 ,347 231 245 (1223) xxu TABLE OF CASES. [The pagimg refers to the [•] pages.] PAGE Mayor of Dartmouth v. Silly . . 243 Meakin v. Morris 14 Meek v. Wallis 178 Megrathi;. Gray 364 Meir v. Hardie 385 Melville v. Dpidge 208 V. Hayden .... 217, 223 Merchants' Bank of London v. Maud 290 Merle v. Wells 218 Metcalfe v. Bruin . 249, 260, 263 Middleton v. Melton 182 Midland Banking Co. v. Chambers 299, 301, 302 Midland Banking Co. Ex parte, In re Sellers 30:2 Miles, Ex parte .... 3, 301, 303 Miller v. Hatch ... 374 Miller v. Long 86 V. Sawyfer 332 Mills V. Alderbury Union . . 290, 359 V. Fowkes 397 Mines v. Sculthorpe 198 Minet, Ex parte . . 19, 149, 271, 285 Mocket V. Ames 27 Moltonfi. Camroux . . Montague v. Tidcombe Montefioret!. Lloyd . . Moor V. Eobei-ts . Morgan v. Seymour Morley v. Boothby . . r. Inglis . . . . 9, 10 . 373, 385 267, 269 . 191 . . 305 18, 19, 73 ; . 202 . 16, 181 . . 279 . 135, 137, 138 Morrel v. Cowan . Morrice v. Redwin Morris i). Cleasby Morten v. Marshall 190, 192 Mortlock V. BuUer 158 Moses V. Macferlen . . . 35 Moss V. Hall 370 v. Ti-ibe 8 Mostyn v. West Mostyn Coal Co. 289, 371 Mountstephen v. Lakeman . . 63, 55, 58, 80, 97, 101, 104, 105, 184 Mowbray .■!). Cunningham . . 95, 96, 97, 105, 135 Mozley v. Tinkler . ... 5 Munday v. Asprey . . . . 173 Mure, Ex parte 391 Murphy v. Glass 289 Muakett.. Rogers .... 187, 373, 389 Mutual Loan Credit Co. v. Sudlow 385 Myers, Ex parte 272 V. Edge 264 N. Nares v. Rowles National Coffee Palace Co., Ex parte Panmure National Provincial Bank, Ex parte. In re Eees Nene Valley Drainage Commis- sioners V. Dunkley Nevill's case Newbiggin-by-the-Sea Gas Co. v. Armstrong Newbury v. Armstrong ... 25, Newell V. Radford Newport v. Spirey Newton v. Chorlton Nicholson v. Paget , V. Eevill . 291, 292, 369, . 177, 178, Nisbet V. Smith . . . . 276, Noble V. Ward . . .... Noel V. Hart . . .... Nolte, Ex parte North British Insurance Co. v. Lloyd 325, North V. Wakefield Norton v. Powell Norwich Equitable' Fire Assur- ance Co., Brasnet's case .... Nottingham Hide, Skin and Fat Market Co. v. Bottrill . . 218, PAGK 204 161 301 174 363 307 154 157 3 293 370 221 368 370 347 65 162 328 369 172 170 219 O. Oakeley v. Pashaller . . Oakford v. European Shipping Co Oastley v. Round O'Carrol's case. Sir D. . . . Offley and Johnson's case . Offord V. Davies . . Ogden V. Aspinall Ogilvie V. Foljambe . . V. Jeaifreson Napier a. Bruce 207, 240 3, 25, .171, Oldershaw v. . King . . . 23, 151, Oldham v. Allen . . . . Onge V. Trulock Oriental Commercial Bank, Re . Oriental Financial Co. v. Overend, Gumey & Co . . . 369, 377, Orme, Re, Evans v. Maxwell . . )'. Young . Ormes v. Beadel . . . Orrell v. Coppock Oswald V. Mayor of Berwick 243, Other V. Iveson ; Overend, Gurney & Co., Limited V. Oriental Financial Corpora- tion . . . '. . , 370 355 203 290 306 344 208 174 338 180 104 316 299 382 278 372 13 128 241, 245 179 379 (1230) TABLE OF CASES. XXlll Overseers of St. Maxtin v. Warren 271 Owen V. Homau 325, 379 Oxley V. Young 388 Pace V. Marsh 157 [The paging refers to the [*] pages.] PAGE J^wick"!). Stanley Paley v. Field .... Palmer v. Sparshott . Parker v. Eamsbottom V. Smith . . V. Wise . . Parkins v. Moravia Parsons v. Briddock . V. Walter . , . ' V. Freeman . . .... 277 206, 286, 298 . 200, 201 284 .... 171 92, 179, 205 93 ." 290, 294 . . .97 . 32, 33, 34 Pattison v. Guardians, of Belford Union 207, 208 Paul V. Jones 283, 285 Payne v. Cave 3 — — V. Ives 169, 189, 384 ■ V. Wilson . 20, 21. Peacock v. Pursell . .... 189 Pearl v. Deacon . . 290, 291, 397 Pearsall v. Somersett . 178, 179 Pearse v. Morrice . . . 190 Pease v. Hirst . . . . 264 V. Lowndes . . 395 Peate v. Dicken . . . 157 Peckham v. Faria ... . 95, 97 Peel V. Tatlock . . . 340, 372, 387 Peelej). Northcote 138 Pemberton 1'. Oakes .... 257, 259 Pendlebury v. Walker . . 311, 312 Penny v. Fox . . . . 280 Peppin V. Cooper . . . 228 Perfect v. Musgrave . 372 Peter v. Rich 315 Peters v. Fleming 15 Petrej). Buncombe . . . 281, 316 Petty V. Cooke . . . 370, 380, 396 Philips D. Astling . .189,360,384 V. Smith 298 Phillips V. Bateman ... . 149 V. Dickson 296 V. Fordyce 189, 190 — V. Foxall . . 288, 327, 333, 339, 340, 386 Philpot V. Briant 370 Pickles V. Thornton 360 Pidcock V. Bishop 331 Pierce ■». Williams 282 Pigot's case 340, 341, 342 Pillan V. Van Mierop . , 19 Pitt V. Purssord 310 -i). Smith 10 PASB Place «. Delegal 200 Pledge V. Buss . . 290, 291, 328, 391 Plomer v. Long 400 Plumbe V. Sanday 290 Polak V. Everett .... 355, 357, 370 Polhill V. Walter . . . Poole V. Willats . . . Pooley V, Harradine . Pope V. Andrews . . Popplewell V. Wilson Powers V. Fowler . Prendergast v. Devey . Price V. Barker — — V. Edmonds . V. Kirkham , I'. Richardson . Primrose v. Bromley Prior V. Hembrow . Pritchardi). Hitchcock Propert v. Parker . . Pugh V. Stringfield . Pybus V. Gibb . . . Q. Queen, The v. Fay . •42, 34 363 370 3 . 150 . . 155 . . 375 . . 366 373, 375 370, 373 157 312 312 396 171 180, 199, 200 ... 239 186, 391, 392 E. Raikes v. Todd . ... 156, 299 Railton v. Mathews . . 327 Rainbow v. Juggjns . . . 297 Rains v. Story 107 Eamsgate Victoria Co. v. Monte- flore 3 Ranelagh v. Hayes . . . 186, 187, 277 Rann v. Hughes 150 Rawstone v. Parr .... 7 Eead». Legard 9 V. Nash 52, 74, 77 Reade v- Lamb . . . . 32 V. Lowndes 381 Reader v. Kingham' ... 48, 110 Rede r. Farr Redhead v. Cater Rees i: Berrington . Rein r. Lane . . . Reynolds v. Doyle . V. Wheeler 188 173 370 176 279 305 Ridgway v. Wharton . ... 174 Ridler, In re, Ridler v. Ridler . 248 Ridley v. Plymouth Grinding Co 170 Roach V. Thompson .... 282, 314 Robinson v. Gee 129 V. Wilson 290. 294 Roe V. Haugh 91 (1231) XXIV TABLE OF CASES. [The paging refers to the [•] pages.] Eolt V. Cozens 20, 194 Eonneberg v. Falkland Island Co 209 Soper V. Cox 334 Rose V. Poulton . . . . 18 Eoss V. Moss 21, 22 Routledge v. Grant 2 Eownson, In re Field v. White 41, 43 Eucker v. Camayer 159 Eushforth, Ex parte 206, 286, 290, 298 Eussell, In re, Eussell v. Shool- bred 296, 392 — V. Moseley . . 24, 156 V. Trickett 193 Eyder v. Wombwell 15 S. Sackford v. Case 21 Sadler v. Johnson 175 St. Saviour's v. Bostock .... 230 Salting, Ex parte. In re Stratton 287 Samuel v. Howarth 203, 288, 323, 369, 370, 372 Sanderson, Ex parte 300 ■- V. Aston 288, 339, 351, 354, 355, 386 V. Graves 347 Saudilands v. Marsh . . 162, 167, 173 Sansom v. Bell 231 Sari V. Bourdillon . .... 157 Saunders v. Taylor 208 V. Wakefieldl9, 19, 149, 157 Saunderson v. Jackson . 171, 172, 174 Savings Bank of Hannibal v. Hunt 228 Schneider v. Norris 172 Scholefield v. Templer .... 365 Scholes D. Hampson and another 102 Scott V. Knox 290 V. Littledale .... . 7 Selbyi!. Selby 171 Seller v. Jones 205 Semple v. Pink 21, 22, 23 Serjeant, Ex parte 285 Sharington v. Pledall 18 Sharman v. Brandt 162 Sharp, Ex parte 331 Shaw V. Thackray 11 V. Woodcock 42 Sheffield Canal Co. v. Sheffield and Eotherham Ey. Co 2 Shepherd v. Beecher 339, 345, 372, 387 Sherry, In re, London and Coun- ty Banking Co. v. Terry 323, 349, PAGE Sicklemore v. Thistleton , . 188, 189 Siffkeni). Wray 277. Simmonds v. Humble 171 Simmons v. Keating . ' . . . . 205 V. Want 3 Simons v. Patchett 161 V. South Western Railway Co 338 Simpson, Ex parte ; . ♦ . . 2*^3 V. Mauley .... 216, 376 V. Penton . . . . 103, 105 V. Vaughan 312 Simson v. Cooke 270 V. Ingham 400 Skeate v. Beale . 12 Skillett V. Fletcher 238, 243 Small V. Currie . . 6, 11, 288, 337, 338 Smith V. Bank of Scotland . . . 333 V. Cosnpton 208, 282 V. Freyler . . 186, 288, 389 V. Hughes 6, 7 V. Neale 158 V. Olding 294 -V. Eudhall .... 101 V. Webster 2 V. Winter . . 170, 370, 380 Smout V. Ilbery 161 Snowden, Ex parte, In re Snow- den 305, 309, 310, 317 Solly V. Forbes 369 Solvency Mutual Guarantee Co. v. Froarae 345 Solvency Mutual Guarantee So- ciety V. Freeman 264 Sorby v. Gordon 4 South V. Bloxam 293 Sontten V. Soutten 285, 286 Spark V. Heslop 181, 209 Spiers v. Houston 254 ScLuirei). Whitton 337 Stadt V. Lill (see Stapp v. Lill). Staines v. Wainright 2 Stansfield v. Johnson 159 Stapp V. Lill . Stead V. Liddard , Stedman v. Hart . Steel V. Dixon Steele v. Hoe . , Shippey v. Denison . Shirreff v. Wilks Shortrede v. Cheek 152 153, 173, 174, 176 ... 9 . 315, 322- . 26, 27, 156, 180 V. M'Kinlay 42 Steiglitz V. Egginton 169 Stephens, In re (see Bamed's Banking Co.) V. Pell 70 V. Squire 127 350, 402 Stephenson v. McLean 3 172, 173 j Stevenson v. Hardie .... 88, 129 . . 162 Stewart v. M'Kean ' 352 155, 156 ' Stiff 1). Local Board of Eastbourne 331 (12 W) . TABLE OF CASES. XXV [The paging refers PAGE Stirling e. Forrester 308 ;Stokes, Ex parte 300 '■ — V. Moore 171 Stone V. Compton 331 Stooke V. Taylor 202 :Stow V. Scott 109 Strange v. Fooks 290, 391 V. Lee 254 Stratou V. Eastall 391 .Strong V. Foster . . 323, 372, 377, 383 Suffell V. Bank of England . . , . 342 Sumner v. Ferryman 12 Swain v. Wall . . . 290, 311, 315, 316 Swan's Estate, In re 316 Swan V. Nesmith 138, 139 V. North British Australasian Co 338 Swann v. Phillips 35 Sweet V. Lee 171 Swift V. Jewsbury 37 V. Winterb(rtham 37 Swire v. Francis 38 V. Eedman 355, 378 T. Tanner v. Moore 157, 220 V. Woolmer 178 Tatlock V. Harris 91 Tatton V. Wade 33, 34 Tawney v. Crowther .... 173, 174 Tayleur v. Wildin 221 Taylor v. Burgess 377 V. Hilary 346 V. Mills 284 Teede v. Johnson 363 Thatcher v. England 2 Thayer v. Daniels 283 Thomas v. Cook . 47, 112, 114, 121, 122 V. Edwards 161 V. Williams . 20, 28, 45, 46, 47, 68, 117, 124, 147 Thompson, Ex parte .... 272, 273 V. Gardiner 161 r- V. Lack .... 368, 369 Thomson v. Davenport . . . 159, 161 V. James 3 Thornton v. M'Kewan . 206, 298, 299 Thoroughgood's case 338 Tomlinson v. Gell 20, 60 V. Gill .... 56, 63, 118 Torrance v. Bank of British N. America 372 Toussaint v. Martinant ... . 306 Town of Union v. Berues .... 182 "Traill v. Gibbons 196 to the £•] pages.] FAGS Trent Navigation Co. v. Harley . 372, 373 Tucker v. Laing 370, 371 Turnbull v. Forman 16 Turner, Ex parte . . . 286, 298, 301 V. Davis . . . 305, 313 Tumley v. Macgregor . . 35, 36 Turquand, Ex parte, In re Fother- gill 285, 299 Twopenny v. Young 361 Tyson v. Cox 380 U. Underhill v. Horwood . . . 306, 311 Union Bank of Manchester v. Beech 365, 380 University of Cambridge v. Bald- win 270 V. Van Sandau v. Corsbie . . . 286 Van Sickel v. County of Buffalo . 182, 226 Van Wort v. Wooley . . . 189 Vanderbergh v. Spooner . 157 Vernon v. Turley 373 Vorley v. Barrett 321, 366 W. Waddington v. Bristow . . . 175 Wade V. Tatton 34 Wain V. Warlters . 148, 149, 153, 157 Wake V. Harrop . . 160 Walker v. Bartlett 48 V. British Guarantee Asso- ciation .... 185 V. Hardman . . 178, 212, 221 V. Hill 66 V. Taylor .... 117, 119, 120 Wallis V. Swinburne . . 284, 317, 318 Walter v. James . ... 279 Walton, Ex parte ... 184 -V. Dodson 158 ■ V. Mascall 188, 189 Wane?!. Horwood 279 Wankford v. Wankford 64 Ward V. National Bank of New Zealand . . 369 Wardens of St. Saviour's v. Bos- tock (see St. Saviour's v. Bos- tock). ~ Warner i>. Willington 172 (1233) XXVI TABLE OF CASES. [The paging refers PAGE Warre v. Calvert 207, 352 Warrington v. Furbor . 175, 188, 189, 279, 281 Warwick v. Bruce 15 Watertown Fire Insui^ance Co. v. Simmons. 386 . . 105 160, 175 . . 373, 392 383, 389, 391 297, 301, 404 . . 9 366, 379 .... 204 209, 355, 365 157, 172 29, 30 Ex . 162 19, 24 255 . 15 91, 92, 9? 391, 393 359 . 273 . 31, 86 . 2f, 25 . .375 . . 175 310 . . 142 129 . 43,' 48, 111 . 174 ... 42 . 187, 372 11, 331, 335 . 157 . . 2 . . 278 . . 157, 158 70, 117, 123, 140, 141, 148 V. Mason 37 1). Owen 292, 293 V. Price 391, 392 v. Eawlinson . 220, 333, 400 V. Wentworih 9 Willis, Ee 62, 272 V. De Castro 369 Watkins v. Perkins . V. Vines Watson V. Alcock . . Watts V. Shuttleworth Waugh V. Wren Weaver, In re . . Webb V. Hewitt . . . r. James . . . Webster «. Petre . . Welfore ex- be express ; it may be implied. Thus, where an offer P[?^ "'' *'^" of guarantee is in these terms, "I agree to be security S,^^ i to you for T. C. for whatever, while in your employ, impife^'^c- you may trust him with, and, in case of default, to ceptance of make the same good," as soon as the person to whom offer to gua- such a guarantee is given employs T. C. (but not ^^°^^- before) the guarantee attaches and becomes binding on the party who gave it (m), without any formal accep- tance. In Pope V. AndreiLis{n) Coleridge, J., said, "If aperaon offers a guarantee, and more still, if he signs a guaran- tee by which he makes himself liable, and that be sent to the other party, such other party, if he means *not to accept the guarantee, is bound expressly [*4] " to dissent within a reasonable time; and if he keeps the guarantee an unreasonable time, he is bound to accept it just the same as if he had assented to it by words ; and if be has ever accepted it either by word or by act, he cannot afterwards retract." In Sorby v. Gordon (o), the facts were as follow: — The defendant, being desirous of having goods shipped to E. & Co., his agents in India, on 9th July, 1868, applied by letter to the plaintiffs, who were manufac- turers of edge tools carrying on business at Shefi&eld, asking the price of certain tools to be sent out to India to the firm of Messrs. K. & Co. In reply, the plaintiffs stated their list of prices, and that their terms were cash settlement in England within a few weeks. On the 11th of the same month the defendant wrote to them as follows: — "I shall be very glad that you should come to an arrangement with R. & Co., that they should be your agents there, but that requires direct corre- spondence between you and theni. I am quite willing to guarantee the first shipment." The same day the {k) Offm-d V. Dairies, 12 C. B., N. S. 748 ; Grant v. Campbell, 6 Dow, H; L. C. S39 ; and see Stevenson v. McLean, 5 Q. B. D. 346. (l) Byrne v. Van Tienhmen, 5 C. P. D. 344 ; 49 L. J., C. P. 316; Stevenson v. McLean, ubi sup. (m) Per Parke B. , in Kennmoay v. Treleavan, 5 M. & W. 498, 500, 501. See also Offord v. Davies, 12 C. B., N. S. 748. (n) 9 C. & P. 564, 568. (o) 30 L. T. E. 528. (1237) 4 THE LAW OF 6UAKANTEES. plaintiffs enclosed a list of prices, and requested a con- firmation of the order, which was accordingly sent by the defendant. The goods, amounting in value to 800Z., were thereupon shipped to B. & Co. in India. Other shipments followed. The sum of dOOl. only having been paid by B. & Co. in respect of this first shipment, the plaintiffs, in July, 1871, wrote to the defendant, '• We sincerely hope it may not be necessary to act upon your letter of the 11th ,Ju]y, 1868." In two letters which the defendantsubsequently wrote to the plaintiffs he never disclaimed his liability, but, on the 26th Sep- tember, 1871, he wrote, "As the event on which I expressed my willingness to guarantee never took place, it never became effective." Messrs. E. & Co. having stopped payment, and there being a sum of 530Z. still [*5] *due upon the first shipment of goods, the plain- tiff's sued defendant upon his letter of guarantee. It was held, that upon the facts there was an express offer of a guarantee and an intimation of acceptance. Express ac- Sometimes, however, an offer to guarantee oontem- ceptance plates an express acceptance. When this is the case, necessary jj^g person to whom the offer is made cannot avail him- conten^lates ^^1* of it without showing an express acceptance of it. it. Thus in Mozley v. TincJder (jo), the defendant gave an alleged guarantee in the following form: "F. informs me that you are about publishing an arithmetic for him. I have no objection to being answerable as far as 50Z. ; for my reference apply to B." This instrument was • forwarded by B. to the plaintiffs, who never communi- cated their acceptance of it to the defendant. In an action against the latter, on the guarantee, it was held that the plaintiffs, not proving any notice of accept- ance to the defendant, were not entitled to recover. In , this case the court considered that the defendant only iatended to be bound by the instrument, in case, upon inquiry, the plaintiff should be satisfied with regard to his solvency. Minds of con- -^ contract being the offspring of intention, it follows tfacting par- that the minds of the contracting parties must be ad ties must be idem as to the subject of the contract. Thus, if two suWecToTthe P®'"^"^^ enter into an apparent contract concerning a contract. particular person or ship, and it turns out that each of them, misled by a similarity of name, had a different person or ship in his mind, no contract would exist between them {q). Again, if a person is induced to (v) 1 Cr., M. & R. 692. See also Martin v. Marshall, 2 H. & C. 315 ; Bank of Montreal v. Munster, 11 Ir. C. L. R. 47, 58 (q) L. E., G Q. B. 597. (1238) FOKMATIOSr OF CONTRACT OF GUARANTEE. 5 buy certain oats from another, under the belief that they are old oats, the contract is binding though tho oats are actually not old. But if the person had agreed to take the oats, not merely under the belief that they were old, but under the belief that the seller contracted *they were old, there would be no contract in such [*6] a case if this was brought to the mind of the seller by any means whatsoever (r). The reason of this some- what subtle distinction is perfectly just, In the former case the minds of both parties would be ad idem as to the purchase of the oats in question, though the motive of the buyer in purchasing them might be in his belief, that they were old. In the latter case the minds of the parties would not be ad idem, as to the subject of the contract, for, whilst the buyer believed that the seller contracted to sell old oats, the seller, knowing this, in- tended to supply oats that were not old. In Paley's Moral and Political Philosophy (s), it is stated that a promise is to be interpreted " in the sense in which the promiser apprehended at the time that the promisee received it." The English rule of law that the promiser is not bound "to fulfill a promise in a sense in- which the promisee knew at the time the promiser did not intend it,'" is a corollary to this rule of morality (t). And, in considering the question, in what sense a promisee is entitled to enforce a promise, it matters not in what way the knowledge of the meaning in which the promiser made it is brought to the mind of the promisee, whether by express words, or by con- duct, or previous dealings, or other circumstances (u). If by any means he knows that there was no real agreement between hini and the promiser, he is not entitled to insist that the promise shall be fulfilled in a sense in which the mind of the promiser does not assent (as). Sometimes, ovring to the way in which one Party maybe of the contracting parties has conducted himself, he is estopped by precluded from showing that he intended something ^'"^^™* fr''™ different from the other contracting party, and that, g^rr^ce of"" *consequently there is not that necessary concur- [*7] intention, rence of intention essential to every contract. Thus, Examples of if, whatever a man's real intention may be, he so con- this doctrine, ducts himself that a reasonable man would believe that (r) See Smith v. Hughes, L. E., 6 Q. B. 597, passim. (s) Book iii., cap. v. (0 L. E.,'GQ. B., 597, 610. \u) Ih. {x) lb. See also observations of Kindersley, V.-G., in Small Y, Ctirrie, 3 Drew, 102, 114. (1239) THE LAW OF GUARANTEES. Second requi- site of con- . tract of guarantee. Competency of parties to coatract. he was assenting to the terms proposed by the other party, and that the other party, upon that belief, enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms {y). So where the defendant (by mistake) chose to sign a guarantee which gave full effect to the plaintiff's intentions, and thereby induced the plaintiff to supply goods to a third person on the faith of such guarantee, it was held that the defendant was liable on his guarantee, and that he had no equity to turn round on the plaintiff and say, " I meant what I have not stated, and although you have relied upon my' statement, I will only be liable for what I meant" (z). So, too, where, in the case of a sale of goods by sample, the vendor (by mistake) exhibited a wrong sample, it was held that the vendor could not, on that accout, treat the contract as void (a). "But if in the last mentioned case, the purchaser, in the course of the negotiations preliminary to the contract, had dis- covered that the vendor was under a misapprehension as to the sample he was offering, .the vendor would have been entitled to show that he had not intended to enter into the contract by which the purchaser sought to bind him" (&). Secondly, we come to another requisite of a contract, namely, the competency of the parties to contract. We have already stated that every contract includes [*8] a Concurrence of intention in two parties. This, in fapt, enters into the idea of every contract. Now in- tention is a voluntary mental operation, being produced by a joint exercise of the will and the understanding (e). Therefore the parties to a contract must be men- tally capable of producing the necessary intention; for, unless both have this capacity, there can be no contract between them. In accordance with this view is the maxim of the civil law which declares that " Furiosus nullum negotium gerere potest, quia non intelligit quod {y) Per Blackburn, J., in Smith v. Hughes, h. E., 6 Q. B. 597, 607. See also Freeman v. Cooke, 2 Ex. 663 ; 18 L. J., Ex. 119. [z) Haymen v. Gover, 25 L. T., N. S., Q. B. 903 ; and see Baw- slone V. Parr, 3 Russ. 539. {a) Scott V. LiUledale, 8 E. & B. 815. Ih) Per Hannen, J., in Smith v. Hughes, L. R., 6 Q. B. at p. 609. (e) As to which of these two powers of the mind predominates in the formation of intention we are not called upon to disexiss. "The faculties of understanding and will, are easily distinguished in thought hut very rarely, if ever, disjoined in operation. ' ' See Bied's Collected Writings, by Sir W. Hamilton, 2nd ed., p. 537. (1240) FORMATION OF CONTRACT OF GUARANTEE. 7 agit" (d). The mere existence, however, of a delusion' in the mind of a person making a disposition or con- tract is not sufficient to avoid it, even though the delu- sion be connected with the subject matter of such dis- position or contract; it is a question for the jury whether the delusion affected the disposition or con- tract (e). In England, in consequence of an old maxim of the Contracts by- common law, affirmed By Lord Coke, which declares insane per- that "a man shall not be allowed to stultify himself," ®°°®- insanity, it would seem, was never a good defence to. an action of assumpsit, unless it also appeared that the plaintiff knew of it and took advantage of the circum- stance to impose upon the defendant (/). Thus, in the case of Brown\. Jo^drell (g), Lord Tenterden said, "I think that this defence cannot be allowed, and that no person can be suffered to stultify himself, and set up his own lunacy in his defence. If, indeed, it can *be shown that the defendant has been imposed [*9] upon by the plaintiff, in consequence of his mental im- becility, it mightbe otherwise, and such a defence might be admitted" (h). Where the contract was executed, in whole or in part, this affords an additional reason for not vacating it, on the ground of insanity (i). Whether, if a person supplies necessaries to a lunatic, Liability of a knowing of the lunacy at the time, a contraclj, on the limatic for part of the lunatic to pay for them can be implied, is a ^'^''^^"■"^• difficult point of law, which it seems has never yet been settled by authority (j). But where necessaries are supplied to a lunatic by a person, who has no reason to suppose him to be insane, an action will lie against the lunatic for the price (k). So, also, the law will raise an implied contract, and give a valid demand or debt (d) Inst. lib. 3, tit. 20, ? 8; Dig. lib. 50, tit. 17, 1. 5, i. 40. (e) Jenkins v. Morris, 14 Ch. Div. 674. (/) Levy V. Baker, Mood.'& M. 106 n. ; Beavan v. M'Donnell, 9 Exch. 309 ; Davis \. Kirkwall, 8 C. & P. 679; Moss v. Tribe, 3F. & F. 297; Lovatt v. Tribe, 3 F. &. F. 9; Baker v. GartwrigU, 7 Jur., N. S. 1247; 30 L. J., C. P. 364; 10 C. B., N. S. 124. (g) 3 C. & P. 30; M. &. M. 105. (h) See Beavan v. McDonnell, supra, as to proof of knowledge of defendant's incapacity. Also Lovatt v. Iribe, 3 F. & F. 9. (i' MouUon V. Camroux, 4 Exch. 17; S. C, in court below, 2 Exch. 487. [j) Per curiam, in In re Weaver, 21 Ch. Div. 615. (k) Bagster Y.Portsmouth (Earl), 7 D. & E. 614; 5 B. & C. 170; 2 C. & P. 178; Bead v. Legard,6 Exch. 637; 15 Jur. 494; 20 L. J., Exch. 309; Siedman v. Barf, 1 Kay, 607; 18 Jur. 744; 23 L. J. , Ch. 908 ; and see the recent American case of Fay v. Burditt, 42 Amer. R. 142 (U, S.). (1241) THE LAW OF GUAEANTEES. Tendency of modem cases as to liability of lunatic for contracts. Contracts by persons in state of in- toxication. How far binding. against the lunatic -or his estate for moneys expended for the necessary protection of his person and estate (Z). In Chitty on Contracts (m), it is stated that modern cases have qualified the doctrine that a man of full age shall not be allowed to disable or stultify himself by pleading his own incapacity, and that "there is no doubt that, at this day, a man or his representatives may show that, when he made a promise, or sealed an instrument, he was so lunatic as not to know what he was about." And where, in an action on a guarantee(w), the defence was^(l ) that the defendant was of unsound [*10] *mind when he executed the guarantee, and (2) that he had been induced by fraud to give the guarantee — the judge told the jury that if the defendant had a mind incapable of consenting ^o sign the guarantee, he could not sign, and finally left it to them to say whether the defendant was so unsound in mind as not to know what he was doing when he signed the instrument of guarantee sued on. Courts of equity were always in the habit of giving relief where a person of weak intellect had entered into a contract, the nature of which justified the conclusion that the party had not exercised a deliberate judgment, but that he had been imposed upon, circumvented, or overcome by cunning or artifice, or undue influence (o). And the Chancery Division of the High Court of Jus- tice has now power to set asi'de a contract in cases where the Court of Chancery formerly possessed jurisdiction to do so (p). Intoxication, if cpmplete and not partial merely, will render an agreement entered into by a person in that state void (q). Thus, in Pitt v. Smith (r), where to an action for libel, in stating that the plaintiff had induced the defendant to execute an agreement in a state of in- toxication, the general issue was pleaded, and evidence given under it to show that defendant was in a com- plete state of intoxication when he executed it, a non- suit was directed by Lord Ellenborough, who said, Williams "v 1 Sid. 119. 10th ed., p. 133. Gray v. Warren. Wentworth, 5 Beav. 325. See also Manby v. See "Times," Thursday, April ■24th, Story, Eq. Jur., 10th ed., par. 238. Supreme Court of Judicature Act, 1873, sect. 34, par. (3). Gore V. Gibson, 13 M. & W. 623; Molton v. Camroux, 4 17, 19 ; Butler v. MulinUll, 1 Bligh. 137 ; HawUna v. Bom, ■t F. 311. ' 3 Camp. 33. (1242) FORMATION OF CONTRACT OF fiUARANTEE. 9 "You have alleged that there was an agreement be- tween the parties, and this allegation you must prove, as it is put in issue by the plea of not guilty; but there was no agreement between the parties if the defendant *was intoxicated in the manner supposed ■when [*11] he signed this paper. He had not an agreeing mind." It seems to have been held, formerly, that the intoxica- tion of one of the contracting parties, to invalidate the contract, must have been known to the other party (s) ; and it seems that this may still be the law in a case of partial intoxication (i). Where, in a suit for specific performance of an agreement, the defence set up was incapacity at the time of executing it, on the ground of intoxication, it was held that the mere intoxication, without fraud, was not safficient ground for getting rid of the agreement (m). And it is to be observed, that, under any circumstances, the contract of a drunken man is voidable -only, and not absolutely void, and therefore becomes binding if adopted by him after he is sober (x). Contracts entered into by persons under a constrain- Duress a ing force are voidable, on the ground of duress, and S^''™;^ "''" the courts will not allow a guarantee given under contract, such circumstances to be taken advantage of {y). This Guarantee is because persons entering into them, under these cir- obtained by, cumstances, are not in a state in which they can pro- void. duce that necessary intention without which no contract can be formed. Thus, duress by imprisonment wUl avoid a contract. To constitute this, it seems, that either the imprisonment or the duress that is offered in prison must be tortious and unlawful (z). Duress by threat will also, sometimes, be sufficient to avoid a contract. No threat will, however, be sufficient to constitute such duress unless it amount to a threat of *personal restraint or injury. Thus, menacing to [*12] commit a battery, or to burn the house (a), or spoil the • goods of a person is not sufficient to invalidate a con- tract (b). (s) Jnhnson v. Medlicote, cited 3 P. Wms. 130 ; Cooke v. Clay- worn, 18 Ves. 12. (t) Byles on Bills, 13th ed., p. 64. (t{) Shaw v. Thackray, 17 Jut. 1045 ; 1 Sm. &G. 537 ; LigUfoot V. Keron, 3 Y. & C. 586. (x) Mathews v. Baxter, L. E., 8 Exch. 132. («y| Per Kinderaley, V.-C, In Small v. Currie, 2 Drew. 102, 114; and see Williams v. Bazley, L. E., 1 H. L. 200 ; 35 L. J. Ch. 717. (z) Bacon, Abr., Duress, A. (a) But see Chitty on Contracts, lOtb ed., pp. 188, 189. (J) Bac. Abr. A. ' (1243) 10 THE LAW OF GUARANTEES. Duress of goods will not iovalidate a contract. Upon whom duress must be exercised to avoid a contract. By whom. Contract ob- tained by duress void- Again, duress of goods will not invalidate a contract (c). Thus, in Skeate v. Beale (d), Lord Denmam said, " We consider the law to be clear and founded on good reason, that an agreement is not void because made under duress of goods. There is no distinction in this respect between . a deed and an agreement not under seal ; and with regard to the former, the law is laid down in 2 Inst. 483, and Sheppard's Touchstone, p. 61, and the distinction pointed out between duress of, or menace to, the person, and duress of goods. The former is a constraining force, which not only takes away the free agency, but may leave no room for appeal to the law for a remedy : a man, therefore, is not bound by the agreement which he enters into under such cir- cumstances ; but the fear that goods may be taken or injured does not deprive any one of his free agency who possesses that ordinary degree of firmness which the law requires all to exert." The duress that will avoid a contract must, as a rule, be exercised upon one of the contracting parties per- sonally (e). Thus, duress to a third person, though a servant of the contracting party, will not avoid a master's contract, or vice versd (/). However, duress to the son will, it seems, avoid the father's deed, and vice versd (g). So, also, duress to the wife will avoid [*13] *the husband's contract (h). Under certain cir- cumstances, duress on a person will avoid the contract of such person, though entered into for him by an agent (i). Duress by a stranger, if at the instance of the party who will reap the benefit of it, is a good ground for invalidating a contract (k). A contract entered into under duress being merely voidable, if it be voluntarily acted upon by a party to it, with a knowledge of all the facts, he cannot (c) Atlee Y. Backhouse, 3 M. & "W. 633, 650 ; Asilee v. Seynolds, 2 Str. 915 ; Sumner v. Ferryman, 11 Mod. 202 ; and see Liverpool Marine Credit Co. v. Hunter, L. E., 3 Ch. App. 487 ; 37 L. J., Ch. 386. (d) 11 Ad. & Ell. 983, 990 ; 3 P. & D. 597 ; 4 Jur. 766. (e) Bac. Abr., Buress, B., and Roll. Abr. 687. (fUb. (g) lb. But see Story on Contracts, 4th ed., vol. i., n. 493, note (3). Ui) Bac. Abr., Duress, B., and Roll. Abr. 687. (i) Oumming v. Inee, 11 A. & E. 112. (fc) Roll. Abr. 688. (1244) FORMATION OF CONTRACT OF GUARANTEE. 11 avoid it when the result has turned out to his disadvau- able only, tage (I). not void. Infants labour under a qualified incapacity to con- Contracts by tract, which is founded upon the supposed absence in. infants, them of that mature intellectual power, without which no intention to contract can be formed. Infancy, by the Roman civil law, lasted, in the case of both males and females, until the age of seven was completed (m). During this period, minors laboured under an almost absolute incapacity to contract. After seven years, minors were said to possess intellectus, but not judicium (n). This latter power was, accordingly, in the case of minors sui juris, supplied by the tutor, and every contract entered into by a minor, after seven years of age, and under the age of puberty, was legally valid if made with the sanc- tion of the tutor (o). If made without such consent, the infant might have the benefit of it if he pleased, though he could not be botind by it, Unde in his cavMS ex quibus dbligationes mutum nascuntur ; ut in emption- ibus, venditionibus, locationibus, conductionibus, man- datis, depositis; si tutoris auctoritas nan interveniat, ipsi quidem qui cum. his contrahunt obligantur ; at in- vicem pupilU nan obligantur ( p). At fourteen a male, and at twelve a *fema]e, attained the age of [*141 puberty, and, if sui juris, could then act in propria persona (q). However, though, as a rule, a person who had reached puberty (minor pubes) was not obliged, against his will, to remain under the control of another, yet, acting under the advice of his tutor, he almost always consented to the appointment of a curator, who, once appointed, held his office until the minor pubes [who was sui juris^ attained majority, i. e., twenty- five years, or until the emperor, by rescript, granted the venia cetatis, or dispensation of age, which could only be obtained by a male at twenty, and by a female at eighteen (r). The curator, unlike the tutor, did not supply any mental deficiency in the minor. He merely assisted him in the administration of his prop- erty (s). (l) Ormes v. Beadel, 30 L. J., Ch. 1; 2 De G., F & J. 333. (m) Mackeldeii Systema Juris Romani, § 126. ' (n) See Institutes of Justinian (Sandars), 4th ed., p. 145. (o) I. 1, 21 pp., Mackeldeii Systema Juris Eomani, ? 584. (p) lb. (g) I. 1, 22 pr. ; I. 1, 23, 2 ; Mackeldeii Systema Juris Ro- mani, ? 126. (r) I. 1, 23 pr. See ^Iso Institutes of Justinian (by Sandars), 4th ed., p. 150. (s) Institutes of Justinian (by Sandars), 4th ed., p. 129. (1245) 12 THE LAW OF GUARANTEES. Disability of infants to contract ex- cept for necessaries. Their con- tracts now incapable of ratification. What are necessaries. Contracts by married women By the English common law, all persons under the age of twenty-one are infants, and, as such, they are altogether disabled from contracting, except in the case of necessaries and of acts in their nature beneficial to themselves (t). But formerly an infant might, on attaining his majority, have ratified previous contracts entered into by him (m). Now, however, it is provided by the Infants' Relief Act, 1874 (37 & 38 Vict. c. 62), [*15] *that all contracts entered into by infants, whether by specialty or by simple contract, except for necessaries, which were formerly voidable only, shall be void, and incapable of ratification. As regards contracts for necessaries, the term neces- saries is a relative one, and its meaning varies with the rank and fortune of the infant (x). It has recently been decided that articles of mere luxury cannot be necessaries suitable to the condition of any infant, but articles of utility, though luxurious and Expensive, may be (y). Where an infant is sued for the price of goods supplied to him on credit, he may, for the purpose of showing that they were not necessaries, give evidence that, when the order was given, he was already sufii- ciently supplied with goods of a similar description, and it is immaterial whether the plaintiff did or did not know of the existing supply (z). Though a cjntraci with an infant is voidable by him, yet it cannot be avoided by the opposite party (a). By the English common law, a married woman could not, as a rule, bind either herself or her husband by any contract she might enter into. Two reasons were usually assigned. for this incapacity — first, for her hus- {t) Burghart v. Angersinn, 6 C. & P. 690; 1 M. & R. 458; Mea- kin Y. Morris, 12 Q. B. B. 352. («) Lord Tenderden's Act (9 Geo. 4, c. 14) enacts by sect. 5, that no action shall be maintained whereby to charge any per- son, upon any promise made after full age, to pay any debt con- tracted during infancy, or upon any ratification, after full age, oi' any promise or simple "contract made during infancy, unless such promise or ratification shall be made by some writing signed by the party to be charged therewith. This section is, semble, impliedly repealed by sect. 2 of the Infants Relief Act, 1874. See Chitty's Statutes, 4th ed., vol. ii,i. p. 547, note (l). (x) Peters v. Fleming, 1 M. &W. 42; Hands v. Slaney, 8 T. R. 578; Harris v. Fane, 1 Scott, N. R. 287; 1 M. & G. 550; 4 Jur. 508; Wharton v. Mackenzie, 5 Q. C. 606; Brayshaw v. Eaton, Y Scott, 183. (y) Ryder v. Womlmell, L. R., 3 Exch. 90. (0) Barnes & Co. v. Toye, 13 Q. B. D. 410. (a) Warwick v. Bruce, 2 M. & S. 205; Zouch v. Parsons, 3 Burr. 1808. (1246) FORMATION OF CONTEACT OF GUARANTEE. 13 band's safety, in depriying her of the power to injure Their com- him by any act without his concurrence or his assent, mon law in- either expressed or implied; and secondly, for her own capacity to security, in guarding against the husband's influence over her, by disabling her from disposing of her own property, except by those methods and with the solem- nities which the law itself prescribes (a). It is clear, from the second of these reasons, that, as regards her *own property, the reason a married woman could* [*16] not by the common law contract, was because, under ordi- nary circumstances, if she were to do so, her free will would be so influenced by her husband that she would really be incapable of producing the necessary intention to contract ; just as a person under duress is incapable of doing so (6). This incapacity to contract under Changes whicb married women laboured so long has been effected in mitigated by modern statutes, commencing with the "f^e's power Married Women's Property Act, 1870, and ending contracte^y' with the Married Women's Property Act, 1882. In- the Married deed, sect. 1 of the last-named statute practically Women's removes all the old restraint? of the common law upon Property a married woman's capacity to contract, by providing that she shall be capable of holding property, and of contractmg to the extent of her separate property, as a feme sole (c) ; while sect. 12 of the same statute, in effect, provides that every married woman, whether married before or after the act, shall have in her own name, against all persons whomsoever, including her husband, the same civil remedies, and, with one exception, the same redress by way of criminal proceedings, for the protection and security of her own personal property as if such property belonged to her as a. feme sole {d). The incapacities to contract, which have hitherto Incapacity to been mentioned, rest on the want of power to prodiice contract on the necessary intention to contract. There are, however, grounds of others which rest on difl'erent principles, originating in ^^ ^*'^° ^'^' motives of public policy, and which perhaps it may be as well to mention in this place. By the common law. Alien all alien enemies, and all British subjects and subjects enemies, of neutral nations domiciled in an enemy's territory, or *engaged in the service of a hostile power, are [*17] la) Eoper's Husband and Wife, 2nd ed., p. 2. \b) As to duress, see ante, p. 11. (c) This section is not retrospective. See Connolan v. Leyland, 27 Ch. Div. 632, TurnlmU v. Fonnan, 15 Q. B. D. 234— C. A. (d) For instance of a case in which guara,ntee was given by a married woman, see Morrell v. Cowan, 7 Ch. Div. 151; 26 W. E. 90; 47 L. J., Ch. 173; 37 L. T. 586. (1247) 14 THE LAW OF GUARANTEES. Alien fi-iends. Naturaliza- tion Act, 1870. Incapacity to contract of felons an.d outlaws. Third requi- site of con- tract of The consid- eration. disabled from ebntracting with British subjects unless they have obtained a license to trade (e). But they may lawfully provide for the wants and necessities of Englishmen detained abroad, and may enforce con- tracts mad e for such purposes on the return ofpeace,(/). Alien friends, by the common law, labour under this partial incapacity to contract — namely, that they cannot lawfully enter or enforce any contracts' connected with the acquisition and enjoyment of freehold estates (/). Prisoners of war seem, by the common law, to possess the same contracting power as alien friends (/). The Naturalization Act, 1870 (g), has effected con- siderable alterations in the capacity of aliens as to prop- erty, it being enacted by sect. 2 of that act, that "real and personal property of every description may be taken, acquired, held and disposed of by an alien in the same manner in all respects as by a natural-bom British subject." No distinction appears to be made by this act between alien friends and alien enemies, or between aliens residing in the country and those who do not. All aliens, therefore, would seem to enjoy the express power conferred by sect. 2, as to taking, acquir- ing and disposing of property, and the implied power conferred by that section, without which the express power would be almost useless, — namely, of entering into contracts for the taking, acquiring and disposing' of real and personal property (h). Felons and outlaws are incapable of contracting (i). But the act abolishing forfeitures for treason and felony enables the crown to appoint administrators of convicts' property, in whom the convict's property shall [*18] *vest, and with absolute power to let, mortgage, sell, convey and transfer any part of such property (m). Thirdly, we now pass on to another requisite of. a contract — the consideration. Every contract not under seal must have a considera- tion to support it. This consideration is either expressed in words, or implied from the very nature of the con- tract. It is implied in the case of bills or notes, it being a presumption of law thab every bill or note, whether expressed or not to be for value received, was (e) Addison on Contracts, 8th ed., p. 151. /) li- tg) ,33 & 34 Vict. c. 14. (A) See Chitty on Contracts, lOtK ed., p. 179. (i) See Addison on Contracts, 8th ed., pp. 151, 152 : and see 33 & 34 Vict. c. 23, a. 8. (m) 33 & 34 Vict. c. 23, ss. 9, 10, 12. (1248) FOEMATION OF CONTRACT OF 6UAEANTEE. 15 given for adequate consideration, which therefore need neither be alleged nor proved by the holder in suing on the instrument (n). However, want of consideration is a defence, in an action between the immediate parties. Contracts under seal or specialties not only are valid without any expressed consideration, but are valid with- out any consideration at all (o). The reason why a contract under seal is valid without consideration is, because an engagement of this description is of so solemn a character, that persons entering into it must be presumed to have previously determined upon what they were about to do {p). Though, however, a contract under seal requires no consideration to support it, yet if it be found on an il- legal consideration, this will render the contract void (q). It would seevi, too, though this has never been actually decided, that the total failure of a considera- tion obviously intended to exist would afford a good defence to an action on instrument under seal (r). *Th6 contract of guarantee, like every other [*19] Guarantee contract, requires a consideration to support it, unless not under it be under seal (s). This was decided in the case of ^^^ requires Barren v. Trussell (t). There, it was contended at the ^^^^ bar, that a promise to answer the debt of another, if in writing, did not require any consideration to sup- port it. The court, however, observed, that in all cases to make any promise valid, whether to pay the debt of another, or to do anything else, there must be a consid- eration for it, whether it be in writing or not in writing. No court of law has ever decided that there must be jjature of the a consideration moving directly between the person giv- consideration ing and the person receiving a guarantee; it is enough for a guaran- if the person for whum the guarantee is given thereby *^^- receive a benefit or advantage; or if the party to whom {«) Chitty on Bills of Exchange, 11th ed., p. 53. (o) FaUowes v. Taylor, 7 T. E. 475 ; Chitty on Contracts, 10th ed., p. 5. (p) Morley v. Boothby, 3 Bing. 106, 111 ; Sharington v. Pledatt, Plowd. 308. (g) Fisher v. Bridges, 3 Ell. & Bl. 642, 649 ; Bunn v. Guy, 4 East, 190, 200. [r) See Rose v. Poulton, 2 B. & Ad.. 822, 828. (s) The consideration need not now be stated in writing. See post,'^. 150. H) 4 Taunt. 117, 120. See also ^et' Abhbtt, C. J., and Bayley, J., in Saunders v. Wakefield, 4 B. & Aid. 595, 600, 601 ; Pillan v. Van Mierop and Hopkins, 3 Burr. 1663 (where the whole subject of consideration is learnedly and fully discussed) ; French v. French, 2 M. Gr. 644 ; Westhead v. Sproson, 30 L. J., Ex. 265, 267 ; ~ ' • v. Moyle, 2 C. B. 644, 650. (1249) 16 THE LAW OF GUARANTEES. it is given suffer a detriment or inconvenience, to form an inducement to the surety to render himself liable for the debt of the principal (u). Owing to the circum- stances that, usually, persons by giving guarantees benefit third persons rather than themselves, it seems to have been assumed in some cases, that where the person giving a guarantee derived any apparent benefit from it, the whole character of the transaction was altered. These cases will be discussed hereafter, when we come to treat of the operation of the Statute of Frauds upon guarantees. In the case of £]x parte Minet («), Lord Eldon is reported to have said, "that the undertaking of one man for the debt of another [*20] does not require a *consideration moving be- tween them." Now, certainly, such a statement requires explanation. If it means that the consideration for a guarantee may consist of a detriment to the person to whom the guarantee is given, or, what is really the same thing, of a benefit conferred by the latter on the princi- pal debtor, why then the statement in question is un- doubtedly good law. If, however. Lord Eldon meant to say, that the existence of a debt between A. and B. is of itself a suificient consideration for a guarantee of C., then, Certainly, ha laid down that which is not the law. Thus, it appears from numerous cases that a promise to pay a debt already incurred by a third per- son, without the intervention of the defendant, is not Pastorexe- binding unless made on Some new consideration {x); cuted consid- for a past or executed consideration, unless moved at eration insuf- the defendant's request, is not binding without some heient. ^^^ consideration. However, an agreement by the creditor that he will forbear to sue the principal debtor Forbearance for a past debt is a sufficient consideration for the a good con- guarantee of the surety. And where the guarantee is given in consideration of the plaintiff undertaking to forbear to sue for a certain period, or when the nature of the transaction shows that this was the intention of the parties, forbearance to sue before the expiration of [u) Per Best, C. J., in Morley v. Boothhy, 10 Moore, 395, 406. See also judgment of Yates, J., in Pillan v. Van Mierop and Hop-^ kins, 3 Burr. 1663. (v) 14 Vea. 189. (x) French v. French, 2 M. & G. 644 ; 3 Scott, N. E. 121 ;' Wood y. Benson, 2 Cr. & J. 94 ; 1 Roll. Abr. 27, pi. 49 ; Payne v. Wilson, 7 B. & C. 423, 426 ; Lyon v. Lamb, Fell on Guarantees, 9nd ed., 36—40 ; Johnson v. ^icholh, 1 C. B. 251 ; Tomlinson v. Oell, 6 Ad. & Ell. 564 ; Thomas v. Williams, 10 B. & C. 664 ; Eastwood v. Kenyan, 11 A. & E. 438; Eunt v. Bate, Dyer, 272a: Broom v. Batchelor, 1 C. B. 255. (1250) aideration. FORMATION OF CONTRACT OF aUAEANTEE. 17 the period agreed upon i s a condition precedent to the plaintiff's right of action on the, guarantee (y). It was Cases on this formerly thought that forbearance to sue for an indefl- subject. nite period was not such a consideration as could sup- port a guarantee, unless, indeed, in those cases where a particular act had to be done which required some time to do it, and in which *the law implied a [21*] reasonable time (z). Thus forbearance per paullulum tempus, or for some time, was held bad (a) ; though for- bearance jper magnum tempus (6), or for a reasonable time (c), which seems certainly to be equally indefinite, was held good. These distinctions, however, no longer exist. Again, in Boss v. Moss (d), which it will be seen presently has been very much questioned, it was held, that the mere discontinuance of an action is hot a suffi- cient consideration to support a promise, because the plaintiff may commence a fresh action the next day. On the other hand, where the defendant, in considera- tion of the plaintiff having, at the defendant's request, consented to suspend proceedings against A., promised to pay a certain sum on account of the debt " on the 1st day of April now next," it was held, that the con- sideration of the promise must be taken as a consent to suspend proceedings at least until the 1st of April (e.) In the case of Harris v. Venabels (/), the case of Ross V. Moss (supi'a) was questioned. In Harris v. Ven- ables, the plaintiff having presented a petition for wind- ing up a company, the defendant signed the following guarantee: " In consideration of your withdrawing the petition you have presented for winding up the com- pany called John King & Co., Limited, we agree to pay yoirall the costs you have incurred of and in relation to such petition, and to indemnify you against all costs (if any) you may be liable to pay to the company, or to any other parties appearing for or in reference to the petition. We further agree to guarantee the payment to you, within *eighteen months from this date, by [*22] the company or the liquidator thereof, of the principal of your debt of 722?. It was held, that the consideration (y) Bolt V. Cozens, 18 C. B. 673. (2) Semple v. Pink, 1 Exch. 74 ; ElUns v. Heart, Fitzg. 202 ; Payne v. WiUon, 7 B. & C. 423. (a) 1 Roll. Abr. 23, pi. 26 ; Sackford's Case, Cro. Eliz. 455. (6) Mapes v. Sidney, Cro. Jac. 683. ji (c) Johnson v. miiieheott, 1 Roll. Abr. 24, pi. 33. (d) Cro. Eliz. 569. (c) Payne v. Wilson, 7 B. & C. 423. ( /) L. R., 7 Excb. 335 ; and se* Alhusen v. Prest, 6 Exch. 720 ; 20 L. J., Ex. 404. 2 (1251) 18 ■ THE LAW OF GUAKANIEES. applied to both promises, .that the consideration was the withdrawal of the then pending petition and not the forbearing for eighteen months to proceed with any petition to wind up the company, and that such a con- sideration was sufficient to support the promise. Baron Bramwell, in the course of his judgment, said, "First, Mr. Trevelyan (g) says, 'withdraw' means 'not to pre- sent or persevere in a petition against the company for the space of eighteen months,' and he says it must mean this, because if it only meant that the plaintiff would withdraw his petition for the moment, there would be no consideration and no valid contract. For this position he cites Boss v. Moss, which certainly goes very far; but whether that case is good law, and would be decided in the same way now, I will not say. If a man expressly contracts that a particular petition being withdrawn, he will pay a sum, of money, that is a good contract; it was his own folly not to provide against ' another petition being filed. It is obvious that a real benefit is gained by the withdrawal, because of the dis- inclination to commence a new proceeding after so much labour and expense have been wasted. I cannot but doubt, therefore, whether Ross v. Moss is good law; and I think that a promise made in consideration of such an agreement would be good" (h). In this same case of Harris Y. Venables, in speaking of Semple v. Pink (i) (in which the court seems to have thought that for- bearance for an indefinite period is bad), Cockburn, C. J., said, " But, supposing that the sole consideration was the forbearing to press for immediate payment, I should not be prepared to assent to- the doctrine laid down in Semple v. Pink;" and Srle, J., said, "I concur [*23] with the *Lord Chief Justice with respect to the case of Semple v. Pink. I do not assent to the doctrine that a guarantee in consideratipn of an agreement to give time is void, unless the time to be given is defined in the contract." In the modern case of Wynne v. Hughes (fc), disapproval of the doctrine laid down in Semple v. Pink was expressed by the court, and its authority doubted. Discontinu- It may, perhaps, be laid down as a safe rule, that ance of an discontinuance of an action or other proceeding is a ac ion wi sufficient consideration to support a guarantee, not- (g) The connsel for the plaintiff. (A) See recent case of Beer v, Foakes, 11 Q. B. D. 221. (i) 1 Exch. 74. [k) 21 W. E. 628. (1252) FORMATION OP CONTRACT OF GUARANTEE.' 19 withstanding the risk which the promiser runs of com- afford con- mencement of fresh proceedings immediately after the sideration for discontinuance of the old proceedings; but that for- ^ suiirantee. bearance to sue for an indefinite period, where there is ■'^^^° forbear- -,. -,• . , '■ J -j i- ance for an no proceeding pending, is also a good consideration, in^^flnite because it always means forbearance for a reasonable period, time, and that what is a reasonable time must be left to the jury (l). This construction of a forbearance for an indefinite period is in accordance with decisions in the analogous cases of guarantees, given in consideration of past and future supply of goods ; and where it seems to have been held that the future supply must be reason- able to support the promise of the surety, where the instrument is silent as to the extent of such a supply (m). In OldershawY. King (n), wherei the guarantee was given in consideration of forbearance to press for immediate payment, the court expressed the opinion that this amounted to an agreement to forbear for a reasonable time, and that' this, of itself, would be sufficient to«sup- port a guarantee. As, however, in that case, the con- tract disclosed a sufficient consideration, independently of such forbearance, it became unnecessary for the court actually to decide the point. In Wynne v. *Hughes (o) the facts were as follows: — "The [*24] plaintifiF's agent wrote to defendant, " I have this morn- ing received the most peremptory instructions to settle this account. Be good enough to arrange something by to-morrow." The defendant, in reply, wrote, "I undertake to pay 500Z. on the account between my late brother Mr. O. D. Hughes and your client on or before this day three weeks." The plaintiff did not expressly agree to forbear suing, but did in fact forbear for three weeks. It was held that the correspondence, together with the plaintiff's actual forbearance for three weeks to sue, constituted a good and binding promise to pay on the part of the defendant. Where certain goods were seized by A. under a warrant from the sheriff, in the belief that they were goods of the debtor, and, upon the goods being claimed by the debtor's brother, the plaintiff, at the request of the defendant, disregarded the claim and sold the goods, in consideration of his doing which the defendant pro- (l) Per Coekium, C. J., in Oldershaw v. King, 2 H. & N. 520. (m) See infra. (n) 2 H. & N. 520; and see observations of Bramwdl, B., on this case in Wynne v. Hughes, 21 W. E. 628, 629. (o) 21 W. R. 628. (1253) 20 THE LAW OF GUABANTEES. Executory consideration for a gua- rantee. Examples. Future ad- vance or supply of goods. Future em- ployment of third persons. mised to indemnify him, the consideration was held to be sufficient (p)., A promise of guarantee is sufficiently supported by a, future or executory consideration. Thus, an agree- ment by the plaintiff for the future supply of goods, or for a future advance, to a third person, is a , sufficient consideration for the defendant's promisS to be answer- able for the payment to the plaintiff of past and future debts of such third person (g). Where, however, there is no agreement binding on the plaintiff to supply the goods, and no goods are in fact supplied, the guarantee fails for want of consideration (r). Moreover, it seems that the supply must be bon& fide, and to a reasonable [*25] *extent, and this question is for a jury to deter- mine (s). Subject, however, to this condition, the amount to be supplied may be discretionary (<). Where it is evident that the future supply is to be on the same terms, and of a character similar to the past supply, the plaintiff will not be entitled to recover on the guar- antee, unless it appear that this condition has been fulfilled (m). Promises to be answerable for the behaviour of third persons in offices or employments are not invalid for want of consideration, merely becaiise the promisee is not bound to employ such persons (x). These promises greatly resemble promises to be answerable for future supplies or 'advances made to third persons (y). In both cases the guarantees are not mutuMlly binding at first, and are, therefore, revocable until the employment in the one case, and the supply or advance in the other {z). Thus, in Offord v. Davies (a) it was held, that a guarantee to secure moneys to be advanced to a third person on discount, to a certain extent, " for the space of twelve calendar months," is countermandable (p) Elliston V. Berryman, 15 Q. B. N. S. 205. (g) Whitev. Woodward, 5 C. B. 810; Chapman v. Sutton, 2 C. B. 634; Boyd v. Moyle, 2 C. B. 644; Eussell v. Moseley, 3 B.- & B. 211. (r) Westhead v. Sproson, 6 H. & N. 728; Boyd v. Moyle, 2 C. B. 644—650. (s) Johnson v. Kicholls, 1 C. B. 251 ; White y. Woodward, 5 C. B. 810, 818; Broom v. Batchelor, 1 H. & N. 255—264; Wood v. Benson, 2 C. & J. 94. (t) While V. Woodward, ubi supra. (u) ■ Johnson v. NiehoUs, supra. (x) Kennavmy v. Treleaven, 5 M. & W. 498; Lysaght v. Walker, 5 Bligh, N. S. 1; Newbury v. Armstrong, 6 Bing. 201. (y) See ante, p. 24. (z) See post, Chapter VI. (a) 12 C. B., N. S. 748. (1254) FORMATION OF CONTRACT OF GUARANTEE. 21 within that time, before it has been in any ivay acted upon. Erie, C. J., in his judgment in this, case, says: '• The promise, by itself, creates no obligation. It is, in effect, conditioned to be binding if the plaintiff acts upon it, either to the benefit of the defendants, or the detriment of himself. But until the condition has been at least in part fulfilled, the defendants have the power of revoking it (6). In the' case of a simple guarantee for a proposed loan, the right of revocation *before the proposal has been acted upon, did not [*26] appear to be disputed. Then, are the rights of the par- ties affected, either by the promise being expressed to be for twelve months, orbj^the fact that some discounts had been made before that now in question and re- paid? We. think not. The promise to repay for twelve months creates no additional liability on the guarantor; but, on the contrary, fixes a limit in time beyond which his liability cannot extend. And, with respect to other discounts, which had been repaid, we consider each discount as a separate transaction, creat- ing a liability on the defendant till it is repaid, and, after repayment, leaving the promise to have the same operation that it had before any discount was made and no more." It has already been pointed out that a past or executed consideration is insufficient to support a pronjise of guarantee, but that an executory or future consideration is quite sufficient for the purpose. Now, it is very often Difficulty in by no means easy to determine whether, according to some cases of fair interpretation of the words of a guarantee, the pro- determining mise of the surety is given for a past or an executed ^deration""' consideration, such as past advances to the original alleged is debtor, or for a future or executory consideration, such, past or as future advances. Where the words of a guarantee future are capable of expressing either a past or a concurrent consideration, the courts will adopt the latter construc- tion, ut res magis valeat quam pereat (c). If, however, it should appear that the parties did not necessarily contemplate future advances, the guarantee will be void (d). Also, if the consideration for the promise is ex- pressed to be past and future advances, whereas, as a fact, the consideration is entirely past or executed, and not moved *by a precedent request, it is certainly [*27] (5) As to revocation of guarantees, see post. Chapter VI. (e) Steel v. Hoe, 14 Q. B. 431; Edwards v. Jevon, 8C. &B. 436; Broom v. Batchelor, 1 H. & N. 255; Goldshede v. Swan, 1 Exch. 154; Colbovrn v. Dawson, 10 C. B. 773. (d) Bell V. Walsh, 9 C. B. 154. (1255) 22 THE LAW OF GUARANTEES. invalid (e). It seems that if the expression of the par- ties is ambiguous, parol evidence is admissible to show that the parties meant not a past but a future supply of goods (/). In Edwards y. Jevons (g), the expression, in consideration "of your giving credit," was held to be equally applicable to future as to past advances. In Haigh v. Brooks (h), the words used were,' in consideration "of your being in advance," and these were held not to necessarily imply a past ad- vance. So it appears that the words, "having re- leased" may he p7:ospectwe (ij, and the words "having resigned" were held equally to import either a, past or a concurrent consideration (A;). In Coles v. Pack (I), an agreement to become responsible for any sum of money '^for the time being'' due, was treated as includ- ing a liability iar future indebtedness. In Broom v. Batchelor (m), the guarantee was as follows : " In consideration of the credit given by B. to E., I hereby agree to guarantee the payment of all bills of exchange drawn by the said B. and accepted Ijy E. Also, I hereby agree to guarantee the payment of any balance that may be due from the said E. to the said B. This guarantee to include all bills of exchange now running, as well as the balance of account at this day." It appeared that at the time of the giving of the guarantee there were bills running, and an account due from E. to B., and future dealings between the parties were contemplated. It was held, that the guarantee, extended to future as well as to past advances. In Mockett v. Ames [n), the plaintiffs supplied the defendant's son with some beer, and on their refusing . to supply more without a guarantee, the son gave them [*28] *the following guarantee signed by the defend- ant : "I hereby undertake to pay you, for all the beer supplied by you to the Star Brewery, 131, East Street, Walworth, on the completion of the purchase, which will take place in a few days." It was held, that the promise Vfss primQ. facie a promise to pay for goods to (e) Bell V. Walsh, 9 C. B/ 154. (/) Hoad V. Grace. 