12 East, 400, Metcalf v. Bruin.

By Bayley, J.
Id. 408.

Guarantees by persons in particular capacities.

Fell, p. 120.

Globe Insurance Company; this term meant a fluctuating or successive body of persons who should from time to time be carrying on the business of insurance under the name of the Globe Insurance Company.

"If this were not so, the single change of one out of 900 persons would have put an end to the obligation, and the probability was that in a week or a "month after the execution of the bond, some one person would drop off."

As a general rule, a guarantee by one partner will bind the rest of the firm, provided it be connected with the partnership trade or business. But if there be any fraud in the case, or if there be an express dissent on the part of the other partners, the case will be different. And so where it is not customary for persons in partnership to enter into the particular guarantee sought to be enforced, some evidence should be given to show the consent of the partner who has not signed.

A subsequent recognition; a prior command; proof 3 Campb. 478, of a previous course of dealing, in which such guarantees were given, and to which both partners have been privy, will suffice.

Duncan v.

Lowndes.

Nor can two partners bind a third, who has come into the firm since the accruing of the debt for which secuShirreff v. Wilks. rity is given, unless that third person give his assent for

1 East, 48,

Fell, p. 121.

that purpose.

of

Great strictness is required, where the engagement guarantee is entered into by the deed of one partner for the firm, to prove that the rest have agreed to be so

bound.

Generally, the executor of a person who has become surety is liable, and the surety, on the other hand, is responsible to the representative of the obligee or individual guaranteed. On the same principle as we have observed in cases of partnership, the debt must havaccrued in the lifetime of the testator. There was

1

a bond conditioned for the faithful services of a clerk, it was given to the obligee and his executors, and the testator died; the executors carried on his trade, and then the clerk made default, but the Court held that the surety was not then liable; they said, that the indemnity was given that the clerk should pay the money received on the testator's account to him, or to his executors, because money might be in his hands at the time of the testator's death, for which he could only account to the executors.

The rights of assignees upon the subject of guarantee will fall so necessarily under the head of bankruptcy, that the consideration of the bankrupt's liabilities, the proving a guarantee under a commission against the surety, with many other particulars connected with that subject, will be postponed until a subsequent chapter.

Term Rep. 287, Barker v.

Parker.

discharged. rantees, p. 160; Comyn on Con

Fell on Gua

One cause which will infallibly operate to discharge Guarantee how a guarantee is the giving time for payment of a debt without the surety's consent. This is a rule so inflexible, and settled by so many authorities, that it is only necessary to refer to the books where they are collected.

The same principle is applied to bills of exchange, where the acceptor is considered the principal debtor, and the other parties as sureties only; the holder, therefore, who is the creditor, ought not so to negotiate with the acceptor, as to prejudice the remaining parties to the bill. If a creditor give time to the debtor, the collateral securities are discharged, both in law and equity.

There was a guarantee for any goods, which might be supplied during a year, mentioning the day; the goods were supplied, but the creditor permitted the principal to renew his bills without acquainting the surety, and the Lord Chancellor held this to be a discharge of the guarantee, although it appeared that the debtor could

tracts, p. 224.

3 Bosanquet & Puller, 366, by Chambre, J.

3 Merivale, 272, not pay, and the prolonging of the credit might thus

Samuell, v.

Howarth.

seem to be for the surety's benefit. The surety is the fittest judge of that, and he alone has a right to determine whether any arrangement is for or against his benefit.

An exception to this rule is the surety in a replevin bond. Thus, by Gibbs, Chief Justice: "The principle "was first adopted in the court of Chancery, that if a creditor gives time of payment to his principal 6 Taunton, 382. debtor, without giving notice to the surety, the surety "no longer remains liable to the debt." The Judge then instanced the case of bail, and proceeded: "what is the present case? sureties in replevin cannot "at any time take the goods of the plaintiff and restore "them to the avowant."

In Moore v.
Bowmaker.

Fell, p. 173.

