TITLE XIII.

GUARANTY.

CHAPTER I. Guaranty in general.
II. Suretyship.

CHAPTER I.

GUARANTY IN GENERAL.

ARTICLE I. Definition of guaranty.
II. Creation of guaranty.

III. Interpretation of guaranty.
IV. Liability of guarantors.

V. Continuing guaranty.

VI. Exoneration of guarantors.

ARTICLE I.

DEFINITION OF GUARANTY.

SECTION 1534. Guaranty, what.

1535. Knowledge of principal not necessary to creation o

guaranty.

what.

S1534. A guaranty is a promise to answer for the Guaranty, debt, default or miscarriage of another person.

This definition is in the precise language of the statute
of frauds (2 R. S., 135, § 2), except that it omits the
word "special" before "promise." It of course in-
cludes a contract of suretyship, but every guarantor is
not necessarily a surety.

S1535. A person may become guarantor even Knowledge

without the knowledge or consent of the principal.

Code Napoleon, 2014.

57

of principal

not neces

sary to creation of guaranty.

Necessity

of a consideration.

Guaranty to be in writing, &c.

ARTICLE II.

CREATION OF GUARANTY.

SECTION 1536. Necessity of a consideration.

1537. Guaranty to be in writing, &c.

1538. Engagement to answer for obligation of another, when deemed original.

1539. Acceptance of guaranty.

S 1536. Where a guaranty is entered into at the same time with the original obligation, or with the acceptance of the latter by the guarantee, and forms, with that obligation, a part of the consideration to him, no other consideration need exist. In all other cases there must be a consideration distinct from that of the original obligation.

See Mallory v. Gillett, 21 N. Y., 412. The person to whom a guaranty is made, is here called the guarantee. This is the proper legal meaning of the word (see Bouvier's Dictionary, also Webster and Worcester), although it is often used in another sense.

S1537. Except as prescribed by the next section, a guaranty must be in writing, and signed by the guarantor; but the writing need not express a consideration.

The familiar provision of the Revised Statutes, made every special promise to answer for the debt, default or miscarriage of another person, void, unless "some note or memorandum thereof expressing the consideration be in writing, &c. (2 Rev. Stat., 135, § 2, subd. 2). In the draft of this Code, the Commissioners recom. mended that the requirement that the consideration be expressed, should be omitted (Dr. Civ. Code, § 1380). This change in the law has since been made, by the Legislature, by Laws of 1863, ch. 464; and the sec tion in the text, therefore, corresponds to the existing law.

The Commissioners have inserted in the text an express provision that the writing need not express a consideration, because by the section immediately preceding an actual consideration is necessary to support a guaranty in some cases, while in others none is required. It has been lately held by the Court of Appeals that a contract required by the statute of frauds to be in

writing, cannot be partly in writing and partly oral;
thus where a writing relating to a contract for the sale
of land fixes the price, but refers to "terms as speci-
fied," which are not stated in writing, the memorandum
is insufficient, and cannot be made good by oral evi-
dence of the time agreed upon for payment (Wright v.
Weeks, 25 N. Y., 153). If, therefore, the section in the
text should simply omit the former provision of the
statute requiring the consideration to be stated, it
might be exposed to the construction that in all those
cases in which the consideration is made, by the previ-
ous section, essential to the contract, it must be stated
in reducing the contract to writing.

In England the statute, 19 & 20 Vict., c. 97, § 3, enables
a party to prove the consideration of a guaranty by
parol. So in Maine (Rev. Stat., 631).

an

not

§ 1538. A promise to answer for the obligation of another, in any of the following cases, is deemed original obligation of the promiser,' and need be in writing:

1. Where the promise is made by one who has received property of another upon an undertaking to apply it pursuant to such promise; or by one who has received a discharge from an obligation in whole or in part, in consideration of such promise;2

2. Where the creditor parts with value, or enters into an obligation, in consideration of the obligation in respect to which the promise is made, in terms or under circumstances such as to render the party making the promise the principal debtor, and the person in whose behalf it is made, his surety;3

3. Where the promise, being for an antecedent obligation of another, is made upon the consideration that the party receiving it cancels the antecedent obligation, accepting the new promise as a substitute therefor; or upon the consideration that the party receiving it releases the property of another from a levy, or his person from imprisonment under an execution on a judgment obtained upon the antecedent obligation; or upon a consideration beneficial to the promiser, whether moving from either party to the antecedent obligation, or from another person;

4. Where a factor undertakes, for a commission, to sell merchandise and guaranty the sale;5

5. Where the holder of an instrument for the payment of money, upon which a third person is or may become liable to him, transfers it in payment of a precedent debt of his own, or for a new consideration, and in connection with such transfer enters into a promise respecting such instrument.

