§ 1119. Where a general guaranty of a promissory note or bill of exchange is made upon the instrument, and is not limited to a particular person or restricted in its terms, but purports to be a guaranty to the bearer, the guaranty is said to be as negotiable as the bill or note, and to accompany it in the hands of every holder.1 But the rule is otherwise where the guaranty is made to a particular person named.2 So, also, if the guaranty be on a separate paper, the same rule would seem to obtain, for if the subject-matter of a guaranty be negotiable, so that a change of parties is necessarily contemplated and provided for, the most natural interpretation of the meaning of the parties would be that the guaranty should follow such paper wherever it goes.3 This

1 McLaren v. Watson, 26 Wend. 425; s. c. 19 Wend. 557; Walton v. Dodson, 3 C. & P. 162; Bradley v. Cary, 8 Greenl. 234; Story on Bills of Exchange, § 458; Adams v. Jones, 12 Pet. 207; Phillipps v. Bateman, 16 East, 356. But see Lamourieux v. Hewit, 5 Wend. 307; Upham v. Prince, 12 Mass. 14; Miller v. Gaston, 2 Hill, 188; True v. Fuller, 21 Pick. 140; Tuttle v. Bartholomew, 12 Met. 452; 2 Parsons on Cont. 3 (6th ed.). The guaranty in such case is doubtless to be regarded as an offer, and becomes binding, like a letter of credit, whenever it is acted npon; and it may not, therefore, be strictly accurate to speak of the contract as negotiable. Its negotiability certainly does not carry with it conclusive evidence of consideration in the hands of any holder. See Lowry v. Adams, 22 Vt. 160; Ketchell v. Burns, 24 Wend. 456; Reed v. Garvin, 12 Serg. & R. 100.

2 See Bleeker v. Hyde, 3 McLean, 279; Grant v. Naylor, 4 Cranch, 224. But see McNaughton v. Conkling, 9 Wis. 317, which cannot be law.

3 Ibid.; Adams v. Jones, 12 Pet. 207, 213; Walton v. Dodson, 3 Car. & P. 163. See Bradley v. Cary, 8 Greenl. 234; Springer v. Hutchinson, rule is, however, restricted to guaranties of negotiable paper, and does not apply to ordinary mercantile guaranties on a debt, or a purchase, or a credit.

19 Me. 359. In McLaren p. Watson, 26 Wend. 425, Mr. Senator Ver-planck said: "There is a clear and manifest difference in the substance of the contract or undertaking itself, in regard to the parties to whom the guaranty is proffered, and by whom it may be accepted, although it is still governed by the same general legal principles. The ordinary mercantile guaranty of a debt, or a purchase, or a credit, is a stipulation to become liable for another for some specific debt or debts, not negotiable in the hands of a creditor, and which he cannot pass away. When the debt is contracted on such a guaranty, the primary liability can go no further than the first parties; and, therefore, there is no promise or undertaking held out by the guarantor to any other person, to give a subsequent credit. Now, as to the undertaking or offer made by a guaranty of payment of negotiable paper. That is a positive undertaking and promise to become liable for its due payment, in case of the default of the original parties; and this offer is held out to every person who may, on the faith of it, become the legal holder of such paper. It is a promise or undertaking held out to a second, third, or fourth indorsee, as much as to the first holder; and the last of these, who advances his money upon such a guaranty, looks as much as the first to the promise of the guarantor. The offer is of an indefinite number of successive guaranties, whilst, in the case of a guaranty of payment for goods bought on credit, the offer, though it may be general in its address, is only of some specific transaction which becomes final as to the parties when the offer is accepted. The guaranty may not be negotiable in itself as a negotiable contract; but it is a collateral promise to any and each, in his turn, of the persons, known or unknown, who may give credit to a negotiable note, coupled with such a guaranty. But, as it can be enforced only by the holder, who is entitled to receive payment from the parties to the note itself, there can be no breach of such an undertaking, or any cause or ground of action, in respect to any one who, after having made himself a party to the contract, parts with the note, and ceases to be entitled to its payment. I cannot imagine any reason of justice, policy, or legal authority for giving legal effect to a contract of guaranty for any future credit to another, proffered in writing to any person indiscriminately, who will give such credit, which does not equally apply to the remote holder of a note or bill, who has taken it after successive intermediate holders, but still upon the faith of the original guaranty. He also guarantees the payment of a note by the very use of those words; and in their common, as well as their legal, meaning and understanding, they hold forth this undertaking or engagement: 'I promise to any person who may, upon the faith of this promise, become, by purchase, discount, or otherwise, the bond fide holder of this note, to pay the same, in case of

§ 1120. By the law of Connecticut, a blank indorsement of a note is a guaranty that the note is due and payable according to its tenor, that the maker shall be of ability to pay it when it comes to maturity, and that it is collectible by the use of due diligence on the part of the holder.1

§ 1121. There is serious conflict as to the effect of an indorsement by a stranger to a bill of exchange or promissory note made before the payee has indorsed the instrument. In some States such an indorsement is held to render the party liable as a guarantor;2 in other States it is held to constitute him an indorser;3 and in still others it is considered as equivalent to a joint promise with that of the maker or acceptor.4 Again, it is said that if such indorsement be intended for the security of the payee, the party becomes a maker or guarantor; if not so intended for the payee, then he becomes an indorser.5 In some courts the nature of the liability assumed has been held to be a question of intention for the jury to decide;6 while in others it has been decided that, though such evidence is inadmissible, still the time when the signature was given may be shown; and if it was subsequent to the execution of the instrument, and an independent transaction, the party is a guarantor.7 If the question were res nova, we should say that such a signature bound the party as guarantor in most cases. It is clear that the party intended to assume a liability of some kind; and it is equally clear that he could its not being duly paid when at maturity.' The consideration may be either some specific payment, security, or benefit to the guarantor, or it may be merely the value of the note paid at his request, and on his credit, to the person for whose benefit the guaranty is made and intended."

1 Ranson v. Sherwood, 26 Conn. 437 (1857).

2 Camden v. McKoy, 3 Scam. 437; Redfield & Bigelow's L. C. 112, 124.

3 Hall v. Newcomb, 7 Hill, 416; Redfield & Bigelow's L. C. 131, 139. 4 Union Bank v. Willis, 8 Met. 504; Redfield & Bigelow's L. C. 124, not become an indorser, for indorsement, properly speaking, always effects a transfer of the title to the paper, - which a stranger could not accomplish. It is almost as clear that the party could not have intended to put himself in the situation of a joint promisor or surety, or he would have put his name in the usual place for effecting such a liability. The true presumption seems to be that the party intended to take upon himself some secondary or contingent liability, dependent upon the failure of the promisor to perform; and as his signature cannot, with any propriety, be regarded as an indorsement, his liability must be that of a guarantor. And the case cannot be different by reason of a subsequent indorsement of the payee above the stranger's signature; for though he would in such a case be apparently an indorser, the liability which he himself assumed could not be changed without his consent.

131.

5 Greenough v. Snead, 3 Ohio St. 415; Redfield & Bigelow's L. C. 143, 150.

6 Rey v. Simpson, 22 How. 341; Redfield & Bigelow's L. C. 150, 164, Sylvester v. Downer, 20 Vt. 355; Redfield & Bigelow's L. C. 139, 143.

7 Benthall v. Judkins, 13 Met. 265; Pearson v. Stoddard, 9 Gray, 199; Irish v. Cutter, 31 Me. 536.