Argument for Plaintiff in Error.

239 U.S.

453; Campbell v. Pucket, 1 Posey Unrep. Cas. 465; Hartley v. Sandford, 66 N. J. Law, 40; Hall v. Weaver, 34 Fed. Rep. 104, 107; McIntosh-Huntington Co. v. Reed, 89 Fed. Rep. 464; Horn v. Bray, 51 Indiana, 555; Anderson v. Spence, 72 Indiana, 315; Minick v. Huff, 41 Nebraska, 516; Fidelity Co. v. Lawlor, 64 Minnesota, 144; Boyer v. Soules, 105 Michigan, 31; Smith v. Delaney, 64 Connecticut, 264; Perley v. Spring, 12 Massachusetts, 297; Aldrich v. Amase, 75 Massachusetts (9 Gray), 76; Lucas v. Chamberlain, 8 B. Mon. 276; Jones v. Shorter, 1 Georgia, 294; Bonebright v. Pease, 3 Michigan, 318; Chapin v. Merrill, 4 Wend. 657; Jones v. Bacon, 145 N. Y. 446; Resseter v. Waterman, 151 Illinois, 169; Saint v. Wheeler, 95 Alabama, 362; Kearnes v. Montgomery, 4 W. Va. 29.

A guarantee must ordinarily exhaust his remedies against the person primarily liable before resorting to his guarantor. But an indemnitee can hold his indemnitor without first seeking reimbursement from any third person. Pingrey on Suretyship, § 360; Page v. White Machine Co., 34 S. W. Rep. (Tex.) 988; Reigart v. White, 52 Pa. St. 438; 20 Cyc. 1446, 1453; Springfield v. Boyle, 164 Massachusetts, 591; Kempton v. Coffin, 29 Massachusetts (12 Pick.), 129; Conery v. Cannan, 26 La. Ann. 123; 22 Cyc. 102; Getty v. Schantz, 100 Fed. Rep. 577; Phenix Ins. Co. v. Louis. & Nash. R. R., 8 Fed. Rep. 142; Osborne v. Smith, 18 Fed. Rep. 126.

An indemnitee must have actually paid a judgment or given his own obligation to the creditor which has been accepted as payment before he can maintain an action upon the instrument of indemnity; while a guarantee may maintain an action against a guarantor to compel payment of the debt itself. Central Trust Co. v. Louisville Trust Co., 100 Fed. Rep. 545; Resseter v. Waterman, 151 Illinois, 169, 177; Barclay v. Gooch, 2 Espinasse, 571; Carter v. Adamson, 21 Arkansas, 287; Solany v. Webster, 35 Florida,

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Argument for Plaintiff in Error.

363; Hay v. Hansborough, 1 Freem. Ch. 533; Gregory v. Hartley, 6 Nebraska, 356; Aberdeen v. Blackmar, 6 Hill, 324; Hearn v. Landee, 74 (11 Bush) Kentucky, 669; Miller v. Fries, 66 N. J. Law, 377; Cochran v. Selling, 36 Oregon, 333.

While a guarantor's undertaking is for the benefit of the creditor, the undertaking of a surety's indemnitor is not. The creditor cannot maintain any action upon it. United States v. United Surety Co., 192 Fed. Rep. 992; State v. St. L. & San Fran. Ry., 125 Missouri, 596; Texas Mid. R. R. v. Miers, 37 S. W. Rep. 640.

As a general rule an indemnitor is neither a guarantor nor a surety. He is a principal, although he is frequently referred to by the courts as a surety. Wise v. Miller, 45 Oh. St. 388; Appleton v. Bascom, 3 Metc. 169.

Historically, contracts of indemnity are creations of the common law, and are usually specialties (except the implied obligation created by law on the part of a principal to indemnify his surety when no express obligation has been given); while contracts of guaranty are commercial contracts having their origin in the rules of the law merchant and are usually simple contracts. Courtis v. Dennis, 7 Metc. 510; Edmundston v. Drake, 5 Pet. 624; Lee v. Dick, 10 Pet. 482; Daniels on Negotiable Inst., par. 1755; Bell v. Bruen, 1 How. 169; Lawrence v. McCalmant, 2 How. 426; Smith v. Dann, 6 Hill (N. Y.), 543; Note to Lanusse v. Barker, 3 Wheat. 148; Kincheloe v. Holmes, 7 B. Mon. (Ky.) 5.

