please be so good as to withdraw the promissory note, and I will see you at Christmas, when you shall receive from me the amount of it, together with the memorandum of my son's, making, on the whole, £45." 46 So it was held, that the consideration, which was a forbearance to sue, was sufficiently manifest where the plaintiff, having pressed W. for payment of a debt, the defendant, W.'s attorney, sent to plaintiff a bill accepted by W. at two months, inclosed in a letter, wherein defendant said: "W. being again disappointed in receiving remittances, and you expressed yourself inconvenienced for money, I inclose you his acceptance at two months," and the plaintiff refusing the bill, unless defendant put his name to it, the latter wrote on the back of the letter: "I will see the bill paid for W." 47

§ 1767. New York decisions. In New York, it was formerly held, that if the original contract and the guaranty were contemporaneous, and the guaranty, therefore, an essential inducement to the credit given, it would not be necessary to show any other consideration than that moving between the parties to the original contract; and that whether the guaranty were on the same or a separate paper, it need not disclose a distinct consideration.48 Subsequently the Statute of Frauds was so amended in that State as to require the consideration to be expressed in writing, and since then a stricter interpretation has obtained. Thus, where a party wrote under a promissory note simultaneously with its exe cution, and the consideration was granted upon the credit of his name, "I hereby guarantee the payment of the above note," the guaranty was held void because no consideration was expressed." But where the consideration is required to be expressed, it need not be defined; and, therefore, the words "value received" are deemed a sufficient expression of it.50 If a guaranty be under seal, the consideration is conclusively imported.51

46. Shortrede v. Cheek, 1 Ad. & El. 57.

47. Emmatt v. Kearns, 5 Bing. N. C. 559.

48. Leonard v. Vredenburgh, 8 Johns. 29; Barley v. Freeman, 11 Johns. 221; Nelson v. Dubois, 13 Johns. 175, approved in D'Wolf v. Rabaud, 1 Pet. 476; Eppert v. Hall, 133 Ind. 417, 31 N. E. 74, 32 N. E. 713.

49. Brewster v. Silence, 11 Barb. 144, 8 N. Y. 207. See also Glen Cove Mut. Ins. Co. v. Harrold, 20 Barb. 298; Draper v. Snow, 20 N. Y. 331.

50. Brewster v. Silence, 11 Barb. 144; Douglass v. Howland, 24 Wend. 35; Watson v. McLaren, 26 Wend. 425; Day v. Elmore, 4 Wis. 190.

51. Bank of Tennessee v. Barksdale, 5 Sneed, 73; Crocker v. Gilbert, 9 Cush. 131.

1767a. The United States Supreme Court considers that where a guaranty is written upon a promissory note after it has been delivered and taken effect as a contract, it requires a distinct consideration to support it; and that where the statute of a State requires the consideration to be expressed in writing, such guaranty is void, where it does not express any consideration. The Statute of Frauds as applied to commercial instruments is a rule of decision of the United States courts.52

SECTION III.

FORMS AND VARIETIES OF GUARANTIES.- ABSOLUTE AND CONDITIONAL GUARANTIES.

1768. Forms of guaranties.

The guaranty of a bill or note need not be in any particular form, and it is governed usually by the same rules which apply to other guaranties.

A guaranty is generally in writing, but when it is to answer for the debt of another, it must be written. But there may be valid verbal guaranties. When written, it may be: (1) By a separate instrument; or (2) by writing on the instrument guaranteed; and it may be (3) sealed or unsealed

When it is written on the instrument guaranteed, its very presence is identification of the contract referred to; but when on a separate paper, it must describe with sufficient accuracy the bill or note or other contract it refers to.

§ 1768a. As to the varieties of guaranties. A guaranty may be (1) general or special; (2) absolute or conditional; (3) limited or unlimited; and (4) temporary or continuing. A general guaranty is a guaranty to whomsoever may accept the proffer made. A special guaranty is a guaranty to a particular person.

