Therefore, the defendant verbally promised the plaintiff, who by Hadley's default became Hadley's creditor for the amount of the default, that he would be responsible for that loss. The defendant's object was to serve no personal or pecuniary interest. His object was to answer for the debt or default "of another person." It was correctly decided, and should not be cited as overruling Thomas v. Cook. And if some court recognizing the correct principle should overrule Wildes v. Dudlow it would deserve a place in this class also.

(D) Cases where the promisor does not become bound with the promisee, but the promisor becomes liable to pay the obligation of a third person, his main purpose in making the promise being to secure something of value for himself. Discussion of this class of cases will be found in Sections 58 to 64, supra.

Consideration of the cases convinces that by the employment of vague language and by lack of clarity of expression, the courts have left the law in hopeless confusion. The cases are not decided upon principle in many instances, but by blindly following illogical precedents, the courts have arbitrarily decided each case. The law in many cases has been applied to facts to which it is unsuited. The view in England without question is that Thomas v. Cook was overruled by Green v. Cresswell, which in turn was overruled, and Thomas v. Cook reinstated. This is the majority view in the United States, though many states adhere to Green v. Cresswell.58 Thomas v. Cook reached the correct conclusion, but the reasoning is not applicable to the facts, therefore improperly reasoned. Green v. Cresswell reached the correct conclusion by logical reasoning. Reader v. Kingham is correct both in its conclusion and ratio decidendi. Wildes v. Dudlow rests upon a false premise; therefore, it is both fallacious in its reasoning and erroneous in the result reached.

58 (1902) 2 Col. L. Rev. 104.

CHAPTER IV.

TEMPORARY AND CONTINUING GUARANTIES:
THEIR DURATION AND TERMINATION.

$76. Temporary, or limited, and
continuing guaranties.

$77. Rules for construction.
$78. Continuing as to time and as
to amount-one view.

§79. Second view.

§ 80. Third view.

§ 81. Must notice of acceptance be
given the guarantor? The

view of United States Su-
preme Court.

§ 82. Guaranty of a pre-existing
debt and a guaranty of fu-
ture credit.

§ 83. Where the guaranty is of future credit to be extended to the principal.

§ 84. View that extension of credit is acceptance of the offer to guarantee.

§ 85. Modification of requirement that notice of acceptance be given by promisee.

§ 86. Weight of American authority.

§ 87. Is the obligee required to notify the guarantor both of the extension of credit and that principal has defaulted?

§ 88. Conclusion as to notice of acceptance.

§ 89. Effect of guarantor's death on guaranty for a definite period.

§ 90. Revocation of the undertaking.

§ 91. Termination where no definite time is expressed.

§ 76. Temporary, or limited, and continuing guaranties. The length of time a contract of guaranty continues depends upon the agreement of the parties. As to time, such agreements are temporary, or, as sometimes called, limited, and continuing. A temporary or limited guaranty is one which is to cover a single or limited number of transactions of the principal. As defined by the Vermont Supreme Court:

"A continuing guaranty is one which is not limited to a single transaction, but which contemplates a future course of dealing, covering a series of transactions, as to which the guarantor has not bound himself for a definite period, and the consideration for which is divisible."

1 Ricketson v. Lizotte et ux. (1916) 90 Vt. 386, 98 Atl. 801, 802. In Merchants National Bank v. Cole

(1910) 83 Oh. St. 50, 93 N. E. 465, 466, it was said: "An unlimited guaranty may be defined as one that

877. Rules for construction. In the event the agreement is capable of being construed either as limited or continuing, most courts incline to the presumption that it is a limited guaranty, following the lead of Justice Story; but some courts, viewing the language employed as that of the promisor, feel it should be construed most strongly against him.*

The parties may agree to limit either the amount for which the guarantor is to be liable, or the time during which his liability is to continue. To determine whether the parties have made a limited or continuing contract requires a construction of the language employed in the light of surrounding circumstances. While the terms of a written agreement cannot be changed by parol evidence except in a direct proceeding to reform it, it may be read in connection with surrounding circumstances. In other words, the restriction on altering a written

is unlimited both as to time and amount, and a continuing guaranty is one that is not limited in time or to a particular transaction or to specific transactions, but is operative until revoked."

