State v. Garton. extreme." See, also, Jones v. Estate of Keep, 19 Wis. 369; Union Bank v. Hill, 3 Cold. (Tenn.) 325; Warren v. Paul, 22 Ind. 276. In Dobbins v. Commissioners of Erie Co., supra, the argument against the right of a state to tax the salary of an officer of the United States is, that under the constitution the general government has the right to employ its officers and agents to execute its laws and fix their compensation for the discharge of those services, and that this, being a sovereign power, cannot be controlled by the state. So the state has, under the same constitution, the right to perpetuate itself; to employ its officers to execute its laws; and fix their compensation. In this it acts, under the constitution, as a sovereign, and subject to no other control. Again, it is said the taxation of the office or its salary is in effect a tax upon the United States government. If so, a tax upon the official bond executed by the state officer is to that extent a tax upon the state, and congress can only impose such a tax by apportionment" among the several states which may be included within this Union, according to their respective numbers." Const. art. 1, § 2. True, the amount exacted is small; so it was in the case of the government officer whose office was appraised for taxation. But the power to exact one dollar involves the power to levy one thousand The power to tax involves the power to destroy. The purposes for which taxation may be levied by the national government are expressed, and are a limitation upon the power. Mr. Jefferson says: "To lay taxes to provide for the general welfare of the United States is to lay taxes for the purpose of providing for the general welfare. For the laying of taxes is the power, and the general welfare the purpose, for which the power is to be exercised. Congress are not to lay taxes ad libitum, for any purpose they please; but only to pay the debts, or provide for the welfare of the nation." Jefferson's opinion on the Bank of the United States, 15th Feb. 1781, 4 Jefferson Correspondence, 524, 525. Such, also, were the views expressed by Mr. Hamilton, in his argument on the constitutionality of a national bank, in his treasury report on manufactures; by Mr. Ellsworth, 3 Am. Museum, 338; by President Monroe, in his message, May 4, 1822; by Mr. Adams, in his letter to Speaker Stevenson, July 11, 1832. In the case of Gibbons v. Ogden, 9 Wheat. 199, Chief Justice MARSHALL said: "Congress is authorized to lay and collect taxes, etc., to pay the debts and provide for the common defense and general welfare of the United States. VOL. II.-41. State v. Garton. This does not interfere with the power of the states to tax for the support of their own governments; nor is the exercise of that power by the states an exercise of any portion of the power that is granted to the United States. In imposing taxes for state purposes, they are not doing what congress is empowered to do. Congress is not empowered to tax for those purposes which are within the exclusive province of the states. When, then, each government exercises the power of taxation, neither is exercising the power of the other." Mr. Justice STORY concludes, that, "Under such circumstances, it is not, perhaps, too much to contend that it is the truest, the safest, and most authoritative construction of the constitution." Sec. 927. See, also, 1 Kent Com. 251; Serg. Const. Law, chap. 28, pp. 311, 315; Rawle Const. chap. 9, p. 104. These limitations on the power of congress are, that the taxes must be levied "to pay the debts and provide for the common defense and general welfare of the United States." Const. art. 1, § 8. But the United States are required by the constitution to guarantee to every state in this Union a republican form of government. Const. art. 4, § 4. This requirement would be a mockery, if congress, under the right to tax for the general welfare, could prevent the exercise of the functions of state government. It would be to guarantee but a mere form of republican government, without the power in the government to execute its functions. But it is plain, from the promptitude evinced by congress in the repeal of the tax upon the process of the state courts, and from the exceptions in the internal revenue act, restricting the stamp duty so as not to include official documents issued by the state itself, that there was no intent to pass the constitutional limit, and that this tax upon official bonds given to the state by its officers is an error in drafting the law, which will doubtless receive as prompt correction. Our duty, however, seems plain. In our opinion, the tax upon official bonds is not within the power of congress to impose, under the provisions of the constitution. The demurrer should have been sustained to the paragraph. Judgment reversed, and cause remanded. NOTE. This decision is substantially affirmed by the recent decision of the supreme court of the United States in the case of Day v. Buffington, 3 Alb. Law Jour. 317, wherein it was held that congress has no power to impose a tax on the salary fa Judicial officer of a state, payable out of the state treasury. — REP. McMillan v. The Bull's Head Bank. MCMILLAN, appellant, v. THE BULL'S HEAD Bank. (32 Ind. 11.) Surety-Notice of principal's default. A, B. and C. executed to the plaintiff, a bank, a joint and several bond, in the penalty of $15,000, with a condition reciting that A. had become a member of a certain firm, rendering it probably necessary for him to use more funds in the business than he had at command, and which he proposed to borrow, and then proceeding thus: “Now the foregoing bond is to be in force, and binding upon us, according to its terms, for the full amount of any loans and advances the said bank may make to said A., in connection with his said business, not to exceed in amount $15,000, for which sum, by the foregoing bond, we acknowledge ourselves his sureties, and in case of his failure to pay any such loans or advances as aforesaid, that the same shall and may be collected off us. Unless such loans and advances are made to said A. in his business aforesaid, upon the faith of this bond, the same is null and void," etc. The plaintiff alleged that, on the faith of this bond, and for the purposes therein specified, it loaned