note as a guarantor, but holds certain security from the principal which he may turn into cash in case he is called upon to pay as a guarantor, the contract between A and the principal is one of indemnity, and is not within the statute of frauds. If another person should subsequently say to A that if he will surrender the security to the principal, he, the third person, will hold A harmless against any liability on the note which he has signed as guarantor, there would be a contract of indemnity between A and the third person.

Kinds of guaranties.-Guaranties may be classified as follows: 1) general or special, 2) limited or unlimited, as to time or amount, 3) for payment or for collection. A general guaranty is one addressed to no person in particular, and anyone may give credit on it, and when he complies with its conditions he is entitled to hold the guarantor. Thus, "For value received I guaranty the payment by JD of goods sold to him within thirty days from date to the amount of one thousand dollars" is a general guaranty, and is open for acceptance by the public generally. A special guaranty is limited to a person or persons to whom it is addressed, and usually contemplates a repose of confidence in the person or persons addressed. Only those who are mentioned in it have therefore a right to act upon it. If anyone else acts upon it, he is not protected, as the guarantor has not made a contract with him. A limited guaranty cannot be assigned by the person to whom it is addressed until a right of action has arisen on it.

A limited guaranty is one that is limited as to time or amount. A guaranty may contemplate only a single transaction or a number of transactions within a given time and to not exceed a certain amount. In the absence of express language as to whether a guaranty is limited or unlimited, it is often difficult to determine what the nature of the guaranty is. Resort in such cases may be had to extrinsic evidence to ascertain the transaction or transactions contemplated by the guaranty, and the situation of the parties at the time. Other evidence to vary the terms of the written contract to ascertain its meaning is not permissible, however. Such evidence as to situation, etc. does not vary the terms of the written contract, but only enables the court to understand the contract as the parties did. When it is plain that the guaranty is for an indefinite number of transactions in the

future, it is an unlimited guaranty. When it is simply a guaranty for a certain amount, or states no amount, but says nothing from which a course of dealing may be inferred, it is limited. The statement of a certain amount in a guaranty does not refer to the amount of the dealings between the principal and the creditor, but refers to the amount of the guarantor's liability. Thus, if A writes B that for value received he will guaranty the payment of C's future dealings to the amount of $1000, B and C may have dealings running to thousands of dollars and if at the end of their dealings C should owe B, A would be responsible to the extent of the indebtedness, not exceeding the amount stated. Unless it appears otherwise, a guaranty will usually be held to apply to a single transaction. Thus, a guaranty "Give C T whatever clothing he needs and I will guaranty that he pays it" will authorize the person to whom it is addressed to deal with GT only once on the faith of it. When the guarantor's responsibility is for goods sold to another from time to time for a certain amount, the guaranty is a continuing one, and he will be liable for any balance due, not exceeding the amount. A contract of guaranty for one employed in a wholesale house "for one year and from year to year", provided that in consideration of "$1 and other valuable considerations," "I hereby guaranty the payment to J. A. T. of any and all monies collected by R. R. and for all moneys and goods which they may from time to time advance to said R. R. and any and all indebtedness which may hereafter become due to J. A. T. . . . .and I agree that any extension may be granted him. . . . My liability is hereby limited to $2000...and for such amount this is intended as a continuing guaranty until revoked," was held to be a continuing guaranty, and where the person employed was in the service of J. A. T. for three years, the guarantor was held liable for any default occurring during that time. The fact that at the time a guaranty is given the person whose conduct is guaranteed is already indebted to his employer will not avoid it, and any payment made by the principal to the employer after the guaranty is given may be applied by the employer on the old indebtedness.

A guaranty of payment is the usual form of guaranty. By it the guarantor becomes liable immediately upon the default of the principal, and it is not necessary to pursue any remedy against the principal, or even to notify the guarantor

of default. The parties may, however, stipulate any conditions on which the liability of the guarantor shall depend, besides the default of the principal. In such case, of course, the liability of the guarantor will not attach until there has been a compliance with conditions. Thus, it may be stipulated that a guarantor shall be notified of the acceptance of the guaranty, or kept informed of the dealings between the parties, and shall be presented with an itemized statement on default, before suit is brought against him. A guarantor for collection "agrees to pay the debt upon the condition that the guarantee shall diligently prosecute the principal debtor without avail, using the ordinary legal means to that end, and exhausting any security that he may have before proceeding against the guarantor. Mere delay to prosecute the principal for a short time is not sufficient to negative the use of due diligence, but such delay may be continued so long as to release the guarantor as matter of law. The prosecution of legal remedies against the principal to final judgment and execution within a reasonable time after the debt falls due is a condition precedent to the right of recovery against a guarantor for collection, and this condition is not satisfied or done away with by proof that the principal was insolvent and that an action against him would have been fruitless. No arbitrary time has been set during which the creditor may delay prosecution of the principal without discharging the guarantor from liabililty. . . . Unexplained delays of six, seven and nine months have been held to discharge a guarantor." In other words a guarantor for collection does not guaranty to pay in case of the default of the principal, but he agrees only to pay if the debt cannot be collected from the principal by proper legal proceedings. Usually the suit must be commenced by the creditor as soon as practicable. The following are examples of guaranties for collection: "For value received I guaranty the collection of this note, or guaranty that "it is good", or "that it will be finally paid."

