Continuing guaranty, what. Revocation. SEC. 2814. A guaranty relating to a future liability of the principal, under successive transactions, which either continue his liability or from time to time renew it after it has been satisfied, is called a continuing guaranty. N. Y. C. C., Sec. 1549. SEC. 2815. A continuing guaranty may be revoked at any time by the guarantor, in respect to future transactions, unless there is a continuing consideration as to such transactions, which he does not renounce. N. Y. C. C., Sec. 1550. ARTICLE VI. What deal. ings with debtor exonerate guarantor. Void promises. alteration. EXONERATION OF GUARANTORS. SECTION 2819. What dealings with debtor exonerate guarantor. 2820. Void promises. 2821. Rescission of alteration. 2822. Part performance. 2823. Delay of creditor does not discharge guarantor. 2824. Guarantor indemnified by the debtor, not exonerated. 2825. Discharge of principal by act of law does not discharge guarantor. SEC. 2819. A guarantor is exonerated, except so far as he may be indemnified by the principal, if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is altered in any respect, or the remedies or rights of the creditor against the principal, in respect thereto, in any way impaired or suspended. N. Y. C. C., Sec. 1551. SEC. 2820. A promise by a creditor, which for any cause is void, or voidable by him at his option, does not alter the obligation or suspend or impair the remedy, within the meaning of the last section. N. Y. C. C., Sec. 1552. Rescission of SEC. 2821. The rescission of an agreement altering the original obligation of a debtor, or impairing the rem edy of a creditor, does not restore the liability of a guarantor who has been exonerated by such agreement. N. Y. C. C., Sec. 1553. formance. SEC. 2822. The acceptance, by a creditor, of any thing Part perin partial satisfaction of an obligation, reduces the obligation of a guarantor thereof, in the same measure as that of the principal, but does not otherwise affect it. N. Y. C. C., Sec. 1554. SEC. 2823. Mere delay on the part of a creditor to proceed against the principal, or to enforce any other remedy, does not exonerate a guarantor. N. Y. C. C., Sec. 1555. SEC. 2824. A guarantor, who has been indemnified by the principal, is liable to the creditor to the extent of the indemnity, notwithstanding that the creditor, without the assent of the guarantor, may have modified the contract or released the principal. N. Y. C. C., Sec. 1556. SEC. 2825. A guarantor is not exonerated by the discharge of his principal by operation of law, without the intervention or omission of the creditor. N. Y. C. C., Sec. 1557. Delay of does not creditor discharge guarantor. Guarantor by the debtor ated. indemnified not exoner Discharge of act of law principal by does not discharge guarantor. CHAPTER II. SURETYSHIP. ARTICLE I. WHO ARE SURETIES. II. LIABILITY OF SUREties. III. RIGHTS OF SURETIES. V. LETTER OF CREDIT. ARTICLE I. WHO ARE SURETIES. SECTION 2831. Surety, what. 2832. Apparent principal may show that he is surety. SEC. 2831. A surety is one who, at the request of an- Surety, what other, and for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person, or hypothecates property as security therefor. Apparent principal may show that he is surety. The common definition of a surety (see Webster's, Wharton's and Burrill's Dictionaries), cannot be distinguished from that of a guarantor, and clearly covers the case of an indorser. But an indorser is not necessarily a surety (Pitts vs. Congdon, 2 N. Y., 352; Hurd vs. Little, 12 Mass., 502). nor is a guarantor, although their rights are in some important respects alike. The distinction between a surety and a mere guarantor is, that the former enters into the contract primarily for the benefit of the debtor, while with the latter the benefit of the principal debtor is no material part of the inducement to him to contract. N. Y. C. C., Sec. 1558. SEC. 2832. One who appears to be a principal, whether by the terms of a written instrument, or otherwise, may show that he is in fact a surety, except as against persons who have acted on the faith of his apparent character of principal. So held as between the parties themselves (Rouse vs. Whited, 25 N. Y., 170; Barry vs. Ransom, 12 id., 446; Griffiths vs. Reed, 21 Wend., 502); and so as to third persons in equity (Hollier vs. Eyre, 9 Clark & Fin., 1; Davies vs. Stainbank, 6 De G., M. & G., 679). At common law, the rule excluding oral evidence to vary a written contract excluded evidence to show that the apparent principal was a surety (Harrison vs. Courtauld, 3 B. & Ad., 36; Fentum vs. Pocock, 5 Taunt., 192; see, however, Artcher vs. Douglas, 5 Denio, 509); and upon the authority of these cases alone the decisions in equity not being cited by