98

the guarantor to act in that capacity. Here the guaranty comes in answer to the request, and is accepted in advance.' He who becomes surety for another has a right to pay the debt when it becomes due, and collect it from his principal; he may substitute himself in the place of the creditor, and subject any funds or securities provided for the payment of the debt by the principal; or he may call upon the creditor to prosecute his suit without delay. The law does not allow the creditor to interfere with these rights. If he do invade them, the surety is held to be discharged. No principle is better. settled than that surety cannot be further bound than by the terms of his undertaking. These terms cannot be changed without his consent. If any change be made that might prejudice his rights, without his consent, he is protected by holding his obligation at an end. Any act which destroys or suspends the right to an instant and continuing pursuit of the remedy, so that the surety cannot enforce the collection of the debt without delay, absolves him from his liability."

NEGOTIATION AND ASSIGNMENT

39. After the original parties have contracted and the guaranty has been entered into, the question frequently arises whether any new parties can acquire rights thereunder; that is to say, whether any one besides the orignal guarantee can ever occupy his place so far as to sue the guarantor upon default of the debtor or principal. Rights of this kind are transferable by negotiation of the contract and by assignment of the contract.

The effect of the two methods of transferring the rights of the guarantee differs in this, that if the contract be negotiated, the party to whom the guarantee thus transfers his rights may, in the event of default by the principal, sue the guarantor in his own name. Furthermore, the transfer may be effected by the guarantee simply signing his name on the back of the instrument. He who takes a negotiable instrument of any kind and pays value for it, knowing

98 12 Pet. (U. S.) 207 (1838).

995 Ohio St. 307 (1855).

nothing of the relations of previous parties, is said to take it free from equities existing between the original parties. This simply means that he is regarded as an innocent purchaser for value without notice of previous injustice in the transaction, and for that reason the courts give him a good title to what he has thus bought, and he can sue on it in his own name. On the other hand, in the case of an assignment, which is not necessarily formal, the suit, by whomever brought, must be brought in the name of the original creditor or guarantee; which is fully explained in another part of this Course.'

100

40. All guaranties are assignable, but some can be assigned only after default has been made. A general guaranty may be assigned with the instrument upon which it is based, and the one to whom both are assigned may enforce both. In the case of a special guaranty, no one but the person to whom it is addressed can enforce it until after default has been made, that is, until a right of action has arisen upon it.1°1

As to the question whether a guaranty can be transferred by negotiating it, and if so, under what conditions it may be done, the decisions are conflicting, and they vary, in addition, with the kind of guaranty. It may be stated, in general, that a mere contract of guaranty coupled with nothing else is transferable only by assignment and is subject to equities existing between the original parties.

102

Certain kinds of guaranties partake of the nature of the contract on which they are based. Promissory notes and bills of exchange are instruments in which negotiability is characteristic.' A guaranty that forms part of the note or bill which it guaranties, is held, in many jurisdictions, to be negotiable. As a necessary consequence, the bona-fide transferee of such a guaranty takes the guaranty, as well as the bill or note, discharged of equities existing between the original parties. In many other jurisdictions, it is held that

103

100 See The Law of Commercial Paper: Negotiation of Instruments, Assignability Distinguished.

101 122 N. Y. 290 (1890).

102 101 Ill. 274 (1882); 59 Kans. 361 (1898). 103 20 Vt. 499 (1848).

even such a guaranty cannot be indorsed to a third person, so as to enable such transferee to sue in his own name; which means that guaranties of whatever kind are merely assignable and are not negotiable.10

Further decisions invest the guaranties under discussion with a sort of semi-negotiability, permitting the transferee to sue in his own name but holding that he takes the guaranty subject to equities existing between the original parties.105

10421 Pick. (Mass.) 140 (1838); 43 N. J.

Law 128 (1881); 58 Pa. 97 (1868).

105 101 U. S. 68 (1879),

THE LAW OF EXECUTORS AND

ADMINISTRATORS

(PART 1)

INTRODUCTION

NATURE OF ADMINISTRATION

1. Administration, in the popular use of the word, is simply the management of the affairs of another, and is constantly used to denote the management of public affairs by public officers; but, in its technical legal meaning, it denotes the management and final settlement of an estate belonging to others. As a legal term, also, administration has two meanings. In the narrower sense in which it is most frequently used, it means the management and final settlement of the estate of one who has died intestate, that is, without a will, and in its broader sense it applies not only to the estates of all deceased persons, whether they have left wills or not, but also to the estates of minors, lunatics, and all others whose estates, because of their incapacity or otherwise, are not entrusted to their own management, but to that of trustees appointed by the former owner of the estate, or by the law.

Our present inquiry deals only with the administration of the estates of deceased persons, and in this respect the term is of comprehensive meaning and includes more than the mere collection of the assets, the payment of debts and legacies, and the distribution to those entitled thereto. It involves For notice of copyright, see page immediately following the title page

all which may be done rightfully in the preservation of the assets, and all which may be done legally by the administrator in his dealings with creditors, distributees, or legatees, or which may be done by them in securing their rights; and it includes all which may be done, and rightfully done, in relation to adverse claims to assets, which have come to the possession of the administrator as the property of the testator or intestate.'

The persons to whom the management of the estate of deceased persons is entrusted are called executors or administrators, according to the source from which they derive their title to administer. They are called the personal representatives of the decedent, because they stand in his place with regard to all matters affecting the estate, and must sue or be sued in all litigation affecting it.

DEFINITIONS

2. An executor is a person appointed by a testator in his will to execute the provisions of that will. If a woman 'be appointed, she is termed an executrix.

An administrator is a person appointed by a competent court to manage and distribute the estate of an intestate or the estate of a testator who has appointed no executor in his will, or in any codicil thereto, or where all the executors have refused to accept their office, or have died. A woman so appointed is termed an administratrix.

The relation between the testator and executor is altogether different from that which an administrator bears to the estate. The former's interest in the estate is such as the testator gives him. The latter has only such an interest as the law of his appointment enjoins."

An executor de son tort (which means of his own wrong) is a person who, without any authority from the deceased or the officer to whom the law entrusts the granting of administration, does such acts as belong to the office of an executor or administrator."

170 Ala. 339 (1881).

2 13 How. (U. S.) 458 (1851).

31 Baxt. (Tenn.) 5 (1875).