Default of Principal Debtor.-Damages.

433 under the name of a firm,-and no promise to answer for the debt, &c., of such a firm or person so trading,-shall be binding on the maker in respect of anything done or omitted to be done, after a change in any one, or more, of the firm or persons so trading, unless the intention, that the promise shall continue to bind, notwithstanding such change, shall appear by express stipulation, or by necessary implication, from the nature of the firm or otherwise. This section is only declaratory of the existing law. Backhouse v. Hall, 6 B. & S. 507; 34 L. J., Q. B. 141. Three persons carried on the business of shipbuilders, under the names of G. & W. Hall. No person of that name had been in the partnership for some time, and the plaintiff and defendant being both aware of the constitution of the partnership, the defendant gave the plaintiff the following guarantee: "In consideration that you have, at my request, consented to open an account with the firm of G. & W. Hall, shipbuilders, I hereby guarantee the payment to you, of the moneys, that at any time may become due, not exceeding 5000l. :" held, that the guarantee ceased on the death of one of the partners, as a contrary intention did not appear, by necessary implication, or from the nature of the firm. S. C.

A guarantee by writing, under hand only, for 12 months for the payment of all bills the plaintiff might discount for D., to the extent of 600l., was held revocable by a notice given during the 12 months, although some discount had been made and repaid before notice. Offord v. Davies, 12 C. B., N. S. 748; 31 L. J., C. P. 319. As to withdrawal from a guarantee, see further Burgess v. Eve, L. R., 13 Eq. 450; Phillips v. Foxall, L. R., 7 Q. B., 666. But, a guarantee the consideration for which is given, once for all, cannot be determined by the guarantor, and does not cease on his death. Lloyds' v. Harper, 16 Ch. D. 290, C. A. The death alone, of the guarantor, does not revoke an engagement to guarantee the balance of a running account until notice. Bradbury v. Morgan, 1 H. & C. 249 ; 31 L. J., Ex. 462. It is, however, in the absence of express provision, revoked as to subsequent advances by notice of the guarantor's death. Coulthart v. Clementson, 5 Q. B. D. 42; but, not as against the survivor of two joint and several co-sureties. Beckett v. Addyman, 9 Q. B. D. 783, C. A. See also Harriss v. Fawcett, L. R., 8 Ch. 866.

Default of principal debtor.] The plaintiff must prove the default of the principal debtor, against which he has been guaranteed by the surety. Admissions made by the principal debtor, or a judgment or award obtained against him by the plaintiff, are not evidence against the surety. Ex parte Young, 17 Ch. D. 668, C. A.

Damages.] A guarantee for payment, by the acceptor, of a bill of exchange, includes interest. Ackerman v. Ehrensperger, 16 M. & W. 99. "We guarantee that 400l. shall be duly paid, in the proportion of 2001. each," signed by two persons, does not make them jointly liable to 400l., but is a separate contract as to 2001. by each. Fell v. Goslin, 7 Exch. 185; 21 L. J., Ex. 145. An agreement to be answerable for all the costs of, and incidental to, an action to be brought by the plaintiff, entitles him to recover the costs of his own solicitor, though not actually paid at the time of suing on the guarantee. Spark v. Heslop, 1 E. & E. 563; 28 L. J., Q. B. 197. The defendant promised to pay the plaintiffs "300l. to secure an advance now or hereafter on a banking account with A." They advanced more than 3001. to A., who paid his creditors 16s. in the £ only; it was held that the defendant's promise was only to repay an advance of 300l., and that he was therefore entitled to the benefit of the dividend thereon. Gee v. Pack, 33 L. J., Q. B. 49; following Bardwell v. Lydall, 7 Bing. 489; Thornton v.

VOL. I.

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McKewan, 1 H. & M. 525; 32 L. J., Ch. 69; Hobson v. Bass, L. R., 6 Ch. 792; Gray v. Seekham, L. R., 7 Ch. 680. The surety may, however, waive his right to the share of the composition by the terms of the contract of suretyship; Ex parte National Provincial Bank of England, 17 Ch. D. 98, C. A. ; Ellis v. Emmanuel, 1 Ex. D. 157, C. A.; as where the guarantee is given for a limited amount, and is less than the debt, the amount of which is then ascertained; S. C. Where a guarantee, given to A., appears to have been so given to him as trustee for B., A. can recover thereon the same damages B. could have recovered if it been given to B. Lloyds' v. Harper, ante, p. 433.

Defence.

The want of a written memorandum must be pleaded specially. Rules, 1883, O. xix., r. 20, ante, p. 283.