Notice to guarantor of acceptance.-When a guaranty is without any condition, such as the usual guaranty of payment, no notice of acceptance to the guarantor is necessary. But when the guaranty is of a debt to be contracted in the future and the guarantor cannot ascertain at the time of giving the guaranty whether he will be liable

upon it or not, then usually notice of the acceptance of the guaranty must be given to him so that he may conduct himself accordingly. Usually, when a consideration already received by the guarantor is expressed in the guaranty, no notice of acceptance is necessary. It is impossible to lay down any definite rule on this subject, further than as stated. Notice of acceptance may be implied from the conduct of the parties, as in the making of any other contract. A mere offer to guaranty will not bind the guarantor until accepted, and in every case when notice is necessary such notice must be given within a reasonable time. What constitutes such reasonable time depends upon the circumstances of each case. The form of the notice is immaterial. Whenever knowledge is brought to the attention of the guarantor that his guaranty has been accepted, it will bind him, whether such notice comes from the creditor or not. It may be stipulated in the guaranty or offer of guaranty that the guaranty shall not be binding unless notice of acceptance is given, or the guarantor may waive notice of acceptance. In order to avoid any question on this point, it is prudent to bring notice home to the guarantor in every case that his guaranty has been accepted.

Notice to guarantor of default.-Usually a guarantor is not entitled to notice of default on the part of the principal. "Unlike the contract of an indorser, there is no condition as to demand and notice of default annexed to the contract of guaranty of payment or of performance. Such a guaranty is an absolute promise that the principal will perform in accordance with the provisions of his contract. It is as absolute in respect to such performance as the promise of the principal; hence it is the business of the guarantor to inform himself as to the conduct of his principal, and, in an action against the former, the facts essential to a recovery are just the same as in respect to the latter. There is no difference... .. When a guarantor makes an absolute promise that any particular thing shall be done, he thereby assumes an active, absolute duty to see that it is done, and must, at his peril, perform the promise. While it is true that the guarantee, from his situation as such, possesses better means of knowing of the default of the principal than the guarantor, the latter has ample means of knowing the facts, and must inform himself, and not

rely upon the guarantee, who owes no duty to the guarantor except to act in the utmost good faith and not be guilty of laches to his prejudice."

When a guaranty is conditional, so that it is impossible for the guarantor to know whether he is liable upon it or not, he is entitled to notice of default, so that he may protect himself. The fact, however, that a guarantor who is entitled to notice of default has not received it does not release him. He is released only to the extent of the damage done him by reason of delay in giving notice. The cases in which the guarantor is entitled to notice of default are rare. When the guarantor has suffered no damage, such as in the case of the principal's continued insolvency, he cannot complain of want of notice. No particular form of notice of default is necessary when it is required. When the contract of guaranty itself provides for notice of default it must be given, and it is generally safe practice to give notice of default to the guarantor in all cases. Suit may be maintained against the guarantor immediately upon the default of the principal except in such cases where the guaranty is one for collection, or in which it has been otherwise stipulated by the parties. The guarantor is liable for the full performance of the contract of his principal unless it is otherwise agreed, and therefore a recovery against him will be of the same amount as against the principal.

Assignment of guaranty.-As a general rule, it may be stated that a guaranty is not assignable. There have been some exceptions made in favor of guaranties on negotiable instruments, or on contracts for the payment of money only. It is now generally held by the courts that an assignment of a negotiable instrument which has a guaranty attached to it, gives the assignee the right to sue the guarantor. In a late case in Wisconsin, a guaranty was delivered to a banker to the effect that "In consideration of one dollar to each of us in hand paid, and in consideration of the granting of credit and discount. . . . . . .to F. & L., we. . . . do hereby jointly and severally guaranty to said" banker, his "heirs, executors, administrators, and assigns, the payment of any and all indebtedness now due or hereafter to become due to said" banker, his "heirs, executors, administrators, or assigns, growing out of or occasioned by any or through any acts of the said F. & L. . . . . . .It is provided that the undersigned