This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A contract of suretyship is construed strictly in favor of the surety, if he does not receive value for becoming surety.13 This rule, however, does not require the contract to be construed unfairly as against the creditor,14 and if by strict construction the liability of the surety is found to exist, his liability in other respects is controlled by the ordinary rules of construction.15 A different principle applies to cases in which a surety becomes such for a valuable consideration which moves to the surety. In such cases the contract is not to be construed strictly in favor of the surety,16 and it has been said that it should be construed strictly in favor of the creditor.17 The reason for this difference in theories of construction is undoubtedly that in the latter case the surety enters into the contract as a matter of business and that he is entitled to no more favorable consideration than any other party who enters into a contract by which he expects to profit. In some states the reason for this difference has been said to be that in the latter group of cases the surety becomes surety for a valuable consideration which moves to himself.18 In some cases, however, it has been intimated that the reason for the difference in cases is that in the latter group of cases the surety is a corporation, while in the former group of cases the surety was an individual.19 It has also been suggested that the reason for the difference in construction is that the surety company selects the language of the instrument by which it becomes a surety.20 For any or all of these reasons such contracts of suretyship are treated in many jurisdictions just as insurance contracts are treated and they are construed in favor of the insured.21
IIlinois. Forest City Ins. Co. v. Hardesty, 182 111. 39, 74 Am. St. Rep. 161, 55 N. E. 139.
Mississippi Home Mutual Fire Insurance Co. v. Pittman, 111 Miss. 420, 71 So. 739.
New York. Paul v. Ins. Co., 112 N. Y. 472, 8 Am. St. Rep. 758, 3 L. R. A. 443, 20 N. E. 347.
North Carolina. Edwards v. Jefferson Standard Life Ins. Co., 173 N. Car. 614, 92 S. E. 695.
Ohio. Webster v„ Ins. Co., 53 O. S. 558, 53 Am. St. Rep. 658, 30 L. R. A. 719, 42 N. E. 546.
10McEvoy v. Security F. Ins. Co., 110 Md. 275, 22 L. R. A. (N.S.) 964, 73 Atl. 157.
11 Warner v. Page, - Okla. - , 159 Pac 264.
12State v. Sapulpa, - Okla. - , 160 Pac. 489.
13 England. Napier v. Bruce, 8 CL & F. 470.
United States. Leggett v. Humph-reys, 62 U. S. (21 How.) 66, 16 L. ed. 50.
California. Felonicher v. Stingley, 142 Cal. 630, 76 Pac. 504.
North Carolina. Blades v. Dewey, 136 N. Car. 176, 103 Am. St. Rep. 924, 48 S. E. 627.
Oregon. Woodle v. Settlemeyer, 71 Or. 25, L. R. A. 1915A, 839, 141 Pac. 205.
14 Mann v. Mann, 119 Va. 630, 89 S. E.'897.
15Blades v. Dewey, 136 N. Car. 176, 103 Am. St. Rep. 924, 48 S. E. 627.
16 Federal Union Surety Co. v. Ma-guire, 111 Ark. 373, 163 S. W. 1171;
This rule, if rightly applied, has especial force with reference to such contracts as are not favored by the law.22 Thus covenants for forfeitures,23 such as covenants inserted in insurance policies,24
United States Fidelity and Guaranty Co. v. Poetker, 180 Ind. 255, 102 N. E. 372; American Surety Co. v. Pang-burn, 182 Ind. 116, 105 N. E. 769; Hile-man v. Faus, 178 Ia. 644, 158 N. W. 597.
17 American Bonding Co. v. Morrow, 80 Ark. 49, 117 Am. St. Rep. 72, 96 S. W. 613.
18 United States Fidelity and Guaranty Co. v. Poetker, 180 Ind. 255. 102 N. E. 372; Hileraan v. Faus, 178 Ia. 644, 158 N. W. 597.
19 Southern Real Estate & Financial Co. v. Bankers Surety Co. (Mo.), 184 S. W. 1030.
20 Federal Union Surety Co. v. Ma-guire, 111 Ark. 373, 163 S. W. 1171.
21 American Bonding Co. v. Morrow, 80 Ark. 49, 117 Am. St. Rep. 72„ 96 S. W. 613; American Surety Co. v. Pangburn, 182 Ind. 116, 105 N. E. 769; Hormel v. American Bonding Co., 112 Minn. 288, 33 L. R. A. (N.S.) 513, 128
N. W. 12; Philadelphia v. Fidelity & Deposit Co., 231 Pa. St. 208, Ann. Cas. 1912B, 1085. 80 Atl. 62; Brown v. Title Guaranty & Surety Co., 232 Pa. St. 337, 38 L. R. A. (N.S.) 698, 81 Atl. 410.
