The same reasons would seem to apply where the debt is payable on demand.76 (3) A third class of cases arises out of continuing guaranties of payment for future advancements under a general letter of credit. It is said that notice of default should be given the guarantor because at the time of the contract he does not know the amount of the future advancements, or the date of maturity, and, in this respect, the same argument prevails which is advanced in connection with the question of the guarantor's right to have notice of the acceptance of his guaranty.' 77 The fact of default in this class of cases is not, however, peculiarly within the knowledge of the creditor or dependent upon his option as in the case of guaranty of collectibility or debt due on demand, and the guarantor's means of information as to whether default has been committed are the same as in the case of the guaranty of a definite amount at a definite time. In either case, he does not know of the default except by reliance upon information received after the execution of his contract, and in both cases he may get this information by inquiry of the debtor or creditor; although the reasons for requiring notice of default in these cases are not wholly satisfactory, yet a large number of decisions are to be found supporting the view that notice of default may be required in continuing guaranties of payment, where the guarantor at the time of his contract does not know the amount nor the maturity of the debt.78 In all cases where notice of default is required the failure to give such notice within a reasonable time will only discharge the guarantor to the extent of his damage in not receiving notice." 76 Whiton vs. Mears, 11 Met. 563; Nelson vs. Bostwick, 5 Hill 37; Douglas vs. Rathbone, 5 Hill 143. But see Foster vs. Barney, 3 Vt. 60. 77 Ante Sec. 64, 65, 66. 78 Clark vs. Remmington, 11 Met. 361; Mussey vs. Rayner, 22 Pick. 228; Gaff vs. Sims, 45 Ind. 262; Douglass vs. Reynolds, 7 Pet. 113; Davis vs. Wells, 104 U. S. 159; Beebe vs. Dudley, 26 N. H. 249; Walker vs. Forbes, 25 Ala. 139; Milroy vs. Quinn, 69 Ind. 406. 79" The guarantor is entitled to a notice, but cannot defend himself for want of it, unless the notice has been so long delayed as to raise a presumption of payment or waiver, or unless he can show that he has §69. Joint and several guaranties. A contract of guaranty executed by two or more persons may amount to a joint obligation, or the liability may be several according as words of severalty or joint obligation are employed. The obligation will be regarded as joint, however, in all cases unless there are express words indicating a several liability. The intent of the parties in this respect may generally be determined to be joint if expressed in the plural form, such as "We guarantee" or it may be made both joint and several by using the words "We or either of us guarantee," but where the form of the contract is singular, but executed by two or more persons, it expresses the intent of the obligors in the majority of cases to hold such promises to be joint and several, and such is the rule.80 If the promise is merely joint a judgment against one bars an action against the other.81 At common law, the estate of a deceased joint obligor is not liable but the survivor will be liable for the entire amount," 82 whereas if the obligation is several, or joint and several, recourse can be had against the estate of the decedent. lost, by the delay, opportunities for obtaining securities, which a notice, or an earlier notice, would have secured him. . . . . If the notice be delayed a very short time, but by reason of the delay the guarantor loses the opportunity of obtaining indemnity, and is irreparably damaged, he would be discharged from his obligation. But, if the delay were for a long period, and it was nevertheless clear that the guarantor would have derived no benefit from an earlier notice, the delay would not impair his obligation." Bank vs. Gaylord, 34 Iowa 246. 80 Fond-du-Lac Harrow Co. vs. Haskins, 51 Wis. 135; 8 N. W. 15. 81 Brady vs. Reynolds, 13 Cal. 32. 82 Johnson vs. Harvey, 84 N. Y. 363. In this case it is held that the discharge is as to the creditor only, and the equitable liability for contribution between joint obligors is preserved against the estate of the decedent. New Haven, etc., Co. vs. Hayden, 119 Mass. 361; Seaman vs. Slater, 18 Fed. Rep. 485; Hawkins vs. Ball's Adm., 18 B. Mon. 816; Burgoyne vs. Ohio Life Ins. & Trust Co., 5 O. S. 586. The estate of the deceased obligor is discharged at common law even though a joint judgment had been entered against him and the princi. pal before the death of the promisor. Risley vs. Brown, 67 N. Y. 160. It seems, however, where a judg ment upon a joint obligation be comes a lien on the obligor's land in $70. Guaranty covers interest. A guarantor is liable for interest on the debt from the time of the default by the principal." This liability for interest increases the amount named as the penalty of the obligation, but is justified because of the fact that the guarantor puts himself in place of the principal and agrees to perform all that the principal is liable for. guarantor may exercise his right to pay the debt at maturity and so avoid all obligation of interest to the creditor. Also the Interest is due from the date of demand on the principal, or from the maturity of the debt where demand is not necessary to fix the time of payment. If the debt is due upon demand, and no demand is made upon the principal, the bringing of an action against the guarantor or surety will amount to a demand upon them which will fix the date from which interest will be computed.84 his life time that it will be preserved against his estate. Baskin vs. Huntington, 130 N. Y. 313; 29 N. E. 310. In Ohio the Code now provides that "When two or more