good conduct, or if it cover a series of transactions, and the like, will release the cautioner. It will not, however, in every case relieve a cautioner for a party intrusted with pecuniary transactions that arrears are allowed to accumulate against him. A cautioner was relieved where there had been a delay in perfecting an heritable security which was to accompany the cautionary obligation.3

SECT. 4.-Prescription.

Certain cautionary obligations for payment of money prescribe or become extinct on the expiry of seven years from their date. It is held that this prescription does not apply to a cautionary obligation contracted abroad though sued for in this country.5 By the terms of the act, where the cautioner uses the form of binding himself as principal, the prescription will not take place in his favour unless the bond contains a clause of relief by the principal debtor, or the principal debtor gives a separate bond of relief to the cautioner, which is intimated to the creditor. It was held not an equivalent to intimation to the creditor, that the debtor's letter of relief was drawn by the creditor's agent who had drawn the bond.6 In the special circumstances where this was decided it did not appear that in drawing the letter, the law adviser was acting as agent for the creditor. Where the cautioner designed himself "cautioner, surety, and full debtor," the two former words were held so to qualify the last that prescription ran in his favour without an obligation of relief. The words of the act are that no man binding and engaging......for and with another conjunctly and severally in any bond or contract for sums of money," &c. The cautionary obligation, to come under the act, must therefore be incorporated with the principal one; and where a bond had been granted, a letter guaranteeing performance of it, not narrated or mentioned in the bond, was found not to prescribe. Professor Bell says, "The statute, by its words, applies only to bonds for sums of money; and this has been held rather too strictly perhaps to apply only to loans of money to be repaid within the seven years." It was main

66

B. C. i. 361.-2 Falconer v. Lothian, 8th March 1843.- Fleming v. Thomson, 23d May 1826, 2 W. & S. 277.-4 1695, c. 5.-5 Alexander Badenach, 23d December 1843.- Drysdale v. Johnstone, 25th January 1839.7 Scott v. Yuille, App. 15th September 1831, 5 W. & S. 436. Monteith v. Pattison, 3d December 1841.- Tait v. Wilson, 8th December 1836.-91 B. C. 357.

V.

K

tained in one case, that on this rule the principal and cautionary obligation both required to be for money advanced at the moment; but it was found that the transaction might be for the fulfilment of an old obligation, and that the cautionary obligation attached to a bond given as an equivalent for certain obligations in a marriage-contract which had not been fulfilled, prescribed in terms of the act.1 "Cautioners ad facta præstanda have not the benefit of the aet; nor judicial cautioners, as in suspensions and loosing arrestments; nor cautioners in marriage-contracts; nor for the discharge of an office. Neither has a cautioner in a bond of relief the benefit of this act. Cautioners for payment of a composition in bankruptcy are not comprehended under the act." It is questioned whether the statute applies to a bond for a cash credit, with cautioners.3 The act has been found not to include a cautioner in a confirmation. (See above, p. 114.)4

It will not give a cautionary obligation for discharge of an office the benefit of prescription, that the cautioner becomes bound in the same deed with the original debtor; there must be a distinct sum of money for which the surety is responsible. In a late case, where prescription was pleaded by the representatives of such a cautioner, it was given as the opinion of the court, that if either the cautioner or his representatives wished to take the benefit of the act, "they ought to have intimated that they withdrew their security,

-a settlement of accounts would then have taken place,— the sum for which the factor was liable would have been ascertained, and for that specific sum he and his cautioners should have given bond. In that way the original obligation would have been extinguished by novation, and that which was substituted in its room would have been valid for

seven years only from its date."5 Commercial guaranties do not prescribe. This species of prescription is not like others interrupted by action and diligence (see Index, Prescription); but if diligence have been commenced before the expiry of the seven years, it may be followed out.7

1 Monteith v. Pattison, 3d December 1841.-2 B. C. i. 357- Alexander v. Badenach, 23d December 1843.- Gallie v. Ross, 4th March 1836.5 Kerr v. Bremner, 5th March 1839, affirmed as to this point, Bremner v. Campbell, 1 Bell, App. 280,- B. C. i. 359.-7 1695, c. 5.

CHAPTER II.

VARIOUS KINDS OF CAUTIONARY OBLIGATIONS.

SECT. 1.-Guaranties and Letters of Credit.