§ 1769. In the second place, as to absolute and conditional guaranties. If A. guarantees, expressly or by implication, to pay the note of B. to C., provided B. does not pay it, he becomes absolutely liable for its payment immediately upon B.'s default, and is, therefore, deemed an absolute guarantor of the due payment of the note by B. to C.53 But if A. guarantees the collectibility or

52. Moses v. Lawrence County Bank, 149 U. S. 298, 13 Sup. Ct. Rep. 900. 53. Dickerson v. Dickerson, 39 Ill. 575; Allen v. Rightmere, 20 Johns. 365; Arents v. Commonwealth, 18 Gratt. 770; Cowles v. Peck, 55 Conn. 251; Loomis Inst. v. Hurd, 57 Conn. 435; City Sav. Bank v. Hopson, 53 Conn. 453;

goodness of B.'s note to C., he does not absolutely guarantee its payment, but only that he will pay it in the event that C. shall test the collectibility or goodness of the note by regular prosecution of suit against B., and shall be unable, by due and reasonable diligence, to enforce its payment. And accordingly he is only deemed a conditional guarantor of payment.54

And he is always deemed a conditional guarantor of payment when there is some extraneous event, beyond the mere default of the principal, upon which the guaranty becomes binding.55

1156

The words, "I guarantee the collection of the within note," and "I promise that this note is good and collectible after due " 57 and "I warrant this note good,' " 58 course of law,' are phrases of similar import, binding the guarantor only upon condition that the guarantee acts with due diligence in prosecuting the collection

Osborne v. Lawson, 26 Mo. App. 555; Huff v. Slife, 25 Nebr. 448; Bloom v. Warder, 13 Nebr. 476; Beardsley v. Hawes et al., 71 Conn. 39, 40 Atl. 1043; Roberts, Throp & Co. v. Laughlin, 4 N. Dak. 167, 59 N. W. 967; Beardsley v. Hawes et al., 71 Conn. 39, 40 Atl. 1043. And it has likewise been held that one who was not a party to a note signed a guaranty written on the back of the note "I guarantee payment, demand, and notice of protest waived," that the guaranty was absolute and the guarantor could not plead want of notice and demand and lack of diligence on the part of the payee in collecting from the payor as a defense. Hoyt v. Quint, 105 Iowa, 443, 75 N. W. 342; Friend v. Smith Gin Co., 59 Ark. 86, 26 S. W. 374; Flentham v. Steward, 45 Nebr. 640, 63 N. W. 924; Holm v. Jamieson, 173 Ill. 295, 50 N. E. 702. 54. 2 Am. Lead. Cas. 129, 133; Cowles v. Peck, 55 Conn. 251; Lemmon v. Strong, 55 Conn. 443; Allen v. Rundle, 50 Conn. 9; Forbes v. Rowe, 48 Conn. 413; Summers v. Barrett, 65 Iowa, 292. And the guarantor of a draft has been held not to be legal if the drawee originally refuses to accept it, and is not liable therein. Merchants' Nat. Bank v. Citizens' State Bank, 93 Iowa, 650, 61 N. W. 1065, 57 Am. St. Rep. 284.

55. Dickerson v. Derrickson, 39 Ill. 575. The guaranty was: "I do hereby agree, in case G. K. does not pay R. P. D. $325 in three months from date, to guarantee to said D. the payment of said sum of money." Walker, C. J., said: "In this case the parties have only clothed in language what the law implies in all mere absolute guaranties. The contract of an absolute guarantor is, that if the principal fails to pay, the guarantor will. If it were not so, it would not be a guaranty, but an independent undertaking."

56. Loveland v. Shepherd, 2 Hill, 139. See Central Investment Co. v. Miles, 56 Nebr. 272, 76 N. W. 566; Holmes v. Jamieson, 173 Ill. 295, 50 N. E. 702, contra.

57. Moakley v. Riggs, 19 Johns. 69.

58. Curtis v. Smallman, 14 Wend. 231; Cumpston v. McNair, 1 Wend. 457; Cowles v. Peck, 55 Conn. 251; Burton v. Dewey, 4 Kan. App. 589, 46 Pac. 325; State Bank v. Burton-Gardner Co., 14 Utah, 420, 48 Pac. 402.

of the note. Where the language of the guaranty was, "I hereby guarantee the payment of the within note without protest,' it was held to create a mere technical guaranty whereby the guarantor was not deprived of his right to require the guarantee to exhaust all remedies against prior indorsers, should any of them remain liable by reason of waiver of protest, or otherwise.59

§ 1769a. What is due diligence in such cases, depends largely upon the statutes of the States, which are variant, and upon the practice which has grown up in the courts; and is rather a question of local jurisprudence than one of general commercial law. We do not deem it, therefore, appropriate to pursue the topic through its multiform ramifications. It may be generally stated, however, that "diligent and honest prosecution of a suit against the principal to judgment with a return of nulla bona, has always been regarded as one of the extreme tests of due diligence."

