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4. Where a factor undertakes, for a commission, to Same. sell merchandise and guaranty the sale;

5. Where the holder of an instrument for the payment of money, upon which a third person is or may become liable to him, transfers it in payment of a precedeut debt of his own, or for a new consideration, and in connection with such transfer enters into a promise respecting such instrument.

NOTE.-The cases upon the very frequently litigated
question whether a promise partaking of the character of
an engagement for the debt of another, is to be deemed
an original or a collateral undertaking, are very numer-
ous, and far from consistent. It is hardly possible to
frame rules having the necessary simplicity and clear-
ness, which shall reconcile all the adjudications. In the
subdivisions of this section rules have been supplied for
distinguishing an original undertaking, which, upon the
whole, are sustained by the weight of authority; though
some of them express views which have been contro-
verted. The rule that the undertaking of a surety, who
signs together with the principal, although he adds the
word “surety," to his name, is an original and not a
collateral undertaking (Perkins vs. Goodman, 21 Barb.,
p. 218; and see Clark vs. Rawson, 2 Den., p. 135); has
relation to the expression of a consideration, and
becomes unimportant when that element is dispensed
with in the memorandum. The same remark applies
to some cases where a guaranty, omitting to specify a
consideration, has been sustained by aid of the fact that
it was indorsed on the principal contract. See Bailey
vs. Freeman, 11 Johns., p. 221. The rule laid down in
Douglass vs. Jones, 3 E. D. Smith, p. 551, that an
agreement by an employer with his clerk, guarantying
that his salary at the rates fixed by the contract of em-
ployment shall not fall below a certain sum, need not
express a consideration, is not properly an exception to
the general principle that a guaranty must be in writ-
ing. Such an engagement is not a guaranty properly
speaking, nor within the definition employed in this
Code. And the decision is put upon the ground that
the engagement was not one to answer for the debt,
etc., of another person, and therefore need not be in
writing. See 2 Parsons' on Contracts, p. 9; Brown on
the Statute of Frauds, Sec. 192, et seq.

Subd. 1-Embraces, in its first clause, such cases as
Wyman vs. Smith, 2 Sandf., p. 331; N. Y. & Erie R.

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R. Co., 16 How. Pr., p. 564; Lippincott vs. Ashfield, 4 Sandf., p. 611; Olmstead vs. Greenly, 18 Johns., p. 12; and compare Westíall vs. Parsons, 16 Barb., p. 645; and in its second clause, such cases as Van Epps vs. McGill, Hill & D. Supp., p. 109; Phillips vs. Gray, 3 E. D. Smith, p. 69.

Subd. 2-Embraces the common case of goods sold and delivered, or services rendered for the benefit of one upon the request and promise of another; as to which see Chase vs. Day, 17 Johns., p. 114; Graham vs. O'Neil, 2 Hall, p. 474; Darlington vs. McCunn, 2 E. D. Smith, p. 411; Chesterman vs. McCostling, 6 N. Y. Leg. Obs., p. 212; Hanford vs. Higgins, 1 Bosw., p. 441; Flanders vs. Crolius, 1 Duer, p. 201.; Briggs vs. Evans, 1 E. D. Smith, p. 192; Devlin vs. Woodgate, 34 Barb., p. 252; Quintaıd vs. De Wolf, 34 Barb., p. 97; State Bank vs. Mettler, 2 Bosw., p. 392; Beach vs. Hungerford, 19 Barb., p. 258; also, such cases as Harrison vs. Sawtel, 10 Johns., p. 242; Chapin vs. Merrill, 4 Wend., p. 657; with which compare Kingsley vs. Balcome, 4 Barb., p. 131; and Stern vs. Drinker, 2 E. D. Smith, p. 401; King vs. Despard, 5 Wend., p. 277. It excludes cases where the whole credit is not given to the person who comes in to answer for the party immediately benefited; such as Rogers vs. Kneeland, 13 Wend., p. 114; affirming S. C., 10 id., p. 218; Marquand vs. Hipper, 12 Wend., p. 520; Brady vs. Sackrider, 1 Sandf., p. 514; Dixon vs. Frazee, 1 E. D. Smith, p. 32; Pennell vs. Pentz, 4 id., p. 639; Allen vs. Scarff, 1 Hilt., p. 209; Leonard vs. Vredenburgh, 8 Johns., p. 29; Larson vs. Wyman, 14 Wend., p. 246; Payne vs. Baldwin, 14 Barb., p. 570; Brown vs. Webber, 24 How. Pr., p. 306; Wilson vs. Roberts, 5 Bosw.,

p. 100.