THERE is perhaps no branch of the law involving distinctions so nice as the question whether a person has engaged to guarantee another or not; nor is there any where individuals are so liable to be ignorant of the effects of what they have done, and to find that the law deduces conclusions from their acts which they never had in view. Where the intention has only been to give one man a good impression of another's character; where nothing was meant but a mere introduction; where the sole intention was to supply useful information; in all these cases it has happened that a man has become security for the solvency of another. It has been stated as a general principle that cautionary engagements of all kinds should be in writing. It repeatedly happens, however, that the obligation is verbally incurred. "As with us," says Mr Brodie, "verbal bargains about moveables are valid, so where the transaction itself is verbal, a verbal guarantie interposed at the moment, and as forming a constituent of the contract, is effectual and proveable by witnesses. But it is only so where the verbal cautionary obligation is thus interposed. It is not for future contractions any more than for past; and where the original bargain is perfected by writing, so must the other." Professor Bell says, "If goods be furnished, or money paid, or indulgence given from the immediate execution of diligence on the faith of the engagement, though verbal, and with the knowledge of the person so engaging, the obligation will be effectual by the law of Scotland."2 Thus, Hunter going to market with cattle, met Carson and Gordon, the latter of whom bargaining about the cattle, the former voluntarily observed that there was not a better man in Scotland for the price, and that Hunter might take his bill at three months without hesitation, as it was as good as the Bank of Scotland. Hunter did take his bill at three months. The cattle were delivered, the purchaser being insolvent did not pay the bill,

1 Br. St. 923.-2 B. C. i. 371.

and Carson, though ignorant of his insolvency, was found liable.1

In a case which was well considered, it was found that a statement to the following effect could not be allowed to go to proof in an action for subjecting a verbal guarantor to payment of a debt, viz. that arrangements had been completed for arresting a person in the rank of a gentleman-that in the emergency he appealed to an acquaintance who agreed to present him to the holder of the diligence at a fixed time and place that this acquaintance was desired to put the engagement in writing, but declined, on the plea that both he and the debtor were gentlemen, and his word was as good as his bond--and that the debtor did not appear at the time specified. This was not a pure question of guarantie, as an obligation to present a person to subject himself to legal diligence, or to pay the debt if he fail, is accomplished by a Bond of presentation, for which there is an accepted style. (See p. 229.) It would appear that in England the only principle on which a person has been held to become verbally liable for the debt of another person is by misrepresentation involving fraud. No such principle, it will be observed, has ruled the Scottish decisions; and with us there seems scarcely to have been a line of distinction between the case where a party has intimated his intention to make good the default of another, and the case where he has not had any such intention, but where he has been made liable for the debt because he was fraudulently the means of the creditor giving credit.3 In England, Lord Tenterden's act has rendered it necessary that even a representation of character and credit, to bind the person making it, must be in writing.

It would be impossible to discuss the various forms in which written guaranties may be constituted. In England, by the statute of frauds, there must be a consideration on the face of the guarantie, i. e. it must bear that the creditor does something, or resigns some right;-that he gives credit or abstains from exaction, &c. It would seem, moreover, that a guarantie must be expressly undertaken, and that the party cannot be rendered liable by inference, except under the plea of wilful misrepresentation. Thus, a letter in the following terms was not held to be a guarantie in England: -"As I understand that Messrs A. & Co. have given you

1 Hunter v. Carson, 17th February 1824.- Chaplin v. Allan, 5th February 1842.-3 Br. St. 926.- 9 Geo. IV. c. 14, § 16.-5 See Theobald on Principal and Surety, 6, et seq.

221 an order, &c. which will amount to about £4000, I can assure you from what I know of A.'s honour and probity, you will be perfectly safe in crediting them to that amount. Indeed, I have no objection to guarantee you against any loss from giving them this credit." In Scotland the result of the decisions has been, that a recommendation to give credit to a person, or even an instruction to another to recommend individuals to give him credit, will constitute guarantie. Thus, M. wrote to Messrs J. L. & Co.,-" In the event of any reference being made to you regarding the responsibility of my esteemed friend A. S., I shall feel much obliged by your stating that he is in excellent credit, and possessed of capital for carrying on an extensive business." The writer was held liable to persons who, on being referred to J. L. & Co., saw this letter, and trusted A. S.2 Where A. said in a letter to a bank-agent, "should B. present his acceptance to you at four months after date for £30 sterling, I shall indorse the same on presentation," he was held liable, though the acceptance was not presented for indorsation, and he received no notice of it till it was dishonoured.3 A letter contained reasons for having a good opinion of a man, and concluded, "I can therefore recommend him to your notice, and you may rely upon his being trustworthy to the amount of any obligations he may come under." It was given in answer to a request for an opinion, not for a guarantie, and the party who obtained it, had been informed in a previous stage of the inquiries, that the party who wrote it would not in any circumstances give a guarantie. It was held not to infer a guarantie.*

The following general rules are laid down by Professor Bell: 1. "That when the person who writes in commendation of the character and credit of another, does so in consequence of an application on the part of him who is about to engage with that other in transactions, his expressions are to be interpreted largely in his own favour; and so that the friendly information thus drawn from him may not entrap him into a guarantie. 2. That he will be liable for the consequence of wittingly deceiving another into a transaction with a person unworthy of credit. This, however, is a case difficult to be made out. The examples of it which are to be found in the books are in cases where the recommenda

M'Iver v. Richardson, 1813, 1 M. & S. 557. See Br. St. 926.Kembles, &c. v. Mitchell, 31st May 1831.-3 Watt v. National Bank, 28th May 1839.- Johnston v. Owen, 15th July 1845.