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of negotiable paper but as a party to a special contract, and the action on the contract is in the party with whom the contract was made. A promissory note, payable to S. B. or bearer, being sold to one T previous to its becoming due, the vendor endorsed thereon, and signed, a writing warranting the collection of the note. T sold the note to C who transferred it to I, who sold it to the person in whose name the action was brought on the guaranty. It was held in New York that the action could not be maintained on the guaranty in that name. Lamourieux v. Hewit, 5 Wend. 307. This decision was followed in Pennsylvania. McDoal v. Yeomans, 8 Watts 361.
The right of action in Virginia and Kentucky, on the implied contract of the assignor, rested on similar ground; the privity between him and his immediate assignee. It was considered that the law raised a promise between them; but no privity existed between an assignor and a remote assignee; and there was no promise implied on which an action could be maintained by the latter against the former. Mandeville &c. v. Riddle & Co. 1 Cranch 290; appendix, note A, p. 367-461; Dunlop v. Harris, 5 Call 55, 6; Hooe v. Wilson, Id. 75; Mardis v. Tyler, 10 B. Monroe 378.
Equity, however, would entertain a bill by the last assignee against all the assignors, when the legal remedy was obstructed, and would decree payment to be immediately made by the person ultimately responsible to the person actually entitled to receive the money. Riddle & Co. v. Mandeville &c. 5 Cranch 322; Bank of U. S. v. Weisiger, 2 Peters 332; McFadden v. Finnell &c. 3 B. Monroe 121; Turneys v. Hunt &c. 8 Id. 408.
The right of the last assignee to reach, in equity, a remote assignor, did not rest on the ground that he had acquired the right of recourse of every intermediate assignor. For, if that proposition were true, he might recover in equity from the first assignor a much larger sum than he was entitled to recover from his immediate assignor. The assignee sought relief in equity because his remedy at large against his assignor was unavailing on account of his insolvency; and he was substituted to the rights of his assignor against a prior assignor. Turneys v. Hunt &c. 8 B. Monroe 410.
Such being the nature of the right in equity, the Virginia statute, giving a remedy at law against a remote assignor, proceeds on the same principle. 1806, 7, p. 16, ch. 28, §3; 1 R. C. 1819, p. 484, $6. In chapter 144 of the Code of 1849, p. 583, next after § 14, cited ante, p. 262, is the following:
§15. Any such assignee may recover from any assignor of such writing; but only joint assignors shall be joined as defendants in one action, and a remote assignor shall have the benefit of the same defence as if the suit had been instituted by his immediate assignce.
ACTION ON A PROMISE TO GUARANTY.
1. Between whom the contract of guaranty is.
Letters of credit usually contain a request that some one will advance money or sell goods to a third person, and an undertaking on the part of the writer that the debt which may be contracted by the third person in pursuance of the request shall be duly paid. These letters have been divided into two classes, general and special. They are general when addressed to any and all persons, without naming any one in particular. They are special when addressed to a particular individual or firm by name. When the letter is addressed to
all persons, it is, in effect, a request made to each and every one of them, and any individual may accept and act upon the proposition contained in it; and on his doing so, that which was before indefinite and at large becomes definite and fixed: a contract immediately springs up between the person making the advance and the writer of the letter, and it is thenceforward the same thing in legal effect as though the name of the former had been inserted in the letter at the beginning. Bronson, J. in Birckhead v. Brown, 5 Hill 642, 3; Laurason v. Mason, 3 Cranch 492; Watson's ex'ors v. McLaren, 19 Wend. 565; S. C. 26 Wend. 425.
When the letter is special, or in other words addressed to a particular individual, he alone has the right to act upon and acquire rights under it. If any one else attempts to accept and act upon the proposition contained in the letter, he comes in as a mere volunteer; and he cannot, by thus thrusting himself forward, create any legal obligation on the part of the writer. Robbins v. Bingham, 4 Johns. 476; Walsh &c. v. Bailie, 10 Id. 180; Birckhead v. Brown, 2 Hill 643; Taylor &c. v. Wilmore &c. 10 Ohio 490.
2. Consideration to support the guaranty.
It is not necessary that there should be a consideration directly between the persons giving and receiving the guaranty. It is sufficient if thereby the party for whom the guarantor becomes a surety receives a benefit, or the party to whom the guaranty is given suffers a loss. Burn v. Grey, 4 East 190; Morley v. Boothby, 3 Bingh. 107; Willatts v. Kennedy, 8 Id. 10, 11 Eng. Com. Law Rep. 53; 21 Id. 200; Moore &c. v. Holt, 10 Grat. 295.
When a guaranty of a note is made before the note is delivered to the party to whom the guaranty is given, it is deemed to be done to add to the strength of the note and to induce that party to take it for his money or property; and no other consideration is necessary. Bickford v. Gibbs &c. 8 Cush. 156; Manson v. Durham &c. 3 Hill 584; Snevily v. Johnston, 1 W. & S. 309; Amsbaugh v. Gearhart & Co. 1 Jones 482; Hopkins &c. v. Richardson, 9 Grat. 494. If, after a note has become a complete contract, there be written on the back of it a guaranty of its payment, a distinct consideration should be proved for the guaranty. Tenney v. Prince, 4 Pick. 385; Howe v. Merrill, 5 Cush. 80. If it be without consideration, it is clearly nudum pactum and void. Aldridge &c. v. Turner, 1 Gill & J. 427. But if the guarantor receives a consideration for it, he may make himself liable for the amount of the note, although the money received by him be less than that amount. Oakley v. Boorman, 21 Wend. 591.
