SURETYSHIP. An undertaking to answer for the debt, default, or miscarriage of an other, by which the surety becomes bound as the principal or original debtor is bound.
It is an accessory promise by which a person binds himself for another already bound, and agrees with the creditor to sat isfy the obligation, if the debtor does not. Hope v. Board, 43 La. Ann. 738, 9 South. 754.
The liability of indorsers of notes given by tobacco growers upon advances by ware housemen is held to be that of guarantors, not sureties; Carey v. Swan, 150 Ky. 473, 150 S. W. 534 ; so of a person who is not a party to a note which is to become a valid obligation against the maker upon its de livery to the payee, by writing his name upon the back of it; Bates v. Worthington, 163 Ill. App. 75.
The subjects of guaranty and suretyship are however, nearly related, and many of the principles are common to both. See GUARANTY. There must be a principal debt or liable, otherwise the promise becomes an original contract ; and, the promise be ing collateral, the surety must be bound to no greater extent than the principal. Sure tyship is one of the contracts included in. the statute of frauds ; 29 Car. II. c. 3.
The contract must be supported by a con sideration, like every other promise. With out that, it is void, apart from the statute of frauds, and whether in writing or not ; 4 Taunt. 117; Cobb v. Page, 17 Pa. 469; Bach arach v. McCurrach, 43 III. App. 584; Briggs v. Latham, 36 Kan. 205, 13 Pac. 129.
Kent, C. J., divides secondary undertakings into three classes: 1. Cases )in which the guaranty or promise is collateral to the prin cipal contract, but is made at the same time and becomes an essential ground of the credit given to the principal or direct debt or. Here there is not, and need not be, any other consideration than that moving be tween the creditor and original debtor. 2. Cases in which the collateral undertaking 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 and unconnect ed inducement. Here there must be some further consideration shown, having an im mediate respect to such liability; for the consideration for the original debt will not attach to this subsequent promise. 3. When
the promise to pay the debt of another aris es out of some new and original considera tion 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; Leonard v. Vreden burgh, 8 Johns. (N: Y.) 29, 5 Am. Dec. 317. This classification has been reviewed and af firmed in numerous cases; Mallory v. Gil lett, 21 N. Y. 415 ; Loomis v. Newhall, 15 Pick. (Mass.) 159.
The rule that the statute does not apply to class third has, however, been doubted; and it appears to be admitted that the prin ciple is there inaccurately stated. The true test is the nature of the promise, not of the consideration; Maule v. Bucknell, 50 Pa. 39; 94 E. C. L. R. 885. But see infra.
A simpler division is into two classes. Where the principal obligation exists be fore the collateral undertaking is made. Where there is no principal obligation prior in time to the collateral undertaking. In the last class the principal obligation may be contemporaneous with or after the col lateral 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 consideration. Moreover, there are other original undertakings out of the stat ute of frauds and valid though by parol, be sides his third class. These are where the credit is given exclusively to the promisor though the goods or consideration pass to another. Under this division, undertakings of the first class are original: 1. When the principal obligation is thereby abrogated. 2. When without such abrogation the prom isor for his own advantage apparent on the bargain undertakes for some new consider ation moving to him from the promisee. 3. Where the promise is in consideration of some loss or disadvantage to the promisee. 4. Where the promise is made to the prin cipal debtor on a consideration moving from the debtor to the promisor; Theob. Sur. 37, 49. The cases under these heads will be considered separately.