§ 1107. The relation of a guarantor or a surety to the other parties to a contract is so similar that it is proper to consider the nature of their undertaking together. In both cases the contract is an engagement to be responsible for the debts or duty of a third person, in the event of his failure to fulfil his engagement.1
§ 1108. These contracts, like all other contracts, require both a proposal and an acceptance thereof. If, therefore, an offer of guaranty be made to any person, it becomes the duty of such person to give notice to the guarantor of his acceptance thereof, or there will be no contract.2
§ 1109. To create a contract of guaranty or suretyship, the language used by the party must express, in a clear and explicit manner, an intention to assume the liability of a surety upon the default of the principal.1 If the language be doubtful or ambiguous, it will not be sufficient to create a contract of guaranty. A guaranty is, however, always treated as a mercantile instrument, and is to be construed so as to give effect to whatever is fairly presumable to be the intention and understanding of the parties thereto, and not according to any strictly technical nicety.2 An agreement guaranteeing the payment of purchases does not cover a claim for labor performed in rolling iron to prepare it to be manufactured in a wire mill, unless a general usage is proved to include such labor under that term; and evidence that in contracts of the kind in controversy, made for supplying a wire mill, such labor, according to the well-understood and general usage of the business, is a purchase, does not show a use so general as to justify the assumption that parties guaranteeing the payment of purchases intended to become liable for charges for such labor.3
1 The contract of suretyship is coeval with the first contracts recorded in history. In Genesis it is related, that when Joseph sent back his brethren to their father's house to bring Benjamin to him, Simeon was retained as surety. (Gen. chap. xlii.) Solomon has some pithy sayings among his Proverbs, and strenuously advises against entering into the obligations of surety. He says: "Be not thou one of those that strike hands, or of them that are sureties for debts " (xxii. 26); and also, "A man void of understanding striketh hands, and becometh surety; " and "He that is surety for a stranger shall smart for it, and he that hateth suretyship is sure." Nevertheless, despite Solomon's wisdom, and the saying of Thales, "Sponde, noxa prcesio est," and of Amyot, "Qui re-pond, paye," this contract is made daily; for generosity and friendship will exist, in defiance of prudence and selfishness.
2 Mozley v. Tinkler, 1 Cromp., M. & R. 692; s. c. 5 Tyrw. 416; Edmondston v. Drake, 5 Pet. 624; Douglass v. Reynolds, 7 Pet. 113; Lee v. Dick, 10 Pet. 482; Adams v. Jones, 12 Pet. 207; Reynolds v. Douglass, 12 Pet. 497; Allen v. Pike, 3 Cush. 238; Mussey v. Rayner, 22 Pick. 223.
§ 1110. So, also, the contract in either case is void, if it be without consideration;4 but a trifling consideration is suffior unless there be some new consideration therefor.1 The consideration need not move, however, directly between the person giving and the person receiving the guaranty. It is sufficient if the person for whom the guaranty is given receive a benefit, or if the person to whom it is given receive or may receive a detriment.2 Nor is it necessary that the consideration of the guaranty should be stated in express terms; for if it be fairly implied from the language used, it will ordinarily be sufficient.3
1 Russell v. Clark, 7 Cranch, 69.
2 Lee v. Dick, 10 Pet. 482; Douglass v. Reynolds, 7 Pet. 122; Bell v. Bruen, 17 Pet. 161; 1 How. 169. The fact that the liability of a party who appears as a principal debtor is really, and as respects the true debtor, but a secondary liability, and that evidences of debt issued were issued chiefly for the accommodation of such real debtor, does not give to the other party the complete equitable rights of a surety, if he himself may also be a gainer by the operations entered into. Baltimore v. Baltimore Railroad, 10 Wall. 543 (1870).
3 Schlessinger v. Dickinson, 5 Allen, 47 (1862).
4 See Cobb v. Page, 17 Penn. St. 469; Cutler v. Everett, 33 Me. 201; Ware v. Adams, 24 Me. 177. The mere statement in a written guaranty of a promissory note that the guarantor has purchased the land mortgaged to secure the note is not sufficient evidence of consideration. Park-man v. Brewster, 15 Gray, 271 (1860). B. lent to A. his accommodation notes, and received a written assurance by C. that D. should guarantee the same. Afterwards C, with the consent of B., drew up the following agreement: "Received of B. his notes for $10,000, payable in six months on two cargoes of rough rice, which I promise to deliver to the Boston Rice Mill, to be there subject to the order of the said B., or to pay him back at the end of said time the aforesaid sum of $10,000." This agreement was signed by A., guaranteed by D., and accepted by B. Held, that there was a valid consideration for D.'s guarcient.1 The consideration must be executory, either wholly or in part; and it must be in respect of a new debt or future act.2 Where the original debt and the guaranty are contemporaneous, no other consideration is necessary than that which moves between the creditor and the original debtor.3 But if a promise of guaranty be made in respect to a debt which is already incurred, it will be void for want of consideration, unless there be some new consideration to support it.4 A guaranty of a note is, therefore, without consideration, unless the undertaking be contemporaneous with the original debt, anty, and that an overstatement in the amount of the notes delivered, and the omission of the plaintiff to inform the defendant of this and other facts respecting the transaction, were no defence to an action on the guaranty, in the absence of a fraudulent intent. Deshon v. Dyer, 4 Allen, 128 (1862). Where the maker of a promissory note, by falsely representing that the payer is to advance to him the money thereon, procures a third party to guaranty the same, the payer taking such note in good faith and for value may enforce the guaranty, there is a sufficient consideration. McWilliams v. Mason, 31 N. Y. 294 (1865).