3. Rules for construing a guaranty.
It is often a question, what is the fair import of the language used in a guaranty. Lee v. Dick, 10 Peters 493, 4; Mauran v. Bullus, 16 Peters 528; Bell &c. v. Bruen, í How. 187; Lawrence v. McCalmont &c. 2 How. 450, 51. For its interpretation, the cases have laid down rules the very opposite of each other. In England, the diversity is even more striking than in the United States.
It has been said, sometimes, that the words of a guaranty are to be taken as strongly against the party giving the guaranty as the sense of them will admit of. Mason v. Pritchard, 12 East 227; Drummond v. Prestman, 12 Wheat. 518. Sometimes that guarantees ought to receive a strict construction; and they should be so drawn up as to embrace in terms the dealing intended to be guarantied. Best, C. J. in Evans v. Whyle, 5 Bingh. 485, 15 Eng. Com. Law Rep. 514. Then,
again, we will be told, that such commercial agreements ought to receive a liberal, not a strict construction. Burrough, J. in Hargreave v. Smee, 6 Bingh. 244, 19 Eng. Com. Law Rep. 69. That the words employed are the words of the grantor, and there is no reason for putting on a guaranty a construction different from that which the court puts on any other instrument; and with regard to other instruments the rule is that if the party executing them leaves anything ambiguous in his expressions, such ambiguity must be taken most strongly against himself. Tindal, C. J. in S. C. While another judge will say it is not unreasonable to expect from a party, who is furnishing goods on the faith of a guaranty, that he will take the guaranty in terms which shall plainly and intelligibly point out to the party giving the guaranty the extent to which he expects that the liability is to be carried. Bayley, B. in Nicholson v. Paget, 1 Cr. & Mee. 48; 3 Tyrwhy. 164. If he were obliged to choose between the two conflicting principles laid down on this subject, Alderson, B. would rather be disposed to agree with that given in Mason v. Pritchard, than with the opinion of Bayley, B. in Nicholson v. Paget. 6 M. & W. 612.
It may now be safely laid down that the proper rule of construction of a guaranty is—that applied to other contracts— to give the instrument that effect which shall best accord with the intention of the parties, as manifested by the terms of the guaranty, taken in connection with the subject matter to which it relates; neither enlarging the words beyond their natural import in favour of the creditor nor restricting them in aid of the surety. This may be regarded as now the rule best established in England, Allnutt &c. v. Askenden, 5 Man. & Grang. 392, 44 Eng. Com. Law Rep. 210; in Massachusetts, Mussey v. Rayner, 22 Pick. 228; Curtis &c. v. Hubbard, 6 Metcalf 191, 2; and generally in the United States.
On the one hand a judge is naturally desirous, where parties have acted on the faith of such engagements, that they should, if possible, be sustained, Wilde, C. J. in Edwards v. Jevons, 8 Man. Grang. & Scott 444, 65 Eng. Com. Law Rep. 444, while on the other hand a court will consider that no party is bound beyond the extent of the engagement, which shall appear from the expression of the guaranty and the nature of the transaction. Drummond v. Prestman, 12 Wheat. 518.
In one case of guaranty, it was said in New York, that on general principles a strict interpretation should be applied in favour of a surety. Whitney v. Groot, 24 Wend. 82. But every instrument of this sort ought to receive a fair and
reasonable interpretation according to the true import of its terms. It being an engagement for the debt of another, there is certainly no reason for giving it an expanded signification or liberal construction beyond the fair import of its terms. On the other hand, as these instruments are of extensive use in the commercial world, upon the faith of which large credits and advances are made, care should be taken to hold the party bound to the full extent of what appears to be his engagement. Douglass &c. v. Reynolds &c. 7 Peters 122. It is, says Mr. Justice Thompson, to be construed according to what is fairly to be presumed to have been the understanding of the parties without any strict technical nicety. Lee v. Dick, 10 Peters 493. The understanding is to be ascertained from the facts and circumstances accompanying the entire transaction. Bell &c. v. Bruen, 1 How. 187. To ascertain the intention of the parties is the great object of the court in the construction of all instruments; and this is especially the case in acting upon guarantees. Mauran v. Bullus, 16 Peters 528.
The words should not be forced out of their natural meaning: but they should receive a fair and reasonable interpretation, so as to attain the objects for which the instrument is designed and the purposes to which it is applied. We should never forget that letters of guarantee are commercial instruments generally drawn up by merchants in brief languagesometimes inartificial and often loose in their structure and form; and to construe the words of such instruments with a nice and technical care, would not only defect the intentions of the parties but render them too unsafe a basis to rely on for extensive credits, so often sought in the present active business of commerce throughout the world. Lawrence v. McCalmont &c. 2 How. 449, 50; Moore &c. v. Holt, 10 Grat. 294.
4. Endorser not to be turned into maker or guarantor; and guarantor not to be turned into maker or endorser.
In New York there are some cases which hold in effect, that a written contract of one kind may be turned into a contract of a different kind, by parol proof concerning the intention of the parties; that the endorser of a promissory note, may, under certain circumstances be charged as maker or guarantor; and that the guarantor of a promissory note may sometimes be charged as maker or endorser. Judge Bronson remarks, that although these cases stand upon no principle,