7 H. & N. 494. (fir) 8 C. B. 436. (h) 10 A. &. E. 309. (i) Butchers. Steuart, .n M. &. W. 857. k) Steele v. Hoe, 14 Q. B. 431. I) L. R., 5 C. P. 65. m) 1 H. & N. 255. («) 23 L. T., N. S. 729. (1256) FORMATION OF CONTRACT OF GUARANTEE. 23 be supplied ; and semble, that the promise also applied to the "goods already supplied. The consideration for the promise of the guarantor Considera- may be concurrent with such promise (o). It need not, ^^^^ ^°^ ^la- however, be co-extensive with it (p), for the courts refuse concurrait to enforce a contract only where it is nudum pactum, that is to say, where there is an absence of consideration, not where the. consideration is inadequate merely, for the law has nothing to do with the prudence or impru- dence of the bargain (q). Thus, the delivering up of a worthless guarantee would be a good consideration for the promise of the guarantor, for an'inadequate security may, from various motives which the courts will not inquire into, be a very good consideration (r). A guar- antee given for an illegal consideration cannot, it is presumed, be enforced (s). It was once thought that a moral obligation was in Insufficiency all cases a good consideration for a promise. In Lee v. of moral con- Muggeridge (t), a feme covert, having an estate settled sideration. to her separate use, gave a bond for repayment, by her executors, of money advanced at her request on security , of that bond to her son-in-law. After her husband's decease she wrote, promising that her executors should *settlethe bond. It was held, that the executors [*29] were liable on this promise of the testatrix. It is con- ceived that this case is not now good law, for it has been held that, except under circumstances presently to be noticed, a mere moral consideration is not sufficient to support a promise (u). In Eastwood v. Kenyon {x) the facts were as follows : The plaintiff was executor under the will of the father of the defendant's wife, who had died intestate as to his real estate, leaving the defendant's wife, an infant, his only child. The plain- tifP had uoZMjitoriZ^/ expended his money for the improve- ment of the real estate whilst the defendant's wife was (o) Butcher v. Steuart, 11 M. & W. 857 ; Goldshede v. Swan, 1 Exch. 154. {p) Johnson v. Meholls, 1 C. B. 251. See, however, Thomas v. Williams, 10 B. & C. 664. (q) Per Erie, J. in Johnson v. Meholls, 1 C. B. 251, 272. See also observations of Cresswell. J. , at pp. 251 and 271 of 1 C. B. , Dutchman v. Tooth, 7 Scott, 710 ; Edwards v. Baugh, 11 M. & W. 641. (r) Haigh v. Brooks, 10 A. & E. ,309. ' (s) See the recent case of Wood v. Barker, L. E., 1 Eq. 139 ; and see Coles v. Strick, 15 Q. B. 2. {t) 5 Taunt. 36. (u) Littlefield v. 8hee, 2 B. & Ad. 811, 812 ; WennaU v. Adney, 2 B. & A. 811. {x) 11 A. & E. 438. (1257) 24 THE LAW OF GUARANTEES. Exceptions to rule that Aoral consid- eration in- sufficient. sole and a minor, and to reimburse himself borrowed money of one Blackburn, to whom he had given his promissory note. The defendant's wife, while sole, had received the benefit, and' after she came of age assented to and promised to pay the note, and did pay a year's interest. After the marriage, the plaintiff's accounts were shown to the defendant, who assented to them, and it appeared that there was due to the plaintiff a sum equal to the amount of the note to Blackburn. The declaration, after alleging these facts, alleged that the defendant, in right of his wife, had received all the benefit, and in consideration of the premises promised to pay and discharge the amount of the note to Black- burn. It was held (that, as the consideration disclosed by the declaration for the defendant's promise was a past benefit not conferred at the request of the defend- ant, the declaration was bad. Now here, no doubt, as well as in Lee v. Muggeridge {supra), there was a per- fect moral consideration for the promise. Though, as a rule, a moral consideration will not, as already pointed out, support an express promise, yet there are certain cases, which we will now proceed to notice, which are exceptions to the general rule. These [*30] *exceptions are summed up in a learned note to the case of Wennall v. Adney {y) in the following •words : — " That an express promise can only revive a precedent good consideration, which might have been enforced at law through the medium of an implied pro- mise, had it not been suspended by some positive rule of law; but can give no original right of action, if the obligation on which it is founded never could have been enforced at law, though not barred by any legal maxim or statute provision" {z). Thus the contracts of in- fants, until the passing of the Infants' Relief Act, 1874, were voidable only, and were capable of ratification by express promise after age, while those of married women, which prior to recent legislation were void, could not be revived by ratification. So, again, it was held that a contract which, for want of written evi- dence required by statute, could not be sued upon might'.be revived by express promise, provided the statute did not render the contract absolutely void for want of written evidence (a). Again, where a person. (y) 3 B. & P. 247, 249, 253. (z) This note is cited with approval by Lord Denman, C. Eastwood T. Kenym, 11 A. & E. 438, 447. (a) Wilson v. Marshall, 15 Ir. C. L. E., N. S. 466. (1258) , FORMATION OF CONTRACT OF GUARANTEE. 25 having entered into a written guarantee and become liable upon it, verbally promised to make good such liability, after the Statute of Limitations had barred the right of action on the guarantee, it was held, that the subsequent promise revived the right of action on ■ the guarantee (&). Such a promise would not now have this effect unless it were in writing (c). It will be seen, in a subsequent chapter (d), that a surety is discharged from his obligation if the credit- or binds himself to give time to the principal debtor. However, just as a subsequent promise may revive a right of action on a guarantee, when such right has been barred by the Statute of Limitations, so also it *seeins, that if a creditor having given time to [*31] the principal debtor makes a demand on the surety and receives a promise from him, that is sufficient to sustain the demand, . not as the creation of a new, but as the revival of an old, debt (e). Whatever may be the nature of the consideration for The consider- a guarantee it moves not from the principal debtor, but ation for a from the creditor. Consequently, even though the con- guarantee tract of guarantee be under seal, it does not extinguishi"'"''' "?* the simple contract debt of the pirincipal (f). For the t^e principal surety does not discharge the obligation of the prinei- debtor, pal,. but contracts another which is accessory to it. (gr). No special form of words is necessary to the forma- -p^ • , tion of a guarantee. But the parties must manifest form of words their intention clearly. The common law did not even necessary to require the contract of guarantee to be in writing, but formation of received paroZ evidence of it. The 4th section of the ^ g"^i''>'iitee. Statute of Frauds (h), however, enacts that no action 'f^^}^^ con- ^ " ' . tract must be ~ ~ in writing as' (o) Gibbons Ti. M'Casland, 1 B. & A. 690. required by (e) 9 Geo. 4, c. 14, s. 1. Statute of (d) Chap, VI. Frauds. (e) Per Lord Eldon in Maiiliew v. Cricket, 2 Swanst. 185, 192. If) White V. Guyler, 6 T. E. 176, 177. (g) Pothier on the Law of Obligations (Evans' Edition), vol. i., pp. 229, 230. • (A) 29 Car. 3, c. 3. The following are the exact words of the 4th section, which, it will be seen, applies to various transac- tions : — ' ' And be it ' further enacted, that no action shall be brought whereby to charge any execufxjr or administrator upon any special promise to answer damages out of his own estate, or whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person ; or to charge any person upon any agreement made upon consid- eration of marriage; or upon any contract *or sale of lands, tene- {Sic.) ments or hereditaments, or any interest in or concerning them ; or upon any agreement that is not to be performed within the space of one year from the making thereof ; unless the agreement " upon which such action shall be brought, or some memorandum. (1259) 26 THE LAW OF GUAEANTEES. Verbal guarantee no longer en- forceable by action; ( except wljere defendant by fraud pre- vents compli- ance with statute. How this provision of Statute of Frauds formerly evaded. ^Special pro- mise treated as false re- shall be brought whereby to charge defendant upon any special promise to answer for the debt; default, or mis- carriage of another person, unless the agreement upon [*32] *which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed' by the party to be charged therewith, or some other person thereunto by him lawfully authorized. The effect of this enactment is not to render verbal guarantees void (i), but to prevent their being e5i/orced by action (j), or other proceedings (A;). And it would seem that, whenever the Statute of Frauds requires writteri evidence of a contract, such evidence must ex- ist before action brought (I). It would appear that where one of the parties to a contract has fraudulently omitted to reduce it into writing, he will not be allowed to cover his fraud by setting up the Statute of Frauds as a defence (m). Many years after the passing of the Statute of Frauds, it was found that that portipn of the 4th sec- tion which relates to guarantees was capable of being evaded in certain cases, to which it was obviously neces- sary that it should apply, in order to prevent the per- petration of those frauds and perjuries against which this enactment is undoubtedly levelled. The case of Pasley v. Freeman (n) inaugurated the evasion in question. There an action founded in tort for deceit was brought against the defendant for inducing the plaintiff to supply with goods on credit a man known to the defendant to have no moans, and whom he false- ly, fraudulently and deceitfully represented to the plain- tiff to be a person safely to be trusted and given credit [*33] to. It *was held that the action might be main- tained. Now, here the foundation of the action was the false verbal affirmation of the defendant, and there or note thftreof shall be iii writing and signed by the party to be charged therewith, or some other person thereunto by him law- fully authorized." (i) Post. p. 41 et seq. \j) Also formerly by suit in equity, see per Lord Eldon, in Cooth v. Jackson, 6 Ves. 72. (k) Laylhoarp v. Bryant. 2 Bing. N. C. 735, 747 ; Crosby v. Wadsworth, 6 'Easi, 60»— 611 ; Leroux v. Brown. 12 C. B. 823—825; but see Carrington v. Roots, 2 M. & W. 248; Eeade v. Lamb, 6 Exch. 130; 20 L. J., Ex. 161. (I) Bell V. Bament, 9 M. & W. 36 : Longfellow v. Williams, 2 Peake, 225 ; but see Fricker v. T/iomlimon, 1 M. & G. 772, 773. («i) Lincoln v. Wright, 4 D. & J. 16; Davies v. Otty, 35 Beav. 208 ; Booth v. Turl, L. R, 16 Eq. 182 ; Haigh v. Xaye, L. E., 7 Cb. 469. " ' < (n) 3 T. E. 51. (1260) FORMATION OF CONTRACT OF GUARANTEE. 27 can De no doubt that, if the action had not been shaped presentation upon a tort, but upon a contract, treating the verbal '^^ action affirmation as though it were a special promise to ^^^^ answer for the debt, default or miscarriage of another person, the court would have held that the plaintiff was precluded from recovering by the 4th section of the . Statute of Frauds. In Lyde v. Banard (o), Parke, B., says, "Since the case of Pasley v. Freeman it is well known, from some reported cases, and from others which have not found their way into the books, that a practice had grown up of fixing a person with the debt of another, by parol evidence of a representation as to the solvency or trust- worthiness of a third person, and proof that credit was given on the faith of that representation. The practice did not extend to all cases within the Statute of Frauds. That statute applies to a guarantee, for good consider- ation, for a debt already contracted, as well as where credit was 'to be given; but the evil existed only in those cases in which credit was subsequently given, on the faith of the representation made. In this respect the practice of bringing actions on such parol repre- sentations was an evasion of the Statute of Frauds." It seems that, in these actions for false representations Action for as to character and credit, the plaintiff almost invariably ^^^^^ repre- succeeded. This remarkable fact induced Lord Ten- wf '?" f" terden to think that there was some latent injustice tainable un- which required a remedv, and he accordingly framed less represen- the 6th section of 9 Geo." 4, c. 14 (p) (Lord Tenterden's t^*?"" i° Act), which enacts, " That no action shall be brought pJ^v,"fon on *whereby to charge any person upon or by reason [*34] this subject of any representation or assurance made or given con- in 9 Geo. 4, cerning or relating to the character, conduct, credit, ''■ ^^' ^■,^- ability, trade or dealings of any other person, to the intent or purpose that such other person may obtain credit, money or goods upon (q), unless such representation or assurance be made in writing, signed by the party to be charged therewith." Since this enactment, therefore, whether the action be in tort, for false representation, or in contract, on a special promise to answer for another's default or miscarriage, the defendant is not chargeable (o) 1 M. & "W. 101. Ip) Such was the origin of this enactment, according to Po??oefc, C. B., in Tatton v. Wade. 18 C. B. 371—381. See also observa^ tions of Lord AMnger, C. B., and Parke, B., in Lyde v. Barnard, 1 M. & W. 101, 114, 117. (q) Probably a mistake for "thereupon." See observations of Parlce, B., in Lyde v. Barnard, 1 M. & W. 101 — 115. (1261) 28 ' THE LAW OF GUARANTEES. without vyritten evidence. Where there are both written and verbal affirmations as to the character of another, the credit is thereby obtained, an action will lie against the party who made these affirmations, if the written representation be a material part of the inducement which moved the plaintiff to give the credit (r). No action will, however, lie for a false representation unless the party making it knows it to be untrue, and makes it with the intention of inducing the party to act upon it, and the latter does so act upon it and sustains damage in consequence (s). It is not, however, necessary that the defendant should benefit by the deceit (f). Unsuccessfal In Haslock v. Ferguson (m),, an attempt was made to atfempt to evade the 6th section of Lord Tenterden's Act, which, evade this j^owever, happily proved un successful. There, the action [*35] *was for money had and received, which form of action is usually adopted whenever the defendant has received money which belongs to the .plaintiff ex aequo et bono (x). The plaintiff's case was that B., through a false verbal representation of his credit made by H., under defendant's sanction, had obtained goods from him, by the sale of which sums were raised by B., andhanded over to the defendant in liquidation bf certain debts due to him from B. These sums the plaintiff, therefore, sought to recover from the defendant. The plaintiff was, however, nonsuited, on the ground that, as there was no mode of fixing the defendant in this action, ex- cept through the medium of evidence as to representa- tion of character; the statute 9 Geo. 4, c. 14, s. 6, applied. In short, in order to prove that the plaintiff was entitled, ex cequo et bono, to the money claimed, it was necessary to give in evidence the alleged false affirmation, and this could not be donfe, as it was not in writing. A rule for a new trial, which the plaintiff's counsel ob- tained in this case, was ultimately discharged, what repre- "With regard to the question what representations are within 9 ^""^ within the statute, the following instances may be Geo. 4, c. 14, noticed: — A representation by the defendant that money s. 6. '- (r) Wade v. Tatton, 25 L. J., C. P. 240; see also Tattonx. Wade, 18 C. B. 371. (s) Belm V. Kenible, 7 C. B.. N. S. 260; see further, Ashlin v. White, Holt, 387; Polhill v. Walter, 3 B. & Ad. 114; and see 2 Sm. L. C, 6th ed., pp. 71, 88; notes to Pasley v. Freeman, 1 Sm. L. C, 6th ed., p. 16.5; Chnndelor v. Lopus, and notes thereto; Corbett v. Brown, 8 Bing. 33. {t) Pasley v. Freeman, 3 T. E. 51; see also Foster v. Charles, 4 M. & P. 61; 6 Bing. 396; 7 Bing. 105. (u) 7 Ad. & E. H6. (x) Moses V. Maeferlen, 2 Burr. 1000, 1-005. (1262) FORMATION OF CONTRACT OF GUARANTEE. 29 might be safely lent to A. B., because the title deeds to an estate which A. B. had just bought were in the de- fendant's possession, and that nothing could be done without the knowledge of the defendant, and that the plaintiff would be safe in making the loan, is a repre- sentation as to the ability of A. B., within 9 Geo. 4, c. 14, s. 6. This was decided in Swann v. Phillips (y). Lord Denman, C. J., in his judgment, said, "That if the words spoken by the defendant amounted only to an assertion that the defendant, being in possession of the *title deeds, would know what A. B. was doing, [*36] the statute did not apply. If they meant that A. B. might be trusted, then they constituted a representation as to his credit and ability." Littledale, J., in his judg- ment in the same case, said: " The representation is en- tire; no one part can be separated from the rest. In the ordinary course of things, if a man states another to be a man of ability, he is asked why he says so; he may answer, 'Because he has had a legacy left to him,' by way of enforcing his representation as to the ability. Here the substance of \he conversation is similar; the defendant says, 'You may trust him, and my reason for saying so is, that I know the estate which he has bought, and have his title deeds.' That is one entire representation concerning his credit." An action cannot, it seems, be maintained against a trustee for a false representation, by parol, of the in- cumbrances effected on the trust fund by the cestui que trust, such a representation being within the statute (z). In Turnley v. Macgregor (a), a similar point was raised, though not decided. There the representation complained of was, that a certain claim which a third person alleged he had upon the Government would be sure to be paid. Where, as in this case, the repre- sentation is as to the condition or value of a particular part of a man's property, whether it relate to or con- cern "his character, conduct, credit, ability, trade or dealings," must depend upon the facts of each particu- lar case (6). A representation made by the defendant as to the credit and circumstances of a firm, of which he ia a *member, is a representation as to the credit of [*37] (y) 8 Ad. & E. 457, 460, 461; see also Turnley t. Macgregor, 6 M. &G. i6; S. C.,6 Scott, N. E. 906. (z) Per Lord Abinger, C. B., and Ourney, B., diss. Parke, B., and Alderson, B. ; Lyde v. Barnard, 1 M. & W. 101; 1 Gale, 388. la) 6 Scott, N. E. 906; & C, 6 M. & G. 46. (6) See, on this subject, Lyde v. Barnard, 1 M. & W. 101. (1263) 30 THE LAW OP GUARANTEES. "another person," within the meaning of the statute 9 Geo. 4, c. 14, s. 6 (c). To whom the A question sometimes arises as to the person to whom representa- ^jjg representation must be made, in order to render the m^e™"^* ^® defendant liable. Upon this point it has been decided that, in order to enable a person injured by a false rep- resentation to sue for damages, it is not necessary that the representation should be • made to the plaintiff directly ; it is sufi&cient if the representation be made to a third person to be communicated to the plaintifp, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made to the public gen- erally, with a view to its being acted on, and the plain- tiff as one of the .public acts on it and suffers damage thereby (d). By whom it As to the signature of the representation in respect must be of which the action is brought, it is to be observed that signed. tjjg Q^}^ section of 9 Geo. 4, c. 14, requires that the written representation shall be signed by the party to be charged. Consequently, the signature of an agent is not, it seems, sufficient, because, whenever the legis- lature intends that the party to be charged shall be bound by the signature of his agent, there is an express enactment to that effect, and in other cases the signature must be the signature of the actual party to be charged (e). Even where the party to be charged can sign in no [*38] *other way but by its agent, this rule was, in JSviift V. Jewsbury (P. O.) and Goddard (/), held to ap- ply. There the facts were as follows : The plaintiff sued W. and G. jointly for a false representation with respect to the solvency of E. -The defendant W. was sued as the public officer of a banking company formed under 7 Geo. 4, c. 46, and the defendant G. was the manager of one of their branches. The plaintiff was the customer of the S. Bank, and requested the manager of that bank to inquire for him as to K.'s credit. The manager wrote a letter addressed to " The Manager " of the defendant's banking company, requesting informa- MDevaux v. Steinkeller., 8 Scott, 202. (d) Per Quain, J., in Swift v. Wimterbotham, L. R., 8 Q. B. 244, 253. This case was reversed, on another point, by the Exchequer Chamber. (e) Williams v. Mason, 21 W. E. 386 ; 28 L. T. 232 ; Clark v. Alexander, 8 Scott, N. E. 147 ; ffyde v. Johnson, 3 Scott, 289 ; 2 Bing. N. C. 776 ; which are decisions on the first section of 9 Geo. 4, c. 14, which section is in pari materia with section six of the same statute. See also observations of Quain, J. in Sivift v Winterbotham, L. E., 8 Q. B. 244. (/) L. E., 8 Q. B. 244 S. C, L. E., 9 Q. B. 301; 22 W. E. 319. (1264) POEMATION OI" CONTRACT OF GUAEANTEE. 31 tion whether K. was responsible to the extent of 50,- OOOl. The defendant G. 'wrote a letter, ■which he signed as manager, giving a favourable reply as to R.'s respon- sibility. The plaintifP, acting upon the faith of this letter, supplied R. with goods, for which he was never paid, in consequence of B 's insolvency. The statement made by G. was false to his knowledge. The defen- dant's banking company had no knowledge, otherwise than through G., that such a letter had been written, and gave G. n.o express authority to write the letter, but the writing of such letter was an act done within the scope of the general authority conferred on G. as manager. It was held, on appeal, first, that G. was liable personally for the false representation ; secondly, that by 9 Geo. 4, c. 14, s. 6, a false representation as to the credit of another person is not actionable tinless it is signed by the person making it, and not by an agent merely, and that, therefore, if G. was to be considered an agent, the banking company was not liable (g) ; thirdly *(overruling the decision of the Court below), [*39] that the sigaature of G. to the letter could not be con- sidered the signature of the banking company itself ; and, fourthly, that the letter was the representation of G., and not of the banking company. (g) It is right to mention, however, that, while expressing this opinion, Lord Coleridge, C. J., stated that if the banking com- pany had actually profited by the act of their manager, it might not be open to them to repudiate the liability accruing to them " by his act. See also Barwick v. English Joint Stock Bank, L. R. 2 Ex. 259 ; 36 L. J., Ex. 147 ; 16 L. T. 461; 15 W. E. 877; Mackay V. Commercial Bank of New Brunswick, L. E., 5 P. C. 412 ; Swire V. Francis, L. R., 3 'App. Cas. 106. (1265J 33 THE LAW OF GUARANTEES. [*40] *CHAPTER II. The second clause of 4th sectioij Stat. Frauds re- lates to gua- rantees. Division of present chap- ter. (A) The operation of sect. 4 Stat.' Frauds on cases within it. Verbal gua- rantees are not void, hut are not en- forceable by action. THE OPERATION OF THE STATUTE OF FRAUDS ON PROMISES TO GUARANTEE. The 4tli section of the Statute of Frauds (a) has, it is almost needless to say, a very extensive and important bearing upon the subject of guarantees. The part of the section which deals with this subject is the second clause. That clause is, in substance (and omitting words not relating to the present subject), in the fol- lowing terms: "No action shall be brought whereby to charge the defendant upon any special promise to an- swer for the debt, default or miscarriage of another per- son, unless the agreement or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." The second clause of the .4th section of the Statute of Frauds is carefully and accurately drawn, and impor- tant decisions have taken place upon every word of it. It is, therefore, proposed in this Chapter to consider it word by word, and to discuss (A) the operation of the statute in cases which it affects, as that operation is pointed out by the words "no action shall be brought" ; (B) to what kind of promises the section applies, as ascertained by the phrase " any special promise" ; (C) the kind of liability, promises to answer for which fall wifiiin the section, as being intended by the words " the debt, default or miscarriage of another." (A) The operation of the statute upon cases to which it applies is, and doubtless its framers intended that it should be, governed by the words "no action shall be [*41] *brought." These words ghould, therefore, be noted. It has been held that they do not make verbal contracts, which are required by the enactment to be in writing, absolutely void; they merely prevent their be- ing entirely by action in default of a memorandum in writing. But, as pointed out in Leroux v. Brown (6), to say that no action shall be brought upon a contract is, for most purposes, equivalent to saying that it shall (a) 29 Car. 2, c. 3. (J) 12 C. B. 801; 22 L. J., C. P. 1. C1266) 33 be void (6). There are, however, cases in which ver- bal guarantees may be taken advantage of. Thus, it Verbal guar Beems that superior courts of justice, by virtiie of that rantee en- jurisdiction which they possess over their own officers, ^orceable will sometimes enforce a verbal guarantee against a officer of '^ person who has given it in his official capacity. This superior was decided in the case of lie Greaves (c ). There an court, action having commenced in the Common Pleas, and judgment obtained. Greaves, an attorney of the Court of King's Bench (but not an attorney of the Court of Common Pleas), who was attorney for the defendant, proposed to compromise the action, and agreed verbally to give his two promissory notes for the debt and costs, payable at six and nine months, in consideration of the plaintiif staying proceedings. This was accepted by the plaintiff. But Greaves afterwards declined to give the notes. Thereupon a rule was obtained in the King's Bench, calling upon Greaves to pay the debt and costs. The court, in making this rule absolute, said, " Even supposing the undertaking to bp void by the Statute of Frauds, the court might exercise a summary jurisdic- tion over one of its officers, an attorney of the court. The undertaking was given by the party in his charac- ter of attorney, and in that character the court may compel him to perform it. An attorney is conusant of the law, and, if he give an undertaking which he must know to *be void, he shall not be allowed to take r*421 -sr ^ 1 J PI- T ,1.11^-.-' -May be given advantage ot his own wrong, and say that the under- in evidence taking cannot be enforced." Again, it appears that an in support oi agreement, required by the 4th section to be in writing, ^ defence. may be proved by parol evidence in order to support a defence (d). So a verbal guarantee is so far good. Money paid that if money be paid under it, it cannot be recovered under verbal (e). Again, when an action is brought on a bill of ex- guarantee change, it may be proved by parol evidence that one of covered ^^' the parties is a surety (/). Thus, if the buyer of it mav be goods accepts a bill drawn upon him for the price by a proved by surety, who afterwards indorses it to a seller, the surety parol evi- cannot refuse to pay the amount upon default of the dence that (b) And see per Bowen, C J., in In re Boimson, Field v. White, 29 Ch. Div. at p. 364. (c) 1 Cr. & J. 374, n. ; and see Evans v. Dunconibe, 1 C. & J. 372. {d) Lavery v. Tarley, 30 L. J., Ex. 49; see also Macrory v. Seoit, 20 L. J., Ex. 90. . (c) Shaw V. Woodcock. 7 B. & C. 73. (/) Garret v. Jull, 1 S. N. P., 11th ed. 407; Ball v. Wilcox, 1 M. & Rob. 58; Pooley v. Harradine, 7 El. & Bl. 431; Greenough V. M^aaiand, 2 Ell. & Ell. 424; 30 L. J., Q. B. 15. 3 (1267) 34 THE LAW OP GUARANTEES. one of the principal debtor, because the agreenient under which parties to a the. bill was signed was not in writing (gf). The law bill is a merchant implies a contract of suretyship between the surety. drawer and indorsee, and between the indorser and subsequent holders of a bill of exchange; and the Bills of Exchange Act, 1882 (45 &46 Vict. c. 61), con- tains provisions on the subject which are declaratory of the common law (h). The indorsing of a bill of ex- change does not, however, create a contract of surety- ship between the indorser and the prior parties to the bill (i). An executor It might be considered that where a person, to whom cannot a verbal guarantee has been given, becomes executor, by retainer under the surety's will, he ought to possess, by retainer, of iTertal"^^* the right of enforcing such guarantee, since he can guarantee in this way pay himself the amount due, without given to him [*43] *bringing an action to recover it. It has, how- by his testa- ever, been decided, in a very recent case, that an execu- tor or administrator has no right of retainer in respect of a debt, which, for want of written evidence, cannot be enforced by the 4th section of Ihe Statute of Frauds (fc). The ground of this decision would appear to be that, as an executor or administrator would commit a devastavit who paid a debt to a creditor who is pre- vented from enforcing it by the 4th section of "the Statute of Frauds, for'the same reason, the right of re- tainer does not extend to such a debt (l). Another consequence of the determination that the 4th section of the Statute of Frauds applies not to the validity of the contract, but oply to the procedure, is that an ac- tion will not lie in the courts of this country to enforce an oral agreement made in France (and valid there),' which, if made in England, could not, by reason of the 4th section of the Statute of Frauds, have been sued upon (m). This is in accordance with the rule appli- cable to foreign contracts , namely, that so much of the law as affects the rights and merit of the contract, all that relates "ad litis decisionem," is adopted, from the [g) Wilkinson v. Unwin, 7 Q. B. D. 636, 638. (A) Bills of Exchange Act, 1882, "s. 55, sub-s. (3); and see Castrique v. Buitigieg, 10 Moo. P. C. 94, 108; Steel v. M'Kinlay, L. K., 8 App. Cas. 754, 769. (i) Wilkinson v. Unwin, ubi supra. (k) In re Bownson, Field v. White, 29 Ch. Div. 358 — C. A. ; and see Wildes v. Dwdlow, L. R., 19 Eq. 198. (l) In re Rmonaon, Field v. White, ubi supra, per Fry, L. J. ; other reasons are, liowever, given for this decision by Cotton, L. J., and Bowen, L. ,7. (m) Leroux v. Broivn, 12 C. B. 801. (12G8) OPERATION OF TH3 STATUTE OP FRAUDS, ETC. 35 foreign couutry; so much of the law as affects the remedy only, all that relates " ad litis ordinationem," is taken from the le.v fori of that country where the ac- tion is brought (w). Another question, which may arise upon the meaning Promise may of the words, " no action shall be brought," is this : it be partly sometimes happens that a promise is, as to part of the T?^'''°J?'^ thing promised, within the Statute of Frauds, but as ^^^ partly to the remainder, is not within the statute. The point outside of it. then arises, whether an action can be maintained upon, the *part not within the statute. The words of [*44J the section do not, it will be noted, make the whole pro- "mise void, but simply say, " no action shall be brought." No right of The rule applicable to such cases appears to be this : if action on part the parts are severable, an action will lie on the part outside stat- outside the statute; but, if the parts are inseparable, ^^^ ^^^^^^1^ then no such action lies. In the case of Chater v. from other Beckei (n), the plaintiff and defendant were both credit- part, ors of one Harrison, who had become insolvent, and with whom all the creditors, but the plaintiff, were anxious to come into a composition. The plaintiff, however, declined to accept the composition unless cer- tain expenses he had been put to were paid him, as well as the proposed composition. The defendant, accord- ingly, verbally promised to pay him what he asked, and subsequently paid the amount of the composition, but refused to pay the expenses ; whereupon the plaintiff paid the expenses incurred by him, and brought this action against the defendant to recover them. The plaintiff declared upon the special agreement, and for money paid to the defendant's use. Two points' were made : first, whether the special agreement was void by the Statute of Frauds? and, secondly, supposing it to be so, whether the plaintiff could not recover the costs paid to the attorney as for money paid to the defend- ant's use? Lord Kenyan, in delivering his opinion, said : " The promise, therefore, was certainly void in part by the statute; and the agreement being entire, the plaintiff cannot now separate it and recover on one part of the agreement, the other being void; and, if that agreement be void, there is an end of the case; for where there is an express promise, another promise can- not be implied." Grose, J., in the same case, said: "It seems admitted that part of this promise is void by (n) Per Tindal, C. J., in Ruber v. 'Stdner, 2 Scott, 304—326. (n) 7 T. E. 201. See observations on this case in Wood\. Ben- son, 2 C. J. 94. (1269) 36 THE LAW OF GUARANTEES. Where the promise is separable action main- tainable on part outside the statute. the statute; but it was one indivisible contract, and the plaintifP cannot recover on any part." . [*45] *The same point was decided in Thomas v. Williams (o). There the verbal promise of the defend- ant was to pay rent actually due to the plaintiff from A., and also rent to become due, in, consideration that the plaintiff would not distrain A's goods. It was held, by the court, that as the promise to pay rent, to become due, was void by the Statute of Frauds, the entire promise was therefore void. So, also, in the old case of Lexington v. Clarke (p), it appeared that the plain- tiff allowed the widow of A. B. to retain possession of certain premises which the plaintiff had demised to- A. B., on receiving from her a promise to pay arrears of rent, due from A. B. at the time of his death, and also 260Z. more. It was argued at the bar, that, inas- much as the promise to pay rent in arrear was alone affected by the 4th section of the Statute of Frauds, the promise might stand good as to the 260i. "But, by the opinion of all the court, judgment was given for the defendant; for the promise, as to one part being void, it cannot stand good for the other; for, it is an entire agreement, and the action is brought for both the sums, and indeed could not be otherwise without variance from the promise." Where, however, from the nature of the case, it is possible to separate that part of the promise which is within the statute from that which is not, the plaintiff can recover upon the latter portion. This was decided in the case of Wood v. Benson (q). There the guarantee was in the following words: "I, the undersigned, do hereby engage to pay the directors of the Manchester Gas Works, or their collector, for all the gas which may ■ be consumed in the Minor Theatre, and by the lamps outside the theatre, during the time it is occupied by my brother-in-law, Mr. Neville; and I do also engage to pay for all arrears which may now be due." An , action on assumpsit was brought up on his guarantee, [*46] *and there was also a count for gas and goods sold and delivered. The defendant pleaded the gen- eral issue, it was objected, at (he trial at Nisi Prius, that there was no consideration apparent on the face of the instrument for the promise to pay the arrears, and that the agreement being consequently void as to part under the Statute of Frauds, was also void as to the whole. (o) 10 B. &C. 664. [p) 2 Ventr. 223. (g) 2 C. & J. 9-1. (1270) OPERATION OF THE STATUTE OF FRAUDS, ETC. 3Y The jnry were directed by the judge to find for the plain • tiff, with leave to the defendant to enter a non-suit. A rule having been subsequently obtained and argued, Lord Lyndhurst, C. B. , in delivering judgment, said : " The case of Thomas v. Williams may, as it appears to me, be sup- ported. Part of the contract in that case was void by the Statute of Frauds. The declaration stated the entire con- tract, including that part of it which was void, and there- fore the contract, as stated in the declaration, was not proved. The same observation applies to Lexington v. Clarke and Chater v. Becket, and I have no disposition to complain of those decisions, beca^ise in none of ■those cases does there appear to have been any count upon which the plaintiff could recover. But the question in the present case is widely different. The contract resolves itself into two parts. One' is, 'I engage to pay for all the gas wfiich may be consumed,' &c. : that is a distinct agreement. The other part is, ' And I do also engage to pay all arrears,' &c. Now, this latter part cannot be sustained, for if it be a distinct engage- ment, there is no consideration to support it expressed oa the instrument (r). The question then is, if I undertake to pay for goods which may be supplied, though there is no promise to supply the goods, whether, when the goods are supplied, a right of action does not accrue to recover the amount. It is quite clear that it does. And though the latter part of the engagement cannot be sustained under the first part of the engage- ment, *the plaintiff is entitled to recover for the [*47] gas subsequently supplied, and therefore the verdict must stand for 15Z. 4s. 6d." Bayley, B., in his judg- ment in this case, says: "In each of the cases referred ■ to for the purpose of showing that the. contract, if void' in part was void in toto, there was a failure of proof. The declaration in each of those cases (s) stated the entire promise, as well that part which was void as that which was good. I think, therefore, that these cases are to be supported on the principle of the failure of proof of the contract stated in the declaration, but that they do not establish that, if you can separate the good part from the bad you may not enforce such part of the contract as is good. I am, therefore, of opinion (r) This is now no longer necessary ; see 10 & 20 'Vict. c. 97, s. 3. (s) /. e., Chater v. Becket, 7 T. R. 201 ; Lexington v. Clarke, 2 "Vent. 223 ; Thomas v. Williams, 10 B. & C. 664. (1271) 38 THE LAW OF GUARANTEES. (B) The Mnd of promises to which the 4th section of Statute of Frauds ap- plies. Whether in- demnities ■within the statute. Implied in- demnities are outside the statute. that the verdict must stand »for the amount of the gas subsequently supplied." (B) The section of the Statute of Frauds which is now under consideration, next proceeds to point out the kind of promises to whicn it is intended to apply. For it was not intended that the statute should apply to all possible cases in which a person is liable to answer, as on a contract, for the debt, default or miscarriage of another, and it does not so apply. The kind of pro- mises to which it is applicable are ascertained by the words " any special promise." Thus, for instance, the question has . been raised whether an indemnity is a promise which falls within the statute. Upon this question, however, it appears that no general rule can be laid down. It was, indeed, stated, as a general proposition, in Thomas v. Cooke {t), that a promise to indemnify does not fall within the words or the policy of the Statute of Frauds. That proposition was, however, denied by the full Court of Queen's Bench in Green v. Cresswell (u). This last- [*48] *named case, which we shall discuss in detail later on, was, however, disapproved of, though not re- versed, by the Court of Exchequer Chamber, in Cripps V. Hartnoll {x), and by Matins, V.-C, in Wildest. Dud- low (y), in which case it was held that where one per- son induces another to enter into an engagement, by a promise to indemnify him against liability, that is not an agreement which the Statute of Frauds requires to be in writing. So far, therefore, as concerns express promises to indemnify, perhaps the best solution of the difficulty is that suggested in Smith's Mercantile Law (z), namely, "that a promise to indemnify may or may not be within the statute, according to circumstances " (a). There are, however, many cases in which the law implies indemnities in obedience to principles of justice (b). And, so far as regards implied indemnities, it may (t) 8 B. & C. 728. fw) 10 Ad. & E. 453. (x) 4 B. & S. 414. See also the cases of Reader v. Kingham, 13 C. B., N. S. 344 ; Batson v. King, 4 H. & N. 739 ; Fitzgerald v. Dressier, 7 C. B., N. S. 374, 385, 386, where the case of 'Green v. Cresswell is observed upon. (y) L. E., 19 Eq. 198. (0) Note (k), 7th ed., p. 462.. (a) For instances of indemnities within the Statute of Frauds, see Adams v. Dansey, 4 M. & P. 245 ; 6 Bing. 506 ; Green v. Oress- weU, 10 A. & E. 453 ; Oresmell v. Wood, 10 A. & E. 460 ; Wine- worth V. Mills, 2 Esp. 484 ; Mallet V. Bateman, L. R., 1 C. P. 163. (i) See Edmunds v. Wallingford, 14 Q. B. D. 811 ; Dugdale v. Lovering, L. R., 10 C. P. 196 ; 44 L. J., C. P. 197; 32 L. T. R. (1272) OPERATION OP THE STATUTE OF FRAUDS, ETC. 39 safely be stated that they are clearly excluded from the operation of the 4th section of the Statute of Frauds. This results from the adoption of the phrase ^''special promise," which is evidently opposed to the phrase " easpress promise " (c). Of these this work does not profess to treat. It has also been made the subject of discussion pr^^inise to whether or not a promise to give a guarantee (as dis- give a gua- tinguished from a promise ioprocure one) (d) is a special rantee is ♦promise which falls within the statute. It is, [*49] ^^^'^*^® however, obvious that a promise to give a guarantee at a future time entirely falls within the mischief which the enactment was intended to guard against, and, in- deed, that if the statute could be evaded by making such a promise it would be useless. Accordingly it has been held, that a promise to give a guarantee must be in writing. This was decided in Mallet v. Bateman (e). Pollock, C B., in delivering the judgment of the Court of Exchequer Chamber in this case, said : " My brother Blackburn has, in the course of the argument, stated that which appears to me to dispose of this case, viz., that a contract to give a guarantee is required to be in writing as much as a guarantee itself. If we were to hold that a contract of guarantee must be in -writing, but that a contract to give a guarantee need not, we ' should, I think, be committing the same mistake as our predecessors did with reference to the Statute of Uses. The object of that statute was that the possession should go along with the use ; but a construction was early adopted whereby the possession should go to A. in trust for B., and so the effect of the statute was simply to add a lew words to the conveyance. - Whether the decisions of the Courts of Equity as to uses and trusts were beneficial or not I do not stop to inquire, but un- doubtedly the whole doctrine arose out ' of a desire to frustrate the intention of the Statute of Uses. I trust we shall not commit a similar mistake in construing the statute now under consideration." (C) Having pointed out the operation which it is in- (c) The kind tended to have, and the kind of promises to which it is of liability to 15,5 ; Benson v. Duncan, 3 Ex. 644 ; Walker '.-. Bartlett, 18 C. B. 845. (c) Throop on the Validity of Verbal Agreements, p. 166. {d) See Bushell v. Beavan, 1 Bing. N. C. 103, and post, p. 77, as to promises to procure a guarantee to be signed by a third per- (e) L R , 1 C. P. 163; S. C. (in court below), 16 C. B., N. S. ^^«- ' (1273) 40 THE LAW OF GUARANTEES. ■which 4th section of Statute of Frauds ap- plies. miscar- riage. ' ' intended to apply, the section under discussion next pro- ceeds to define the kind of liability, promises in respect [*50J *of which are intended to be affected. This it does in the words " the debt, default or miscarriage of another." These words, it will be at once seen, are most comprehensive. And they have been made the subject of a good deal of learned discussion. To com- mence with the words "debt, default or miscarriage" : Differences of jj; -yyould seem that these three words, "debt, default or diratedby " miscarriage " point to three distinct kinds of guarantee, words "debt namely, (1) guarantees for the payment of a "debt" default, or already contracted by another person ; (2) guarantees against the "default" of another person, i. e., for the payment of debts to be contracted by another person, or against loss that may occur from another's future breaches of duty; and ( 3) guarantees against the "mis- carriage" of another person, i. e., against loss that may occur from another's past or future breaches of duty. The words " debt, default or miscarriage " have fre- quently been commented upon, and it has been doubted whether the word " miscarriage " is not superiiuous. Certainly the word "default" is large enough to include promises to be answerable for future breaches of con- tract, as well as proniises to be answerable for future breaches of duty. And, on the other hand, it appears that the word " miscarriage " can clearly only apply to breaches of duty, and cannot apply to breaches of con- tract. But it is submitted that, unlike the word " de- fault," the word "miscarriage" includes jpasi breaches of duty as well as future breaches, and that, therefore, it is not a superfluous Word at all. Mr. Throop, in his able work on the Validity of Verbal Agreements (/), says that, but far the word " default " -occurring in the 4th section of the Statute of Frauds, the words "debt" and "miscarriage" would, perhaps, have been confined to past transactions, being peculiarly applicable to such. Now, it is submitted [*51] that, *though the word "debt" is certainly peculiarly applicable to past transactions, the word "miscarriage" is not, and that it clearly includes both past and future breaches of duty. If this view be cor- rect, then it would seem that the word "default" must have been used by the framers of the 4th section in a restricted sense, namely, as applving merely to future debts, and not to future breaches of duty,though our courts have certainly treated it as equally applicable to both. Meaning of the words "debt, de- fault or mis- carriage ' ' discussed. (/) Page 193. (1274) OPERATION OP THE STATUTE OF FEADDS, ETC. H If, however, the legislature had. omitted to employ the word " miscarriage," the 4th section of the Statute of Frauds might well have been confined to promises to be answerable for past and future breaches of contract, on the ground that the word "default" was meant merely to supplement the word "debt," and must be so con- fined in its meaning, though capable of a larger con- struction. In fact, the word "debt" would have been the key -word in the clause, and would have served as an indicator of the sense in which the word "default" was used by the legislature. Notwithstanding the employment of the word "mis- carriage" in the 4th section of the Statute of Frauds, it seems, at one time, to have been thought that this en- actment did not effect promises to be responsible for the future wrongful acts or torts of third persons. Thus, in Birkmyr v. Darnell (g), it seems to have been considered that, if the alleged principal debtor had not been chargeable in contract, but had only been liable to an action of tort, the promise of the defendant to be answerable for him would not have been within the statute. Thus, Powell, J., says (ft): "The objection that was made was, that if English did not re-deliver the horse, he was not chargeable in an action upon the promise, but in trover or detinue, which are founded upon the tort, and are for *a matter subsequent [*52] to the agreement. But I answered that English may be charged on the bailment in detinue on the original bailment, and a detinue is the adequate remedy ; and upon the delivery English is liable in detinue, and con- sequently this promise by the defendant is collateral, and is within the reason and the very words of the statute." Any doubt that may have been caused by these observations of Justice Powell, or by the decision ' in Read v. Nash (i), was certainly entirely removed by the case of Kirkham v. Marter (k). There A. had wrongfully, and without the license of B., ridden his horse, and thereby caused its death. It was held, that a promise by a third person to pay the damage thereby sustained, in consideration that B. would not bring any action against A., was a collateral promise within the Statute of Frauds, and must be in writing. "This case," said Holroyd, J., in his judgment, "is certainly (g) 2LordEavm., p. 1085. where it is called Bttetaj^r v. Darnell, (h) In the other reports of this case the judgment of PoweU, J., is not given. li) 1 Wills. 305. (fc) 2 B. & Aid. 613, 616, 617. (1275) 42 THE LAW OF GUARANTEES. within the mischief contemplated by the legiBlature, and it appears to me to be within the plain, intelligent import of the words of the act of parliament." So Abbott, C. J., in the dame case, said: "The wrongful riding of the horse of another without his leave and license, and thereby causing its death, is clearly an act for which the party is responsible in damages, and therefore, in my judgment, falls within the meaning of the word 'miscarriage' " (l). The meaning of the words "debt, default or mis- carriage " was also discussed in the following cases : — In the case last cited, of Kirkhnm v. Marter (m), Abbott, C J., says: "Now the word 'miscarriage' has not the same meaning as the word 'debt' or 'default'; it seems to me to comprehend that species of wrongful act, for the consequences of which the law would make the [*53] *party civilly responsible. The wrongful riding the horse of another without his leave and license, and thereby causing its- death, is clearly an act for which the party is responsible in damages, and therefore, in my judgment, falls within the meaning of the word 'miscarriage.'" In the same case Holroyd, J., said: "I think the term miscarriage is more properly appli- cable to a ground of action founded upon a tort than to one founded upon a contract; for, in the latter case, the ground of action is, that the party has not per- formed what he agreed to perform, not that he has mis- conducted himself in some manner for which by law he is liable. And I think that both the words miscar- riage and default apply to a promise to answer for another with respect to the non-performance of a duty, though not founded upon a contract." In Mountstephen v. Ldkeman (w), Willes, J., said : "Again, if there was a contract with reference to a liability, not existing at the time, by reason of the debt not being due at the time, that would come under the word default, and there would be no difficulty about that." On the other hand, it should be mentioned that, in Eastwood V. Kenyan (o). Lord JEllenborough seemed to think there was no distinction in meaning between the words "default" and "miscarriage." (l) See also Throop on the validity of Verbal Agreements, pp. 193, 194. (m). 2 B. & A. 613, 616, 617. See this case svpm. (n) L. R., 7 Q. B. 197, 202 ; 8. C, L. E., 5 Q. B. 613 ; S. C, 7 H. L. 17. _ (o) 2 East, 325. (1276) OPERATION OF THE STATUTE OF FRAUDS, ETC. , 43 These observations and authorities will probably throw sufficient light upon the meaning of the words " debt, default or miscarriage." It remains to notice the words "of another." Like the other words of the , statute, they are of much importance, and a large body ' of law has turned upon their meaning. Their opera- tion has, however, now been ascertained by a long cur- rent of authority, which has indisputably established that they restrict the 4th section of the Statute of Frauds to *cases where, either at the time the [*54] promise is made, there is some person actually liable, ia the first instance, to the promisee, and who remains so liable, notwithstanding such promise, or, where, at the time such promise is made, the future primary lia- bility of a third person to the promisee is contemplated, as the very foundation of the promise. The same idea is often expressed by the words, " the promise must be collateral" (p). It is, however, necessary to observe, that there are many cases where the promise, is, undoubtedly, in a certain sense, collateral, and yet to which the 4th sec- jjnjgg f^j. ^g. tion of the Statute of Frauds has no application, termining These will sufficiently appear while we are discussing what prom- the rales for determining what contracts are within the P'^^^f'''^ !'''% meaning of the second clause of the 4th section of the jYauds Statute of Frauds'. It is often very difficult, with the sect. 4.' aid of the broad principles just alluded to, to assert whether a contract falls within the second clause of section 4 of the Statute of Frauds. In order to bring a promise within the terms of this enactment, it must fall cwithin certain principles. These principles may be reduced to five separate rules. These rules are as follows : — Ell I. At the time the promise is made there must be Li^^jiity ^f some person actually liable, in the first instance, to the third party- promisee for the debt, default or miscarriage guaranteed for debt, &c. against, or, at all events, the creation of such liability, guaranteed at some future time, must be contemplated as the foan-.^^^p^^g^J"^ dation of the contract. plated. II. The promise must be made to the creditor, i. e., Rule ii. to the person to whom another is already or is thereaf- Promise must ter to become liable. }^ made to the creditor. (p)- The term collateral does not, however, occiir in the 4th sec- tion of the Statute of Frauds, and, moreover, it involves the question, "AVhat is a eollateral promise ?" which is quite as diffi- cult to answer as the question, " What is a promise to answer for the d%ht, default or miscarriage of another person within the 4th section of the Statute of Frauds?" (1277) 44 THE LAW OF GUARANTEES. Rulelll. [*55) *III. There must be an absence of any liability Absence of ^^ ^Jjq pj^^j. qJ ^Jjq promiser (the surety), except such liability on • j. -l ■ part of surety ^^ arises from his express promise. other than on IV. The mam or MJMwedwfe object of the agreement Ms guaran- must be the payment of a debt or the fulfilment of a *^^- duty by a third person. r^i'ri'^^' f "^^ '^^® agreement between the promiser and the third "party^s creditor, to whom the promise is made, must not amount obligation to a saje by the latter to the former, either of the secu- the main ob^ rity for a debt or of the debt itself, jeetofprona- j^ jg proposed to treat of these rules in the order RnleV. above given. Transaction must not Rule I. — At the time the proimse ts made there must amount to a he some person actually liable, in the first instance, to ^f^e'}>J cied- f fig promisee for the debt, default or miscarriage guar- _ anteed against, or, at all' events, tlie creation of such '_ ' liability, at some future time, must be contemplated as Liability of the foundation of the contract (g). third party The present or future primary liability of another for debt, &c. person to the person to whom the promise is made is must exist ^^^ very basis or foundation of the contract of guar-. or be con- antee. This proposition is, in effect, laid down lDy the templated. ["*56] judges *in the celebrated case of Birkmyr v. Dar- This rule nell (r), where it was held, that a promise is not within Md down in ^jjg Statute of Frauds, 4th section, unless the creditor Darnelf ^ have a right of action against the principal debtor. The facts of this well-known case [which was argued fully, and upon which all the judges were consulted] are simple enough, as will be seen from the following report taken from 1 Salkeld, p. 27: "Declaration — That in consideration the plaintiff would deliver his gelding (q) It has been suggested by Judge Stonor, in his very able judgment in 7 he Crystal Palace Gas Co. v. Smitli (DeColyar's. County Court Cases, p. 38), that a guarantee is not within sect. 4 of the Statute of Frauds unless the liability of some third per- " son be actually contemplated by the contracting parties, even though, as a matter of fact, such liability may exist. While ad- •mitting that this is a reasonable view (as the nature of every contract depends upon the intention of the contracting parties), ' and that, moreover, it is countenanced by certain ohiter dicta of the judges in Mountstephen v. Laheman (L. R., 7 Q. B. 197; S. C, 7 H. L. 17), it has been thought best not to alter the original wording of this rule, because in some of the reported cases (see post, p. 59 et seq.) the Statute of Frauds has been held to apply when the liability of a third person existed in fact, without con- sidering whether or not the parties had contemplated such liability as the foundation of their contract. (r) 6 Mod. 248; 2 Lord Raym. 1085; 1 Salk. 27. See observa- tions on this case by Lord Hardwicke in Tomlinson v. Gill, Amb. 330. ' (1278) OPERATION OF THE STATUTE OF FRAUDS, ETC. 45 to A., the defendant promised that A. should re-deliver Rule I. him safe, and evidence was given that the defendant -^nie, p. *55. undertook that A. should re-deliver hira safe; and this ■was held a collateral undertaking for another, for where the undertaker comes in aid only to procure a credit to the party, in that case there is a remedy against both, and both are answerable according to their distinct en- gagement; but where the whole credit is given to the undertaker, so that the.other party is but as his servant, and there is no remedy against him, this is not a collateral undertaking. But it is otherwise in the principal case, for the plaintiff may maintain detinue upon the bail- ment against the original hirer, as well as assumpsit upon the promise against this defendant. Et pur cur. 7 If two come to a shop and one buys, and the other, to gain him credit, promises the seller, If he does not pay you, I will, this is a collateral undertaking, and void without writing by the Statute of Frauds. But if he says, Let him have the goods; I will he your paymaster, or, I will see you paid, this is an undertaking as for himself, and he shall be intended to be the very buyer, and the other to act but as his servant." In the second volume of Lord Raymond's Reports, p. 1087, the following report of the judgment of Holt, C. J., in Birkmyr v. Darnell, is given: "The last day of the term the Chief Justice delivered the opinion of *the court. He said that the question had been [*57J proposed at the meeting of judges, and that there had been great variety of opinions between them, because the horse was lent wholly upon the credit of the de- fendant, but that the judges of this court were all of opinion that the case was vtithin the statute. The ob- jection that was made was, that if English did not re- deliver the horse he was not chargeable in an action upon the promise, but in trover or detinue, which are founded upon the tort are for a matter subsequent to the agreement (s). But I answered, that English may be charged on the bailment in detinue on the original delivery, and a detinue is the adequate remedy, and upon the deli-very English is liable in detinue; and con- sequently this promise by the defendant is collateral and is within the reason and the very words of the statute, and is as much so as if, where a man was in- debted, J. S., in consideration that the debtee would forbear the man, should promise to pay him the debt, such a promise is void unless it be in writing. Sap- (s) See remarks on this part of the judgment, ante, p. 51. (1279) 46 THE LAW OF GUARANTEES. EuLE I. pose a man comes with another to a shop to buy, and Amte, p. *55. the shopkeeper should say, 'I will not sell him the ~ — goods unless you shall .undertake he shall pay me for them,' such a promise is within the statute; otherwise if a man had been to pay for the goods originally. So, here, detinue lies against English, the principal; and the plaintiff having this remedy against English, the principal, cannot have an action against the defendant, the undertaker, unless there had been a note in writ- iiig-" In the note to Birkmyr v. Darnell (t), it is stated that, " from all the authorities it appears, conformably to the doctrine in this case, that if the person for whose use the goods, &c., are furnished is liable at all any other person's promise is void, except in writing" (u). OTDservatioEs [*58] * On this propositiofi Mr. Justice Willes made of Willes, J., the following remarks in the important case of Mount-, in Mount- Stephen v. Lakeman (x): "The leading case upon the ^hen\. application of the Statute of Frauds has generally been considered to be Birkmyr v. Darnell, and in the note to Mr. Evans' edition of Salkeld's Reports it is stated, that ' from all the authorities it appears, conformably to the doctrine in this case, that if the person for whose use the goods are furnished is liable at all any other per- , son's promise is void, except in writing.' I think that they may very well be modified, — or if his liability is made the foundation of a contract between the plain- tiff and the defendant and that liability fails, the promise is void, — so as to include the case which I put to Mr. Charles (y) of persons wrongfully supposing that a third person was liable and entering into a con- tract on that supposition. If, in such a case, it turned out that the third person was not liable at all the con- tract would fail, because there would be a failure of that which the parties intentionally made the founda- tion of the contract. The lex contractus itself would make an end of the claim, and not the 'application of the Statute of Frauds, whether the contract was in writing or not, and whether signed or not. The law of contract gives you as foundation that a person was taken to be liable, and that a suretyship was a surety- ship in respect of that liability. Take away the foun- dation of the principal contract, the contract of surety- (t) 1 Salk..27, Evans' edition. (») See also Comyns' Digest, Action on Assumpsit (F. 3), 5th ed. Vol. I., p. 319, note(/). ■ L. R, 7 Q. B. 197 ; S. C, L. R., 5 Q. B. 613 ; 7 H. L. 17. The counsel for the plaintiff. (1280) ili ETC. 47 eliip would fail. Again, if there was a contract with EtrLE I. reference to a liability not existing at the time, by Ante, p. *55. reason of the debt not being due at the time, but being payable in futiiro, that would come under the word 'default,' and there would be no difficulty about that. So, if there was a contract, ' if A. B. will employ you to do work, I promise to become surety for him that he shall pay you;' in that case the promise * would [*59] clearly come within the statute, because, although there was no liability existing at the time when the promise was made, there was a liability contemplated as the foundation for the promise of the defendant. It was a contract of suretyship in respect of a liability to be created; but if the liability were not created, there again the lex contractus would prevail. There would be the condition precedent to the arising of any liabil- ity as surety, that there should be a principal debtor established. In all these cases, no doubt, one agrees thoroughly with what was laid down in the Court of Queen's Bench, because you have the case of principal • debt contemplated by the parties and suretyship founded in respect of that principal debt. But to bring the case within that i~u,le you must first of all show that the parties did intend that there should be a principal debtor " (z). In accordance with the principles which have thiis been laid down, it is now a well-established rule, that, where a liability on the part of a third person exists or is contemplated, the promise falls within the statute ; but that where no liability on the part of a third person exists or is contemplated, the promise does not fall within the statute. There are numerous reported cases in which it has Examples of been held that a liability did exist on the part of a third Rule I. dis- person, and that, therefore, the rule first enunciated "'"^^ • caused the statute to apply. Thus, for instance, in Coleman v. Eyles (a), one Cases where Allen, the landlord of certain premises, in respect of liability of which rent was due, gave a warrant to a man named existed''^''" Gray, to distrain upon the tenaot. The defendant was „ 7g™„„ „ a creditor of Allen, and he paid the broker who valued Eylea. the goods. He also put the plaintiff on the premises to keep possession of the goods and promised to pay him his charges, and also to repay him certain sums to be *advanced to one Emmett, who was also in [*60] (z) See also the judgment of Lord Selbome in the same case at p. 24 of 7 H. L. (a) 2 Stark. 