(9.) Of mercantile guaranties.

A guaranty, in its enlarged sense, is a promise to answer for the payment of some debt, or the performance of some duty, in the case of the failure of another person, who, in the first instance, is liable. As this engagement is a common one in mercantile transactions, and analagous, in many respects, to that of endorser of negotiable paper, a few remarks concerning its creation and validity will not be altogether inapplicable to the subject.

In Pillans v. Van Mierop, it was held, that a note of guaranty, being in writing, and in a mercantile case, came within the reason of a bill or note, and did not require a consideration to appear upon the face of it. But there was a sufficient apparent consideration in that case, and the dicta of the judges were afterwards considered as erroneous, in Rann v. Hughes, before the House of Lords. The doctrine in the latter case was, that all contracts, if merely in writing, and not specialties, were to be considered as parol contracts, and a consideration must be proved.

The English statute of frauds, which has been adopted throughout this country, requires, that, "upon any special promise to answer for the debt, default, or miscarriage of another person, the agreement, or some memorandum or note thereof, must be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." An agreement to become a guarantor, or surety, for another's engagement, is within the statute; and if it be a guaranty for the subsisting debt or engagement of another person, not only the engagement, but the consideration for it, must appear in the writing. The word agreement, in the statute, includes the consideration for the promise, as well as the promise itself, for without a considera

tion there is no valid agreement. This was the decision in the case of Wain v. Warlters, and though that decision has been frequently questioned," it has since received the decided approbation of the courts of law; and the Ch. J. of the C. B. observed, that he should have so decided if he had never heard of the case of Wain v. Warlters. The English construction of the statute of frauds has been adopted in New-York and South Carolina, and rejected in several other states. The decisions have all turned upon the force of the word agreement; and where, by the statute, the word promise has been introduced, by requiring the promise or agreement to be in writing, as in Virginia, the construction. has not been so strict.

Where the guaranty or promise, though collateral to the principal contract, is made at the same time with the principal contract, and becomes an essential ground of the credit given to the principal debtor, the whole is one original and entire transaction, and the consideration extends and sustains the promise of the principal debtor, and also of the guarantor. No other consideration need be shown than that for the original agreement, upon which the whole debt rested, and that may be shown by parol proof, as not being within the statute. If, however, the guaranty be of a previously existing

a 5 East's Rep. 10.

b See Ex parte Minet, 14 Ves. Rep. 190. Ex parte Gardom, 15 ibid. 286.

c Saunders v. Wakefield, 4 Barnw. & Ald. 595. Jenkins v. Reynolds, 3 Brod. & Bing. 14. Morley v. Boothby, 3 Bing. Rep. 107. Newbury v. Armstrong, 6 Bingham, 201.

Leonard v. Vredenburgh, 8
Packard v. Richardson, 17

d Sears v. Brink, 3 Johns. Rep. 210. ibid. 29. 2 Nott & M Cord, 372, note. Mass. Rep. 122. Levy v. Merrill, 4 Greenleaf's Rep. 180. S. P. ibid. 387. Sage v. Wilcox, 6 Conn. Rep. 81.

e Marshall, Ch. J., 5 Cranch's Rep. 151, 2.

ƒ Leonard v. Vredenburgh, 8 Johns. Rep. 29. D'Wolf v. Rabaud, 1 Peters' Rep. 476. The doctrine in 8 Johns. Rep. is confirmed in 11

debt of another, a consideration is necessary to be shown, and that must appear in writing, as part of the collateral undertaking; for the consideration for the original debt will not attach to this subsequent promise; and to such a case the doctrine in Wain v. Warlters applies. But if the promise to pay the debt of another arises out of some new and original consideration of benefit or harm moving between the newly contracted parties, it is then not a case within the statute."

There are no such words in the statute of frauds as original and collateral. The promise referred to is to answer for the debt or default of another. The term debt implies, that the liability of the principal had been precedently incurred; but a default may arise upon an executory contract, and a promise to pay for goods to be furnished to another, is a collateral promise to pay on the other's default, provided the credit was, in the first instance, given solely to the other. If the whole credit be not given to the person who comes in to answer for another, his undertaking is collateral, and must be in writing.

