SURETYSHIP. An undertsking to an swer for the debt, default, or miscarriage of another, by which the surety becoines bound as the principal or original debtor is bound. It differs from guaranty in this, that suretyship is a primary obligation to see that the debt Is paid,• while guaranty is a collateral under taking, essentially in the alternative, to pay the debt if the debtor does not pay it. 24 Pick. Mass. 252. And accordingly a surety inay be sued as a promisor to pay the debt, while a guarantor must be sued specially on his contract. 8 Pick. Mass. 423.
While guaranty applies only to contracts not under seal, and principally to mercantile obligations, suretyship may apply to all obli gations under seal or by parol. The subjects are, however, nearly related, and many of the , principles are common to botb. There must be a .principal debtor liable, otherwise the promise becomcs an original contract; and, the promise being collateral, the surety must be bound to no greater extent than the principal. Suretyship is one of the contracts Included in the Statute of Frauds, 29 Car. II. c. 3.
2. Kent, C. J., divides secondary under takings into three classes:---First, cases in Which the guaranty or promise is collateral to the principal contract, but is made at the same time and becomes an essential ground of the credit given to the principal or direct debtor. Here there is not, and need not be, any other consideration than that moving between the creditor and original debtor. Second, cases in which the collateral under taking is subsequent to the creation of' the debt, and was not the inducement to it, though the subsisting liability is the ground of the promise without any distinct aud un connected inducement. Here there must be some further consideration shown, having an immediate respect to such liability; for the oonsideration for the original debt will not attach to this subsequent promise. Third, when the promise to pay the debt of another arises out of some new and original consider ation of benefit or harm moving between the newly contracting parties. The two first classes of cases are within the Statute of Frauds; the last is not. 8 Johns. N. Y. 29. This classification has been reviewed and af firmed in numerous cases. 21 N. Y. 415 ; 21 Me. 459; 15 Pick. Mass. 159. A simpler di
vision is into two classes. First, where the principal obligation exists before the collateral undertaking is made. Second,• where there is no prineipal obliption prior in time to the collateral undertaking. In the last class the principal obligation may be contemporaneous with or after the collateral undertaking. The first class includes Kent's second and third, the second includes Kent's first, to which must be added cases where the guaranty referring to a present or future principal obligation does not share the consideration thereof, but proceeds on a distinct considera tion. Moreover, there are other original un dertakings out of the Statute of Frauds and valid though by parol, besides his third class. These are where the credit is given exclu sively to the promisor though the goods or consideration pass to another. Under this division, undertakings of the first class are original: first, when the principal obliption is thereby abrogated; second, when without such abrogation the promisor for his own ad vantage apparent on the bargain undertakes for some new consideration moving to him from the promisee; third, where the promise is in consideration of some loss or disadvan tage to the promisee; fourth, where the pro mise is made to the principal debtor on a consideration moving from the debtor to the promisor. Theobald, Surety, 37 et seq., 49 et seq. The cases under these heads will be considered separately.
3. First, where the principal obligation is pre-existent, there must be a new consider ation to support the promise; and where this censideration is the discharge of the principal debtor, the promise Is original and nut colla teral, as the first requisite of a collateral pro mise is the existence of a principal obligation. This has been held in numerous caees. The discharge may be by agreement, by novation or substitution by discharge or final process, or by forbearance under certain circuin. stances. 5 Barnew. & Ald. 297 ; 1 Q. B. 933; 4 Bus. & P. 124; 11 'Vices. & W. Exch. 857; 7 Johns. N. Y. 463 ; 8 id. 370; 21 N. Y. 412; Hill & D. N. Y. 109; 19 Barb. N. Y. 258 ; 5 Cush. Mass. 488: 8 Gray, Mass. 233; 13 Md. 141; 5 Chandi. Wisc. 61; 28 Vt. 135; 29 id. 169 ; 10 Ired. No. C. 13 ; Browne, Stat. Frauds, 166, 193.