22 Letchworth v. Vaughan, 77 Ark. 305, 90 S. W. 1001; Hunn v. Pennsylvania Institution for Instruction of the Blind, 221 Pa. St. 403, 18 L. R. A. (N.S.) 1248, 70 Atl. 812.
23 Letchworth v. Vaughan, 77 Ark. 305, 90 S. W. 1001; Jensen v. Palatine Insurance Co., 81 Neb. 523, 116 N. W. 286; Hamann v. Nebraska Underwriters' Insurance Co., 82 Neb. 429, 118 N. W. 65; Reeves v. Martin, 20 Okla. 558, 94 Pac. 1058; Jacobs v. Spalding, 71 Wis. 177, 36 N. W. 608.
24 Arkansas. American Bonding Co. v. Morrow, 80 Ark. 49, 117 Am. St. Rep. 72, 96 S. W. 613.
Georgia. Thornton v. Ins. Co.. 116 Ga. 121, 94 Am. St. Rep. 99, 42 S. E. 287.
are construed strictly against the party for whose benefit they are exacted. Thus under an insurance policy containing a provision that the policy should be incontestable after three years, and another provision avoiding the policy "if the insured die in consequence of his own criminal action," the latter clause was held not to apply after the expiration of three years.25 A condition in an insurance policy which makes the policy void if gasoline is kept, used or allowed on the premises, applies to such keeping or using as a matter of practice, and it does not apply to the temporary possession of a small quantity of gasoline for the purpose of cleaning an automobile and vulcanizing tires.26 A provision to the effect that a railway ticket is not good if mutilated is to be construed strictly against the railway company.27 A contract by which an employe releases his legal rights,28 and a covenant for arbitration,29 are to be construed strictly. In many cases language is used which seems to indicate that the question to be considered is which party in fact prepared the contract or the term in question, and that the term is to be construed as against the party who prepared it in fact.30 It has, however, been said that to have this rule apply, the contract must, on its face, show which party makes use of the language; and that oral evidence is inadmissible to show which party stipulated for certain terms since it is immaterial.31 In most cases the contract shows on its face that the provisions in question were inserted for the benefit of the party by whom they were in fact drawn; and the question of the right to show, as a fact, which party prepared such provision does not arise.
Kentucky. Home Ins. Co. v. Bridges, 172 Ky. 161, L. R. A. 1917C, 276, 189 S. W. 6.
Illinois, Forest City Ins. Co. v. Hardest?, 182 111. 30, 74 Am. St. Rep. 161, 55 N. E. 139.
Indiana. Aetna Ins. Co. v. Deming, 123 Ind. 384, 24 N. E. 86, 375.
Nebraska. Connecticut Fire Ins. Co. v. Jeary, 60 Neb. 338, 51 L. R. A. 698, 83 N. W. 78; Hamann v. Nebraska Underwriters' Insurance Co., 82 Neb. 429, 118 N. W. 65.
Ohio. Webster v. Ins. Co., 53 O. S. 558, 53 Am. St. Rep. 658, 30 L. R. A. 719, 42 N. E. 546.
South Dakota. McNamara v. Ins. Co., 1 S. D. 342, 47 N. W. 288.
Washington. Starr v. Aetna Ins. Co., 41 Wash. 199, 4 L. R. A. (N.S.) 636, 83 Pac, 113. 25Sun Life Ins. Co. v. Taylor, 106
Ky. 408, 94 Am. St. Rep. 383, 56 S. W. 668.
26 Home Ins. Co. v. Bridges, 172 Ky. 161, L. R. A. 1917C, 276, 189 S. W. 6.
27 Young v. Central of Georgia Ry. Co., 120 Ga. 25, 102 Am. St. Rep. 68, 65 L. R. A. 436, 47 S. E. 556.
28 Maucher v. Chicago, R. I. & P. Ry. Co., 100 Neb. 237, 159 N. W. 422.
29Hunn v. Pennsylvania Institution for Instruction of the Blind, 221 Pa. St. 403, 18 L. R. A. (N.S.) 1248, 70 Atl. 812.
30 Allen-West Commission Co. v. People's Bank, 74 Ark. 41, 84 S. W. 1041; General Accident, Fire & Life Assurance Corp. v. Louisville Home Telephone Co., 175 Ky. 96, L. R. A. 1917D, 952, 193 S. W. 1031; Bickford v. Kir-win. 30 Mont. 1, 75 Pac. 518.
Contra. Blanken.ship v. Decker, 34 Mont. 292, 85 Pac. 1035; Gillet v. Bank, 160 N. Y. 549, 55 N. E. 292.
The rule contra proferentem is not one of the favored rules of construction. Indeed, it is said that it is to be resorted to only when the other rules fail.32
It has no application where the contract is not ambiguous and where the intention of the parties is clear.33