fact." The latter, on the contrary, may be revoked as to subsequent transactions by the guarantor upon notice to that effect, and are determined by his death and notice of that event." 72

§ 1771. Where the letter of credit ran, "The object of the present letter is to request you, if convenient, to furnish them (S. & H. H.) with any sum they may want, as far as fifty thousand dollars, say fifty thousand dollars," it was held to be limited to a single advance of $50,000, and that when the sum was once advanced, the guaranty was exhausted.

"The language of a letter," said Story, J., "should be very strong that would justify the court in holding the guaranty to be a continuing guaranty, which is to cover advances from time to time to the stipulated amount, toties quoties, until the guarantor shall give notice to the contrary. I see nothing in this letter to justify such a conclusion; and in every doubtful case, I think that the presumption ought to be against it." 73

Where the guaranty was as security "to the amount of £10,000 on certain acceptances, or any other account thereafter to subsist between A. & B.," it was held to cover all transactions up to the amount of £10,000, but none beyond.

74

71. Green v. Young, 8 Me. 14, 22 Am. Dec. 218; Moore v. Wallace, 18 Ala. 458; Royal Ins. Co. v. Davis, 40 Iowa, 469; Lloyd v. Harper, 16 Ch. Div. 290; Rapp v. Phoenix Ins. Co., 113 Ill. 390, 55 Am. Rep. 427.

72. Offerd v. Davies, 12 C. B. (N. S.) 748; Jordan v. Dobbins, 122 Mass. 168, 23 Am. Rep. 305; Coulpart v. Clemenston, 5 Q. B. Div. 42; Rapp v. Phoenix Ins. Co., 113 Ill. 390; Menard v. Scudder, 7 La. Ann. 385.

73. Cremer v. Higginson, 1 Mason, 323. See Drovers' Nat. Bank v. Albany County Bank, 44 Fed. 183.

74. Sansome v. Bell, 2 Campb. 39. In Ranger v. Sargent, 36 Tex. 26, it appeared that R. & Co. were sued on a draft drawn September 3, 1866, on the faith of a letter of credit as follows: "The bearer, W. H. R., is authorized to draw on us for six hundred dollars specie. Houston, August 31, 1866. R. & Co." They pleaded that, since the giving of the letter of credit, they had paid to W. H. R., and to his order, more than the sum specified in the letter of credit, whereby the authority conferred by said letter had been exhausted; and that the plaintiff, by the exercise of ordinary diligence, could have ascertained these facts. Held to be a good defense. That though the instrument sued on was a general letter of credit, in that it was directed to no particular person, and limited to no time or place, yet it was special in that it was limited in amount, and a party making advances on it was bound to make inquiry whether it had been paid, or the authority to draw exhausted; and held further, that when the defendants delivered the letter of credit, it became the absolute property of the holder, and they lost all control over it.

75

§ 1772. Expressions of continuing credit; English decisions. In the foregoing cases, it will be observed that there were no such expressions of continuing credit, as "from time to time," or at any time," or for "any debt," etc.,- and where such expressions are used, they are regarded as extending the guaranty to several and successive transactions. Thus a guaranty of "any debt A. B. may contract in his business, as jeweler, not exceeding one hundred pounds, after this date," "5 or to A. "for any goods he hath, or may supply my brother W. P. with to the amount £100," 76 has been held to be limited only in respect to the amount guaranteed at any one time, and to apply to any sum or goods. not over £100, which might be advanced from time to time. Lord Ellenborough said, in the first of the cases just cited: "The guaranty is not confined to one instance, but applies to debts successively renewed. If a party means to be surety only for a single dealing, he should take care to say so. By such an instrument as this, a continuing suretyship is created to the special amount." " The like decision was rendered upon a guaranty of " any bills you "9 78 So may draw on him on account, etc., to the amount of £200." where it was 66 to the extent of £300, for any tallow or soap supplied by B. to F." 79

