SURETYSHIP AND GUARANTY DEFINED AND DISTINGUISHED. Surety ship is a contract by which one person obligates himself to be responsible for the debt, default or miscarriage of another. The person thus obligating himself is called a "surety," and the person for whom he engages is the primary or principal debtor, and sometimes called simply "principal." The term suretyship further denotes the relation in which the surety stands towards the primary debtor and the creditor whose claim he assures.
A contract of guaranty is likewise a contract to answer for the debt, default or obligation of another; the "guarantor" being the one thus engaging, while the creditor to whom he makes the promise is styled the "guarantee," and the party for whom the guarantor engages is still the principal or primary debtor.
While the terms guaranty and suretyship are fre quently used synonymously, and the definitions show slight difference if any, yet they arc distin guishable by important differences Thus in Mc Millan v. Bull's Head Bank, 32 Ind., II, it is said: "The surety is bound with his principal as an orig inal promisor; he is a debtor from the beginning, and must see that the debt is paid, and is held ordi narily to know every default of his principal, and cannot protect himself by the mere indulgence of the creditor, nor by want of notice of the default of the principal, however such indulgence or want of notice may in fact injure him. On the other hand, the contract of a guarantor is his own separate con tract; it is in the nature of a warranty by him that the thing guaranteed to be done by the principal shall be done, not merely an engagement jointly with the principal to do the thing. The -original contract of the principal is not his contract, and he is not bound to take notice of its non-performance; therefore the creditor should give him notice; and it is universally held, that if the guarantor can prove that he has suffered damage by the failure to such notice, he will be discharged to the extent of the damage thus sustained It is not so with a surety "