Page:The American Cyclopædia (1879) Volume VIII.djvu/298

 GUARANTY be construed into an expression of that in- tention; and this will be sufficient. The contract of guaranty is one which is construed, if not severely, at least exactly. Thus if A guaranties the notes of B, he is not bound for notes which B signs jointly with C ; and if B changes his business or the nature of his debts, so as to throw upon A a liability distinctly dif- ferent from that which it was his intention to assume, A is thereby discharged from his guar- anty. The guarantee (or party guarantied) must preserve all the securities he has of the principal debtor unimpaired, because if the guarantor pays the debt, he is entitled to all these securities; and a court having equity powers will, upon cause shown, compel the guarantee to do what he can to turn these se- curities to account for the beneft of the guar- antor, if the guarantee alone can do it, or can do it to the most advantage, before it will per- mit him to call upon the guarantor. Indeed, it may be regarded as a fundamental proposi- tion of the law of guaranty, that the guarantee shall act with entire fairness toward the guar- antor, and shall do all that can properly be done to lessen his burden. Therefore if the creditor, being guarantied, agree with the prin- cipal to reduce his debt in any certain propor- tion, he shall be understood to make the agree- ment for the guarantor's benefit as much as for his own, and therefore the guaranty shall be reduced in the same proportion. Still, however, it seems to be generally held that the guarantor's right is confined to the securities for the debt, and does not extend to the debt itself; if therefore a guarantor pays a debt, it is said that he has no right to demand from the creditor a transfer of the debt itself, or of the note by which the debt was evidenced, for the reason that this very debt has been already paid or discharged by himself as guarantor. But he may demand, with the securities, the note itself, or a transfer of the debt, if this be necessary to make the securities available ; and it would be difficult to resist his right, we should say, to be subrogated to the creditor's claim, so far as he could make that available to himself. But the law on this point can hardly be considered as distinctly settled. The prom- ise to pay the debt of another, like every other promise known to the 'law, must rest upon a good consideration, or it cannot be enforced by legal process. The law on this subject is a little nice in respect to guaranties; for while it demands inexorably that there should be a con- sideration, it sometimes declares that if the promise which is guarantied rests upon a good consideration, this same consideration shall be sufficient to sustain the promise of guaranty; but if the tinaranty is given subsequently, after the consideration for the original promise is executed and passed, so that it can have no force or application whatever to the new and distinct promise of guaranty, the latter will require a new and distinct consideration for its support. But to make this consideration suf- ficient, it is not necessary that anything shall pass directly from him who receives the guar- anty to him who gives it; for if the party for whom it is given, or the party by whom it is given, receive any benefit, or the party to whom it is given suffer any loss or injury, from or by reason of the promise of guaranty, it is a good consideration. The guarantee must con- duct himself in all respects with entire good faith, and if there be any taint or fraud about the consideration (as, for example, if a guaranty is given for a certain amount of goods sold, and the seller has made an arrangement with the buyer whose debt is guarantied, by which ar- rangement the buyer is to pay him more than the true price, the difference going toward an old debt due from the buyer to the seller), this is a fraud upon the guarantor, and he is dis- charged not only as to this unfair excess, but as to his whole promise of guaranty. A guar- anty, being a promise to pay the debt of an- other, is precisely within the clause of the stat- ute of frauds which requires that such a prom- ise be in writing and signed by the guarantor. It often happens, however, that a guaranty, or a contract which has all the appearance of a guaranty, and which is not in writing, is still enforced by the courts. This occurs when they can hold the promise to be an original promise, and not a collateral promise. For an original promise is a promise to pay one's own debt ; while a collateral promise is a promise to pay a debt which is primarily the debt of another. This is a very nice and difficult question, and has been very variously decided. The disposi- tion of the courts so to construe and apply the statute of frauds as that it shall not be an instrument of fraud, has led them to some strange decisions. Comparing the cases, and drawing from them the true principle which must govern the question, we should say the rule must be this : If one who promises to pay the debt of another receives an independent consideration for his promise, and thereby en- joys a benefit or advantage which is entirely his own, and which he would not have enjoyed but for the transaction, then the promise is to be regarded as his promise to pay his own debt, and therefore needs not to be in writing. As an illustration of this question, which is frequently recurring and always difficult, we should say that if the creditor had attached the property of the original debtor, and the alleged guaran- tor had requested that the attachment might be discharged and agreed to pay the debt if it were, and the attachment was then discharged and the property set free, this would not be enough to make it the guarantor's promise for his own benefit, or his original promise, and therefore it could not be enforced, unless it was in writing. But if the alleged guarantor had re- quested not only that the attachment should be discharged, but that the property should be de- livered over to him for his own advantage, this new element would make his promise one for his own benefit, or, in the language of the law,