The mere omission, on the part of the principal creditor, to enforce his rights against the principal debtor, does not discharge the surety. Mansfield Union v. Wright, 9 Q. B. D. 683, C. A.

On

Concealment.] The surety may sometimes rely on the concealment of material particulars, by the principal, at the time the contract was made, as a fraud. Lee v. Jones, 14 C. B., N. S. 386; 17 C. B., N. S. 482; 34 L. J., C. P. 131, Ex. Ch. So, in the case of concealment during the pendency of a continuing guarantee. Phillips v. Foxall, L. R., 7 Q. B. 666; Sanderson v. Aston, L. R., 8 Ex. 73. The duty of the principal must always ultimately be measured by the jury, but the judge will have to point out, what their duty is, in this respect; the language in which he ought to do this has not, however, yet been very precisely settled. A direction that a concealment must be "wilful and intentional, with a view to the advantage they (the principals) were thereby to receive," is wrong. Railton v. Mathews, 10 Cl. & F. 934. See further Davies v. L. & Provincial Marine Insur. Co., 8 Ch. D. 469. the other hand, the creditor is not bound to communicate every circumstance calculated to influence the discretion of the surety in entering into the required obligation; Owen v. Homan, 4 H. L. C. 997; for, a surety is only entitled to disclosure of any arrangement that may exist between the debtor and creditor, that may make his position different from what he would reasonably expect; and hence, if a person undertakes to be responsible for a cash credit given to one of the banker's customers, the banker is not bound voluntarily to communicate that the intention is to apply the credit to an old debt due from the customer to the banker; Hamilton v. v. Watson, 12 Cl. & F. 109, per Ld. Campbell. Accord. N. British Insur. Co. v. Lloyd, 10 Exch. 523; 24 L. J., Ex. 14. So, where the guarantee was a continuing one, given to a bank to secure advances "not exceeding in the whole 1,000l.," it was held no defence, to an action to recover 1,000l., on the guarantee, that the bank had made advances together exceeding 1,000l. Laurie v. Scholefield, L. R., 4 C. P. 622.

Alteration of position of parties.-Giving time, &c.]. Any alteration by a binding agreement in the relative position of the creditor and principal debtor, whereby the latter is released, or the remedy against him is suspended, or the risk of the surety varied, without the surety's assent, will be a discharge of the guarantee. Polak v. Everett, 1 Q. B. D. 669, C. A.; Lewis v. Jones, 4 B. & C. 506, and 515, n.; Cragoe v. Jones, L. R., 8 Ex. 81; and see cases cited ante, pp. 369, 370. So, any material alteration in the terms of an agreement between the creditor and principal debtor will discharge the surety, provided the agreement forms the basis of the contract of suretyship;

Alteration of Position of Parties.

435

N. W. Ry. Co. v. Whinray, 10 Ex. 77; 23 L. J., Ex. 261; but, not otherwise; Sanderson v. Aston, L. R., 8 Ex. 73. See further Holme v. Brunskill, 3 Q. B. D. 495, C. A.

The contract for suretyship is sometimes severable, so that it is only discharged as to part, by an alteration in the position of the creditor and the principal debtor. Harrison v. Seymour, L. R., 1 C. P. 518; Skillett v. Fletcher, L. R., 1 C. P. 217; L. R., 2 C. P. 469, Ex. Ch.; Croydon Commercial Gas Co. v. Dickinson, 2 C. P. D. 46, C. A.

If the rights against the surety are expressly reserved, the latter is not discharged; Kearsley v. Cole, 16 M. & W. 128; Price v. Barker, 4 E. & B. 779; 24 L. J., Q. B. 130; Bateson v. Gosling, L. R., 7 C. P. 9; and, if the contract of suretyship contains a special clause allowing the creditor to compound with the principal debtor, the surety is not discharged by such compounding; Cowper v. Smith, 4 M. & W. 519; Union Bank of Manchester v. Beech, 3 H. & C. 672; 34 L. J., Ex. 133. The reservation of rights against the surety prevents the latter from being discharged, because the principal debtor cannot then complain that the surety, when he has been obliged to pay the debt, immediately claims to be indemnified by the principal debtor, and that this claim makes the release illusory. Kearsley v. Cole, supra; Nevill's 's case, L. R., 6 Ch. 43, 47; Muir v. Crawford, L. R., 2 H. L., Sc. 456, 458.