Subd. 3-Chiefly rests upon the views expressed in the prevailing opinion in Mallory vs. Gillett, 21 N. Y., p. 412, where numerous cases upon the distinction between original and collateral undertakings are reviewed. See, also, Cailleux vs. Hall, 1 E. D. Smith, p. 5; Stymets vs. Brooks, 10 Wend., p. 207; Farley vs. Cleveland, 4 Cow., p. 432; Meech vs. Smith, 7 Wend., p. 314; Blunt vs. Boyd, 3 Barb., p. 209; Kingsley vs. Balcome, 4 Barb., p. 131; Elwood vs. March, 5 Wend., p. 231; Mersereau vs. Lewis, 25 Wend., p. 243; Barker vs. Bucklin, 2 Den., p. 45; Blunt vs. Boyd, 3 Barb., p. 209; Earle vs. Crane, 6 Duer, p. 564; Blyer vs. Monholland, 2 Sandf. Ch., p. 478; Stoddard vs. Graham, 23 How. Pr., p. 518; Therasson vs. McSpedon, 2 Hilt., p. 1. It will be observed that the last clause of the

subdivision—"upon a consideration beneficial to the party engaging”-embraces not only cases where an absolutely new consideration moves to the promisor, but also those in which property of the principal debtor held by the creditor by virtue of a lien, or under legal process, or otherwise for his demand, is surrendered to the promisor (as in Slingerland vs. Morze, 7 Johns., p. 463; Skelton vs. Brewster, 8 Johns., p. 376; Gardiner vs. Hopkins, 5 Wend., p. 23; Stilwell vs. Otis, 2 Hilt., p. 148; 7 Abb. Pr., p. 431); while it excludes cases in which the property is surrendered to the principal debtor (as in Mallory vs. Gillett, 23 Barb., p. 610, affirmed, 21 N. Y., p. 412; Mercein vs. Andrus, 10 Wend., p. 461; Fay vs. Bell, Hill & D. Supp., p. 251). See Wolf' vs. Koppel, 2 Den., p. 368; affirming S. C., 5 Hill, p. 458; Sherwood vs. Stone, 14 N. Y., p. 267, and cases there cited. The following authorities hold the cases embraced within Subd. 5 to be exempt from the Statute of Frauds, on the ground that the engagement is original, and not a guaranty: Brown vs. Curtiss, 2 N. Y., p. 225. Here the payee and holder of a promissory note transferred it to his creditor in exchange for his own note, held by such creditor, and at the same time executed, on the back of the note transferred, a guaranty of the payment thereof. It was held that the guaranty was not within the Statute of Frauds, and was, therefore, valid, although it expressed no consideration. Such an undertaking, although in form a promise to answer for the debt of another, is, in substance, an engagement to pay the guarantor's own debt in a particular way, and would be good without any writing. There is a new and distinct consideration moving between the parties to the new promise. Durham vs. Manrow, N. Y., p. 535: Here C. P. Durham, one of the defendants, was holder of a note payable to himself or bearer, made by E. Durham. C. P. Durham made a purchase from the plaintiff, and transferred to him the note. He, together with his codefendant, acting by his request, executed a joint guaranty of payment of the note, which, however, expressed no consideration. The Supreme Court (3 Hill, p. 584), held that the undertaking was not within the Statute of Frauds, and was valid; and their judgment was aflirmed in the Court of Appeals (2 N. Y., p. 535), by an equally divided vote of the Judges. The decision of the Supreme Court was also approved, as to the undertaking of the principal guarantor, in Brown

30-vol. ii.