1 Lawrence v. McCalmont, 2 How. 426. Forbearing to eject a tenant at will whose rent is overdue is a good consideration for a guaranty by a third person for the payment of the past and future rent. Vinal v. Richardson, 13 Allen, 521. And see Johnson v. Wilmarth, 13 Met. 416; Boyd v. Freize, 5 Gray, 553.
2 Bailey v. Freeman, 4 Johns. 280; Leonard v. Vredenburgh, 8 Johns. 29; Chater v. Beckett, 7 T. R. 203; Elliott v. Giese, 7 Har. & Johns. 457; Fish v. Hutchinson, 2 Wils. 94; Ware v. Adams,.24 Me, 177. " In consideration of your having resigned the office of deacon, etc, I hereby agree to holdmyself responsible for the payment of £150, due to the Rev. J. E.," etc, was held sufficient, and not merely a part consideration without request. Steele v. Hoe, 14 Q. B. 431. So "considering that you have employed W. F. as your agent, I hereby agree and bind and oblige, as cautioner for the whole intromissions, actions, and doings of the said W. F. not to exceed £100 sterling," has been held good. Gorrie v. Wood-ley, 17 Irish Com. Law, 221 (1864). See Broom v. Batchelor, 1 H. & N. 254 (1856), as to guaranty of future debts.
3 Gillighan v. Boardman, 29 Me. 79; How v. Kemball, 2 McLean, 103. See Semple v. Pink, 1 Exch. 74, which was overruled by Oldershaw v. King, 2 H. & N. 517. And see Coles v. Pack, Law R. 5 C. P. 71.
4 See Haigh v;. Brooks, 10 Ad. & El. 309; Hawes v. Armstrong, 1 Biug. N. C. 761; Gilman v. Kibler, 5 Humph. 19; Bebee v. Moore, 3 McLean, 387; Kean v. McKinsey, 2 Barr, 30.
§ 1111. In these and in most other particulars, the contracts of suretyship and of guaranty are alike. There are, however, some points of difference worthy of note. Suretyship is a primary obligation; while guaranty is a collateral undertaking, assumed in the alternative to pay the debt, provided the debtor does not pay it. Accordingly, a surety may be sued as a promisor to pay the principal debt, while a guarantor can only be sued upon his special undertaking.4 Another point of difference is that sometimes a guarantor can require the creditor to make demand of payment upon the debtor and give notice of non-payment before resorting to the guaranty. In some of the early cases it was supposed that this was a general rule, applicable to all cases except where the debtor was insolvent; but it is now held that demand and notice are not incidental to the situation of guarantor, and that these can only be required in the absence of express agreement, where the want of them would cause a loss or prejudice to the defendant.1
1 Payne v. Wilson, 1 Man. & Ry. 708; s. c. 7 B. & C. 423; Fell on Guaranties. 8. See D'Wolf v. Rabaud, 1 Pet. 476; Ware v. Adams, 24 Me. 177; Pike v. Irwin, 1 Sandf. 14; Blake v. Parlin, 22 Me. 395; Bell v. Welch, 9 Com. B. 154.
2 Morley v. Boothby, 10 Moore, 395; s. c. 3 Bing. 107. See Bickford v. Gibbs, 8 Cush. 156; Klein v. Currier, 14 I11. 237; Campbell v. Knapp, 15 Penn. St. 27. A guaranty that the owner of stock in a corporation shall receive dividends thereon of a specified amount for a certain number of years, he paying to the contractor all he receives above that amount, is valid. Elliot v. Hayes, 8 Gray, 164 (1857).
3 Raikes v. Todd, 8 Ad. & El. 855; James v. Williams, 5 B. & Ad 1109. See Bainbridge v. Wade, 16 Q. B. 89; 1 Eng. Law & Eq. 238.
4 Bouvier, Law Dict. Suretyship; Oxford Bank v. Haynes, 8 Pick. 423, 428.
§ 1112. When a contract is to be deemed an original contract by the promisor, and when it is to be deemed a mere guaranty, is sometimes a matter of considerable nicety. And in this respect no distinct rale can be laid down, but every case must be decided upon its own circumstances, the criterion in all cases being the intention and understanding of the parties. If credit be given primarily to any person with his I consent, he is not a guarantor; and if a person undertake to 1 pay the debt of another, he must look to it that the form of the contract imports only a conditional liability, and that the party for whom he undertakes is primarily and legally liable, and can be sued. Thus, where a person gave the following written promise: " In consideration of your discharging Bacon out of custody in this action, I undertake he shall pay the debt to you, with interest, by four equal half-yearly instalments, the first on the 17th May, 1839," Bacon being at that time in custody, under a ca. sa. for the debt in question, and he was accordingly discharged, it was held that it was an original promise by the promisor, and not a mere guaranty, because Bacon was no longer liable for the debt, and was discharged therefrom.2 So, also, where goods were furnished to an infant at the request of the defendant, his undertaking to pay for them was held to create an original liability, because there could be no liability on the part of the infant.3
1 Vinal v. Richardson, 13 Allen, 521, 527 (1866).
2 Lane v. Burghart, 1 Q. B. 933; Goodman v. Chase, 1 B. & Ald. 297.
3 Harris v. Huntbach, 1 Burr. 373; Duncomb v. Tickridge, Aleyn, 94.