persons shall be indebted in any joint contract, or upon a judgment founded upon any such contract, and either of them shall die, his estate shall be liable therefor, as if the contract had been joint and several, or as if the judgment had been against himself alone." R. S. O., Sec. 6102. This statute abrogates the common law rule and similar provisions have been enacted by the legislatures of nearly all the States. Some modifications of the common law rule were made by courts of equity in cases where the deceased joint obligor, participated in the benefits of the contract, such as a joint maker of a promissory note, where the consideration was for the joint use and benefit of the makers. In such cases, the court construed the obligation as joint and several by employing a fiction that since the contract was jointly and severally for the benefit of both, that it must have been intended for a joint and several obligation, and written by mistake as a joint contract. Simpson vs. Vaughan, 2 Atk. 31; Bishop vs. Church, 2 Ves. 100. But the courts declined to extend the fiction to cases where one of the joint obligors was not directly benefited by the contract, as in the case of a surety or guarantor. Getty vs. Binsse, 49 N. Y. 385; Wood vs. Fisk, 63 N. Y. 245; Carpenter vs. Broost, 2 Sandf. 537; Weaver v3. Shyrock, 5 Serg. & R. 262. 83 Gammell vs. Parramore, 58 Ga. 54; Gridley vs. Capen, 72 Ill. 11; City of New Orleans vs. Clark, 95 U. S. 644; French vs. Bates, 149 Mass. 73; 21 N. E. 237. 84 U. S. vs. Curtis, 100 U. S. 119. Where the obligation is that of a §71. Revocation of guaranty. A contract of guaranty which is merely executory, may be revoked by the guarantor at any time before it is acted upon. So far as affected by this question an executory contract of guaranty may be considered as a mere offer to contract, and not binding until acted upon, and may be withdrawn even though the creditor has given notice to the promisor that he will act upon it. Such notice by the creditor, even in the form of an acceptance of the guaranty, will not bind the creditor to make advances to the principal, and so long as both parties are not bound either may withdraw.85 Where the consideration has wholly passed the guaranty can not be revoked.88 It is not necessary that the creditor should actually make the proposed advances in order to constitute an executed contract. If the creditor has bound himself to make the advances relying upon the guaranty, the guarantor cannot revoke. Where the consideration is divisible, part of which has been advanced, the guaranty may be revoked, after a breach, as to any further advances, providing such future advances are optional with the creditor.87 A revocation will not in all cases become instantly operative. A reasonable time must intervene, that the creditor may have opportunity to adjust his business without loss. A guaranty, for instance, of the faithful performance of duty by one hold bail bond in which the amount payable is a penalty as distinguished from a debt, interest is not recoverable against the promisor. U. S. vs. Broadhead, 127 U. S. 212; 8 S. Ct. 1191. 85 Potter vs. Gronbeck, 117 Ill. 404; 7 N. E. 586; Offord vs. Davie, 12 J. Scott (N. S.) 748; Jordan vs. Dobbins, 122 Mass. 168. 86 Green vs. Young, 8 Me. 14; Kernochan vs. Murray, 111 N. Y. 306; 18 N. E. 868. 87 LaRose vs. Logansport Bank, 102 Ind. 332; 1 N. E. 805; Hunt vs. Roberts, 45 N. Y. 691; Emery vs. Baltz, 94 N. Y. 408; Gay vs. Ward. 67 Conn. 147; 34 Atl. 1025; Singer Mfg. Co. vs. Draughan, 121 N. C. 88; 28 S. E. 133; Metropolitan Washing Machine Co. vs. Morris, 39 Vt. 393; Tischler vs. Hofheimer. 83 Va. 35; 4 S. E. 370; Coulthart vs. Clementson, 5 Q. B. Div. 412. ing a position of trust will cover damages to the creditor for a reasonable time after notice of revocation.88 The death of the guarantor operates as a revocation of the guaranty in all cases where the guarantor might if living have revoked by giving notice.89 The death of the guarantor does not ipso facto operate as a revocation, but knowledge of the death must be brought home to the creditor. 90 The death of the guarantor will operate as a revocation even 88 Bostwick vs. Van Voorhis, 91 N. Y. 353; Reilly vs. Dodge, 131 N. Y. 153; 29 N. E. 1011; LaRose vs. Logansport Nat. Bank, 102 Ind. 332; 1 N. E. 805. 89 Jordan vs. Dobbins, 122 Mass. 168; Hayland vs. Habich, 150 Mass. 112; 22 N. E. 765. Contra-Bradbury vs. Morgan, 1 Hurl. & Colt. 249. See also Broome vs. The United States, 15 How. 143; Fewlass vs. Keeshan, 88 Fed. Rep. 573; McClasky vs. Barr, 79 Fed. Rep. 408. Lloyds vs. Harper, 16 Ch. Div. 290, Lush, L. J.: "Now it will be found, I think, that guarantees may, for the purpose of this case, be divided into two classes, the one in which the consideration is entire, and the other in which the consideration is fragmentary, supplied from time to time, and therefore divisible. An instance of the first is where a person enters into a guarantee that in consideration of the lessor granting a lease to a third person he will be answerable for the performance of the covenants. The moment the lease is granted there is nothing more for the lessor to do, and such a guarantee as that, of necessity runs on throughout the duration of the lease. The lease was intended to be a guaranteed lease, and it is impossible to say that the guarantor could put an end to the guarantee at his pleasure, or that it could be put an end to by his death contrary to the manifest intention of the parties instances of the second class are more familiar. They are where the guaranty is given to secure the balance of a running account for goods from time to time, and it is reasonable to hold, unless the guarantee stipulates to the contrary, that the guarantor may at any time terminate the guarantee." 90 Gay vs. Ward, 67 Conn. 147; 34 Atl. 1025. |