vs. Curtiss, 2 N. Y., p. 225. Cardell vs. McNeil, 21 N. Y., p. 336: Here a contract for the sale of the plaintiff's horse to the defendant was concluded between the plaintiff and an agent of the defendant. By the terms of the contract, part payment was to be made in a note of C., whom the defendant's agent said he would warrant to be good. The plaintiff delivered the horse, and the note was sent to him the next day. There was no written guaranty of the note of C., which turned out to be worthless. The plaintiff then sued the defendant on the verbal undertaking. It was held, 1. The plaintiff's acceptance of the note on the second day, without exacting a written guaranty, was no waiver of the parol undertaking. 2. The parol guaranty was in effect for payment of the note according to its terms, and not for collection by process of law. It was broken, and defendant became liable upon it, when C. failed to pay. 3. The guaranty was not void by the Statute of Frauds. Although in form it was a collateral undertaking, yet in substance it was an agreement by defendant to pay so much of the price of the horse, unless C. should make the payment for him, and thereby discharge hir. Dauber vs. Blackney, 38 Barb., p. 432: Here it appeared that the defendant purchased from one W., a wagon, at the price of eighty dollars. Of this sum the defendant paid thirty dollars in cash, and fifty dollars in a note of B. for that sum; but W. exacted a guaranty of the note from the defendant before he would accept it towards the price. The defendant wrote and signed a guaranty upon the note, without, however, expressing any consideration. W. afterwards sold the note and guaranty to the plaintiff, who, failing to collect the note, brought suit upon the guaranty against the defendant. It was held that the plaintiff was entitled to recover, on the ground that the undertaking was original, and no consideration need be expressed. Whenerer the holder of a note against a third person turns it out in payment of his own debt, or in payment of property purchased, or for money received by him from the person to whom he transfers it, and at the same time agrees that the note is good, or will be paid at maturity, or that it will be collected by due process of law against the maker, this is an undertaking, in substance, entirely for his own benefit and advantage; and the contract is not within the Statute of Frauds. To substantially the same effect are Fowler vs. Clearwater, 35 Barb., p. 143; Westcott vs. Keeler, 4 Bosw., p. 564.

of

P. 557.

p. 203;

2795. A mere offer to guaranty is not binding, Accent until notice of its acceptance is communicated by the guaranty. guarantee to the guarantor; but an absolute guaranty is binding upon the guarantor without notice of acceptance.

NOTE.—"Mere offer."— Mozley vs. Tinker, 1 Cr.
M. & R., p. 692; M'Iver vs. Richardson, 1 M. & Selw.,

“Absolute guaranty." This is the rule in
New York (Union Bank vs. Coster, N. Y.,
Smith vs. Dann, 6 Hill, p. 543; Douglass vs. Howland,
24 Wend., p. 35); though not generally received in the
United States.-See Adams vs. Jones, 12 Peters, p.
207; Lee vs. Dick, 10 id., p. 482; Norton vs. Eastman,
4 Greenl., p. 521; Kay vs. Allen, 9 Penn. St., p. 320;
Mussey vs. Rayner, 22 Pick., p. 223; Taylor vs. Wet-
more, 10 Ohio, p. 490; Walker vs. Forbes, 25 Ala.
(N. S.), p. 139; Bell vs. Kellar, 13 B. Monr., p. 381;
Howe vs. Nickels, 22 Me., p. 175; Hill vs. Calvin, 4
How. Miss., p. 231; Craft vs. Isham, 13 Conn., p. 28;
see 2 Parsons on Contracts, p. 12.

ARTICLE III.

INTERPRETATION OF GUARANTY.

SECTION 2799. Guaranty of incomplete contract.

2800. Guaranty that an obligation is good or collectible.
2801. Recovery upon such guaranty.
2802. Guarantor's liability upon such guaranty.

contract.

2799. In a guaranty of a contract, the terms of Guaranty which are not then settled, it is implied that its terms incompleto shall be such as will not expose the guarantor to greater risks than he would incur under those terms which are most common in similar contracts at the place where the principal contract is to be performed.

Note.-The guaranty of the price of things to be thereafter sold extends only to a sale upon not more than the ordinary length of credit.-Combe vs. Woolf,

8 Bing., p. 156. 2800. A guaranty to the effect that an obligation Guaranty is good, or is collectible, imports that the debtor is obligation

is good or solvent, and that the demand is collectible by the collectible.

that an

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