62. (1281) 48 THE LAW OF GUARANTEES. Rule I. Arite, p. "'-'J Tomlinson v. Gell. Brunton v. Dallas. possession of the goods distrained. An action was brought against the defendant for payment of these sums, and it was contended that he was liable to pay them. But Lord Ellenborough was of opinion, that, since there was a principal, namely, the landlord, who was responsible for the necessary expenses of the dis • tress, the case was within the Statute of Frauds, and that the debt was to be considered as the debt of an- other ; and, consequently, that the defendant could not be liable without a note in writing. The decision in Tomlinson v. Gell (b) turned upon the same principle. There A. had commenced a Chan- cery suit against B. T. acted as A.'s attorney* in the suit, and 30X hqd become due to him for his costs in the suit, when he and B. agreed, with the consent of A., that the suit should be discontinued, and that B. should pay T. the costs which were due. B., in consideration of this promise, and that A. had consented to discon- tinue and plaintiff (T.) to accept his costs fromB.", pro- mised plaintiil (T.) to pay him such costs. It was held, that such promise was a promise to pay the debt of an- other within the 4th section of the Statute of Frauds. Now, in this case A. remained liable to his attorney, T., notwithstanding the promise of B. The transaction was neither more nor less than the defendant under- taking to pay the bill of costs which the plaintiff in Chancery owed the plaintiff in this suit. So also, in Brunton v. Dallas (c), it was held, that a promise to pay a debt to be transferred from promisor's account to that of a third party, his agent, is a valid guarantee, and that parol evidence was admissible to identify the debt. The report of this case is exceedingly brief. It appeared that B., acting as agent for the defendant, ordered goods for him from the plaintiff. It [*61] *was subsequently agreed that these goods should be supplied to B., and that the order, which had been entered by plaintiff to the defendant, should be ac- cordingly entered in the plaintiff's books to B. instead. In consideration of this arrangement the plaintiff re- quired a security, and the defendant wrote to him in these terms, "with regard to the transferring of B.'s order, it shall be paid." Now, such a promise would clearly come within the 4th section of the Statute of Frauds, because it would only amount to a promise to pay for the goods supplied to B., if B. did not himself pay for them. nt 4 Ad. & E. 564. F. & F. 450. (1282) OPEKATION OF THE STATUTE OF FRAUDS, ETC. 49 The case of Chater v. Becket (d), if it was rightly Rule I. decided, also belongs to the class of cases now under -^nte, p. *55. review. In that case, in consideration that the plain- „, . tifP would stay all proceedings against one Harris, and ^g^/tei would accept certain bills of exchange, drawn or ac- cepted \>j the defendant, for a certain part, namely, 10s. 3d., the defendant undertook and promised to give the plaintiff such bills for the same, and to pay all the ex- penses which the plaintiff had been put to, in and about a certain intended commission of bankruptcy. It was held, that the promise of the defendant to pay 10s. in the pound of Harrises debts was within the Statute of Frauds. Now, with reference to this case, it is pro- per to remark that the question, whether Harris re- mained liable notwithstanding the promise of the de- fendant, does not seeni to have been brought before the court, and altogether the decision in this case is far from satisfactory. But it'is presumed, that if this case decides that though Harris, the principal debtor, was released from liability by the promise of the defendant, such promise was within the 4th section of the Statute of Frauds, it is no longer law. Another example of the operation of the rule, that if *a third person is liable the statute applies, is [*62] afforded by the case of Re Willis (e). In that case A. -«« J^*"**- &.Co. bought certain wools of B. & Co., to be paid for by the biiyer's acceptance at eight months. Before the sale was completed, B. & Co., requiring some security, in consideration of 11. per cent., obtained the follow- ing instrument from C, signed by him : " Gentlemen, in consideration of 11. per cent., I hereby guarantee the due and correct payment of half the amount of 136 bales of wool, sold to Messrs. A. &Oo., as per contract," ■&C. It was held, that the instrument was a guarantee. Where a person promises that the creditors of a third Promises that person shall be paid the amount of a composition in third person lieu of their original debts, the application of the 4th ^^^^ V^J section of the Statute of Frauds to such a promise de- p^itioii°to " pends upon whether or not the third person remains his creditors liable to the creditors notwithstanding such promise. If when within the third person continues liable then the promise is statute. within the statute, otherwise it is not within it. In Emmet v. Dewhurst (/), where W. D., by inden- Emmet y. ture, agreed to guarantee a certain composition to all Dewhurst. the creditors of J. D., who should before a fixed day (d) 1 T. R. 201. Vide ante, p. 44. (e) 4 Exch. 530. (/) 3 Mac. & G. 587. 4 (1283) 50 THE LAW OF GUARANTEES. KtTLE I. execute a release of their debts, it was held, that this Ante, p. *55. was an agreement required by the 4th section of the Statute of Frauds to be in writing, and that its terms could not, therefore, be varied by parol. , Now, in this case it appears that J. D. continued liable for the amount of the composition, notwithstanding the pro- mise of W. D., for each creditor, on executing the deed of release, received, in pursuance of the agreement, the joint notes of J. D. and W. D., for the proportion- ate part of the debt due to the creditor. Vice-Chancel- lor Knight- Bruce, in his judgment in this case, says : " It is a special promise to answer for the debt of another person. It is not a promise, upon good con- [*63] sideration, to take the *debt exclusively upon himself. It professes in terms to be a case of guar- antee. The composition notes were to be the joint notes of J. D., the principal debtor, and of the defend- ant W. D., as his guaranty of surety. The agreement is clearly within the 4th section of the Statute of Frauds, and must be in writing. Any alteration of the agreement must also be in writing." In Anstey v. Harden (g), A. being insolvent, a ver- MmAen.' ^^ agreement was entered into between several of his creditors and B., whereby B. agreed to pay the credit- ors 10s. in the 'pound in satisfaction of their debts, which they agreed to accept, and to assign their debts to B. It was held, that this agreement was not within the 4th section of the Statute of Frauds. Now, there can be no doubt that this decision is perfectly correct, for the efPect of the transaction in question was to sub- stitute B. as debtor in lieu of A. Consequently, the promise of B. was an original promise. It was, in short, a contract to purchase the debts of the several creditors, instead of being a contract to answer for the debts owing by A. As Mansfield, C. J., said, " The creditors agreed to accept 10s. in the pound from B. in full satisfaction of their debts, and undertook to assign their debts to him" (ft). Cases in ^^ ^^ other hand, there are very riiany cases in .which there which eifect has been given to the other branch of this heingnoprin- part of the rule, and it has been held, that, it appearing, stT\'^^h*ld ^^^®'' ^^^ circumstances, that there was no third per- uot to apply, son liable — in other words, that there was no principal debtor — the Statute of Frauds had no application what- ever. Thus, for example, in the case of Tomlinson v. (g) 1 N. R. 124. ' ' (h) Sec also post, where another reason is given for excluding this case from the operation of the Statute of Frauds. (1284) OPERATION OF THE STATUTE OF FRAUDS, ETC. 51 Gill (»'), it was held, that a promise by A., that, if the RrrLE 1. widow of the intestate would permit him to be joined -^nte, p. *55. with hor in the letters of administration, he would _ ~. I OlTLtlflSOTt "V make good any deficiency of assets to pay debts, was q^^ not within *the 4th section of the Statute of [*64] Frauds. Now, it is submitted, that, under no circum- stances, could such a promise be within the 4th section of the Statute of Frauds. It clearly cannot be main- tained for a moment that A.'b widow, to whom the pro- mise in question was made, was a creditor, and this cir- cumstance of itself, as will presently be seen (A;), is sufficient to exempt the promise from the operation of the statute. But, it may perhaps be said, that A.'s widow occupied the position ot principal debtor. Now, even assuming this to be the case, the Statute of Frauds would have no application, since it does not operate upon promises made to principal debtors (I). It is, however, submitted, that, inasmuch as at the time the promise was made, A.'s widow had not taken out letters of administration, she was not even a principal debtor. For though an executor may act before probate, " with respect to an administrator, the general rule is, that a party entitled to administration can do nothing as ad- ministrator before letters of administration are granted to him, inasmuch as he derives his authority, not like an executor from the will, but entirely from the ap- pointment of the court" (m). If, therefore, A.'s widow did not, in fact, occupy the position of principal debtor, another reason why the promise in question is not within the Statute of Frauds is, becEtuse the promise of the defendant is not to answer for the debt of another, but to answer for the sufficiency of the assets of an in- testate, or, in other words, it is a. promise to answer for the debts of a deceased person. It is right, however, to mention that the Lord Chan- cellor Hardvixicke, in excluding this*case from the opera- tion of the Statute of Frauds, grounded his decision on the alleged distinction "between a promise to pay the *original debt, and on the footing of the [*65] original contract, and where it is on a new considera- tion*' (m) (t) Amb. 330. (&) ^eepogl, "Rule II.," p. 110. (I) See pnst, p. 110. (m) Williains' Law of Executors, Tol. I., 6th ed., p. 389; Wankfard v. WanTcford. 1 Salk. 301, by Powys, J. [n) See this distinction commented upon, post pp. 118, 119, 120. (1285) 52 THE LAW OF GUARANTEES. EULE I. Ante, p. *55. Lexington v. Clarke. Eimlditeh v. IfUne. In Lexington v. CZarfce (o), the Dromise was somewhat similar to that in Tomlinson v. Gilt. In consideration of the plaintiff allowing the widow of A. B. to retain possession of certain premises which the plaintiff had demised to A. B., the widow of A. B. (who was also his executrix) promised to pay to the plaintiff the ar- rears of rent due to the plaintiff from A. B. at the time of his death, and also 260i. more. It was held, that the promise to pay the arrears of rent due from A. B., deceased, was within the 4th section. For the reasons above stated it is submitted that this decision is erro- neous. Under the following circumstances, too, it was on the same principle held, that no note in writing was required. An action was brought against a sheriff for taking the plaintiff's goods on a fl. fa. against a third person. The sheriff failed on the trial, and-the execu- tion creditor then employed an attorney to apply for a new trial, and (on obtaining a rule for a new trial) to act as attorney on the second trial. It was held, that the attorney could recover his bill against the execution creditor, although there was no memorandum in writing. For the execution creditor is a person primarily liable to him. But if the attorney had in the first instance been employed by the sheriff, it would be otherwise (p). The case of Houlditch v. Milne (q) appears to be re- garded by some text writers as being another example of the principle now under consideration. There the plaintiff had a lien on certain carriages belonging to A., for the cost of repairs which he had done to them. The plaintiff parted with such lien and gave up the carriages, on the defendant's prornising to pay what [*66] *was due for such repairs from the person in whose name the bill for such repairs had been made out. After the promise of the defendant, the plaintiff ap- pears to have made out the bill in the name of the de- fendant. It was held, that the 4th section of the Stat- ute of Frauds did not apply. This case, which we shall have occasion to notice at greater length in another part of this book, is very badly reported. It is only cited in this place, because in 1 Wms. Saund. 233, it is stated, that the reason the statute did not apply was, • because credit was given to the defendant and not to the owner of the carriages, who was not therefore lia- ble to the plaintiff at all. There was, in fact, no prin- cipal debtor. (o) 2 Ventr. 323. (p) Noel v. Hart, 8 C. & P. 230. Iq) 3 Esp. 86. See also Castling v. Avbert, 2 East, 325. (12R6) OPERATION OF THE STATUTE OF FRAUDS, ETC. 53 The case of Walker v. Hill (r) may be cited as another Eule I. instance of the rule that there must be a principal Ante, p. *55. . debtor. In that case, one Hulls, who was agent for the ^ ~ plaintiffs, being desirous of retiring, the defendant ap- ^^^ ^ ' plied for the agency. Hulls was indebted to the plain- tiffs, and, on the other hand, claimed a commission for introducing customers. It was agreed that the plain- tiffs should allow Hulls 52Z. on that account, and that the defendant, on taking the agency, should allow the plaintiffs to retain six months' salary, which amounted to 52?. In an action by the plaintiffs for money re- ceived by the defendant as such agent, to which the de- fendant pleaded a set-off for six months' salary, it was held, that this was not an undertaking to answer for the debt of another within the 4th section of the Stat- ute of Frauds. The ground on which it was insisted that the Statute of Frauds applied was thus stated by the defendant's counsel (s): — He said, "The agreement is one which ■ is required by the Statute- of Frauds to be in writing. The plaintiffs say, ' If you will enter our service, and allow us to retain twenty-six weeks' salary, we will give Hulls 521., whereby so much *will be wiped off the debt due from him to us.' [*67] The defendant, by assenting to that, undertakes to an- swer for so much of the debt of Hulls. It is an agree- ment to give the value of service for a certain time, to be applied in reduction of a debt due from a third person to the plaintiffs." Pollock, C. B., in giving judgment in this case, said: "If a person agrees that whatever shall hereafter become due to him shall be disposed of in a particular way, such an agreement need not, be in writing. Stripped of immaterial details and placed upon a broad ground, the transaction seems simply to have amounted to a purchase by the defendant of the agency for the plaintiff at a certain price, the plaintiff being guided in fixing the price by a wish to make good the loss he had sustained by his former agent. In this view of the case the old agent had really noth- ing to do with the contract (as such), and there was therefore no principal debtor." There is another class of cases which is sometimes Promises to considered referable to the principle that the statute P^y ^^^^ i° only applies where there is a principal debtor. These j^ord'^wSl^ncrt ■ are cases in which a person makes a promise to a land- djstrain, lord, in consideration of his desisting from distraining s 5 H. & N. 419. Mr. Hopwood. (1287) 54 THE LAW OF GUARANTEES. Edwards v. Williams v. Leper. Ettlb I for rent in arrear. In such cases the promise need not Ante, p. *55. be in writing. Thus, in the case of Edwards, \. Kelly {t), after goods had been actually distrained for rent, the plaintiff consented to give them up to one of the defendants, upon all the defendants giving a joint nn dertaking to pay to the plaintiff all such rent as should appear to be due from the 'tenant. It was held that this agreement was not within the Statute of Fraudp. Bayley, J., in his judgment in this case, said, that after the plaintiff had distrained, he held in his own hands the remedy for recovering the rent, and the tenant was at that time no longer indebted; for so long [*68] as the *landlord held the goods under distress, the debt due from the tenant was suspended. One rea- son (u), therefore, for this decision was that there was no principal debtor. The earlier case of Williams v. Leper (x) is very similar to Edwards v. Kelly. The circumstances, indeed, are exactly similar, except that in Williams v. Leper, when the promise of the defendant was made, the goods had not been actually distrained. It was held that the 4th section of the Statute of Frauds did not apply. The following judgment was delivered by the majority of the judges who decided this case : — "This is not a promise to pay the debt of another ; the goods were debtor, and the defendant was in the nature of a bailiff for the landlord, and, if the defendant had sold the goods and received money for them, an action for money had and received for the plaintiff's use would have laid." Mr. Justice Aston, however, thought that if the goods had not sold for so much money as the plaintiff's rent, he would be liable for no more than they sold for.i Lord Tenterden, C. J., in Thomas v. Williams (y), said: "In Williams v. Leper there(was no actual dis- tress, but there was a power of immediate distress, and an intention to enforce it ; and I think the judges must be understood to have considered that power as equivalent to an actual distress. It is not necessary now to decide whether it was rightly so considered." Thomas v. Williams. (t) 6 M. & S; 304. \u) Vide post, pp. 118, 146, for another reason. \x) 2 Wils. 308 ; 3 Burr, 1886. This case is also cited under Rule III., at p.. 123, where it will he seen that there is another reason why the 4th section of the Statute of Frauds does not ap- ply to it. See also p. 70. (y) 10 B. & C. 664, 070. See also remarks of Bayley, J., in Edwards v. Kelly, supra. (1288) OPERATION OF THE STATUTE OF FKAUDS, ETC. 55 In Bampton v. Paulin {z), too, where Williams v. Le- Eule I. per is followed, the promise was made before the goods Ante, p. *55. had been distrained. It would seem, therefore, that, whether the *promise is made before or after [*69] the distress, the statute does not apply, because, at the time the promise is made, there is no principal debtor other, indeed, than the goods themselves. Love's Case (a), it is presumed, rests upon the same j^^tg Qg^^ principle as the cases just cited. There the sheriff had taken goods in execution upon af,. fa., and a promise to the ofiflcer, by a third party, to pay him the debt, in consideration that he would restore them, was held to be an original promise not within the 4th section of the Statute of Frauds. A further example of the rule, that the Sta,tute of Promise to Prauds does not apply unless there be a principal pay a debt debtor, is furnished by a line of cases which decide that ?^* °^ ^^^ a promise made to a third person's creditors to pay the debtor^^not debt of that third person out of the proceeds of a sale of within that third person'' s goods need not be in writing, and is statute, not within the 4th section of the Statute of Frauds. Such a promise is not a promise to answer for the debt of another person, but a promise to answer for the suffi cieney of a certain fund, or for the due application of such fund, as the case may be. In such a case, you undertake or promise, not for another, but for yourself. You undertake, not that another shall pay out of the proceeds of the sale, but that you yourself will do so. Consequently, there is no one liable, or to become liable, in the first instance, to do that which you promise or undertake to do, and, thereupon, the operation of the 4th section of the Statute of Frauds is excluded by the rule now under consideration. If it is a promise to answer only for the application of a certain fund to the payment of the debt due to the promisee from the third person, it seems that the party making such a promise is not liable for a greater sum than the goods may realize *by the sale (6). In Williavis v. Leper [*70J (c), where the promise of the defendant was to pay rent due to the plaintiff from a third party out of the pro- duce of the sale of that third party's goods; in Edwards T. Kelly (d), where the promise was almost the same (z) 4 Bing. 264. (a) Salk. 23. This case is also cited, post, p. 115, under Eule II., and at p. 144, under Rule V. (b) StepJiens v. Pell, 2 C. & M. 710 ; but see Williams v. Leper, 2 Wils. SOS. (c) UW supra. \d) 6 M. & S. 204, 208, ante, p. 67. (1289) 56 THE LAW OF GUABANTBES. Edle I. Ante, p. *55, Promise to pay another's debt out of debtor's money when received by • promiser, whether within statute. as in Williams v. Leper (e) ; in Bampton v. Paulin{f), where the promise was " to pay rent out of the proceeds of sale" ; and in Stephens v. Pell (g), where the pro- mise was to pay the sum due for rent " out of ihe pro- duce of the effects," the Statute of Frauds, sect. 4, was held to have no application. There is also a class of cases, greatly resembling those just cited, which proceed on the same principal, and therefore further exemplify the present rule. These are cases in which, in consideration of goods supplied on credit to a third person, the defendant has promised to pay for such goods out of certain moneys about to be received by him (the derfendant) for such third person. Now, in these cases, the promise is really nothing more nor less than a promise to pay the third party's debt with the third party's money, for, when the promise is made, it is known whether the money to be received will be sufficient in amount to cover the debt. The person giving such a promise or undertaking does not therefore undertake any responsibility whatever, and certainly does not stand in need of the protection afforded by the (Statute of Frauds. His engagement, like that of a person who undertakes to pay another's debt out of the produce of the sale of such other's goods, is not that the principar debtor shall pay, or, in default, that he himself will do so, but that he himself will pay out of moneys coming to hini for such other person. In such [*71] *cases there is, in fact, no third person answer- able, in the first instance, for the debt or default guar- anteed against, for it is the promiser who undertakes that he himself will apply, in a certain way, a third party's fund over which he (the promiser) has or is to have control. He does not undertake that another shall do this. In such cases, therefore, the event on which the liability of the promiser is to depend is, not the default of another, but the receipt by the promiser of a certain sum of money. The promiser's undertaking to pay out of a certain fund creates a privity of contract between himself and the third person's creditor, and enables the latter to maintain against the former an action for money had and received, and, where the appropriation in ques- tion is made with the debtor's consent, renders such appropriation irrevocable as far as the debtor is con- cerned e) Supra. f) 4 Bing. 264. g) 2 C. & M. 710. (1200) OPERATION OF THE STATUTE OF FRAUDS, ETC. 57 For the above reasons, it is submitted that the Statute Ettle I. of Frauds has no application to a promise to pay ^™*^!_P^ 55. another's debt out of such other's funds when they are q^^^ q^ this received by the promiser in consideration of goods to subject some- be supplied to such other person on credit. However, what con- on an examination of the authorities, it will be found fli<'ti°g- that in the two cases in which this view was adopted, the goods were supplied on the sole credit of the promiser, and, therefore, for this reason alone, the statute could not apply, whilst, in the one case in which this view was not adopted, credit was given to a third party. Thus, in Andrews v. Smith (h), one Hill was employed ^""-^jewa v. to do certain work, and the defendant was appointed surveyor over him, and to receive moneys due to Hill for ^ch work. The defendant promised the plaintiff, in consideration that he would deliver to Hill materials, as he might require to enable him to do the work in question, that he (defendant) would pay him for them out of such moneys received by him (the defendant) as should become due to Hill for the work, if Hill would give *him an order for that purpose. The prom- [*72] ise of the defendant was held to be original, and there- fore not within the Statute of Frauds. Now, in this case, it appeared that there was nothing on the face of the declaration to imply a contract by the plaintiff with Hill, i. e., there was no principal debtor. Lord Abinger, C. B., however, while admitting that this was an answer to the objection raised by the defendant, went on to say : "But further, if the defendant contracted, not to pay Hill's debt out of his own funds, but only faith- fully to apply Hill's funds for that purpose when they should come to his hands, that contract would not be within the operation of the statute." Parke, B., too, said: "There is nothing on the face of the declaration to imply a contract by the plaintiff with Hill. If that be so, it is clear the defendant's contract was an original, not a collateral one, and so not within the statute. But, even if that were otherwise, this is nothing more than a prospective assignment of funds which were to come to the defendant's hands for Hill, and an attornment, as it were, by the defendant- to that assignment ; and the authorities show that in such case the contract is not within the statute. On this ground, also, the plaintiff is entitled to the judgment of the court." In Dixon j)^^^ ^ V. Hatfield (i), W. undertook to complete the carpenter's Batfieu' (h) 2Cr., M. &E. 627. (i) 2 Bing. 439 ; 10 Moore, 24. (1291) 68 THE LAW OF SUAEANTEES. Rule I. work-in the defendant's house, and find all materials. Ante, p. *55. W. being delayed for want of credit or funds to pro- cui-e timber, it was supplied by M. on the defendant's signing the following undertaking: "I agree to pay M. for timber to house in A. C. out of the money that I have to pay W. provided W.'s work is completed." It was held, that this was not a guarantee to pay if "W. should fail, but a direct undertaking to pay when the work should be completed. Now here, again, it does not appear that there was any contract between M. and W., [*73] *and Mr. Justice Park, in his judgment, seemed to think that, had this been the case, the defendant's promise would have amounted to a guarantee. On the other hand, Mr. Justice Gaselee seemed to think that, even if credit had been given by M. to W., the defend- ant would have been liable, as he undertook to pay for the timber on the completion of the work. Morley v. In the case of Morley v. Boothby (fc), the defendants Sooihby. promised the plaintiffs that if they would deliver to A. B. certain goods, &c., to the value of lUl. 13s. 5d, re- * quired for the building of St Philip's Church, to be paid for by bill of exchange, to be drawn by the plain- tiffs on A. B., the said bills should be paid, at maturity, out of money to be received, from St. Philip's Church. It seems to have been admitted that the promise was within the Statute of Frauds, and the only question for the decision of the court was, whether a certain agree- ment was a sufficient memorandum in writing to satisfy the 4th section of the Statute of Frauds, and the court held that it was. not, on the ground that no considera- ' tion appeared on the face of the agreement. Now, in this case, as pointed out by Lord Abinger, C. B., in Andrews v. Smith, supra, there could be no doubt that A. B. was indebted to the plaintiffs — in other words, that there was a third person who. was primarily liable to pay the debt. The question, however, whether the defendant had assumed a liability io see that such third person paid, or had merely undertaken to apply the funds coming from St. Philip's Church to the pay- ment of the debt, was not (as has been observed) ar- gued at all. The decision of the court does not, there- fore, touch the principle of the decisions which we have just been considering. Promises in In the following cases, it is submitted, it will also be consideration found that the promise or undertaking of the defendant of stay or [*14^ *was for himself, and not for another, and that (k) 3 Bing. 107. (1292) OPERATION OF THE STATUTE OF FRAUDS, ETC. 59 "there was no one liable, in the first instance, to the Etjlb I. plaintiff, within the meaning of Eule I. They are all -^nte, p. *55. instances in which the defendant's promise was made . ~ in consideration of proceedings against a third party ^proce^- being stayed or withdra\^, and in which, therefore, at ings against first sight, the statute might appear to apply. Thus, third party, in Jarmain v. Algar {h, the defendant promised to sign Jarmain v. a bail bond for a defendant in a civil action, in consider- Algar. ation of the plaintiff forbearing to arrest such defend- ant on a suit already sued out. But it was held, that this promise was not within the 4th section of the Statute of Frauds. For, as will not have escaped the Teader's notice, the undertaking was that defendant himself would sign the bail bond, not that another should do so. So, also, it had been previously decided, in the case j^^^ ^ ^^j^ ■of Read v. Nash (m), that a promise by C. to A. to pay him 501. and costs if he would withdraw the record, in an action of assault brought by A. against B. need not be in writing, as it is not a promise within the Statute of Frauds. Lee, C. J., in his judgment in this case, says : " The single question is, whether this promise, which is confessed by the demurrer not to have been in writing, is within the Statute of Frauds and Perjuries, "that is to say, whether it be a promise for the debt, de- fault or miscarriage of another person ? And we are all of opinion that it is not, but that it is an original promise, sufficient to found an assumpsit upon against Nash, and is a lien upon Nash, and upon him only. ■Johnson was not a debtor; the cause was not tried; he did not appear to be guilty of any default or miscar- riage; there might have been a verdict for him if the •cause had been tried, for anything we can tell ; he never was liable to the particular debt, damages or -costs. The true difference is between an original ^promise and a collateral promise; the first is [*75] out of the statute, the latter is not, when it is to pay the debt of another which was already contracted." In Chater v. Becket («.), Lord Kenyon, C. J., referred ciicder v. to the case of Read v. Nash, supra, and seemed to ap- Becket. prove of it. In 1 Wms. Saund. p. 231, however, it is stated that Kirlcham v. Head v. Nash is in effect overruled by Kirkham v. Mar- Marter, ter (o). The facts of Kirkham v. Marter are as fol- Cl) 2 C. & P. 249. (m) 1 Wils. 305. (n) 7 T. E. 301. (o) 3 B. & A. 613. (1293) 60 THE LAW OF GUARANTEES. EuLB I. lows : — A. had ridden the plaintiff's horse without his Ante, p. *55. leave, and thereby caused his death, and the defendant (the father of A.) promised to pay the plaintiff the- damage he had sustained, in consideration of the plain- tiff forbearing to sue A. : it was held, that the defend.- ant's promise was void, not being in writing ; but Ah- bott, G. J., in delivering his judgment, expressly recog- nized Read v. Nash, distinguishing Kirkham v. Marter from it. He says : " The case of Bead v. Nash is very distinguishable from this; the promise there was ta pay a sum of money as an inducement to withdraw a record in an action of assault brought against a third person. It did not appear that the defendant in that- action had even committed the assault, or that he had ever been liable in damages ; and the case was ex- pressly decided on the ground that it was an original and not a collateral promise. Here the son had rendered himself liable by his wrongful act, and the promise was expressly made in consideration of the plaintiff's forbearing to sue the son." It is submitted that the distinction between the two cases is perfectly clear. In Bead v. Nash the promise' simply was, "forbear to proceed with the action you, have commenced against A. and I will pay you 50Z." In Kirkham v. Marter it was, "do not make A. pay for his default, and I will do so myself." [*76] *The older case of Fish v. Hutchinson is much the same in effect as Kirkham v. Marter. In Fish v. Msh V. Slit- Hutchinson (p) the plaintiff declared that, whereas one c inson. ^ ^g^ indebted to him in a certain sum of money, and he had commenced an action for the same, the defend- ant, in consideration that the plaintiff would stay his action, promised to pay the money due to him by A. De- murrer and joinder. Ft per totam curiam : " This case is very clearly within the statute ; for here is the debt of another party still stibsisting, and a promise to pay it. It is not like the case of Bead v. Nash. In that case there was no debt in another, it being an action of battery ; and it could not be known, before trial, whether the plaintiff would recover any damages or not. But, in the present case, there is the debt of an- other still subsisting, and a promise to pay it." It is: quite possible to distinguish Bead v. Nash from Fish V. Hutchinson. Tor in Bead v. Nash the promise of the defendant was to pay 50Z. and costs. On the other hand, in Kirkham v. Marter and Fish v. Hutchinson, (p) 2 Wils. 94. (1294) OPERATION OF THE STATUTE OF FRAUDS, ETC. 61 the defendants promised not to pay the plaintiff a fixed Rule I. sum of money, but something that a third person was ^«*e, P- *55. Jiable to pay. In the following case of Bird v. Oam- „. ,' ' mon (q), it will be seen that Read v. Nash was fol- j^g^^ lowed. In Bird v. Gammon the facts were as fol- lows : — The plaintiff having issued execution against Lloyd for debt, Lloyd, with the assent of the plaintiff, conveyed all his property to the defendant, who there- upon undertook to pay the plaintiff the debt due from Lloyd, plaintiff withdrawing the execution. It was held, on the authority of Read v. Nash, supra, that the de- fendant's undertaking .was not within the 4th section of the Statute of Frauds. Tindal, C. J., thus de- scribed the transaction: "It appears, then, that the plaintiff', with the consent of Lloyd and the defendant, "had relinquished his execution against Lloyd, to look to "*the defendant ; that the defendant admitted his [*77] liability when the account was* presented ; and that the jury found such to have been the agreement between the parties. No objection, therefore, can be raised on the )Statute of Frauds, for this is not an agreement to pay the debt of a third person ; but an agreement that if the plaintiff would forego his claim on Lloyd, the de- fendant would pay the amount of his debt on his own account. The case, therefore, falls within the princi- ple of Read v. Nash (r). ... It is objected that the plaintiff, if he fails in this action, may still sue Lloyd •or issue execution ; but if he were to do so, Lloyd might show on plea or audita querela that on good ■consideration the plaintiff gave up his remedy against Lloyd, and took the defendant's liability instead ; which, though, not properly accord and satisfaction, would be a complete defence on the general issue. Oood V. Cheeseman (s), and the cases there cited." In the case of Bushell v. Beavan (t) we have an in- Promise to stance of a promise, which, at first sight, would appear procure the to obviously fall within the Statute of Frauds. For the ^f^^W promise was " to procure the signature to a third person person to a to a guarantee "(m). And this would seem to be, in guarantee effect, an undertaking that the third person shall do a not within certain thing, namely, sign the guarantee. Here, again, statute. no person " other than the defendant himself was ever -S»sAei;? v. ^ Beavan. (q) 3 Bing. N. C. 8, 83. (r) 1 Wils. 305. (s) 2 B. & Adol. 328. (t) 1 Bing. N. C. 103. (m) As to promises to give a guarantee, see Mallei v. Bateman, L. JR., 1 C. P. 163, anU, pp 48 — i9. (1295) 62 THE LAW OF GUARANTEES. Rule I. liable on the promise sued upon." The facts were as Ante, p. *55. follows: — The plaintiffs, owners of a ship hired on charter-party by H. Semphill, refused to let her sail till certain disputes about the freight between them and H. Semphill were settled, by H. Semphill giving security; whereupon the defendant, in consideration that the plaintiffs would let H. Sem,phill's ship sail, without giv- ing security, undertook to get P. Macqueen to sign a [*78] guarantee and *deliver it to the plaintiffs in a week. The guarantee, which it was promised that P. Macqueen should sign, ran as follows: "Whereas H. Semphill has hired your ship for six months from the 12th July, 1830, and such longer time as his intended voyage may require, and has paid or secured the freight for six months from the 20th August, 1830, and is about t3 leave England, I guarantee the payment of freight which shall accrue for any portion of the voyage after the said six months." And the court held, that this guarantee was within the Statute of Frauds. Never- theless, the court also held — and it is submitted rightly held — that the defendant's promise to procure Mac- queen's signature to this document did not fall within the statute. Tindal, C. J., in the course of his judg- ment, said: " The promise on which the first count is framed is an immediate undertaking by the defendant to get a copy of a guaranty which is written above it, duly signed by Mr. Potter Macqueen, and within a week afterwards delivered to the plaintiff's agent. The im- mediate consideration for that promise was the removal by the plaintiff of a stop which they had put upon the vessel, then lying in St. Katharine's Docks, and the per- mitting her to sail . on the voyage before the security . was signed. Under these circumstances the contract appears to us not to be a contract to answer for the debt, default or miscarriage of any other person, but k new and immediate contract between the defendant and the plaintiffs. If Mr. Macqueen had signed the guaranty, that guaranty would, indeed, have been vrithin the Statute of Frauds; for his is an express guaranty to be answerable for the freight due under fiie charter- party, if Semphill did not pay it. But no person could be answerable on the promise to procure his signature but the defendant. Semphill had never engaged to get the guaranty of Macqiieen, nor had Macqueen engaged to giva it. There was, therefore, no default of any one [*79] for which the defendant made *himself liable ; but he did so simply on his own immediate contract, For, as to any default of Semphill in paying the freight, , ' (1296) OPERATION OF THE STATUTE OF FRAUDS, ETC. 63 the action, on the undertaking of the defendant, could Eule I. not be dependent on that event; for it would have been ^»*«, P- *55. maintainable if the guarantee were not signed at any time after the day on which the defendant engaged it should be given, that is, long before the time when the freight became payable." The ground of the decision, as stated in the judgment of the court, may be briefly stated to be, that, from the very nature of the case, it was impossible that any one could be liable to the plaintiff simulta- neously with the defendant. For, as soon as the lia- bility of the third person (Macqueen) commenced, by his .signing the guarantee, the liability of the defendant ceased, and, until the third person signed the guarantee, obviously, there could be no one liable but the defendant. . Again, in the old case of Elkins v. Heart (x), just as Promise that in Bushell v. Beavan, the promise was seemingly to athirdperson answer for another within the Statute of Frauds. There ^^^ ^°* the plaintiff having sued J. G., the defendant's son-in- jrinLdom law, for money due from him to the plaintiff for diet without pay- and lodging, the defendant, in consideration that the ing his debt plaintiff would forbear to sue the said J. G. for the said ^°* within sum, promised that the said J. G. should not leave the 1,^]^ ' kingdom without paying the same. The court inclined Tj-gJ^ ^' to the opinion that this case was not within the 4th sec- tion of the Statute of Frauds. Now, in this case, it wUl be observed that the terms of the engagement of the defendant simply were that J. G. should not leave the kingdom without paying his debt. But it does not appear that J. G., by leaving the kingdom, incurred any liability to the plaintiff. Consequently there was no principal debtor or defaulter vyithin the meaning of Eule I. The event on which the liability of the *defendant was to attach, namely, J. G. leaving [*80] the country without paying his debt, would not make J. G. liable to the plaintiff. Just as, on the other hand, the failure of J. G. to pay his debt (provided he did not leave the country) would not render the defendant liable to J. G. The decision may, in a wprd, be put upon the ground that the defendant's promise was that J. G. should not leave the kingdom; but J. G. made no such promise, and therefoi'e no one but the defendant himself was ever liable upon the promise in question. The following cases, again, form another class in Promises to which the Statute of Frauds has no application, because indemnify there is no other person Hable but the defendant him- a^inft^^ste self. It frequently happens that one person is induced, (x) Pitzg. 202. (1297) 64 THE LAW OF GUARANTEES. EuLB I. at the request of another, to defend or commence some Ante, p. *55. legal proceeding in consideration of a promise, by the f i+^~^ person making such request, to indemnify him against • ^dertaken ^^^ ''o^ts of the suit. In these cases it is submitted that at promiser's the 4th section of the Statute of Frauds has no appli- request. cation. The foundation of a promise to answer for the debt, default or miscarriage of another is the present or future liability of a third person in the first instance to the promisee. Take away this liability, and not the Statute of Frauds, but the lex contraot-Cis, puts an end to the contract {y), which cannot survive the loss of its essential ingredient, the liability of a third person. Now, in the present class of cases, it will be observed, on ex- amination, that the foundation of the contract is not, as in the case of a guarantee, the present or future liability of a third person to the promisee. True, such a liability inay arise, but whether it arises or not the promiser is equally liable, whereas in the case of a guarantee, as already pointed out, if it does not arise, the contract is at an end for loss of one of its essential ingredients. [*81] *To make this still clearer. If a person at your request defends or commences an action, and you en- gage to indemnify him, you are liable on your engage- ment whether he is successful or whether he prove un- successful. But it is only in the former event that a third person is liable in the first instance, for, unless you succeed, your adversary has not to pay you either costs or damages. In the latter event the promisee has to pay at least his own costs, and these are covered by your indemnity, which exists, though the liability of a third person has not arisen, because such a liability is an accidental, and not, as in the case of a guarantee, an essential ingredient of such a contract. Accordingly, in consonance with these principles, in the case of Bullock V. Lloyd (z), it was held that the promise of an indorser of a dishonoured bill of exchange to indemnify a sub- sequent indorsee against costs, if he would bring an action against the acceptor, would certainly not require to be in writing. The only case which seems to militate against this view is Winckworth v. Mills (a), where it was decided, that a promise by the indorser of an un- paid note to indemnify the holder if he would proceed to enforce payment against the other parties on the note, must be in writing, or it would be void under the (^) Per Willes, J., in Mountstephen v. Lakeman, L. E., 7 Q. B. 197; 7 H. L. 17. (z) 2 C. & P. 119. (a) 2 Esp. 484. (1298) OPERATION OF THE STATUTE OF FRAUDS, ETC. 65 . Statute of Frauds. Much importance cannot, however, Eule I. be attached to this latter case, which was decided at -^nte, p. *55. Nisi Frius many years ago, and which is at variance ~~~' with modern authorities, though it has never been ex- pressly overruled. Besides, Lord Kenyan offered to save the point, but the plaintiff's counsel decjined. Moreover, the case of Howes v. Martin (b) is an au- thority to the same effect as Bullock v. Lloyd. In j)^^^' Howes V. Martin plaintiff had accepted a bill for 201. for the accommodation and on account of the defendant. This bill was not taken up by the *defendant [*82] when due, and the defendant accordingly prevailed upon the holder of the bill to accept l&.l. in part and the plaintiff's acceptance for six guineas (being the balance due on the bill, including the interest then due) for the remainder. This bill for six guineas not being paid when dae, the holder of the bill brought an action on' it against the plaintiff as the acceptor. On the action being brought, plaintiff acquainted the de- fendant with the circumstance, and he desired the plaintiff to defend the action. In consequence of this representation plaintiff did accordingly defend, when the holder of the bill obtained a verdict for the amount of the bill, which, with costs, amounted to 32Z. To re- cover this sum the plaintiff brought an action of as- sumpsit for money laid out and expended to the use of the defendant, declaring on the common counts. At the trial it was objected that, under the Statute of Frauds, this action was not maintainable, inasmuch as there was no note in writing, and the object of the action was to recover from the defendant a sum of money- which was the debt and costs in an action against the plaintiff herself on her own acceptance, and which, therefore, was to be deemed her own debt. In< support of this view a case of Hitchcock v. Hicks was cited, which was said to have been decided before Lord Kenyan. This case does not, however, appear to be reported any- where. Lord Kenyan overruled the objection in the present instance, and held that the case was not within the Statute of Frauds. He said that it appeared that the plaintiff never had any consideration whatever for her acceptances, which were given merely on the de- fendant's account and for his use; that the defence to the action on the note was on his account, and from whence he could have derived a benefit ; that as he, therefore, was personally interested, and directed the (6) 1 Esp. 162. 5 (1299) 66 THE LAW OF GUAKANTEES. Rule I. Ante, p. *55. Adams v. Dansey. Promises to lie jointly, liable with another not within statute. Butson V. King. defence to be made by which he might have been benefited, the money must be considered to have been [*83J *laid out by the plaintiff on his account and to his use, and that the plaintiff, therefore, was entitled to recover it from him. Ta the same effect, also, is the case of Adams v. Dansey (c): There the plaintiff, an occupier of land, at the request of the defendant, and upon a promise of in- demnity, resisted a suit of the vicar for tithes. It was held, that the defendant's promise was not a promise required by the Statute of Frauds to be in writing. Now, the ground of this decision is, that the promise was not an undertaking for the debt, default or miscarriage of another, but was for a liability to which the plaintiff himself was to be exposed at the request of the defend- ant. This case, therefore, so far resembles the case of Eastwood V. Kenyan (d), (which will be cited hereafter to show that the promise is not within the statute unless made to the creditor, ) that it is a promise made to the debtor and not to the creditor. But it differs from that case in this, that hete the promise was not, as in East- wood V. Kenyan, to pay the promisee's debt to the creditor of the promisee, but to pay the promisee him- self the expenses which he might incur at the promiser's request. It is, therefore, submitted that the true reason for excepting such a promise from the operation of the 4th section of the Statute of Frauds is because it amounts to a promise to pay the promiser's awn debt. There is another class of cases governed by the rule that the Statute of Frauds does not apply unless there is a principal debtor. It sometimes happens that a transaction has the appearance of being a contract between debtor, surety and creditor, but it is not so in reality. ' If it should appear, by evidence, that such was not the nature of the transaction, and that the alleged principal debtor and surety are, in fact, nothing more [^*84] *than joint debtors, the operation of the 4th sec- tion of the Statute of Frauds will be excluded. Thus, in Batson v. King (e ) , it was held that a promise made by the defendant, that, if the plaintiff would draw a bill, to be accepted by one Dalton and indorsed by the defendant, he (plaintiff) should not be called upon, need not be in writing, under the 4th section of the Statute of Frauds. Martin, B., delivered the following judg- ment: — "As between the holder of the bill of exchange (c) 6 Bing. 506; 4 M. & P. 245. (d) 11 A. & E. 438. (e) 4 H. & N. 739. (1300) OPERATION OF THE STATUTE QF FRAUDS. ETC. 67 *rv-; and the parties whose riameg were oa it, Dalton, as Rule I.' acceptor, was primarily liable, and the drawer and ^«''', p indorser stood in the relation of sureties for him. But ^ as between the parties, it inay always be proved what is the real nature of the transaction. As between themselves, Dalton and the defendant were the real principals. The plaintiff, having paid the bill, had a right to sue tho defendant for money paid to his use. The Statute of Frauds has no application to the case; and the question in Green v. Cresswell does not arise here. It might have been otherwise if Dalton had been entirely separate from the defendant and the plaintiff had become respons- ible for Dalton, upon the defendant's promise to in- demnify him. Dalton and the defendant, being both principals, the only answer which the defendant had was by a plea in abatement for the non-joinder of Dalton." The effect of this decision really is, that, where the actual transaction, though apparently re- sembling a guarantee, really is not one, the court will treat it as being outside the 4th section of the Statute of Frauds. So, it appears, that if a man says to an- other, "If you will, at my request, put your name to a bill of exchange, I will save you harmless," this is not within the statute (/). "It is not a-responsibility for the debt of another. It amounts to a contract by one, that if the other will put himself in a certain situa- *tion, the first will indemnify him against the [*85] consequences" {g). The rule that the 4th section of the Statute of Promises to Frauds only applies where, at the time the promise is be answer- ariven, the present or future legal liability of some third ^"^^ for per- -i liTui-fLii • jiu sons under person is contemplated by both the promiser and the disability. promisee, is further illustrated by cases in which the third person referred to is under disability. For a pro- mise to answer for the debt, default or miscarriage of a person incompetent to contract, or not answerable for his wrongful acts, need, not be in writing. Thus, in the Infants, case of Harris v. Huntbach (h), the plaintiff declared, first, for money lent and advanced by the plaintiff at the defendant's request; and, secondly, for money laid out and expended by the plaintiff at the defendant's re- quest. The question upon the case reserved at the trial was, whether the evidence supported the declaration. A note of the defendant was produced in evidence by (/) Per Pollock, C. B., dictum in Batson v. King, 4 H. & N. 739. la) /6> (A) 1 Burr. 373. (1301) 08 THE LAW OF GUARANTEES. Rui,E I. the plaintifP, in tbe following words :— "3rd December, ^ft/e, p. *55. 1751. Then received of Mr. Harris the sum of Itl. ■ on the behalf of my grandson, which I promise to be accountable far, on demand. Witness my hand. S. Huntbach." It appeared that the grandson, on whose behalf the note was given, was an infant. Mr. Justice Foster, in giving his opinion, said : " The infant was not liable, and, therefore, it could not be a collateral undertaking. It was an oinginal undertaking of the defendant to pay the money." So, also, from the old case of Buncombe v. Tickridge (*), decided in 24 Car. 2, it appears that an undertaking by a stranger to pay for "diet, lodging and apparel of an infant," is an original promise, which extinguishes the liability of an infant. Much importance cannot, however, be attached to this case, for it is apprehended that an undertaking to pay for necessaries supplied to an infant, made on [*86] proper *consideration, would amount to a collat eral promise, within the 4th section of the Statute of Frauds, since the infant would himself be liable for necessaries (/). Promise to be Whether a promise by a person other than the hus- answerable band to answer for the debt, default or miscarriage of for a married a, married woman was an origi'nal or a collateral pro- ■woman. mise, appears naver to have been decided in England (fc). However, there are two cases which throw some White V. light on this question. The tirst is White v. Cuyler (I). Oayler. There the defendant's wife, without any authority from the defendant, her husband, by articles of agreement, under seal, between herself and a Mr. Low, of the one part, and the plaintifP of the other part, agreed to take the plaintifP with her to Barbadoes, as a waiting-maid, and also agreed, amongst other things, to pay the plain- tiff's passage home to England, in case she (the defen- dant's wife) should dismiss the plaintiflF from her ser- vice. The defendant's wife having dismiss4d the plain- tifP, but not having paid the plaintifp's passage home to England, the plaintifP brought an action of assump- sit against the defendant. In moving for a rule to enter a nonsuit (the verdict having passed for the plaintiff), it was, inter alia, contended at the bar that the action was vrrongly conceivedj if either the defen- ^0 Aleyn, 94. Ij) As to what are necessaries, see ante, p. 15. (k) See, however, American cases of KirribaU v. Newall, 7 Hill, 116; Nilltr v. Long, 4 Pennsylv. 