Same - Contracts Of Suretyship

The contract of suretyship has sometimes been treated as being within this excepted class of contracts, but as regards the formation of the contract it is not really so. To vitiate such a contract the misrepresentation or nondisclosure must amount to fraud; but we shall see, in treating of fraud, that nondisclosure of facts which there is a duty to disclose is sometimes regarded as fraud, without regard to the question of motive or design.85 Where the contract of suretyship has once been formed, the surety is entitled to be informed of any agreement between the creditor and the debtor which alters their relations, or any circumstance which would give him a right to avoid the contract.86 Failure of the creditor to give such information does not affect the formation of the contract, but merely discharges the surety from any further liability, and therefore the question has nothing to do with our present discussion.

81 New Brunswick & C. R. Co. v. Muggeridge, 1 Drew. & S. 381. And see

Venezuela R. Co. v. Kisch, L. R. 2 H. L. 113; Peek v. Gurney, L. R. 6 H. L. 403. See "Corporations," Dec. Dig. (Key-No.) § 80; Cent. Dig. §§ 244-264.

82 Brewster v. Hatch, 122 N. Y. 349, 25 N. E. 505, 19 Am. St Rep. 498. Bee "Corporations," Dec. Dig. (Key-No.) § 80; Cent. Dig. §§ 244-264.

83 Brooks v. Martin, 2 Wall. 70, at page 84, 17 L. Ed. 732; Baker v. Humphrey, 101 U. S. 494, at page 502, 25 L. Ed. 1065; James v. Steere, 16 R. I. 367, 16 Atl. 143, 2 L. R. A. 164; Smith v. Davis, 49 Md. 470; McCon-key v. Cockey, 69 Md. 286, 14 Atl. 465; Reed v. Peterson, 91 I11. 288; Ward v. Armstrong, 84 I11. 151; Zeigler v. Hughes, 55 I11. 288; Norris v. Tayloe, 49 I11. 17, 95 Am. Dec. 568; Casey v. Casey, 14 I11. 112; Bowen v. Kutzner, 107 Fed. 281, 93 C. C. A. 33 (brother and sister); post, p. 308. See "Attorney and Client," Dec. Dig. (Key-No.) § 128; Cent. Dig. §§ 239-249; "Guardian and Ward," Dec. Dig. (Key-No.) §§ 62, 63, 99; Cent. Dig. §§ 288-299, 370, 371; "Parent and Child," Dec. Dig. (Key-No.) § 9; Cent. Dig. §§ 74, 111-118; "Trusts," Dec. Dig. (Key-No.) §§ 81, 288; Cent. Dig. §§ 115-118, .403, 404.

84 2 Pom. Eq. Jur. § 902.

Agent's Warranty Of Authority

To the rule that an innocent misrepresentation has no effect upon the liabilities of the parties another exception must be noted. A person who contracts as agent in effect represents that he has the authority of his principal, and if the representation is untrue he is liable to the other party for any resulting loss, even if he acted in good faith and in the belief that he had authority. By a fiction, the professed agent is deemed to warrant his authority.87