contract of guaranty is the obligation of a surety, it is to be construed as a mercantile instrument in furtherance of its spirit and liberally, to promote the use and convenience of commercial intercourse.

This view applies with equal force to the exceptions to the other charges and refusals to charge of the court below. These exceptions are based on the propositions,

1. That if Wells, Fargo & Co. neglected to notify the defendants below of the amount of the overdraft within a reasonable time after closing the account of Gordon & Co.; and,

2. That if they failed within a reasonable time after demand of payment made upon Gordon & Co. to notify the defendants of the default the plaintiffs could not recover upon the guaranty.

For if the necessity in either or both of these contingencies existed to give the notice specified, it was because the duty to do so was, by construction of law, made conditions of the contract.

But by its terms, as we have shown, the contract was made absolute and all conditions were waived.

It is undoubtedly true, that if the guarantee fails to give reasonable notice to the guarantor of the default of the principal debtor, and loss or damage thereby ensues to the guarantor, to that extent the latter is discharged; but both the laches of the plaintiff and the loss of the defendant must concur to constitute a defence.

If any intermediate notice, at the expiration of the credit, of the extent of the liability incurred is requisite, the same rule applies. Such was the express decision in Louisville Manufacturing Co. v. Welch, supra. An unreasonable delay in giving notice, or a failure to give it altogether, is not of itself a bar.

There was a question made at the trial as to the meaning of the word "overdrafts," as used in the guaranty. It was contended that it would not include the debit balance of account charged to Gordon & Murray, and assumed by Gordon & Co., as their successors, before the guaranty was made, nor charges of interest accrued upon the balance of Gordon & Co.'s account, which was entered to the debit of the account. The reason alleged was, that no formal checks were given for these amounts. The point was not urged in argument at the bar, and was very properly abandoned.

The charges were legitimate and correct, and the balance of the account to the debit of Gordon & Co. was the overdraft for which they were liable. There could be no doubt that it was embraced in the guaranty. We find no error in the record.

Judgment affirmed.

MERE DELAY ON THE PART OF THE CREDITOR IN ENFORCING THE OBLIGATION AGAINST THE PRINCIPAL

WILL NOT DISCHARGE THE SURETY

ALLEN V. HOPKINS

98 Ky. 668; 34 S. W. Rep. 13 (1896)

Appeal from circuit court, Boyd county.

Action by John Allen against John C. Hopkins and others. Judgment for defendants, and plaintiff appeals. Reversed.

HAZELRIGG, J. Several years prior to 1886 John Allen loaned to the firm of Hogan & Son $1,000, and upon the back of the firm's note for that sum the names of Hopkins and the other appellees appeared as accommodation indorsers. On June 11th of the year named, the form of the paper was changed, and under the firm's name the appellees wrote their names as sureties. This note was due in 12 months, and contained no provisions as to interest. On it were the indorsements, "Interest paid up to June 11, 1888," and "Interest paid up to June 11, 1889." In November, 1889, suit was brought against the principals, and judgment obtained; but it appears they had become insolvent, and in October, 1890, this action was instituted against the sureties. They pleaded that, for a valuable consideration, the payee had extended indulgence to the principals for a definite period, and forborne to sue on the original contract, and whether or not this is true is the only question presented on this appeal. The contention of the sureties is that the testimony shows that, upon the maturity of the note, on June 11, 1887, Hogan & Son paid Allen $100, a like sum on June 11, 1888, and a like sum on June 11, 1889; that upon the payment of each of these sums Allen agreed that the firm shall keep the money for another year, the consideration for the extension of credit being the payment of usurious interest, or $40 each year in excess of legal interest; that this was a novation, and effected their discharge, or, at any rate, here was an agreement, in consideration of interest to be paid, by which a definite time was fixed within which the payee had lost his right to resort to his legal remedy. It is conceded that no interest was paid in advance. The principal agreed, when he borrowed the money, to pay 10 per centum interest per annum, and at the maturity of the note, in June, 1889, he paid the exact sum he agreed to pay, and no more. So far, therefore, the suréty is not affected. If, however, in addition to complying with its provision. to pay this interest, the firm secured a valid and enforceable contract to keep the money another year,-a contract which would prevent Allen from suing for his money, or the firm from paying it if it so desired,—

