Henry Anselm de Colyar

“ In the event of the bankruptcy of a surety, proof can be made against his estate by a co-surety for any excess over the latter’s contributive share. The right of contribution is not the only right possessed by co-sureties against each other, but they are also entitled to the benefit of all securities which have been taken by any one of them as an indemnity against the liability incurred for the principal debtor. ”

“ The surety is not to be changed beyond the limits prescribed by his contract, which must be construed so as to give effect to what may fairly be inferred to have been the intention of the parties, from what they themselves have expressed in writing. In cases of doubtful import, recourse to parol evidence is permissible, to explain, but not to contradict, the written evidence of the guarantee. As a general rule, the surety is not liable if the principal debt cannot be enforced, because, as already explained, the obligation of the surety is merely accessory to that of the principal debtor. ”

“ The consideration for a guarantee must not be past or executed, but on the other hand it need not comprise a direct benefit or advantage to either the surety or the creditor, but may solely consist of anything done, or any promise made, for the benefit of the principal debtor. It is more frequently executory than concurrent, taking the form either of forbearance to sue the principal debtor, or of a future advance of money or supply of goods to him. ”

“ The Statute of Frauds does not invalidate a verbal guarantee, but renders it unenforceable by action. It may therefore be available in support of a defence to an action, and money paid under it cannot be recovered. An indemnity is not a guarantee within the statute, unless it contemplates the primary liability of a third person. ”

“ This right is, however, often waived by the guarantee stipulating that, until the creditor has received full payment of all sums over and above the guaranteed debt, due to him from the principal debtor, the surety shall not participate in any dividends distributed from the bankrupt’s estate amongst his creditors. As regards the rights of the surety against the creditor, they are in England exercisable even by one who in the first instance was a principal debtor, but has since become a surety, by arrangement with his creditor, duly notified to the creditor, though not even sanctioned by him. ”

“ Most continuing guarantees are either ordinary mercantile securities, in respect of advances made or goods supplied to the principal debtor or else bonds for the good behaviour of persons in public or private offices or employments. With regard to the latter class of continuing guarantees, the surety’s liability is, generally speaking, revoked by any change in the constitution of the persons to or for whom the guarantee is given. ”

“ A revocation of the contract of suretyship by act of the parties, or in certain cases by the death of the surety, may also operate to discharge the surety. The death of a surety does not per se determine the guarantee, but, save where from its nature the guarantee is irrevocable by the surety himself, it can be revoked by express notice after his death, or, it would appear, by the creditor becoming affected with constructive notice thereof ”

“ As regards the competency of the parties to enter into a contract of guarantee, this may be affected by insanity or intoxication of the surety, if known to the creditor, or by disability of any kind. The ordinary disabilities are those of infants and married women—now in England greatly mitigated as regards the latter by the Married Women’s Property Acts, 1870 to 1893, which enable a married woman to contract, as a feme sole, to the extent of her separate property. ”

“ The general principles which determine what are guarantees within the Statute of Frauds, as deduced from a multitude of decided cases, are briefly as follows: (1) the primary liability of a third person must exist or be contemplated as the foundation of the contract (Birkmyr v. Darnell, 1 Sm. L.C. 11th ed. p. 299; Mountstephen v. Lakeman, L.R. 7 Q.B. 196; L.R. 7 H.L. 17) ; (2) the promise must be made to the creditor; (3) there must be an absence of all liability on the part of the surety independently of his express promise of guarantee ”

“ Where one of a number of joint and several sureties dies, the future liability of the survivors under the guarantee continues, at all events until it has been determined by express notice. Moreover, when three persons joined in a guarantee to a bank, and their liability thereunder was not expressed to be several, it was held that the death of one surety did not determine the liability of the survivors. ”

“ The most prolific ground of discharge, however, is usually traceable to causes originating in the creditor’s laches or conduct, the governing principle being that if the creditor violates any rights which the surety possessed when he entered into the suretyship, even though the damage be nominal only, the guarantee cannot be enforced. ”

“ Act 1875, which has been amended by the Statute Law Revision Act 1883, contains certain provisions with regard to the acceptance by the heads of public departments of guarantees given by companies for the due performance of the duties of an office or employment in the public service, and enables the Commissioners of His Majesty’s Treasury to vary the character of any security, for good behaviour by public servants, given after the passing of the act. ”

“ It has never been actually decided in England whether this rule holds good in cases where the principal debtor is an infant, and on that account is not liable to the creditor. Probably in such a case the surety might be held liable by estoppel (see Kimball v. Newell, 7 Hill (N.Y.) 116) . When directors guarantee the performance by their company of a contract which is ultra vires, and therefore not binding on the latter, the directors’ suretyship liability is, nevertheless, enforceable against them (Yorkshire Railway Waggon Co. v. Maclure, 21 Ch. D. 309 C.A.) . ”

“ This latter enactment, which applies to incorporated companies as well as to individual persons (Hirst v. West Riding Union Banking Co., 1901, 2 K.B. 560 C.A.) , was rendered necessary by an evasion of the 4th section of the Statute of Frauds, accomplished by treating the special promise to answer for another’s debt, default or miscarriage, when not in writing, as required by that section, as a false and fraudulent representation concerning another’s credit, solvency or honesty, in respect of which damages, as for a tort, were held to be recoverable (Pasley v. Freeman, 3 T.R. 51) . ”

“ The surety cannot be made liable except for a loss sustained by reason of the default guaranteed against. Moreover, in the case of a joint and several guarantee by several sureties, unless all sign it none are liable thereunder (National Pro. Bk. of England v. Brackenbury, 1906, 22 Times L.R. 797) . ”

“ As regards the stamping of the memorandum or note of agreement, a guarantee cannot, in England, be given in evidence unless properly stamped (Stamp Act 1891) . A guarantee for the payment of goods, however, requires no stamp, being within the exception contained in the first schedule of the act. Nor is it necessary to stamp a written representation or assurance as to character within 9 Geo. IV. c. 14, supra. If under seal, a guarantee requires sometimes an ad valorem stamp and sometimes a ten-shilling stamp ”

“ Contribution may be enforced, either before payment, or as soon as the surety has paid more than his share of the common debt (Wolmershausen v. Gullick, 1803, 2 Ch. 514) ; and the amount recoverable is now always regulated by the number of solvent sureties, though formerly this rule only prevailed in equity. ”