350; Connerat v. Goldsmith, 6 Geng. 14. {I) 1 Esp. N. P. C. 200 ; fif. a, 6 T. E. 176. (1302) OPERATION OF THE STATUTE OF FRAUDS, ETC. 69 dant or Low could be sued on the covenant contained Eule I. in the above-named articles of agreement ■ under seal. Ante, p. *b5. Lord Kenyan, in discharging this rule to enter a non-. ' suit, said, " And, with regard to Low, the contract of a guarantee or surety under seal does not, by operation of law, extinguish the debt of the principal " (in). *In this case, therefore, Lord Kenyon seems to L*87J have been disposed to treat Low as a surety, under the articles of agreement, though the principal debtor under such instrument was clearly (if any one) the married woman. Perhaps, however, it would not be incorrect to say that, in this ease, the husband must be treated as the principal debtor, though his liability did not certainly arise under the articles of agreement (w). Indeed, until recently (o), whenever the wife had ex- press or implied authority to enter into contracts, the husband alone was liable. It would seem, therefore, that (subject to the provisions of the Married Women's Property Acts (p) ), whenever a person promises to answer for a married woman's breach of contract, in a case where she is expressly or impliedly authorized by her husband to enter into such a contract, the husband is the principal debtor, and the promiser is the surety. Where she has no such authority, either the promiser is solely liable^ or else is not liable at all, according to the circumstances of the case. The next case throwing light on the present question Darnell v. is Darnell v. Tratt (q). There, a married woman took Trtit. her son to school, but no evidence was given of what passed at that time. Afterwards, a bill was delivered to the boy's uncle, who said it was quite right to deliver the bill to him, for that he was answerable. It was held, that the Statute of Frauds, section 4, did not apply, and that it was proper to leave it to the jury to say, under those circumstances, whether the original *credit was not given to the uncle. In this case, [*88] (m) The defendant could certainly not hare been sued on the articles of agreement, because he never authorized his wife to ex- ecute them at all, and supposing that he had done so, by writing not under seal, that would have been an 'insufficient authority to her to execute a deed. Moreover, supposing she had been author- ized by deed to execute the said articles they would not have bound her husband, as she signed her own name instead of his. (?0 See last note. (o) See now Married Women's Property Acts, ante, p. 16. ip) Ante, p. 16. The Married Women's Property Act, 1883, does not seem to have affected the liability of the husband for contracts made by his wife as his agent, or by his authority. Macqueen's Husband and Wife, 3rd ed., 98. (S) 2 C. & P. 82. (1303) TO THE LAW OF GUABANTEES. Rule I. Ante, p. *5j. Promises which ex- tinguish principal debtor's liability not within the statute. Goodman v. Chase. therefore, though the alleged principal debtor was a married woman, it was thought proper to treat this .case as one presenting no extraordinary features, and make the nature of the uncle's liability depend on the answer of the jury to the question, To whom was credit given (r)? If, however, in this case' the jury had found as a fact that credit was given to the niamed woman, in the first instance, the court would probably have held that the transaction was within the Statute of Frauds, on the ground that the wife was- acting as the implied agent of her husband (s). In a case de- cided long before recent legislation enabling a taarried woman to contract as a feme sole,- to the extent of her separate property, it was held that an undertaking by a husband to pay a loan made to his wife, at his re- quest, was not a collateral undertaking (t). As a further corollary from the principle that a pro- mise is not within the Statute of Frauds unless there be a third person who is primarily liable, it follows, as a general rule, that wherever the promise of the defen- dant has the effect of extinguishing or releasing the lia- bility of the third person, it amounts to an original promise, and is therefore not within the 4th section of the Statute of Frauds In such cases there is, in fact, no principal debtor. Thus, as, under the old law, the discharge of a debtor taken under a ca. sa. destroyed the debt, it was held that a promise to pay the debt for which a person was thus taken was not within section 4 of the Statute of Frauds. For instance, in Goodman v. Chase ( w ), the plaintiff had taken A. B. under a ca. sa. [*89] *The defendant promised to pay A. B.'s debt in consideration of the plaintiff discharging him from cus- tody. It was held that, as by the discharge of A. B. from custody, with the consent of the plaintiff, the debt itself was extinguished ; the promise made in consider- ation of that discharge was an original promise. Lord Ellenborough, C. J., said: "By the dischage of Chase with the plaintiff's consent, the debt as between those persons was satisfied Then, if so, the promise by the defendant here is not a collateral, but an original, promise, for which the consideration is the discharge of the debt as between the plaintiff and Chase. That be- [r) In the case of Maggs v. Ames, too, cited post p. 90, the fact of the .principal debtor being a married woman does not appear to have been noticed, though coverture was pleaded in order to show a want of consideration. is) See ante, p. 87. h) Stevenson v. Hardic, («) 1 B. & A. 297. (1304) 2 W. Bl. 872 I and see post, p. 129. OPERATION OF THE STATUTE OF FRAUDS, ETC. 71 ing SO, it becomes wholly unnecessary to consider the Rule I. question arising out of ihe construction of the 4th sec- -^nle, p, *55. tion of the statute." • In Butchery. Steuart (x), where the promise was also in Butcher v. consideration of the discharge from custody of a third per- Steuart. son arrested under a ca. sa. , Goodman v. Chase wasf ollowed So, again, in Lane t. Burghart (2/), plaiutifi's, having taken one Bacon in execution for a debt, discharged Lane v. Burg- him upon the following undertaking of the defendant : ^lart. " In consideration of your discharging Bacon out of custody, I undertake that be shall pay the debt due to you by four half-yearly instalments," &c. The defen- dant subsequently became bankrupt and obtained his certificate. Lord Denman, 0. J., said : "Bacon was at this time in custody under a ca. sa. for the debt in question ; and, as that was entirely discharged by the execution, and he could no longer be sued for it, or make default in respect of it, it was argued, on the authority of Goodman y. Chase (z), that this undertaking was an original one, on the part of the bankrupt, to pay the amount of the sum that had been due from Bacon, and though in form it was an undertaking that Bacon *should pay, yet. at most, it was an undei^aking [*90] by the defendant to pay by the hand of Bacon. On consideration we agree that this is correct ; the unpaid instalments might, therefore, have been estimated and proved under the commission. It follows that his cer- tificate is a bar to the action." In Maggs y.' Ames (a), the first count of the declara- Maggs v. tion stated that Ann Prickett, a married woman, was -^mes. indebted to the Howells before they became bankrupts, and was arrested at their suit ; that, thereupon, in con- sideration that the Howells (before their bankruptcy) would procure the discharge of Ann Prickett, and take her bill of exchange for the amount of the debt, the defendant undertook to pay the amount of the bill of exchange, in case it should be dishonoured by Ann Prickett. The second count was upon an undertaking to pay the debt for which Ann Prickett was arrested, in consideration of the Howells procuring her discharge. It was held, that the undertaking stated in the first count was within the Statute of Frauds, but that that stated in the second count was not. It will be ob- served, that the reason the undertaking stated in the (x) 11 M. & W. 857. [y) 1 Q. B. 933. [z) 1 B. & Aid. 297. (ffi) 4 Bing. 470 ; 1 M. & P. 294. See ante, note (r), p. 88. (1305) 72 THE LAW OP GUARANTEES. Rule I. Ante, p. *55. Where there is a complete novation the statute does not apply. Ansley v. Marden. Transfer to creditor of debt due to debtor from third person not within statute. second count could not be within the -ith section of the Statute of Frauds is, because the consideration for it was the discharge from arrest of the principal debtor, and her consequent release from all liability. On the same principle, where there is a complete novation, that is to say, an arrangement, by which it is provided that an old debt shall be. discharged, and an entirely new agreement and liability entered into, the Statute of Frauds does not apply. Thus, in Ex parte Lane (6), it was decided that if A. be a creditor of B., and B. and C. purpose to enter into, or have entered into partnership, and say to A., " We wish this debt to be a debt from us both, and we will pay it," and A. [*91] *accedes to that, although there is no writing, the agreement is valid and effectual, and is not in any way affected by the Statute of Frauds. The effect of such an agreement is to extinguish the first debt, and, for a valuable consideration, to substitute the second debt. So, again, raAnsteyi. Marden (c), A. being insolvent, a verbal agreement was entered into between several of his creditors and B., whereby B. agreed to pay the cred- itors 10s. in the pound in satisfaction of their debts, which they agreed to accept, and to assign their debts to B. It was held that this agreement was not within the Statute of Frauds, not being a collateral promise to pay the debt of another, but an original promise to purchase the debts. Where A. sold goods to B., who, being unable to pay for them, made a transfer thereof to C, who promised A. to pay for them, it was held that this constituted a new sale to C, and not a mere promise by C. to pay the debt due from B. {d). There is another class of cases turning upon the same principle. ' These cases, which are of frequent occur- rence, are cases in which a person to whom another is indebted assigns or transfers the debt owing to him to a person to whom he is himself indebted (e). fJb) 1 De Gex, 300. (c) 1 N. R. 124. See this case post, pp. 143, 144. In the case of Emmet v. Dewhurst, 3 Mac. & G. 587, which is very similar to Ansley v. Marden, it did not appear that the liability of the prin- cipal debtor was extinguished, and the Statute of Frauds was held to apply." (d) Browning v. Stallard, 5 Taunt. 450. (e) See Israel v. Douglas, 1 H. Bl. 239; Tatlock v. Harris, 3 T. R. 174; Hodgson v. Anderson, 5 D. & R. 735 ; S. C, 8 B. & C. 842; WUson v. Coupland, 5 B. & A. 228; Cuxonw Chadley, 3 B. & C. 591 ; Wharton v. Walker, 6 D. & R. 288; 4 B. & C. 163; Fairlie V. Denton, 2 M. & R. 353, and note (c), 355; S. €:, 8 B. & C. 395; Boe V. Haugh, 3 Salk. 14. (1306) OPERATION OF THK STATUTE OP FRAUDS, ETC. 73 *nf; Thus, suppose A. is debtor to B., and 0. is debtor to Rule I. A. for the same or a larger amount, and that the three -^nte, p, agree that C. shall beB.'s debtor instead of A., and that *C. promises to pay B., in such a case B. may [*92] maintain an action against C. (/). " These cases are exceptions to the rule of law that a chose in action can- not be assigned. It is a necessary ingredient to this exception that the original debt from A. to B. should be extinguished, for B. cannot sue C. if he retains the right to sue A. (g). To such cases, therefore, the 4th section of the Statute of Frauds can have no application, since it is essential to the validity of the transaction that the transferor's liability be extinguished. In such a case, the substituted debtor, in fact, pays his own debt with his own money, to a substituted creditor, i. e., the trans- feree (ft). Thus, in Lacy v. M'Neile {i), one Goodfellow, j^'^gile. indebted to the plaintiffs for goods sold, upon being re- leased from his liability, assigned to them a debt due to him from the defendants. Notice of the assignment was given to a partner in the defendant's firm, who, by parol, promised, in the name of such firm, to pay the debt to the plaintiffs out of the partnership funds. It was held, in an action by the plaintiffs against the de- fendants for money had and received, that the promise was not within the Statute of Frauds. Abbott, C. J., in the course of the argument, said: "The defendant's debt to Goodfellow was assigned to the plaintiffs, and Goodfellow discharged from all liability to them; then, surely, the old debt by him waa extinguished, and anew one by the defendants created." Wilson V. Coupland (k) is another instance of this wilsonv. kind. There the plaintiffs were creditors, and the de- Coupland. fendants debtors of T. & Co., and, by consent of all parties, *an arrangement was made that the de- [*93j fendants should pay to the plaintiffs the debt due from them to T. & Co. The Statute of Frauds does not seem to have been alluded to in the case, and it was held, that, as the demand of T. & Co. on the defendants was for money had and received, the plaintiffs were entitled to recover on a count for money had and received ( f) Wilson V. Coupland, 5 B. & A. 228; FairHe v. Denton, ^M.. & E. 353, and note (c), 355; S. C, 8 B. & C. 395. (g) 1 Wms. Saund. p. 226, and the following eases there cited, Viz. , Cuxon V. Cliadley, 3 B. & C. 591 ; Wharton v. Walker, 6 D. & E. 288; S. 0., 4 B. &C. 163. (See also Parker v. Wise, 6 N. & S. 239; Liversieg v. Broadbent, 4 H. & N". 603.) (h) See also post, p. 125. (i) 4 D. & R. 7, 9. (fc) 5 B. & Aid. 228. (1307) u THE LAW OP GUARANTEES. EULE I. Ante, p. *55. Parkins v. Mor'avia. Hodgson v. Anderson. Browning v. Stallard. ' against the defendants {I). Now, in this case, the debt transferred actually existed. In the case of Parkins v. Moravia (m), on the other hand, the transfer was not of an existing debt, but of a contingent one. There the defendant, in considera- tion that the jjlaintiffs would discount a bill of exchange for a person named Benjamin, undertook to pay the plaintiffs such sum of money as should be due from him to Benjamin for work done within a specified time. It was contended that the case was within the Statute of Frauds. Abbot, 0. J., said, ''It is an assignment of a thing not in esse. Wilson v. Co'upland is not like this case." He also said, in answer to plaintiff's coun- sel, " it is to go to reduce the bill, and, therefore, it is to answer for the debt of another." It appears, from the report of this case, that another question was also raised as to the amount of stamp duty required, and a verdict was taken for the plaintiff, subject to the two points of law, in order that the opinion of the court above might be had on them, or a motion to enter a nonsuit. This motion never appears to have been made, and no further report of this case appears anywhere. Much importance cannot, therefore, be attached to it. Indeed, between this case and Wilson v. Coupland there seems to be no rational distinction (w). Again, in Hodgson v. Anderson (o), where the [*94] *defendant, who owed A. B., a debtor of the plaintiff, a sum of money, at A.- B.'s request promised the plaintiff to pay him what he (the defendant) owed A. B., such promise was held not to be within the 4th section of the Statute of Frauds, for A. B.'s debt was extinguished by the defendant's promise. The case of Browning v. Stallard (p) involves the" same principle. There A. sold goods to B., who, being unable to pay for them, transferred them to C, who promised A. to pay for them. It was held, that the promise was not within the 4th section of the Statute of Frauds, as B. was discharged from all liability. The cases which have now been cited abundantly illustrate the proposition that, to bring a case within the Statute of Frauds, there must be a liability, present or future, existing on the part of some person, other (I) Otherwise he would, under the old rules of pleading, have had to declare specially. See Wharton v. Walker, 4 B. & C. 163. (in) 1 C. & P. 376. In) Smith's Merc. Law, 9th ed., p. 463, n. (o). (o) 5 D. & E. 735; S. C, 3 B. & C. 842. (p ) 5 Taunt. 450. (1308) OPERATION OF THE STATUTE OF FRAUDS, ETC. 75 than the promiser. It will not have been forgotten, Rdle I. however, that the rule we have laid down states, in the Ante, p. *55. alternative, that there must either be some other person actually liable in the fiist instance, or that the creation of such liability at a future time must be contemplated. Hitherto we have only considered the absolute necessity which the rale creates, that there should be some actual liability by a third person. It now becomes necessary to discuss the question suggested by the terms of Rule 1, and to consider when, in point of time, a liability may take its origin, and yet be such as to bring a case within the Statute of Frauds. Now, formerly, it was necessary that, at the time of Pormerly, if the making of the promise, some one should be actually promise made liable, in the first instance, to the promisee, and a con- ^J surety Je- tract did not fall within sect. 4, if, at the time of the of'tj^"^^ ^°° making of the promise, the creation of such liability at party'sliabil- some future period was only contemplated and not ity, statute actually in existence. If, therefore, the promise were l. per cent, to be paid to such agents, guaranteed the punctual half-yearly payment of the annuity to the plaintiff. An action having been brought on this guar- antee, the question arose whether Marsh, who was the partner of Creed, who gave the guarantee in the name of the firm, was bound by it. At the trial the learned judge left it to the jury to say, whether, under the cir- cumstances of the case. Marsh was cognizant of the transaction as to the purchase of the annuity, though he might be ignorant as to the facts of the guarantee itself, telling them that, in that case, he thought the defendant was liable. The jury found this fact in the affirmative, and the plaintiff obtained a verdict. Leave to move was given, and a rule nisi obtained. In dis- charging this rule, Abbott, C. J. , said : " Two material questions have been made ; the first (e) of which, and the most important and extensive in its consequences is, whether this defendant shall be held to be bound * by the guarantee given without his knowledge by his partner Greed, and if the verdict of the jury, finding him to be so bound be not sustainable, it will be very dangerous hereafter to deal with a partnership; for the business in each department of a firm is generally transacted by one partner only. It has, undoubtedly, been held that, in a matter wholly unconnected with the partnership, one partner cannot bind the others. But the true construction of the rule is this, that the act and assurance of one partner, made with reference to business transacted by the firm, will bind all the *partners. In this case, the proper business of [*164] Marsh and Creed was to receive the money due from the navy board to their customers, and their dividends in the public funds. ... It was no part of their ordinary business to guarantee annuities or to lay out (d) 2 B. & Aid. 673. (e) The second question has no bearing on the subject now un- der discussion. 9 (1363) 130 THE LAW OP GUAKANTEES. the monies of their customers in the purchase of them. Under these circumstances the original proposal was made by Creed, in answer to which the joint power of attorney was transmitted to Marsh and Creed, under which the stock was afterwards sold. Now that sale must have appeared in the partnership books, and if that fact were doubtful, it is proved by the balance stated in the accounts transmitted by the partnership : that sale, therefore, and the fact that the proceeds had been laid out in the purchase of an annuity, either were actually known, or ought to have been knoWn by Marsh. Now, if that whole transaction were known to him, the guarantee, which is connected with it, be- comes, in point of law, an assurance made by one part- ner with reference to business transacted by both ; and, according to the rule previously stated, it will bind both. To illustrate this position, a case may be put where two persons, in partnership for the sale of horses, should agree between themselves never to war- rant any horse : yet, though this be their course of business, there is no doubt that if, upon the sale of a horse, the property of the partnership, one of them should give a warranty, the other would be thereby bound." In the same case, Bayley, J., in his judg- ment, says: "It is true that one partner cannot bind another out of the regular course of dealing by the firm. But where the assurance has reference to busi- ^ ness transacted by the partnership, although out of the regular course, it is still within the scope of his author- ity, and will bind the firm." Ex parte ■ In Ex parte Gardom (/), Gardom being applied to by Gardom. Thomas Tapp, of Mav,chester, to sell him cotton twist, [*165] *desired a reference. Accordingly, Goodwin, of the house of Hargreave & Goodwin, verbally informed Gardom that their house would guarantee what twist Gardom might sell to Tapp, up to the 1 st of January, 1808, as Tapp was manufacturing goods for them. In due course the following engagement was drawn up in writing to be signed by Hargreave and Goodwin : " We agree and engage to guarantee for what twist Thomas Tapp may purchase from you from the 28th ult. to the first of January, 1808. Hargreave & Goodwin." That paper was signed by Goodwin only. A renewal of the guarantee afterwards took place, in similar terms. Sales took place under both guarantees. A commission of bankruptcy issued against Tapp ; and another against (/) 15 Ves. 286. (1364) I MEMORANDUM TO SATISFY STATUTE OP FRAUDS. 131 Hargreave & Goodwin. Under that commission Oardom offered to prove the residue of his demand upon Tapp, but proof was rejected upon three grounds, one of which was, that the signature of Goodwin alone could not bind the partnership. This ground, however, was ultimately- given up, whereupon Lord Chancellor EMon said : "The objection, that the partnership was not bound by the signature of one partner, is properly given up." It appears that, in the case of ordinary merchants, q^^ member one partner has no incidental authority to bind another of an orcli- in the name of the firm, by a guarantee given out of nary mercan- the course of ordinary business. This was decided jn ^-'l^. "rm haa Duncan v. Lowndes (g). There a guarantee was given ^owertobind for the due payment of a bill of exchange to the plain- the rest, tiff for 6101. 15s., accepted by Dickinson & Co., for the Duncan v. price of goods which the plaintiff had sold them. It Lowndes. appeared that the guarantee was signed by the defen • dant Lowndes, who was one of the partners, in the name of the partnership firm. Lord Ellenborough held, that it was necessary to prove that Lowndes had authority from his co-partner to execute the guarantee *in the name of the partnership firm, as it was [*166J not usual for merchants, in the common course of busi- ness, to give collateral engagements of the sort in ques- tion. " It is not incidental to the general power of a partner to bind his co- partners by such an instrument." It was also held, that proof of a subsequent recognition of the guarantee by the partner who did not actually sign it, as well as prior command or proof of a previous course of dealing in which such guarantees were given, and to which all the partners were privy, would be suf- ficient evidence of an authority to execute the guarantee in the name of the partnership firm. So, in Crawford v. Stirling (h), Crawford & Co., the Qrawfordv plaintiffs, were manufacturers and merchants at Glas- Stirling. gow, in Scotland; but Andrew Mitchell, one of the part- ners, resided in London, and conducted the business of the house there. One Kirhpatrick, who lived in Liver- pool, having occasion for goods in the course of his trade, in which the defendant dealt, procured the guar- antee of Mitchell to the defendant, on account of the house of the plaintiffs, for which the house received an allowance of 2J per cent. There was evidence of adop- tion of the guarantee by the firm of Crawford & Co. It was held, that this guarantee bound the entire firm. Lord Ellenborough said : " A guarantee given by one {g) 3 Camp.47X ' (A) 4 Esp. 207. (13B,5) 132 THE LAW OF GUAKANTEBS. partner in the partnership's name, unless it was in the ];egular line of business, could not bind the other part- ners ; but if they afterwards adopted it, and acted on it, it should bind them." ^rettell v. In Brettell v. Williams (i), the defendants, who were Williams. in partnership as railway contractors, contracted with a railway company to do certain works. U. & R. made a sub-contract with the defendants to dopartof the work, and, for that purpose requiring coals to make bricks, one of the defendants, without the knowledge or assent [*167] *of his copartners, signed in the name of the firm, and delivered to the plaintiffs a guarantee, not addressed to any person, for payment of coals to be supplied to U. & E. It was lield, that the guaran- tee did not bind the firm of railway contractors, there being no evidence that it was necessary for carrying into effect the partnership contract, or that the other partners had adopted it. Baron Parke, in his judg- ment in the case, ably reviews the authorities on the subject we are dealing with. He says: "That one of two partners engaged in business as merchants had not, by reason of that connection alone, power to bind the other by a guarantee, apparently unconnected with the partnership trade; was decided by Lord Ellenhorough, in the case of Duncan v. Lowndes (fc); and the Court of Queen's Bench gave a similar decision in that of Hasleham v. Young (l), where the defendants were in partnership as attornies. No proof was given in either of these cases of the previous course of dealing or * practice of the partners, which, it is admitted in both cases, might be sufficient to prove a mutual authority; nor was any evidence given of the usage of similar partnerships to give such guarantees; nor was there any of a recognition and adoption by the other partners which would have the same effect. The case of Sandi- lands V. Marsh (m) proceeded on the latter ground. In the present case, no evidence was given to show the usage of the defendants in this particular business, or of others in a similar business; nor was there any evi- dence of the sanction by the other defendants of the act of their co-partner; for a witness, who was called to prove the latter fact, would not, on cross-examina- tion, swear that he was authorized by them to write a letter, which, if proved to have been so written, would (i) 4 Exch. 628. (k) 3 Camp. 477. [l) 5 Q. B. 836. (?n) 2 B. & Aid. 673, ante, p. 163. (1366) MEMORANDUM TO SATISFY STATUTE OF FRAUDS. 133 have been sufficient. Simply as railway contractors they could not have any such power. The only *que8- [*168] tion then is, whether they had it in this particular case, in consequence of its being a reasonable mode of car- rying into effect an acknowledged partnership contract. One partner does communicate to the other, simply by the creation of that relation, and as incident thereto, all the authority necessary to carry on their partnership in its ordinary course (n), and all such authority as is usually exercised by partners in the same sort of trade, but no more. To allow one partner to bind another by contracts out of the apparent scope of the partnership dealings, because they were reasonable acts towards effecting the partnership purposes, would be attended with great danger. Could one of the defendants in this case have bound the others by a contract to lease or buy lands, or a coal mine, though it might be a rea- sonable mode of effecting a legitimate object of the partnership business ? Our opinion is, that one part- ner canno*; bind the others in such a case, simply by virtue of the partnership relation. In the case of Ex parte Gardom (o), this point was not fully discussed, but given up by Sir S. Romilly, who had two other ob- jections to the guarantee, on which he could rely, and on one of which he succeeded. Besides, we are not sufficiently informed by the report whether there might not have been some peculiar circumstances in the case which caused the abandonment of that point. We do not think that is an authority sufficient to establish the doctrine now contended for." Similar doctrines are applied in the case of other Basleham v. business, such as attorneys. Thus, in Hasleham v. Young. Young (p), one of two attornies in partnership, in order to procure the release of a client from custody, gave an undertaking in the name of the firm, to pay the debt and costs on a day named, and it was held that the firm *was not liable. It did not appear that the [*169] guarantee was any advantage to the firm, there was no evidence that the guarantee was given in pursuance of the ordinary practice of the parties, and, as Patteson, J., said, "Certainly such a transaction is not in the usual course of the business of attorneys." In Payne v. Ives (q) Abbott, C. J., left it to the jury p^yne v. Ives. to say whether a guarautee had been given with the (») See Haiotaine v. Bourne, 7 M. & "VV. ^95. (o) 16 Ves. 286. See ante, pp. 164—165. \p) 5 Q. B. 836. (g) 3 D. & E. 664. (1367) 134 THE LAW OF GUARANTEES. privity and consent of all the partners. Ttere Mann, of the firm of Ives, Sargon & Mann, gave a guarantee in his own handwriting, and signed by him only, on the part of the firm, to Messrs Payne & Co., whereby Messrs. Ives, Sargon & Mann undertook to indorse any bill or bills which one John Stubbs might give to Messrs. Payne & Co., in part payment of an order for certain goods then being executed for him. Power of one -^^ regards the power of one or more in a partnership partner to to bind the whole firm by a guarantee under seal, there bind the rest can be no doubt that the rule laid down by Lord Ken- by guarantee y^^^ Q j^ jjj Harrison v. Jackson (r), would apply to under sea . g^pj^ ^ case, namely, that a " general partnership agree- Jaejlson^ ^ ment, though under seal, does not authorize the part- ners to execute deeds for each other, unless a particular power be given for that purpose." Effect of sub- ■'■*' ^^®™S) moreover, that the subsequent acknowledg- sequent ment of the partner or partners, who did not execute acknowledg- the deed, that it was executed with their authority, is ment by firm qq-j; sufficient to make the instrument binding upon of CTwai^e^e them (s). " However, though one partner has no im- underseal by plied authority generally to bind his co-partner by deed, member of yet, if one partner execute a deed on behalf of the fi"'!- firm, in the presence and with the consent of his co- [*170] partners, *that will bind the firm; in such case the sealing and delivery by one is deemed to be the act of all " (t). Senible guar- It seems that a guarantee given by a partnership firm antee only (jQgg ^ot bind persons who subsequently become mem- ing members bers of the firm {«). of firm, not As regards the liability of a company, on a guarantee subsequent given by its directors, it appears that the company, is ?:^™.^?^^' „ not bound, in the absence of proof, that , the directors a company ^^^ power to give it (x). The directors of a company on guarantee may, however, become sureties for it, and they then given by possess the rights and incur the responsibilities attach- directors. (r) 7 T. R. 207; and see Lindley on Partnership, 4th ed., p. 278. (s) CoUyer on Partnership, 2nd ed., p. 309 ; Sieir/liiz v. Egging- ton, Holt, N. P. C. 141; Brutton v. BuHon, 1 Chit! 707; but see Harvey v. Kay, 9 B. & C. 3o6. ' (<) Colly er on Partnership, 2nd ed. pp. 309, 310; Ball v. Dun- sterville, 4 T. R. 313 ; Burn v. Burn, 3 Ves. 573; Smitli v. Winter, 4 M. & W. 454. (u) Fell's Law of Mercantile Guarantees, 2nd ed., pp. 120, 121. (») In re Era Life Assurance Society, 1 W. K. 309. See also Bidley v. Plymouth Grinding Co., 2 Ex. 711; Kirk v. Bell, 16 Q. B. 29a. (1,368) MEMORANDUM TO SATISFY STATUTE OF FRAUDS. 135 ing to the ordiaary contract of suretyship (y). And where directors guarantee the performance by a com- pany of a contract which is ultra vires, and cannot therefore be enforced against bhe company, the direc- tors are nevertheless liable under their guarantee, (z). Where directors are sureties for an unlimited company which is being wound up, they cannot set off payments made by them, after the winding-up order, in discharge of their suretyship liability, against calls made before the filing of the petition and enforced by a subsequent order but not yet paid (a). As regards the position of the signature of the party xhe position to be charged to a written memorandum required by of the signa- the Statute of Frauds, it appears that, provided the t"^e to mem- *name be inserted in an instrument in such a [*171] ^^^antee manner as to have the effect of authenticating it, the requisition of the act vrith respect to signature is com- plied with, and it does not matter in what part of the instrument the name is found (b). A mere casual in- troduction of the name would not, however, amount to a sufficient signature (c). Where the party to bo charged has not signed the instrument in the usual place, the question is always open to the jury, whether the party, not having signed it regularly at the foot, meant to be bound by it as it stood, or whether it was left so unsigned because he refused to complete it (d). Where it is obvious that the parties did not intend that the agreement should be perfect till their names were added at the foot, the Statute of Frauds will not be satisfied (e). As regards the kind of signature, we may observe that xhe kind of a mark by a marksman is a sufficient signature of an signature to agreement in writing within the Statute of Frauds (/). memoran- There must, however, be a signing, i. e., an actual signa- "P guar- (y) Oray v. Seckham, L. E., 7 Ch. App. 680; and see In re Booth-Browning v. Baldwin, 27 W. E. 644; DaUas v. Walls, 29 L. T. E. 599; MacDonald v. Whitfield, 8 App. Cas. 733. (a) Yorkshire Railway Wagon Co. v. Maclure, 19 Ch. Div. 478; Chambers v. Manchester & Milford Railway Co., 5 B. & S. 588, 612. (a) In re Norwich Equitable Fire Assurance Co. , Brasnet's case, 33 "W. E. 1010. (i) OgilmeY. Foljambe, 3 Mer. 53; Colon y. Caton, L. E., 2 H. L. 127. See also Lo66 v. Stanley, 5 Q. B. 574; Simmonds v. Hum- ble', 13 C. B., N. S. 258; Propert v. Parker, 1 Euss. & My. 625. (e) See Stokes v. Moore, 1 Cox, 219. (d) Per Lord Abinger, C. B. , in Johnson v. Dodgson, 2 M. AW. 653, 659. See also Knight v. Crockford, 1 Esp. 190, 193, and Saunderson v. Jackson, 2 B. & P. 238, 239. (e) SubeH v. Treheme, 3 M. & G. 743. (/) Selby v. Selby, 3 Mer. 2. See also Suberl v. Moreau, 13 Moore, 216, 219; Baker v. Dening, 8 A. & E. 94. (1369) 136 THE- LAW OF GUARANTEES. Initials sufS.cient. Printed signature sufficient. Signature by a witness. Signatui-e by indorsement of draft. Guarantee drawn up in plural num- ture of the name, or something intended by the writer to be equivalent to a signatni-e; for it is not enough that the party may be identified; the statute requires him to sign (g). It seems that a signature by initials is sufficient (h), if the initials be intended as a signature [*172] *by the party who writes them (i). However, the christian name may be set out at length, denoted by initials, or left out altogether (k). A printed signature would seem to be sufficient. Certainly this is the case where there is subsequent recognition, or where part of the instrument is in the handwriting of the party(Z). It seems to be doubtful, having regard to decided cases, r whether a signature by a person mentioned in the memorandum as a contracting party, though he profess to sign as a witness, is sufficient (m). But it would seem that where the signature is not that of the agent of the party to be charged, qu& agent, but only in the capacity of witness to the writing, it will not suffice (n). The mere altering of a draft is not a sufficient signature, because the party clearly did not intend to be bound- thereby (o). Where, however, a parol agreement in writing was entered into, and a draft of it was prepared, and, by indorsement on this draft, the defendant ad- mitted the agreement, but excused himself from per- forming it, it was held that the 4th section of the Statute of Frauds was satisfied (p). A guarantee drawn up in the plural number, and concluding as, " Witness our hands," but signed by one surety only, is binding upon the surety vyho signed it{q). (g) Ibid. (h) Chichester y.Cohh, 14 L. T., K S. 433, Q. B.; Golne v. Woodley, 17 Ir.' C. L. E. 221; Jacob v.. Kirk, 2 Moo. & E. 231; Sweet Y. Lee, 3 M. & G. 452; Farker v. Smith, 1 Coll. 608; HubeH V. Moreau, 2 C & P. 528; and see Benjamin on Sales, 3rd ed., pp. 220, 221. See also In re Goods of Blewiti, 5 P. D. 116. [i) Per Lord Wesfbury, in Caton v. Caton, 2 H. L. 127, 143. (i) Lobb V. Stanley, 5 Q. B. 574, 581, 582. See 2 Sm. L. C. 6tli ed., p. 233. [l) Schneider v. Norris, 2 M. & S. 286. See also Saunderson v. Jaclcson, 2 B. & P. 238. And see Benjamin on Sales, 3rd ed., p. 223 et seq. (m) Welford v. Bazeley, 1 Ves. sen. 6', Coles v. Trecothick, 9 Ves. 234, 250; Blore v. SuUon, 3 Mer. 237; GosbeU v. Archer, 2 Ad.'& E. 500. (n) Benjamin on Sales, 3rd ed., p. .236. (o) Hawkins v. Holmes, 1 P. W. 770. (p) Shippey v. Denison, 5 Esp. 190. See also Backworth v. Young. 26 L. J., Ch. 153; Jackson v. Lowe, 1 Bing. 9; Warner v. WiUington, 25 L. J., Ch. 662; Bailey v. Sweeting, 30 L. J., C. P. 150; Gibsirn V. Holland, L. E., 1 C. P. 1. (q) Norton v. PoweU, 4 M. & G. 42. (1370) MEMORANDUM TO SATISFY STATUTE OF FRAUDS. 137 *A letter beginning, " "We hereby guarantee," [*173] ^er and signed -with the name of a firm, and by each of the signed by partners, though it would only have been a joint guar- ^'^^ ^ antee if signed in the name of the firm alone, or only by each of the partners, has been held to be a separate guarantee by each partner as well as a guarantee by the firm (r). It has recently been decided that the signature of the Signature of party to be charged to instructions for a telegraphic instructions message, accepting the plaintiff's written offer, is a suf- ^°^ *f\^' ficient signature under the Statute of Frauds (s). messaee It is not necessary that the note in writing, to be jiemoran- binding under the statute, should be contemporary with dnm in writ- the agreement. It is sufficient if it had been made at ing need not any time, and adopted by the party afterward, and ^^ contem- then anything under the hand of the party, expressing a^eSient that he had entered into the agreement, will satisfy the statute, which was only intended to protect persons from having parol agreements imposed on them (t). But, as But when the held by Fry, J., in a very recent case, the iaemorandum ™emoran- or note of agreement required by the 4th section must +w„^* ™+vl J J! J. ij.i.i.1. ^'^<^™ mustbe be a memorandum oi an agreement complete at the a complete time the memorandum is made (u). agreement in To satisfy the Statute of Frauds, it is not necessary existence, that the agreement of the parties should be contained Agreement in one written instrument. It may be contained in con+afgij f several different papers, which, taken together, form the one written agreement between the parties (x). But these different instrument. *papers must be, in themselves, and on the face [*174] of them, connected, either in express words or by con- taining those which are capable of an interpretation (r) Ex parte Harding, In re Smith, 12 Ch. Div. 557; 41 L. T. 388 ; 28 W. E. 158. (s) Godwin v. Francis, L. E., 5 C. P. 295; M'Blain v. Cross, 25 L. T., N. S. 804. (i) Per Lord Ellenborouyh, in Shippey t. Deiiison {libi supra), p. 193. See also Tawney v. Crowther, 3 Bro. C. C. 161 ; Bradford v. Boulslon, 8 Ir. C. L. E., N. S. 468. (u) Mundayv. Asprey, 13 Ch. Div. 855. {x) Stead v. Liddard, 8 Moo. 2 ; Redhead v. Cater, 1 Stark. 14 ; Samdilands v. Marsh, 2 B. & Aid. 680 ; Buxton v. Rust, L. E., 1 Ex. 1 ; Hemming v. Perry, 2 M. & P. 375 ; Hare v. Riehards, 5 » 'M. & P. 235 ; BretteU v. Williams, 4 Exch. 623 ; Macrory v. Scott, 5 Exch. 907 ; Oolbourn v. Dawson, 10 C. B. 765 ; Coe v. Duffield, 7 Moo. 252. See also Jackson v. Lowe, 7 Moo. 219 ; Dobell v. Hut- chinson, 3 A. & E. 355 ; Hammersley v. Baron de Bid, 12 CI. & F. 45 ; De Bert v. Thompson, 3 Beav. 471 ; Ridgway v. Wharton, 6 H. L. 238 ; 27 L. J., Ch. 46 ; Ogilvie v. Foljambe, 3 Mer. 53 ; Horsey v. Graham, L. E., 5 C. P. 9 ; Jones v. Williams, 7 M. & W. 493 ; Nene Valley Drainage Commissioners v. Dunkley, 4 Ch. Div. 1 ; Baumann v. James, L. E., 3 Ch. App. 508. (1371) 138 THE LAW OF GUAEANTEES. which, in its sense, connects the different instruments. Parol evidence is not admissible for the purpose of con- necting them (y). In Bluck V. Gompertz (z), the defendant gave to the plaintiff a guarantee, signed by the defendant. Subse- quently, it was discovered that there was a mistake in. the instrument of guarantee. This mistake was ac- cordingly rectified by an indorsement written across the guarantee itself by the defendant, but signed by the plaintiff only. It was held that the instrument was a valid memorandum of the contract declared on, within the Statute of Frauds, since the indorsement, having been made for the purpose of correcting the mistake, and being written by the defendant on the same piece of paper as the original undertaking, must be considered as authenticated by the original signature of the defen- dant. If signed ■"■* ^^ ^^^'^ sufficient if a signed paper refer to another paper refer paper which is not signed, and which contains the terms to unsigned of the agreement between the parties (a), paper, statute "Where a court has to find a contract in a correspond- ^ ^ ^ ' ence and not in one particular note or memorandum contract h^ formally signed, the whole of that which has passed to he col- between the parties must be taken into consideration, lected iiom [*175] *even though the first two letters of the cor- correspond- respondence seem of themselves to constitute a complete ^^'^^- and binding contract (&). The stamp- It may be as well to say a few words here as to the ing of aguar- stampimgr of an instrument of guarantee (c). The in- antee. strument of guarantee cannot be given in evidence un- it cannot be less it is properly stamped (d). This is the case even dence with^' ^^®''® *^^ instrument does not state on its face the con- out a stamp, sideration for the promise (e). In Glover v. Hackett (f), H., being tenant to E., G. signed the following document: — "August 2nd. According to Mr. H.'s re- quest, the land at B., under Mr. E., I will be bound for (y) 1 Sm. L. C, Stlied., pp. 336, 337. See WilkuisonY. Evans, L. E., 1 C. P. 407. (z) 7 Exch. 862. (a) Tawney v. Crowfher, 3 Bro. Ch. Cas. 161 ; Allen v. Bennet, 3 Taunt. 169; Saundersonv. Jackson, 2 B. & P. 238 ; Stead v. Lid- dard, 1 Bing. 196 ; De Bert v. Thompson, 3 Beav. 471 ; Coldham v. Showier, 3 C. B., N. S. 312. (?)) Hussey v. Home Payne, L. E., 4 App. Cas. 311 ; and see Tay V. Thomson, 20 Ch. D. 705. (e) The Stamp Act, 1870 (33 & 34 Vict. c. 97), governs this subject. (d) 33 & 34 Vict. c. 97, s. 17. (e) Whitfield v. Moojen, 1 F. & F. 290. (/) 29 L. J., Ex. 416. (1372) MEMORANDUM TO SATISFY STATUTE OP FRAUDS. 139 till next Ladyday; rent 48Z., (Signed) J. G." The document being tendered in evidence, in an action by .eyond pre- never be lost sight of, and which may in some instances i,\s\ng^e-° restrain the operation of the first. This is the rule that ment. a surety is not to be charged beyond the precise terms of his engagement (gf). Dealing with it as a mercan- tile contract, the Court does not apply to a guarantee mere technical rules, but construes it so as to give effect to what may fairly be inferred to have been the real in- tention and understanding of the parties as expressed in the writing; for, to bind a person by a contract of guarantee, the language used must express clearly an intention to take on himself the liability of a surety (h). If the writing falls short of that, or if the ex pressions *used be doubtful or ambiguous [*179] (provided they cannot be explained) no contract of , guarantee arises (i). Where a party becomes surety to another, but the instrument by which he becomes surety in terms creates only a joint liability, then, in the absence of any proof to the contrary, the intention of the parties must be taken to be that the surety is only so to the ex- tent limited by the instrument. He does not intend to become, and does not become, surety out and out and Tinder all circumstances, but he only undertakes a joint liability with others (fc). A third general rule is, that in the construction of Natural guarantees, as indeed in the construction of all con- meaning to tracts, their natural or literal meaning must be given ™^s o° guarantee. (/) IC. &M. 68;3Tyr. 164. [g) Wright v. Russell, 2 "W. BI. 934 ; Tanner v. Woolmer, 8 Ex. 482; 22 L. J., Ex. 259; Pearsall v. Summersett, 4 Taunt. 593; Chal- mers v. Victors, 16 "W". E. 1046: Walker v. Hardman, 11 C. & F. 258; 11 Bligh, 299; Carrv. Wallachian Petroleum Co., Limited, L. E., 2C. P. 468; ifeefc v. Wallis, 27 L. T. E. 650. (A) Per Fitzgerald, J., in Bank of Montreal v. Munster Bank, 11 Ir. C. L. E., at p. 55. (i) Ibid. {k) Per Kindersley, V.-C, in Other v. Iveson, 3 Drew. 182; and see York City and Banking Co. t. Bainbridge, 43 L. T. E. 732. (13751 U2 THE LAW OP GUARANTEES. "Whole con- tract must be consid- ered. Construction should give effect to con- tract if pos- sihle. Parol evi- dence not admissible to contradict to the words employed (Z), unless such natural or liter- al meaning would lead to an absurdity (m). And where there are no words of doubtful trade meaning, and the extrinsic facts are not in controversy, the ques- tion whether the words used amount to a contract of guarantee are not for the jury, but are for the deter- mination of the Court alone (n). It is likewise a general rule that the whole instru- ment must be considered in construing a guarantee. Thus, when the guarantee is by bond, the extent of the condition at such bond may be restrained by the reci- tals, as will be seen in a subsequent part of this chap- ter (o). Whether the condition of the bond is actually re- strained by the recitals, is often a very difficult ques- tion to determine (p). [*180] *It is a further general rule that the construc- tion shall be favourable, so as to support and give ef- fect to the instrument, if possible (q). In construing a guarantee, as in the construction of every contract (whether under seal or not), the court will, if possible, give effect to it, it being a maxim of • our law that Benignce faciendce sunt Interpretationes propter simplicitatem Laicorum ut res magis valeat quam pereat ; et verba intentioni, non e contra, debent inservire (r). In the case of Wood v. Priestner (s), which was an action upon a guarantee. Baron Bram- weli said, that there was a presumption ^against the de- fendant giving an invalid document or the plaintiff re- ceiving it. In addition to these general rules of construction, it will be well also to call attention in this place to a principle of law, which, though not itself a rule of con- struction, frequently has an important bearing when {D Allnuti V. Ashenden, 5 M. & G. 397; Haigh v. Brooks, 10 A. & E. 309 ; S. a, in error, ib., p. 323. (m) Chalmers v. Victors, 16 W. R. 1046. (n) Bank of Montreal v. 3funster Bank, 11 Ir. C. L. E. 47. (o) See post; and see Glyn v. Hertel, 8 Taunt. 208 ; PearsaU v. Summerselt, 4 Taunt. 593. But see Bank of British North Amer- ica V. Cuvillier, 4 L. T. 159. (p). See Parker v. Wise, 6 M. & S. 239 ; Gordon v. Rae, 8 E. & B. 1605 ; Evans v. Earle, 10 Exch. 1 ; and see note (d), 3 Dougl. 326. (q) Broom v. Batchelor, 1 H. & N. 255 ; Steele v. Hoe, 14 Q. B. 431 ; Oldershaw v. King, 2 H. & N. 517 ; Heffletd v. iVeadows, L. E., 4 C. P. 595 ; Ford v. Beech, 11 Q. B. 852; Pugh v. Stnngfleld, 4 C. B., N. S., 364 ; Dally v. Poolly, 6 Q. B. 494. (r) Co. Litt. 36 a. (s) L. E., 2 Exch. 66. (1376) LIABILITY OF THE SURETY. 143 questions arise as to the meaning of a written in- written docu- strument. This is the doctrine that parol evidence is ment, but not admissible to contradict a written document, and °^^7 to f.r- consequently, that where there is no ambiguity in the words used, parol evidence to fix a meaning upon them is not admissible at all. Parol evidence is, however, Surrounding admissible to explain a written instrument when am- circumstan- biguities occur in it {t). " The surrounding circum- ^yen in evi- stances " are frequently looked at where the contract dence in requires , explanation : e. g., to ascertain the subject- explanation, matter of the *contract (u). Thus, in a recent [*181] case, where the wife of a retail trader who was pos- sessed of separate estate, in order to obtain credit for her husband from a wholesale merchant with whom he dealt, gave the following guarantee: "I do hereby guarantee to you the siim of 500i. This guarantee is . to continue in force for the period of six years and no longer," it was held that in the construction of this document the Court was entitled to look at the sur- rounding circumstances, that is to say, to consider, first, who the parties were ; secondly, in what position they were ; and, thirdly, what the subject-matter of the agreement was. Upon full consideration of these cir- cumstances the Court came to the conclusion that the guarantee was limited to the goods actually supplied to the husband after it was given (x). Having thus briefly treated of the construction of the The liability- contract of guarantee, let us now proceed to consider — of the surety. First. The nature of. the surety's liability. Secondly, ^^^^u^e'^ When the liability of the surety arises. Thirdly. How such liability may be enforced. Fourthly. What is the extent of such liability ? First, the nature of the surety's liability. jp^^s^ the It appears from the very definition of a guarantee, nature of the that the person giving it is not answerable till the de- surety's lia- fault of another person (y). bility. The liability of the former (the surety) is, therefore, ^et*^een''the (t) Edwards v. Jevom, 8 C. & P. 436 ; Hoad v. Grace, 7 H. & N. 494; 31 L. J., Exch. 98; Goldshede v. Swan, 1 Exeh. 154; Bainlridge v. Wade, 16 Q. E. 89 ; Garrett v. Handley, 4 B. & C. 664. («) Heffieldv. Meadows, L. R., 4 C. P. 595 ; Chalmen^v. J'icfors, 16 W. R. 1046 ; Spark v. Hedop, 1 El. & El. 563, 570 ; Coles v. Pack, L. R., 5 C. P. 65, 70, 71 ; Leatliley v. Spyer, L. R., 5 C. P. 595 ; Laurie v. Scholcfield, L. R., 4 C. P. 622. {x) Morrell v. Cowan, 7 Ch. Div. 151 ; 26 W. R. 90 ; 47 L. J., Ch. 173 ; 37 L. T. 586. {y) Fell on Guarantees, 2nd ed., p. 1 ; and Mallet v. Batsman, L. E , 1 C. P. 163. (1377) 144 THE LAW OF GUAKANTEES. liability of termed secondary, whilst that of the latter (the princi- the surety pal debtor) is termed primary. and that of Between the surety and the principal debtor there debtor™'''^^ is no privity of contract, for the surety contracts with No privity of *^^ creditor. Consequently, in the absence of special contract be- [*182] agreement, *a judgment or an award against a tween surety principal debtor is not binding on the surety, and is and principal ^^^^ evidence against him in an action in which he is sued by the creditor, for it is res inter alios acta (b). ott^^^^ Moreover, the debtor's admission of liability does not dispense with proof thereof in an action against the surety brought by the creditor (c). Howerer, the entry by a deceased collector of taxes of monies received by him made in a book which he kept for his own private convenience was in one case held to be good evidence as against his surety, though the persons from whom ■ the money was received were alive and might have been called as witnesses (d). In a recent American case it was held that the surety for good behaviour in an office is not estopped from contesting the correctness of the principal debtor's voluntary official reports as to the amount of money in his hands at the commenceilieht of the term for which the bond was given (e). But offi- cial books and reports which the official is bound to furnish as one of the duties incidental to his office, would seem to be presumptive evidence against him and Lis sureties (/). "Where a Guarantee Society became surety for an official liquidator and entered into a bond which provided that the certificate of the chief clerk on taking the accounts of the liquidation should be con- clusive evidence against the surety as to the amount due from the liquidator, it was held that even after such certificate had been given the Court had power to allow the accounts to be re-opened at the surety's request, upon certain terms, as it was proved that the liquida- [*183] tor's accounts had (but in accordance *with the usual practice) been carried in and vouched without notice to the surety (g). g — . (J) JEx parte Young, In re KitcUn, 17 Ch. Div. 668 ; 50 L. J., Ch. 824 ; 45 L. T. 90. See also American cases of Douglass v. Sowland, 24 Wendell, 35 ; Graves v. Bulkley, 37 Amer. R. 249 (US.). (c) Evans v. Beattie, 5 Esp. 26. (d) Middleton v. Melton, 5 B. & C. 317. le) Van Sickel v. County of Buffalo, 42 Amer. E. 753 (U. S.). (f) Town of Union v. Bermes, 43 Amer. E. 369 (U. S.) ; Borne County V. Jones, 37 Amer. E. 229 (TJ. S.). ■ (g) In re Birmingham Brewing, Malting and Distillery Oo.. Limited, 31 W. E. 414 ; 52 L. J., Ch. 358 ; 48 L. T. 632. (1378) ' LIABILITY OF THE SURETY. 145 It was formerly a rule of pleading, that if he who was party or privy in estate or interest, or he who jus- tified in right of him who was party or privy, pleaded a deed, he must make profert of it to the court (h). But in the case of Bain v. Cooper (i), it was held, that a surety might plead a release to his principal without making profert of the deed. Parke, B., in his judg- ment, said, " The general rule with respect to profert is correctly stated in Dangerfleld v. Thomas (fc), viz., that a party is not required to make profert of an in- strument, to the possession of which he is not entitled. The only exceptions to that rule are, where the party pleading acts as tenant of another, or where there is a privity of interest between them, as in the case of a re- lease to a reversioner, of which the tenant for life may avail himself. So, also, in the cases of heir and executor, he may plead a release to the ancestor or ' testator whom they respectively represent; so, also, with respect to several tortfeasors, for, in all these cases, there is a privity between the parties which constitutes an identity qf person ; but there is no privity between the surety and principal, for the surety contracts with the creditor. They do not constitute one person in law, and are not jointly liable to the plaintiff." Except under certain circumstances, to be explained As a general hereafter, the surety is not liable, on his guarantee, rule surety where the principal debt cannot be legally enforced, not liable if This is in accordance with the lex contractus, which j^Sf^'ot prevents contracts from becoming operative, unless and legally en- until all conditions precedent are fulfilled, and, as is forceable. *obvious, the existence of a principal debtor is [*184] a condition precedent to the operation of the contract of guarantee {I). Thus, it is stated in Pothier on Con- tracts (m), that, "As the obligation of sureties is ac- cording to our definition an obligation accessary to that of a principal debtor, it follows that it is of the essence of the obligation that there should be a valid obligation of a principal debtor; consequently, if the principal is not obliged, neither is the surety, as there can be no accessary without a principal obligation according to the rule of law, cum causa principalis non consisti, nee (Ji) Dr. LaifieWs Case. 10 Co. 88 ; profert has been rendered unnecessary by the C. L. P. Act, 1852 (15 & 16 Vict. c. 76), S. 55. ' ' {i) 1 D. P. C. 11, 14. (k) 9 Ad. & E. 292. m Mounlstephen v. Lakeman, L. E., 5 Q. B. 613 ; L. B., 7 Q. B. 196, 202 ; 7 H. L. 17. (m) Elans' ed., vol. i., p. 229. 10 (1379) 146 THE LAW OF GUAKANTEES. Surety's liability may continue even after that of the principal debtor has ceased. when does the surety's liability arise? Principal debtor must have made default. cea quidem quae, sequuntur, locum habent. L. 178, ff. de Reg. Jur." (n). However, where directors guaran- tee the performance of a contract by their company which does not bind the latter, as being ultra vires, the directors' suretyship liability is enforceable (o). Again, the liability of a surety may continue even after that of the principal debtor has ceased. Thus, in the case of a surety to the assignor of a lease for the due payment of rent and fulfilment of cuvenants by the assignee, if, on the bankruptcy of the latter, the trustee in bankruptcy (-or now the official receiver) dis- claim all interest in the lease, such disclaimer, though it may operate to relieve the bankrupt assignee from liability, does not extinguish the liability of the surety, which continues during the remainder of the term as- signed (p). And it is provided by " The Bankruptcy Act, 1883," that an order discharging a bankrupt " shall not release any person who, at the date of the receiv- ing order, was a partner of a co-trustee with the bank- [*185] rupt, or was *jointly bound or had made any joint contract with him, or any person who vyas surety or in the nature of a surety for him" (q). Secondly, When does the liability of the surety arise? It is, in all cases, essential, before the surety can be called upon to fulfil his engagements, that the principal debtor shall have made default. Thus, if the alleged default were owing to the creditor's misconduct, the surety will not be held liable (r). Again, if the prin- cipal debtor has not made default at all, the surety is not liable. This appears from the case of Walker v. British Gfuarantee Association (s), where the following were the facts : — The treasurer of a benefit building society, within statutes 6 & 7 Will. 4, c. 32, and 10 Geo. 4, c. 56, covenanted with the society's trustees that he would faithfully discharge the duties of treas- urer, duly obey the directions of the trustees in relation to such duties, and punctually account to the trustees for all and every sum and sums of money, bills, notes, securities, goods and chattels, which he, in his office of treasurer, should receive on the society's account. The (n) See Lewis v. Jones, 4 B. & C. 506, 513. (o) Yorkshire Baihoay Wagon Co. v. Maelure, 19 Ch. D. 478. (p) Harding v. Preece, 9 Q. B. D. 281 ; 47 L. T. 100 ; 51 L. J., Q. B. 215 ; ,31 W. R. 42 ; see also Ex parte Walton, 17 Ch. Div. 746, 755 ; East and West India Doci Co. v. Hill, 22 Ch. Div. 14. (?) 46 & 47 Vict. c. 52, s. 30, par. 4. (r) Halliwell v. Counsell, 38 L. T. 176. («) 18 Q. B. 277 I Lloyds v. Harper, 16 Ch. Div. 290 ; 50 L. J., Ch. 140 ; 29 W. E. 452 ; 43 L. T. 481 ; King v. Cole, 15 Q. B. 628. . (1380) LIABILITY OF THE SURETY. 147 defendants, as liis sureties, guaranteed to the building society the due observance of this covenant. It ap- peared that the treasurer was bound by the rules of the society to pay over, in a given time, the same moneys which he received. It was held, that such an obliga- tion was only that of a bailee, that he did not violate such obligation, if, after receiving moneys, and before he had an opportunity of paying them over, he was robbed of them by irresistible violence and without fault of his own, and that, to an action against the *sureties of the treasurer by the trustees of the [*186j society, complaining that the treasurer had not paid the said moneys, a plea by the sureties of robbery commit- ted upon their principal, in excuse of his non-payment, was an answer to the action. Once the principal has actually committed a default, After cTefanlt for which the surety is responsible, as a general rule a ™afex- as a debt due can, in ordinary cases, be sued for with- press stipula- out a previous demand. However, it sometimes hap- tion on the pens that, under the circumstances of the case, a right subject. of action against the surety does not arise till some demand has been made on him ; and in some cases it is necessary for the creditor to call upon the surety to fulfil his engagement, though he be not expressly bound to do so. Thus, where a person binds himself, by guarantee, to indorse any bills which may be given in part payment of a debt, to be contracted by a third person, the rule of law is, that a demand upon the surety to fulfil his engagement must be made, and within a reasonable and convenient *time (g). [*189] . . As the surety can be sued without any previous demand necessarv being made upon him, it is, as a rule, not even neces- even to in- sary Ihat the creditor should previously inform him of form surety the default or neglect to pay of the principal debtor, ^* default unless the surety has expressly stipulated for notice (h); j^^de^ though an omission to give the surety this information might affect the question of costs. Thus, it has been held, that presentment or notice of dishonour is not necessary to keep alive the liability of a person, not a party to the instrument, who has guaranteed that a bill or noteshall be paid («'). But where a debtor indorsed a bill of exchange, of which he was the indorsee, over to his creditor byway of collateral security for his debt, (e) In SicJcIemore v. Thisfteton, 6 M. & S. 9, there was such an express stipulation as that alluded to in the text. See also Batson v. Spearman, 9 Ad. & E. 298. (fl mtchcoclc V. Humfrey, '5 M. & G. 559. (g) Payne v. Ives, 3 D. & Ry. 664. (A) Cutler v. Soutliern, 1 Wms. Saund. 115 ; Ker v. Mitchell, 2 Chit. Eep. 487 ; Com. Dig. Condition (T) ; Hurlstone on Bonds, p, 83 et seq. ; SickUmore v. Tliistleton, 6 M. & S. 9 ; Batson v. Spearman, 9 Ad. & E. 298 ; and see Carr v. Browne, 12 Moore, 12 : Phillips v. Fordyce, 2 Chit. 676. (i) Hitchcock V. Humfrey, 5 M. & Gr. 559 ; WaJton v. Mascall, 13 M. & W. 72 ; Holbrow v. Wilkins, 1 B. & C. 10 ; Van Wort v. Woolley, 3 B. & C. 439 ; Warrington v. Furber, 8 East 242. (1383) 150 THE LAW OF GUAKANTEES. and the creditor did not present it at maturity, nor give the debtor notice of its dishonour when presented, it ■was held, that the creditor could not recover in an action either on his original debt or upon the bill of exchange (A;). And it would seem that if such want of presentment or notice of dishonour, owing to the pecu- liar circumstances of the case, were to amount to un- reasonable neglect on the part of the holder of the bill or note, the guarantor would be discharged from all liability (Z). Cases of this kind would seem to depend upon the circumstances peculiar to each (m). Where L*190] * Where the guarantee is only to operate on guarantee to {jjg occurrence of a certain event, it may become neces- certain °° ^^^ ^'^^ *^** creditor to give notice to the surety of the events notice occurrence of such event, before proceeding upon the of occurrence guarantee (w). of such event The liability of the surety— like any other liability necessary. arising on a contract — -may, by express stipulation, be suretv^iuav ^^^^ *'0 depend on the performance of conditions pre- depend on cedent to its accrual (o). And when this is the case, the performance liability of the surety is, of course, not complete until of conditions ^H conditions precedent to his liability have been f ul- prece en . filled (p). Thus, a contract by way of guarantee, to xamp es. ^^^ ^^^^ ^ ^j^^ creditor moneys received as the proceeds of the property of the debtor, is conditional, not only upon the receipt of money, the proceeds of such prop- erty, but on the receipt of such money properly payable to him; and does not apply to money received only subject to a prior claim of a third party, and which, therefore, is not payable to the creditor {q). Again, where the vendor of a business to "a company guaranteed to the shareholders thereof a minimum dividend for the term of live years, it was held, that the guarantee was given upon the implied condition that the company (fc) Peacoch v. Pursell, 14 C. B., N. S. 728 ; 32 L. J., C. P. 266; 10 Jur., N. S. 178 ; 8 L. T 636 ; 11 "W. E. 834. (1) Phillips V. Astling, 2 Taunt. 206 ; and see Chitty on Bills, 10th ed., note 3, p. 308. (m) Per Abhoit, C. J., in Van Wort v. Woolley, 3 E. & C. 439, 448. (n) See Morten v. Marshall, 9 Jur., N. S. 651. (o) It has already been seen, when the nature of the surety's liability was described, that the existence of a principal debtor is a condition precedent to the very existence of a guarantee, and therefore -essential to the surety's liability, ante, p. 183 et aeq. (p) EheoHhyv. Maunder, 2 Moo. & P. 482; Pearsev. Morrice,' 2 Ad. & E. 84; Lawrence v. Walmaley, 31 L. J., C. P. 143; 10 W. E. 344; 5 L. T. 798; Phillips v. Fordyce, 2 Chit. 676; Burton v. Gray, L. E., 8 Ch. App. 932. (2) Jupp V. Biehardson, 26 L. J., Ex. 261. (1384) LIABILITY 0? THE SURETY. 151 should carry on the whole concern as it existed at the first, and that the company having broken the contract, or its part, the vendor was discharged from his guaran- tee (r). So, where in consideration *of the [*191] plaintiff agreeing to supply A. with goods, to enable him to carry out his contract with the government, the defendant guaranteed to the plaintiif the payment of the goods when the government paid A. the amount of the contract, it was held, that the government having, before the performance of the contract, dismissed A. and employed some one else in his place, and not having therefore paid to A. the whole amount of the contract, the. plaintiff was not entitled to recover (s). So also, in another case, H. & Sons being engaged, under a con- tract in writing, in the erection of certain engineer's work for N., for which iron and brass castings were re- quired, and Hill, the founder from whom the castings were procured, having a claim against H. & Sons to the amount of 2181. for goods already supplied, and refusing to continue the supply without obtaining payment or security for that sum, N. consented to give Hill a guar- antee in the following terms: — " May 22nd, 1861. Mr. J. N. agrees to pay to Mrs. Hill, ironfounder, on H. & Son's account, the sum of 218Z., being the amount owing to her by them, together with interest, in six months from the above date, pro- viding he has work done as security for the sam^." In an action by the representatives of Hill against N. upon this guarantee, it was held, that it was a condition of N.'s liability thereon, that, at the end of the six months, work should have been done by H. & Sons for him in respect of which a debt should be due from him to them ; and that the plaintiifs could not recover without producing the contract between H. & Sons and N. under which the work was done (i). In London Guarantee and Accident Co. v. Fearnley (m), the following were the *facts : — By an agreement, and a policy of in- [*192] surance, the defendants agreed to reimburse the plain- tiff any pecuniary loss, to the amount of 1,000Z , which he might sustain by reason of any such fraud or dis- honesty of A. in connection with his employment by the plaintiff, as should amount to embezzlement, and (r) Brown & Co. v. Brown, 35 L. T. 54. (s) Hemming v. Trenery, 2 Cr. M. & E. 385. See also Moor v. - Boifrts. 