"But

So it seems that a creditor may enter into a composition with a co-surety, and he does not thereby discharge the principal or the other sureties.

Another event fatal to the continuance of a guarantee is a neglect to comply with the terms of the instrument. There was an agreement on the defendant's part to be answerable to a certain amount for any tallow or soap; and the principals paid a sum of money for goods supplied, but became subsequently embarrassed in their circumstances, on which a new arrangement was entered into, and the defendant contended that after the first payment the guarantee had been exhausted. But both sides urged too much: Lord Ellenborough being of opinion, that the word any made the agreement a subsisting guarantee as long as the old credit remained, Bastow v. Ben- though, at the same time, the goods supplied under the new arrangement, could not, his Lordship said, be within the scope of the guarantee.

3 Campb. 220,

nett.

Mr. Comyn says, "If a promise is made to guarantee "a bill of exchange for a certain sum, but the creditor "takes from the debtor a bill for a much larger amount,

“it seems doubtful whether this does not wholly dis- Citing 2 Taun charge the surety.".

66

Another ground of discharge accrues if the creditor part with any lien, or give up any legal mode of reimbursing himself. "It cannot be contended, upon any principle that prevails with regard to principal and "surety, that where the principal has left a sufficient "fund in the hands of the obligee, and he thinks fit, "instead of retaining it in his hands, to pay it back to "the principal, the surety can ever be called upon."

Again, the concealment of circumstances which ought to have been made known to the guarantor will vitiate the security: though the privity of the surety to such circumstances has been considered equivalent to assent. As where one was bound for another's honesty, but the party in question committed acts of embezzlement, and no notice was given to the surety of the unfaithfulness of his principal, it was held, that as there was no industrious attempt at concealment, and as the guarantor was considered by the jury to have been cognizant of the transaction, the responsibility still attached, although the creditor had debited his debtor with the amount embezzled.

Laches, by neglect to give the surety notice of his principal's default, will operate in some instances to destroy the guarantee. A bond having been given for a servant's fidelity, there was a covenant on the part of the obligees that they would see the apprentice make up his cash monthly. This, however, they failed to do, and the court of Chancery restrained them from recovering more than they could prove the apprentice had embezzled during the first month. But it is observable that there was a special covenant in that case, which no doubt weighed very strongly in favour of the surety. For where obligees, in a bond conditioned for the due collection of tolls, neglected to look into their accounts

S

ton, 211.

10 East, 34, Trent Naviga tion Company v. Harley.

for eight or nine years, and thus failed to call on the principal for arrears so soon as they otherwise would, the Court said, that there was no estoppel at law, and the plaintiffs (r) recovered. And so it was where a property-tax collector made default, but no notice Nares v. Rowles. was given to the surety, nor payment demanded till after the principal's dismissal.

14 East, 510,

However, it is proper in general to acquaint the surety with the failure of his principal's contract. So that, where goods were to be paid for by the giving of a bill, but, upon the nonpayment of it, the creditor failed to use due diligence in demanding his money of the drawer and guarantor, the Court held the latter discharged, observing, that if the necessary steps are Philips . Ast- not taken to obtain payment from the parties liable on the bill being at the same time solvent, the guarantor must be discharged.

2 Taunton, 209,

ling.

1 Barnewall & Cresswell, 10,

But where the insolvency occurred before the bill beHolbrow. Wil. came due, and it would not have been paid if presented, the guarantor was held liable, and the case of Philips v. Astling was distinguished.

kins.

The silence of a creditor who is applied to for the purpose of giving up an indemnity, will not imply such an assent to the proposal as to discharge a guarantee. A person wishing to have goods, obtained the usual guarantee, but the surety required and procured an indemnity; subsequently to this, the person who had indemnified became desirous of recalling his pledge, and a letter was written by the surety to the owner of the goods to that effect. No answer having been received for a considerable time, the surety concluded that

(r) Lord Ellenborough added, "Whatever remedy there may be in equity." And Mr. Fell seems to think that relief might have been had in equity against such a demand.