Where the liabilities of the principal debtor have been changed by statute during the pendency of the guarantee, the surety is discharged; Pybus v. Gibb, 6 E. & B. 902; 26 L. J., Q. B. 41; unless the terms of the guarantee show that it is intended the suretyship should continue; Oswald v. Berwick, Mayor of, 5 H. L. C. 856; 25 L. J., Q. B. 383. See Skillett v. Fletcher, supra.

As a surety, on payment of the debt, is entitled to all the securities of the creditor, whether he is aware of their existence or not, even though they were given after the contract of suretyship, if the creditor who has had, or ought to have had, them in his full possession or power, loses them or permits them to get into the possession of the debtor, or does not make them effectual by giving proper notice, the surety to the extent of such security will be discharged; a surety, moreover, will be released if the creditor, by reason of what he has done, cannot, on payment by the surety, give him the securities in exactly the same condition as that in which they formerly stood in his hands. See notes to Rees v. Barrington, 2 White & Tudor, L. C.; Wulff v. Jay, L. R., 7 Q. B. 756. Thus, where the plaintiff held a bill of sale of the debtor's furniture, as security for a debt to him, for which the defendant was surety, but neglected to register it, and although he had notice of the debtor's insolvency, did not seize the furniture under it; and the goods in consequence passed to the debtor's trustee in bankruptcy; it was held that the defendant was discharged to the extent of the value of the goods. S. C., Id. See also Watts v. Shuttleworth, 5 H. & N. 235; 29 L. J., Ex. 229; and Mutual Loan Assoc. v. Sudlow, 5 C. B., N. S. 449; 28 L. J., C. P. 108; Lawrence v. Walmesley, 12 C. B., N. S. 799; 31 L. J., C. P. 143. These rules as to the right of the surety apply as between the acceptor and indorser of a bill where securities had been deposited to secure its payment, and it has been paid at maturity by the indorser. Duncan v. N. & S. Wales Bank, 6 Ap. Ca., 1 D. P. In Polak v. Everett, 1 Q. B. D. 669, C. A., the distinction is explained between intentional acts which discharge the claim against the surety altogether, and negligent acts which discharge it only to the extent to which the surety has been thereby prejudiced.

In the case of two sureties, A. and B., contracting severally, the creditor does not, by releasing A., thereby break his contract, and so release B., unless

B. can show that he had a right to contribution, which has been taken away or injuriously affected. Ward v. National Bank of New Zealand, 8 Ap. Ca. 755, P. C.

A creditor, who holds security for his debt, does not discharge a surety for the debt, by surrendering his security to the trustee in the bankruptcy of the principal debtor, in order to entitle himself to prove for the whole debt. Rainbow v. Juggins, 5 Q. B. D. 138, 422, C. A.

As to revocation of guarantee, vide ante, pp. 432, 433.

ACTION ON WARRANTY.

A warranty is either express or implied. "Warranties implied by law are for the most part founded on the presumed intention of the parties, and ought, certainly, to be founded on reason, and with a just regard to the interests of the party who is supposed to give the warranty, as well as of the party to whom it is supposed to be given.' Readhead v. Midland Ry. Co., L. R., 4 Q. B. 392, Ex. Ch., per cur.; accord. Francis v. Cockrell, L. R., 5 Q. B. 184, 193, per cur.

Where plans and a specification of a certain work, to be done for A., are prepared as the basis of tenders, A. does not warrant that the work can be done under such plans and specification. Thorn v. Mayor of London, 1 Ap. Ca. 126, D. P. So, where the architect takes out the quantities, A. does not warrant their correctness. Scrivener v. Pask, L. R., 1 C. P. 715,

Ex. Ch.

The most frequent cases in which an action is brought on a warranty, is on the occasion of the sale of goods, and of a representation of authority to enter into a contract on behalf of another person.

Action on Warranty on Sale of Chattels.