3 C. B., N. S. 830. («) Hill V. Nuttall, 17 C. B.,]Sr. S. 262. See also Burbridgey. Child, 10 Jur., N. S. 106. («) 5 App. Cas. 911 ; 43 L. T. R. 390 ; 28 W. R. 893. (1385) 152 THE LAW OF GUAKANTEBS. should be committed and discovered during the con- tinuance of the policy. The policy provided (among other things) "that the employer shall, if and vphen required by the company [but at the expense of the cqmpany if a conviction be obtained] use all diligence in prosecuting the employed to conviction for any fraud or dishonesty as aforesaid, which he shall have commit- ted, and in consequence of which a claim shall have been made under the policy, and shall, at the company's expense, give all information and assistance to enable the company to sue for and obtain reimbursement by the employed, or by his estate, of any moneys which the company shall have become liable to pay." It was held by Lords Blackburn and Watson {Selborne, L. C, diss.), that the prosecution of A. for embezzlement was a condition, precedent to the plaintiff's right of action upon the policy. But where, in consideration of the plaintiff agreeing to stay proceedings in an action against A. until a given day, and proceeding to trial with an action against B., the defendant promised to indemnify the plaintiff against all costs and expenses connected with the action against B., ichether the same should be decided in favour of the plaintiffs or of B. : it was held, that the final determination of the action against B. was not a condition precedent to the plain- tiff's right to sue for costs, and that the consideration was satisfied by the plaintiff staying proceedings against A. and going to trial against B. (a;). [*193j . *In Lends v. Hoare (y), the facts were as fol- low : — The respondent advanced money to the appel- lant on a guarantee " to be repaid on the completion of six houses in accordance with a contract between my ■ self and T." One of the terms of the contract was that the houses were to be built to the satisfaction of a sur- veyor, and payment was to be made upon his certificate. No such certificate had been given. In an action on the guarantee brought by the respondent against the appel- lant, the jury found, that as a matter of fact the houses were completed. It was held, that the respondent was entitled to recover, notwithstanding the absence of the certificate. Where, a plaintiff having given the defen- dant promissory notes and a cognovit for 500Z. as a (a.-) Wilson v. Bevan, 7 C. B. 673. See also Christie v. Borelly, 7 C. B., N. S. 561 ; Morten v. Marshall, 9 Jur. N. S. 651 ; Coyte v. Elphicic, i2 W. R. 541 ; Crick v. Warren, 2 F. & F. 348 ; Dimmock V. Sturla, 14 M. & W. 758; 15 L. J., Ex. 65, which are instances of conditions precedent. (y) 29 W. R. 357 ; 44 L. T. R. 66. See also JEx ^arie Ashwell, 2 Dea. & Chit. 281. (1,386) . LIABILITY OF THE SUKETT. 153 composition for certain claims, the defendant, in con- sideration of the money so secured to be paid, engaged to indemnify him against certain liabilities, it was held that the security, not the actual payment, was the con- sideration, and that the plaintiff might sue on the guar- antee, though he had not paid the 500Z. (z). In Russell V. Trickett (a), the facts were as follow : — By a deed between a local board of the first part, certain con- tractors of the second part, and the defendant of the third part, the contractors covenanted to do work upon the basis of a specification ; and the defendant coven- anted to pay any losses that might be sustained from the non-performance of the work. The deed recited that the specification had been signed by five members of the local board, as was required by the Local Act. la point of fact, the specification had never been signed, although it had been acted upon. Held, *that [*194] the mere fact of the specification not having been signed did not release the sureties from their liability. The most common examples, perhaps, of the exist- ence of a condition precedent to the liability of the surety, are cases in which a guarantee is given in consideration of time being given to the principal debtor ; or, in which a guarantee is given in which it is intended that others shall join. Where a guarantee is given in consideration of the plaintiff undertaking to forbear to sue a third person for a certain period, or where the nature of the trans- action shows that this was the intention of the parties, forbearance to sue before the expiration of the period agreed upon is a condition precedent to the plaintiff's right of action on the guarantee (6). In a similar manner, where a person executes a Execution of surety-bond on the faith of its being at some subse- guarantee by quent time also executed by another person as co-sure- co-surety is ty, or by the principal debtor himself, the execution by condition^ ^ such co-surety or principal debtor is a condition prece- precedent to dent to the liability of the person who thus executes, surety's Consequently lie is not bound by the bond unless this liability. condition be fulfilled (c). However, where there are more than one surety on the face of a deed, it does not follow that one is not bound by his signature unless the others sign. That is not the law, and unless either (2) Ikin ^: Brook, 1 B. & A. 124. (a) 13 L. T. 280. (b) Bolt V. Cozens, 18 C. B. 673. (c) Bonser v. Cox, 4 Beav. 379 ; Evans v. Bremridge, 2 K. & J. 174; 8DeG., M. & G. 101. (1387) 154 THE LAW OF 6UAKANTBES. To relieve surety, omission by another to execute an instrument must amount to a breach of a condition precedent. the parties expressly stipulated that one surety should act be bound unless the others were, or the deed was delivered as an escrow, the omission of one surety to sign would not relieve the others from liability (d). A very good example of the rule, that a surety- ship may be made dependent on the execution of a deed by others, is afforded by the well-known case [*195] *of Emmet v. Dewhurst (e). There W. D., by indenture, agreed to guarantee a certain composition to all the creditors of J. D. who should, before a fixed day, execute a release of their debts. The plaintiff, who was a creditor of J. D., did not execute by the time named, but insisted that this delay had taken place in consequence of an arrangement entered into between him and the agent of W. D., the effect of which was to bind the plaintiff to accept the composi- tion, but to allow him to postpone his execution of the release. It was held, dismissing a bill filed by the plaintiff against W. D. for specific performance of agreement to pay the composition, that there was no evidence that the agent of W. D. had authority to enter into any new agreement ; that. if such authority had been proved, the agreement being within the 4th section of the Statute of Frauds, any alteration in its terms must have been evidenced by writing ; that the condition in the original agreement not having been performed by the plaintiff, the agreement never took efiect so far as he was concerned, and that in the ab- sence of fraud no parol agreement could be substituted. It should, however, be here observed that it has been decided that a surety, who has executed a bond on the faith of its being executed by the principal debtor also, cannot be released from his obligation on the ground that the principal has never executed it, if the princi- pal has executed an instrument on which the surety may sue him, and become a specialty creditor of his (/). Moreover, where a defence of this kind is relied upon, there must be some evidence, either of an agreement by the plaintiff with the defendant that such co-surety should execute, or that the defendant executed the instrument on the faith of the others doing so. Thus, [*196] *where in an action against a surety the de- fendant had pleaded an equitable plea, founded on the non-execution of the security by ^ co-surety, and it ap- peared that the proposal of another surety came from (d) Coyie v. Elphick, 22 W. E. 541, 544. (e) 3 Mac. &«G. 587. (/) Cooper V. Evans, L. R., 4 Eq. 45. (1388) LIABILITY OF THE SURETY. 155 the plaintiff, and was not at the time made a conditionhj the defendant, it was held that the defence failed (g). In the case of Home v. Ramsdale (h), it was also held that the existence of the alleged condition prece- dent was not made out. In that case the declaration stated that one T. was the lessee of certain tolls, and that one S. and the defendant agreed to join with T. in a bond conditioned for payment of the rent under the lease, and it alleged as a breach that the defendant re- fused to join T. in the bond. The defendant pleaded, first, that at the time of tendering the bond to him, S. had not executed the same, nor was he present ready to execute it jointly with the defendant; secondly, that S. died before the commencement of the suit, and that before his death the bond was not tendered to the de- fendant for execution, nor was he requested to execute it. It was decided that the pleas were bad. Lord Abinger, C. B., thus described the nature of the con- tract: "It is a contract by each of the intended sure- ties to join in the bond with T.,the principal; i. e., to execute the bond in the character of surety. It is not a contract that they shall execute it in the presence of each other, or that if one die the other shall be at liberty to refuse to execute it." Again in Dallas v. Walls (i), the following were the facts: A bank, having advanced certain sums to a company, made a further advance upon the personal security of three of the directors. Five of the guarantors for the amount secured by an earlier bond signed an agreement that they would join the three directors in guaranteeing *repayment [*197] to the bank of the further advance in equal proportions with the three directors. One of the tive who signed this agreement stated by his affidavit that his signature (if he did sign) was obtained "on the express agree- ment and understanding" that the agreement should be signed by all the giiarantors for the sum secured by the bond. It was held that the words " express understand- ing" were utterly unmeaning, and that the Court would never pay any attention to a statement that something was done on an express engagement unless the engage- ment was deposed to in a manner which was admissi- ble in evidence. {g) Traitl v. G-ibhons, 2 F. & F. 3.=58. See also Austin v. How- ard, 7 Taunt. 2S ; Cumberlege v. Lnwsnn, 1 C. B., N. S. 709; but see Barry v. ilcrroney, 8 Ir. C. L. R. 554. m 9 M. & W. 329. (i) 29 L. T. E. 599. And see Dodge v. Pringle, 29 L. J., Ex. 115. (1389) 156 THE LAW OF GUARANTEES. Thirdly. Thirdly. The nature of the surety's liability having Ho\v surety's been indicated, and when it is that such liability arises, liability may jj. jg j^^^ necessary to consider haw such liability may oe eniorcecl. , j. j ■ . ^i, . be enforced against the surety. The liability It is important to bear in mind that the surety is en- must be titled to have the liability proved as against him in the proved same way as against the principal debtor. Therefore, surety in ^'^ *^^ absence of special agreement, a judgment or an same way as award against a principal debtor is not binding on the against prin- surety, and is not evidence against him in an action by cipal debtor, the creditor (A;). And, on a guarantee to pay for goods sold and delivered to a third person, what such person has said respecting the goods sold to him is not evidence to charge the person giving the guarantee; but inde- pendent proof must be given of the delivery of the goods (I). Action the In the majority of cases, of course, the creditor, as usual way of plaintiff, seeks to enforce his liability by means of an enforcing action against the surety as defendant, liability ^^ ^^ aclion brought for this purpose, one of the first things which, before the passing of the Judicature Act, had to be considered was the form of action to be [*198] adopted. *With regard to this, it was held, that the surety must be sued specially on the guarantee, and not on the common counts (n). However, where, on the trial of an action upon a guarantee for the payment of work done for a third person, the plaintiff at first shaped his case upon a guarantee, but afterwards re sorted to the commop counts, and made out the defend- ant's liability as a principal, and recovered a verdict on those counts, it was held that the verdict could not be disturbed (o). So, also, in Wilson v. Marshall (p), where a verbal guarantee was given for the supply of goods to a third person, and, subsequently, to the sup- ply of the goods, the defendant admitted his liability under the guarantee, it was held that the plaintiff was entitled to recover on accounts stated. Plaintiff may It is now provided bv the Eules of the Supreme now proceed Court, 1883, that where the plaintiff seeks only to re- Buretv bv cover a debt or liquidated demand in money payable by specially in- the defendant, with or without interest, arising on a (fc) ExpaHe Young, In re Kitehner, 17 Ch. Div. 668; 50 L. J., Ch. 824; 45 L. T. 90, following the American case of Douglass v. Howland, 24 Wendell, 35. U) Evans v. Beaitie, 5 Esp. 26. {n)Minea v. SchuHhorpe, 2 Camp. 215. See also Jonesv. Fleming, 7 B. & C. 217. (o) Edge v. Erost, 4 D. & E. 243. (p) 15 Ir. C. L. E. 467. (1390) dorsed writ. LIABILITY OF TUB SURETY. 15T gaarantee, whether unrler seal or not, where the claim against the principal is in respect of a debt or liquidated demand only, the writ of summons may, at the option of the plaintiff, be specially indorsed with a statement of his claim, or of the remedy or relief to which he claims to be entitled. Such special indorsement shall be to the effect of such of the forms in Appendix C, sect. 4, as shall be applicable to the case (q). Where the writ is specially indorsed, it is provided that no further statement of claim shall be delivered, but the indorsement on the writ shall be deemed to be the statement of claim (r). After the defendant has ap- peared to such a writ, the plaintiff may make summary application for judgment in manner provided by Ord. XIV. of the *Supreme Court Eules 1883. The [*199] defeadaat may, however, show cause why judgment should not be signed and obtain leave to defend. Where, in an action against a surety on a specially in- dorsed writ, it was not shown that the debt had been acknowledged by the principal debtor, or that particu- lars had been furnished to the defendant, or that he had admitted his liability, it was held that the defend- ant might reasonably call on the plaintiif to prove his claim, and should be allowed to defend without paying money into court or giving security (s). In cases where the plaintiff does not or cannot pro- ceed against the surety by means of a specially in- dorsed writ the statement of claim must be framed in accordance with the rules of pleading contained in the Supreme Court Rules, 1883 (i). As regards the question, who must be joined as plain- Parties to tiffs or defendants in an action upon a guarantee, the actions on following principles and decisions are of importance : — guarantees. First, as regards the persons who may enforce a The plaintiffs guarantee, that is to say, under ordinary circumstances, to action on a the plaintiffs (u). It has been decided that where the guarantee, interest of persons in a guarantee is actually joint, but in terms, is joint and several, the action must be brought in the names of all the persons to whom the guarantee (g) Ord. Ill, 1'. 6. And see Jud. Act, 1875, App. C. s. 4, Forms 10 and 11. (r) Supreme Court Rules, 1883, Ord. XX. r. 1 (a). (s) Lloyd's Banking Co. v. Ogle, 1 Ex. D. 262; 45 L. J., Ex. 406; 34 L. T. 584; 24 W. R. 678. {t) See Jud. Act, 1875, App. C. s. 4, Forms 10 and 11. («) Ord. XVI. of the Supreme Court Rules, 1883, governs the subject of parties to High Court actions. (1391) 158 THE LAW OF GUARANTEES. was given (v). In an action by persons, jointly inter- ested in a guarantee, it is not necessary that, as between themselves, their interest in the sum sought to be [*200J *recovered from the surety should he joint; but, as between the plaintiffs and defendants, the damages to be recovered under the instrument must be joint (x). And, on the one hand, it seems that where a guarantee is addressed to, among other persons, one who has no interest whatever in the subject matter guaranteed, such person need not be joined as a plaintiff. Thus, in Place V. Delegal (y), E., as attorney for the plaintiifs, who were executors of M., sold an estate, to a share of the proceeds of which W. was entitled as legatee of M. The defendant claimed W.'s share of such proceeds under an agreement with VV. Thereupon the plaintiffs paid the amount to the defendant on receiving from him a guarantee addressed to E., and also to the plain- tiffs as executors of M., and undertaking to indemnify them, and each of them, against any action by W. It was held, that the plaintiffs might sue on this guaran- tee without joining E. On the other hand, moreover, persons who are actually interested in the subject-mat- ter of the guarantee, but to whom it is not addressed, need not be joined as plaintiffs in an action brought against it. Thus, in Agacio v. Forbes (z), the plaintiff was a member of a partnership, and in consideration of the plaintiff's undertaking not to sue B. & Co., who were debtors to his firm, the defendant gave a guaran- tee to the plaintiff. It was held, that the contract being entered into with the plaintiff personally upon his undertaking not to sue B. & Co., it constituted a personal agreement, and that the plaintiff was entitled to sue the defendant in his own name without joining his partners as plaintiffs in the action. The defend- Next, as regards the persons against whom a guar- antstoaction ant.ee may be enforced, that is, under ordinary circum- on a guaran- stances, the defendants. It sometimes occurs that a ^^' [*201 ] *guarantee which, "at first sight, would appear joint, is really joint and several. Thus, in Fell v. Gos- lin (a), the plaintiffs sued the defendants jointly upon (u) Pughv. SIrinfffield, 3 C. B., N. S. 2. The Supreme Court Rules, 1883, Ord. XVI. v. 1, provide that all persons may be joined as plaintiffs in whom the right to any, relief claimed is alleged to exist, whether jointly, severally, or in the alternative. (x) Pugh V. Stringfield, 4 C. B., N. S. 364. ly) 4 Bing. N. C. 426. And see Palmer v. Sparshott, 4 M. & J. 137. (z) 14 Moore, P. C. C. 160. (a) 7 Exeh. 185. See also Collins v. Prosser, 1 B. & C. 682. And see Palmer v. Sparshott, 4 M. & J. 137. (1392) LIABILITY OF THE SURETY. 159 the following guarantee : " In consideration that you will sell to Mr. F. the distillery situate at, &c., and will take Mr. F's acceptance, to be dated 29th September, 1849, for 4:001. (the amount of the purchase-money), and interest payable at six months after the date, we undertake and guarantee that the said sum of 400?. and interest shall be duly paid to you when the said accept- ance arrivea at maturity, in the proportion of 2001. each." It was held, that the defendants were severally liable to the plaintiff to the extent only of 200Z. each. Again, in the Irish ease of Armstrong v. Ca/w7Z(6), where A., as principal, and three sureties, B., C. and D., executed a bond to E. for the fidelity of A. in certain dijties for which he was employed by E., the bond was in the following form: " We, A., R, G. and D., are held and firmly bound to E in the sum of 50/. each, to be paid to E , his executors, administrators and assigns ; to which payment well and truly to be made, we hereby bind us and each of us, our and each of our heirs, ex- ecutors and administrators, and every of them by these presents." It was held that the bond was the separate bond of each obligor, binding each to pay the sum of hOl. in the event of default by the principal; and that, therefore, the payment of 50Z. by E., one of the obligors, after breach, was no answer to an action on the bond against another obligor, 0. The plaintiff may now, at his option, join as defend- who may ants to the same action all or any of the persons sever- now be .joined ally, or jointly and several!}', liable on any one contract, ^® defend- including parties to bills of exchange and promissory ^^ ' notes (c). *It is now necessary to consider how far. the [*202] Right of set- liability of a surety can be enforced against him by °^ founded way of set-off. For, although the persons entitled to y^°° ^^^ the performance of a guarantee usually seek to enforce antee. it as plaintiffs, it, in some cases, happens that they wish to avail themselves of their rights under the guarantee, by way of defence to some action brought by the person liable as surety. And it then becomes important to considor whether rights existing under a guarantee can be enforced against a surety by way of set-off. Formerly, where a mere Hability under a guarantee existed on the plaintift''8 part, such mere liability could not have formed the subject of a set-off (d). (J) Ir. L. R., 6. Q. B., C. P., and Ex. Divs. 440. (c) Supreme Court Rules, 18S3, Ord. XVI. r. 6. (d) Crawford v. Stirlinq, 4 Eap. 207; Morley v. Inglis, 4 Bing. tJ. C. 58; 5 Scott, 314, 333. (1393) 160 THE LAW OF GUARANTEES. However, it was decided in the case of Hutchinson v. Sydney (e), that though a mere liability under a guar- antee could not be set off, yet money that had actually been paid for another under an indemnity might be set ofP as money paid to the use of the plaintiff (/). Set-off now The whole law relating to the right of set-off is now regulated by regulated by the Judicature Rules (g), which extend the Judicature rigi^t of set-off to cases in which it was not formerly ° '^^' available. Thus, in the case of pecuniary claims, the power of set-off is no longer, as was formerly the case, limited to debts. Claims for unliquidated damages may now be set off against debts, and debts against damages, and damages against damages (h). Moreover, the Judicature Act likewise enables the defendant to set up a counterclaim, which, as distinguished from a set-oif, is the assertion of a separate and independent demand; but does not answer or destroy the original claim of the plaintiff (i). Fourthly. [*203] * Fourthly. Having now shown what is the The extent of nature of the surety's liability, when it arises, and how liability *' *® enforced, it remains to consider the question, what is the extent of the surety'' s liability ? "Was the same Upon this point it is to be observed, that the liability both at law gf the surety was always, it seems, the same both at equity. '^^'^ ^nd in equity (fc). , Notneces- •'•*' ^^ obvious that the extent of the surety's liability sarily co- must vary in each case. Sometimes it is co-extensive extensive with that of the principal debtor. Sometimes it is not with that of co-extensive. The surety, however, can never be obliged debto?^ to a greater extent than the principal debtpr. He may be obliged for less than the debtor ; but one who obliges himself in favour of another, for more than the other is obliged for, is not a surety {I), at all events, so far as the excess is concerned. Where the lialaility is co- extensive the question as to the extent is a very simple one. For the measure of the surety's liability is the loss sustained by the creditor through the default of the principal debtor. A good instance of this kind is furnished by the case of Oastleyv. Round (m). There fe) 10 Exch. 438, 94 L. Ji, Ex. 25. (/) As to right of set-off possessed by surety, see post, p. 289. h) Kules of Supreme Court, 1883, Ord. XIX. r. 3. Ui) Wilson's Judicature Acts and Rules, 4th ed. pp. 249 rf seq. («■) County Court Practice, by G. Pitt-Lewis, assisted by H. A. de Colyar, 2nd ed. Vol. I. p. 347. And see Siooke v. Taylor, 5 Q. B. D. 569. (k) Per Lord Eldon in Samuel v. Howarth, 3 Meriv. 277, 278. u) Theobald on the Law of Principal and Surety, pp. 3, 66. (m) 11 W. E. 518. (1,1,94) LIABILITY OF THE SUKETY. 161 the plaintifp entered into a sub-contract witk one B., a government contractor, to supply B. with certain articles within the period stipulated in a certain government contract. In the government contract there were pen- alties and deductions for delay in delivery, but these were not contained in the sub-contract. The defend- ants guaranteed the plaintiffs "the payment of the value " of the articles thus to be supplied by the plain- tifPs to the government contractor "so soon as he should have received payment from the government." The plaintiffs supplied the goods, but did not supply them within the time named in the government contract held by B., and there was delay *in delivery under [*204] both contracts. The government, however, did not exact any penalties, and paid B. (their contractor) at the full contract price. Obviously by accepting and keeping the goods supplied, B. became liable to the plaintiffs to pay for them, subject perhaps to any ques- tion with the government. Accordingly it was held that B. was liable to pay the plaintiffs the full contract price under their contract with him, and that, therefore, the defendant was liable on his guarantee to the same amount. In many cases, however, it is by no means obvious. Division of or agreed, that the liability of the surety and of the the subject principal debtor are co-extensive. And, in such cases, under con- it often becomes a matter of some difficulty to deter- ^^ ^"^^ °°' mine the exact extent of the surety's liability. The most convenient mode of discussing the subject will probably be to separately consider — (I.) As from what time a guarantee comes into operation, and the liability of the surety commences ; (II.) To what things, and how far, a guarantee extends ; (III.) How long a guarantee continues in operation; (IV.) The liability of the surety for fraud committed by himself ; (V. ) The effect of the surety's liability of a change in constitution on persons to or for whom the guaran- tee is given; (VI.) The effect of bankruptcy of the surety. First, then, as to the time from which a guarantee (I.) From comes into operation and the liability of the surety what time commences. This depends upon the agreement made'^ guarantee by the parties themselves. A guarantee only operates operation, as from the time at which the parties intended that it should do so. Thus the liability of a surety for the good behaviour of a third person in an office extends only to defaults committed after such third person has 11 (1395) 162 THji i,AW OF GUARANTEES. been legally appointed to the office (n). ^nd, even if the [*205] *condition of surety bonds recite the due appoint- ment of such third persons to the offices contemplated, the sureties are not estopped by these recitals from showing that there had been no complete appointment (o). • But. upon the other hand, a guarantee for the payment of goods supplied to a third person, if given on the 7th, will cover goods contracted for on the 6th, but not delivered till the 7th, and then supplied on the credit of the guarantee {p). (II.) To what It is now, in the second place, necessary to considei things, and to what things, and how far, a guarantee extends, how far guar- Now, in some cases, by the instrument of guarantee extends itself, a limit is placed upon the extent of the liability -rj^ +, of the surety. Where this is done the surety is liable guarantee up to such amount, but of course not beyond it. The imposes a rule as laid down by a modern text- writer and approved limit on by \}^q courts is this : '■ If a bond or guarantee is given surety s hj & surety to secure the repayment of advances of liability. money to the principal, provided such advances do not exceed iti the whole, at any one time, a certain limited amount, the proviso protects the surety from being answerable beyond the amount named, but it does not render the obligation void if the advances go beyond it, unless that clearly appears to have been the intention of the parties " (g). Difficult Where a surety gives a continuing guarantee, limited sometimes to in amount to a certain fixed sum, the question some- determine times arises whether the suretyship is in respect of the ^'TiSiitee '^^"^ ^^^^' ^^^^ ^ limitation on the liability of the Hmited in surety, or is applicable to a part only of the debt co- amount is extensive with the amount of the guarantee. On this applicable to [*206J question the *following principles were laid whole debt down in Ellis v. Emmanuel (r), namely: where a surety or to »art . ,. ■ i T .^ n • ■ x thereof. gives a continuing guarantee, limited in amount, to secure the floating balance which may from time to time be due from the principal to the creditor, theguar- (m) Kepp V. Wiggeti, 10 C. B. 35. See also Nares v. Bowles, 14 East, 510 ; Webh v. James, 7 M. & 1V. 279 ; Holland v. Lea, 9 Exch. 430. (o) Kepp V. Wiggett, nbi supra. f Ip) Simmons v. Keating, 2 Stark. 426. (}) Addison on Contracts, 8th ed. p. 656. Approved of in Laurie v. Scholefield, L. R., 4 C. P. 622. See also Seller v. Jones, 16 M. & "W. 112; Gee v. Pack, 33 L. J., Q. B. 49 ; Backhouse v. Hall, 6 B. & S. 507 ; 34 L. J., Q. B. 141 ; 12 L. T. 375 ; 13 W. E. 654 ; Parker v. Wise, 6 M. & S. 246 ; Gordon v. Bae, 8 Ell. & Bl. 1087. (r) 1 Ex. Div. 157 ; 46 L. J., Ex. 25 : 34 L. T. 453: 24 W. E. 832. (1396^ LIABILITY OF THE SURETY. 163 antee is, as between the surety and tlie creditor, to be Principles construed {prima facie, at least) as applicable to a part regulating only of the debt co-extensive with the amount of the *^ subject, guarantee. But a guarantee, limited in amount, for a ^^^ ''■ debt already ascertained, which exceeds that limit, is not primd facie to be constraed as a security for part of the debt only ; it is a question of construction on which the Court is to say whether the intention was to guarantee the whole debt with a limitation on the liabil- ity of the surety, or to guarantee a part of the debt only (s). As regards the liability of a surety for the payment Surety for of calls which may be made on shares in a company, it payment of has been decided that he is not liable to be placed on '^^^^ ^°*^ the list of contributor ies of the company (t). *^" n u ly. In other cases, however, — indeed, probably in the Surety never majority of cases, — either no limit to the surety's lia- liable, ex- bility is laid down at all, or, the limit mentioned is only ceptmg for a pecuniary one, and is of no assistance in determining +w,!!^h^de- whether losses which have occurred are of a class in- fault guaran- cluded within the guarantee or not. In such cases, the teed against, question, whether or not the surety is liable, has to be determined by general principles. And the great lead- ing principle, which applies to such cases, is, that a surety for the performance of a contract of a third *person can only be made liable for what is [*207j strictly loss sustained by breach of the contract (m). Accordingly, this principle is applied in determining whether a given loss is covered or not as answering the description of being what may properly be termed the principal thing guaranteed against, and the very sub- ject-matter of the contract. For instance, a surety for Surety for the good behaviour of another in an office or employ- '^^"'^l'*''' ^ ment is only liable to answer for those defaults — or f^ ^^ office rather for breaches of those duties only — which are liable only strictly within the scope of the office or employment. for default Thus, in Leigh v. Taylor (x), it was held, that, as an ^^^^"/""P® overseer has not, by virtue of his office, any authority (s) And see Hohson v. Bass, L. R., 6 Ch. App. 792; Ex parte BushfoHh, 10 Ves. 409 ; Paley v. Field, 13 Ves. 435 ; Bardwell v. Lydall, 7 Bing. 489 ; Ex parte Holmes, Mont. & Ch. 301 ; Gee v. Pack, 33 L. J., Q. B. 49 ; Thornton v. iWKewan, 33 L. J., Ch. 69*; Gray v. SecUam, L. E., 7 Ch. 680. {f) In re Bank of Rindostan, China and Japan, Harrison's case, L. R., 6 Ch. App. 286. (tt) Warre v. Calvert, 7 A. & E. 154 ; King v. Norman, 4 C. B. 884. {x) 7 B. & C. 491. See also Napier v. Bruce, 8 C. & F. 470; Pattison v. Guardians of Belford Union, 1 H. & N. 523 ; 26 L. J., Ex. 115 ; Jcphson v. Hawkins, 2 Scott, >r. R. 605. (1397) of ofdee. 164 THE LAW OP GUARANTEES. to borrow money, therefore, in an action against a surety on a bond, conditioned for the overseer's faith- fully accounting for all sums received by him by virtue of his office, the surety is not liable for a sum lent to the overseer, and applied by him to parochial purposes. Upon the other hand, the liability of the surety extends to transactions, which, in the natural and usual order of things, take place on the faith of the guarantee. Thus where the defendant entered intoa bond as surety for the due and faithful performance by one C. of his duty as clerk to a provincial bank, and C. being sent by the manager of the bank, at the request of a custo- mer, to his residence about eleven miles distant from the bank, for the purpose of receiving a large sum of money to be placed to his account — a considerable por- tion of it being in gold and silver — on his way back dropped the money from his pocket and lost it, it was held that the money was received by C in the course of his employment as clerk to the bank ; that the de- [*208] fendant was liable *as surety, notwithstanding the finding of the jury that it was not the custom of bankers in that part of the country to send for their customers' money in the manner adopted ; and that the loss of the money was primO, facie evidence of gross negligence on the part of 0. {y). So, in Ogden V. Aspinall (z), A. gave B. the follovring guarantee: — "I have given C. an order to purchase cotton, and, as it may be to my advantage to have his bills on me negotiated through your house, I have in such case to request that you will honor his drafts to the amount of those we may send to you for sale, on my account, and I engage that his bills on me, so transmitted, shall be regularly accepted and paid. " It was held, that, under this guarantee, B. was justified in honouring C.'s draft to the amount of a bill , drawn by C on A., and repre- sented by 0. to B. a^ being drawn on account of A., though such bill was in fact drawn by C. on his otim account. And, on the same principle, it is settled that the creditor is entitled to recover loss actually sus tained, although he may have entered into a compro- mise of the liability. This was settled by Smith v. Conipton (a), where it was held that, in an action on a (y) Melville v. Doidge, 6 C. B. 450. See also Saunders v. Taylor, 9 B. & C. 35 ; Homshy v. Slack, 1 Ir. C. L. E. 126. [z) 7 D. & E. 637. See also Pattison v. Guardians of Belford Union, 1 H. & N. 533; Loveland v. Knight, 3 C. & P. 106; Qwynne v. Bumell, 7 CI. & F. 572. (a) 3 B. & Ad. 407. See also Lewis v. Smith, 9 C. B. 610. (1398) LIABILITY OF THE SURETY. 165 general guarantee, the only efPect of a party receiving the guarantee compromising a suit commenced against him without notice to the surety is to let in proof on his part, that the compromise was improvidently made, and it lies on him to establish that fact. The doctrine, that the principal is liable for what is Liability of strictly loss caused by the default guaranteed against, surety for is also applied to what may, perhaps, be called matters incidental incidental to the principal subject-matter of the guar- ' ' antee. *Thus, upon the one hand, whenever the [*209] For interest, principal debtor was liable to pay interest on what ho owed the creditor, his surety is also liable, on his de- fault, for interest. So, a party who guarantees the due payment of a bill of exchange (which is an instrument carrying interest by law) by the acceptor, is liable for interest upon it if it be not paid when due (&). Where the defendant agreed to indemnify the plain- For sum paid tiff against all liability which he might incur in giving in pursuance a certain bond to the Treasury, and the plaintiff, under °^^ statute a statute passed subsequently to the giving of the S^rantee ^ indemnity, made a payment to obtain the cancelling of given, the bond, it was held that such payment was covered by the indemnity of the defendants (c). Upon the other hand, it sometimes happens that a For costs in- person to whom a guarantee has been given, incurs curred by costs by reason of his having enforced or resisted legal creditor, proceedirgs. The question then arises, is the surety liable for such costs ? Can their amount be recovered from him ? Upon this point, in Gillett v. Rippon (d), Lord Tenterden, C. J., said : "A man has no right, merely because he has an indemnity, to defend an ac- tion and to put the person guaranteeing to useless ex- pense" (e). And this principle was applied and acted upon in the case of Colvin v. Buckle (/). There, in consideration of a further advance by the plaintiffs to G., on his consignment, the defendants undertook to reimburse them the amount on demand, with interest, in the event of the plaintiffs finding it necessary to call upon the defendants to do so, either from the state of G.'s pending account with the plaintiffs, *or [*210] (6) Ackermann and others v. Ehrensperger, 16 M. & W. 99. (c) Webster v. Peire, 4 Ex. Div. 127. {d) 1 M. & M. 406; Spark v. tieslop, 1 El. & El. 563. And see Caldbeck v. Boon, 7 Ir. C. L. E. 32; Howard v. Lovegrove, L. R., 6 Ex. 43; Baker v. Jarrati, 3 Bing. 56. (e) See also Bonneberg v. Falkland Island Co., 17 C. B., N. S. 1; Fisher v. Val de Travers Asphalte Paving Co., 1 C. P. D. 511. (/) 8 M. & W. 680. (1399) 166 THE LAW OF GUARANTEES. Credit must be given by creditor for sums paid by the principal debtor. (III.) How lon^ a guarantee continues in operation. Necessary sometimes to determine whether guarantee continuing or not. Two classes of continuing guarantees. First class of continuing guarantees. from any other circumstances. On the arrival in Eng- land of the consignment on which the advances had been made, the East India Company sold the goods consigned, and out of it paid the freight, and in conse- quence of conflictin'g claims from the assignees of G. (for G. had become a bankrupt), filed an interpleader bill and paid the balance of the proceeds into Court Proceedings, at law and equity, were carried on between all the above parties, for several years, and ultimately the plaintiffs were obliged to pay the costs of the owner of the vessel. It was held that the defendants could not be made liable, under the guarantee, for the ex- penses incurred by the plaintiffs in the law proceedings. While the surety is thus held liable "for all losses, which are strictly losses arising from his principal's de- fault, he, of course, cannot be held liable for anything beyond the actual and real extent of such losses. Con- sequently, the creditor is bound, in estimating the lia- bility of the surety to him, to give the surety credit for what the principal debtor may have paid towards the liquidation of the amount due to the creditor. Thus, where the creditor, with the privity of the surety, ac- cepts from the principal debtor a composition on the whole of the debt due, the surety is entitled to a pro- portional reduction of his own liability (g). The third matter to be considered, in inquiring into the extent of the surety's liability, is the question, How long a guarantee continues in operation ? It is some- times by no means easy to determine what is the extent, in point of time, of the surety's liability. Thus, sup- posing goods to be supplied, or advances made to a third person, on the faith of a guarantee, the question often arises. Is the guarantee intended as a security for more than the^rsi advance or supply ? Is it a continu- ing guarantee or not? [*211] *The cases in which this question, whether a guarantee is a continuing one or not, most commonly arise, may be considered as being of two classes. The first class of cases consists of ordinary mercantile guar- antees for a current account, either for goods sold, or for money advanced, or some consideration of the like nature. The second class of cases arises where guar- antees have been given for the good behaviour of a per- son in some office or employment. With regard to the first class of cases, no fixed rules have been laid down for determining whether a guar- L;ii}..U, 7 Bing. 489. See also Gee v. Pack, (g) See Bardswell • 33 L. J., Q. B. 49. (1400) LIABILITY OF THE SUKBTY. 167 antee is to be considered a continuing one or not. Ail, therefore, that can be done is to give a selection from some of the more important of the decided cases as they are found in the reports. In such cases the Ian- Ordinary guage of one guarantee affords little or no guide to the mercantile construction .of another which is given under other and guarantees, different circumstances (h). Probably this is the rea- son that no fixed rules are to be fotind with regard to them. In the following cases the instrument was held to be Cases in a continuing guarantee. ^^^'^^-h'^T't In Laurie v. Scholefleld (i), E. & Co. being about to ^e continu- open an account with the Union Bank, the defendant ing. and one Black signed the following guarantee : — Laurie r. "In consideration of the Union Bank agreeing io Scholefleld. advance, and advancing, to B. & Co. any sum or sums of money they may require, during the next eighteen months, not exceeding in the whole 1,000Z., we hereby, jointly and s,everally, guarantee the payment of any such sum as may be owing to the Bank at the expira- tion of the said period of eighteen months." 1,000Z. was placed by the Bank to the credit of R. & Co.'s drawing account, and B. & Co. were debited with 1,000Z. in a loan account. B. & Co. from time to time drew cheques against, and paid money to the credit of. their drawing account. Over *l,000t was thus'paid in [*212] by E. & Co., and they were not debtors on the drawing ac- count when it was finally closed. The loan account remained unaltered. The Bank sued the defendant for IjOOOZ. on the guarantee, and after the commencement of the action. Black paid the Bank 500Z. in discharge of his liability. The defendant did not plead this payment. It was held that the guarantee was a con- tinuing one, and that the defendant's liability was not discharged by the payments made by E. & Co. It was held, also, that (by rule 14 of Hilary Term, 1853), the defendant could not, in the absence of a proper plea of payment, give the payment by Black in evidence in mitigation of damages ; and that the Bank was there- fore entitled to recover the full amount claimed; but that the Court having power to amend the pleadings, would reduce the verdict by 500Z. on payment by the defendant of the costs of the rule. In the case of Heffleld v. Meadows (k), W. York's Heffield v. ■ Meadows. (h) Per Bovill, C. J., in Coles v. Pack, L. R., 5 C. P. 65, 70. (i) L. E., 4 C. P. 632. (fc) L. R., 4 C. P. 595. But see Walker v. Hardman, 11 CI. & F. 258; 11 Bligh, 299. (1401) 168 THE LAW OF GUARANTEES. father had failed in hia business of a butcher, and was succeeded by his son, W. York, who had been supphed, from time to time, as his father had been, with stock, by the plaintiff, who was a grazier. At the time the guarantee was given, W. York owed the plaintiff 91. 9s. 9d, and wished to purchase from the plaintiff some stock for 911. The plaintiff, not wishing to trust W. York to such an extent, went to the defendant and asked him to give him a guarantee, saying, that if he would give one for bOl. he would still keep supplying W. York, as he had supplied York's father. The de- fendant consented, and signed the following guarantee: — "£50. I, John Meadows (the defendant), of Bar- wick, in the county of Northampton, will be answerable for £50 sterling, that William "^ork, of Stamford, butcher, may buy of Mr. John Heffield (the plaintiff), of Donnington." The defendant desired the plaintiff [*213J not *to let W. York know that he had given this guarantee. The plaintiff delivered the stock to W. York accordingly. Payments were subsequently made by W. York to the plaintiff, to an amount exceeding 91Z. It was held, that the surrounding circumstances showed that the object the parties had in view was to keep up W. York in his business of a butcher, and that, as the language of the guarantee was general, and capable of meaning that the defendant intended to be answerab'e for goods, at any time supplied, to the extent of 50Z., it was a continuing guarantee. Willes, J., in his judg- ment, says: "The question in this case is, whether the guarantee declared on was a continuing guarantee for bOl, so as to be a security to the plaintiff to that extent for any balance which might become due to him in the course of his dealings with York (l), or whether the security was limited to a single transaction between the plaintiff and York. It is obvious that we cannot decide that question, upon the mere construction of the docu- ment itself, without looking at the surrounding circum- stances to see what was the subject-matter which the parties had in their contemplation when the guarautee was given. It is proper to ascertain that, for the par- pose of seeing what the parties were dealing about, not for the purpose of altering the terms of the guarantee by words of mouth passing at the time, but as part of the conduct of the parties, in order to determine what was the scope and object of the intended guarantee. Having done that, it will be proper to turn to the lan- (l) The principal debtor. (1402) LIABILITY ^n' TUE SURETY. 169 guage of the guarantee to see if that language is capable of being construed so as to carry into effect that which appears to haye been really the intention of both par- ties." And Montague Smith, J., in the same case, said: "The consideration is defectively stated. It does not show in what the supply is *to consist. We [*214] naay, therefore, look at the surrounding circumstances, in order to see for what it was given, and to what trans- actions or dealings it was intended to apply, not to alter the language, but to fill up the instrument where it is silent, and to apply it to the subject-mattfer to which the parties intended it to be applied." In Coles V. Pack (m), in April, 1867, in order to in- ColeiY. Pack. duce the plaintiff to continue his dealings with one F., who was then largely indebted to him, the defendant gave the plaintiff a guarantee as follows: — "Holborn Wharf, Chatham, April 3, 1867. "Memorandum. In the event of your supplying Mr. D. French, of Chatham, any coals, during the next twelve months, from the 1st April last past, I do hereby guarantee the payment to you of the amount, for the time being, due from Mr. D. French to you, for coals sold by you to him. This guarantee to expire at the end of twelve ra.onths, viz., 1st April, 1868. (Signed) "r. H. Pack." Before the expiration of the twelve months mentioned in the above guarantee, viz., on the 28rd of July, 1867, the debt due from F. to the plaintiff having greatly increased, and the plaintiff pressing for a settlement, the defendant gave him a further guarantee, as follows: "Ditton, July 23rd, 1867. " To E. R. Coles, Esq. "Whereas Mr. D. French of Chatham, Kent, coal merchant, is and stands indebted to you, the said E. B. Coles, in the sum of 2,205t 8s. 9d., upon an account this day stated and settled between you and the said D. French, in addition to his liability upon two certain acceptances of mine to his drafts, each for 750^., dated 8rd July, 1867, and payable three and four months *after date, and respectively indorsed to you [*215] by the said D. French : And whereas you are pressing for the immediate payment of the said sam of 2,2052. 3s. 9d. : Now, I do hereby, in consideration of your (m) L. E., 5 C. P. 65. (1403) 170 THE LAW OF GUAKANTJSES. forbearing to take immediate steps for the recovery tjf the said sum, guarantee the payment of, and agree to become responsible for, any sum of money for the time being, due from the said D. French to you, whether in addition to the said sum of 2,205Z. 3s. 9d. or no. (Signed) "T. H. Pack." It was held that this was a continuing guarantee, un- limited both as to time and amount (w). Burgess Y. In Burgess v. Eve (o), a father, being desirous of Eve. obtaining advances for his son from a bank, gave the son a promissory note for 2,000Z., and gave the bank the following agreement under seal: — " To W. McKewan and W. J. Norfolk, Eaqrs., public officers of the London and County Banking Company. "Gentlemen, — In consideration of your discounting for Mr. William Henry Maeers my promissory note to him for 2,000?., dated this day, and payable four months after date, and of the sum of 5s., the receipt of which I hereby acknowledge, I deposit with you the several documents mentioned in the schedule hereunder written, which I agree shall remain with you, or other the public officers, for the time being, of the said company, as a security for the payment to you, or other 3uch public officers as aforesaid, of all moneys due, or to become due, from him to the said company, of whatsoever « members or proprietors it shall from time to time con- sist, on any account whatsoever, including charges for interest, commissioQ and all costs, charges and expenses which you may incur in enfprcing or obtaining payment [*216] *of such money, or in realizing this or any further security. And I agree to pay you, or such public officers aforesaid, upon demand, all such money. And I hereby charge the hereditaments and premises comprised in such documents respectively and all fix- tures now or hereafter therein, with the payment thereof." It was held that the payment was not limited to the 2,000Z., but was a continuing guarantee for all money already due, or which should become due from the son to the bank. Wbodv. In the case of Wood v. Priestner (p), the guarantee Priestner. ^as as follows: "In consideration of the credit given by H. G. G. & Co. to my son, for coal supplied by them (m) The able judgment of Bovill, C. J., in this case is well worth perusing. (o) L. R., 13 Eq. 450. Ip) L. E., 2 Exoh. 66. (1404) LIABILITY OF THE SUEETY. 171 io him, I hereby hold myself responsible as a guarantee to them for the sum of lOOl., and in default of his pay- ment of any accounts due, I bind myself by this note to pay to the H. G. C. & Co., whatever may be owing to an amount not exceeding the sum of 100/." When the guarantee was given, the defendant's son owed the plaintiff a debt of more than lOOZ. for goods supplied. It was held to be a continuing guarantee. Kelly, C. B., , in delivering judgment, said: "I think this is clearly a continuing guarantee. The question in these cases de- pends not merely on the words, but when the words are at all ambiguous, requires a consideration of the circum- stances to aid the construction." In Simpson v. Manley (q), the guarantee was as fol- SimpaonY. lows : — Manley. "May 26th, 1830. "Our relation, Mr. Thomas Manley, having intimated to us that he is about to make some purchases of goods from you, we beg to say, that if you give him credit, we will be responsible that his payments shall be regularly made to the extent of 1,000Z., from this period to the 1st of June, 1831." *It was admitted by counsel, and stated by [*217] "the court, to be clear, that this was a continuing guar- antee. In Mason v. Pritchard (?'), it was held, that a guar- jtfason v. «,ntee by the defendant to the plaintifP "for any goods Pritchard. he hath or may supply W. P. with, to the amoiint of lOOZ.," is a continuing or standing guarantee to that •extent for goods which may at any time have been sup- plied to W. P., until the credit was recalled, although goods to more than lOOZ. had been before supplied and paid for. In Allan v. Kenning (s), the following -^''«™ v. guarantee was given : " Whereas W. C. is indebted to """*'• you in a sum of money, and may have occasion to make further purchases from you, as an inducement to you to continue your dealings with him, I undertake to guarantee you in the sum of 100?., payable to you in default on the part of the said W. C. for two months." It was held to be a continuing guarantee, and that it was binding on the defendant till the parties came to an understanding that they would be ofP, and that, on default of W. C. for two months, the defendant would imniediately be liable. (q) 2 C. & J. 12. (r) 12 East, 227. See observations on this case in Melville v. Eayden, 3 B. & Aid. 593. (s) 9 Bing. 618 ; 2 M. & Scott, 762. (140.^>) 172 THE LAW OF GUARANTEES. Basiowv. Sennet, Merle v. Welli. Martin v. WHgM. In Bastoww. Bennett (t), the guarantee was as follows r "Londoh, 7th March, 1810. "I hereby undertake and engage to be answerable to the extent of 300i., for any tallow, or soap supplied by Mr. Bastow to France & Bennett, provided they shall neglect to pay in due time." It was held to be a con- tinuing guarantee. Lord Ellenborough, in his judg- ment, says : " The defendant here became answerable for any soap or tallow supplied by the plaintiff to France & Bennett. Without the word any it might perhaps have been confined to one dealing to the amount of 300 i. ; but, as it is actually worded, I am of opinion it remained in force while the parties continued to deal on the footing established when it was given. But L [*218] *think the goods supplied after the new ar- rangement (m) were not within the scope of the guaran- tee, and that the defendant is only answerable for th& unsatisfied balance of the old account." In Merle v. Wells (a;), the guarantee was as follows : — " Gentlemen, — I have been applied to by my brother William Wells, jeweller, to be bound to you for any debts he may contract, not to exceed \QQl. (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 lOOZ. after this, date. "(Signed) John Wells:' It was held to be a continuing guarantee. Lord Ellenborough, in his judgment, said ; "I think the de- fendant was answerable for any debt, not exceeding lOOZ., which William Wells might from time to time contract with the plaintifFs in the way of his business. The guarantee is rtot confined to one instance, but ap- plies to debts successively renewed. If a party means to be surety only for a single dealing, he should take care to say so." In Martin v. Wright (y), the guarantee was as fol lows: "In consideration of your agreeing to supply goods to K., at two months' credit, I agree to guarantee (t) 3 Camp. 221). («) The new .irrangement alluded to was one which altered the credit on which the plaintiff supplied the goods to France & Bennett, substituting for a two months' credit, payment in ready money. (x) 2 Camp. 413. (y) 6 Q. B. 917. (1406) LIABILITY OF THE SURETY. 173 iis present or any future debt with you to the amount of &0l. Should he fail to pay at the expiration of the above credit, I bind myself to pay you within seven days of receiving notice from you."' It was held that this was a continuing guarantee. In The Nottingham Hide, Skin <& Fat Market Co. NotiingJum *(Limited) v. John liottrill and another (z), the [*219] Hide, &c. Co. facts were as follows : The plaintiffs were in the habit ^^^/^,f ^' of holding weekly sales of hides, skins, &c., the course of business being that the goods bought at each sale were paid for in the following week. One Dyson, who had for some time bought skins at these sales, on the .29th of December, 1871, bought to the extent of 34^. 7s. 6d. Having heard that Dyson had executed a bill of sale, the plaintiffs declined to deliver the skins unless the defendants would engage to be responsible for the price. This being communicated by Dyson to the de fendants, the latter on the 1st of January, 1872, tele- graphed to the plaintiffs, " We agree to be answerable for the skins," and on the same day sent them a cover- ing letter, in which, after stating that they had had dealings with Dyson for five years, and had never known anything dishonourable or dishonest in any of his trans- actions, they wrote, " What you have heard was done to protect him from a dishonest tradesman, and will in no way, we hope, be to the injury of hia creditors. Having flvery confidence in him, he has but to call upon us for a cheque, and have it with pleasure, for any account he may have with you." The plaintiffs accordingly sent Dyson the goods, and continued to deal with him down to the 3rd of May, 1872, at which time he was indebted to them in 921. Isi lOd., which he was unable to pay, the defendants, who were the holders of the bill of sale, having seized and sold all his effects under it. It was . held that the defendants' letter of the 1st of January was a continuing guarantee. In his judgment in this case, Keating, J., said: "Each case must, no doubt, depend entirely upon the language used, and the docu- ment must be looked at with reference to the special circumstances under which it is given. Now, what did the writers of that letter of the Ist January mean, and what would the plaintiffs naturally understand from it ? The defendants *were aware of the state of [*220] things between the plaintiffs and Dyson, and sent that letter in order to remove the unfavourable impression the plaintiffs had of Dyson's credit and ability. The («) L. E., 8 C. P. 694. (1407) 174 THE LAW OF GUARANTEES. Mayer v. Isaac. J in ■which guar antee held not to he continuing. Walker v. Hardman. letter does not confine itself to the transaction alluded to in the telegram ; but it goes on — ' Having every con- fidence in him, he has but to call upon us for a cheque, and have it with pleasure, for any account he may have with you ; and when to the contrary we will write you.' What would any man of business understand by that ? The only reasonable construction of the letter, as it strikes me, is this : Our opinion of Dyson is so high, that we are re'ady to become sureties for any ac- count for which he may become indebted to you ; and, if we see reason to change our mind, we will let you know. That amounts to a guarantee, and a continuing guarantee. It was calculated to induce the plaintiffs to give credit to a man to whom they would not other- wise have given it " (a). In Mayer v. Isaac (b), the guarantee was as follows: "In consideration of your supplying my nephew V. with china and earthenw&re, I guarantee the payment of any bills you may draw on him on account thereof to the amount of 200Z." It was held that the guarantee was a continuing one, and that the defendant washable upon it, although, after the guarantee, goods to a greater amount than 2001. had been supplied to and paid for by V. "It contemplates" (says Baron Alderson in his judgment in this case) " the continuance of a supply on the one side, and on the other, a liability for any de- fault during that supply, and then it defines the extent to which the defendant will be bound upon this con- tinuing or running guarantee " (c). [*221] *The following cases have been selected as in- stances of instruments which have been held not to be continuing guarantees. In Walker v. Hardman (d), it was laid down by the House of Lords that where a bond, which, on the face of it, appears to be a simple money bond, is given to secure a sum certain with interest, it must be con- strued, so far at least as regards the surety, as given to secure the debt then existing, and not to cover floating balances. (a) The judgment of Brett, J., in this case will also well repay perusal. (b) 6 M. & W. 605. (c) For other instances of continuing guarantees, see Tanner v. Moore, 9 Q. B. 1 ; Hargreave v. Smee, 6 Bing. 244 ; Williams v. Bawlinson, 3 Bing. 71 ; Hiiclieock v. Humfrey, 5 M. & G. 559 ; Hennikery. Wigg, 4 Q. B. 792. See also Woolleyy. Jennings,^ B. & C. 165 ; Hoad v. Grace, 7 H. & N. 494 ; In re Booth, Browning v. Baldwin, 40 L. T. E., 248 ; 27 W. E. 644 ; Sorlor v. Carpenter, 3 C. B., N. S. 172. (d) 11 CI. & F. 258 ; 11 Bligh, 299. (1408) ' LIABILITY OF THE SURETY. 175 In Nicholson v. Paget (e), the guarantee was in the MchoUony. following -words : — Paget. "Sir, — I hereby- agree to be answerable for the pay- ment of 50Z. for T. Lerigo, in case T. Lerigo does not pay for the gin, &c., which he receives from you, and I will pay the amount." It was held that this was not a continuing guarantee, for that it referred to a particu- lar quantity of gin which the party was to receive from the plaintiff. In Tayleur v, Wildin (/) one M., being yearly tenant Tayleur-r. to the plaintiff on the terms of a written agreement. J^*^*'"- the defendant, in consideration of the plaintiff's con- tinuing M. as such tenant, gave the plaintiff a guaran- tee for " the rent- of the Leese Farm, in the occupation of M." The plaintiff afterwards gave M. notice to quit, but, on the payment of arrears of rent, withdrew it before the expiration of the current year. The next year the rent became in arrear, and the plaintiff sued the defendant on his guarantee. It was held that the old tenancy was determined by the notice to quit ; that the guarantee applied only to the tenancy which ex- isted at the time *when it was given ; and that [*222] the defendant was, therefore, not liable. In Chalmers v. Victors (g), the defendant gave the Chalmers v. following guarantee : — " J. V. hereby engages to be re- Victors. sponsible for liabilities incurred by M. and V. to the extent of 501." At the time the guarantee was given, 4cll was due from M. and V. to the plaintiffs. It was held that the guarantee contemplated future credit, but only to such an amount as, with the existing liability, made up 50Z., and that amount having been paid off by M. and V., it was held that th& guarantee did not cover goods subsequently supplied. Bovill, C. J., in his judgment in this case, says : " It is difficult, if not im- possible, to reconcile all the cases cited. The docu- ments in them vary from each other, and the document in the present case varies from all those that have been cited. Taking the documents simply -without reference to the surrounding circumstances, and reading it in the ordinary sense, it would apply only to past liabilities, and if there were nothing further, the guarantee would be altogether bad, but we are at liberty to look at the facts as they were on the day when the guarantee was given." Byles, J., in the same case, said: "The words of this guarantee are ' for liabilities incurred,' and we (e) 1 C. & M. 48. (/) L. E., 3 Ex. 303. See Holney. Bninskill, 3 Q. B. Div. 495. [g) 16 W. E. 1046. (1409) 176 THE LAW OF GUARANTEES. are to give it a literal construction, unless that would lead to an absurdity, or something plainly alien to the intention of the parties We are asked to extend the words as if they were ' incurred or to be incurred ;' but we cannot do so without manifest rea- son, especially in the case of a surety." Allnutt T. In Allnutt v. 