2 Morgan v. Boyer (1883) 39 Oh. St. 324, 326, 48 Am. Rep. 454.

3 Cremer v. Higginson et al. (1817) 1 Mason 323, Federal Cases No. 3,383.

4 Hartwell and Richards Co. v. Moss (1901) 22 R. I. 583, 48 Atl. 941; Belloni v. Freeborn (1875) 63 N. Y. 383.

5 This language from the opinion of Willes, J., in Heffield v. Meadows (1869) 4 C. P. (L. R.) 595, 598, is quoted approvingly in the opinion in White's Bank v. Myles (1878) 73 N. Y. 335, 29 Am. Rep. 157, 159: "The question in this case is whether the guarantee declared on was a continuing guarantee for 50 pounds, so as to be a security to the plaintiff to that extent for any balance which might become due to him in the course of his dealings with York,

or whether the security was limited
to a single transaction between the
plaintiff and York. It is obvious
that we cannot decide that question
upon the mere construction of the
document itself, without looking at
the surrounding circumstances to
see what was the subject-matter
which the parties had in their con-
templation when the guarantee was
given. It is proper to ascertain that
for the purpose of seeing what the
parties were dealing about, not for
the purpose of altering the terms of
the guarantee by words of mouth
passing at the time, but as part of
the conduct of the parties, in or-
der to determine what was the scope
and object of the intended guaran-
tee.

Having done this, it will be
proper to turn to the language of
the guarantee, to see if that lan-
guage is capable of being construed
so as to carry into effect that which
appears to have been the real inten-
tion of both parties." See Home
Savings Bank v. Hosie (1898) 119
Mich 116, 77 N. W. 625.

instrument by parol does not prevent the court from ascertaining what the parties themselves meant when the agreement was made so as to effectuate their intention."

§78. Continuing as to time and as to amount one view. The guaranty may be continuing as to time, or it may be continuing as to the amount. For instance, the guarantor may agree to be responsible "for all sales but our liability

not exceed in any event $3,000." Does this mean that the promise is only for the first $3,000 worth of goods sold to the principal, or does it mean that the promisor is liable for any $3,000 worth of goods owing by the principal on the sale of such goods! Even though the principal purchased $8,000 worth of goods altogether from the plaintiff, and had paid or secured the payment of $5,000 thereof, nevertheless the guarantor was held liable for $3,000. The view expressed in the case referred to was that when the amount of a guaranty is limited, but the time is not limited, it is a continuing guaranty, so as to cover a series of transactions." The rule of construction established by the cases following this view is first, that if the guarantor limits neither the time nor amount, his guaranty will be construed to cover but a single transaction; second, if the guarantor limits either the time or amount, but not both, his contract will be continuing as to the other. The reason for the first rule is that one would not be presumed to become a guarantor without limitation both as to time and amount, unless it necessarily follows from his agreement, or he has expressly so assumed a continuing obligation. As to the second, the reason is that if the guarantor has limited his contract to a single transaction, but not as to amount, or has placed a limitation on the amount but not the time, it can be implied that no limitation was intended by him, other than the one expressly mentioned. Courts following this view construe the contract of guaranty against the guarantor as strongly as it will permit. They feel that if a

6 Tottle v. Elgutter (1883) 14 Neb. 158, 15 N. W. 228, 45 Am. Rep. 103.

7 Trustees of Presbyterian Board of Publication v. Gilliford et al. (1894) 139 Ind. 524, 38 N. E. 404.

person intends to guarantee but a single transaction, he should be careful to say so.8

§ 79. Second view. Other courts, with more consideration for the guarantor, in the case of any doubt presume that the guaranty is not continuing either as to time or amount unless expressly assumed. By such a view, the guarantor, in the illustration given in Section 78, would be liable for the first $3,000 worth of goods sold the principal, and when he paid that sum, the defendant would be relieved from liability, no matter how many additional transactions might occur between the obligee and the principal. This is in accord with the common law that a guarantor is a favorite in law like the surety, and is never held beyond the express terms of his obligation.9