place of payment and easy for the creditor to give notice of these facts.

§ 38. Notice to guarantor of acceptance of guaranty. When a person offers to guarantee the payment of goods to be sold, or credit given to another, there is conflict of authority as to whether notice must be given by the creditor to the guarantor that he accepts the guaranty. In the case of Davis v. Wells (27) the defendant's written guaranty stated that the defendant guaranteed any indebtedness of a certain firm to the extent of $10,000 for any overdrafts then made, or that might be made in the future. This writing was sent to the plaintiff, who thereupon gave credit to the firm named in the guaranty, but never gave the defendant notice that they had accepted the guaranty and given such credit in reliance on it. Notice of the amount of the firm's indebtedness was given to the defendant the day before the suit. The court here said that, when a guaranty was sent to the creditor, acceptance was required from him to make a valid contract, and he must give notice that he has accepted, but in this case the guaranty showed on its face it was made at request of the plaintiff, and therefore the contract was complete. If the guaranty is at the request of the creditor, the contract is complete; for it is in effect an offer by the creditor to accept the party as guarantor, which is accepted by the latter. When not at the creditor's request, the cases are hopelessly in conflict as to whether he must give the guarantor notice when he accepts the guarantee. If the guaranty is in the form of an offer requiring a counter promise to the offeror, then

(27) 104 United States, 159.

it would seem that some notice of acceptance should be given in order to complete the contract. If in the form of an offer to guaranty, "if goods are sold," thus calling for an act instead of a counter-promise, the contract seems completed when goods are sold, upon the principle of a unilateral contract. If further notice is required it is due to a requirement of the law of suretyship and not of contracts. See Contracts, § 22, in Volume II.

§ 39. Alteration of principal's contract. The general rule of law is that a material alteration of the principal debtor's contract, without the consent of the surety, will release the surety, if such alteration might possibly prejudice any of his rights. By alteration here is meant any change made with apparent intent to affect the terms of the contract. An alteration made by any party discharges the surety, when made without his consent, for after such alteration the deed is not the deed which he signed. Thus, where the principal to a promissory note changed or erased the word "September" and put in the word "October," without the knowledge or consent of either creditor or surety, the Supreme Court of the United States held that the surety was discharged (28). An alteration made by a stranger to the instrument does not release a surety to it, and the same is true when the change is made by accident or mistake. An immaterial alteration, of course, does not release the surety, as it cannot in any way prove prejudicial to him. If there is an alteration in a note by changing the place of payment the surety is discharged, unless he consents. It is the duty of the maker to seek the payee at

(28) Wood v. Steele, 6 Wallace, 80.

the place where the note is payable, and it is likewise the duty of the surety to see that the debt is paid; and, if the place of payment is changed, his duty may thereby be increased, for it may require greater effort to find the payee.

§ 40. Same: By agreement between creditor and principal. A material change in the contract by agreement between creditor and principal releases the surety to the extent to which he might possibly be injured. In an English case, the plaintiff had rented the milking of thirty cows to the principal, and the defendant guaranteed payment of the rent. By a later agreement between the plaintiff and the principal, thirty-two cows were furnished part of the time and twenty-eight for the rest of the time. This it was held discharged the defendant as surety (29). In this case, it should be noted, an entirely new contract was substituted for the old one. In such case the surety is released, regardless of whether he might be prejudiced or not. Where a slight change is made in the old contract, then the question whether he might be prejudiced must be determined.

If the change in the contract is such that it is apparent it could not injure the surety, then he will not be released from liability. To illustrate, suppose the maker of a promissory note is to pay seven per cent. interest, and later by agreement it is written on the note that the rate of interest henceforth is to be six per cent. Clearly, no right of a surety on such a note would be prejudiced, for it would merely amount to a release by the creditor of a part of his rights on the note and would be beneficial to the surety

(29) Witcher v. Hall, 5 Barnwell and Cresswell, 269.

(30). Likewise, the creditor and principal may agree to reduce the amount of the debt, or that the creditor shall furnish more goods for the amount guaranteed than had been previously agreed upon. Such changes, which it is evident could by no possibility injure the surety, but must prove beneficial to him, do not discharge him; but in such cases it must be apparent that there is no possibility that his rights will be injured.

§ 41. Non-disclosure of facts creditor should reveal to surety. Facts of an unusual nature which the surety is not likely to discover, which are known to the creditor but unknown to the surety, and which are of such a nature as to impose greater risk on the surety, should be disclosed to him by the creditor on making the contract of suretyship. If the facts are such that the surety would probably not have entered into the contract had he known them, he will be discharged if such facts are concealed from him. Thus, an agreement between the principal and the creditor, that the creditor is to charge the principal more than market price for goods, must be disclosed to a surety for the payment of the goods (31); and where the creditor concealed from the surety on the bond of an employee, that the employee had previously been guilty of fraudulent misconduct while in the creditor's employ, it was held the jury might properly find the surety discharged, and, if the fact should have been disclosed by the creditor, his motive in not revealing it to the surety was immaterial (32). Also, when the surety signed the bond of a state treasurer when

(30)

Cambridge Savings Bank v. Hyde, 131 Massachusetts, 77. (31) Pidcock v. Bishop, 3 B. & C. 605.

(32) Railton v. Mathews, 10 Clark & Finnelly, 934.

the treasurer had already embezzled funds, and this was known to the state officer at the time the surety signed, concealment of such facts was held to release the surety (33). The creditor need not disclose all the facts he knows, and it is not easy to tell just what facts he must disclose; except that we may say that, if he is pretty certain the surety will not enter into the contract if he knows certain facts and yet he intentionally conceals them, the surety will be released, for this is like a fraudulent concealment. Thus, the mere fact that the creditor knew that his employee, a collection agent whose bond the surety was about to sign, had failed to remit money collected for some time, does not impose on the creditor the obligation to inform the surety; but if the creditor knew such employee had embezzled the money, such fact would have to be revealed.

§ 42. Creditor not bound to discover facts. The creditor, however, is not bound to make any effort to find out facts concerning the principal, and the surety will not be discharged where the creditor was ignorant of the facts complained of, even though he was grossly negligent in not knowing them. As to facts which need not be disclosed, it has been held that the fact the principal's brother had been surety and a new surety was substituted for the brother need not be disclosed to such new surety. Also, irregularities or omission of duty on the part of a bank cashier, which did not affect his official integrity, need not be disclosed; for facts which must be disclosed must have a bearing on the question whether the principal will be likely or able to perform the obligation (34).

(33) Sooy v. New Jersey, 39 New Jersey Law, 135. (34) Bostwick v. Van Voorhis, 91 New York, 353.