public law the social demand has been steadily recognized and broadly interpreted. Two instances may be given, because the decisions show a far-sighted comprehension of problems likely to arise from the modern tendency toward urban living.80 In one case the definition of a city purpose was made so broad and so flexible that developing views can readily be met in the future. 81 In another, which involved the validity of zoning regulations, the inevitable encroachment on individual rights under modern city conditions is recognized and sanctioned. 82 In the field of private law-and the attitude is entirely sane-the disposition to broaden has been more guarded, particularly so in commercial and banking cases. Certainty in the law-itself a social need-has in these cases had greater weight than any other demand. For instance, under a letter of credit the defendant bank paid a draft accompanied by a bill of lading, which described the article shipped only when supplemented by an invoice issued by the vendor, who was not the shipper. The article received by the plaintiff was not the article so described. The court was asked to say that the defective description in the bill of lading might not be aided by an invoice made out by the vendor. Judge Hiscock says:83

"The whole process of authorizing banks to issue letters of credit under which the purchase price of goods is often paid for account of the vendee before he has had a chance to examine them is largely based on confidence in the honesty of the vendor. If the vendee is suspicious of dishonesty he can guard against it by appropriate clauses in his contract. But certainly the courts ought to exercise no power of embarrassing or confusing widespread processes of commercial life by inserting in such contracts as this one clauses which it may deem in a particular case might have been quite properly placed there but which as matter of fact the parties were content to disregard and omit." In another instance, plaintiff sought to recover damages sustained by the delay of defendant in establishing in Bucharest a credit for 2,000,000 lei. The damage claimed was a decline in the market value of lei. The answer in the opinion is that "it is impossible to say that the lei, measured by lei, had declined in market value." In other words, the lei in Bucharest had no market value. Since the only market for standards of value recognized by the business world is the market of bankers who deal in exchange, the phrase "market value”, as used in the complaint, might perhaps have been

80 Cf. People v. Colantone, 243 N. Y. 134, 152 N.E. 700 (1926), where the settled rule of evidence as to proof of reputation for good character is modified to meet urban conditions.

81Schieffelin v. Hylan, 236 N. Y. 254, 140 N. E. 689 (1923).

82 Matter of Wulfsohn v. Burden, supra note 56.

83 Laudisi v. American Exchange Nat. Bank, 239 N. Y. 234 at 242 146 N. E. 347 (1924).

construed to have reference to that market, and not to a market in Bucharest which did not exist. The established rule, however, was adhered to.84

The very recent case of Mirizio v. Mirizio presented a strong appeal to Judge Hiscock's inherent sense of right and justice. It was open to the Court to so construe the word "misconduct" as to give flexibility and choice of decision in individual cases. By the term itself a standard of conduct was involved. But public policy which has attached definite duties and obligations to the contract of marriage, created a demand for rigidity which outweighed that for the supple test of prevailing opinion.

Since the tendencies of the Court is the subject matter of this paper, it has touched the attitude and work of the Chief Judge only as they seem to be related to those tendencies. The other things which one would like to say of him, one passes by. To lead a great court at a critical time was Judge Hiscock's task. He and his associates were called upon to know and to measure new forces and to determine wisely the extent to which they should be guided by them. It requires "suppleness of mind and heart to see the world from others' eyes, to think their thoughts with them, to measure the weight and meaning of their motives and desires." When one is to deal with "the demands or claims or desires involved in social life" rather than with the old, fixed, familiar rights and duties, something more than logical discrimination is needed. Knowledge of men, experience in affairs, insight into matters of government, breadth of understanding, and a vision of the future-call it imagination if you will-are qualities which the judge must have, if he is to distinguish between demands which are merely of the moment and those which are of tomorrow. The distinction is vital.86

Another great judge once said:87

"As law embodies beliefs that have triumphed in the battle of ideas and then have translated themselves into action, while there is still doubt, while opposite convictions still keep a battle front against each other, the time for law has not come; the notion destined to prevail is not yet entitled to the field. It is a misfortune if a judge reads his conscious or unconscious sympathy with one side or the other prematurely into the law * **”. To me it seems that the recognition of and steadfast holding to some such truth constitute one-if not the greatest-of the services which Judge Hiscock has rendered to the State and to the law.

84 Richard v. American Union Bank, 241 N. Y. 163, 149 N. E. 338 (1925). 85242 N. Y. 74, 150 N. E. 605 (1926).

86"A great part of the difficulties in which, at times, courts find themselves involved, arises from a failure to look forward and see what will be the result of the rules of law they declare."-Dissenting opinion of Cullen, C. J., in People ex rel Stabile v. Warden, 202 N. Y. 138, 155, 95 N. E. 729 (1911).

87 HOLMES, COLLECTED LEGAL PAPERS (1920) 294, 295.

The History and Economics of

Suretyship*

BY WILLIS D. MORGANT

EARLY HISTORY OF THE CONTRACT OF SURETYSHIP

The contract of suretyship antedates the Christian era by more than 2500 years.1 The Library of Sargon I, king of Accad and Sumer (circa 2750 B. C.) contains a tablet which records the making of such a contract. This contract, although made nearly 4700 years ago, contains features which are strikingly modern. A farmer, who resided in the suburbs of Accad, had been drafted into the military service of the king. He entered into a contract with a second farmer by the terms of which the latter agreed to cultivate the soldier's farm for the period of his absence. He also agreed to fertilize the land properly and to maintain the property and return it to the owner upon the expiration of the lease, in as good condition generally as when received by him. The lessee, in return, was to receive onehalf of the produce from the farm. The owner, of course, would be in no position to personally supervise the performance of the contract by his lessee, and, in order that he might be properly secured, the tablet states that a merchant of the city of Accad, as a surety for the lessee, guaranteed the performance of this contract by him.2 But contracts of suretyship were probably in common use long prior to the reign of Sargon I. The code of Hammurabi (circa 2250 B. C.), enacted only 500 years after the time of Sargon I, provided for a system of state fidelity insurance which belonged rather to the 19th century than to the year 2250 B. C. Sections 22 and 23 of this code read:

*This article will appear in the Cornell Law QUARTERLY in two installments. The first installment, which appears herein, covers the history of the contract of suretyship from the year 2750 B. C. to 1720 and that of the corporate surety from 1720 to 1875. The second installment will continue the history of the corporate surety to date and will discuss the social and economic significance of the corporate surety.