'Ashenden (h), the guarantee given to Ashenden. the plaintiff was follows : — "Messrs. Allnutt & Arbouin, 50, Mark Lane. "Sirs, — I hereby guarantee Mr. John Jennings's [*223] *account with you for wines and spirits to the amount of lOOl. "(Signed) E. Ashenden. " Sittingbourne, April 14, 1838." At the time of the giving of such gua^ntee there was an existing account between Jennings and the plaintiff, upon which the former was indebted to the latter (though in a less sum than lOOl.). It was held, that the guarantee was for the payment of such existing account, and that it did not extend to future supplies of goods. "The document," said Erskine, J., in his judgment in this case, "contains no express words which point to any prospective supply of goods, neither does anything appear from which it can be inferred that the parties contemplated any such supply. The primary meaning of the language used can only have reference to an existing account." BoviUy. In Bovill v. Turner [i), the guarantee was as fol- Tarim: lows: — "You may let L. have coals to 50?., for which I will be answerable at any time." Coals were supplied for many years, and many were from time to time delivered and paid for, but ultimately more than the sum of 50Z. was in arrear. It was held that the surety had not given a continuing guarantee. Melville^. In Melville v. Hayden (k), the guarantee was as fol- Hayden. lows:— "Memorandum, 23rd September, 1818. I en- gage to guarantee the payment of Mr. Amos Mould'en to the extent of 60?., at quarterly aocount, bill two months, for goods to be purchased by him of William and David Melville." It was held that this was not a continuing guarantee for goods to be at any time sup- plied. Bayley, J., in his judgment in this case, said: (A) 5 M. & G. 392. (i) 2 Chit. 205. (fc) 3 B. & Aid. 593. (1410) LIABILITY OF THE SUEETY. 177 " The words ' quarterly account ' do not seem to me to vary the case, they only mean that, at whatever time the goods might have been delivered, the account for them *8hould be rendered quarterly. A party [*224] who takes a guarantee of this sort should carefully provide that there are words in it expressive of its being a guarantee of goods to be furnished by him from time to time. In the' case of Mason v. Pritchard ( I) that was the case. The words there were ' for any goods he hath or may supply,' so that there the guarantee was applicable to any goods furnished at any time to the amount of lOOZ., whatever intervening payments might have taken place. They were, therefore, equivalent to the words 'any goods furnished from time to time.' In this case, however, I think there was no continuing guarantee ..." In the same case Best, J., said: "I think the case of Mason v. Pritchard went as far as possible, but that case is distinguishable from the present." In Kirby v. The Duke of Marlborough {in), it was Kirbyy. held, that a bond entered into by A. and B. to the Duke of Marl- plaintiffs to enable A. to carry on his trade, conditioned J>orough. for the payment of all such s'lims not exceeding 3,000Z., which should at ,any time thereafter be advanced by plaintiffs to A., is not a continuing guarantee to the extent of 3,000Z. for advances made at any time, but only a guarantee for advances once made to the extent of 3,000Z. In Kaij V. Groves (n), the guarantee was as follows: — Kag v. Groves. " I hereby agree to be answerable to Mr. Kay for the amount of five sacks of flour, to be delivered to Mx. W. Taylor, Gray's Inn Lane Road, payable in one month. ''November 18th, 1828. Thomas Groves." *This was held to be a guarantee for flour not [*225] exceeding five sacks, delivered at one time, within a month from 19th November, and not a continuing guarantee for parcels delivered at various subsequent periods, though not exceeding in the whole five sacks. {I) 12 East, 227; ante, p. 217. This case decides that a guarantee by the defendant to the plaintiff "for any goods he hath, or may supply W. P. with, to the amount of 100/. , " is a continuing or standing guarantee to that extent for goods which may at any time have been supplied to W. P. until the credit was recalled, although goods to more than WOl. had been before supplied and paid for. (m) 2 M. & S. 18. (m) 6 Bing. 276. 12 (1411) 178 THE LAW OF GUAKANTEES. It appeared at the trial before Tindal, C. J., that on the 19th November, plaintiff deliYered to Taylor five sacks of flour, and on the 21st November five more. On the 24th, Taylor sent back three and a half sacks out of the first five, as being of a bad quality, and three and a half other sacks were supplied that day. The defend- ant paid into Court the price of a sack arid a half of flour. Chief Justice Tindal observing, that plaintiff had proved no second order from the defendant, nor any agreement on his part that three and a half sacks should be substituted on the 24th November, for three and a half delivered on the 1 9th, and to be paid for within a month from that day, left it to the jury to say whether the delivery on the 24th was made under the defend- ant's guarantee, and in substitution of any part of the delivery on the 19th, or whether it was made under a new contract. Verdict for defendant. Second class Tli^ second class of cases, in which the question, how of continuing long a guarantee continues in operation, usually be- guarantees, comes important, consists of those cases in which a guarantee has been given for the fidelity of a person in some office or employment (o). Bonds given Where a bond or other guarantee has been given for for fidelity of the good behaviour of third persons in offices or em- official per- ployments, very nice questions often arise as to whether the liability of the surety continues, after some change has takeh place as to the circumstances of the appoint- Rules for [*226] *ment; but (unlike the cases of mercantile guar- determining antees), certain fixed rules appear now to be laid dovm surety's lia- ^°^ ^^® determination of all such questions. We will, bility in such therefore, proceed to discuss in order (1) The liability .cases. of the surety after the third person's re appointment to the same office; (2) The surety's liability after the third person's appointment to another, though similar office or employment; (3) The surety's liability after a change has taken place in the duties or length of term of the third person's office. These cases well exem- plify the rule that a surety's liability is not to be ex- tended beyoud the precise terms of his engagement. In determining the extent of this liability under a surety bond, it must be borne in mind that the word^ of the condition of the bond are to be restrained by the reci- tals. (o) It has recently been held that a "guarantee society" may be accepted as surety to a bond given by an administrator pend- ing suit, even though the directors do not by the bond render themselves personally liable : Qarpenier v. Solicitor to the Treas- ury, 7 P. D. 235. (1412) LIABILITY OF THE SUKETT. 179 And first, let us consider those cases, where subse- (1.) Cases quently to the execution of the surety bond, the third where, after person for whom the surety has agreed to be answera- gy^rantee ble is re- appointed to the same office which he filled at third person the time of the execution of the bond. To such eases, is ra- the rule applicable appears to be, that, though the words appointed to of the condition of the bond be general and indefinite ^^^'^ office, as to the time durinsr which the surety is to remain ^^^^ applica- . nip TO SHCll liable, yet "such liability is not to extend beyond the ^^^^ time for which the office recited in the condition is limited to be holden, because such a construction is most agreeable to the intent of the condition. More- over, it appears from the reported cases that even where the recital in the condition of the bond does not state the office to be for a specific time, yet, if this be shown by the pleadings to be the case, the liability of the surety must be confined to such specific time {p). We will now illustrate what we have just stated by one or two examples. * In the celebrated case of Lord Arlington v. [*227] Lord Arling- Merrick (q), the bond was conditioned for the perform- '"» ^-^ . anee of the duties of deputy postmaster, by A. B., "for ^^<^''™''^ andduring all the time that he shall continue deputy post- master of the said stage." It appeared, however, from a recital in the bond, that the plaintiff had appointed A. B. to act as deputy postmaster for the term of six months. It was accordingly held, that the general words of the condition was restrained by this recital, and that therefore the liability of the defendant under the bond as surety for A. B., endured only during the six months recited in the bond, and did not extend to subsequent re-appointments to the same office. In Bamford v. lies (r) a bond reciting that A. was Bamford v. appointed assistant overseer of the parish of M. was lies. conditioned for the due performance of his duties "thenceforth from time to time, and at all times, so long as he should continue in such office." Before the date of this bond, namely, on the 25th June, (p) In a recent American case it was held that a surety on the bond of a re-elected county treasurer is liable only for default during ftie term for which the bond was given : Van Sichel-v. County of Buffalo, 42 Amer. R. 753 (U. S.) {q) 2 Wms. Saund. 813. See also Liverpool Waierworks Co. v. Atkinson, G East, 507. (r) 3 Exch. 380. It appears, however, from the case of Frank , V. Edwards, 8 Exch. 214, that a mere reduction of salary, where the original appointment is not revoked, will not discharge the surety unless indeed the bond contain a stipulation to that effect. See title judgment of Parte, B., in this case, where the distinc- tion between it and Bamford v. lies, supra, is pointed out. (1413) 180 THE LAW OF GUABANTEES. 1840, a vestry meeting was held at which A. was elected assistant overseer until the 25th March, 1841, at a salary of 8d. in the pound on some sums col- lected, and Ad. on others. On the 9th July, 1840, the justices by their warrant, which recited the resolution of the vestry, electing A. at the aforesaid salary, appointed A. assistant overseer in pursuance of 59 Geo. 3, c. 12. On the 25th March, 1841, he was again elected to the same of&ce, at a salary of 501. per annum, and was re- appointed by the justices, and continued to be so re- elected and re-appointed by the justices till March, [*228] 1846. On ceasing to hold oifice *he retained monies in his hands. It was held that the sureties were not liable on the bond. Peppin v. In Peppin v. Cooper (s), a bond was given, which. Cooper. after reciting the appointment of Henry Warren to be a collector, under an act of parliament which made the office an annual one, was conditioned for the due col- lection by Henry Warren, of the rates and duties " at all times hereafter ;" and it was holden ttat the due collection of the rates for one year was a compliance with the condition of the bond. Abbott, C. J., said, "I am of opinion that the condition of the bond is satisfied by the faithful collection of rates and duties for the space of one year. It is true that the words ' at all times hereafter,' in the condition of the bond, would, taken by themselves, extend the liability of the surety beyond that period. But these words must be construed with reference to the recital, and to the nature of the appointment there mentioned, and the recital is, that Warren, together with Peppin, had been appointed col- lectors under the said act of parliament. Now, the nature and duration of that office must be learnt from the act of parliament itself; for if the statute make it an annual office, it is unnecessary to state that fact either in the bond or in pleading" (t). In the three following cases the recitals of the bonds did not indeed state the office to be holden for a specific time, but, as this appeared from the pleadings, it was held that this was sufficient to control the general and indefinite language of the conditions of the bonds. Kitsonv. Ii Kitsonr. Julian (u), the defendants J. and S. Julian. gave a joint and several bond to the plaintiff, the con- dition whereof recited, that J. had been appointed clerk ts) 2 B. & A. 431. (i) And see Savings Bank of Hannibal v. Sunt, 37 Amer. E. 449 (U. S.) (m) 4 Ell. & Bl. 854. (1414) LIABILITY OP THE SURETr. 181 to plaintiff, and, that upon sucii appointment being made, it was agreed that J. and S., as surety for J., should *enter into the bond for the due execution of [*229] his said ofJfice, and the condition was declared to be, that if J. should " from time to time," and at all times, so long as he shall continue to hold the said office or employment," duly account for and pay to the plaintiff all sums of money received by him, '• by virtue or in execution of his said office," and account for and de- liver to the plaintiff all books and things " which shall at any time or times, be received by, or come to his hands, by virtue or in execution of his said office or em- ployment," and "at all times" regularly keep accounts of such sums, books, &c., and "faithfully and diligent- ly, in all respects, demean and conduct himself in the said office or employment, and in all matters and things relating to or concern the same," the bond should b( void. The plaintiff declared on the bond against the defendants -J. and S. The defendants' principal plea (after setting out the condition) alleged that the ap- pointment of J. to the said office and employment was for one year, and no longer, and that J. did well and truly observe, perform, &c., all tne articles, &c., in the condition specified. The replication to this plea al- leged, that J., with the assent of the defendants and the plaintiff, remained in the said office and employ- ment after the expiration of the year, for a long period, and during such last-mentioned period, and before the commencement of the suit, omitted to account, &c., for sums received by him " under and by virtue and in ex- ecution of his said office during such period." On demurrer to this replication, it was held : T/iat the allegation in the plea, as to the time for which J. was in fact appointed, had the same effect as if the period of the appointment were recited in the condition. That the plea showed a good defence, the liability of the de- fendants on the bond not extending beyond the specified year. That the replication did not answer the plea, for that it did not show more than a fresh appointment by parol, which would not be comprehended in the condi- tion of the bond. *In Hassell v. Long (x), a bond was given by [*230] jjasseU v. the defendant's testator as surety for E. The condition Long. of the bond recited that E. had been, and still was, col- lector of the land tax, and all other taxes and duties imposed by several acts of parliament on the inhabitants (x) 2 M. & Selw. 362. See also Wardens of SI. Saviour's v. Bos- tock, 2 N. R. 175, infra. (1415) 182 THE LAW OF GUARANTEES. Wardens of St. Saviour's, Southwark v. Bostoek. Sometimes lialbility of surety is co- extensive with dura- tion of tliird person's office. Mayor of Birmingham V. Wright. of the parish of C, by means whereof he received from the inhabitants divers sums of money. The condition, in its operative part, depended on the due payment by E. from time to time, and at all. times thereafter, to the Eeceiver-General of Taxes, &c., all and every sum which he (E.) should from time to time collect and receive from the inhabitants of the parish, for or on account of any tax or taxes then imposed, or which should or might thereafter be imposed on them by any act of parliament. It was held that this bond was confined to the current year for which E. was, at the date of the bond, collector, although it did not appear on the condition that he was only appointed for a year: it being shown, by the defendant's plea, that the said office of collector was an annual one, and held as su(jh by E. at the date of the bond (?/). In The Wardens of Si. Saviour's, Southwark v. Bos- toek (z), A., B. and C. entered into a bond, as sui'eties for D. and E. The condition of the bond recited that D. was, on a certain day, appointed collector of the church rate of the parish of St. Saviour's, Southwark, by virtue of vrhich office he was empowered to collect and receive all such monies as were rated and assessed on the inhabitants by virtue of the said rate, and for which he was accountable to the wardens of the grand account. It bound the sureties that D. should duly account for all monies collected or received by him, on account of the above rate, and also on every other rate [*231] *or rates thereafter to be made and collected by him, the said D. It being admitted by the replication that the office was an annual one, it was held that the sureties were only answerable for D. in that single ap- pointment, and not on his appointment in the ensuing year. Where, however, it does not appear from the recital ' of the bond itself, or in any other way, that the office, for the due fulfilment of which another is surety, is, limited in duration, then, there being nothing to control the general and indefinite language of the condition of the bond, the liability of the surety is co-extensive in duration with the length of the third person's office. Thus,' in the case of The Mayor of Birmingham v. Wright (a), certain parties hadbecome sureties by bond. (y) See, further, as to alleging in the defendant's pleading that the office is limited in duration, the cases of Curling v. Chalklen, 3 M. & S. 502, and Leadley v. Evans, 3 Bing. 32. (a) 2 N. E. 17.5. (a) 16 Q. B. 623. See also Sansom v. BcM, 2 Camp. 39. (1416) LIABILITY OP THE SUKBTY. 183 The bond recited that R. had been appointed to act as overseer for making and levying borough rates in that part of the parish, A., which lay within the borough of B., during the pleasure of the council of the borough. It was conditioned for performance of the duties dur- ing such time as A. should act as overseer. Upon this bond it was held, that the sureties were liable beyond the expiration of the year, A. continuing in office ; for that there was no law limiting the duration of the office to a year, so as to control the express stipulations of the bond. In Curling v. Chalklen (6), debt was brought on a Curling v. bond made by one C/ia ZA;tew and his sureties. The con- Chalklen. dition recited statute 27 Geo. 2, c. 38, and that Chalklen (four years before the date of the bond) was appointed by tte churchwardens and parishioners of Deptford, in pursuance of the statute, collector of the poor rates to be levied and raised in the parish. And the condition itself was that Chalklen should account, as often as re- quired, for all monies so collected and received by him, by virtue of the act, &c. The breach alleged was not accounting for monies collected and received by Chalklen before the making of the bond *The defendant pleaded, first, that C. ac- [*232j counted for all the monies collected and received by him before the" making of the bond ; secondly, that the office of collector is an annual office, and that C. ac- counted for all the monies collected and received by him within the current year of office in which the bond was made. Upon demurrer, it was held that both the pleas were ill, for, by the words of the statute, the ap- pointment was prospective, to collect future rates, and not retrospective only, and the condition was in the words of the statute, without any restraining words ; and it was not pleaded that the office was an annual office at the time of making the bond, and if it had been, yet it appeared by the statute not to be an an- nual ofiSce, though concerning rates which are raised in the course of the year. Lord Ellenborough, G. J., in his judgment in this case, said: "Here is a duty, not limited by the act to a year, so that it shall extend to that period and no longer, but a continuing duty on the party so long as he shall remain collector, without regard to any definite time, though it may be that the rates which he is to collect are, in form, limited to a less or not a greater period than a year. It appears, (6) 3 M. & S. 502. (1417) 184 THE LAW OE SUAKANTEES. Sometimes surety's lia- bility, by express agreement, does not ter- minate on subsequent re-appoint- ment of third party to same oiSce. Angero v. (2.) Where, after surety bond given, third person then, that there is nothing on the face of the act of par- liament, nor of the condition, directly or indirectiy, to limit the period of office to a year. Therefore, the obligation of the surety cannot be so narrowed ; it is indefinite in its language relating to a period before and after. As to the allegation in the plea that rhis is an annual office, I consider that as impertinent. The allegation should have been, that it was an annual office at the time when the obligation was made ; but that would not have been supported by the act." Of course, by the use of proper words, a surety may provide for a continuance of his liability, on subse- quent re- appointments to the same office, of the person whose default or miscarriage is guaranteed against. [*233J Thus, in *Augero v. Keen (c), a bond given to secure the faithful performance of the office of a col- lector of parochial rates (who was by act of parliament to be appointed by trustees for a year, and then to be capable of re-election) was conditioned that "from time to time, and at all times thereafter, during such time as he should continue in his said office, whether by virtue . of his said appointment, or of any re-appointment thereto, or of any such retainer or employment by or under the authority of the said trustees, or their suc- cessors, to be elected in the manner directed by the said act, he should use his best endeavburs to collect the monies received by means of the rates in the then present or in any subsequent year," &c., &c. It was held, that the obligation of the bond was not confined to the year for which he was originally appointed, but ex- tended also to all subsequent years in which he was continuously re-appointed. Lord Abinger, C. B., in giving judgment in this case, said : " It would be diffi- cult to find any words more clear than those employed in this case to show that the parties meant to provide for the continuance of the party in office. In order' to save expense, as long as he continues in office under his original appointment, or any continuing re-appoint- ment, only one bond is to be required." We now' come, in the second place; to cases where, after the execution of the surety bond, the third person has been appointed to another, though similar o&ce (d). fe) 1 M. & W. 390. (d) These cases might certainly, without impropriety, be dis- cussed with the cases which we shall next discuss, and which they to a certain extent resemble. It is, however, thought desir- able, in order to prevent all possible confusion, to treat these cases separately. (1418) LIABILITY OF THE SURETY. 185 An instance of this kind is furnished by the case of re-appointed The Guardians of the Portsea Island Union v. Whillier to another (e). In that case a bond, dated the 16bh December, ^^*J''"*''"' 1852, recited an order of the Poor Law Commissioners ^ ',. in *18y6, by -which it was ordered that the [*234] porlseaTsland plaintiffs (guardians of the Portsea Union) should ap- Union v. point one or more fit and proper persons to be the col- Whillier. lector or collectors of the poor rates of such of the parishes as the guardians might deem to require a col- lector, and that every person appointed a collector should give security for the due discharge of the duties of the office, and further recited that W. was duly ap- poiilted to be a collector under the said order. The bond was then conditioned (among other things) that W. should during his continuaijce in his said office, and whether the district for which he was appointed were or were not changed, faithfully discharge the duties thereof, and obey the lawful directions of the guardians. In the first instance the guardians had elected three persons to be collectors of the poor rate in Portsea, to each of whom was assigned a portion of the parish. In 1848 the guardians had divided the parish into four districts for collection of the poor rates, and appointed an additional collector. After the passing of statute 13 & 14 Vict.' c. 99, it was determined to appoint a fifth collector. At this time one of the four collectors re- signed, and an advertisement was published that the guardians should appoint "two persons to be collectors of the poor rates of the parifeh of Portsea, to one of whom would be assigned a collection of such rates from the owners of small tenements." W. had applied, offering himself as a candidate for one of them, and had been elected for the purpose of collecting the rates from the owners of small tenements. The bond men- tioned above was then executed by the defendant Whillier, and as his surety. Some years after the ex- ecution of the bond, in the year 1855, one of the col- lectors having resigned, W. applied to the plaintiffs, to transfer him to that district, which application was acceded to. In an action upon this bond it was held, that the appointment of Whillier was a general one as collector of poor rates for the parish, and that there *being only a change of duties in 1855, the [*235] obligation of the surety was not discharged. Cockburn, C. J., delivered the following judgment in the ease : — " The question which we have to determine in the first (e) 6 Jut., N. S. 887. (1419) 186 THE LAW OF GUARANTEES. instance is, whether the appointment of the collector, for whose default the defendant is sought to be made responsible, was an appointment of him as collector of ' rates generally, or of rates payable in respect of small tenements exclusively. If the latter, then, inasmuch as by the subsequent act of the guardians he was em- ployed for a different purpose, and the default arose in respect of that appointment, it follows, according to well-established authorities, that the surety cannot be made responsible for his default ; in justice and law his responsibility ceases. The question is not altogether free from doubt, but, upon the whole, I ttiink that the right conclusion to arrive at is, that the appointment of ' James William Whillier was as collector of the rates of the parish of Portsea generally. In the first place, the order of the Poor Law Board was for the appointment of a collector of the parish generally. Then the advertise- ment, which led to the appointment of James William Whillier, as collector, was for two collectors of the parish, with an intimation that to one of them would be assigned a collection of the rates from the owners of small tenements.. James William, Whillier applies to be appointed as one of them, and then the bond, from beginning to end, treats the appointment, not as a special appointment, but as an appointment for collecting the rates of the parish of Portsea generally. Looking at the whole of the order, the advertisement, and the bond, there is sufficient evidence to lead us to the con- clusion that the appointment ; was treated as, and was in effect, an appointment generally, and not for a limited or special purpose. It is true that at the time of the appointment the resolution is couched in language which, at first sight, appears to have reference to a more limited purpose, but, looking at the whole, I [*236] *think that much weight is not to be attached to that,becau8e it being convenient to assign to each collector certain duties, they would, on the appointment, declare at once the particular duties which each was to dis- charge. Suppose, without reference to the collection of rates from the owners of small tenements, the guard- ians had thought proper to transfer one of the district collectors to another district, there is nothing in the appointment to justify the collector in refusing to acquiesce in the transfer. Suppose there was illness, or any other disability in a collector, can it be said that one collector could not discharge the duties of the other 80 disabled ? I think that this was the appoint- ment of a collector generally, and then it would be (1420) LIABILITY OF THE SURETY. ' 187 competent to the guardians to determine which set of duties each collector should discharge. That is the good sense and justice of the case. It cannot be that because the principal is transferred to another department, with other duties, his surety is to be allowed to avoid his lia- bility. Therefore I think that this was a general ap- pointment for the whole parish, and that the defend- ant is liable." In Holland v. Lea (/) the facts were as follows: — Holland y In March, 1845, E. L. was nominated and elected assis- Lea. tant overseer of the poor of the parish of W. by the inhabitants in vestry assembled, at the yearly salary of 211. In May following he entered into a bond, with two sureties, for the faithful execution of the office, under the 59 Geo. 3, c. 12. The condition of -the bond recited that statute, and that E. L. had been duly nominated and elected at the annual salary of 27Z. K. ' L. then, proceeded to perform the duties of the office. In March, 1846, at a vestry duly held, a resolution was come to, that the permanent overseer's salary (meaning E. L.'s) should be raised from 211. to 35Z. a year, in- cluding all other extra charges. In June, 1846, a *warrant of the appointment of E. L. as assist- [*237] ant overseer was signed and sealed by two justices of the peace. This warrant recited that E. L. had been nominated and elected in March, 1846, at the yearly salary of 'S5l Subsequently to June, 1846, E. L. had acted as assistant overseer, but had become a defaulter to a considerable amount. In an action on the bond by the succeeding overseers against the sureties, it was held (Pollock, C. B., Parke, B., and Alderson,^., Mar- tin B., diss.), that E. L. had never been duly appointed assistant overseer, and that the sureties were not liable. It seems that where a person is surety for another's Sulssequent good behaviour in a particular office, and subsequently appointment such other person is appointed to a perfectly distinct J. dirfiii^t ^ office, which is incompatible and inconsistent with (g) oflee which the first appointment, the surety is discharged; even is inconsist- though the duties under the two appointments be sub- ^^^ ^^^^ ^''^^ stantially the same. This was decided in the case of ^^JchTr^r* The Mailing Union v. Graham (h). There A., in 1865, sm-ety. was duly appointed by a vestry of the parish of Mai- Mailing ling assistant overseer of the said parish at a fixed Union v. salary. This appointment was made in pursuance of <^™''«m /) 9 Ex. 430. ' Worth V. N'ewion, 10 Ex. 247. L. E.j 5 C. P. 201. (1421) 188 THE LAW OF GUARANTEES. 59 Geo. 3, c. 12, s. 7 (»)• B. became A.'s surety. Sub- sequently under 7 & 8 Vict. c. 101, s. 62 (k), A. was [*238] appointed *by a board of guardians of a union, on the recommendation of the vestry of the parish of West Mailing, collector of poor rates for the' said parish, at a poundage of Qd. The Poor Law Board duly confirmed this appointment. The duties under the two appointments were substantially the same. After the last appointment A. continued to perform the same duties as he had before performed, and the appoint- ment of 1865 was not otherwise resigned or revoked. A. having made default aftfer the last appointment in keeping iDOoks and in paying over money, B. (the de- fendant), was sued on the bond. It was held, that the two appointments were inconsistent and incompatible: that the appointment of 1865 ceased by virtue of 7 & 8 Vict. c. 101, s. 62, on A.'s acceptance of the appoint- ment by the guardians, and consequently that the lia- bility of B., as surety on the bond, was at an end. It would seem that there was under the circumstances both a revocation of the first appointment by the vestry, and a resignation by A. AUter where AVhere a person, for whose good behaviour another the two is suBety, is, subsequently to the execution of the surety offices are not bond, appointed to an additional office or employment, inconsistent. ^^^ liability of the surety does not in consequence necessarily cease (I). Of course, however, in such a case the liability of the surety would not extend to anything done or omitted by the principal in respect to such additional office or employment. In a recent American case it was held that sureties for the faithful performance of the duties of the book- keeper of a bank are liable for his errors in that capa- city, although he a] so performs the duties of teller, un- (i) This enactment in substance provides, that the inhabitants of a parish in vestry assembled may elect, and that two justices of the peace may appoint, assistant overseers with a salary; and that the person so appointed assistant overseer shall continue in such office until he shall resign the same, or until revocation of his appointment by the vestry. (Ic) This enactment in substance provides, that the poor law commissioners, on the application of the board of guardians of any parish or union, may direct the appointment of a paid col- lector of poor rates. And all powers of the inhabitants of any parish in vestry assembled, or of justices of the peace, or of any persons other than the board of guardians of such parish or union, to appoint any collector for any such parish as aforesaid, and (except when otherwise directed by the commissioners), all ap- pointments under such powers shall cease. [l) Skillett V. Fhicher, L. E., 2 C. P. 469; S. C, 1 C. P. 217; WoHh V. Newton, 10 Ex. 247. (1422) LIABILITY OP THE SURETY. 189 less the errors were connected with or induced by the latter employment (m). Thirdly, we come to those cases where, after the exe- /^ \ guT,ge. cution *of the surety bond, a change has taken [*2391 quent alter- place in the duties or length of term of the third per- ation in son's office or employment, or in the mode of remuner- 'i'l^i^ °^ ,. 1 J.I.- J ■ J! i,- ■ duration of ating such third person tor his services. third party's It seems to be well established, that, where the office, change made materially alters 'the duties of the office, Material and this affects the peril of the sureties, they are re- alteration in leased from liability. duties of the Thus, in the case of Pybus y. CHbb {n), sureties gave gharges^he a bond to the high bailiff of a county court, conditioned surety, for the good behaviour in his office of one of the bail- pyius v. iffs appointed by the high bailiff. After the execution GiMi. of the bond, and before the breach of the duty com- plained of, several acts of parliament came into opera- tion which materially altered the nature of the office of bailiff. It was held, that the surety was discharged, even though the misconduct of the bailiff was in a mat- ter not altered by the said acts of parliament. So, also, in Bartlett v. The Att.-Gen. (o), one Clarke, BartMt-7. in 1691, was made collector of customs in the port of The Att.-Gen, Boston; Bartlett and others were security for him. In 1698 (p), the duties were granted upon coals, &c., which by the statute were to be under the management of the commissioners of the customs, and several clauses for that purpose were contained in the act. The commissioners gave Clarke a deputation for that purpose, and took security. Afterwards Clarke died ; the customs were paid ; but, on this new coal duty, 1,OOOZ. remained unpaid; upon which the bond was put in suit against Bartlett, the widow and executrix of Bart- lett, the surety, and she brought her bill, and the ques- tion was, whether the bond in which Bartlett became surety extended to this future duty on coals. After adjournment, the barons delivered their opinions seri- atim, and unanimously held, that the said bond did not extend to the future *duty on coals, and that [*240] the plaintiff ought to be relieved ; and accordingly or- dered a perpetual stay of process on the said bond. Another case, which depends on the same principle, j^g^arr is Bonar y. Macdonald (q). There A. became surety, 3iacdonald. (m) Home Savings Bank v. Iraube, 43 Amer. K. 402 (IT. S.). \n) 6 E. & B. 902. (o) Parker's Reports, p. 277. (p) 10 Will. 3. (s) 3 H. L. 226. (1423) 190 THE LAW OF' GUARANTEES. Napier v Bruce. Immaterial or contem- by bond, for B.'s conduct as a clerk in a bank. B. was subsequently appointed to a better situation in a branch of the same bank, and A. extended his suretyship to the new situation. B. afterwards, while remaining in the same situation, undertook on having his salary raised, to become liable to one-fourth of the losses on discounts. No communication of this new arrange- ment was made to A. B. allowed a customer consider- ably to overdraw his accounts, and thereby the bank lost a sum of money. It was held, that the surety could not be called on to make good the loss, though it fell within the terms of the original agreement, as the fresh agreement was the substitution of a new agree- ment for the former one, and A. was thereby dis- charged. It appears, too, that in construing an agreement in the form of a bond in which a surety becomes liable for the due fulfilment of an agent's duties, therein par- ticularly emimerated, a general clause in the obligatory part of the bond must be interpreted strictly, and con- trolled by reference to the prior clauses, specifying the extent of the agency. It was held, accordingly, in Napier v. Bruce (r) (affirming the judgment of the Court of Session), that monies received by an agent on account of his employers, during the time of his agen- cy, but not in pursuance of the particular agency dis- closed to the surety by the specified conditions in the bond, were not covered by the surety's obligation "that during the whole time the said J. D. B. (the ageitt) shall continue to act as agent aforesaid, in consequence of the above-recited agreement, he shall well and truly [*241] *account for and pay to us (the employers) all sums of money received by him on oxir account." If a material change in the duties of the principal were relied on as a defence, such change must formerly have been clearly and distinctly alleged by the defend- ant in his plea. Thus, for instance, where the de- fendant became surety for G., so long as he continued in that service of the bank, and at the time the guar- antee was given G. was clerk to the bank : it was held, that a plea stating that G. had, subsequently to the execution of the guarantee, been appointed manager of the bank was bad, as not showing conclusively that G. had ceased to be clerk when he became manager (s). Where, however, the change made in the duration of M 8 C. & F. 470. (s) Anderson v. Thornton, 3 Q. B. 271. (1424) LIABILITY OF THE SURETY. 191 the office does not materially alter the duties, or is con- plated altera- templated by the parties, tho bond is not avoided. tion in tenure In Oswald v. The Mayor of Berwick (t), the facts "r duties of were as follows :— Sureties by deed, in 1842, covenanted not^discharge with the Mayor and others of Berwick that David the surety. Murray, who had been appointed treasurer to the cor- Oswald v. poration under stat. 5 & 6 Will. 4, c. 76, s. 58, " "should Mayor of well and truly pay to the Mayor, &c. of Berwick, or to Berwick. | their successors all such sums of money as the said David Murray should or might recover or receive in virtue of his said appointment as treasurer as aforesaid during the whole time of his continuing in the said office in consequence of the said election, or under any annual or other future election, of the said council to the said *office." At the time of the appoint- [*242] ment of David Murray the office was an annual one under 5 & 6 Will. 4, c. 76, s. 58 ; but in 1843 was passed the 6 & 7 Vict. c. 89, which, by sect. 6, repealed that enactment as inconvenient and unnecessary, and directed that the treasurer should "thenceforth hold his office during the pleasure of tho council for the time being." It was held by the House of Lords (affirming the judgment of the Exchequer, from which, however, Jervis, C. J., Pollock, 0. B., and Maule, J., had dis- sented), that there was not such a variation of tenure of the office as to discharge the sureties, and that the change from an annual to a perpetual appointment dur- ing pleasure was provided for by the words of the bond " annual or other future elections." Baron Alderson in this case delivered the unanimous opinion of the judges on the questions put to them by the House of Lords. He stated, that even assuming that an alteration of risk necessarily followed from a change in the duration of the office, yet as that change was contemplated this increase of risk must have been contemplated also. Baron Alderson then proceeds to distinguish in the follow- ing words the case before him from Arlington v. Merricke : " It was said that words such as these with which we have to deal are, according to Arlington v. Merricke and various other cases, to be modified and construed ac- (t) 5 H. L. 856 ; Mayor of Berwick y. Oswald, 1 E. & B. 295 ; 6 E. & B. 695. This case is cited in 2 Jur., N. S. 743, as Dobie v. 77»e Mayor of Berwick. There were in fact three actions in the court iDelow, and three writs of error in the House of Lords. The first of these writs was brought in the name Dobie v. Mayor of Berwick, and under that name the case was argued. The other cases, involving precisely the same point, were made to depend on the decision of the first. See note fa), 5 H. L. C, p. 856. (1425) 192 THE LAW OF SUAKANTEES. Frank v. Edwards. Skillett V. Fletcher. cording to the words of the recital of the deed, and then it is suggested that the deed must be construed as containing a recital that the future appointments must be made according to the law which was in force when the deed was executed. But this is a mere fallacy ; wholly inconsistent, we think, with the words of the covenant, which are quite general. The reason for re- ferring to the recitals in a deed is, because from the circumstances and facts there stated, the parties them- selves have plainly expressed their intention ; and, con- sequently, in accordance with that express and specific [*243] intention, the Courts construe *and modify the more general words of their covenant. But it is some- what strange to propose that the Court should construe their covenant by what must be at most an implied re- cital suggested by the counsel, and that where there is no express recital on this subject at all. And, there- fore, after all, we can only in the present case construe the words of iiie covenant without any such light being thrown upon them ; and, doing so, we cannot doubt that the natural and reasonable construction of the words ' under any annual or other future election' is ' under any future election, whether annual or other than annual' " (u). So, too, in the case of Frank v. Edwards {x), the bond was conditioned that T. R. should from time to time, and at all times thereafter during the continuance of his said appointment, faithfully account for the collection of the rates, &c., and duly execute all the duties of the office of permanent assistant overseer to the parish of W. F. Subsequently to the execution of the bond, the duties of the office filled by T. E. became lessened in consequence of the appointment of a relieving officer, and the vestry, with the consent of T. K, thereupon came to a resolution that T. E. should continue his office, at a reduced salary. It was held, that the surety was not discharged by this action on the part of the vestry, as it did not amount to a revocation of the office filled by T. E. Another case of the same class is the recent one of Skillett V. Fletcher (y). There an action was brought on a bond, conditioned for the due performance by A. (m) See also 3Iayor of Dartmouth v. Silly, 7 E. & B. 97, in which the point raised was precisely the same as that determijied in Oswald V. Mayor of Berwick. (x) 8 Exch. 214 ; Holland v. Lea, 9 Ex. 430. (j) L. R., 2 C. P. 469 ; S. C, 1 C. P. 217 ; followed in Home Savings Bank v. Trauhe, 42 Amer. E. 402 (XJ. S.). (1426) LIABILITY OF THE SURETY. 193 of his duties as collector of the poor rates, and of the *sewer8 rates for the parish of St. Anne ; the [*244] bond to continue in force if A. held either office sepa- rately. The breach alleged ■was, that A. received money in both capacities and failed to pay it over. To this the defendant pleaded, that before breach an act was passed increasing A.'s duties as collector of sewers rates, and under which he was also elected collector of main drainage rates, by the persons under whom he held his other appointments. This plea was held bad on de- murrer, on the ground that the bond was divisible, and that the plea afforded no answer to the defendant's liability for A.'s breaches of duty as collector of poor rates. It was also held, that the appointment of A. to the new office of collector of main drainage rates did not avoid the bond, and also that the changes introduced by the acts did not amount to an alteration of the office of collector of sewers rates to which A. was originally appointed, and, therefore, did not avoid the bond. In this case Lnish, J., delivered the following judgment (z) : "There is no doubt about the principle that gov- erns these cases ; the only doubt is as to its application in the present instance. If the office is altered by the addition of new duties, the surety is discharged ; and it is. no answer to say, that if the old office had re- mained, the principal would have incurred the same debts, and the surety have been responsible, because the old office does not exist, and it was only for wrong , acts committed by the principal in the old office that the surety is liable. I think the present case does not come within the rule, for I think the acts referred to did not alter the office of collector of sewers rates ; and the addition of a new office, that of collector of the main drainage rate, could not do so. Even, however, if the sewers rate had been altered by the act, I think the plea would be bad, for the reasons given by the *Court of Common Pleas (a), the offices of col- [*245] lector of poor rates and collector of sewers rates being distinct, and the plea affording no answer to the liability arising from the breaches of duty committed by Skillett as collector of poor rates." j If, indeed, the words of the condition of the surety- Surety may- bond show that the suristy intended that his liability stipulate that [z) See also the judgments cf Blackburn, J., Bramwell, B., and Martin, R , in this case. I (o) That the bond sued upon w.ia divisible. See S. C, L. E. , 1 C. P. 217. See also Croydon Commercial Gas v. Dickinson, 2 C. P. D. 46; 46 L. J., C. P. 157; 36 L. T. l;;5; 25 W. K. 157. 13 (1427) 194 THE LAW OF GUARANTEES. his liability should not continue, after a change in the tenure, then shall not con- his liability will be discharged, if subsequently to the a^^chm 'e execution of the bond the office for the due fulfilment m^e in ten- °^ which he is surety is converted from being an annual ure of third one into one during pleasure. This appears from the party'soffice. case of The Mayor of Cambridge v. Dennis (b). There the condition recited that S. had been appointed, under a certain statute, treasurer to a borough, and declared that it had been agreed that the obligor should join S. in the bond for the due performance of the office. The condition of the bond was declared to be that if S. should duly perform the office according- to the provi- sions of the said statute, and of such statutes as might be thereafter passed relating to the said office, then the bond should be void, &c. At the time the bond was given, the office filled by S. was an annual office, but it was subsequently converted into an office " during pleasure." It was held, that the surety was discharged, and that the words in the condition, which provided that S. should duly perform the office according to the provisions of a certain statute, and of such statutes as might be thereafter passed relating to said office, applied only to statutes that might be passed during the year of office. In this case, the decision in Oswald v. Mayor of Berwick (c) was approved of, but considered to be inapplicable, owing to the difference in the language of the bonds in the two cases. Surety may [*246] *The liability of the surety may also be de- be discharged stroyed by an alteration in the mode of pavment, as WltiratioZ "^^^^ ^^ ^^ ^^ alteration in the duties of the offi'ce. For, in mode of where a bond, given by a person as surety for the good paying the behaviour of a third person in an office or employment, third party, recites that such third person is to be remunerated for his services in a particular way, the surety is discharged from all liability, if, subsequently to the execution of the bond, any change be effected in the mode of remuner- London & N. ation. This was decided in The London and North Z'^T^ndn- ^^^iern Railway Go. v. Whinray (d). These were the y™, ' facts of the case: In January, 1851, the defendant, as surety, executed a bond to a railway company, which, after reciting that the company had agreed to appoint L. as their clerk or agent for the purpose of selling coal, at a yearly salary of lOOi., was conditioned for the due accounting by L. of all monies received by him for the use of the company. L. performed the duties of (ft) Ell., Bl. & Ell. 660. (c) Anie, p. 241. (d) 10 Exch. 77. (1428) LIABILITY OF THE SURETY. 195 sucli clerk or agent at the above salary until May, 1851, when it was agreed between L. and the company to substitute for such salary a commission of sixpence per ton on all coal for which he ' should obtain orders. From that time L. was paid for his services by such commission which amounted to a larger sum than the fixed salary. In 1852, L. was indebted to the company for sums which he did not pay over, and the company having sued the defendant on his bond, it was held (among other things), that the condition of the bond was restrained by the recital, so that the defendant, as surety, only undertook to be responsible for the faith- ful conduct of L. whilst he continued clerk at such fixed salary, and consequently that the defendant was not liable after the change in the mode of remunera- tion. Having considered from what time a guarantee op- (iv.) Lia- erates, to what things it extends, and how long it bility of a *continues, we may now conveniently notice the [*247] £"^^y ^°^ rule that beyond the mere letter of the guarantee con- ^^ ' tained within its four corners, a surety may be liable for fraud. Thus, a surety who gives a guarantee which he knows to be worthless, and thereby induces a person to supply goods to a third person, is liable as for a ^(j^^^;(. ^ fraua. This is shown by the case of Bdrwich v. The English Joint English Joint Stock Bank (e). In that case, the plain- Stock Bank. tiff having for some time, on a guarantee of the defen- dants, supplied J. D., a customer of theirs, with oats on credit, in order to enable him to carry out a govern- ment contract, refused to continue to do so unless he had a better guarantee. The defendants' manager thereupon gave him a written guarantee, to the effect, that the customer's cheque on the bank in the plain- tiff's favour, in payment for the oats supplied, should be paid on receipt of the government money, in priority to atiy other payment " except to this bank." ^J. D. was then indebted to the bank to the amount of 12,000t, but this fact was not known to the plaintiff, nor was it communicated to him by the manager. The plaintiff thereupon supplied the oats to the value of 1,2211. ; the government money, amounting to 2,Q16l., was received by J. D. and paid into the .bank ; but J. D.'s cheque for the price of oats, drawn on the bank in favour of the plaintiff, was dishonoured by the defendants, who claimed to retain the whole sum of' 2,676Z. in payment of J. D.'s debt due to them. The plaintiff having (e) L. R., 2 Exch. 259 ; 36 L. J., Exch. 147 ; 16 L. T, 461 ; 15 W. K. 877. a429) 196 THE LAW OF GUABANTEES. Voluntary settlement made by surety whether fraudulent and void against cred- itors within ISEliz. c. 5. brought an action for false representation and for money had and received, it was held, first, that there was evidence to. go to the jury that the manager knew and intended that the guarantee should be unavailing, and fraudulently concealed from the plaintiff the fact ■which would make it so. Secondly, that the defendants would be liable for such fraud in theiragents. Thirdly, [*248] that the fraud was properly *charged in the de- claration as the fraud of the defendants. The question of whether a voluntary settlement made by a surety of the whole of his jwoperty can be sup- ported by showing that when he made it, the principal debtor had assets enough to pay the amount guaranteed, was considered in the recent case of In re Kidler, Kid ler V. Ridler, (/). The Court there held that where a surety, whose guarantee is one which he must know will probably be enforced, makes a voluntary settle- ment, without leaving enough property to pay his creditors, he must be considered to do it with an intent to defeat or delay them, so as to make the settlement a fraudulent one within 13 Eliz. c. 5. In his judgment in this case, Lord Chancellor Selborne thus expresses himself : — " I do not think that any close inquiry as to the supposed capacity of the person guaranteed to pay the debt ought to be entered into. I do not say that there might not be a state of things in which the lia- bility of the guarantor might be so remote that it need not be regarded ; but if he conveys away all his prop- erty by a voluntary settlement, I think it doubtful whether the settlement could in any case be supported in the event of his being ultimately called on under his guarantee." In the cases which we have hitherto been considering, it will be observed that the liability of the surety liability of a (Jepends upon the circumstances as they exist or were constitvition contemplated at the time the guarantee was given, of persons to But, in some cases, the surety's liability may be Con- or for whom siderably affected by events, not at all contemplated the guarantee \^j ^jjg parties, occurring subsequently to the execution IS given. ^j ^j^^ guarantee, and altering the position cf the parties. The most common cases in which this happens are, where a change takes place in the constitution of a [*249] *firm to whom or for whom the guarantee is given, or where a bankruptcy takes place. In addition to the classes of cases as to the surety's liability, which have already been discussed, it is proposed, now, to (V.) Effect on surety's (/) 22 Ch. Div. 74. (1430) LIABILITY OF THE SURETY. 197 consider the effect of a change in the persons (usually^ as will be found, a partnership firm) to whom or for whom a guarantee is given ; and lastly, the effect of at bankruptcy. We will commence by noticing those cases where, subsequently to the execution of the surety- bond, the obligees of the bolid have ceased to occupy/ the positions filled by them at the time of the execu- tion of such bond. In Leadley v. Evans (g), a bond, after reciting th» Leadley y. appointment of J. B. hf churchwardens and overseers Evans, as a collector of church and poor rates, was conditioned for the duly accountirig to the obligees and their suc- cessors for money received pursuant to, and in execui- tion of, the offiae of collector. It was held, that the obligors were not responsible for receipts on account of any year subsequent to that during which the obligeesi were in office. It is to be observed that, in this case,, the offices of churchwarden and overseer were shown- to be annual offices. Indeed, the court took judicial^ notice of the fact. Now J. B., as collector, was nothing more than deputy to the overseer, and it was therefore held by BQst, 0. J., that as the office of overseer wasi ^'Gahey v annual, so must be that of deputy. In M'Gahey v. Alston. Alston (h), however, which was much the same sort of ease as Leadley v. Evans, it appeared that the office,, for good behaviour in which security was given by bond, was not, according to the construction of an act of par- liament, merely co- existent with that of the obligees of the bond.. If was, therefore, held that the bond con- tinued in force after the obligees, to whom it was given, had gone out of office. *^When guarantees are given to partners, or as[*250]i Effect on security for the debt, default or miscarriage of partners, liability of it frequently becomes a very nice question for decision, surety of whether the surety continues liable after a change has %^^g^ fy^ taken place in the firm to or for whom he has consented ^vhom guar?, to become answerable. antee given. The 4th section of the Mercantile Law Amendment 19 & 20 Vict. Act, 1856 («), enacts, that "No promise to answer fore. 97,8. 4. the debt, default or miscarriage of another made to a firm consisting of two or more persons, or to a single person trading under the name of a firm, and no pro- mise to answer for the debt, default or miscarriage of a. firm consisting of two or more persons, or of a single person trading under the name of a firm, shall be bind- (g) 3 Bing. 32. See also Melcalfv. Bruin, 12 East, 400. (ft) 1 M. & W. 386. (i) 19 & 20 Vict. c. 97. (1431) 198 THE LAW OF GUARANTEES. ing on the person making Buch promise in respect of anything done or omitted to b6 done after a change shall have taken place in any one or more of the per- sons constituting the firm, or in the person trading un- der the name of the firm, unless the intention of the parties that such promise shall continue to be binding, notwithstanding such change, shall appear either by express stipulation or by necessary implication from the nature of the firm or otherwise." This enact- This enactment appears merely to affirm the common mentdeelara- law. This was decided in Backhouse v. Hall (k). tory of the There three persons carried on the business of ship- ffi^ll ' No person of that name had been in the partnership for some time, and the plaintiff and defendant being both aware of the constitution of the partnership, the defendant gave the plaintiff the following guarantee : " In consideration that you have at my instance and re- quest consented to open an account with the firm of O., W. & W. J. Hall, ship- builders, I hereby guarantee the payment to you of the monies that at any time may [*251] become due, not *exceeding 5,O0OZ." It was held, that the guarantee ceased on the death of the partners, as a contrary intention did not appear by ex- press stipulation, or by necessary implication from the nature of the firm or otherwise. As the 4th section of the Mercantile Law Amend- ment Act merely affirms the common law, those cases which were decided before the passing of this enactment, upon the subject which we are now considering, are, consequently, as binding now as ever they were. We propose, therefore, to examine them, and in doing so. we shall not confine ourselves exclusively to cases where guarantees were given to or for partners, but we will also examine those strictly analogous cases where guar- antees were given to or for individuals who have sub- sequently altered their condition. In the following examples it will be observed that the judges were very careful not to bind the isurety beyond the scope of his engagement; and that, in the absence of express stipulation or necessary implication to the contrary, they have always held his liability to determine on any change taking place in the persons, to 01 for whom the guarantee was given (l). (k) 6 B. & S. 507; 34 L. J., Q. B. 141. (/) Many of these cases are collected and commented upon in note (d), at p. 326 of 3 Douglas' Reports. (1432) LIABILITY or THE SURETY. • 199 We 'will first examine those cases where, after the I. Where, execution of the guarantee, a change took place in the after guar- persons to whom such guarantee was given. antee given, ( 1. ) Where the change consisted of an increase in taken place ' tlie number of persons to whom the guarantee was in persons to given. whom guar- Whether an increase in the number of partners to antee is whom a guarantee was given discharged the surety fjT^p " . seems to have been somewhat unsettled before the crease in the passing of the Mercantile Law Amendment Act. number of In Wright v. Russell (m), a bond, conditioned for the persons to honesty of one Baird, a clerk, was given by the defend- ^hom the *ant to one Wright, the employer of the clerk. [*252] ^^^^'^ ^^ ^ Wright, subsequently to the giving of the bond, entered ^^i„jit y into partnership with one J. D. It was /leM that the de- Eussell. f endant was no Iqnger liable on the boo d. It was said, in the judgment in this case : "It is truly said that the defendant (the surety) ought not to be bound beyond the scope of his engagement, which was to be answer- able for the fidelity of Baird to Wright only, not to Wright and any other person or persons The defendant Russell engaged for Baird's faithful service to Wright. When Wright took in a partner there was an end of the obligation; the condition was confined to Wright only, and the breach assigned is for non payment of the money to Wright and Delafield, or either of them, which is not within the condition. The defendant Russell and the other surety might have confidence in Wright, that he would be careful with respect to the conduct of Baird in his office of broad clerk, which they might not have in any partner with Wright, and, for anything that appears to the Court, the defendant Russell had no conception of being en- gaged for Baird's fidelity to any other person besides WHght." It appears that, in the case just cited, the breach Barclay v. assigned was for embezzling the partnership money, not Lucas. the money of Mr. Wright only. This circumstance is commented on in Barclay v. Lucas (?i). In this latter case, debt was brought on a bond (reciting that the plaintift's, at the recommendation of the obligors, had agreed to take one Philip Jones into their service and employ as a clerk in their shop and counting-house, and that the obligors had agreed to become security for (m) 3 AVils. 