that the principal was solvent at the maturity of the note, and that the same could then have been collected of him by the holder, and that he has since become insolvent. If he wished to protect himself against loss, he should have kept his engagement with the holder of the note, paid it upon default of the principal, taken up the note, and himself prosecuted the party for whose faithful performance of the contract he became liable.

The court properly directed the verdict for the plaintiff; and the judgment of the court below must be affirmed, with costs. The other Justices concurred.

Liability of Guarantor on General and Particular Guaranty.* TAYLOR ET AL. v. WETMORE ET AL.

10 Ohio 491. 1841.

This is an action of assumpsit from the county of Portage. The declaration contains two special counts. In the first, it is averred that one C. D. Farrar, on November 26, 1836, being desirous of purchasing a general assortment of goods in the city of Pittsburg, for a retail country store, on a credit, and being unknown to the business men of said city, applied to the defendants, Messrs. Wetmores, then doing business at Cuyahoga Falls, in Portage county, for a general letter of credit, directed to some one or more of their correspondents in the said city of Pittsburg, by means of which the said Farrar might be enabled to make his purchases; and the said defendants upon such application, made and delivered to Mr. Farrar a letter of credit, or written guaranty, addressed to Messrs. A. D. McBride & Co., merchants in Pittsburg, in the words following:

"CUYAHOGA FALLS, November 26, 1836. "MESSRS. A. D. MCBRIDE & Co.

"Gentlemen: Mr. C. D. Farrar has concluded to purchase a few goods; we have that confidence in Mr. Farrar, that we will

* See Secs. 888-889, Vol. 6, Cyclopedia of Law.

say that we will be responsible to the amount of $2,000 for goods delivered him. We are truly,

"C. W. & S. D. WETMORE."

And which said letter, the plaintiffs aver was taken by Mr. Farrar, and presented to Messrs. McBride & Co. at Pittsburg, who retained it, as security for themselves and such other merchants in the said city, as should, at that time and on the faith of said guaranty, sell goods on credit to the said Farrar.

It is also averred that Mr. Farrar was unable to obtain a general assortment of goods from the house of the Messrs. McBrides, whose business was confined to that of grocers, and therefore he made application to the plaintiffs, upon the strength of the said guaranty, then in the hands of McBride & Co. referring the plaintiffs to the house of McBride & Co. and to the said guaranty; that the plaintiffs did in fact call upon McBride & Co., examined the letter of credit, and being satisfied with their statements in regard to the responsibility of the defendants, and of the guaranty, in consideration thereof, sold and delivered to Mr. Farrar, upon a credit of six months, a bill of dry goods, amounting to $760.75; of all which the defendants had due and timely notice. The plaintiffs then aver that the credit has expired, and that Farrar has omitted to pay, etc.

The second count states that on November 6, 1836, etc., in consideration that the plaintiffs at the special instance and request of the defendants, would sell to said Farrar, on credit, all such goods as said Farrar should have occasion for and require of said plaintiffs in their trade and business of wholesale dry goods merchants, they, the defendants, undertook and promised to pay the plaintiffs therefor; this count then avers the sale and delivery of goods to the amount of $760.75, on a certain credit, agreed upon between the parties, that the credit had expired, that Farrar had not paid, of which the defendants had notice; avers their liability, and breach in the non-payment.

To this declaration the defendants filed their plea of the general issue.

The testimony submitted on the part of the plaintiffs, proves: 1. The execution and delivery of this mercantile guaranty, as set forth in the first count of the declaration; and 2. That a

few days after its date, it was handed to the firm of McBride & Company, who not being dealers in dry goods, the witness (who was a partner of the last mentioned firm), went with Mr. Farrar to the plaintiffs, and the said guaranty was shown to Mr. Taylor, one of the plaintiffs; the witness stated to Mr. Taylor, that he had sold a bill of groceries on the strength of the letter, and Mr. Taylor then said he would sell a bill of goods on the strength of the same, and Mr. Farrar accordingly obtained the goods. The clerk and salesman of the plaintiffs prove the amount of the goods sold to be $760.75, and on a credit of six months.