Instruments of guaranty (unlike instruments of indemnity) are divided into two classes, (a) overtures or offers to guaranty (to which class belongs Davis Sewing Machine Co. v. Richards), and (b) absolute guaranties (to which class belongs Davis v. Wells). Pitman on Principal (1843), 28; DeColyer on Guaranty, 3; 14 Am. & Eng. Ency., 2d ed., 1145; 20 Cyc. 1404 and 1407; 25 Cent. Dig., § 9, and 9 Dec. Dig., par. 7.

Argument for Plaintiff in Error.

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The doctrine that notice of acceptance is necessary to bind a guarantor applies only to instruments which are overtures or offers to guaranty. Russell v. Clarke, 7 Cranch, 69; Edmundston v. Drake, 5 Pet. 624; Douglass v. Reynolds, 7 Pet. 113; Lee v. Dick, 10 Pet. 482; Adams v. Jones, 12 Pet. 207; Reynolds v. Douglass, 12 Pet. 504; Davis Machine Co. v. Richards, 115 U. S. 524; Barnes Cycle Co. v. Reed, 84 Fed. Rep. 601; Steadman v. Guthrie, 4 Metc. (Ky.) 146, at page 157; Kincheloe v. Holmes, 7 B. Mon. 5; Oaks v. Weller, 13 Vermont, 106; Newman v. Streator Coal Co., 19 Ill. App. 594; Ruffner v. Love, 33 Ill. App. 601; Neagle v. Sprague, 63 Ill. App. 25.

The rule does not apply to instruments which are absolute guaranties. To this class belongs Davis v. Wells, 104 U. S. 159; Wildes v. Savage, 1 Story, 22; Kent v. Silver, 108 Fed. Rep. 365; Dowd v. National Park Bank, 54 Fed. Rep. 846; Bond v. John V. Farwell, 172 Fed. Rep. 58; Cook v. Orne, 37 Illinois, 186; Newcomb Bros. v. Emerson, 17 Ind. App. 482; Sears v. Swift & Company, 66 Ill. App. 496; American Exchange National Bank v. Severns, 121 Ill. App. 480; Acorn Brass Co. v. Gilmore, 142 Ill. App. 567; Frost v. Standard Metal Co., 215 Illinois, 240; Pressed Radiator Co. v. Hughes, 155 Ill. App. 80; Bryant v. Stout, 44 N. E. Rep. 68; Deering & Co. v. Mortell, 110 N. W. Rep. 886; Lane v. Mayer, 44 N. E. Rep. 73; Shows v. Steiner, 57 So. Rep. 700; Watkins Medical Co. v. Brand, 143 Kentucky, 468; People's Bank v. Stewart, 152 Mo. App. 314; J. L. Mott Iron Works v. Clark, 69 S. E. Rep. 227; Bank of California v. Union Packing Co., 111 Pac. Rep. 573; Emerson Mfg. Co. v. Rustad, 120 N. W. Rep. 1094; Sheppard v. Daniel Miller Co., 68 S. E. Rep. 451; Sheffield v. Whitfield, 65 S. E. Rep. 807; Booth v. Irving Bank, 82 Atl. Rep. 652; McConnon & Co. v. Laursen, 135 N. W. Rep. 213; Furst Mfg. Co. v. Black, 111 Indiana, 308.

The doctrine of notice of acceptance is not applicable to

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Argument for Defendants in Error.

bonds of indemnity or to any form of instrument which is an original undertaking.