530; 2 Bl. Rep. 934. (n) Cited in a note to Barker v. Parker, 1 T. E. at p. 291. But see 1 N. E. 42; 4 Ta^unt. 681, from which it appears that the decision in Barclay v. Lucas has heen doubted. (1433) 200 THE I.AW OF GUARANTEES. his fidelity as far as 500?. eaeh), which declared that if the said P. Jones should faithfully accoant for and pay [*253] *to the plaintiffs all sums of money he should at any time receive, &c. in the service of the plaintiffs, and did not embezzle, &c., then the bond was to be void. It was pleaded by the defendants that after the giving of the above bond, the plaintiffs received into partnership one Robert Barclay, and that P. Jones then quitted the service of the plaintiffs and entered into the service of the plaintiffs and Robert Barclay, and that P. Jones, all the time he remained in the service of the plaintiffs alone, well and faithfully accounted, &c. The plaintiffs replied in substance, that the said bond was given to the house, and not to the individual members of the firm. The following judgments were given in this case: — Lord Mansfield, G. J., said: "The question in this case turns upon the intention of the parties at the time of entering into the contract. In questions upon inteintion we must look to the subject-matter of the con tract. It is notorious that there are many banking houses in the city which continue for generations. This can only be done by a constant succession of partners, and even if they should not bear the same name with the first proprietors, yet still the house frequently con tinues under the original firm. To carry on this business it is necessary to have a great liumber of clerks, whose office is extremely beneficial; for besides the present fees and emoluments, they are frequently taken into partnership in process of time. But it is of the utmost consequence to these houses that the clerks should behave honestly; and, therefore, a security is taken for their fidelity. The circumstance of taking in a new partner makes no difference either as to the quantity of the business, or the extent of the engagement. He con tinues to carry on the business of the plaintiff's; and this contract is co-extensive with his continuance in the house. This is a security to the house of the plaintiffs, and no change of partners will discharge the obligor." Buller, [*254] J., in the same case, said : * "This case is dis tinguishable from that in the Common Pleas (o); there the breach assigned was for embezzling the whole partnership money; and I observe from the re port of that case, that Mr. J. Gould lays much stress upon the point that the breach assigned was for em bezzling the partnership money, whereas it should have been for the plaintiff's money only. I confess I do not (o) Wright V. Russell, cited ante, p. 251. (1434) LIABILITY OF THE SURETY. 201 see the force of that objection: but, however, it is not applicable to this case, — for here the plaintiffs have confined the breach to the proportion of the money which was actually their property." In Spiers v. Houston (p) it was held that a guarantee Spiers v. of monies advanced by a firm consisting of F. & Co., Houston. will not extend to a new firm into which H. is intro- duced as a partner. And payments made by the principal, after the alteration of the firm, and in trans- actions with him, are applicable to the extinction of the balance due to the old firm at the date of the altera- tion (q). (2.) Where the change consisted of a diminution in (2) Where the number of the persons to whom the guarantee icas number of qivn persons to k' By Death. ;^--J«- The effect of a change by death in the firm to whom is dimin- tbe guarantee is given, generally speaking, was to dis ished— charge the surety. Thus, in Strange v. Lee (r), the (a) By death. defendant's bond recited that A. intended forthwith to ^trange v. open an account with C, D. & E. as his bankers, and ^^' was conditioned for the payment to C, D. & E. of all sums from time to time advanced to A. at the banking house of C, D. & E. It was held, that on C.'s death the obligation ceased, and did not cover future ad- vances made after another partner was taken in, and that A., who was indebted to the house at C.'s death, having *afterwards paid off the balance, which [*255], was applied at the time to the old debt incurred in C.'s lifetime, A. was wholly discharged from his obligation. Tiord EUenborough diBtingmahed this case from ^ar- clay V. Lucas (s), on the ground that the words of the bond in the latter case were different, for in that case the bond provided that the clerk was to be taken into the service of the obligees, as a clerk in their shop and counting house, which might be supposed to mean the sajwe house, however the individual partners might change. So, again, in Barker v. Parker (t), it was held, that Barker v. a bond with a condition that a clerk should faithfully Parker. serve and account for money to the obligee and his ex- ecutors, did not make the obligor liable for money re- (p) 4Bligh, N. S. 515. (?) /ft. (r) 3 East, 484. (s) Ante, p. 252. (t) 1 T. E. 287. (1435) 202 THE LAW OF GUAKANTEES- ceived by the clerk in the service of the obligee's exec utor. Lord Mansfield, 0. J., said: "The bond in question is relative to the service vyith Pyott, the tes- tator. It v?as given as an indemnity that the clerk should be faithful to him, and should pay all the money received on his account to him, or to his executors ; because money might be in his hands at the time of the testator's death, for which he could only account to the executors. So that it was the intention of the parties that the bond should not be extended beyond the life of the testator." Wesi-on v. To the same effect, also, is the case of Weston v. Barton. Barton (u). There the condition of the bond was for the repayment to five persons of all sums advanced by them, or any of them, to Catterall & Watson, in their capacity of bankers. It was held, that the bond did 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., delivered the following judgment ; " The question here is, whether the original partnership being at an end, in consequence of the [*256] death *of Golding, the bond is still in force as security to the surviving four ; or whether that politi- cal personage, as it may be called, consisting of five, being dead, the bond is not at an end. The case has stood over in consequence of doubts which the Court entertained on particidar expressions in the bond. Many cases were cited at the bar, and the result of them is, that, generally, when a change takes place in the number of persons to whom such a bond is given, the bond no longer exists. These decisions certainly fall hard on the obligees ; for I believe the general un- derstanding is, these securities are given to the hank- ing house, and not to the particular individuals who compose it ; and we should readily so construe the bond, if the words would permit. The words of the condition, on which the question depends [and which his lordship now read over], again and again refer to the obligees' capacity of bankers ; they were bankers, only as they were partners in their banking house, as / it is called, and this security is conditioned to pay any money advanced 'by them five, or any or either of them.' Taking those last words by themselves, it might at first be conceived, that, if any one of the five advanced money this bond should secure it, but the words are afterwards explained, when it is seen that (w) 4 Taunt. G73. (143G) LIABILITr OF THE SURETY. 203 the money is to be paid to the five. Now it could never be intended that money advanced by one of them singly should be repaid to the five ; and this shows that the words ' advanced by them, or any or either of them ' must be confined in their meaning to money advanced by any or either of them in their capacity of bankers, on behalf of all the five. This, then, being the construc- tion of the instrument, from almost all the eases, in truth, as 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 rea- sons of those *decisions, but there may be very [*257] good reasons for such a construction ; it is very prob- able that sureties may be induced to enter into such a security, by a confidence which they repose in the in- tegrity, 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 per- son on whom the sureties relied ; it would, therefore, be very unreasonable to hold the surety to his contract after such change. And, though the sum here is lim- ited, that circumstance does not alter the case ; for, although the amount of the indemnity is not inde- finite, yet 3,000i. is a large sum ; and, even if it were only 1,000Z., the same ground, in a degree, holds, for there may be a great deal of difference in the measure of caution or discretion with which different persons would advance even 1,000Z. ; some would permit one who was almost a beggar to extend his credit to that sum ; others would exercise a due degree of caution for the safety of the surety ; and, therefore, we are of opinion, that as to such sums only which were advanced before the decease of Golding can an indemnity be recovered by the plaintiffs ; and, as to the sums claimed for debts incurred since his decease, the judgment must be for the defendant." A similar decision was also come to in the case of Peniberton v. Pemberton v. Oakes(x). There a banking partnership Oaken. was formed for fifteen years, between Harding, Oakes and Willington ; it was stipulated that, if Oakes or Wil- lington should die during the term, the concern should (.t) 4 Euss. 154 ; and see Bank of Scotland v. Christie, 8 CI. & F. 214. (1437) 204 THE LAW OF GUARANTEES. be continued by the survivors or survivor, the deceased's share to be paid to his executors up to the death ; but [*258] that if Harding should die, he might dispose *of his share to his wife and children, and there was a pro- vision for his appointing persons who should carry it on as if he were living, during the minority of his. children ; and the business was, in that event, to be carried on by the surviving partners and the appointee, in the manner and on the terms and conditions directed by the partnership articles, as if he had not died. Harding made his will in favour of his children as to his share, and appointed persons to carry on the con- cern with his partners ; and he dying, this was carried into effect. The question was, whether a surety for a customer of the original firm, who had executed a deed to the members of that firm to secure them for sums already due or which should become due to them for advances made thence forward to the end of the fifteen years, was liable to any advance made after the death of Harding. Lord Chancellor Lyndhurst held clearly that he was not liable for advances by a new firm, although he had stipulated to secure advances made during the whole fifteen years ; and that the death of Harding, with the substitution of the appointees, though contemplated by the original articles, made a new firm. Chapman v. And yet another case in which the same view pre- Beckington. vailed is that of Chapman v. Beckington, (y). In that case the plaintiff and one William Chapman entered into partnership, by deed, with one Potts. Potts was to be the acting partner. In consideration of this trust he and the defendant bound themselves by a bond of guarantee to the plaintiff and the Said William Chap- man, for the observance by Potts of the covenants in the partnership deed, and also that Potts, during such time as he should continue the acting partner in the said trade of the said co-partnership, should faithfully make and deliver a true account in writing of all sums [*259] of *money, notes, bills, and other partnership effects, which should come to his hands, or which he. should be intrusted with by or on account of the said co-partnership, and also make good, answer for and pay over, the moneys due on the balance to the said plain- tiff and W. Chapman. Potts, after the decease of W. Chapman, rendered false accounts. It was held, that the co-partnership referred to in the condition of the bond was determined by W. Chapman's death, and that (y) 3Q. B. 703. (1438) LIABILITY OF THE STJKETY. 205 the defendant was therefore not liable for PoWs' default happening after that event. In this case, Lord Denman, C. J., said : "Many eases were cited to show that, where the surety had covenanted with the house, and not the members of the firm, or had stipulated that his liability should not be effected by a change of the members, he would remain liable to the new firm. These cases we do not in the least question, our judgment proceeding on the language of this condition, making all due allowance for the effect which the language of the deed ought to have on its construction." Even the circumstance that the guarantee was to be Holland v. for a fixed time, which had not expired when the change Teed. in the firm happened, made no difference as to the appli- cation of the rule. Thus, in Holland v. Teed (z), under a guarantee given to a banking house consisting of several partners, for the repayment of such bills drawn upon them by one of their customers as the bank might honour, and any advances they might make to the same customer, it was held that the guarantee ceased upon the death of one of the partners in the bank, before the expiration of the time to which the guarantee was expressed to extend. It was also held, that bills accepted before the death of the partner and payable afterwards, were within the guarantee; that the amount guaranteed could noj; be ipcreased by any act of the *continuing firm and the customer after the [*260] death of the partner, although such amount might be diminished by sucji act. Even before the Mercantile Law Amendment Act, By agree- however, the liability of the surety continued, if it ™ent surety appeared that the parties intended it should do so, not- JfaWeTfter"^ withstanding a change in the firm. Thus, in Metcalf v. change in Bruin (a), the bond was given to " seven of the trustees firm to whom of the Globe Insurance Company," or to their certain gaarantee attornies, executors, administrators or assigns, to secure Si^en. the faithful services of a clerk to the Globe Insurance ^<'^!^V ^- Company. The condition of the obligation was, that if the clerk should, from time' to time, and at all times thereafter, during his continuance in the service of the said company, faithfully serve the said company, and should, when required, deliver in writing a true account of all monies, &c. which in the said service should come to his hands on account of the said company, and pay over the balance to the said company, or to such person S7 Hare, 50. See also Pemberton v. Oakes, ante, p. 257. 13 East, 400. See also Leadley v. Evans, 2 Bing. 32, cited ante, p. 249. (1439) 206 THE LAW OF GUARANTEES. as the said company or the court of directors thereof, for the time being, should appoint; and should indemnify the said company and the directors and all other mem- bers thereof for all losses, &c., &c., which the company or any of its membei;s might sustain, by anything done or neglected by the said clerk, during his said service, then the obligation to be void. The Globe Insurance Company was not a corporation. It was held, that the said bond might be put in suit by the truptees, for a breach of faithful service by the clerk, committed at any time during his continuance in the service of the actual existing body of persons carrying on the same business under the same name, notwithstanding any intermediate change of the original holders of the shares by death or [*261] transfer ; the intention of the parties *to the instrument being apparent, to contract for such service to be performed to the company as a fluctuatirfg body, and the intervention of the trustees removing all legal and technical difficulties to such a contract made with, or suit instituted by, the company themselves as a natural body. The following is the judgment of Lord Ellenborough, C J., in the case: — "We cannot enhance the obligation beyond thp terms of it; the only question, therefore, is upon the fair meaning of the terms used in it, and we must put upon the word company the sense in which the parties themselves used it in this instrument. We could not, indeed, invert the rules of law to enable persons to sue as a body or company who are not a corporation; but here the bond has been given to trustees, who are under no difficulty of suing upon it in their own names; and the only question is, as to the description of persons meant to be designated under the term company. I will begin, therefore, by translat- ing that word according to the subject-matter, namely, the Globe Insurance Company. Now, suppose a bond given to a trustee to secure the performance of certain services to the commoners of such a common, would there be any difficulty in applying it to the use of the commoners for the time, being, whoever they might happen to be, during the period for which the services were to be performed ? There could be no doubt of it. Now, the persons constituting this company laboured at the time under an imperfection to contract from the fluctuating nature of their body, and therefore they constituted seven persons to be trustees for them ; and whether those seven were members of the body or not is, for this purpose, indifferent. Those seven entered (1440) LIABILITY OP THE SURETY. 207 into this contract for the benefit of the company, and if it had not been understood by the contracting par- ties that the company therein mentioned meant a fluc- tuating company, we must suppose that they contem- plated that *fche bond might probably be gone [*262] in twenty-four hours, which never could have been meant. It must, therefore, have been intended to secure the faithful performance of the service to a succession of masters, who might from time to time constitute the company. Wilkinson then was admitted into the ser- vice of the Globe Insurance Company, the parties well knowing that a body so constituted would be continually changing and fluctuating, and they looked to his con- tinuance in the service of the said company, which could not mean a continuance in the service of the same individuals, some of whom might be changed before the wax on the bond was cold, but must have meant the successors of the persons so called the Olobe Insurance Company. He is then to account to the said company, that is, to the same successive body; and he is to in- demnify 'the company and the directors and all other members thereof, from all losses, actions, &c. which may be sued against them, or which the said company, or any member or members thereof, should bear,' &c., by reason of his neglect: all this looks to the change that might take place in the body. There is ^lothing contrary to any rule of law in such an agreement: a man may well agree to serve the subscribers to the rooms at Bath. A contract with the body itself at large would not have done; but a contract with the trustees, for the benefit of the body, gets rid of all the difi&culty. So, if the contract were made with the commoners themselves of a certain common, the successive com- moners could not come into court and sue upon the contract, but a trust may be created for such a body which would extepd to those who were successively clothed with the right of the original body. However anomalous, therefore, the body may be, if we can get at the intent of the contracting parties in their descrip- tion of it, there is nothing illegal in such a contract. Nor does our opinion clash with any of the cases which have proceeded upon the terms of the respective bonds. A *bond to A. cannot be extended to A. and B., [*263] unless, as in Barclay v. Lucas, the terms of the bond may be taken to explain such an intention. It may even be thought that there was greater difficulty in that case than in the present; but I only collect from it the prin- ciple on which it professes to proceed, which wai the (1441) 208 THE LAW OF GUARANTEES. Kipling v Turner (b) Diminu- tion by retire- ment of per- sons from apparent intention of the parties at the time of enter- ing into the contract to provide for a service to a change- able body carrying on the same concern. In the pres- ent case, the intent appears very clearly to Ibok to the service of a fluctuating body." In the same case, in commenting on Barclay v. Lucas, Bayley, J., said: "In Barclay v. Lucas the obligation was understood as in- tended to secure the service to such persons as should become partners in the same house of trade. This mode of considering the case gets rid of the difficulty started in the argument, that if it were extended be- yond the continuance of the then existing members of the body, it should include all who then were or should thereafter become members; but it meant only the com- pany for the time being, which gets rid of the diffi- culty." The case oi Kipling v. Turner (b) proceeds much on the same principle asMetcalf v. Bruin (c). In Kipling V. Turner, the condition of a bond, after reciting that A., B. and C. had filed a bill in equity against R. M. and J. S., was that the obligor would pay all such cosls as the Court of Chancery should award to the defend- ants on the hearing of the cause. It was held by Bay- ley, J., Holroyd, J., and Best, J., (Abbott, C. J., duM- tante), that the death of one of the defendants, before any costs awarded, could not be pleaded in discharge of the bond. ■ Bayley, J., said, "This bond is not condi- tioned to pay such costs as the court of equity shall award to E. M. and J. S. by name, but to pay such costs as shall be awarded by the court to those who, [*264] *at that time, fill the character of defendants in equity. The case is very different where persons are ' described by character and where they are described by name. If, for ipstance, a man makes A., B. and C. his executors, and directs that A., B. and C. shall sell his property, then if A. dies, B. and C. cannot sell it; but if he directs his executors to sell it, B. and C. may do so. In this case, therefore, I think, that if any costs were awarded to pereons filling the character of defendants in equity, ihey would be within the bond, and here it appears by the replication that there were costs so awarded. I am, therefore, of opinion that there should be judgment for the plaintiff." (b) By one partner retiring from the firm. The voluntary retirement by a partner from the firm had, even before the Mercantile Law Amendment Act, 1 (o) 5 B. & A. 261. Ante, p. 260 et ^eq. (!442) LIABILITY OF THE SURETY. 209 the same effect as liis death — it put an end to the sure- firm to whom ty's liability. Thus, in Myers v. Edge (d), it was held guarantee that a promise in writing directed to A. B., &c. [a house g^^^"- in trade] to pay for goods to be furnished to another, ^"^^ ^" cannot be enforced in an action by B. and C. to recover the value of goods furnished after A. had withdrawn from the partnership. In Pease v. Hirst (e), however, Pease v. it was held, that as the instrument (a promissory note -Sira'- payable to the five members of a banking house or order) was framed so as to comprehend future as well as pres- ent partners, the maker of the note-was liable notwith- standing a change in the firm by the retirement of a partner from the firm. (3.) Where the change consisted of the incorporation or (3) Effect on consolidation of the persons to whom the guarantee was surety's lia^ given. . • bilityofin- Where the effect of the consolidation was entirely to or^ongoiila'a. change the nature and circumstances of the creditors tion of the *the surety was discharged, even before the [*265] persons to passing of the Mercantile Law Amendment Act (/). whom the Thus, in Dance v. Girdler (g), a bond was given to A., ^g^^yg^ B., C, &c., payable to them and their successors as the naace v governors of the Society of Musicians, conditioned to Qirdler.' secure J. H.'s faithfully accounting with them and their successors, governors, &c., as their collector ; afterwards, the society was incorporated by letters patent, at which time J. H. had duly accounted for all monies collected by him, but after the incorporation he received monies for which he did not account. It was held, that the obligor was not liable for such default of J. H. in an action on the bond. Lord Mansfield, C. J., in his judg- ment, while pointing out that it would be unreasonable, under the circumstances, to hold the surety liable, inas- much as a voluntary society, to which the bond was given, is very different in character from the corpora- tion which had been substituted for such voluntary society, expressly bases his decision on the ground, that according to all the cases which had been cited, as well as others which might be found, the surety was not bound to answer for sums received after the charter of incorporation, which constituted a perfectly new body (rf) 7 T. E. 254. See also Dry v. Dav}/, 10 A. & E. 30; Solvency Mutual Guarantee Society v. Freeman,^ H. &. N. 17; 31 L. J. Ex. 197. (e) 10 B. & C. 122. (/) See 19 &20 Vict. c. 97, s. 4, ante, p. 250. (g) 1 N. R. 34. 14 (1443) 210 THE LAW OF GUARANTEES. II. Where, after guar- antee given, change has taken place in persons /or whom it was given. (1) By in- crease in the number of persons for whom the guarantee was given. Bellairs v. Hbsworth. of persons in point of law. But, where the consolida- tion makes no substantial difference in the situation of the creditor and the surety, the latter is not discharged. Thus where a surety became bound by bond for the good behaviour of a clerk to two railway companies, and, subsequently to the execution of such bond, these two companies were consolidated by act of parliament, it was held, that the surety was not discharged, as the consolidation of the two companies did not affect the duties or responsibility of the principal or surety, not- withstanding the new company possessed additional lines (h). [*266j *We will next examine those cases where, after the execution of the guarautee, a change has oc- curred in the persons for whom such guarantee was given. (1.) Where the change consisted , , . , „ , n -, cancelled. The rights which the surely possesses when called TheChancery iipon to pay do not call for notice at length. Of course Division of there are a great variety of defences, any one or more High Court ^f -which may be open to the surety; but, as such de- now fences are of common occurrence in other actions, they jurisdiction, need no special remarks here. There are only two mat- The rights of ters of defence which it is necessary to make special surety when mention of. called upon Formerly, if the creditor sued the surety on his to pay. guarantee, the surety might have pleaded equitably a Htl'^dt^'b n- set-off which the principal debtor had against the efitofset-ofl' creditor (t). And now, by virtue of the Judicature which Act, 1873, vyhere a defence shows grounds entitling the principal defendant in equity to be relieved against a contract a'^ainst''^'^ sought to be enforced by the plaintiff, any Division in creditor. which the action is pending may give effect to the equitable defence, at least so far as to treat it as a defense to the action (u). Surety's The other matter of equitable defence against a claim right to com- under the guarantee requiring notice is, the surety's pel '^'^'^^^"21 i right to compel a creditor having a claim upon two (p) HawksJiaio v. Parkins, 2 Sw. 544 ; Samuel v. JJowarth, 3 Mer. 272 ; Small v. Currie, 5 D., M. G. 141 ; 2 Drew. 102 ; Allan y. Inr man, 7 Jur. 433. See also Story, Eq. Jur., 9th ed., pars. 883, 883a. (q) 36 & 37 Vict. c. 66, s. 24 (5).. {r) Blest V. Brown, 3 Giff. 450. (s) Judicature Act, 1873, s. 34 (3). (0 Murphy v. Glass, L.. R., 2 P. C. 408; 8. C, 6 Moo. P. C, N. S. 1; 20 L. T., N. S. 461; 17 W. R. 592. See also Bechervaise v. Lewis, 20 W. R., C. P. 726; S. C, 41 L. J., C. P. 161; 26 L. T. 848; L. R., 7 C. P. 372. (m) 36 & 37 Vict. c. 66, s. 24 (2); Mostyn v. West Mostyn Coal Co.. 1 C. P. D. 145; Wilson's Judicature Act, 4th ed., p. 20. (1462) KI6I-ITS OF THE SUKETT. 229 funds, one of which the surety cannot make available, to the fund to resort to the latter fund first (x). whicli is not The rights which a surety possesses against the creditor available to ^ STixetv after he has been called upon to pay the debt are of „. , considerable importance. surety ^fter If, in ignorance of the facts, he has paid the creditor payment that which he was not liable to pay, the surety is enti- demanded. tied *to recover the amount so paid («/). If, [*290] To recover however, a surety were to make an improper payment sum paid to in ignorance of law, and not of fact merely, it is pre- f'^^oranclTof sumed that he could not recover it back, for "ignorantia f^ct. legis neminem excusat." Assuming no such question as this to arise, another To benefit of right is, that he is entitled to the benefit of all the se- all securities curities, whether known to him (the surety) or not (z), held by which the creditor has against the principal (a). And creditor. it is the duty of the creditor, as soon as the surety has paid the debt, to make over to him all the securities which he (the creditor) holds, in order that the surety may recoup himself (b). In the case of a person who becomes surety for a limited amount of a debt, he has, on payment of the amount for which he is liable, all the rights of a creditor in respect of that amount, and is entitled to a share in the security held by the creditor for the whole debt (c). This right of the surety to the benefit of all the Nature of securities held by the creditor is not necessarily de- this right. pendent upon contract, but is the result of the equity (x) Ex parte Kendall, 17 Ves. 514. ly) Mills V. Alderbury Union, 3 Exch. .590. (z) Duncan, Fox <& Co. v. North and South Wales Bank, ubi infra; Mayhew v. OricJceit, 2 Swanst. 185, 191; Pearly. Deacon, 24 Beav. 186. See also Scott v. Knox, 2 Jones (Ir.), 778; Hodgson v. Shaw, 3Myl. & Kee. 183; Yonge v. Meynell, 9 Hare, 809; MerchanW Bank of London v. Maud, 18 W. R. 312; 19 W. E. 657. [a) Ex parte Orisp, 1 Atk. 135; Sir Daniel 0' Carrol's case, Amb. 61; Goddard v. Whyte, 2 Giff. 449; Brandon v. Brandon, 3 De G. & J. 524; Pardons' v. Briddock, 2 Vern. 608. Observations of Willes, J., in Bechervaise v. Levns, 20 W. E., C. P. 726; 41 L. J., C. P. 161; 26 L. T 848; L. E., 7 C. P. 372. See also Craythorne V. Swinburne, 14 Ves. 160; W7ightY. Morley, 11 Ves. 12; Ex parte Rushforth, 10 Ves. 409; Pledge v. Bv,ss, Johns. 663; Bobinsonv. Wilson, 2 Madd. 434; Sotham v. Stone, cited2Madd. 437; Plumbe V. Sanday, 1 Madd. Princ. & Prac. 236;S(ra»fl'e v. Fooks, 4 Giff. 408; Hodgson v. Shaw, 3 Myl. & Kee. 183; Swain v. Wall, 1 Ch. Eep. 80. (6) Per Cockburn, C. J., in Wulffv. Jay, 20 W. R., Q. B. 1030, 1031; 8. a, L. R., 7 Q. B. 756; 41 L. J., Q. B. 322; 27 L. T. 118; 20 "W. E, 1030. (c) Goodwin v. Gray, 2 "W. E. 312. (1463) 230 THE LAW OF GUARANTEES. Surety en- titled to securities given after the contract of suretyship, Eight of surety to transfer of mortgages taken by creditor for the debt. of indemnification attendant on the suretyship (d); and [*291] *it can be exercised even where the only surety- ship is created by indorsing a bill of exchange in order to get it discounted (e). It seems, however, that, during the currency of a bill of exchange, the indorsers.are not sureties to the indorsees, nor have they any equity to prevent an indorsee from dealing as it may seem to him most desirable with any other parties, unless thereby he prevents himself from giving notice of dishonour, so as to give them their remedy against prior parties to the bill ( /). Thus, it would seem, that, where bankers are holders of a bill accepted by a customer, and in- dorsed by a third person, they will not be incapacitated from carrying on their dealings with that customer, by varying the securities received from him according to the ordinary course of those dealings as long as he re- mains solvent, and before the acceptance has been dis- honoured (gr). This right extends, and the surety is entitled, to securities given after the contract of suretyship (ft.). And, therefore, where the creditor has so dealt after- wards with such security that on payment by the surety it cannot be given up to him in the same con- dition as it was when the creditor first acquired it, the surety is discharged to the extent of such security (*'). And so, also, the surety is entitled to a transfer of any mortgage which the creditor may have taken for his debt, even though the surety was not originally aware of its existence (fc). But, upon the other hand, a surety is sometimes not entitled to an assignment from the creditor of a mortgage, unless he pays off, not only [*292] the *sum for the payment of which he became surety, but also such further sum as may have been ad- vanced on the security of the same mortgage (Z). This does not, however, appear to be the case, where the surety was wholly ignorant of the second advance, and such advance was not contemplated at the time of the orig- {d) Duncan, Fox <& Co. v. North and South Wales Bank, 6 App. Cas. 1; 11 Ch. Div. 88; 50 L. J., Ch. 355; 43 L. T. 706; 29 W. E. 763. {e) n. (/) lb., per Blackburn, Lord, at p. 18 of 6 App. Cas. (g) lb., per Selbome, L. C, at p. 15 of 6 App. Cas. (ft) Forbes v. Jackson, 19 Ch. Div. 615, 621 ; Fledge v. Buss, Johns. 663 ; contra Newton v. Charlton, 10 Hare, 646 ; 2 Drew. 333 : Pearl v. Deacon, 24 Beav. 186. (i) Campbell v. Rothwell, 47 L. J., Q. B. 124; 38 L. T. 33. (k) Mayhew v. Orickett, 3 Swan, 185, 191. (0 Williams v. Owen, 13 Sim. 597. (1464) / EIGHTS OF THE SUEETY. 231 inal loan (m). Where, also, there is a special contract ex- cluding the right to tack a subsequent debt, the creditor ■would not be allowed to retain the mortgage, as against the surety, until payment of such subsequent debt (w). In the case of Farebrother \. Wodehouse (o), it -was Faretrother t. decided, that where two properties are mortgaged by ^o'^"^''^- A. to B. for distinct sums, and C. is surety for one only, the right of B. to retain all the securities until repaid both debts overrides the right of C. to have the benefit of the securities for that debt for which he is surety. There the defendant lent A., at the same time, two sums of 2,000Z. and 3,0001. on distinct securities, and the plaintiff was surety for the first sum. It was held that the plaintiff, on paying the 2,O0OZ., was not entitled to have a transfer of the securities held for that sum until the defendant had also been paid the 3,0002. This last-named case has been disapproved of in the Forties v. recent case of Forbes v. Jackson (p), in which the J<"^kson. facts were as follows : — In December, 1854, S. as- signed certain premises and a policy of assurance to secure the repayment of a sum of 2001. advanced to him by W. and interest. The proviso for redemption was, that on payment of the money W. would re-as- sign the premises and policy unto S., his executors, administrators or *assigns, or as he or they [*293] should direct. F., by the same indenture as surety, covenanted, for himself only, with W. that while the • 200Z., or any part thereof, remained owing, he would pay the interest and premiums, and he also assigned a policy on his own life and covenanted to pay the pre- miums. W., at four different periods, between May, 1856, and May, 1866, advanced moneys amounting to 530Z. to S., on security of the same premises. S. made default in payment of the interest. W. died in 1878, and his executors made a demand upon F. for all ar- rears, which he paid, and he also paid the premiums on the policy of S. It was held that F. was entitled to have a transfer of all the securities on paying what was due upon the mortgage of December, 1854. Now, it is to be noticed that in this case it was admitted that the subsequent advances were made without the sure- (m) Forbes v. Jackson, 19 Ch. Div. 615 ; L. J., Ch. 690 ; 30 W. E. 252 ; Newton v. Clwrlton, 10 Hare, 646 ; 2 Drew. 333 ; contra Williams v. Otoen, 13 Sim. 597. (») Bowker v. Bull, 1 Sim. N. S. 29, where, however, Williams v. Owen, supra, was not cited. (o) 23 Beav. 28. (p) 19 Ch. Div. 615 ; 51 L. J., Ch. 690 ; 30 W. E. 252 ; and see In re Kirkwood, 1 Ir. L. E., Ch. 108. (1465) 232 THE LAW OF GUARANTEES. South V. Bloxam. Formerly surety not entitled to have bond debt of prin- ty's knowledge or consent. It is, therefore, submitted that this circumstance is quite sufficient of itself to support the judgment of Hall, V.-C, and that, conse- quently, his decision in no way conflicts with Fare- brother Y. Wodehouse (g), where, at the time the sure- tyship was entered into, the surety kneiv that the secu- rities held by the creditor were intended to cover not only the sum guaranteed, but also another sum to which the promise of the surety did not extend. How- ever, no such distinction was drawn by the learned Vice- Chancellor in his judgment, in which he states that his decision is founded on Newton v. Chorlton (r), and that he refuses to follow Williams v. Owen (s), though Lord Romilly followed it in Farebrother v. Wodehouse. The case of South v. Bloxam (t), is also of much im- portance to sureties. There two funds were mortgaged to A., with a covenant by a surety. A second mort- gage of one of these funds was made to B. B.'s fund [*294] having *been exhausted in part payment of A.'s debt, and A.'s mortgage having been transferred to the surety, on payment by him of the balance, it was held that B. had a right to marshal the securities as against the surety. It was also held that the surety could not tack, as against B., the costs of a defence to an action on his covenant from which B." derived no beneiit, but that he might charge, as against B., all costs incurred for the common benefit of the persons interested in the estate after the first mortgage. Semble, also, that, as against the original mortgagor, the surety might have tacked to his security all costs not improperly incurred as surety. And in all cases, as against the mortgagor, a surety for a mortgagor who pays part of the mortgage is entitled to a charge on the estate (u). In an action for foreclosure one period only of six months for re- demption will be allowed to the mortgagor and his surety for the payment of the mortgage debt, and not a period of six months to each in succession (x). There formerly existed a remarkable exception to the general right of the surety to have all securities held by the creditor made over to him on payment of the debt. This exception was founded upon highly tech- (q) TIM supra. M 10 Hare, 646. (s) 13 Sim. 597. U) 2 H. & M. 457. (») Gedge v. Matson, 25 Beip,v. 310 ; and see Allen v. De Lisle, 11 W. E. 158. (x) Smith v. Olding, 25 Ch. Dlv. 462 ; 50 L. T. 357 : 22 W. E. 386. (1466) RIGHTS OF THE SURETY. ' 233 nioal reasons. For it was held that, where a surety cipal debtor paid off the bond debt of his principal, for which he assigned to was bound, he could not require the creditor to assign '^"^ °° P'^^' to him such bond debt, because it was satisfied and ex- ™^"^ ' tinguished by the very act of payment by the surety (y). And it was held, that even an assignment of the bond, executed to a trustee for the surety at the time when the surety paid off the debt, would not keep *alive the instrument so as to "make the surety [*295] . in equity a specialty creditor of the principal (z). The confe"red bv law of England has in this respect been altered by the 19 & 20 Vict. 5th section of the Mercantile Law Amendment Act (a), c.,97, s. 5. This enacts that, "every person who, being surety for the debt or duty of another, or being liable with another for any debt or duty shall pay such debt or perform such duty, shall be entitled to have assigned to him, or to a trustee for him, every judgment, specialty or security which shall be held by the creditor in respect of such debt or duty, whether such judgment, specialty, or other security, shall or shall not be deemed at law to have been satisfied by the payment of the debt or performance of the duty, and such person shall be en- titled to stand in the place of the creditor, in any action or other proceeding at law or in equity, in order to ob- tain from the principal debtor, or any co-surety, co- contractor, or co-debtor, as the case may be, indemnifi- cation for the advances made and loss sustained by the person who shall have so paid such debt or performed such duty ; and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him : provided always^ that no co-surety, co-cqntractor, or co-debtor, shall be entitled to recover from any other co surety, CO- contractor or co-debtor, by the means aforesaid, more than the just proportion to which, as between those parties themselves, such last -mentioned person shall be justly liable." This enactment has, in one or two instances, received Construction judicial interpretation. Thus, it has been decided, that °f *^^s enact- the act applies to contracts entered into before the ™^^ ' passing of the act, provided the breaches of them have (y) Copis V. Middlelon, 1 T. & E. 231 ; Jones v. Davids, 4 Russ. 277 ; Armitage v. Baldwin, 5 Beav. 278 ; DowMggan v. Bourne, 2 You. & Coll. 462 ; Gammons. Stone, 1 Ves. sen. 339 ; but see Bot- ham V. SioTie, 1 T. & Russ. 226 (npte) ; Robinson v. Wilson, 2 Madd. 434 ; Parsons v. Briddock, 2 Vein. 608. (2) Jones V. Davids, 4 Rtiss. 277. (a) 19 & 20 Vict. c. 97. (1467) 234 THE LAW OF GUARANTEES. In re Russell, Bussell V. Shoolbred. Mode of compelling assignment' of securities under 19 & 20 Vict. c. 97,' a. 5. Surety not discharged by creditor surrendering security on debtor's bankruptcy, and electing to prove in- stead for whole debt. taken place and payment has been made by the surety, after the passing of the act (6). It has also been [*296] *held that a surety is not entitled to have an assignment of the principal security, unless he pays the debt in fall (c). And in the very recent case of In re Russell — Russell v. Shoolbred (d), it was held that a right of distress for rent in arrear is not .a security held by a creditor in respect of a debt within the meaning of the act, and, therefore, that the act of the creditor, though it may have the efEect of destroying such right, does hot discharge the surety. The reasons for this decision were thus shortly expressed by the court : — "In the first place, the right of distress is not in com- mon parlance, nor we think in legal phraseology, a security held for a debt, it is a particular remedy which arises on non-payment ; in the second place, the section appears to be dealing with securities, which, according to the existing law, are in their nature as- signable, which is not the case with a power of distress for rent in arrear, which, according to the common law, was only incidental to the immediate reversion ; and, lastly, we think that the preamble is strong to show that the Legislature had no intention of effecting a great change in the law regulating the relations of land- lord and tenant." As regards the mode of enforcing the surety's right under 19 & 20 Vict. c. 97, s. 5, to an assignment of securities, it was held, in a case decided before the Judicature Acts, that advantage cannot be taken of the act by motion (e), and that the only way, apparently, in which it can be made available is by action (/). An exception to the rule which requires all securities held by a creditor for the debt guaranteed to be pre- served for the benefit of the surety exists where, on the [*297] *bankruptcy of the debtor, the creditor elects to surrender his security and prove for the whole debt (g). For it must be taken that where three persons enter into the relations of creditor, debtor and surety, the possible bankruptcy of the debtor is an event Which the surety. has in his contemplation at the time of entering (6) In re Cochran, De Wolf v. LindseV, L. E., 5 Eq. 209; 16 W. R. 324; 17 L. T., N. S. 487 ; 37 L. J., Chanc. 293, following LoclcJiart v. Bdlly, 1 De G. & J. 464 ; 27 L. J., Ch. 54 ; Batehelor V. Lawrence, 9 C. B., N. S. 543 ; 30 L. J., C. P. 39. (c) Ewari v. Latta', 4 Macq. H. L. E. 983. U) 29 Ch. Div. 254.- (e) Phillips V. Dickson, 8 C. B., N. S. 391. /) ^l>- (g) Rainbow v. Juggins, 5 Q. B. D. 138, 422. (1468) EIGHTS OF THE SURETY. 235 into the contract of suretyship, and that consequently it becomes an implied term of that contract, that in the event of the bankruptcy occurring, the creditor shall be j entitled to exercise that option which the bankruptcy .law gives him in the way which is most advantageous to himself (h). It is submitted that if the surety, on payment of the Whether if debt guaranteed, does not insist on the securities held surety cioes for it by the creditor being given up, and a long time securities ^ afterwards credit is given to the debtor on the same being given securities, the surety cannot compel the delivery of them up he can to him. Certainly, as against the debtor the right of long after- the creditor td hold such securities is absolute (i). mand them Not only is a surety, who pays off his principal's debt, from ci'editor entitled to a transfer of securities held by the creditor, who has but he is also in all respects entitled to all the equities ™ade ad- , which the creditor could have enforced. And, this right ^^^ prevails, not merely against the original creditor of the g^j-g^y ig en- principal debtor, but also against all persons claiming titled to all under the latter (k). A. mortgaged his estate to 0., the equities and B. became A.'s surety for the debt. Afterwards 'which credi- A. rqortgaged the estate to D., who had notice of the jjave'eii- first mortgage. The iirst mortgage was subsequently forced, paid off, partly by B., the surety, but D. got a transfer of the legal estate. It was held that the surety had still priority over D. for the amount paid by him under the first mortgage, as surety for A. {t). Again, on a *purcha8e of goods by a broker for an undis- [*298] closed principal, in a market according to the usage of which such a broker is personally liable in default of his principal, and is therefore a surety for the latter, the unpaid vendor's lien will pass to the broker, on de- fault made by his principal, even though the latter may have pledged his interest in the goods to third persons, and indorsed the delivery order to them (m). A surety who has paid the principal's debt, also has Right of a right, upon the bankruptcy of the principal debtor, to surety to stand in the place of the creditor himself. ?^^^ ^"{Zf' Thus a surety may compel the creditor, on the bank- on principal ruptcy of the principal debtor, to prove against his estate debtor's for the amount due, and the creditor will be a trustee of bankruptcy, the dividends for the suretv who has paid the whole The creditor is a trustee of (70 n. (i) Wauffh V. Wren, 11 "W. E. 244. (k) Drew v. Locketi, 33 Beav. 499. h) lb. [m) Imperial Bank v. London and St. Katherine's Dock Co., 5 Ch. Div. 195 ; 46 L. J., Ch. 335 ; 36 L. T. 233. (1469) 236 THE LAW OF GUARANTEES. dividends for debt (»). If the dividends on the bankrupt's estate are surety who not sufficient to pay the creditor, and the surety pays debt*^^*^ what remains due, he is entitled to stand in the creditor's place as to future dividends (o). Where a limited guarantee has been given, and the limit has been ex- ceeded by the creditor, who afterwards receives from the estate of the principal debtor a dividend, the surety is entitled to the benefit of a part of that dividend, proportional on the amount guaranteed, notwithstanding that the unpaid debt greatly exceeds the amount of such guarantee (p). And if, in such a case, the creditor has recovered the whole sum guaranteed, in an action against the guarantor, the right of the latter to file a bill for an [*299] account and payment to him of such dividends, *is not barred by the fact that he might have pleaded a set-off to that extent in the action, and omitted to do so (g). Such a claim was held not to be a mere " money demand," within the meaning of the principal exclud- ing actions for damages merely (r). And where a creditor receives dividends upon a debt, partly secured by the guarantee of a third person, the dividends must not be appropriated to the excess of the debt, above the sum guaranteed, but must be applied rateably to the whole debt, and the surety is relieved from liability by the amount of dividend on the part which is secured (s). On the other hand, if the creditor accepts from the surety a composition of so much in the pound, he can only prove against the estate of the principal debtor for the balance, after deducting part payment (t). If bills be discounted in the market which are drawn by one firm upon another firm and then both these firms become bankrupt or agree to a conposition, the bill- holder is entitled to prove against both estates and to receive all the dividends or composition he can get frofli both estates until he has received 20s. in the pound, and whether it may turn out that the drawer is surety for (n) Ex parte Bushforth, 10 Ves. 409, 414 ; Beardmore v. Cruiten- den, 1 Cooke, B. L. 211, margin. And see Jackson v. Nagee, 3 Ad. & E. 57 ; Phillips^. Smith, cited 10 Ves. 412 ; Ex parte Turner, 3 Ves. 243 ; Paley v. Field, 12 Ves. 435. (o) Ex parte Johnson, 3D., M. & G. 218. (p) Tliornton v. WKewan, 1 H. & M. 525. See also Hdbson v. Sass, L. E., 6 Ch. App. 792. (g) Thornton v. 3PKewan,, supra. (r) lb. (s) Eaikes v. Todd, 8 Ad. & E. 846. But see Ihe Liverpool Bor- ough Bank v. Logan, 5 H. & N. 464. (t) Oriental Commercial Bank, Ex parte Maxoudoff, L. E., 6 Eq. 582. See also Midland Banking Co. v. CJiambers, L. E., 4 Ch. App. 398. (1470) EIGHTS OF THE SURETY. 237 the acceptor or the acceptor is surety for the drawer, yet the surety has no right to receive anything until the bill -holder has received altogether 20s. in the pound (u). ' The right of the surety, under section 173 of the Rights for- Bankruptcy Act, 1849, was to prove in the place of the merly pos- creditor, or to have the benefit of the creditor's proof, ^^^^'^^ "^ and the sureties were bound by the election *of [*300] gg^^; J73 ^f the creditor who had elected to prove against a particu- B. A. 1849. lar estate [x). A surety paying, after the bankruptcy of the princi- pal debtor, to a creditor who has proved, can only stand in the place of the creditor upon the bankrupt's estate, and, in case of a surplus, cannot claim interest unless the creditor could have claimed it (y). Where, how- ever, the surety had improperly proved for interest, subsequent to the fiat in bankruptcy, the Court of Chancery, sitting in .bankruptcy, refused to reduce the proof after seven years had elapsed, and after the death of the surety (z). The Bankruptcy Act of 1869 did not, it seems, con- Subsequent tain anv section equivalent to the 17 3rd section of the Bankruptcy Baniiuptcy Act, 1849, which enacted, that " sureties f^^^^^^^ and persons liable for the debts of a bankrupt may prove provision, after having paid such debts" (a); nor do the Bank- ruptcy Act, 1888, and the rules framed under it, con- tain any provision as to proof by sureties (a). Where there are several sureties, it sometimes becomes a question which of them is entitled to the benefit of the creditor's' proof. A bond was entered into by a principal and three sureties. The principal and one of the sureties compounded with their creditors, and the other two sureties became bankrupt. The obligee proved the full amount of his debt against the separate estates of the' two bankrupts, and claimed under the composi- tions, and by these means received 20s. in the pound ; but the estate of the compounding surety paid more than its contributive share. It was held that that estate was entitled to the benefit of the proof made by the creditor against the bankrupt surety (6). («) Ex parte Turquand, In re Fofliergill, 3 Ch. Div. 445, 450; 45 L. J., Bank. 153. (x) Ex parte Came, L. E., 3 Ch. App. 463. See also Ex parte Sevan, 10"Ves. 107. (jf) Ex parte Houston, 3 G. & J. 36. See also Ex parte Wilson, 1 E. 137. (z) Ex parte Sanderson, 8 D., M. & G. 849. (a) Eobson's Bankruptcy, 5th ed. 309. " (6) Ex parte Stokes and another, DeyGex, 618 ; 12 Jur. 891. (1471) 238 THE LAW OF GUARANTEES. Rights pos- [*301] *Akin to the rights possessed by a surety, on sessed hj the bankruptcy of the debtor, are those devolving upon surety for g, person who has guaranteed the debt of a company tSK"''' which has afterwards been wound up. That is to say, being wound where such a person has paid the debt for which he is up. surety, he is entitled to receive from the creditor a share of the dividend payable to the latter in the wind- ing up, bearing the same proportion to the whole divi- dend as the sum paid by him bore to the sum proved for by the creditor (c). Moreover, the rule established by Ex parte Turner (d) that in similar 'cases in bank- ruptcy, the sum paid by the surety is, in calculating the proportions of dividend, to be considered as ex- punged, does not apply to cases in winding up (e). Surety may The rights which the surety possesses of standing in waive his the creditor's place, as regards all the latter's securities and equities, and on the . bankruptcy of the principal, may, however, be waived. The waiver may be made by express agreement in the contract of suretyship (/). Thus it may be agreed between the surety and creditor that the receipt by the latter of dividends in the bank- ruptcy of the principal debtpr shall not diminish the liability of the surety to pay in full (gr). But it need not of necessity be express (h). Thus, for instance, in the case of Cooper v. Jenkins (i), A. was tenant for life of lots 1 and 2, to which B. was entitled in remainder. B., and A. as his surety, mortgaged •lot 2, — B. alone covenanting to pay. By a con- temporaneous deed, B. conveyed his interest in the other lot on trusts to indemnify A. as his surety. A. , [*302] paid large sums for interest *on the mortgage. It was held.that he was entitled to the benefit of the deed of indemnity only, but not to stand in the place of the mortgagee on lot 2. Sir John Bomilly, M. R., said, " The plaintiff cannot have the benefit of the mortgage on the principle of the Mercantile Law Amendment Act. He must proceed under one or other of the two rights which he claims. If he had bound himself to pay the mortgagee and had done so, he would then have (c) Gray v. Seckham, L. R., 7 Ch. App. 680; 26 L. T. 233 ; 27 L. T. 290. (d) 3 Ves. 243. (e) Gray v. Seckham, libt supra. If) See Ex parte Hope, 3 M. D. & D. 720 ; Midland Bank v. Chambers, L. R.,' 4 Ch. App. 398 ; Earle v. Oliver, 2 Exch. 71.- (g) Ex parte National Provincial Bank, In re Bees, 17 Ch. D. 98; 44 L. T. 325; 27 W. R. 796 ; Ex parte Miles, Be Gex, 623. (h) Wauffh V. Wren, 11 W. E. 244. (i) 32 Beav. 337. (1472) RIGHTS OF THE SURETY. 239 been entitled to the benefit of the mortgage. He has not done so ; he has bargained by a separate instru- ment for an indemnity which is perfectly distinct. This payment of interest was perfectly voluntary, but that does not aifect the deed of indemnity, which is precise and entitles him to what he has paid, whether be was compelled to pay or not. If a surety pay off the mort- gage, he is entitled to the benefit of all the securities. But here the plaintiff has contracted with the mortga- gor, for whom he is surety, that he should receive a particular species of indemnity if he pay ofP any part of the principal or interest. That indemnity he is en- titled to, and not to the benefit of the mortgage paid off." Where a sui'ety who is liable for the whole or part of another's debt has paid the whole of what he is liable for, and has expressly waived in the contract of surety- ship his right to stand in the place of the creditor to that extent against the estate of the bankrupt debtor (j), the circumstance of the surety having received from the principal debtor a counter- security, makes no dif- ference in the respective rights of the parties. This was decided in the recent case of The Midland Banking Gompany-Y. Chambers (k.) There, a bank permitted a customer to *overdraw his account upon hav- [*303] ing a guarantee from a surety to the extent of 300Z., which guarantee provided that all dividends, composi- tions and payments received on account of the custo- mer should be applied as payments in gross, and that the guarantee should apply to and secure any ultimate balance that should remain due to the bank. The cus- tomer gave the surety a mortgage on part of his estate by way of indemnity. Afterwards the customer com- pounded with his creditors by a deed which provided for the administration of the assets as in bankruptcy. His banking account was overdrawn 410Z. The mort- gage was realized, and the surety paid the bank the 300^. secured by it. It was held by the Lords -Justices (affirming the decree of Malins, V.-C), that the bank was not, as contended by the trustees of the composi- tion deed, restricted to proof for the balance of llQl., but was entitled to receive dividends on the whole 4101., (j) As to this right, see ante, p. 298, and see The Midland Bank- ing Co., Ex parte, In re Sellers, 38 L. T. 395 ; Ex parte Hope, 3 M., D. & D. 720; Midland Banking Co. v. Cluimbers, L. R., 4 Ch. App. 398. (k) L. E., 4 Ch. App. 398. See also Ex parte Hope, 3 M., D. & D. 720. (1473) 240 THE LAW OF GUARANTEES. not receiving in the whole, including the 300Z., more than 20s. in the pound. In a continuing limited guarantee there was a proviso, that, if the creditors received a dividend from any estate of the principal debtor, it should not be taken in dis- charge of the guarantee, but that the creditors should be entitled to recover on the guarantee to the fall ex- tent of the limit notwithstanding. On the bankruptcy of the principal debtor the creditors proved, and, before receiving any dividend, obtained payment of the sureties to the extent of the limit. It was held that the sureties were not entitled to stand in the place of the creditors as to so much of their proof as was equal to their pay- ment (I). Right of The right of the surety to reduce his liability, by de- surety to the ducting a rateable proportion of dividends paid under diviTdend's *^® bankruptcy of the principal debtor, may not only received on he wholly lost by reason of its express exclusion con- principal tained in some clause of the instrument of guarantee, debtor's [*304] but it is *often a nice question of construction often™ nice 'whether, having regard to the form of the guarantee, question of this right of the surety can be exercised, in cases where construction the debt guaranteed exceeds the sum to which the lia- of instrument bility of the surety is expressly limited, until the whole of guarantee, ^j ^.j^^ ^^^^^ ^^^ ^^^^ liquidated. The determination of this question would appear to depend upon whether the intention was to guarantee the whole debt, with a limi- tation on the liability of the surety, or to guarantee a part of the debt only (m). In the former case, the surety's right to stand in the place of the creditor re- mains in abeyance until satisfaction of the whole debt (n) ; while", in the latter case, his right can be exercised the moment the limit of his guarantee has been reached, and he has been obliged to make payments thereunder (o). To which class of guarantees a par- ticular instrument belongs is determined by principles which have been explained on an earlier page of this work (p). Previous It would seem that a course of dealing between the course of parties, previous to the bankruptcy of the principal twee™part"ies the second, a reasonable time must be allowed after: the expiration of the two years for the plaintiffs toj endeavour to obtain payment from H. Nevertheless (e) 3 A. & E. 758 ; 5 Bing. 54. 21 (1555) 322 THE LAW OF GUARANTEES. that the plaintiffs, having allowed two years io pass without proceeding againsi N. H., after whicli he went abroad, had certainly exceeded such reasonable time, and were barred of their remedy against H. by the Statute of Limitations in July, 1828. Bartland v. In Hartland v. Jukes (/) the facts were as follow : — Jukes. In the year 1855 W. Courtney proposed to open a banking account with the Gloucestershire Banking Company, and thereupon he and W. Steward, as his surety, gave the banking company their joint and several promissory note for 200i., and at the same time [*407] *a memorandum in writing was signed by them and delivered by the banking company. This memo- randum, in effect, provided that the promissory note was given as a further and collateral security to the banking company, for the banking account intended to be kept by W. Courtney with them, and that it thould be held by them, and that they should be at liberty to recover thereon to the full amount thereof all the money which W. Courtney should at any time thereafter become lia- ble for or indebted to the banking company on his bank- ing account.' The account was opened, and on the 31st December, 1855, W. Courtney was indebted to the bank- ing company in 173Z. No demand of payment was made, however, nor was a balance struck until 30th June, 1856, when 194Z. was due to the banking com- pany on the account. A balance was afterwards struck every half-year, the banking company from time to time making advances, and W. Courtney paying money into the bank with which his account was credited. The The sums so credited exceeded the value of the prom- issory note. The account was not closed till February, 1861, when a balance of 1611. was due to the banking company. In March, 1862, the banking company com- commenced an action on the note against W. Steward's executors. It was held that the cause of action was not barred by the Statute of Limitations. (/) 1 H. & C. 667. (1556) APPENDIX. *38 & 39 VioT. 0. 64. [*409] An Act to repeal the Ouarantee by Companies Act, 1867, and to make other Provisions in lieu thereof. [11th August, 1875.] Whekeas by the Guarantee by Companies Act, 1867, the heads of public departments were authorised to accept as security for persons required to give security for the due performance of the duties of an ofSce or employment in the public service the guarantee of a company which complied with the condi- tions contained in that act, and received a certificate from the treasury as pro- vided by that act: And whereas it is expedient that the power of the treasury to give such certi- ficate to a company as is provided by the said act should cease, and that the said act should be repealed, and other provision made as hereinafter mentioned: Be it therefore enacted by the Queen's most excellent Majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority of the same as follows: 1. The Guarantee by Companies Act, 1867, is hereby repealed, and every cer- tificate granted by the treasury to a company under that act is hereby can- celled. Provided as follows : (1.) Where a certificate has been given by the employer as mentioned in the said act of the amount due in respect of any loss from the guarantor, such certificate shall continue to have the same effect as provided by the said act; and, (2. ) All rights and remedies vested in any company under section seven of the said act shall continue to be so vested; and, (3.) Such remedy, and any investigation or legal proceedings in respect of any such right, loss, or remedy, may be had and carried on in like manner as if this act had not passed. *2. Where a person holding any office or employment in the public [*410] service is required by law to give security for the due performance of the duties of such office or employment, the treasury may from time to time, if they think fit, by warrant made upon the representation of the head officer of the depart- ment in which such person serves, authorise that head officer, in such cases, under such circumstances, and upon such conditions as may be specified in the warrant, to vary the character of the security, notwithstanding that the same maybe prescribed by any act or otherwise. The treasury may from time to time, by warrant made upon the like repre- sentation revoke or vary any previous warrant made in pursuance of this sec- A warrant made in pursuance of this section may apply to any class of per- sons as well as to any single person. , „, , .J Everv warrant of the treasury made in pursuance of this section shall be laid before both houses of parliament within one month after it is made, if parlia^ ment be then sitting, or, if not, within one month after the then next session of parliament. Clo57) 324 APPENDIX. For the purposes of this section every person who is remunerated out of the consolidated fund, or out of moneys provided by parliament, or out of fines or penalties, or other moneys which otherwise would be paid into the receipt of her Majesty's exchequer, or out of other public revenue, or who holds any pub- lic office or employment under the crown in respect of which he is entitled to fees, shall be deemed to hold an office or employment in the public service. The expression "treasury" in this act means the Commissioners of her Ma- jesty's Treasury. 