
    James M. Reynolds, John B. Byrne and William Farriday, merchants, trading under the firm of Reynolds, Byrne & Co. v. James S. Douglass, Thomas G. Singleton and Thomas Going.
    Commercial guaranty. ‘ The rule is well settled, that the guarantor of a promissory note, whose name does hot appear on .the.note, is bound without notice; where .the maker of the note was insolvent at its maturity; unless he can show life has sustained some prejudice by want of notice of a demand' on the- maker of the note and notice of non-payment.
    If the guarantor'could prove he had suffered damage by the neglect-to make the demand on the maker of the.note, an’d to give notice, he, could only be discharged to the extent of the damage sustained.
    In order to enable the party claiming- under a guaranty, to recover from the guarantor by a ’letter- of -credit, he must prove that notice of its acceptance had been given in a reasonable time after the letter of credit had been accepted. This notice need not be proved to have been given in writing, or in any particular form.; but may be inferred by the jury from facts and circumstances which shall warrant such inference.
    A recognition of the parties to a.'letter of credit of their obligation to pay as guarantors under a supposed liability, Which did not arise from the facts of the cáse, and of which facts they were ignorant, would not be a waiver of the notice they were entitled tó have of the acceptance of their guaranty.
    A party to a note entitled.to notice, may waive, the notice by a promise to see it .paid, or an acknowledgment that it must be paid; or a promise that “ he will set the matter to rights;” or by a qualified1 promise, having knowledge of thj laches' of the .holder.
    A promise to pay a debt by the guarantors, qualified with a condition which was rejected, is not a waiver by the guarantor of-his right to notice of the acceptance of the guaranty.
    When the party ki whose favour a letter of credit is given afterwards becomes insolvent, and his insolvency is known to the guarantors; it,is not necessary, in an action on the letter of credit, to prove that a demand of payment was made on the insolvent.
    IN’ error to the district court óf the United States for the district of Mississippi.
    This case was before the Court at January term, 1833, on a writ of error .prosecuted by'the plaintiffs in the court below; and was then remanded to the district'court of Mississippi, with directions to issué a. venire facias de novo,. 7 Peters, 113. The facts of the case are fully statéd in the case reported j'n 1833.
    The plaintiffs again brought up the case; arid it was argued by Mr. Southard for the- plaintiffs in error, and by Mr. Jones for the defendant
   Mr. Justice M‘Lean

delivered the Opinion of the Court:

This case is brought before this Court by a writ of error to the •district court of Mississippi. ■

The action is founded bn the. following guaranty:

Port' Gibson, 21th December.11827.

Messrs. Reynolds, Byrne & Co.

■ Gentlemen,- — Ourfriend, Mr. Chester Haring, to assist him in business, may require your aid fro.m time to time, either by acceptances or endorsement of his paper, or advances in cash. In order tG save you from harm in so doing, we do hereby bind ourselves, severally and jointly, to be responsible to you, at any time, for a sum not exceeding eight thousand- dollars, should the sáid Chester Haring fail to do so.- Your obedient servants,

JAMES S. DOUGLASS,

THOMAS G. SINGLETON,

THOMAS GOING.

On the trial, the plaintiffs proved that they treáted this, paper as a continuing guaranty] .and from time to time, on the faith- of it, accepted drafts]- endorsed bills, and made advances of money at the request of Haring.- And-an account-current was given in evidence sjhbwinga balance due to, the plaintiffs, from Chester-Haring, on the -1st of July, .1828, of thirteen thousand Seven hundred ánd two dollars and seventyi-three cents; on 1st of January,'1829, of thirty-two thou-' sand nine hundred and twenty dollars .fifty-seven cents; and on the 1st of July in the same year, .of twenty-five thousand one hundred and bine dollars and fifty-seven cents. And' eight bilis of exchange, drawn by Haring on the plaintiffs,1 amounting to eight thousand dollars, and which were accepted and .paid by them in the year-1828; were also given in evidence.