A bond of indemnity or other original undertaking when executed, delivered and acted upon becomes effective. Haupt v. James, 120 S. W. Rep. 541; McIntosh v. Reed, 89 Fed. Rep. 464; Newcomb Bros. Co. v. Emerson, 17 Ind. App. 482; Wise v. Miller, 45 Oh. St. 388; Hall v. Weaver, 34 Fed. Rep. 104; Lane v. Mayer, 44 N. E. Rep. 73; Bruce v. Lambour, 127 Louisiana, 969; Haywood v. Townsend, 38 N. Y. Supp. 517; Singer Mfg. Co. v. Freerks, 98 N. W. Rep. 705; Lachman v. Block, 15 So. Rep. 649; Swope v. Forney, 17 Indiana, 385; Saint v. Wheeler, 95 Alabama, 362; Fidelity Life Ins. Co. v. Stegall, 111 Pac. Rep. 389; Wheeler v. Rohrer, 52 N. E. Rep. 780; Page v. White Machine Co., 34 S. W. Rep. 988; White Machine Co. v. Powell, 74 S. W. Rep. 746; Engler v. Fire Ins. Co., 46 Maryland, 322; Walker v. Brinkley, 42 S. E. Rep. 333; Klosterman v. Olcott, 41 N. W. Rep. 250; Fiala v. Ainsworth, 88 N. W. Rep. 135; Bank of U. S. v. Dandridge, 12 Wheat. 64; Bird v. Washburn, 10 Pick. 223; Boyd v. Agricultural Ins. Co., 76 Pac. Rep. 986..

It is not necessary that the indemnitors should receive any benefit as a consideration to render them liable. The liability incurred by the indemnitee and the harm and injury suffered by it constitute a valid and sufficient consideration for the bond of indemnity. Chapin v. Merrill, 4 Wend. 657; Emerson v. Slater, 22 How. 28, 43.

Mr. Walter McC. Allen, with whom Mr. Albert Salzenstein was on the brief, for defendants in error:

The instrument was a mere offer and not an absolute and complete obligation under the facts certified in the case. Davis v. Wells, 104 U. S. 159; Davis v. Richards, 115 U. S. 524; Deering v. Mortell, 16 L. R. A. (N. S.) 363; Barnes Cycle Co. v. Reed, 84 Fed. Rep. 603; S. C., 91 Fed.

Argument for Defendants in Error.

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Rep. 481; 20 Harvard Law Rev. 486; Lachman v. Block, 47 La. Ann. 505.

The instrument is not a bond of indemnity. While it does not evidence a completed contract of any kind, yet as an instrument it is, as to the defendants who signed itas distinguished from those who did not sign it—one of guaranty and not of indemnity. 16 Am. & Eng. Ency., p. 168; 22 Cyc., pp. 79, 80; 1 Am. & Eng. Ency., p. 1128; Pingrey on Suretyship, § 4; 20 Cyc., pp. 1397-1400; Kearnes v. Montgomery, 4 W. Va. 29; Courtis v. Dennis, 7 Metc. 518; Hall v. Weaver, 34 Fed. Rep. 106; Brandt on Suretyship, § 1; 15 Halsbury's Laws of Eng., p. 444.

Mutuality of assent is essential to every contract and requires the assent of a party to whom a proposal is made to be signified to the party making it, in order to make a binding contract. In this case there was no signification of assent or notice of acceptance. The instrument never became a binding obligation, regardless of the question as to whether it was in form an instrument of guaranty or of indemnity. Davis v. Wells, 104 U. S. 159; Davis Machine Co. v. Richards, 115 U. S. 524; Lachman v. Block, 15 So. Rep. 649; Louisiana Code, § 1797; Deering v. Mortell, 16 L. R. A. (N. S.) 353; Bishop v. Eaton, 161 Massachusetts, 496; Anson on Contracts, 15, 16; Frost v. Standard Metal Co., 215 Illinois, 245; S. C., 116 Ill. App. 642; Ruffner v. Love, 33 Ill. App. 601; Newman v. Streator Coal Co., 19 Ill. App. 602; Sears v. Swift, 66 Ill. App. 496; Myer v. Ruhstadt, 66 Ill. App. 346; Acme Mfg. Co. v. Reed, 197 Pa. St. 359.

The fact that the instrument in suit was in the form of a bond under seal does not take it out of the general rule requiring notice of acceptance. Davis v. Wells, 104 U. S. 159; Hall v. Weaver, 34 Fed. Rep. 104; Burke v. Delaney, 153 U. S. 235; Jordan v. Davis, 108 Illinois, 336; Philadelphia R. R. v. Howard, 13 How. 334; Rountree v. Smith, 152 Illinois, 493; Stanley v. White, 160 Illinois, 605;