CHAPTER XV.

Contract of guarantee must be in writing.

Need not state the consideration.

ON GUARANTEES.

BRITISH LAW.

A CONTRACT of guarantee, or a contract to answer for the debt, default, or miscarriage of another person, must be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorised (a). The statute applies not only to collateral undertakings by any party to be answerable for the subsisting debts of another, but also to undertakings made before the debt accrues; in other words, it applies to promises made to the persons to whom another is already, or is to become, answerable (b).

It is not necessary that the contract of guarantee should state the consideration for which it is given. The law on the subject was changed by the Mercantile Law Amendment Act, which declared "that no special promise to be made by any person to answer for the debt, default, or miscarriage of another person, being in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorised, shall be deemed invalid to support an action, suit, or other proceeding to charge the person by whom such promise shall have been made, by reason only that the consideration for such promise does not appear in writing, or by necessary inference from a written document" (c). The duration of the liability of the surety will depend upon the terms of the contract, or upon the recital of the bond entered into by the party guaranteed (d). The guarantee Where a guarantee is given for a firm, whether to secure the faithful services of a clerk, or the repayment of advances to the firm, should any change take place in the firm by death or change of partners, the guarantee is at an end, unless it appears other

Duration of liability.

ceases when the firm changes.

(a) 29 Car. 2, c. 3, s. 4, as to Scotland; 19 & 20 Vict. c. 60, s. 6.

(b) Hargreaves v. Parsons, 13 M. &

(c) 19 & 20 Vict. c. 97, s. 3.

(d) Berwick v. Oswald, 3 E. & B. 653; Augero v. Keen, 1 M. & W. 390.

entitled to the assignment of all

securities in

the hand of the creditor.

wise from the terms of the contract. The law upon the subject has been declared in the Mercantile Law Amendment Act (a). The non-performance by the creditor of his express or implied What will engagements with the surety, or any alteration or release of the discharge a Surety. principal obligation, will discharge the surety (b). But mere Surety is forbearance will not discharge the surety (b). Every person who, being surety for the debt or duty of another, pays such debt, or performs such duty, is entitled to have assigned to him all the securities held by the creditor in respect of such debt, and becomes entitled to stand in the place of the creditor, and to use all the remedies in any action or proceeding, in order to obtain from the principal debtor, or any co-surety, indemnification for the advances made, and the loss he has sustained (c). Where any person has become surety for any principal debtor, it is not necessary for the creditor to whom such security is granted before calling on the surety for the payment of the debt to take proceedings against the principal debtor, but it is competent to such creditor to proceed against the principal debtor and the security, or against either of them (d).

The contract of guarantee is founded on good faith. In all cases, if with the knowledge or assent of the creditor any material part of the transaction between the creditor and his debtor is misrepresented to the surety, the misrepresentation being such that but for the same having taken place either the suretyship would not have been entered into at all, or, being entered into, the extent of the surety's liability might be thereby increased, the security so given is void at law, on the ground of fraud (e).

FOREIGN LAW.

France. The contract of guarantee or cautionnement exists when a debtor gives to his creditor a surety who will bind himself to pay in case the debtor should not. The cautionnement includes-1st. The obligation of the debtor to furnish the security; 2nd. The obligations to which the security subjects

(a) 19 & 20 Vict. c. 97, s. 4; and as to Scotland, 19 & 20 Vict. c. 60, s. 7.

(b) Orme v. Young, Rolt. 84; Goring v. Edmonds, 6 Bingh. 94; Musket

v. Rogers, 5 Bing. N. C. 728.

(c) 19 & 20 Vict. c. 97, s. 5.
(d) Ibid. c. 60, s. 8.

(e) Stone v. Compton, 5 Bing. N. C.
157.

