guarantee by other parties contracted for by insurers, at least for a proportion of the liability.(h)

10. But a mere neglect to enforce the obligation will not have that effect, and notwithstanding that a considerable delay may have occurred on the part of the employer in settling the accounts, or even in giving notice of an embezzlement after its discovery.(i)

11. The obligee must also, to be entitled to recover, have performed his own part of the contract. Thus, in a case where a man put his son apprentice, and gave a bond for his fidelity, and his employer covenanted that he would settle the cash-book every month; on an embezzlement occurring, and its appearing that the employer had neglected to settle the cash, it was held that the father should be relieved from the payment of so much as was embezzled after the first month.(k) In this case a separate covenant was entered into, but the effect would be the same if there was a distinct contract or warranty that a particular course should be pursued, although it would be otherwise where there was no warranty or agreement, but *a mere representation of the usual practice or [*104] intention of the employer.

12. This distinction was taken in a late case where an action was brought against a guarantee company. The answer to the inquiry "as to what checks would be used to secure accuracy in his accounts, and how often they would be balanced and closed," was "examined by the finance committee every fortnight." No such examination took place, and a loss occurred. In an action upon the policy it was contended that the provision as to the mode of examining the accounts was to be read as a warranty, and that the neglect had put an end to the guarantee. The Court, however held that the manner in which the question was put and answered, showed that it was not understood as more than a declaration of the course that was intended to be pursued, and if made bonâ fide and honestly at the time, did not prejudice the right of the employer to recover. In reply to the argument that the stipulation operated as a warranty, the Chief Baron remarked: "If this is a warranty, it must be construed literally, and therefore, although the employers had found out a better mode of checking his accounts, they would still be obliged to go through the idle ceremony of having them examined by the finance committee." In consequence, apparently, of this decision, a change has been made in the proposals of some companies, and instead of simply requiring a series of replies to the questions above mentioned and a declaration of their truth, the 15th question is put in the following form: "What checks will you use to secure accuracy in the applicant's accounts;" and the declaration signed by the employer is made in the following form: "I, A. B., declare that the answers and representations above made by me are true, and that the same, so far as they relate to future acts and omissions, shall be complied with on the part of A. B. and Co.,

(A) Hodgson v. Hodgson, 2 Keen, 704.

(1) Shepherd v. Beecher, 2 P. Wms. 288; Trent Navigation Company v. Harley, 10 East, 34, and see cases cited ante, note (g).

(4) Montague v. Tidcombe, 2 Vern. 518.

() Benham v. The United Guarantee and Life Assurance Comp., 7 Exch. 744.

and their representatives; and that the truth of the said answers, and representations, and future compliances therewith, shall be [105] deemed to be a contract entered into by us with the above company, and the basis of the proposed guarantee."

13. Upon a bond conditioned for the faithful service of a person as clerk, the surety may be liable for complicity by the clerk in the default of another, notwithstanding there may have been no misapplication of moneys by him in his own favour. Thus, where the cashier of a railway suffered moneys to remain in the hands of the booking clerks, making up moneys on one day by appropriating to it a portion of the moneys received on the following day, the sureties were held liable. The fact that there were no moneys of the company in the hands of of the clerk at the termination of his engagement, was held not to discharge them.(m) And gross negligence on the part of the clerk will occasion a similar liability.(n) But the surety is only liable for money becoming actually due from the employed: thus, when the treasurer who was the paid officer of a building society and bailee of the moneys entrusted to him, was robbed of a sum belonging to the society, it was held that the surety was not liable on a bond, the condition for which was, that the treasurer should duly account to the trustees for all money received by him.(0)

14. The sureties will only be liable for the default of the employed in the due performance of the business to which their guarantee contract relates. Should there be any ambiguity in the words of the guarantee, they will, as in the case of other written instruments, be construed more strictly against the grantor ;(p) but the obligation itself is to be construed strictly, and not extended to any other *subject, to any [*106] other person, or to any other period of time than is expressed or necessarily included in it.(g) Thus, upon a bond given by sureties for the due payment of moneys received by a collector of income tax (under 56 Vict. c. 35,) as such collector, it was held that the surteies were not answerable for moneys improperly received by him, and which he had no legal authority to collect. (r) And where the sureties were such for a person in the due performance of his duties in an office, on his reappointment upon different terms, the sureties were held to be released,(s) although a mere reduction of salary would not have that effect.(t)

And where the surety agrees to undertake the obligation jointly with another, in the event of the refusal of that other person, he will not be liable on any document that he may have previously signed.(u)

15. It is also to be observed that the contract of guarantee is personal, and that when entered into with partners nominatim the surety is released as to future transactions by the death or retirement of one of the part

(m) London, Brighton, and South Coast Railway Company v. Goodwin, 3 Exch. 736. (n) Melville v. Doidge, 6 C. B. 450.