1 The cases upon the very frequently litigated question

whether a promise partaking of the character of an engagement for the debt of another, is to be deemed an original or a collateral undertaking, are very numerous, and far from consistent. It is hardly possible to frame rules having the necessary simplicity and clearness, which shall reconcile all the adjudications. In the subdivisions of this section the commissioners have endeavored to supply rules for distinguishing an original undertaking, which, upon the whole, are sustained by the weight of authority; though some of them express views which have been controverted.

The rule that the undertaking of a surety, who signs together with the principal, although he adds the word "surety," to his name, is an original and not a collateral undertaking (Perkins v. Goodman, 21 Barb., 218; and see Clark v. Rawson, 2 Den., 135), has relation to the expression of a consideration, and becomes unimportant when that element is dispensed with, in the memorandum. The same remark applies to some cases where a guaranty omitting to specify a consideration has been sustained by aid of the fact that it was indorsed on the principal contract (see Bailey v. Freeman, 11 Johns., 221).

The rule laid down in Douglass v. Jones, 3 E. D. Smith, 551, that an agreement by an employer with his clerk, guarantying that his salary at the rates fixed by the contract of employment, shall not fall below a certain sum, need not express a consideration, is not properly an exception to the general principle that a guaranty must be in writing. Such an engagement is not a guaranty properly speaking, nor within the definition employed in this Code. And the decision is put upon the ground that the engagement was not one to answer for the debt, &c., of another person, and therefore need not be in writing. Subdivision 1 embraces, in its first clause, such cases as Wyman v. Smith, 2 Sandf., 331; N. Y. & Erie R. R. Co., 16 How. Pr., 564; Lippincott v. Ashfield, 4

Sandf., 611; Olmstead v. Greenly, 18 Johns., 12; and compare Westfall v. Parsons, 16 Barb., 645; and in its second clause, such cases as Van Epps v. McGill, Hill & D. Supp., 109; Phillips v. Gray, 3 E. D. Smith, 69.

• Subdivision 2 embraces the common case of goods sold and delivered, or services rendered for the benefit of one upon the request and promise of another; as to which see Chase v. Day, 17 Johns., 114; Graham v. O'Neil, Hall, 474; Darlington v. McCunn, 2 E. D. Smith, 411; Chesterman v. McCostling, 6 N. Y. Leg Obs., 212; Hanford v. Higgins, 1 Bosw., 441; Flanders v. Crolius, 1 Duer, 206; Briggs v. Evans, 1 E. D. Smith, 192; Devlin v. Woodgate, 34 Barb., 252; Quintard v. De Wolf, 34 Barb., 97; State Bank v. Mettler, 2 Bosw., 392; Beach v. Hungerford, 19 Barb., 258; also such cases as Harrison v. Sawtel, 10 Johns., 242; Chapin v. Merrill, 4 Wend., 657; with which compare Kingsley v. Balcome, 4 Barb., 131; and Stern v. Drinker, 2 E. D. Smith, 401; King v. Despard, 5 Wend., 277.

It excludes cases where the whole credit is not given to the person who comes in to answer for the party immediately benefited; such as Rogers v. Kneeland, 13 Wend., 114; aff'g S. C., 10 Id., 218; Marquand v. Hipper, 12 Wend., 520; Brady v. Sackrider, 1 Sandf., 514; Dixon v. Frazee, 1 E. D. Smith, 32; Pennell v. Pentz, 4 Id., 639; Allen v. Scarff, 1 Hilt., 209; Leonard v. Vredenburgh, 8 Johns., 29; Larson v. Wyman, 14 Wend., 246; Payne v. Baldwin, 14 Barb., 570; Brown v. Webber, 24 How. Pr., 306; Wilson v. Roberts, 5 Bosw., 100.

Subdivision 3 chiefly rests upon the views expressed

in the prevailing opinion in Mallory v. Gillett (21 N. Y., 412), where numerous cases upon the distinction between original and collateral undertakings are reviewed. See also Cailleux v. Hall, 1 E. D. Smith, 5; Stymets v. Brooks, 10 Wend., 207; Farley v. Cleveland, 4 Cow., 432; Meech v. Smith, 7 Wend., 314; Blunt v. Boyd, 3 Barb, 209; Kingsley v. Balcome, 4 Barb., 131; Elwood v. March, 5 Wend., 231; Mersereau v. Lewis, 25 Wend., 243; Barker v. Bucklin, 2 Den., 45; Blunt v. Boyd, 3 Barb., 209; Earle v. Crane, 6 Duer, 564; Blyer v. Monholland, 2 Sandf. Ch., 478; Stoddard v. Graham, 23 How. Pr., 518; Therasson v. McSpedon, 2 Hill., 1.