On'the first ofMay, 1829, it was-proved that Haring executed five promissory notes, in the whole amounting to «twenty-five thousand • dollars, which were endorsed, by Daniel Gr'eénleaf, and also by the plaintiffs; and which were payable in the months of November, December, January, February and March, succeeding; the proceeds of which notes, when discounted, were to be credited to Haring in the general account. ■

On the l'lth of April, 1829, Haring sold and transferred, to Daniel Greenleaf his mercantile establishment, which constituted the whole of his property; and in August'or September, following, he die'd.

At the time this transfer was made, Greenleaf gave , a bond in the penalty of thirty-tvyo thousand dollars, with ThQmas G. Singleton, one of the guarantees and' others security, conditioned, that he would faithfully pay the debts of Haring, as therein stated; land especially after.paying the home debts,, “that he should pay the sum of eight thousand dollars to the securities and signers of a letter of credit, to Reynolds, Byrne & Co., in favour of the concern of Chester Haring, for that amount; or otherwise relieve and exonerate the securities and signers to said letters of credit.” And on the'24th of December following, Daniel Greenleaf,assigned .to James S. Douglas?, another of .the guarantee's, by deed of trust, on the conditions stated' ■ therein, “all.his debts,-claims and demands, either at law or in'.equity due, or to become due.” This assignment included the property, &c., he received from Haring.

One-of the'witnesses examined, státed, that he heard" James S.Douglass and. Thomas Going'say, they considered the above assign-, ments would indemnify them for their liability under the .guaranty.

, There wasa good deal of .evidence in the case, which, in considering .the questions of law on the instructions, it Is not material to notice. .

Ti '«case was brought before'this' Court on cerfaih- exceptions, at the. January term, 1833; at which- time the following points were adjudged.

1, That the paper.in question- was a.continuing guaranty, and was not discharged-on the payment of advances, acceptances, and endorsements amounting to eight thousand dollars; but chat it covered future and successive advances, acceptances and endorsements.

' 2. That to bntitle the plaintiffs to recover on the guaranty, they must show, that within'a reasonable, time they gave'notice-of its acceptance.

3. - That notice of the future and successive advances, acceptances and1 endorsements,' after - the acceptance of the guaranty, was not necessary.

4. That- in casé of non-payment, the plaintiffs were required to show a demand of Haring; and, within a reasonable time, a notice to the guarantees.

After the evidence was closed, the plaintiffs moved the court to instruct the jury, “if they believe that Chester Haring was insolvent previous to the maturity of any of the five promissory notes drawn by Chester Haring, dated the 1st May, 1829; and that these notes were endorsed upon the faith of the letter of credit, by the plaintiffs; then such previous insolvency rendered it unnecessary for the plaintiffs to give the defendants, as guarantors, notice of a demand upon and refusal by Chester Haring to pay the said notes; and the plaintiffs are entitled to recover. But the court refused to charge as requested; and charged the jury, that the insolvency of Chester Haring could be proved only-by a record of the insolvency, or by admission of the defendants, and not by common rumor or hearsay evidence.”

This instruction was incautiously drawn, and its language is open to criticism. It would, seem at the first view to place the right of the plaintiffs to recover, on the fact of Haring’s insolvency. This would' dispense with notice of the acceptance of the' guaranty, and with all evidence of advances of money by the plaintiffs; and' of acceptances and endorsements under it, except the five notes referred to. But such could not have been the meaning of the instruction, as understood, by the counsel concerned in the case, and by the court. Much evidence had been given of advances of money, of acceptances and of endorsements on the faith of the guaranty; and also evidence qf facts, from which the jury might, in the exercise of their discretion, infer a notice to the defendants that the guaranty had been accepted. In tile view o.f/thesé facts, it cannot be supposed that the plaintiffs would ask the court to instruct the jury to find in their favour; aside from all the other evidence in the case; if the insolvency of Haring should be satisfactorily established.

