Exonerated by offer of relation of the surety. (Bangs v. Strong, 7 Hill, 250; Schroeppell v. Shaw, 3 N. Y., 446, aff'g S. C., 5 Barb., 580; Bay v. Tallmadge, 5 Johns. Ch., 305; Delaplaine v. Hitchcock, 11 Barb., 159; Boughton v. Bank of Orleans, 2 Barb. Ch., 458; Hubbell v. Carpenter, 5 Barb., 520, reversing S. C., 2 id., 484; La Farge v. Hester, 9 N. Y., 241; Storms v. Thorn, 3 Barb., 314.) But the above seems the more reasonable rule. § 1370. Where satisfaction of the principal obligation, satisfaction or due offer of satisfaction, is made, whether by the principal or by a third person, the surety is exonerated. Elmendorph v. Tappen, 5 Johns., 176. § 1371. Where the liability of the principal is discharged by act of law and not through the intervention or omission of the creditor, the surety is not exonerated. Bowery Savings Bank v. Clinton, 2 Sandf., 113; Storm v. ARTICLE III. Surety may require the proceed against the principal. THE RIGHTS OF A SURETY. SECTION 1372. Surety may require the creditor to proceed against the principal. 1373. A principal bound to re-imburse his surety. § 1372. The surety may require his creditor to proceed creditor to against the principal, or pursue any other remedies in his power which the surety cannot himself pursue, and which would lighten his burden, on offering to indemnify the principal against loss by so doing; and if in such case the creditor neglects to do so, and the recovery from the principal is lost in consequence, the surety is exonerated. This seems on the whole to be the more reasonable rule, bound to re surety. § 1373. If the surety satisfies the obligation for which A principal he has become liable as surety, or any part thereof, whether imburse his with or without legal proceedings,' the principal is bound to re-imburse what he has disbursed, including necessary costs and expenses; but the surety has no claim for reimbursement against other persons, though they may have been benefited by his act.' 1 Mauri v. Hefferman, 13 Johns., 58; Vechte v. Brownell, 2 Bonney v. Seely, 2 Wend., 481; Hunt v. Amidon, 4 Hill, 3 Laws of 1858, 506, ch. 314, § 3. 4 Tom v. Goodrich, 2 Johns., 213. § 1374. The surety, upon satisfying the obligation, is entitled to enforce every remedy which the creditor had against the principal, to the extent of reimbursing what he has expended. Hayes . Ward, 4 Johns. Ch., 123; Bullock v. Boyd, § 1375. Whenever property of a surety is pledged with the property of the principal, the surety is entitled to have the property of the principal first applied to the discharge of the principal's obligation. Vartie v. Underwood, 18 Barb., 561. § 1376. The provisions of sections 1373, 1374 and 1375, apply where the surety has only pledged his property, as well as where he is personally bound. Gahn v. Niemcewicz, 11 Wend.,312; affg. S. C., 3 Paige, 614. CHAPTER II. GUARANTY. SECTION 1377. Guaranty defined. 1378. Guarantor. 1379. Necessity of a consideration. 1380. Guaranty to be in writing, &c. 1381. What engagement to answer for obligation of another is not guaranty. 1382. Continuing guaranties. 1383. Revocation. The surety the right of Ecquires the creditor The properpal to be ty of princi taken first. A surety property pledging alone. Guaranty defined. Guarantor. Necessity of a consideration. Guaranty to be in writ ing, &c. SECTION 1384. A guaranty, how construed. 1385. Liability upon guaranty of payment or performance. § 1377. A guaranty is a contract of suretyship whereby the surety engages to satisfy the obligation of the principal, if the principal fails to do so himself. § 1378. A person may become guarantor even without the knowledge of the principal. Code Nap., art. 2014. § 1379. Where a guaranty is entered into at the same time with the original obligation, or with its acceptance by the person guaranteed, and forms, with that obligation, a part of the consideration to him, no other conideration. need exist. In all other cases there must be a consideration distinct from that of the original obligation. See Mallory v. Gillett, 21 N. Y., 412. § 1380. A guaranty must be in writing, signed by the guarantor or his agent, and express the consideration. 