Guarantor

“ In that case, in consequence of the frequent and unusual extension of the time of payment, by repeated renewals of the bills, the guarantor was held to have been discharged.
There is no necessity for a guaranty, when the terms of sale are cash; the very nature of the undertaking presupposes a credit; indeed, guaranty can exist only in cases in which credit is given. ”

“ The guarantor is bound without notice where the drawer is insolvent, unless he proves that some special damage accrued from the failure to give notice. A distinction is recognized between parties to a bill and guarantors. 2 Pet., 497.
The same strictness of proof is not necessary to charge the guarantor as in an action on the bill itself. 8 East, 245.
In 6 Ves., 734, Lord Ellenborough says, there is no obligation of active diligence on the part of the creditor, as far as the surety is concerned. The law-merchant is confined to papers where all are parties to the bill. ”

“ The person who owns and sells imported goods can make a guaranty for the purpose aforesaid, though the goods may be shipped directly by the firm of whom the guarantor buys them to the customer of the guarantor. ”

“ Frequently the only consideration contemplated is that the guarantee shall extend the credit and make the advances to the third person, for whose performance of his obligation, on that account, the guarantor undertakes. But a guaranty may as well be for an existing debt, or it may be supported by some consideration distinct from the advance to the principal debtor, passing directly from the guarantee to the guarantor. In the case of the guaranty of an existing debt, such a consideration is necessary to support the undertaking as a binding obligation. ”

“ The court refers to a class of cases both in England and in this country, drawing the distinction between the liability assumed by a guarantor, and that of the drawers or indorser of commercial papers; the former being held liable on his guaranty in the absence of any demand and notice, unless some damage or loss had been sustained by reason of the neglect; while, in order to charge the latter, strict demand and notice must be shown according to the law merchant. ”

“ In some instances it has been treated as a rule, inhering in the very nature and definition of every contract, which requires the assent of a party to whom a proposal is made to be signified to the party making it, in order to constitute a binding promise; in others it has been considered as a rule springing from the peculiar nature of the contract of guaranty, which requires, after the formation of the obligation of the guarantor, and as one of its incidents, that notice should be given of the intention of the guarantee to act under it, as a condition of the promise of the guarantor. ”

“ The court rightly recognized that a continuing guaranty, if supported at the outset by a sufficient consideration, is a binding contract which is neither revocable by the guarantor nor terminable by his death, although the acts guaranteed may cover a long or indefinite priod of time. [3] But it pronounced this rule inapplicable because it regarded the bond as more nearly analogous to a continuing guaranty without present consideration. ”

“ But when, as here, the debtor is insolvent at the very time the guarantor meets his obligation, it defies reality to attribute the guarantor's loss to anything other than the discharge of his guaranty obligation. To attribute that loss to the acquired debt in such a case requires one to conceive of the debt as having value at the moment of acquisition, but as withering to worthlessness the moment the guarantor touches it. ”

“ If she commit adultery and she is a betrothed woman, if she is a commoner, let 60 shillings be paid in compensation to the guarantor, and let that be in livestock or cattle, but let no one give any human as part of it. If she be of 600 shilling wergeld, let 100 shillings be paid in compensation to the guarantor. If she be of 1200 shilling wergeld, let compensation of 120 shillings be paid to the guarantor. 19. If anyone lends his weapon to another so that he may kill with it, they may combine, if they are willing, in the matter of paying the wergeld. ”

“ In this covenant the surety guarantees nothing to the principal obligee, the government,-though the latter permits an action upon the bond for the benefit of the subcontractors. The covenant is made solely for their benefit. The guarantor is ignorant of the parties with whom his principal may contract, the amount, the nature, and the value of the materials required, as well as the time when payment for them will become due. ”

“ A stipulation in consideration of one dollar is just as effectual and valuable a consideration as a larger sum stipulated for or paid. The very point arose in Dutchman v. Tooth (5 Bingham's New Cases, 577) , where the guarantor gave a guaranty for the payment of the proceeds of the goods the guarantee had consigned to his brother, and also all future shipments the guarantee might make in consideration of two shillings and sixpence paid him, the guarantor. ”

“ Contract of a Guarantor. Anyone who agrees to answer for the debt, default, or obligation of another upon condition that the other does not or cannot pay the debt, or upon any condition whatever, is a guarantor. ”

“ It is sound business practice always to notify a creditor of acceptance of a guaranty. If a letter of guaranty contains a stipulation that the guarantor is to receive notice of default of his principal, such notice must be given, or the guarantor will be discharged to the amount of his damage resulting from failure to receive this notice. ”

“ A contract of guaranty, like every other contract, can only be made by the mutual assent of the parties. If the guaranty is signed by the guarantor at the request of the other party, or if the latter's agreement to accept is contemporaneous with the guaranty, or if the receipt from him of a valuable consideration, however small, is acknowledged in the guaranty, the mutual assent is proved, and the delivery of the guaranty to him or for his use completes the contract. ”

“ The Portuguese code (art. 822, s. 1) retains the surety’s liability, in respect of an invalid principal obligation, until the latter has been legally rescinded.
The giver of a guarantee is called “the surety,” or “the guarantor”; the person to whom it is given “the creditor,” or “the guarantee”; while the person whose payment or performance is secured thereby is termed “the principal debtor,” or simply “the principal.” In America, but not apparently elsewhere, there is a recognized distinction between “a surety” and “a guarantor” ”

“ If made subsequently to the date of the note and without a prior indorsement by the payee, it will be presumed that it was not made for the same consideration, and the party, if liable at all, will be regarded as a guarantor. Such a contract to guarantee the debt of a third person must be in writing, and there must be sufficient proof of the consideration. ”