• The instruction was undoubtedly Intended to cover the objection that no demand had been' made of Haring on his failure to pay, nor notice' given to the defendants. And that if the jury should find the notes referred'to had been. endorsed on the faith of the letter of ■credit, the previous insolvency of' Haring rendered notice of a .demand on him unnecessary; and consequently the -want of this notice constituted no objection to the plaintiffs’ recovery. That the court considered the instruction in this light, is clear from the qualification which they annexed to it. By charging the jury that the insolvency of Haring could be proved only by the admission of the defendants, Oí by record evidence, the cóurt seem to consider if the fact of insolvency were legally made out, demand and notice were unneces-. sary;

Although the objection to the structure of-the'prayer is not without force, yet we are inclined to think that if the instruction had been given in the terms requested by the plaintiffs, under the circum-. stances, it could not have misled- the jury. They could not have understood the instruction as laying down the basis' of -a.recovery, independent of all other .evidence' in the case. •

In this part of the- record, the question is fairly raised whether the insolvency of Haring, either prior to or at thé timé of payment, will excuse-the plaintiffs from making a demand on him, and giving notice to the guarantees.

' At the death of Haring, the' notes given by him On the 1st May, 1829, and endorsed by Greenleaf, were not dué. And'these promissory .'notes, to have had an influence in. the case, under thé instruction, must have been endorsed by the plaintiffs on the faith of the guaranty.

An objection is made, that these notés greatly exceed in amount the guaranty; and, consequently, that they could not have been endorsed on the credit of the guarantees. The same objection is urged against' the'various balances, which exceed the amount of the guaranty as stated in' the account current. ' And it is contended, that to bind the guarantees, the advances, acceptances and endorsements, although made at-successive periods, on the faith of the guaranty, must not exceed it in amount. '

If this objection were well founded, it could' not affect the right of the plaintiffs. They have brought their action on the guaranty, and exhibit eight bills of exchange, amounting to eight thousand dollars,

. ’uch they aver were accepted and paid by them on the faith of the guaranty.

The question as to the liability of the guarantees; un^er acceptances and endorsements, for a sum exceeding eight thousand dollars, does not, therefore, arise-in this case; and it is unnecessary to consider it. The advances- which were made from time to time, and also the acceptances and endorsements on the credit of the guaranty, go to show how it was considered and treated by the plaintiffs. And it was a question for the jury to determine;-whether the advances, acceptances and^endorsements, as alleged by the'plaintiffs, were made-under the guaranty.

If the insolvency of Haring was a material fact in the cáse, how was it to be proved?. Could it be proved' only by record evidence,- or by the admissions of the defendants, as decided by the district ■court?. No reason is perceived for this rule, and there is no principle o(law. that sustains-it. The insolvency of Haring should be proved in thé. same manner as any other fact in the causé. Was he without property, and unable'to pay- the demands against him?. There can be no difficulty in showing his circumstances, by competent proof-

But does'the-insolvency of Haring, if it be established, excuse :the failure to make a demand on him at the maturity-of his notes; and tó givé notice-to the. guarantees.

’ It. the case of Gibbs v. Cannon, 9 Sergt. & Rawle, 198, it was held, that on a-guaranty of ,a‘ promissory note, drawn ,and endorsed by- others, if the drawer and endorser are insolvent when the note becomes due, this would,-prima facie,-be-evidence that: the guarantor was’not prejüdiced; and therefore the giving, him notice of non-payment, is, in -such case, dispensed with, .And .'in the case of Halbrow v. Wilkins, 1 Barn. & Cressw. 10, the court say,,if á guarantor of-a bill be informed, before.it is due, of the insolvency of the acceptors, and that the plaintiff looked, to. him for payment; it is- not necessary to prove presentment and notice of non-payment;

In the case of Warrington and another v. Furbor and Warrington, 8 East, 242, lord Ellenooraugh says: the same strictness of proof is pot necessary to charge the guarantees, as would have been necessary-to. support an action upon the bill itself, where, by.the; law-merchant, a-demand upon and-refusal by the acceptors • must have been .proved in order to charge any other party upon the Bill; ánd this, notwithstanding' the bankruptcy-of the acceptors. But this,-is not.necessary to charge, guarantees, who insure, as it were, the sol-' vency of the principals; and; therefore, if thé latter become bankrupt .and notoriously insolvent,.it is the same.as if they were dead; and it is nugatory to go through the ceremony of making a demand upon them.