Warranty of title.] If a man sells goods, affirming them to be his own, that amounts to a warranty of title. Cross v. Garnett, 3 Mod. 261; 1 Show. 68; Medina v. Stoughton, 1 Salk. 210; 1 Ld. Raym. 593. But, it would seem that there is in general no implied warranty of title, any more than of quality, on the bare sale of a personal chattel. Per cur., Morley v. Attenbo rough, 3 Exch. 500; Bagueley v. Hawley, infra. Where a pawnbroker sold an unredeemed pledge at an auction of such pledges, which was bought by the plaintiff, and was afterwards claimed by the right owner, it was held that there was no warranty of title. Morley v. Attenborough, supra. So, there is no warranty of title on a sale under an execution, nor, on a sale by the purchaser on that occasion to another purchaser, privy to the first sale. Chapman v. Speller, 14 Q. B. 621. So, in Bagueley v. Hawley, L. R., 2 C. P. 625, the defendant had bought at a public auction a boiler set in brickwork, which had been seized as a distress for poor rate; the plaintiffs bought it of the defendant, with notice of the circumstances under which it had been originally sold, and were to remove the boiler at their own expense, but were prevented so doing by the mortgagees of the premises: it was held that the seller had not warranted his title to the boiler, or that the plaintiffs would be permitted to remove it; Willes, J., dissented, observing that the plaintiffs had purchased a boiler and not a lawsuit. In order to make the seller of personal property liable for a bad title, there must be shown fraud, or ex

Warranty of Title.-Warranty of Quality.

437

press warranty, or an equivalent to it by declaration, or conduct, or usage of trade. When articles are bought in a shop, professedly kept for the sale of goods, there can be no doubt that the shopkeeper must be considered as warranting that a purchaser will have a good title to keep the goods purchased. In such case the vendor sells as his own, and that is what is equivalent to a warranty of title. So, in the case of an executory contract of sale, there is a warranty of title. Morley v. Attenborough, per cur., ante, p. 436. Although, therefore, the maxim of caveat emptor applies, yet the exceptions 'wellnigh eat up the rule. . . . so that there may be difficulty in finding cases to which the rule would practically apply." Sims v. Marryatt, 17 Q. B. 291, per Ld. Campbell, C. J. Accord. Eichholtz v. Bannister, 17 C. B., N. S. 708; 34 L. J., C. P. 105, per cur. Where the plaintiff had purchased some pieces of print in the warehouse of the defendant, and received an invoice in which the defendant was described as dealer in prints; the goods had been stolen, and the true owner claimed them; and it was held that the defendant had warranted his title to the goods. S. C.

Warranty of quality.] The following arrangement of the different classes of sales, for the purpose of showing in which cases there is an implied warranty of quality, is taken from the judgment in Jones v. Just, L. R., 3 Q. B., 197, at p. 202 et seq.; a few cases subsequent to, or not referred to in, that judgment being added:

:

1st. Where the goods are in esse, and may be inspected by the buyer, and there is no fraud on the part of the seller, the maxim caveat emptor applies, even though the defect is latent and not discoverable on examination, at least where the seller is neither the grower nor manufacturer. Parkinson v. Lee, 2 East, 314. So, in the case of the sale in a market of meat, which the buyer has inspected, there is no warranty that the meat is fit for human food. Emmerton v. Matthews, 7 H. & N. 586; 31 L. J., Ex. 139. A sale by sample falls under this rule, if the sample truly represent the bulk. Smith v. Hughes, L. R., 6 Q. B. 597.

2ndly. Where there is a sale of a definite existing chattel, specifically described, the actual condition of which may be ascertained by either party, there is no implied warranty. Barr v. Gibson, 3 M. & W. 390.

So, on the

sale of a patent there is no warranty that it is valid. Hall v. Conder, 2 C. B., N. S. 22, 53; 26 L. J., C. P. 138, 288, Ex. Ch.; Smith v. Buckingham, 18 W. R. 314, H. T. 1870, Q. B.

3rdly. Where a known, described and defined article is ordered of a manufacturer, although it is stated to be required by the purchaser for a particular purpose, still, if the known, described, and defined thing be actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer. Chanter v. Hopkins, 4 M. & W. 399; Ollivant v. Bayley, 5 Q. B. 288. See Chalmers v. Harding, 17 L. T., N. S. 571, H. T. 1868, Ex.

4thly. Where a manufacturer or dealer contracts to supply an article which he manufactures or produces, or in which he deals, to be applied to a particular purpose, so that the buyer necessarily trusts to the judgment or skill of the manufacturer or dealer, there is in that case, an implied warranty that it shall be reasonably fit for the purpose to which it is to be applied. Brown v. Edgington, 2 M. & Gr. 279; Jones v. Bright, 5 Bing. 533; Mallan v. Radcliffe, 17 C. B., N. S. 588; and, there is no exception as to latent undiscoverable defects; Randall v. Newson, 2 Q. B. D. 102, C. A.

5thly. Where a manufacturer undertakes to supply goods manufactured by himself, or in which he deals, but which the vendee has not had the opportunity of inspecting, it is an implied term in the contract that he shall supply a merchantable article; Laing v. Fidgeon, 4 Camp. 169; 6 Taunt.