" 60

But if the principal were insolvent, suit would be vain, and need not be brought.61 And so, if he remove from the State where the contract was made.62 But if the principal resided in a foreign State when the contract was made, the guarantee would then be required to proceed against him before pursuing the guarantor.

SECTION IV.

63

LIMITED AND UNLIMITED, AND TEMPORARY AND CONTINUING GUAR

ANTIES.

§ 1770. A guaranty may be limited or unlimited in respect to the amount guaranteed. It may be limited to a single transaction.

59. Zahm v. First Nat. Bank, 103 Pa. St. 579; Hartman v. Same, 103 Pa. St. 581; Getty v. Schantz, 40 C. C. A. 560, 100 Fed. 577, citing text. Compare Pierce v. Merrill, 128 Cal. 464, 61 Pac. 64. An indorsement on a promissory note by the payee as follows: "For value received, I hereby sell and assign the within note to W., and guarantee the payment and collection of the same, and agree to pay all attorneys' fees, and do hereby waive presentment for payment, protest and notice of protest, and nonpayment of the same," constitutes a direct and absolute undertaking to pay the note, upon which undertaking, the indorser is liable at the suit of the assignee. See Metzger v. Hubbard, 153 Ind. 189, 54 N. E. 761. See Leonhardt v. Citizens' Bank, 56 Nebr. 38, 76 N. W. 452; Dillman v. Nadelhoffer, 160 Ill. 121, 43 N. E. 378. 60. Camden v. Doremus, 3 How. 515; Jones v. Ashford, 79 N. C. 176. 61. Camden v. Doremus, 3 How. 515; M'Doal v. Yeomans, 8 Watts, 361; Sanford v. Allen, 1 Cush. 473; Flentham v. Steward, 45 Nebr. 640.

62. Cooke v. Nathan, 16 Barb. 342; White v. Case, 13 Wend. 543. 63. Burt v. Horner, 5 Barb. 501.

VOL. II-51

may

It may be limited within a certain period of time. And it a continuing or standing guaranty, applying to successive transactions, without limit as to time.64 Where A. & B. addressed a letter of credit to C., saying, "If D. wishes to take goods of you on credit, we are willing to lend our names as security for any amount he may wish," it was held unlimited as to the amount, but not continuing beyond the first parcel of goods delivered to D., there being no words to show that successive transactions were contemplated.65 So, where the agreement was to be answerable for the payment of £50 for T. L., in case T. L. does not pay for the gin he received from you," it was held limited to the single purchase of £50 worth of gin.66 So, where it ran: "I hereby guarantee Mr. J. J.'s account with you for wine and spirits to the amount of £200;" 67 and where it guaranteed A. "to the extent of sixty pounds, at quarterly account, bill two months, for goods to be purchased for him of B." 68 Where the wife of C., a retail trader, owning property in her own right, gave the plaintiff, with whom C. dealt, the following guaranty: "In consideration of you having, at my request, agreed to supply and furnish goods to C., I do hereby guarantee to you the sum of £500. This guaranty to continue in force for the period of six years, and no longer," it was held that the guaranty did not cover sums due for goods supplied before its date, but was limited to goods sold after its date, to the value of £500.69

§ 1770a. "Guaranties," as is well said in Rhode Island, by Matterson, J., "have been divided into two classes;70 one where the consideration is entire, that is, where it passes whole at one time, and the other where it passes at different times and is, therefore, separable or divisible. The former are not revocable by the guarantor and are not terminated by his death and notice of that

64. Gay v. Ward, 67 Conn. 147, 34 Atl. 1025.

65. Rogers v. Warner, 8 Johns. 92. To the same general effect is the case of Barnett v. Wing, 62 Hun, 125, 16 N. Y. Supp. 567; Brittain Dry Goods Co. v. Yearout, 59 Kan. 684, 54 Pac. 1062.

66. Nicholson v. Paget, 1 Cromp. & M. 48. But quære, Mayer v. Isaac, 6 M. & W. 605.

67. Alnutt v. Ashenden, 5 M. & G. 392.

68. Melville v. Hayden, 3 B. & Ald. 593.

69. Morrell v. Cowan, 7 Ch. Div. 151; Frost v. Weatherbee, 23 S. C. 354.

70. National Eagle Bank v. Hunt, 16 R. I. 148, 13 Atl. 115.