A. a sum of money on the checks of two other parties, indorsed by A., and that these checks were protested for non-payment. Held, that the bond was not an overture to guaranty by the sureties, but an actual undertaking. Held, also, that B. and C. were sureties, and not guarantors, and, therefore, not entitled to notice of loans made on the credit of the bond, and of the default of the principal debtor. The surety is bound with his principal as original guarantor, and his obligation to pay is equally absolute, irrespective of any notice of the principal's default, while a guarantor is an individual contractor, to answer only for the consequences of the default of the principal, and is therefore entitled to notice of such defaults. THIS was a suit by the Bull's Head bank against James T. and Samuel E. McMillan and James Goddard, upon a joint and several bond executed by them, in a penalty of $15,000, with a condition reciting that James T. McMillan had become a member of a certain firm in New York, rendering it probably necessary for him to use more funds in the business of the firm than he would have at command, and which he proposed to borrow; and then proceeding thus: "Now the foregoing bond is to be in force and binding upon. us, according to its terms, for the full amount of any loans and advances the said bank may make to said James T. McMillan in connection with his said business, not to exceed in amount $15,000, for which sums, by the foregoing bond, we acknowledge ourselves McMillan v. The Bull's Head Bank. his sureties, and, in case of his failure to pay any such loans er advances as aforesaid, that the same shall and may be collected off of us * *. Unless such loans and advances are made to said McMillan in his business aforesaid, upon the faith of this bond, the same is null and void. In witness," etc. It was averred by the complaint, that the plaintiff, on the faith of the bond, for the accommodation of James T. McMillan in the business aforesaid, loaned to him certain sums, viz., $840 on the check of one Miller on another bank, indorsed by McMillan, and $775 on a similar check of one Meyer, indorsed, etc.; that said checks were duly presented for payment, which was refused, and thereupon protested, etc.; and that both checks remain unpaid, etc. Copies of the bond and checks were made exhibits. There was also a paragraph for money loaned and money paid. It was assigned for error that the court below erred in overruling a demurrer by the sureties to the first paragraph of the complaint. M. M. Ray, B. F. Claypool and B. L. Smith, for appellant. L. & W. O. Sexton, for appellee. FRAZER, C. J. The argument is, that the bond shows a mere overture to guaranty by the sureties, which at most would only create a secondary and collateral liability; and that there should have been an averment of notice of the loans made on the credit of the bond, and of the default of the principal debtor. It was not an overture or proposition to guaranty, but an actual undertaking. The distinction will be readily seen by an examination of the cases of Stafford v. Low, 16 Johns. 67, and Beekman v. Hale, 17 id. 134. There is considerable loose writing in the text-books upon the subjects of guaranty and suretyship. Sometimes the two things are confounded throughout, and the terms used interchangeably, as signifying the same thing. This has introduced some confusion in the cases, so that there are dicta, and even decisions, to the effect that, to fix the liability of a guarantor, notice of default of the principal debtor is required, such as in the case of an indorser of strictly commercial paper. Smith v. Bainbridge, 6 Blackf. 12, is a case of this character. It was decided on the authority of Douglass v. Rey nolds, 7 Pet. 113, and was followed in Virden v. Ellsworth, 15 Ind McMillan v. The Bull's Head Bank. 144. Harris v. Pierce, 6 id. 162, is not quite in harmony with those rulings, however. This doctrine has never been applied, that we are aware of, only in cases of letters of credit and the guaranty of commercial paper, except in Virden v. Ellsworth; and its soundness has been utterly denied, even in that class of cases, in New York and Massachusetts. Oxford Bank v. Haynes, 8 Pick. 423; Douglassv. Howland, 24 Wend. 35; Smith v. Dann, 6 Hill, 543. It is certain that the supreme court of the United States found it impossible to stand upon the broad principle which they had laid down in Douylass v. Reynolds, supra; for, when the same case came before that court again, a very important modification of the former ruling as to notice of default was made. Reynolds v. Douglass, 12 Pet. 497. See also 2 Am. L. Cas. 124. It is possible that the subject should receive a more thorough consideration than it has heretofore received in this court before the questions alluded to can be deemed closed against further discussion in this state. The view which we take of the bond sued on in the case before us renders it unnecessary to enter upon that investigation at present, and what has been said concerning the matter is not intended to commit the court upon it. We are not of the opinion that the instrument sued on is a guaranty, in any strictly legal sense. A guaranty differs in some important respects from suretyship, and it is not easy to define it by any brief and comprehensive formula. Mr. Parsons says: "We cannot, therefore, define a guarantor of a bill or note any better than by saying that he is one who engages that the note shall be paid, but is not an indorser nor a surety." 2 Par. Notes and Bills, 117. And yet the same author, in his excellent work on contracts (chap. VII), uses the terms "guaranty" and "suretyship" as being of the same import. So also does Mr. Chitty, in his work on contracts. Chit. Con. 546. The contract of a surety corresponds with that of a guarantor in many respects, but important differences exist. The surety is bound with his principal as an original promisor; he is a debtor from the beginning, and must see that the debt is paid, and is held ordinarily 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. Being bound with the principal, his obligation to pay is equally absolute. On the other hand, the contract of a guarantor is his own separate contract; it is in the nature of a warranty by him that the thing guaranteed to be |