No necessity ditor to prothe debtor.

for the cre

ceed against

Misrepresen

tation or fraud

annuls the

contract.

himself. As to the first, the person who has promised to give security cannot withdraw from his engagement, but he instead give a pledge equivalent to the guarantee promie The contract of guarantee depends entirely on the agreemen of the contracting parties. The contract must be expres though it is not necessary that it should be in writing; it may be proved by witnesses in matters of trade, provided there is special law rendering it necessary to be in writing. In either case, the intention of the party to be a surety must be cleari expressed. If the surety has not limited his engagement to a specific sum, he must settle the whole sum when it becomes dy The surety has a right to demand that the creditor shall first proceed against the debtor, because he bound himself only in the event that the debtor should not pay. The surety is discharged in case of fraud or misrepresentation, and he has a right to be reimbursed of what he has paid in consequence of his guarantee (u).

(a) Pardessus, Droit Commercial, vol. ii. p. 90.

CHAPTER XVI.

ON NEGOTIABLE INSTRUMENTS.

SECTION I.

DOCK WARRANTS.

BRITISH LAW.

A DOCK WARRANT is an engagement by the wharfinger to Definition. deliver the goods therein specified to the consignee, or any one he may appoint; and when a delivery order is granted for them, it operates as an authority to the person in whose possession the goods are, to deliver such goods. But unless the sale be intimated to the actual custodier of them, and the wharfinger has agreed to hold them for the assignee, no change in the ownership will have taken place (a). And at any time before such order has been presented and accepted by the assignee, it may be countermanded by the seller, and the lawful acceptance of it prevented.

As soon as the delivery order has been presented and accepted, the goods cease to be in the order of the vendor, and the wharfinger becomes the agent or trustee of the purchaser (b). Though even then the delivery order may be countermanded in case of the insolvency of the purchaser, by the exercise of the right of stoppage in transitu, so long as actual possession has not been given of the goods, and provided the rights of solvent sub-purchasers have not intervened (c).

A dock warrant is not a conclusive title to the property of the goods; therefore, when it is fraudulently obtained, and the relation of vendor and vendee has never subsisted, the property in the goods would not pass by it. The mere possession of the

(a) Farina v. Holme, 16 M. & W. 119.

(b) Harman v. Anderson, 2 Camp. 242; Dickinson v. Marrow, 14 M. &

VOL I.

W. 713.

(c) Hanson v. Meyer, 6 East, 265; Hammond v. Anderson, 4 A. & P. 69 ; Swanwick v. Sothern, 9 Ad. & E. 895.

L L

When will the property pass.

Dock warrant clusive title to property.

not a con

goods, with no further indicia of title than a delivery order i not sufficient to entitle the bona fide pawnee of the person fraudulently obtaining possession from the true owner to resis the claim of the latter in an action of trover (a).

SECTION II.

PUBLIC STOCK.

Every person inscribed on the books of the Bank of England or of the Bank of Ireland as proprietor of a share in the public stock (except the trustee of any share) may obtain a certificate of title to the said share, having annexed coupons entitling the bearer to the dividends. No certificate, however, is granted in respect of any sum of stock not being £50 or a multiple of £50, or in respect of any larger amount than £1000. The stock certificate will be issued only in respect of the £3 per cent. Consolidated Annuities, reduced £3 per cent. Annuities, and the new £3 per cent. Annuities. And the coupon will comprise the dividends for a period of not less than five years commencing from the date of the certificate. A stock certificate, unless a name is inscribed therein, will entitle the bearer to the stock therein described, and will be transferable by delivery. But the bearer of a stock certificate may convert the same into a nominal certificate by inserting therein in the manner prescribed the name, address, and quality of some person; and when so rendered nominal the stock shall cease to be transferable; and the person named therein, or some person deriving title from him by devolution in law, shall alone be recognised by the bank as entitled to the stock described in the certificate. nominee in a nominal stock certificate is not entitled to have the same renewed as nominal; but he shall, on delivery up to the bank of his certificate, and of all unpaid coupons belonging thereto, be entitled to receive in exchange from the bank a stock certificate to bearer. The nominee in a nominal stock certificate and the bearer of a stock certificate to bearer may, on the like delivery, require to be registered in the books of the bank as a holder of the stock described; and thereupon the stock shall be re-entered in the books kept by the bank for the entry of transferable stock, and become transferable, and the

(a) Kingsford v. Merry, 1 H. & N. 503; 26 L. J. Ex. 83.

The