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REYNOLDS V. DOUGLASS, 37 U. S. 497 (1838)
U.S. Supreme Court
Reynolds v. Douglass, 37 U.S. 12 Pet. 497 497 (1838)
Reynolds v. Douglass
37 U.S. (12 Pet.) 497
Commercial guarantee. The rule is well settled, that the guarantor of a promissory note whose name does not appear on the note is bound without notice where the maker of the note was insolvent at its maturity unless he can show he has sustained some prejudice by want of notice of a demand on the maker of the note and notice of nonpayment.
If the guarantor could prove he had suffered damage by the neglect to make the demand on the maker of the note, and to give notice, he could only be discharged to the extent of the damage sustained.
In order to enable the party claiming under a guarantee, 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 case and of which facts they were ignorant, would not be a waiver of the notice they were entitled to have of the acceptance of their guarantee.
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; 2 or by a qualified promise, having knowledge of the 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 guarantee.
When the party in whose favor 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.
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 issue a venire facias de novo, 32 U. S. 7 Pet. 113. The facts of the case are fully stated in the case reported in 1833.
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