(0) Walker v. The British Guarantee Association, 16 Jur. 885, Q. B.

(P) Hargrave v. Smee, 6 Bing. 244.

(r) Kepp v. Wiggett, 10 C. B. 35.

Frank v. Edwards, 8 Exch. 220.

(9) Burge on Suretyship, 40. (8) Bamford v. Iles, 3 Exch. 380.

(u) Rice v. Gordon, 11 Beav. 265. See 4 Beav. 379. JULY, 1853.-6

ners, (v) or even by the introduction of a new partner into the firm. (w) And when the executors of the employer continued to carry on the business, the surety was not held answerable for moneys received by the employed while in their service, although the condition of the bond was for payment to the obligee, his executors or administrators, of all moneys received by the employed on account of the employer, his executors or administrators; (x) but when the intention is clear, the obligation will continue, as where the guarantee is given to a firm by its name of trade, or to a company, by which a fluctuating body is necessarily intended. (y) *16. The proposal having been accepted, the guarantee is [*107] issued in the form of an agreement between the company and the employer, or of a policy, as it is termed, having that effect, or in the common form of a bond for the due performance of services. The form is not, however, very material, and the general provisions of the contract seem common in all cases; but the different companies adopt additional stipulations of their own, more or less affecting it. Thus, in one company a deduction of 10 per cent. upon every claim is required, thus making the employer to a limited extent the co-assurer with the company. A further condition, which is usual, but not universal, is, that the guarantee is granted upon the express condition that every person making any claim thereunder, shall at the costs of the company, whenever required by the directors, or other duly authorised agents thereof, afford every description of assistance in their power to enable the company to prosecute or bring to justice the employed for any criminal offence committed by him while in such employ.

In one company whose conditions seem peculiarly unobjectionable, the contract is issued in the form of an agreement signed by the employer and three directors on behalf of the company. It recites the agreement of the employer to accept the guarantee of the association, and of the . association to give the guarantee, that the employer and employed have executed the proposal or declaration as the basis of the contract, and that the premium has been paid; and then witnesses that the association, as surety for the employed, thereby agrees that during the space of one year, and during every succeeding year in respect of which the association shall consent to receive, and the employer or employed shall pay the renewal premiums, the funds and property of the association shall, according to the provisions of the deed of settlement, be liable to reimburse and make good, to the amount of the sum guaranteed to the employer or his representatives, within three calendar months next after proof shall have been given to the reasonable satisfaction of the directors, every loss which shall be sustained by the employer by [*108] reason of the want of integrity, honesty, or fidelity of the employed, in or arising out of his employment. Provisions are then contained to the effect that the contract shall be subject to the conditions indorsed upon the agreement, and for a reference to arbitration in case of

Simson v. Cooke, 1 Bing. 452.

(w) Pemberton v. Oakes, 4 Russ. 154. (y) Barclay v. Lucas, 1 T. R. 291, in notis; Metcalf v. Bruin, 12 East, 400.

(x) Barker v. Parker, 1 T. R. 287.

e. By the indorsed conditions (1.) fifteen days are given for the nt of the renewal premium; (2.) the agreement is declared void in ent of fraudulent misstatement or the suppression of a material 3.) it is provided that the right to make a claim under the said ent shall cease three months after the death of the person whose y is guaranteed; (4.) that after notice and satisfactory proof of the guarantee shall become void as to all future claims in respect loss sustained by any subsequent want of integrity, &c., but suba discretionary power in the directors not to take advantage of oidance; (5.) that a written report of the loss and of all particuto be made within fourteen days after its discovery, or in default eement becomes absolutely void; (6.) that the assurer shall only e to make good such loss in the event of the employer giving, fourteen days after such loss shall have come to his knowledge, a at in writing, declaring that he hath been damnified, and stating particulars and amount so far as then ascertained, to be verified red by proofs and statutory declarations, and that after the deliassociation shall be, ipso facto, discharged from all liability in of the subsequent acts of the employed; (7.) that the written ge or receipt of the employer for any sum of money paid in of any loss contemplated by the agreement, shall be sufficient and ve evidence against the employed, of the fact and amount so paid, mount shall be repaid by him or his representatives, and shall be g charge against him or them without any further or other proof. An additional stipulation is sometimes added, but which, if omitted, would be supplied in equity, that on *paying any claim the company shall be entitled to the right of rateable contribution and all other the rights and remedies of co-sureties against every other corporation or person then or thereafter becoming surety for the employed. (2)