After a valid guaranty has been made, the rights of the parties in the relative character of principal and surety affords an interesting subject of inquiry, and the doctrine in the case of negotiable paper, as to demand and notice, has a feeble and qualified application to the guarantor. Thus it has been held, that the guarantor of a note could be discharged by the laches of the holder, as by neglect to make demand of payment of the maker, and give notice of non-payment to the guarantor, provided the maker was solvent when the note fell due, and became insolvent afterwards. The rule is not

Johns. Rep. 221, and 13 Johns. Rep. 175, and in Peters' Rep. the doctrine is said to be founded in good sense and convenience.

Freeman,

a Leonard v. Vredenburgh, 8 Johns. Rep. 29. Bailey v. 11 ibid. 221. Hunt v. Adams, 5 Mass. Rep. 358. Williams v. Leper, 3 Burr. Rep. 1886. Atkinson v. Carter, 2 Chitty's Rep. 403. b Leland v. Creyon, 1 M'Cord, 100.

so strict as in the case of mere negotiable paper, and the neglect to give notice must have produced some loss or prejudice to the guarantor." And in the case of the absolute guaranty of the payment of a note, no demand or notice is requisite to fix the guarantor. But a further pursuit of this subject of guaranty would not strictly appertain to the doctrine of negotiable paper; and I shall conclude the present general outline of that subject, with some notice of the principal publications on bills and notes.

(10.) Of the principal treatises on bills and notes.

It would have been impossible to enter into greater detail of the distinctions and minute provisions which apply to negotiable paper, without giving undue proportion to this branch of these elementary disquisitions. The treatises and leading

a Oxford Bank v. Haynes, 8 Pickering, 423. The opinion of Duncan, J., in Cannon v. Gibbs, 9 Serg. & Rawle, 202, is to the same point. See also Philips v. Astling, 2 Taunton, 206. Warrington v. Furbor, & East, 242.

b Breed v. Hillhouse, 7. Conn. Rep. 523.

c The student will find the law concerning mercantile guaranties, and of principal and surety, fully examined, and the substance of the numerous cases well digested, in Fell's Treatise on Mercantile Guaranties.

d As evidence of the diffusiveness of the subject, and the infinity of its subordinate rules and distinctions, I would refer to the edition of Chitty on Bills, published at Philadelphia in 1826, which is a bulky octavo of 729 pages in small type, and which has an index alone of 159 pages. It contains the citation of perhaps 2000 English, and 600 American adjudged cases, on this single subject of bills and notes. I have attempted no more, in the course of the lecture, than to select a sufficient number of cases to establish the general principles, and to show their wide spread adoption. And yet I am apprehensive it may be thought I have already gone too far into detail, and encumbered the notes too much with references to authority. The apology (if any be necessary) is, that these commercial subjects cannot, as it appears to be handled usefully in any other way. My mind has been too long disciplined by the actual business of life, to indulge in general theory

me,

cases must be thoroughly understood, before the student can expect to be master of this very technical branch of commercial law, and a brief notice of the best works on the subject will serve to direct his inquiries.

The earliest English work on bills is in Malynes' Lex Mercatoria. The author was a merchant, and the work was compiled in the reign of King James I., and dedicated to the king. That part relating to bills of exchange is brief, loose, and scanty; but it contains the rules and mercantile usages then prevailing in England, and other commercial countries. It was required, at that early day, that the bill should be presented for acceptance, and again for payment, with diligence, and at seasonable hours, and on proper days; and the default in each case was to be noted by a notary, and information of it sent to the drawer with all expedition, to enable him to secure himself. If the drawee would not accept, any other person was allowed to accept for the honour of the bill. Malynes takes no notice of promissory notes or checks, and he even laments that negotiable notes were unkown to the law of England.

The next English treatise on the subject was that by Marius, published in the year 1651, and that treatise has been referred to by Lord Holt and Lord Kenyon, as a very respectable work.

on law subjects, or to think it of much value. The first duty of a law book is to state the law as it is, truly and accurately, and then the reason or principle of it as far as it is known; and if the author be a lecturer or commentator, he may be more free in his observations on its history and character, and he ought to illustrate it by comparison with the institutions of other countries and ages, and, in strong cases, to point out its defects, to show its false doctrines, and modestly and temperately to suggest alterations and improvements. All this I have endeavoured to do, so far as the subject was within the compass of my means and resources; but still the existing and leading rules ought to be laid open to the inspection of the lawyer and the scholar, with mathematical precision, and absolute certainty. I say ought, for how can any one pretend to be infallible in treating of subjects perplexed by ten thousand cases, and when every rule is checked or qualified by reservations and exceptions of the most fine-spun and subtle character?