§ 1773. Decisions in the United States. In the United States the like course of adjudication has been followed. Where the guaranty ran, "I will be responsible for what stock McK. has had, or may want hereafter, to the amount of five hundred dollars," it was held to embrace successive advances of $500 each.80 And in a leading case before the United States Supreme Court, where the letter of credit recited that the bearer "might require your aid from time to time" and promised "to be responsible at any time for a sum not exceeding eight thousand dollars," the expressions," from time to time," and "at any time," were thought decisive of its being a continuing guaranty of several and successive advances of $8,000.81

75. Merle v. Wells, 2 Campb. 413.

76. Mason v. Pritchard, 2 Campb. 436.

77. Merle v. Wells, 2 Campb. 413; Fifth Nat. Bank v. Woolsey, 31 App. Div. 61, 52 N. Y. Supp. 827. See Fisher v. National Bank, 12 C. C. A. 409, 64 Fed. 706.

78. Mayer v. Isaac, 6 M. & W. 605.

79. Barton v. Bennett, 3 Campb. 220.

80. Gates v. McKee, 13 N. Y. 237.

81. Douglass v. Reynolds, 7 Pet. 113. See 2 Am. Lead. Cas. 38 et seq. In

SECTION V.

THE NEGOTIABILITY OF GUARANTIES.

§ 1774. In the first place: As to the negotiability of guaranties not written upon negotiable instruments. It seems to be settled, by weight of authority, that when the guaranty is written upon a separate paper, unless it were addressed in such a manner as to denote that it was intended to guarantee the bill or note to every holder, it would not be negotiable; and that if addressed to a particular person only, it would be a mere personal contract limited to that person.82 And when no person's name is mentioned in such a guaranty, it will be regarded as limited to the first person who takes the note, and relies on the guaranty."

83

§ 1774a. Equitable interest in guaranty is assignable.— But in either case and in any case of the guaranty of a bill or note— the party to whom the guaranty is originally made, may, in equity, assign his right to the holder at the same time that he transfers the bill or note, and thereby invest him with the equitable, although not the legal, title thereto.84

§ 1775. In New York the doctrine was urged by Senator Verplanck, in a dissenting opinion of great learning and ability, that although the guaranty of a negotiable instrument be upon a separate paper, and be not expressed in negotiable words, it ought to be held negotiable in the same manner and to the same extent in favor of each successive holder.85 And while the weight of authority is to the contrary it is difficult, and in our judgment impossible, to answer satisfactorily the cogent reasoning upon which this view is based.

Tidioute Sav. Bank v. Libbey, 101 Wis. 193, 77 N. W. 182, certain persons in an instrument in writing guaranteed to W. T. R. & Co., “the payment of any and all indebtedness now due or hereafter to become due to him, growing out of, or occasioned by, any act of F. & L. Co." Held to be a general continuing guaranty. Leonhardt v. Citizens' Bank, 56 Nebr. 38, 76 N. W. 452. 82. McLaren v. Watson's Exrs., 19 Wend. 559, 26 Wend. 425; Story on Notes, § 484; 2 Am. Lead. Cas. 314, 2 Rob. Pr. (new ed.) 298, 299; Voltz v. National Bank, 158 Ill. 532, 42 N. E. 69, citing text.

83. Story on Notes, § 484.

84. Arents v. Commonwealth, 18 Gratt. 770; Story on Bills, § 457.

85. McLaren v. Watson's Exrs., 26 Wend. 431 et seq.; Everson v. Gere, 47 N. Y. S. C. 250; Vermont Township Bank v. St. Johnsbury R. Co., 40 Fed.

1776. In the second place: As to guaranties written upon the paper contemporaneous with its execution; not generally deemed negotiable. When the guaranty is made at the time the paper is executed and delivered, there are numerous authorities which hold that where it is not expressed in negotiable words, the mere fact that it is written upon a negotiable instrument does not impart to it any negotiability, and no action can be maintained upon it by any subsequent holder thereof. It was so held in Massachusetts where, underneath the signature of the payee of a note indorsed by him, the defendant wrote: "I guarantee the payment of semi-annual interest on this note as well as the principal." " 86 So in Michigan where the defendant McCauley, contemporaneously with the execution of the note, made by Sayer payable to Soule, wrote on the back: "For value received, I hereby guarantee the payment of the within note," and Soule, the payee, indorsed it to the plaintiff, it was held he could not recover, the guaranty not being negotiable.87 But in such cases it will be presumed, unless the contrary appears, that the guarantor of a note for accommodation contracted with the party who sues upon it, and it will not be necessary for him to prove affirmatively that he was the first holder for value.88