†Member of the New York Bar.

STORY, CONTRACTS, (2d Ed. 1874) p. 319, note 1; William H. Lloyd, The Surety (1918) 66 U. Pa. L. REV., 40; Earl C. Arnold, The Compensated Surety (1926) 26 COL. L. REV. 171.

See Jarvis W. Mason, Radio Talks, Season 1923-1924, p. 5; Jarvis W. Mason, Origin and History of Suretyship, p. 4. This tablet was not a memorandum of the agreement. The names of the parties, if such were the case, would have been set out. Mr. Mason, in both these pamphlets, mentions another contract from the same source and period.

22. "If a man has committed highway robbery and has been caught, that man shall be put to death."

23. "If the brigand be not captured, the man who has been robbed shall, in the presence of God make an itemized statement of his loss, and the city and the governor, in whose province and jurisdiction the robbery was committed, shall compensate him for whatever was lost."4

Under this latter section, the city and the governor were placed in the position of a surety. But more than this, the section applies the insurance principle to contracts of suretyship; it substitutes group responsibility for individual responsibility. The city insured the fidelity of any person who came within its jurisdiction and, in turn, every person who came within the jurisdiction of the city was insured against the dishonesty of others. The persons who would benefit most directly from this legislation, however, would be the inhabitants of the city and, to meet the expenses incident to acting in this new capacity, the city would be forced to increase its taxes. The persons who would bear this burden of taxation would also be, we assume, the inhabitants of the city. If, in the kingdom of Hammurabi, taxes on property were apportioned according to the total value of the property owned by each individual, (and this is not improbable) the beneficiaries of this state insurance may be said to have paid a premium, in the form of a tax, the computation of which rested upon a substantial scientific basis-the amount of property protected against embezzlement or theft. But whether or not this was the case, it is evident that under this section of the code of Hammurabi the city performed functions which are analogous to those now performed by the corporate surety. The surety company, a product of the 19th century, had been anticipated by more than 4000 years.

The contract of suretyship is usually an instrument of trade. By section 32 of this code, however, it was made to serve the purposes of war. This section provides:

"If such an official has been assigned to the king's service (and captured by the enemy) and has been ransomed by a merchant and helped to regain his city, if he has had means in his house to pay his ransom, he himself shall do so. If he has not had means of his own, he shall be ransomed by the temple treasury (that is, the temple treasury shall reimburse the merchant)." If there has not been means in the temple treasury of his city,

'C. H. W. JOHNS, BABYLONIAN AND ASSYRIAN LAWS, CONTRACTS AND Letters (Library of Ancient Inscriptions) 46. For a history of this inscription see page 5 of the above.

'BOTSFORD, SOURCE BOOK OF ANCIENT HISTORY, 29.

"Writer's insertion.

the state will ransom him." (that is, the state will reimburse the merchant).

Under this section, the temple treasury of the city, as surety for the official, was subject to all the duties of a surety, and the state, as a surety for the temple treasury, was also subject to those duties. It should be observed, however, that the temple treasury and the state were both denied an important right of the surety. Under this section, the official was relieved of all liability if he had no means of payment. The very contingency, upon the happening of which the temple treasury would be called upon to pay, terminated the liability of the official. The temple treasury, therefore, would not be in a position to demand recoupment from a principal who, by the express provision of the section, was not primarily liable. Thus the very important right of the surety, that of reimbursement, was denied to the temple treasury. Likewise, this right was denied the state. In all other respects, however, both the temple treasury and the state were in the position of a surety.

It is a justifiable inference that the common use of contracts of suretyship over many preceding centuries was the basis of and the inspiration for such legislation.

If we are to give credence to the Greek historian Herodotus, who is not always to be relied upon, the surety played an important role in the Babylonian marriage. Every year the maidens of marriageable age were assembled in the market place to be sold into marriage by a crier. He first selected the most beautiful maiden of the group and sold her to the highest bidder. He then selected the next in beauty and disposed of her in like manner. This procedure was continued until the quality of the group had so far deteriorated that the most beautiful of those remaining unsold would not draw a bid. She was then sold to the man who demanded the least dowry as a condition to taking her as his wife. In this way all of the crippled and the ugly were disposed of, their dowries being paid out of the proceeds from the sale of their more favored sisters. But whether she was beautiful and without dowry or ugly or crippled and commanding a large dowry, "No man," says the historian, "could take away the woman whom he had purchased without first producing a surety that he would make her his wife." Even our modern surety company, with its 500 odd varieties of bonds, cannot boast of a bond of this nature. The fact that no written contracts of suretyship are to be found executed prior to 670 B. C., leads to the belief that such contracts

C. H. W. JOHNS, BABYLONIAN AND ASSYRIAN LAWs, Contracts and Letters (Library of Ancient Inscriptions) 47.

"Herodotus Vol. 1, 196.