The evidence on the part of the defendants proves that Farrar was in business at Cuyahoga Falls from December, 1836, until April or May, 1837, when he transferred all his goods to the defendants, and closed his store. That he paid none of his debts in Pittsburg. That in September, 1837, the witness was present at a conversation between Taylor, one of the plaintiffs, and C. W. Wetmore, one of the defendants, in which the defendant asked Taylor, if he considered him responsible, either legally, morally, or honorably, for the goods Farrar had purchased of him. To which Taylor replied he did not, but that the defendants had more goods in their possession, received of Farrar, than they were holden to the house of McBride for; that the goods would amount to $500 or $700. To this the defendant replied he did not know how that was; that there was also left with them, by Farrar, notes and accounts to the amount of about $200, and what they could not make up out of them, must be made up out of the goods; and if there was any balance, so far as he was concerned, that should go to the plaintiffs.

Richard, for the plaintiffs.

WOOD, J. Under the averments in the declaration, and the testimony submitted, are the plaintiffs entitled to judgment?— and I may here remark, in the outset, in this case, that I know of no arbitrary rule applicable to actions founded upon mercantile guaranties, which creates obligations between the parties to which they have neither expressly nor impliedly assented. In all actions founded in contract, the agreement as set forth must be proved, or the circumstances existing between the parties must be such as to leave it clearly to be inferred. In enforcing

them, courts of justice, though they may sometimes be confined by technical rules, always endeavor to ascertain the understandings and intentions of the parties, and these are considered as the essence of their agreements in carrying them into execution. Mercantile guaranties are either general or special; though a single letter of credit may bear upon its face both of these distinctions. It may be general, as to the whole world, to whom the bearer may be accredited, and to any portion of whom, at his own option, he may make the guarantor a debtor, and special, as to the amount of the credit; or unlimited or general in the amount, and special as to the parties.

The first inquiry which arises here, is, whether the guaranty in question is not special as to persons. It is directed to the house of McBride & Co., in the city of Pittsburg, and nothing upon its face evincing an intention to give Farrar credit, or to incur responsibility with any other house.

The counsel for the plaintiff here admit, that a surety can not be held beyond the terms of his engagement, but they insist that although it is addressed only to McBride & Co. as it does not say "we will be responsible to you," it is a letter of credit to any other, who will advance the goods. It seems to us, this reasoning is more ingenious than sound. The guaranty being addressed to A. D. McBride & Co., it is to them the defendants speak when they say, "we will be responsible to the amount of $2,000,” and it contains no general terms, by which either Farrar, or the house of McBride, had the authority to transfer it to the plaintiffs, and they to make the defendants their guarantors, without their assent, express or implied.

Judgment for the defendants.

MORRISON ET AL. v. ARONS ET AL.

65 Minn. 321; 68 N. W. 33. 1896.

Action in the district court for Ramsey county. The case was tried before Kelly, J., who ordered judgment against defendant Arons for $801.43, and against defendants Williams

and Hall for $559.50, with interest. From an order denying a motion for a new trial defendants Williams and Hall appealed. Reversed.

COLLINS, J. Plaintiffs entered into business as co-partners, and employed defendant Arons as general manager, salesman, and collector. According to the written contract, the employment was to continue as long as mutually agreeable. Arons was to receive as compensation for his services a sum equal to onehalf the net profits of the business, and these profits were to be ascertained as follows:

"During the existence of the employment of said party of the second part, once each month, commencing with December 1, 1892, a just and true inventory of the assets and liabilities of said firm shall be taken, and all accounts which are considered bad shall be charged to profit and loss, and from the residue of the accounts due said firm shall be deducted five per cent. of the aggregate amount thereof as a reserve to cover bad debts, and the excess of the assets over the liabilities and the capital stock of said firm shall be determined and agreed upon as the net profits of said business, and a sum equal to one-half of such excess shall then and there be credited to said party of the second part as and for his compensation, and be considered an expense of said business. That when the relation between said firm and said party of the second part is extinguished, then the actual amount of profit or loss, as the case may be, of the business of said firm, shall be determined, and, if there has been a net profit, a sum equal to one-half thereof shall be allowed said party of the second part, and any errors in estimating the net profits at the previous stated periods shall then and there be rectified, and, if said party of the second part shall have withdrawn more money from said firm that he is entitled to, he shall then and there forthwith repay the same; and, if there is. any amount due him on account of his compensation, it shall then and there forthwith be paid him."

Arons, as principal, and defendants Williams and Hall, as sureties, entered into a bond, in which plaintiffs were obligees, which, after reciting that Arons was about to enter plaintiffs' employ as general manager, salesman, and collector, provided, and was conditioned, that:

"If the said Charles T. Arons shall faithfully and honestly perform all the duties of his said employment, and shall keep