[*109]

17. Persons employed in the service of the Crown in public offices, and in collecting the revenue of the state, are required by statute to give security by bond, with sureties, for the due performance of their functions.(a) By subsequent statutes the privilege has been granted of making deposits of stock or exchequer bills in lieu of giving such security.(b) Bonds to the Crown are, however, subject to this specialty, that the lands of sureties thereunder, as well as of the principal, are bound for the due performance of the obligation, and in such a manner that even future debts will bind such lands in the hands of a purchaser, although at the time of the sale to him there was no debt existing.(c) This charge will bind not only an estate or vested interest, but even a power of appointment which the accountant can exercise in his own favour.(d)

As to Crown debts and obligations, however, whose existence has com

(2) Deering v. Winchelsea, 1 Cox, 318, 2 B. & P. 270; Pendlebury v. Walker, 4 You. & C. 424; Mayhew v. Crockett, 2 Swanst. 185.

(a) 50 Geo. 3, c. 85; 52 Geo. 3, c. 66.

6 & 7 Wm. 4, c. 28, 1 & 2 Vict. c. 61, (in lieu of bonds given for the due payment of fire duties,) 5 & 6 Vict. c. 79. (c) Sugden, Purch. p. 644.

(d) Ellis v. Reg. 6 Exch. 921.

menced after the 4th of June, 1839, it is now enacted, (e) that no purchaser or mortgagee shall be bound unless a memorandum or minute of the sum in which the obligor shall be bound, or for which the obligation or specialty shall be made, and the date of the same, with the names and descriptions of the parties, shall have been left with the Senior Master of the Court of Common Pleas, who shall enter the same in an index, which may *be searched by any person on the payment of the fee

[*110] of one shilling.(f) It is also enacted, that the Commissioners

of the Treasury may, if they think fit, grant a quietus, discharging any lands without affecting the obligation, (g) and this quietus is to be also registered.(h) This liability to the Crown affects the real estate of all shareholders in guarantee companies. More than one private bill has, it is believed, been laid before the legislature, the object of which has been to free some particular company from this burthen; but up to the present date no such bill has been passed.

18. A further form which the contract of guarantee has taken is in association with life insurance. The object, in this case, is to make the premium of the life insurance, or, at least such part of it as the actuary terms the loading or surplus premium, over and above that which is required to meet the risk at the assumed normal rates of mortality, an interest applicable as an indemnity fund, by virtue of which a reduction of the annual premium on the guarantee becomes admissible. Hence, the aggregate premium on the two risks, when insured together, becomes less than the sum to which the separate premiums would amount if separate insurances were effected. In a bonus-giving office, where all the assured are also applicants for guarantees, whether mutual or not, such an arrangement seems sufficiently reasonable; but where the life-policy holders are entitled to divide the profits of the concern, and many of them have no interest under the guarantees, there is a danger of their interests being sacrificed to those of the guaranteed parties. This would seem to be the case whenever the guarantee premiums are insufficient to cover the guaranteed risks, since the mere right to confiscate the policy or apply its value in reduction of the loss in the individual case, may be no compensation for insufficient premiums in the entire mass of cases.

19. When the double contract is intended, proposals *are made

[*111] to the company in the same form as if separate contracts, viz., of insurance and guarantee, are required. It is then carried into effect by the issue by the company of two documents, namely, the life policy, which is the property, and rests in the custody of the employed, and the guarantee, which is delivered to the employed. The latter is in the usual form, and in no way differs from the ordinary evidence of the guarantee contracts issued, when no life insurance is effected; but the policy is granted subject to a lien on behalf of the company, with a right or power of declaring the policy surrendered at the office value, or as a contingent contract, to take effect only in the event of no claim arising under the guarantee. The reduction in the premium appears to be car

(e) 2 Vict. c. 11, (7 & 8 Vict. c. 90, ss. 11, 12, 13, 14, Ireland;) Sugden, Purch. (f) Sect. 8.

(g) Sect. 10.

(h) Sect 9.