counsel on either side-the same rule has been followed in a recent case in this State (Howard Banking Co. vs. Welchman, 6 Bosw., 280). The fusion of law and equity in this State has superseded the common law rule. In England, since equitable defences have been admitted in common law Courts, the equitable rule has been followed and defined as in the text, by all the Judges (Pooley vs. Harradine, 7 El. & Bl., 431; Greenough vs. McClelland, 2 El. & El., 424; 6 Jur. (N. S.], 772; 30 L. J. [Q. B.], 15; Taylor vs. Burgess, 5 Hurlst. & N., 1). And see Mohawk and Hudson River R. R. Co. vs. Costigan, 2 Sandf. Ch., 306; Artcher vs. Douglass, 5 Denio, 509. Compare Casey vs. Brabason, 10 Abb. Pr., 368; Gahn vs. Niemcewicz, 11 Wend., 312; Elwood vs. Diefendorf, 5 Barb., 398; Chester vs. Bank of Kingston, 16 N. Y., 336). The same rule is established in Massachusetts (Weston vs. Chamberlin, 7 Cush., 404; Carpenter vs. King, 9 Metc., 511; Harris vs. Brooks, 21 Pick., 195.) N. Y. C. C., Sec. 1559. ARTICLE II. LIABILITY OF SURETIES. SECTION 2836. Limit of surety's obligation. 2837. Rules of interpretation. 2838. Judgment against surety does not alter the relation. surety's SEC. 2836. A surety cannot be held beyond the ex- Limit of press terms of his contract, and if such contract prescribes obligation. a penalty for its breach, he cannot in any case be liable for more than the penalty. N. Y. C. C., Sec. 1560. SEC. 2837. In interpreting the terms of a contract of suretyship, the same rules are to be observed as in the case of other contracts. Rules of tion. interpreta N. Y. C. C., Sec. 1561. against SEC. 2838. Notwithstanding the recovery of judgment Judgment by a creditor against a surety, the latter still occupies the relation of surety. N. Y. C. C., Sec. 1562. SEC. 2839. Performance of the principal obligation, or an offer of such performance, duly made, whether by the principal or by another person, exonerates a surety. This rule seems just, though not fully supported by any SEC. 2840. A surety is exonerated— 1. In like manner with a guarantor; surety des not alter the relation. Surety discharged by certain acts of the 2. To the extent to which he is prejudiced by any act creditor. of the creditor which would naturally prove injurious to the remedies of the surety or inconsistent with his rights, or which lessens his security; or, 3. To the extent to which he is prejudiced by an omission of the creditor to do anything, when required by the Burety, which it is his duty to do. N. Y. C. C., Sec. 1564. ARTICLE III. RIGHTS OF SURETIES. SECTION 2844. Surety has rights of guarantor. 2845. Surety may require the creditor to proceed against the prin cipal. 2846. Surety may compel principal to perform obligation, when due. 2847. A principal bound to reimburse his surety. Surety has rights of guarrantor. Surety may require the creditor to proceed against the principal. Surety may compel prin SECTION 2848. The surety acquires the right of the creditor. SEC. 2844. A surety has all the rights of a guarantor, whether he becomes personally responsible or not. N. Y. C. C., Sec. 1565. SEC. 2845. A surety may require his creditor to proceed against the principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced. N. Y. C. C., Sec. 1566. SEC. 2846. A surety may compel his principal to per cipal to per- form the obligation when due. form obliga. tion, when due. A principal bound to reimburse his surety. The surety acquires the right of the creditor. Surety entitled to benefit of securities held by creditor. The property of principal N. Y. C. C., Sec. 1567. SEC. 2847. If a surety satisfies the principal obligation, or any part thereof, whether with or without legal proceedings, the principal is bound to reimburse what he has disbursed, including necessary costs and expenses; but the surety has no claim for reimbursement against other persons, though they may have been benefited by his act, except as prescribed by the next section. N. Y. C. C., Sec. 1568. SEC. 2848. A surety, upon satisfying the obligation of the principal, is entitled to enforce every remedy which the creditor then has against the principal, to the extent of reimbursing what he has expended; and also to require all his co-sureties to contribute thereto, without regard to the order of time in which they became such. N. Y. C. C., Sec. 1569. SEC. 2849. A surety is entitled to the benefit of every security, for the performance of the principal obligation, held by the creditor, or by a co-surety, at the time of entering into the contract of suretyship, or acquired by him afterwards, whether the surety was aware of the security or not. N. Y. C. C., Sec. 1570. SEC. 2850. Whenever property of a surety is hypothe first. cated with property of the principal, the surety is enti to be taken |