■ My, Justice Lawr¡eneé, in the same case, says,- that; although proof of a demand on'thé acceptors, who had become bankrupts, was. not necessary to Charge the guarantees; yet that the latter were not prevented from showing that-they ought not to have, been called.upon at all; for that the principal' debtors- could' have paid the bill.if demanded of them. And Mr.. Justice Le Blanc also says, in the same case, there is no need' of the spine proof to charge a guarantee, as to charge a party whose náme is upon the. bill of exchange; for it is sufficient, as against the former, to show that the holder of the bill could not have obtained the money by .making á' demand- upon the bill. ' ' " • . ’

In the third volume of his Commentaries, 123, Chancellor Kent says, it has been .held that the guarantor óf a note could'Be discharged, by the laches of the holder, as by neglect.- to make demand of payment of the maker, Rd give notice of non-payment to the guarantor; provided the- maker was solvent when the. note fell due, and became’ insolvent'afterwards. The rule is not.so strict as in the case-df mere negotiable paper; and the neglect to give notice must have produced some loss or prejudice to ,the guarantor.1

The same principiéis laid down in the-following cases: Phillips v. Astling, 2 Taunt. 206; Swinyard v. Bowes, 5 M. & S. 62; Van Wert v. Woolley, 3 Barn. & Cressw. 439.

The ruléis well settled that the guarantee of a promissory note, whose name dpes not appear on thé note, is bound without notice,' where the maker of the note was insolvent at its-maturity.. That his' liability continues!, unless Re pan show he has sustaine'd’someprer judice-by want-of notice of a. demánd on the maker of the'note, and non-payment.

In the case before us, there is no pretence that the defendants have sustained any injury from a-neglect of the plaintiffs to make a de*-. niand on Chester. Haring for payment of the balances against, him, in the account current;' or for. the amount ’paid in discharge of the; eight hills of exchange referred to in the declaration.

' But if the. defendants-, could prove they had suffered damage by .the neglpCt of the plaintiffs to make the .demánd and give notice, according to the case of Vanwart v. Woolley,- 3 Barn. & Cress. 439.; they could only be discharged to the extent of the damage sustained’.

As before remarked,'Haring died before any of the promissory notes dated 1st May, 1829, became due; and .consequently,.no demand on him for the payment of these notes’ could he made. From .the facts in the case, it appéars that the, defendants resided in-Pdrt Gibson, the place where.Haring lived; and it Cannot be doubted that-they'had. knowledge of his death._

From, these considerations, it is clear that- the district court erred in-refusing to'give-the first instruction asked by the plaintiffs.

The plaintiffs also requested the court to charge that-if the"'jury-believed' that Chester Haring transferred all his property to Daniel Greénleaf, on the 11th April? 1829, and'that Daniel Greenleaf at that time was engaged to pay all the debts of the. said, firm, and to secure the defendants from their liability on the letter of guaranty; and that Darnel Greenleaf,. on 24th December, 1829, by deed of trust to one. of the defendants, James S. Douglass, transferred claims to the amount of. twenty-eight or nine thousand dollars, to secure the defendants for their liability on said letter of credit; then it' is not ne-. cessary.for the plaintiffs to prove-.that the. defendants were duly notified of their'liability on said letter of credit: "which charge the court refused to give.

The facts, hypothetically stated as the basis of this instruction, are such, as if'found by the jury, must have had influence on their minds; for they conduce to- show that the defendants had received knowledge of their responsibility under the. letter of credit/and of the circumstances of Haring.' But as the instruction does not necessarily imports the insolvency of Haring, which, or his death, .can alone-excuse the plaintiffs,from making a demand on him, and giving notice to the defendants of his failure to pay; the court did-not err in •declining to give the instruction. The' facts supposed in the instruction might.be admitted; and yet the insolvency of Haring, at some ■subsequent period, would not follow as a consequence..

Several instructions were given by the court, at the request of the defendants’ counsel, to which-the plaintiffs excepted;' and we -will now consider them.

And first, the court charged the jury, that to entitle .the plaintiffs to recover on said letter of credit, they’must prove that notice had been given in a reasonable time after said letter of credit had been accepted by them to the defendants, that the samé had been accepted* This instruction, being in conformity to the rule formerly laid down by this Court in this; case, was properly given. ■ This notice need not be proved to .have been given in. writing, or in any particular form; but may be inferred by the jury from facts and circumstancés which shall warrant such inference..'