2 R. S., 135, § 2, sub. 2. It may be worthy of consideration whether the words requiring the consideration to be expressed, should not be omitted. They were introduced in the revision of 1830, under the expectation, it seems, that they would mitigate the litigation arising out of this provision (see Rogers v. Kneeland, 13 Wend., 114), but have greatly extended the labyrinth of conflicting cases on this subject. So common a form of transaction as a guaranty ought not to be the subject of such uncertain and nice distinctions as those which abound in the books. Since the testimony of the parties is now admissible, the statute of frauds is less important to its primary object than before. In the next section, the criterion by which to distinguish a guaranty from an original undertaking is given; and if the guaranty is required to be iu writing, perhaps the consideration may be left to be gathered from the terms of the instrument, or even to be supplied by parol, as in other cases. Barnes v. Perine, 15 Barb., 249; affirmed, 12 N. Y., 18; Frink v. Green, 5 Barb., 455. The change here suggested has been adopted in England, by stat. 19 and 20 Vict., c. 97, and a guaranty there is no longer required to express any consideration. See Holmes v. Mitchell, 7 C. B. (N. S.), 370. See many of the cases on the present rule reviewed in Mallory v. Gillett, 21 N. Y., 412. § 1381. An engagement to answer for the obligation of another person, made in terms or under circumstances such that the promisor becomes a principal debtor, upon a new consideration to himself, and the original debtor becomes, in effect, his surety, is not a guaranty within the meaning of the preceding section. State Bank v. Mettler, 2 Bosw., 392; Beach . Hunger- guaranties. § 1382. A guaranty relating to a future liability of the Continuing principal, under successive transactions, which either continue his liability or from time to time renew it after it has been satisfied, is called a continuing guaranty. § 1383. A continuing guaranty may be revoked at any Revocation. time by the guarantor, as to future transactions, unless there is a continuing consideration as to such transactions which he does not renounce. 1 Pars. on Contr., 517. There seems no sufficient reason for preserving the exception in the case of guaranties under seal. how con § 1384. A guaranty is to be deemed an unconditional A guaranty, guaranty of payment or performance, unless its terms im- strued. port some condition precedent to the liability of the guar antor. Morris v. Wadsworth, 11 Wend., 100; 17 id., 103; Smith § 1385. A guarantor of payment or performance is liable to the person guaranteed immediately upon the principal's default,' and without proof of demand and notice.' 1 Van Rensselaer v. Miller, Hill & D. Supp., 237; Bank 2 Allen v. Rightmere, 20 Johns., 365; Clark v. Burdett, § 1386. Where one guarantees a conditional obligation, his liability is commensurate with that of the principal, and he is not entitled to notice of the principal's default, Liability anty of pay upon guarment in performance. Liability anty of a obligation. upon guar conditional A guaranty that an obligation is good or unless the condition is exclusively within the creditor's knowledge. Douglass v. Howland, 24 Wend., 35. § 1387. A guaranty that an obligation is good, or that it is collectable, or in equivalent terms, imports that the oblicollectable. gor is solvent, and that the demand is collectable by the usual legal proceedings taken with reasonable diligence. Guarantor's liability upon such guaranty. Curtis v. Smallman, 14 Wend., 231; Cooke v. Nathan, 16 § 1388. In the cases mentioned in the preceding section, the removal of the principal from the state, leaving no property therein from which the obligation might be satisfied, is equivalent to the insolvency of the principal in its effect on the rights and obligations of the surety. This is the principle adopted in Cooke v. Nathan, 16 Barb., 342; but White v. Case, 13 Wend., 543; Burt v. Horner, 5 Barb., 501; Newell v. Fowler, 23 Barb., 628, are to the contrary. Letter of credit defined. Liability of the writer. Letter of credit CHAPTER III. LETTER OF CREDIT. SECTION 1389. Letter of credit defined. 1390. Liability of the writer. 1391. Letters of credit either general or special. 1392. Nature of general letter of credit. 1393. A letter of credit may be a continuing guaranty. 1394. When notice to the writer necessary. 1395. The credit given must agree with the terms of the letter. § 1389. A letter of credit is a written request addressed by one person to another, requesting the latter to give credit to the person in whose favor it is drawn. It may be addressed to several persons in succession and must express a consideration. As to the last clause see note to § 1380, supra. § 1390. Upon the debtor's default, the writer of the let ter of credit is liable to those who gave credit in compli ance with its terms. 1391. Letters of credit are either general or special. either gene. When the request' is addressed to specified persons by |