GUARANTY. An undertaking to answer for another's liability, and collateral thereto. A collateral undertaking to pay the debt of another in case he does not pay it. Shaw, C. J., Dole v. Young, 24 Pick. (Mass.) 252.
A provision to answer for the payment of some debt, or the performance of some duty in the case of the failure of some per son who, in the first instance, is liable for such payment or performance; Gallagher v. Nichols, 60 N. Y. 438 ; Bayl. Sur. & Guar. 2.
A promise to answer for the debt, de fault, or miscarriage of another person. First Nat. Bank v. Babcock, 94 Cal. 96, 29 Pac. 415, 28 Am. St. Rep. 94. See Gridley v. Capen, 72 Ill. 13.
It is distinguished from suretyship in be ing a secondary, while suretyship is a pri mary, obligation ; or, as sometimes defined, guaranty is an undertaking that the debtor shall pay ; suretyship, that the debt shall be paid. Or again, a contract of surety ship creates a liability for the performance of the act in question at the proper time, while the contract of guaranty creates a liability for the ability of the debtor to per form the act ; Bayl. Sur. & Guar. 3. Guar anty is an engagement to pay on a debtor's insolvency, if due diligence be used to obtain payment. Reigart v. White, 52 Pa. 440. But if the principal debtor is insolvent, the cred itor need not pursue him before suing the guarantor ; National Bank of Chester Coun ty v. Thomas, 220 Pa. 360, 69 Atl. 813.
The undertaking is essentially in the alter native. A guarantor cannot be sued as a promisor, as the surety may; his contract must be specially set forth. A guarantor warrants the solvency of the promisor, which an indorser does not ; President, etc., of the Oxford Bank v. Haynes, 8 Pick. (Mass.) 423, 19 Am. Dec. 334.
The distinction between suretyship and guaranty has been thus expressed : A sure ty is usually bound with his principal by the same instrument, executed at the same time, and on the same consideration. He is an original promisor and debtor from the begin ning, and is held, ordinarily, to know every default of his principal. Usually, he will
not be discharged, either by the mere indul gence of the creditor to the principal, or by want of notice of the default of we principal, no matter how much he may be injured thereby. On the other hand, the contract of the guarantor is his own separate undertak ing, in which the principal does not join. It is usually entered into before or after that of the principal, and is often supported on a separate consideration from that support ing the contract of the principal. The orig inal contract of his principal is not his con tract, and he is not bound to take notice of its non-performance. He is often discharged by the mere indulgence of the creditor to the principal, and is usually not liable un less notified of the default of the principal. Brandt, Sur. & Guar. § 1. See also, Mark land Min. & Mfg. Co. v. Kimmel, 87 Ind. 560; White's Adm'r v. Life Ass'n, 63 Ala. 419, 35 Am. Rep. 45 ; Chatham Nat. Bank v. Pratt, 135 N. Y. 423, 32 N. E. 236. A written guar anty which fails to show on its face the per son to whom the guaranty is made is void; Marston v. French, 17 N. Y. Supp. 509; and where a contract contains no guaranty, parol evidence of one is inadmissible; Van Winkle v. Crowell, 146 U. S. 42, 13 Sup. Ct. 18, 36 L. Ed. 880.
At common law, a guaranty could be made by parol ; but by the Statute of Frauds, 29 Car. II. c. 3, re-enacted almost in terms in the several states, it is provided that "No action shall be brought whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person, . . . unless the agree ment upon which such action shall be brought, or some memorandum or note there of, shall' be in writing, signed by the party to be charged therewith, or by some person thereunto by him lawfully authorized." While, under this statute "no action shall be brought" on a contract not in writing, etc., yet such a contract may be enforced by a court against an attorney, by summary pro ceedings; 1 Cr. & J. 374.