Guarantee

^ 1, v. (1) To engage to do a thing; to assure, stipulate, or covenant solemnly. "The -United States shall guarantee to every. State.. a Eepublioan (g. v.) Form of Government." 4 (3) To engage that another will do as he has promised.

3, n.

The person with whom such engagement is made.

Guarantor.

He from whom the engagement proceeds. To guarantee may be equivalent to to promise.'

Guaranteed.

Warranted, preferred: as, guaranteed stock.6 See Stock, 3 (8). Guaranty. (1) Solemn assurance, covenant, or stipulation that something shall be 1 Ferree v. School District, 76 Pa. 378 (1874). = Supervisors v. Pabst, 64 Wis. 244 (1885). ' F. garantir, to warrant, lit., to guard, keep. See G. * Constitution, Art. IV, sec.

4. •Thayer i>.

Wild, 107 Mass. 458 (1871); Mo Naughton or be done: as, the guaranties in the Constitution and Amendments thereto. Quaranty clause. Specifically, section four of article four of the Constitution, guaranteeing a republican form of government to each State. See Guarantee, 1. (3) Distinctively, a promise " to answer for the debt, default or miscarriage " of another person. This by the statute of frauds (g. v.) must be in writing and be signed by the guarantor. The contract by which one person is bound to another, for the fulfillment of the promise or engagement of a third party.' Usually, a collateral undertaking to pay the debt of another in case he does not pay it.2 An undertaking by one person that another shall perform his contract or fulfill his obligation, or that, if he does not, the giiarantor will do it for him.^ May also mean security or lien; as, in an agreement that lumber should be held as guaranty for the payment of a debt.* An engagement to pay in default of solvency in the debtor, provided due diligence be used to obtain payment from him. A contract of " suretyship " is a direct liability to the creditor for the act to be performed by the debtor; whereas a "guaranty" is a liability only for his ability to perform this act. A "surety " assumes to perform the contract for the principal debtor if he should not; a "guarantor" undertakes that his principal can perform, that he is able to perform. The undertaking of a "surety" is inunediate and direct, that the act shall be done, and, if not done, then he is to be responsible at once; but from the nature of the imdertaking of a "guarantor," nonability (insolvency) must be shown.^ A " guarantor " insures the solvency of the debtor; a " surety " Insures the debt itself. A surety must demand proceedings, with notice that he will not continue bound unless they are instituted; whereas a guarantor may rely upon the obligation of the creditor to use due diligence to secure satisfaction of his claim. ^ To enable a creditor to enforce a contract of guaranty, he must exercise "due diligence" to enforce payment from the principal. That is, the creditor must bring suit within a reasonable time after the ma-, turity of the claim, and duly prosecute the same to '2 Pars. Contr. 3, 26; Story, Prom. Notes, § 457; 3 Kent, 121. 'See Dole v. Young, 24 Pick. 252 (1837), Shaw, C. J.; Parker v. Culvertson, 1 Wall. Jr. 160 (1846); Hill v. Smith, 34 How. 286 (1858). 'Gridley v. Capen, 73 Ul. 13 (1874), Breese, C. J. • Wilkie V. Day, 141 Mass. 72 (1886). » Reigart v. White, 52 Pa. 440 (1866), Agnew, J. 'Kramph v. Hatz, 52 Pa. 589 (1866), Woodward, C. J. judgment and execution, unless it appears that such proceedings can produce no beneficial results.' Absolute guaranty; conditional guaranty. A guaranty that a note is collectible is a conditional promise binding upon the guarantor only in case of diligence. To perfect the obligation so as to render him liable thereon, the guarantee must use diligence in the endeavor to collect his note, for it is a condition precedent. The inchoate obligation does not become absolute until the guarantee has performed the condition on his part.

2 Contimiing guaranty.

An undertaking to be responsible for moneys to be advanced or goods to be sold to another from time to time.' General guaranty; special guaranty. A special guaranty operates only in favor of the person to whom it is addressed; a general guaranty is open for acceptance by the public generally. G<iaranties are sometimes further classified as such as are limited to a single transaction, and such as embrace continuous or successive dealings. A guaranty is a contract in and of itself; but it also has relation to some other contract or obligation with reference to which it is collateral; and it always requires a consideration. When executed at or about the time of the execution of the main contract, as part of one transaction, one consideration may support both contracts; so also where the guaranty is executed in pursuance of the assignment of the main contract.* The real party in interest is now entitled to maintain an action for damages arising from a breach of such contract in his own name, although he was not originally privy to it. That is, both equitable and legal assignments now are equally cognizable in a coini: of law. A special guaranty -contemplates a trust in the addressee, and no cause of action arises thereon, except upon compliance with its conditions by such person. Until a right of action has arisen, the guaranty is not assignable. A consideration is necessary; if it is not acknowledged, it must be proved. Guaranties are construed so as to accord with the apparent intention of the parties. Where the lan- ' National Loan, &c.

Society v. Lichtenwalner, 100 Pa. 103 (1883), cases, Paxson, J.; 26 Am. Law Eeg. 129-47, 201-318 (1687), cases; 18 F. R. 136; 37 Conn. 37; 2 N. Y..949; 60 id. 444; 11 Ohio St. 168; 13 R. L 119; 7 Humph. 539; 20Vt.

503. "Edwards, Bills, 238; 2 Daniel, Neg. Inst. § 1769; Allen V. Rundle, 60 Conn. 20-23 (1882), cases. s Buck V. Burk, 18 N. Y. 343 (1858), Selden, J.; Addison, Contr. 668. guage is ambiguous, the surrounding circumstances may be looked at. When the meaning is ascertained, the guarantor is entitled to the application of the strict rule governing the contracts of sureties, and cannot be held beyond the plain terms of the contract.' See further Constrdction, Liberal. As a principle, a guaranty is not negotiable; it may, perhaps, be made so by negotiable language.'' The negotiation of a bill or note is not a guaranty. ^ The rule requiring notice of the acceptance of a guaranty applies only where the instrument is merely an offer or proposal, acceptance of which Is necessary to mutual assent. Made at the request of the guarantee, its delivery constitutes the contract. The same result follows where the agreement to accept is contemporaneous with the guaranty, and is its consideration. An unconditional guaranty of advances is a waiver of demand of i>ayment, and notice of the debtor's default to the amount of the advances, etc. Delay in giving notice, when required, is a defense to an action to the extent of the loss or damage proved. Notwithstanding that the contract is the obligation of a surety, it is to be construed as a mercantile instrument in furtherance of its spirit, and, literally, to promote the convenience of commercial intercourse.* See Frauds, Statute of.

III (2); Letter, 3, Of credit; Promise, Collateral; Surety; Warrants'.