1777. Cases maintaining the negotiability of the guaranty of a negotiable instrument made at its inception. But, on the other hand, there are cases which maintain that, although the guaranty on the paper, written at the time of delivery, specifies no person to whom the guarantor undertakes to be liable, and has no negotiable words, it runs with the instrument to which it refers, partakes of its quality of negotiability, and any person having the legal interest in the instrument takes in like manner the guaranty as an incident, and may sue thereon.89 And it has been said, in such a case, "this view is consistent with the nature of the transaction, the evident intention of the parties, and the objects and

86. True v. Fuller, 21 Pick. 140 (1838); Louisville Trust Co. v. Louisville, etc., R. Co., 22 C. C. A. 378, 75 Fed. 433, citing text.

87. Tinker v. McCauley, 3 Mich. 188 (1854), overruling Higgins v. Watson, 1 Mich. 420. See also Small v. Sloan, 1 Bosw. 353 (1857).

88. Northumberland County Bank v. Eger, 58 Pa. St. 97.

89, Phelps v. Church, 65 Mich. 232; Russell v. Klink, 53 Mich. 151; Green v. Burrows, 47 Mich. 70. See Cooper v. Dedrick, 22 Barb. 516, for law of New York; Louisville Trust Co. v. Louisville, etc., R. Co., 22 C. C. A. 378, 75 Fed. 433, citing text; Crissey v. Interstate Loan & Tr. Co., 59 Kan. 561, 53 Pac. 867.

uses of commercial paper." 90 This seems to us the better doctrine. By writing the guaranty on the paper, the guarantor evidences his intention to guarantee the contract of the maker. That contract, being negotiable, is made with any and every person who may be the holder, and the guarantor is thus brought in privity with any and every person who becomes the holder.91 The foregoing views of the text were recently approved in Indiana, in the case of a note where above the name of the payee and indorser there were written the words, "We jointly or severally, for value received, hereby guarantee the prompt payment of the within note," signed by two persons, and suit was brought by the indorsee of the payee against the guarantors.92

§ 1778. Views of Story and Parsons considered. Judge Story says that "with a view to the convenience and security of merchants, as well as the free circulation and credit of negotiable paper, it would seem that such a guaranty upon the face of a bill of exchange, not limited to any particular person, but purporting to be general, without naming any person whatsoever, or purporting to be a guaranty to the payee or his order, or to the bearer, ought to be held, upon the very intention of the parties, to be a complete guaranty to every successive person who shall become the holder of the bill." 93

On the contrary, Professor Parsons says: "Our view of this question is this: The negotiability of paper payable to order is established by a very peculiar exception to the general law of contracts; and this exception rests upon a usage so ancient and universal as to show a distinct and urgent need of it. But the

90. Webster v. Cobb, 17 Ill. 466 (1856), Skinner, J. See Arents v. Commonwealth, 18 Gratt. 770.

91. In McLaren v. Watson's Exrs., 26 Wend. 430 (1841), Walworth, Chancellor, said: "A guaranty indorsed upon a negotiable note, whereby the guarantor agrees with the holder of the note that he will be answerable that the note shall be paid to him or to his order, or the bearer thereof, when it becomes due, is probably negotiable by the transfer of the note upon which it is written; for it is in fact a special indorsement of the note, or more properly a negotiable note in itself. But to make a guaranty negotiable as a part of the note to which it relates, it must be on the note itself, or at least it must be annexed to it, in the nature of un allonge, or eking out of the paper upon which the note is written." Com. Bank v. Cheshire Provident Inst., 59 Kan. 361, 53 Pac. 131, 66 Am. St. Rep. 368, citing text.

92. Cole v. Merchants' Bank, S. C. of Ind., Am. Law Reg., Nov., 1878, p. 703. 93. Story on Bills, § 458.