The court also instructed the jury, that if they believed from the-evidence that two of the.defendants, Going and Singleton, admitted that the debt sued for was; a just- debt, and- that the said two defendants stated that they would try to arrange the-payment thereof, out' of the funds or effects.that had been assigned by Daniel Greenleaf to James'S. Douglass; and that the ¿dmission and declaration ..were made in 1830, and that at said period no notice had been given-by the plaintiffs'to the defendants, that said guaranty had been accepted by them; and that said defendants were uninformed at, the time of such admission and declaration of such failure to give such notice;that'then, such admission and declaration do not operate in law a waiver of, and dispense with .the necessity of such notice.

This instruction must have been hastily drawn; but we understand it as laying down the principle that a recognition of,their obligation to pay, by the defendants, under a supposed liability which, did not exist,-from the.facts of the case,- and of which" facts they were ignorant; would not be'a waiver of the notice. In this view, the instruction was correctly given.

And the court -further instructed the jury, that in the absence of evidence of notice given in a reasonable time by the plaintiffs, that said letter of .credit had been accepted by them, the mere' acknowledgment by the defendants, that the debt sued for is a just debt, does not dispense with the necessity of such notice; but that to dispense with such notice, there'must be evidence of an express-and unconditional promise by the defendants to pay, made under a full knowledge that such notice had not been given.

This instruction is not founded upon the supposition that the defendants were ignorant of the necessity of a notice to bind them; and this ignorance, therefore, cannot be presumed. The proposition then is, that although the defendants knew that á notice was neces-, sary to bind them, and which had not been given; an acknowledgment of the debt- and a- promise to pay, which is not express and unconditional, would not dispense with notice. In giving this instruction, we think the court erred. A party to a note entitled, to notice, may waive it by a promise to see it paid;, or an acknowledgment that it must be paid; or a .promise that “he will set the matter to rights;” or by a,qualified promise, having knowledge of the laches of the holder. Hopes v. Alder, 6 East, 16; Selw. N. P. 323; Haddock v. Beery, 7 East, 236; Rogers v. Stephens; 2 T. R. 713; Anson v. Baily, Bul. N. P. 276. In the case of Thornton v. Wynn, 1 Wheat. 183, tb:" Court say: an acknowledgment of his liability, by the endorser of a bill or .note, and knowledge of his discharge by. the laches of the holder, will amount to a waiver of notice.

In their fourth, instruction the court say, that a qualified or conditional promise, made by the defendants to-pay the debt- sued foi1; which was rejected by the plaintiffs or their agent, is not a waiver, of tl}e necessary notice from the plaintiffs'to the. defendants, that said letter, of credit had been accepted by -them.

This instruction is somewhat vague in its. language; but if it is to be considered as laying down the rule, that a promise1 to pay the debt,’ qualified with a condition which yvas rejected by the plaintiffs, or théir agent; the court, were fight in saying that it was not a'waiver'of notice.

In their fifth and last instruction, the cdurt charge the jury that to •enable the. plaintiffs' to recover on said letter of' creditj they must. prove, that a demand of payment had been made of Chester Haring; the principal debtor, of the debt sued for; and in case-of, non-paypiént, notice should have been given in a reasonable lime, to the defendants; and on failure of sueh proof, the defendants are .in'law ‘discharged.

This instruction rests upon the necessity, of a personal demand of Haring by-the" plaintiffs. Tt hás been already shown,that this de^ mand was', unnecessary in case of Haring’s-insolvency; the in true-, tipn was therefore, on the facts in the case, erroneous.; The judgment of the district court must be reversed; and the cause remanded for a venire dé novo..

Mr., Justice Baldwin dissented.

This cause came on to be heard on the transcript of the record from the district court of .the United .States for the. district pf Mississippi;.and was argued by counsel. On consideration whereof; it.is 'npw.here adjudged and ordered by this Court, that the judgment of the said district court in this cause be, and the. same is hereby reversed and' annulled; and that this, cause be, and the same.is hereby remanded to the said district court, with directions to avyard a venire facias de novo.  