3. Where the guarantee of any company has before the passing of this act, been accepted as security for any person holding any office or employment in the public service, such guarantee shall continue to be received as security ibr such person, subject to any power which the head officer of the department in which such person serves may have to require some other security. 4. This act may be cited as the Government Officers (Security) Act,. 1875. (1558) INDEX. [The paging refers to the [•] paging.] ABANDONMENT, verbal abandonment of contract within Statute of Frauds, 347. abandonment by creditor of execution against principal debtor, 391, 392. ACCEPTANCE, of offer of guarantee, 2 — 5. may be express or implied, 3. examples of implied acceptance, 3 — 5. when express acceptance necessary, 5. verbal acceptance of written proposal, 158. ACCORD AND SATISFACTION, to deed before breach, 346, 347. ACTION, to satisfy Statute of Frauds, written evidence of contract must exist before action brought, 32. in England on verbal guarantee made abroad, not maintainable, 43. See Statute of Fbauds. when a verbal promise is partly within Statute of Frauds, and partly out- side it, action maintainable where one part separable from the other, 45. promise to pay if action against another stayed, 73 et seq. See Statute of Frauds. upon a guarantee, 197. form of, before Judicature Act, 197, 198. plaintiff may now proceed against surety by specially indorsed writ where demand liquidated, 198. course of procedure where this remedy adopted, 198, 199. where specially indorsed writ not available, plaintiff must deliver a statement of claim, 199. parties to actions on guarantees, 199 — 201. See Paeties. by surety against a principal debtor, 280 et seq. by surety against co-surety, 313 et seq. See Conteibution. cannot now be restrained by injunction, 288. ADMINISTRATOR, light of surety to letters of administration on decease of principal debtor, 278. AGENT, signature by agent of representation of credit, &o., does not satisfy 9 Geo. '4, c. 14, s. 6 . . 37 et seq. even in case of a public company, 37^ — 39. promise by principal that if his agent does not pay he will, not within Statute of Frauds, 129. See Statute of Frauds. who is agent within sect. 4 of Statute of Frauds, 158 — 170. See Auc- tioueee; Beokbe; Company; Parties; Paetnees; Sigstatxiee. agent's authority need not be in writing, 158. cannot delegate his authority, 158, 159. but if he does principal may ratify, 159. (1559) ,326 INDEX. [The paging refers to the [*] pages.] AGENT— conimued. subsequent recognition of agent's act, 159. agent need not sign as such, 159. parol evidence of agency admissible, 159. where agent signs his own name and that of his principal, he must be taken to have signed as a contracting party, 159. agent need not sign in name of principal, 159, 160. where agent signs his own name, parol evidence when admissible to prove agency, 159. agreement that agent was not to be liable as principal may be pleaded, 159, 160. authority of agent countermandable, 160. agent must have some authority, 160, 161. effect of his signing without authority, 161. his liability in such a case, 161. what class of agents possess implied authority to give a guarantee, 161 — 170. See AuciiONEBS ; Beokees ; Paetnees. del credere agent, what is, 134. See DEL Ceedbee Commission ; Statute OF Feauds. AGREEMENT, requisites of agreement, 2 — 7. See Conteact of Guaeantee. substitution of new for old, 346 — 348. See Dischaege op Suhbty. variation oi terms of, 350 — 361. See Dischaege of Sdeety. parol evidence to explain vrritten agreement, 150, 159, 180. See Evi- dence. sect. 4 of Statute of Frauds requires whole agreement to be in vmting, 148 at seq. See CONTEACT OP GUAEANTEE. consideration need not now appear in writing, 150 et seq. See CoN- TEACT OF Guaeantee. memorandum in writing need not be contemporary with agreement, 173. but when it is made there must be a complete agreement actually in existence, 173. to satisfy Statute of Frauds agreement need not be contained in one in- strument, 173, 174. See Conteact op Guaeantbe. to satisfy Statute of Frauds agreement must be reduced to vrriting before action, 32. ALIENS, common law as to contracts by, 16, 17. Naturalization Act, 1870, effect of, 17. ALTERATION, of instrument of guarantee, 340 — 343. rule in Pigot's case applies to guarantees, 340, 341. semble, immaterial alteration by a party does not invalidate instru- ment, 342. effect of alteration made vrtth consent of principal debtor, 342. ground on which discharge by alteration of written instrument proceeds, 342, 343. verbal alteration of contract within Statute of Frauds, 347. APPROPRIATION OF PAYMENTS, explanation of the doctrine, 397 et seq. right of appropriation in English law, 397. debtor first right to appropriate, 398. if he does not, creditor may, 398. if neither does, then law appropriates to earlier debt, 398. application of doctrine where sureties claim benefit of payments made by principal, 398—400. (1560) INDEX. 327 [The paging refers to the [*] pages.] APPEOPEIATION OP PAYMENTS— continued. right of appropriation in English law — eoniinued. presumption in favour of appropriation of items of credit to items of debit in order of date may be rebutted, 401, 402. right of appropriation in Raman law, 398. at what time appropriation to be made, 398. by debtor, 398. by creditor, 398. ARREST, promise to pay if another discharged from arrest, 88 — 90. See Statutk OF Fbauds. ASSENT, mutual, of contracting parties necessary, 2. See Contbact op Guakantee. ASSIGNMENT, promise to pay debtt)f another in consideration of debt being assigned, 142, et seq. See STATUTE OP Frauds. effect on surety's liability of execution of deed of assignment of debtor's property by creditor as trustee under such deed, 363. ATTORNEY. See Solicitoe. AUCTIONEER, whether he can sign guarantee as agent, 161, 162. AUTHORITY. See Agent. AWARD, against principal debtor not binding on surety, 181, 182, 197, 273. BAIL, promise to execute bail bond, 74, 134. See Statute op Frauds. promise to indemnify bail in a civil case, 113. See Statute of Fraitds. in a criminal case, 113, 114. See Statute of Frauds. BANKRUPTCY, of surety, 271—275. before default of the principal debtor creditor could not formerly prove, 271. 56 Geo. 3, c. 56, gave enlarged right of proof, 271, 272. to what cases contingent debt clauses of old Bankruptcy Acta applied, 272, 273. right of proof against surety now regulated by B. A. 1883 . . 273. proof, where surety has been discharged by conduct of creditor, will be rejected, 273. award against principal does not dispense with strict proof of surety's liability by creditors against his estate, 273, 274. person proving against surety must have a sufficient interest in the guarantee, 274, 275. right of creditors to benefit of securities received by surety from prin- cipal debtor when both insolvent, 275. of co-surety, 316—319. proof in respect of payments before co-surety's bankruptcy, 317. made after the bankruptcy, 317 et seq. no proof against co-sureties existed under sect. 52 of 6 Geo. 4, c. 16 . . 275 nor under sect. 177 of B. A. 1849 . . 318. whether under B. A. 1883, proof can be made in respect of contingent right of contribution, 319. of principal debtor, 283—287. (1561) 328 INDEX. [The paging refers to the [*] pages.] QANKRUPTCY— continued. of principal debtor — continued. righte of surety against principal debtor on latter's bankmptcy, 283 et seq. formerly could not prove in respect of payments made after prin- cipal's bankruptcy, 283, 284. right of proof under 49 Geo. 3, c. 121, s. 8, and subsequent statutes re-enacting this provision, 284 et seq. decisions under these statutes, vrho deemed a surety, 284. • necessary for principal's debt to be actually due when commis- sion issued, 285. whole debt of principal must have been satisfied, 285, 286. surety when entitled to prove for eostn and expenses, 286. certificate a bar to principal debt and consequential damage, 286. surety's right of prool not affected by creditor delivering up bond to him and receiving surety's promissory note for sum remaining due, 286, 287. doubtful whether under sect. 37 of B. A. 1883, surety may prove, before actual payment, against estate of defaulting debtor, 286. rights of surety against creditor on principal debtor's bankruptcy, 298—304. may compel creditor to prove against principal debtor's estate, 298. creditor is trustee of dividends for surety paying debt, 298. when surety entitled to stand in creditor's place as to future dividends, 298. proof in case of limited guarantee where limit has been exceeded, 298. proof where debt partly secured by guarantee, 299. rights formerly possessed by surety under sect. 173 of B. A. 1849 . . 299, 300. right against principal debtor's estate where surety had paid after bankruptcy of principal to creditor who had proved, 300. proof under subsequent Bankruptcy Acts, 300. they do not contain any provision corresponding with sect. 173 of B. A. 1849 . 300. which of several sureties entitled to benefit of creditor's proof, 300. agreement by surety to waive right of proof in favour of creditor, 300—302. right of surety to benefit of dividends received on principal debtor's bankruptcy often a nice question of construction of guarantee itself, 303, 304. such waiver not presumed by previous course of dealing be- tween parties, 304. BANKRUPTCY ACT, 1883, order under, discharging bankrupt does not release surety, 184, 185. right of proof regulated by sect. 37 . . 273. doubtful whether under this section a surety may prove against prin- cipal debtor's estate before actual payment, 286. does not, nor do the Rules framed under it, contain any express provision as to proof by sureties, 300. whether under B. A. 1883, proof can be made in respect of contingent right of contribution, 319. (1562) INDEX. 329 [The paging refers to the [•] pages. ] BILL OF EXCHANaE, consideration implied in, 18. promise to indemnify indorser of a bill, 84, 85. See Statute of Pbauds. surety for payment of a bill, but not a party to it, whether entitled to notice of dishonour, 189. when guarantor of bill, not a party to it, discharged by omission to pre- sent, 189. agreement to indorse another's bills discharged if demand to indorse not madle in reasonable time, 188, 189, 384. BILL OF.SALE, , promise to pay another's, debt if goods not taken under bill of sale, 146. See Statute of Featjds. BILLS OF EXCHANGE ACT, 1882, provisions in, as to suretyship of parties to bills, 42. BOND, promise to sign bail bond if third person released, 74, 134. bonds for good behaviour of persons in offices, &c. , 204, 205, 225 — 246. liability of surety under, bond for good behaviour in an office extends only to deiaults committed after legal appointment, 204, 205. and to breaches within scope of office, 207. after third person's re-appointment to same office, 226 — 233. general words of condition as to duration of surety's liability restrained by recitals, 226 et seq. or by allegations in pleadings where no recital of term of office, 226, 228, ei seq. liability of surety where general words of condition in no way restrained, 231 et seq. by use of proper words surety's liability may extend to reappointments, 232, 233. after appointment to another but similar office 233 — ^238. where new office incompatible and inconsistent with first appointment, 237, et seq. acceptance of additional office where first appointment retained, 238. after change in duties, &c. of office, 238 — 246. material alteration of duties discharges surety, 239 et seq. even though principal's default be in a matter not affected by alteration, 239 et seq. hut alteration must be clearly alleged in the pleadings, 241. general clause in obligatory part of bond for fulfilment of an agency controlled by reference to prior clauses specifying extent of agency, 240, 241. surety not discharged by immaterial alteration, 241 — 245. or if alteration was contemplated by surety, 245. or where duties lessened, 243. bond for good behaviour in two distinct offices, 243 — 245. alteration in mode of paying principal, 246. BOOKS, entries in plaintiff's books often settle question to whom credit given, 108, 109. See Credit .; Statute of Frauds. entries by principal debtor in, whether evidence against surety, 182. BKOKER, who receives a commission for incurring liability is a surety, 1 n (a). implied authority to sign guarantee as agent, 161. promise to pay broker of distraining landlord his charges, 59, 60. See Statute of Frauds. (1563) 330 INDEX. [The paging refers to the [•] pages.] CALLS, surety for payment of, 206. is not a contributory, 206. CANCELLATION, of instrument of guarantee, 10, 288, 289. CAPIAS AD SATISFAOIENDUM, promise to pay another's debt on his discharge from arrest on cq. so., 88 — 90. See Statute of Frauds CHANCERY DIVISION, will set aside contracts made by persons of weak intellect, 10. proceedings in, to compel debtor to exonerate surety from liability, 276, 977, proceedings in, to set aside and cancel guarantees, 288, 289. CHARTER-PARTY, guarantee for performance of, need not be stamped, 176. CIRCUMSTANCES. See Subrounding Cibcumstancbs. CLAIM. See Statement of Claim. COLLATERAL. See Statute of Frauds. meaning of term, 53 — 54. COMPANY. See Directors ; Ultra Vires. liability of, on representation of credit, &c., signed by its manager, 37 — 39. liability of, on guarantees given by directors, 170. guarantee for term of years of a minimum dividend given by vendor of busi- ness to, 190. consolidation of company to whom guarantee given, 264, 265. See Paet- ners. rights possessed by surety for a company, which is being wound up, 301. liability of company on representation of credit, &c. , made by its manager, 38, 39. proof of surety for company in respect of interest, 281. COMPOSITION, guarantee for payment of a composition, 61, 144. See Statute of Frauds. effect on surety's liability of composition deed executed by creditor, 362, 363. where .surety's right reserved, 363. where surety consents, 366. CONCEALMENT. See Fraud. CONCURRENT CONSIDERATION. See Consideration, CONDITION. See Bond. CONDITION PRECEDENT. See Surety. to surety's liability must he fulfilled, 190 — 197. where execution of guarantee by a person jointly with surety is a condi- tion precedent, 194 — 197. to relieve surety omission by another to execute an instrument must amount to breach of a condition precedent, 195 et seq. where agreement by creditor to give time to principal conditional on per- formance of some act by principal, 373. See Time. CONSIDERATION, necessary to a contract not under seal, 18. expressed in words or implied, 18. in what cases implied, 18.- (1564) INDEX. 331 [The paging refers to tlie [*] pages.] CONSIDERATION— eomfenucd. guarantee invalid (unless under seal) without consideration, 19. consideration for siirety's promise need not move directly between parties, 19. executed consideration vrill not support guarantee, 20. forbearance a sufficient consideration, 20 — 24. executory consideration supports guarantee, 24 — 28. future supply of goods, 24, 25. future employment of third persons, 25. sometimes difficult to determine vfhether consideration is pa-st or future, 26 et seq. guarantee supported by a concurrent consideration, 28. whether moraZ consideration will support a promise, 28 — 31. illegal consideration for guarentee, 28. from whom consideration for a guarantee moves, 31. consideration for promise of guarantee must once have been in writing, 148, 149. this no longer necessary, 150. See Contbact of Guaeanteb. failure of consideration for guarantee, 343, 344. See Dischaege of Surety. what amounts to, 343, 344. agreement giving time to debtor will not discharge surety unless supported by consideration, 370, 371. See Dischaege of Sueety; Time. CONSTRUCTION OF GUARANTEE, rules of, .specified, 177—181. formerly held that guarantee was not to be construed against surety, 177. now ordinary rule held to apply, 177, 178. terms of surety's engagement regulate his liability, 178, 179. when natural and literal meaning of words must be given, 179, construction must be on whole instrument, 179. construction must be favourable, 180. parole evidence to explain instrument, 180. See Evidence. construction of guarantees limited in amount, 206. See Limited Guae- antee. ■CONTINUING GUARANTEE, whether guarantee continuing, often difficult to determine, 210. two classes of continuing guarantees, 211. ordinary mercantile guarantees, 211 — 225. instances of continuing guarantees, 211 — 220. instances of guarantees not continuing, 221 — ^225. bonds given for fidelity of oflcial persons, 225 — 246. See Bond. CONTRACT OF GUARANTEE, definition ol, 1. formation of, 1 — 39. parties to, 1. their relative position, 31, 181 et aeq. requisites of, 2. mutual assent, 2. offer to guarantee not binding, 2. till acceptance revocable, 3. acceptance is express. 3. or implied, 3. minds of contracting parties must be ad idem as to subject of contract, 5. sense in which promiser bound to fulfil promise, 6, 7. competency of parties to contract, 7. intention defined, 8. contracting parties must be capable of intending, 7, 8. (1565) 332 INDEX. [The paging refers to the [•! pages.] CONTRACT OF GVA'RANTBE— continued. requisites of — continued. competency of parties to contract — continued. effect of insanity of one of contracting parties, 8 — ^10. effect of intoxication of one of contracting parties, 10, 11. ■why and when duress avoids a contract, 11 — 13. infants, contracts by, 13 — 15. See Infants. married women, contracts by, 15, 16 See Maeeied "WoMElT. incapacities to contract arising from motives of public policy, 16 — 18^ aliens, 16, 17. See Aliens. felons and outlaws, 17, 18. See Felons AND OUTLAWS, valuable consideration, 18, 31. See Consideeation ; FoebbaeANCB. no special form of words necessary to constitute a guarantee, 31. evidence of guarantee by comirwn law, 31. 4th sect, of Statute of Frauds requires written evideruie, 31. evasion of this enactment, 33, 33. remedy applied by 9 Geo. 4, c. 14, s. 6 . . 33. See LoED Tendeeden'S Act. attempt to neutralise this provision, 34. See Lord Tenteeden's Act what cases within 9 Geo. 4, c. 14, s. 6 . . 35 et seq. See LoED Ten- teeden's Act. what written memorandum satisfies sect. 4 of Statute of Frauds, 148 — 176. tohole agreement must originally have been in writing, 148, 149. what term agreement includes, 148, 149. respective requirements of 4th and i7th sects, of Statute of Frauds- as to written evidence contrasted, 149. by sect. 3 of 19 & 20 Vict. c. 97, consideration need not appear in writ- ing, 150. this enactment not retrospective, 150. does not dispense with necessity for consideration, 150. verbal consideration cannot explain written promise, 150, 151. this enactment does not make a promise valid which was not so- formerly, 151. nor does it cure bad consideration, 151. Gases cited where court had to decide whether statement of considera- tion sufiBcient, as they help to indicate whether statement of promise now sufficient, 151 — 157. substantial compliance with statutory requisition as to written evidence suilicient, 157. names of contracting parties must appear in writing, 157. to whom memorandum to be addressed, 157, 158. effect of a guarantee not addressed to anyone, 158. guarantee addressed to one partner may enure for benefit of firm, 158, verbal acceptance of written proposal, 158. signature of memorandum. See Signatuee. memorandum in writing need not be contemporary -with agreement, 173. but when the memorandum is made, there must be a complete agreement actually existing, 173. agreement need not be contained in one written instrument, 173 — 175. whel-e agreement evidenced by several -written instruments, how they are connected, 173, 174. statute satisfied by signed paper referring to another unsigned con- taining terms of agreement, 17. the stamping of a memorandum of guarantee, 175, 176. See Stamp. sufficient if statute once satisfied by memorandum in writing, 176. rulesfor construction of, 177 — 181. liabilities of surety for, 246—248. voluntary settlement made by surety, whether fraudulent and \iiid within 9 Eliz. c. 5. .248. right of contribution not enforceable where fraudulent to insist upon it, 319, 320. discharge of surety by, 324 — 340. - antecedent to contract, 325. ' suppression or concealment, 325 — 335. " rule prevailing in insurance cases as to effect of concealment does not apply to guarantees, 325 — 328. what am-.tants to fraudulent concealment, 329. intentional concealment not necessarily fraudulent, .329. what matters surety bound to disclose spontaneously, 329 — 331. particular examples of cases where non-disclosure com- plained of, 331—335. every private bargain between creditor and principal varyingdegree of surety'sresponsibility should be disclosed, 331. and sometimes agreement between creditor and a stranger, 331, 332. whether necessary to disclose past misconduct of principal debtor, 333. whether principal debtor's indebtedness should be disclosed, 333,334. subisequent change in circumstances originally con- templated ty parties should be disclosed, 334, 335. misrepresentation, 335 — 339. written, 335, 336. verbal, 336, 337. guarantee obtained by undue influence or by misrepresent:;ti ii of its contents, 337 — 339. subsequent to contract, 339, 340. creditor conniving at principal debtor's default, 339. fraudulent concealment of dishonest act of employed, 339, :;4U. discharge of principal by creditor through fraud of surety, 365. FRAUDS, STATUTE OF. See Statute op Frauds. FRAUDULENT REPRESENTATIONS, as to character, 32 et aeq. Sec Lord Tenterdbn's Act. FRAUDULENT SETTLEMENT, by surety, 248. (1575) 342 INDEX. [The paging refers to the [•] pagesO GOODS, duress of, will not avoid a contract, 12. agreement for future supply of goods is a sufficient consideration for guar- antee, 24, 25. whether the supply reasonable, for jury to decide, 24, 25. guarantee for payment of, requires no stamjj, 175, 176. GUAEANTEE. /See 'Consteuction ; Conteact op Guaeajttee ; Statute op Feauds. GUARANTOR. See Sueety. HOTCHPOT. co-surety bound to bring into, whatever he receives from counter-secuiity obtained by him from principal debtor, 321, 322. HUSBAND, liability of, on wife's contracts 15, 16, 86, 87. See Mabeied Woman. IGNORANCE, of fact, money paid in, 289, 290. of law, money paid in, 290. LAIPLIED ACCEPTANCE. &e Acceptance. INDEBTEDNESS, whether surety should be informed of principal's indebtedness, 333, 334. INDEMNITIES, express indemnities, whether within sect. 4 of Statute of Frauds, 48. See Statute of Feauds. implied indemnities not within sect. 4 of Statute of Frauds, 48. See Statute of Feauds. INFANT'S RELIEF ACT. renders infants contracts, except for necessaries, void and incapable of ratification, 14, 15. INFANTS. why they labour under qualified incapacity to contract, 13. Boman law as to contracts by infants, 13, 14. EnglisJi law as tr> contracts by infants, 14, 15. can only contract in respect to necessaries, 14. what are necessaries, 15. their contracts now incapable of ratification, 14, 15. promise to answer for infants, 85. INITIALS, signature of contracts by, whether sufB.cient, 171, 172. INJUNCTION, actions no longer restrainable by, 28>i. grounds on which injunctions formerly granted now available as a de- fence, 288. INSANITY, when good defence, 8, 9. executed contract not vacated on ground of insanity, 9. liability of a lunatic for necessaries, 9. equity courts used to relieve from contracts entered into by persona of vreak intellect, 10. Chancery division now does so, 10. (1576) INDEX. 343 [The paging refers to the [•] pages.] INTENTION, concurrence of, necessary to a contract, 2. definition of, 8. parties to contract must be capable of iorming intention, 7, 8. to render guarantee binding as such, its language must clearly indicate intention to incur the liability of a surety, 178, 179. INTEREST, ■when surety liable to creditor for, 209. surety entitled to recover interest from principal debtor, 281. ^ surety for a company proving for interest, 281, 282. bond creditor agreeing by anticipation to take interest on his debt, 371, 372. INTOXICATION, contract entered into under, renders agreement voidable, 10, 11. JOINT LIABILITY, promise to be jointly liable for another, 83 — 8.i. See Statute of Frauds. JUDGMENT, against principal debtor not binding on surety, 181, 182, 197, 273. summary application for, where writ especially indorsed, 198, 199. JUDICATURE ACT, rules under, enable claim upon a guarantee to be enforced by especially indorsed writ, 198, 199. rules under, as to joinder of plaintifEs, 199, n. (j;)- of defendants, 201. abolishes restraining of actions by injunctions, 288. grounds on which injunctions formerly granted now available as a de- fence, 288. assigns to Chancery Division jurisdiction to set aside and cancel agree- ments, 288, 289. fusion of law and equity effected by, 307, 378. rules under, as to third party notices, 313, 314. See Thibi) Pakty. provision in, as to raising equitable defences, 371. provision in Judicature Act, 1875, as to administration of insolvent estates as in bankruptcy, 278. JURY, determines whether supply of goods to third person reasonable, 24, 25. when signature to contract not in its usual place, its effect for jury, 171. to whom credit given is for jury, 97, 101, 104, 106, 107. for jury to say whether defence by surety reasonable, so as to entitle him to recover from principal costs of defence, 282. LACHES, surety discharged by, 383 — 391. mere passive negligence does not constitute, 383. neglect to insure, against fire, work performance of which guaranteed, 383, 384. guarantee to endorse third person's bills discharged, if demand to endorse not made in reasonable time, 384. when surety for payment of negotiable instrument, but not a party to it, discharged by omission to present for payment, 188, 189, 384. surety for solvency of purchasers discharged by omission to sell at good opportunities, 384, 385. when surety discharged by conduct' of persons associated in office with principal, 385, 386. neglect of employer to dismis.s dishonest servant, 386. negligence of employer in calling upon employed to account after notice not to trust latter, 387. (1577) 344 INDEX. [The paging refers to the [*] pages. ] LACHES — continued. omission to give notice to surety of third person's embezzlement, 387, 388. when surety has expressly stipulated that such notice shall be given, 388. accidential omission to answer surety's inquiry, 388, 389. omission by creditor to take proceedings which would have been fruitless, 389, 390. , omission by creditor to render bill of exchange complete by inserting drawee's name, 390. semble, where guarantee given to crown, laches on part of latter do not dis- charge surety, 391. LANDLORD, promises to pay rent in arrear if landlord will not distrain, 67 — 69, 122 — 125, 146, 147. See Statute of Featjds. LEADING OBJECT, of contract, a test whether sect. 4 of Statute of Frauds applies, 129 — 142. See Main Object ; Statute of Frauds. LEASE, bankruptcy of assignee of lease, followed by disclaimer of official receiver, does not discharge surety, 184. LIABILITY OF PRINCIPAL DEBTOR. See Debtor. LIABILITY OF SURETY. See Surety. LIEN, prbmise in consideration of lien being given up, 65, 66, 118 et seq., 130, 131, 143, 144. See Statute of Frauds. LIMITATIONS. See Statute of Limitations. LIMITED GUARANTEE, sometimes difficult to determine whether guarantee limited in amount is applicable to whole debt or part thereof, 205 — 206. principles regulating this subject, 206. importance of ascertaining the nature of the liability under the guar- antee when principal debtor has become bankrupt, 303, 304. LORD TENTERDEN'S ACT (9 Geo. 4, c. 14). sect. 6 cured evasion of sect. 4 of Statute of Frauds, 33, 34. by sect. 6, representation of character, &c., not actionable unless in writ- ing, 33, 34. origin of this enactment, 33, n. (p). rule where representations of character, &c. , partly icritten and verbal, 34. defendant not liable unless representation false to his knowledge, 34. but defendant need not benefit by the deceit, 34. attempted evasion of sect. 6, of Lord Tenterdeu's Act, 34, 35. cases within sect. 6 . . 35 et seq. representation of credit of firm of which defendant a member, 36 to whom representation must be made, 36, 37. signature of representation, 37 — 39. liability of company on representation of credit, &c.. signed by its man- ager, 37—39. MAIN OB,TECT, of promise, 129 — 142. See Leading Object ; Statute Op Frauds. MARKSMAN, mark by, a sufficient signature of agreement within Statute of Frauds 171. ' nr,7P) INDEX, 345 [The pa^ng refers to the [*J pages.] MARRIED WOMAN, reasons for common law incapacity to contract, 15, 16. changes effected in her power of making contracts by the Married Women's Property Acts, 16. promise to answer for a married woman, 86 — 88. MARRIED WOMEN'S PROPERTY ACTS, changes effected by, in regard to wife's power of making contracts, 16. MARSHALLING, of securities in favour of sureties, 287. of assets in favour of sureties, 289. MEMORANDUM. See Conteact op Guarantee. MERCANTILE GUARANTEES. See Bond; Continuing Guarantees ; Surety. MERCANTILE LAW AMENDMENT ACT (19 & 20 Vict. c. 97), by sect. 3, consideration need not now appear in writing on face of guai^ antee, 150. See Contract of Guarantee. operation of sect. 4 on guarantees to or for partners, 250. See Partners. by sect. 5, surety entitled to assignment of satisfied securities, 294, 295. See Securities. right of distress for rent is not a security held by creditor lor a debt within this enactment, 296, 392. MERCHANTS, guarantee by one of several, in partnership, 165 — 169. MERGER, of original security by creditor accepting from principal debtor further surety of a higher order, 361, 362. MISCARRIAGE, meaning of word in sect. 4 of Statute of Frauds, 49 — 53. See Statute of Frauds. MISREPRESENTATION. See Fraud. MONEY PAID, under a verbal guarantee cannot be recovered back, 42. MORAL CONSIDERATION, when it will not support a promise, 28, 29. when it supports a promise, 29, 30. MORTGAGE, when surety entitled to assignment of, 291 — ^294. cases on this subject examined, 292 — 294. MUTUALITY. does not always exist when guarantee first given, 25. NAVY AGENTS, guarantee by member of firm of, 162 — 164. NECESSARIES, liability of lunatics for. 9. infants can only contract in respect of, 14. what are, 15. NEGLIGENCE. See Laches ; Security. (1579) 346 INDEX. [The pAgtaig refers to the [*] pages. ] NOTICE. Sef Thikd Paety. guarantee .sometimes expressly determinable by notice, 344, 345. when guarantee silent on the subject, power of revocation depends on nst- ture of guarantee, 345. guarantee for person employed cannot be revoked by notice so long as he retains the status which he acquired on the fnith of It, 345, 346. when notice of surety's death will revoke guarantee, 348 — 350. creditor may assign Securities without giving notice to surety, 392 — 394. NOVATION, substitution of one debtor for another who is thereby discharged, 90, 91. See Statute of Frauds. conversion of sole debt into a, joint debt, 90, 91. acceptance of composition from a stranger in lieu of original debt, 91. OFFEE. See Acceptance. to guarantee not binding, 2, 3. OFFICE, . promise to be answerable for third person in an office, 204, 205, 207, 225 — 246. See Bond. OFFICIAL RECEIVER IN BANKRUPTCY, disclaimer by, of lease, does not release surety for assignee, 184. OPERATION OF LAW, discharge of principal debtor by, does not discharge surety, 363, 364. what amounts to discharge by operation of law, 363, 364. ORDER OF DISCHARGE IN BANKRUPTCY, does not release any person who was surety, or in the nature of surety, for bankrupt, 184, 185. provision in B. A. 1883, on this subject, 184, 185. ORIGINAL DEBTOR, where his liability extinguished by guarantor's promise, 88 — 91. See Statute of Feauds. PAROL EVIDENCE. 'See Evidence. PARTICULARS OF DEMAND, surety claiming payment of definite sum by way of contribution must give, 313. PARTIES, to contract of guarantee, 1. names of contracting parties must appear in writing, 157. See Contraot OF Guarantee. guarantee need not be addressed to other contracting party, 157, 158. to action on guarantee, 199 — ^201. as plaintiffs, 199, 200. joinder of, 199, 200. provision in Judicature Rules, 199, note (»). as defendants, 200, 201. joinder of, 201. provision in Judicature Rules, 201. signature of one contracting party as agent fop other, to memorandnm of guarantee, 162. PARTNERS, guarantee addressed to one of several partners, 158. (1580) INDEX. 347 [The paging refern to the [•] pages. ] PAETNERS— eo)rimMC(7. guarantees hy partners, 102 — 170. how far iirm bound by signature of a member of firm to a guarantee, leSrf.wYy, one member of an ordinary mercantile firm has no implied power to bind the rest by a guarantee, 165 — 169. power of one partner to bind iirm by rleerl, 169. effect of acknowledgment by firm of guarantee under seal given by member thereof, 169, 170. effect of guarantee given by firm on persons subsequently joining firm. 170. guarantees to or for partners, 250 et neq. provision of sect. 4 of 19 & 20 Vict. c. 97, on this subject, 250. this enactment merely affirms the common law, 250, 251. guarantees to partners, &c., liability of surety under, 251 — 2C5. after increase in number of partners, 251 — 254. after diminution in number of partners, 254 — 264. by death, 254. by partners retiring from firm, 264. consolidation of company to whom guarantee given, 264, 265. guarantees /o)- partners, &c., liability of surety under, 265 — 271. after increase in number of partners, 266 — 270. after diminution in number of partners, 270, 271. by death, 270. by partners retiring from firm, 270, 271. PARTY TO BE CHARGED, need only sign memorandum to satisfy 4th section of Statute of Frauds, 158. PAYMENT, by surety in default of principal not a voluntary payment, 280, 281. illegal payment made by surety and not recoverable, 283. in full by debtor, defence to action by surety, 283. in full by principal debtor discharges surety 396. simple payment, 395. payment must be raft'rf, 395, .396. what amounts to a payment, 396, 397. surety entitled to benefit of all payments obtained from principal, whether voluntarily or by compulsion, 397. appropriation of payments, 397 — 402. See Appropeiation of Pay- MEXTS. made by surety to creditor, and accepted by latter, discharges surety, 403, 404, I PLEADING. See Defence ; Statement of Claim. verial guarantee may .support, a defence, 42. pleading as a defence grounds on which injunctions restraining actions for- merly obtainable, 288. eqiiitahle defence of set-off, 289, 402, 403. See Set-off. defense by surety of parol agreement giving time to principal, 371. provision in Judicature Act as to raising-equitable defences, 371. PRESUMPTION, against defendant giving or plaintiff receiving an invalid instrument, 180. See CONSTEUCTION OF GUARANTEE. no pre-sumption of waiver by surety of proof against estate of principal debtor from previous course of dealing, 304. PRIMARY LIABILITY, cases in which facts rebut existence of, on part of promiser and Statute of Frauds therefore applies, 105 ct seq. See Statute op Frauds. incurred by principal debtor, 181. (1,581) 348 INDEX. [The paging refers to the 1*1 pages.] PEINCIPAL DEBTOR. See Debtor. PEIVITY, none between surety and principal debtor, 181, 182, 183. consequence of this, 182, 183. r PROMISE. See. Contract of Guarantee; Statute of Frauds. PROOF. ;S'ec Bankruptcy. . PROPERTY, ' promise to pay debt for which promiser's property already liable, 116 — 12a See Statute of Frauds. PURCHASE, of a debt, 142—147. See Statute of Frauds. QUESTIONS OF FACT. See Jury. RAILWAY CONTRACTORS, guarantee by member of firm of, 166 — 168. RECITALS, effect of recital in surety bond of legal appointment of a person to an office^ 205. See Bond. condition of bond restrained by, 226. See Bond. RECORD, promise to pay if record in action again'st third person withdrawn, 74, 75. See Statute of Frauds. RELEASE, of debtor by creditor, 362 — 368. See Discharge of Surety. where rights against surety reserved, 366 — 368. whether such reservation can be proved by parol evidence, 367. effect of release given after surety has become a, principal debtor, 368. of one of several sureties by creditor, 368, 369. effect of release of one of several joint debtors where it is alleged that the remainder are only sureties for him, 368. RENT, promises to pay rent due from third parties if distress abandoned, 67 — 69, 122 — 125, 146, 147. See Statute of Frauds. « REPRESENTATIONS. See Lord Tenterden's Act. RESERVATION, of creditor's rights against surety, 366 — 368, 378 et seq. See Composition^ Discharge of Surety; Evidence; Release; Time. BES INTER ALIOS ACTA, judgment or award against principal debtor is, when surety sued, 181, 182. RETAINER, executor cannot by retainer obtain benefit of verbal guarantee given to him by his testator, 42, 43. by surety, as executor of principal debtor, 278. REVOCATION, of contract of suretyship, 344 — 350. by act of the parties, 344—348, (1582) INDEX. 349 [The paging refers to the [•] pages.] REVOCATION— con/OT«(^. of contract of suretyship — continued. by act of the parties — continued. where notice of revocation given by the surety to the creditor, 344—346. where guarantee is silent on the subject, power of revocation depends on nature of guarantee, 345. formerly considered that guarantee under seal could not be revoked, 345. guarantee for person employed cannot, as a rule, be revoked, so long as he retains the status which he acquii-ed on the faith of it, 345, 346. when new agreement is substituted for original one by mutual consent, 346—348. at common law a specialty could not be discharged by substi- tution of a new contract before breach of the old one, 346, 347. equity courts, however, disregarded common law rule, 347. parol dispensation may now be pleaded to action on a deed, 347. whether in cases to which Statute of Frauds applies the sub- stituted contract must be in writing, 347, 348. by death of the surety, 348 — 350. - surety's death does not affect his past liability, 348. its effect on subsequent transactions depends on nature of guaran- tee itself, 348, 349. result of decisions on this subject stated, 349, 350. RIGHTS OF THE SURETY. &e Contkibution; Ckeditoe; Debtor. RULES, to determine what is a promise to answer for debt, default, &c. within sect. 4 of Statute of Frauds, 54 et seq. See Statute op Frauds. SATISFIED SECURITIES. See Secueity. surety now entitled to assignment of, 394, 295. SECONDARY LIABILITY, incurred by surety, 181. SECURITY, creditor may sue surety before resorting to securities for debt received from debtor, 187. right of surety to securities held by creditor, 290 et seq. nature of this right, 290, 291. .surety not entitled formerly to satisfied securities, 294. .sect. 5 of 19 & 20 Vict. c. 97, permits assignment of satisfied securities, 295. construction of this enactment, 295, 296. how far this enactment retrospective, 295. right of distress for rent not a security within this enactment 296, 392 how advantage may be taken of it, 296. ■right of surety to securities given after contract of suretyship, 291. right of surety to transfer of mortgages taken by creditor for debt guaran- teed, 291—294. cases on this subject examined, 291 — 294. iright of surety in respect of securities lield by a co-surety, 321. right of security in respect of securities given by a co-surety, 392. :surety discharged by loss of securities, 391 — 395. loss must have been caused by creditor, 394. 'What securities creditor bound to keep up for surety's benefit, 391 et seq. (15H3) 350 INDEX. [The paging refers to the [•] pages,] SECVRITY— continued. effect of primary security becoming worthless, 394. creditor need not give surety notice of assignment of securities, 392 — 394.. effect of creditor taking additional security, 361, 362. as to merger of original security in inferior security, 361, 362. SEE PAID, promise to see paid, 104, n {k). SEPARABLE, where promise is, action is maintainable on part outside Statute of Frauds, 45 ci seq. effect of alteration of one of two separate and distinct things, performance- of which surety has guaranteed, 358. SET-OFF, mere liability under guarantee not formerly capable of being set-off, 202. but money actually paid under a guarantee constituted set-off, 202. subject of set-off now regulated by Judicature Rules, 202. equitable defence by surety of set-off in full between principal debtor and creditor, 289, 402, 403. now available in any Court, 403. SIGNATURE. See Agent ; Lord Testteeden's Act ; Parties. promise to procure the signature of another to a guarantee not within statute, 77 — 79. See Statute op Frauds. of memorandum in writing to .satisfy sect. 4 of Statute of Frauds, 158— 173. See Contract of Guarantee. such memorandum need only be signed by party to be charged, 158. signature by agent, 158 — 170. See Agent. where signature to memorandum must be ijlaced, 170, 171. casual introduction of name in an instrument, 171. when signature not in its usual place its effect is for jury, 171. the kind of signature to memorandum of guarantee, 171 — 173. marfc by marksman, 171. whether signature by initials sufficient, 171 , 172. signature without christian name, 172. printed signature, 172. signature by contracting party a,s a witness, whether sufficient, 172. whether alteration of draft amounts to a signature, 172. signature by indorsement of draft agreement, 172. effect of guarantee drawn up in plural number and signed by one per- son, 172, 173. effect of signature by party to be charged of telegraph form accepting offer, 173. signature of a paper referring to another paper containing terms of agreement, 174. SOLICITOR, verbal guarantee of, 41. See Statute of Frauds. promise by a defendant to pay charges of plaintiff's solicitor, 60. See Statute of Frauds. guarantee addressed to solicitor for plaintiff, 158. guarantee by one o£ several solicitors in partnership, 168, 169. SPECIAL PROMISE, evasion of Statute of Frauds by treating special promise as a false repre- sentation, 33. remedy applied by 9 Geo. 4, c. 14, ». 6 . . 33, 34. See Lord Ten- TERDEN's Act. what is, 47 — 49. See Statute of Frauds. (1584) INDEX. 351 [The paging refers to the [*] pages.] SPECIAL INDORSEMENT, now available in action against surety on guarantee, 198, 199. peculiarities of this mode of procedure, 1 98, 199. STAMP, unstamped instrument of guarantee cannot be given in evidence, 175. though it does not state on its face consideration for promise, 175. guarantee relating to sale of goods does not require a stamp, 175, 176. guarantee for due performance of a charterparty requires no stamp, 176. promise in consideration of unstamped guarantee being given up, 28. STATEMENT OF CLAIM, cannot be delivered vrhere vrrit specially indorsed, 198. in actions on guarantees, 198, n. {(). STATUTE OF FRAUDS, requires contract of guarantee to be in writing, 31, 32. evasion of this enactment, 32, 33. how remedied, 33 et seq. See Loed Tbnteeden's Act. to satisfy statute written evidence of contract must exist before action brought, 32. operation of 4th section of Statute of Frauds on guarantees, 41 ei. seq. operation of 4th section pointed out by words ' ' no action shall be brought, " 40—47. verbal guarantee not void, 41 . how verbal guarantee of solicitar enforced, 41, 42. parol agreement "within sect. 4 may support a defence, 42. money paid on verbal guarantee cannot be recovered back, 43. executor cannot, however, by retainer obtain benefit of verbal guar- antee, 42, 43. action in England on verbal agreement within 4th section made abroad, 43. promises pa?'^^!/ within sect. 4 and partly wUJiout it, 43 — 47. what Mnd of promises within 4th section indicated by words " on any special promise," 47 — 49. express indemnities may be within sect. 4 . 48. implied indemnities not within, 48. promise to give a guarantee, 48, 49. the Had of h'«6i7% contemplated by 4th section indicated by words "to answer for the debt, default or miscarriage of another, " 49 ei seq. meaning of words debt, default and miscarriage, 49 — 53. liability of promiser must be collateral, 53, 54. rules for determining what promises within 4th section, 54 et seq. rule I. , liability ot a third person must exist or be contemplated, 55 — 109. existence of third person's liability basis of guarantee, 5.') — 59. ■where third person liable 4th section applies, 57. promise to pay broker, put in by distraining landlord, his charges, 59, 60. promise by defendant to plaintiff's solicitor to pay him his charges, 60. promise bv a principal to pay a debt booked to his agent, 60, 61. guarantee for payment of a composition to creditors where insolvent not released, 61. agreement to guarantee punctual pajonent by vendee of goods in. consideration of a commission payable by vendor, 62. promises that third person shall pay agreed composition to his creditors, when within statute, 02, 63. where no third person liable 4th section does not apply, 63 et seq. promise to answer for debt due by a deceased i^erson, 63, 64. (1585) 352 INDEX. [The paging refers to the [*1 pages. 1 STATUTE OF FRATJDS— continued. the kind of liability contemplated by 4th section — continued. rule for determining what promises within 4th section — continued, rulel., liability of third person, Ac. — continued. where no third person liable, &c. — continued. promise by an execution creditor to a sheriffs solicitor, 65. promises to pay a debt if a lien for it given up, 65, 66. agreement that sum subsequently receivable by promiser from promisee shall be applied in payment of debt due to latter from third person, need not be in writing, 66, 67. promises to pay rent due if distress abandoned, 67 — 69. promises to pay third person's debt out of proceeds of his goods, 69, 70. or out of money belonging to him which former is about to receive, 70, 71. cases on this subject rather conjflicting, 71 — 73. promises in consideration of stay or withdrawal of proceedings against third party, 73 — 77. promise to sign a bail bond if a third person released, 74. promise to pay if record be withdrawn in action against third party, 74, 7p. promise to pay if execution ^gainst third party with- drawn, 76. promise to procure another's signature to a guarantee, 77 — 79. promise tliat a third party shall not leave kingdom, 79, 80. promises to indemnify against the costs of legal proceedings taken at promiser' s request, 80 — 83. promises to be jointly liable with another not within statute, 83—85. promise to indemnify indorser of a bill, 84, 85. promises for persons incapable of legal liability, 85 — 88. promises to be answerable for infants, 85, 86. promises to be answerable for married women, 86 — 88. promises by which third person's debt extinguished, 88 — 91. to pay a debt for which defendant arrested on ca. sa. on his discharge, 88 — 90. novation by express agreement, 90, 91. transfer to creditor of debt due to debtor from third per- son not within statute, 91 — 94. contemplation in future of liability of third person brings a case within 4th section, 94 et seq. formerly 4th section did not apply unless third person actual- ly liable when promise sued on was made, 95. but secus now, 96 et seq. often diificult to say whether third person's liability contem- plated, 97. examples, 97 et seq. cases in which facts rebut existence of primary liability and promiser is a mere surety, 105 — 108. entries in plaintiff's books often settle question to whom credit given, 108, 109. sometimes credit given entirely to defendant and yet case is within statute, 109. . rule II., promise must be made to the creditor, 110 — 116. promise to debtor not within 4th section, 1 10. promise to county court bailiff who has arrested defendant 110. 111. promises of indemnity to persons joining with promiser in a bond. 111 et seq. (1586) INDEX. 353 [The paging refers to the [•] pages.] STATUTE OF FkAVDS— continued. the kind of liability contemplated by 4th section — continued. rules for determining what promises within 4th section — continued, rule II., promise must he made to the creditor — continued. promise to indemnify bail in a civil case, 113, 114. promise to indemnify bail in a criminal ftase, 113, 114. examples of decided cases which are semUe referable to this rule, though determined upon other grounds, 114 — 116. rule III. , there must be an absence of all liability on part of surety or his property, except such as arises from his express promise, 116—129. comments upon this rule, 116 ri seq. many cases referable to this rule (III.) aenible decided on wrong grounds, 117. the nature of promise determines whether statute applies, 118. promise by sub-vendee to original seller that first vendee shall pay, 116, 117. promise by one partner to pay debt of deceased partner's widow if lien given up, 119. when promises to pay if lien given up fall within present rule, 118 et seq. promise to indemnify person if he will become surety for another 121, 122. promises by person having interest in goods distrained for rent due from third person to pay rent due if goods released, 122 — 125. promise to answer for promisor's own debt, 125 — 129. rule IV., the main object of the agreement between the parties must be the payment of a debt or" fulfilment of a duty by a third per- son, 129—142. this rule difficult of application. 130. has not always been adhered to, 130. promise to provide for acceptances if lien on policies given up, 130, 131. promise that debtor shall not leave kingdom without paying debt, 132. agreement that judgment for smaller amount should stand as security for larger amount, 132, 133. promise to execute bail bond, 134. promise by del credere agent, 134 — 142. not within statute, 134. reasons assigned in America for this, 135 — 140. reasons assigned in England for this, 140 — 142. rule V. , agreement between promiser and the creditor, to whom the promise is made, must not amount to a sale by latter to former of a security for a debt or of debt itself, 142 — 147. very few direct authorities for this rule, 143. peculii3,rities of cases within this rule, 143. promise to provide for acceptances if lien on policies given up, 143, 144. promise to pay another's debt on goods taken in execution being restored, 144. promise to pay composition on assignment of debt, 144. promise to pay for repairs of carriage if lien on same given up, 144—146. promise to pay another's debt if goods not taken in satisfaction under bill of sale, 146. promises to pay rent due from another if goods not taken in dis- tress, 146, 147. when such transactions cannot be treated as purchases, 147. as (1587) 354 INDEX. [The paging refers to the [*] pages. ] STATUTE OF FRAVBS—ccmUnued. what is a sufficient memorandum of guarantee to satisfy sect 4, 148 — 176. See Agent ; Auctionbek ; Beokek ; Contract of Guaeantee ; Sio- NATUEE. verbal abandonment of contract within Statute of Frauds, effect of, 347. STATUTE OF LIMITATIONS, when it begins to run against a surety, in favour of principal debtor, 283. in favour of co-surety, 320. when it begins to run against a creditor, 404—407. STAY OF PROCEEDINGS, promises in consideration of, 73 et seq. See Statute of Featjds. STOPPAGE IN TRANSITU, mere surety for price of goods cannot exercise right of, 277. but scmble, that surety for an insolvent buyer, on paying vendor, may exer^ cise this right, , 277. broker for an undisclosed principal- may exercise this right, 277. SURETY. See Statute of Frauds. irom whom consideration for surety's promise moves, 31. the nature of the surety's liability, 181 — 185. not answerable till default of principal debtor, 181 — 185. his liability is secondary, 181. no privity of contract between him, and principal debtor, 181, 182, 183. consequences ot this, 182, 183. judgment of awaitl against principal debtor not binding on surety, 182. debtor's admission of liability does not dispense with proof thereof in action against surety, 182. cases on this subject, 182, 183. as a general rule surety not liable if princjipal's debt not legally en- forceable, 183, 184. aliler, where directors guarantee performance of a contract by their companies which is void against latter because ultra vires, 184. surety's liability may continue even after that o f principal has ceased, 184, 185. liability of surety to assignor of lease after bankruptcy of as- signee, 184. Bankruptcy Act, 1883, preserves surety's liability where bank- rupt principal discharged, 184, 185. person not liable as, unless language of guarantee indicate an intention to become a surety, 178, 179. when surety's liability arises, 185 — 197. not till default of principal debtor, 185. creditor may sue surety before principal debtor, 186. unless otherwise stipulated, 186, 187. and without first resorting to securities for debt received from principal debtor, 187. Roman law enabled surety to compel creditor to sue principal debtor first, 187. this rule prevails in most countries, 187. before suing surety, creditor need not request principal to pay, 187, 188, nor demand payment of surety, 188. but that sometimes necessary, 188. creditor need not inform surety of principal's default, 189. in the absence of express stipulation, 189. (1588) INDEX. 355 [The pa^ng refers to tho [•] pages.] SVKETY—coniinued. ■ this rule prevails in most countries — continued. conditions precedent must be fuMUed, 190 — 197. examples, 190 ct seq. guarantee for payment to creditor of proceeds of debtor's pro- perty, 190. guarantee for term of years of a minimum dividend given by vendor of business to a company, 190. guarantee for payment of goods supplied by plaintiff when the government has paid the person to whom they were supplied, 191. guarantee by defendant to pay for goods supplied to his en- gineer, provided work has been done by latter as security for same, 191. guarantee for good conduct of another conditional on diligent prosecution of latter in case of his fraud, &c., 192. guarantee for payment on completion of six houses where surveyor's certificate of completion not given, 193. guarantee for performance of certain work on basis of a speci- fication, 193, 194. person executing surety bond on faith of another executing it, 194—197. the omission by another to execute the instrument mu.st, to relieve surety, amount to breach of a condition precedent, 195—197. how surety's liability enforced, 197 — 202. surety must, before Judicature Act, have been sued specially, 197, 198. when surety was liable on common counts, 198. plaintiff may now proceed against surety by specially indorsed writ when demand liquidated, 198. form of procedure where this course adopted, 198, 199. parties to action on guarantee, 199 — ^201. as plaintiffs, 199, 200. as defendants, 200, 201. as to setoff, 202. See Set-ofp. extent of surety's liability, 203 et seq. sometimes co-extensive with principal debtor's liability, 203. but not necessarily so, 203. considerations for determining surety's liability in complicated cases, 204 et seq. as from what time guarantee operates, 204, 205. intention of parties governs time of operation, 204. surety for conduct of official not liable till legal appointment of latter, 204, 205. surety may show that recital of complete appointment erroneous, 205. to what things and how far guarantee extends, 205 — 210. limit prescribed by guarantee itself to be observed, 205. effect of provision that advances to third party shall not ex ceed a certain limit, 205. sometimes difficult to determine whether a guarantee lim- ited in amount is applicable to whole debt or to part thereof, 205, 206. principles regulating the construction of such con- tracts, 206. liability of surety for payment of calls, 206. surety never liable excepting through loss sustained by defiuilt guaranteed against, 206 et seq. surety for conduct of official liable only for breaches of duty within scopiP of office. 207, 208. (15.-.9) 356 INDEX. [The paging refers to the [*] pages. ] SVKETY— continued. consideration for determining surety's liability, &c. — eontimied. as trom what time guarantee operates — continued. to what things and how far guarantee extends — continued. liability of surety for incidental losses, &c., 208 — 210. ' liability of surety for interest, 209. See Interest. liability of surety for costs, 209, 210. See Costs. creditor must give surety for amount received from principal debtor, 210. how long guarantee continues in operation, 210 — ^246. ordinary guarantees ira^mde 21 1-225. ,&(? Continuing Gtjaeantbks. guarantees for persons in offices, 225 — 246. See Bond. liability of surety for fraud, 246 — ^248. See Feaud ; Voluntaby Settlement. liability of surety after change in persons to or for whom guarantee given, 248 — 271. See Paetnees. effect upon surety's liability of his own bankruptcy, 271 — 275. See Bankeuptoy. rights of surety, 276 — 322. See Contribution ; Ceeditoe ; Debtor ; discharge of surety, 323 — 407. See Dischaege of Surety. SURROUNDING CIRCUMSTANCES, may be given in evidence to explain a guarantee, 180, 181. TECHNICAL RULES, guarantee not to be solely construed by, 178. TELEGRAM, signature of instructions for, will satisfy Statute of Frauds, 173. TENTERDEN'S ACT.- See Lord Tenterden's Act. THIRD PARTY, future supply of goods to, will support a guarantee, 24, 25. or future employment of, 25 et seq. liability of, for debt guaranteed must exist or be contemplated, 55 — ^109. See Statute of Frauds. main object of guarantee must be to secure fulfilment of third party's obligation, 129 — 142. See Statute of Frauds. bonds given for fidelity of, 225 et seq. See Bond. ' defendant can claim contribution fi:om co-surety by means of third party notice, 313, 314. when leave will be given to issue such a notice, 314. form of third party notice, 314, n. (m). TIME. See Discharge of Surety. effect of agreement by creditor to give time to principal debtor, 369 — 382. agreement must be binding, 370, 371. valuable consideration necessary to support it, 370. whether binding, though not in writing, 371. need not give time in expres-s words, 371, 379. effect of passive inactivity, 372, 373." where condition to agreement giving time not fulfilled, 373, 374. agreement must be made with principal debtor, 374. it must be an agreement "to give time," 374. definition of "giiting time" 375, 376. whether time has been given sometimes depends on construction of original contract, 376. whether custom of trade justifies indulgence to principal debtor, 376, 377. former distinctions between law and equity as to right of defendant set-, ting up defence of discharge by time given to principal, to be treated as a surety where contract does not distinguish between principal and surety, 377. these distinctions abolished by Judicature Act, 378. INDEX. 357 (The paging refers to the C*3 pages. 3 TIME — continued. effect of agreement giving time with reserve against surety, 378 el seq. whether such reservation may be proved by parol evidence, 379. where agreement to give time in effect accelerates surety's remedies, 380. effect of agreement to give time after surety has become a principal debtor, 380, 381. to what extent surety discharged by agreement giving time to principal debtor, 381, 383. agreement by creditor to give time to a co-surety does not prevent latter from recovering contribution from other sureties, 321. agreement by creditor to give time to surety, 382, 383. TORT, promises to answer for third person's tort, whether within Statute of Frauds, 49—53. TRANSFER, of a debt due from third person, 90, 91. of mortgages held by creditor, 291 — 294. when surety entitled to, 292 — 294. TRUSTEE, creditor, when a trustee of execution. for surety, 392. creditor when a trustee for surety of dividends received from bankrupt's estate, 298. See Bankruptcy. ULTBA VIBES, where directors guarantee performance of a contract by their company, which is, they still remain liable on their guarantee, 184. UNDUE INFLUENCE. guarantee obtained by, liabW to be set aside, 337, 338. VALUABLE CONSIDERATION. See Considebation. VARIATION, of terms of agreement, 350 — 361. See DIschaeqe of Sueety. VERBAL GUARANTEE, not void, but not enforceable by action, 32, 41. except where defendant by fraud prevents its reduction into writing, 32, 41. may sometimes be enforced otherwise than by action, 41, el seq. executor cannot by retainer obtain benefit of verbal guarantee, 42, 43. may be given in evidence in support of a defence, 42. money paid under, cannot be recovered, 42. VOLUNTARY SETTLEMENT, made by surety, whether -fraudulent within 13 Eliz., c. 5 . . 248. WAIVER, of rights of sm-ety against creditor, 301 et seq. may be express or implied, 301, 302. whether surety has waived his right to dividends received by credi- tor on principal's bankruptcy often depends on language of guar- antee, 303, 304. previous course of dealing does not indicate an intention by surety to abandon right of proof against principal debtor's estate, 304. WARRANTY, difference between it and a guarantee, 1, 2. WITNESS, signature by contracting party as a witness to memorandum required by Statute of Frauds, 172. (1591) PhiLa. ; The Blackstonb Pub. Co. / Date Due ■\ ^ ,^ ^^ Library Bureau Cat. No. 1137 KF 10i^5 D29 1891 Author De Colyar, Henry Anselm Vol. Title A treatise on the law of guarantees and of principal. Copy Date Borrower's Name