“ The existence of a guarantee does not oblige the banker to any particular system of keeping the account. So long as it is not unfairly manipulated to the detriment of the guarantor, there is Guarantees.no obligation to put moneys paid in, without appropriation, to the guaranteed rather than to the unguaranteed account, and on the termination of a guarantee, the banker may close the account, leaving it to be covered by the guarantee, and open a new one with the customer, to which he may devote payments in, not otherwise appropriated. ”

“ There ought to be no doubt that in a case of collective guarantee one of the guarantors alone cannot be considered bound to act according to the treaty of guarantee. For a collective guarantee can have the meaning only that the guarantors should act in a body. But if one of the guarantors themselves violates the object of his own guarantee, the body of the guarantors remains, and it is certainly their duty to act against such faithless co-guarantor. ”

“ The agreement to accept is a transaction between the guarantee and guarantor, and completes that mutual assent necessary to a valid contract between them. It was, in the case cited, the consideration for the promise of the guarantor. And wherever a sufficient consideration of any description passes directly between them, it operates in the same manner and with like effect. It establishes a privity between them and creates an obligation. ”

“ The same course of reasoning and authority would seem to be equally applicable to the notice required of the goods furnished or credits given under the guaranty, and on the faith of it at the close of the transactions, and of the amount for which the party intended to look to the guarantor for payment, so as to advise him of the extent of his liabilities. We perceive no reason why the rule in respect to notice should be more strict in this stage of the dealings of the parties, than at the time when the debt becomes due ”

“ The latter is the interpretation which we are disposed to adopt; and the question, which, under this view, is presented, is, whether upon a letter of guaranty addressed to a particular person, or to persons generally, for a future credit to be given to the party in whose favour the guaranty is drawn, notice is necessary to be given to the guarantor, that the person giving the credit has accepted or acted upon the guaranty, and given the credit on the faith of it. We are all of opinion that it is necessary ”

“ The inquiry is to be directed at the conclusiveness of the order releasing the guarantor from his obligation, assuming the Bankruptcy Court did not have jurisdiction of the subject matter of the order, the release in reorganization of a guarantor from his guaranty of the debtor's obligations. [8]
A court does not have the power, by judicial fiat, to extend its jurisdiction over matters beyond the scope of the authority granted to it by its creators. ”

“ It seems plain from all this language, that a series of new transactions, new agreements, and new engagements were within the contemplation of the parties; not advances for six months alone, but advances from time to time, for an indefinite period, until notice to the contrary should be given by the guarantor. ”

“ The guarantors had no notice that their sufficiency had been approved, or that their guaranty had been accepted, or even that the original contract had been executed or assented to by the plaintiff, until long afterwards, when payment was demanded of them for goods supplied by the plaintiff to the principal debtor. ”

“ Wilkins, 1 Barn. & Cressw. 10, the court say, if a guarantor of a bill be informed, before it is due, of the insolvency of the acceptors, and that the plaintiff looked to him for payment; it is not necessary to prove presentment and notice of non-payment. ”

“ This definition applies only to guarantors, since it is a conditional promise to pay the debt or obligation of another. A surety's obligation is absolute, and not conditional in any way upon the failure or inability of the principal debtor to pay. In commercial practice, the contract of a surety is infrequently used as compared with the obligation of a guarantor. ”

“ The bankruptcy court held that a guarantor must receive direct economic benefits in exchange for its guarantee in order to have received reasonably equivalent value for its guarantee. While the bankruptcy court applied an overly narrow interpretation of what may constitute reasonably equivalent value for a guarantee, the bankruptcy court did not clearly err in finding that Image Worldwide did not receive reasonably equivalent value for its guarantees. ”

“ The fourth instruction insists, that a demand of payment should have been made of Haring, and in case of non-payment by him, that notice of such demand and non-payment should have been given, in a reasonable time, to the defendants, otherwise, the defendants would be discharged from their guarantee. We are of opinion, that this instruction ought to have been given. By the very terms of this guarantee, as well as by the general principles of law, the guarantors are only collaterally liable, upon the failure of the principal debtor to pay the debt. ”

“ It is true, of course, that the guaranty referred to in § 303 (c) (2) is one given for the purpose of protecting the dealer 'in case of an alleged violation of section 301 (a) ,' thereby relieving him of liability if he reships adulterated or misbranded goods in interstate commerce. But where such a guaranty, as in this case, is given to a dealer regularly engaged in making interstate shipments and who may therefore have need of the guaranty, § 301 (h) imposes liability on the guarantor if that guaranty turns out to be false. ”

“ If the party intended at the time to be bound only as guarantor of the maker, he shall not be an original promisor; and, if he intended to be liable only as a second indorser, he shall never be held to the payee as first indorser. ”

“ In June, 1931, the North Carolina Bank advised the guarantors that the 'B' assets were not in such shape that the Bank could use them to the extent necessary for banking purposes and requested the guarantors to put their guaranty into a bankable form so that it could be used by the Bank to obtain credit. Respondent accordingly gave to the Bank his note for $125,000 and endorsed the note of C. W. Gold, another guarantor, for a like amount and assigned certain securities to the Bank as collateral for the payment of his guaranty. ”

“ That as such, they would be entitled to the bill and all the rights of the bank.
4. Whatever extinguishes the right of the principal destroys the guarantee.
5. That by the omission to find Timberlake he was as much released as if he had a written receipt.
6. That therefore the guarantor, Rhett, was discharged.
1st and 2d points. It was marked on the note itself that it was collateral security for the bill, by the agent of the party himself. If the principal is more bound than the rest, then it is a case of guarantee. ”