then the original attitude of the parties has been changed, and the sureties are released. The proof on the particular point involved is within a small compass, though not altogether free from confusion. Allen is positive that the only agreement ever made was that the Hogans were to pay him 10 per cent. interest. Hogan, Sr. upon whose testimony the sureties rely, proves that he agreed to pay, and did pay, 10 per cent. at the end of each year as interest for the preceding year, and it was then agreed that the firm might keep the money for another year at the same interest. On cross-examination, he states that there was no consideration given by him, directly or indirectly, that Allen should not collect his money whenever he pleased. The testimony of Hogan, Jr., the only other witness, is too indefinite to be of any value. It is manifest that the payment of the $100 did not to any extent form the basis of the agreement to let the Hogans keep the money for a succeeding year. The agreement to extend the credit for a year was solely because of the promise of the Hogans to again pay a like sum at the end of the extended period. They paid this interest solely because they agreed to do it. It was their contract. So far, therefore, as the various payments of interest are concerned, the rights of the sureties are not affected; and the simple question remains, was there an agreement to extend the time of payment for a definite time in the future in consideration of a promise to pay interest at the rate stated? It is clear however, that the rate agreed on is immaterial. So far as it was beyond the legal rate, it was usurious, and the contract was not enforceable save to the extent of the legal rate. But while the note, after the first year, bore 6 per cent., and an agreement that that rate should be paid was no more than the law said should be paid, yet the promise to extend the time definitely in consideration of an agreement to pay the legal rate would be based on a valuable consideration, because, as said in McComb v. Kittridge, 14 Ohio 351, cited and approved in Robinson v. Miller, 2 Bush. 188, "the law does not secure the payment of this interest for any given period, or prevent the discharge of the principal at any moment. There is precisely the same consideration for the extension of time as there was for the original loan." A careful examination of Hogan's testimony convinces us that the arrangement he had was a general one, commencing in 1883, when he first borrowed the money, that he was to pay 10 per cent. interest at the end of each year, and was to keep the principal sum at that rate so long as he wanted it or the payee did not choose to demand it. While the witness, in his examination in chief, speaks with some positiveness of his agreement to keep the money another year, on his cross-examination he qualifies his statements by saying, in one instance, "the only agreement we had, I was to pay him 10 per cent. for his money."

And from his language, quoted heretofore, it is manifest that there was no agreement by which the payee might not collect his money "whenever he pleased to do so."

From the testimony as a whole, we are impressed with the belief that great surprise would have been expressed by all the parties if, upon the tender of the money by the Hogans, Allen had refused to accept it by reason of an agreement that the payors were to keep it for any definite period in the future, or if Allen had demanded the principal and the Hogans had asserted the right to keep it for any specified time. The alleged arrangement or agreement is entirely too indefinite to support the belief that we have here a case of a legal novation. We cannot believe that the proof authorizes the conclusion that, by any new contract, the sureties were denied any of their rights, or were at all obstructed in any of their remedies, legal or equitable. They could have paid the debt at any moment, and have been subrogated to the rights of the creditors, or they could have required the creditor to sue notwithstanding the indefinite arrangement existing between the principal and his debtor. In reaching these conclusions, we have not overlooked the circumstances surrounding the parties to be affected. Allen was an old man,over 73, and apparently unlettered. He was simply willing to let the earnings of his farm and log business stay out at 10 per cent, as long as his security was good. To construe his passive indulgence into an agreement binding him not to collect his money would be a perversion of the proof as affected by the surroundings. The debtors were quite willing to keep the money as long as they were not required to pay it, but never thought to defeat recovery at any time by the plea of an agreement to extend the credit for any definite time. At least, they did not do so when sued in November, 1889, as they might have done had such an agreement existed. The sureties were residents of the same town, and it is fair to presume, knew the debt had not been paid. Their remedies were, in fact, unobstructed; and if they did not choose to urge the collection of the debt, they and not Allen must bear the resulting loss. Judgment reversed, for proceedings consistent with this opinion. GUARANTOR OF PAYMENT IS IMMEDIATELY AND ABSOLUTELY LIABLE TO THE CREDITOR

ROBERTS V. HAWKINS

70 Mich. 566; 38 N. W. 575 (1888)

Error to Superior Court of Grand Rapids. Assumpsit. LONG, J. January 12, 1884, one Lyman D. Follett made his promissory note as follows:

"$1,000.

Grand Rapids, Mich. January 12, 1884.

One year after date, I promise to pay to the order of Helen M. Roberts one thousand dollars, with interest at eight per cent. per annum. received.

Value

Lyman D. Follett."

And defendant signed an indorsement on the back thereof, as follows:

"For value received, I hereby guarantee the payment of the within. Value received.

L. E. Hawkins."

On the delivery of this note to plaintiff, she paid Follett $1,000. January 8, 1885, seven days before this note became due, Follett paid one year's interest; and neither at that time, nor at the maturity of the note, was the same presented to Follett or defendant for payment. No notice of non-payment was given defendant then or at any time prior to June 8, 1887. January 25, 1886, Follett paid the interest for the year, and January 17, 1887, for the following year. About June 8, 1887, the note being then two years and five months overdue, it was first presented to defendant, and payment demanded and refused. August 13 this suit was brought.

On the trial, plaintiff, having proved the note and guaranty, and its non-payment, rested. Defendant then sought to make his defense as pleaded, and offer to show:

1. That he was an accommodation guarantor, without consideration or security.

2. That, at or about the maturity of the note, he inquired of the maker of the note if it was paid, and was told it was.

3. That neither at the maturity of the note, nor at any subsequent time, prior to June 8, 1887, was any notice of the non-payment of this note given to defendant, nor any demand made on him for the payment thereof.

4. That at the maturity of this note, and for some considerable time thereafter-at least a year-Follett, the maker of the note, was solvent, and had property out of which defendant could have procured him to pay the note or obtained security.

5. That when defendant, on June 8, 1887, learned of the non-payment of this note, the maker was insolvent, out of the jurisdiction, and that he could then obtain no security or payment.

The court directed a general verdict for plaintiff on all the counts of the declarations. Judgment being entered on the verdict in favor