Goss, J.
This action is brought upon contract upon an alleged written guaranty. It reads as follows:
This agreement made and entered into this 29th day of September, a. d. 1911, by and between A. M. Iverson and J. H. Lockwood, of Rugby, North Dakota, now owners of the Citizens State Bank of Rugby, [387]*387parties of the first part, and Harold Thorson, of Drake, North Dakota, party of the second part,
Witnesseth, That the said parties of the first part for and in consideration of the sum of Eight Thousand Dollars to them in hand paid in Bills Receivable of the said Bank, such as the party of the second part may select, have bargained and sold unto the said party Eighty (80) shares of capital stock of the said Citizens State Bank of Rugby, North Dakota, hereby agree to deliver to the said party of the second part commission notes and mortgages securing the same to the amount of $10,145.
The said parties of the first part further agree to transfer their good will to the said bank, and not to engage in any banking business in the city of Rugby, North Dakota, for a period of five years, nor to make any real estate loans for sale or on commission.
The said parties of the first part further agree to have all bills receivable now in said bank, which are past due or payable on demand, either renewed and secured or paid.
This decision must depend upon the construction to be given to the last paragraph. Plaintiffs contend that by the words “parties of the first part further agree to have all bills receivable now in said bank, which are past due or payable on demand, either renewed and secured or paid,” — defendants have agreed that they will pay all said paper not renewed and secured. Defendants insist that the construction should be that they will have said paper renewed and secured, or paid by the makers. If the plaintiffs are right, this suit is maintainable upon the written contract. If defendants be correct, they can be responsible only to the amount of the actual damage any breach of their contract in failing to procure the makers to pay the notes may have caused plaintiffs, and which damages would be measured by the difference between the actual value of the notes and the amount due upon them, together with the necessary expense of endeavoring to enforce payment.
This portion of the contract does not purport to be one for absolute indemnity. Defendants are not guarantors of payment, but only of collection. Their agreement is none other than to have the makers of all past-due or demand bills receivable, either renew and secure or pay. Such is clearly the construction to be given. Had the agreement ended [388]*388with tbe' words “renewed and secured,” omitting the words “or paid,” it could not be contended that a guaranty of payment could be implied. The only obligation upon defendants would have been to have, procure, cause, or bring about the renewing and securing of the paper by the makers. Did the parties intend, therefore, to obligate themselves to pay absolutely these debts of others by the addition of the words “or paid ?” To hold that such was their intent necessitates a construction that the words “or paid” was intended as the penalty of what must be declared their guaranty of payment. Suppose the contract had omitted the words “or paid,” and this suit, instead of being brought upon the grounds urged, was instead for damages because the-notes had been allowed by defendant to be paid, instead of renewals with security procured or exacted ? In other words, with these two words omitted, had plaintiffs sued for damages because their money was not kept at interest, what would have been the answer ? Simply that the agreement necessarily implied the alternative of payment by the makers, in case they preferred to pay rather, than renew and secure. The words “or paid” add nothing to the legal import of the contract. The omitted words wore nevertheless understood as necessarily an implied part of the contract. How, then, can the situation be changed when the parties have but mentioned such alternative, instead of leaving it to implication? This fairly tests the question, and concludes it against the plaintiff. 'Appellants concede the alternatives “secure or pay” was both given and intended, but argue that, because the alternative of procuring security was not performed by procuring within a reasonable time renewals and security, said alternative under § 4779, Comp. Laws 1913, ceased, and defendants became liable absolutely to pay as upon a guaranty of payment. The fallacy in this position is that it necessitates an entire change of the nature and legal effect of the contract, which is to be construed and determined as of the time of contracting, and not retrospectively, dependent on how’ it was performed or violated, no reference to practical construction being here had. Whether it be a contract guarantying payment, or merely guarantying collection, it is the same now as when executed, and if then it only guaranteed collection, it can never be held to guarantee payment simply because in terms it granted an alternative. That an alternative was given does not authorize the ‘addition, by construction, of a penalty not contracted for. To do so [389]*389would be nothing short of making a contract for the parties which they have not seen fit to malee for themselves.
There are various rules for construction and interpretation of guaranties. In Bell v. Bruen, 1 How. 169, 11 L. ed. 89, it is said that construction of a guaranty should be adopted “which, under all the circumstances of the case, ascribes the most reasonable, probable, and natural conduct, to the parties.” Ibid.; Lawrence v. McCalmont, 2 How. 450, 11 L. ed. 335; London & S. F. Bank v. Parrott, 125 Cal. 482, 13 Am. St. Rep. 64, 58 Pac. 164; Crane Co. v. Specht, 39 Neb. 132, 42 Am. St. Rep. 562, 51 N. W. 1015; Swift & Co. v. Jones, 135 Fed. 438. This is at least a safe and sane general proposition.' Also it should be remembered that a guaranty is an engagement to' pay the debt of another, and “there is certainly no reason for giving it an expanded signification or liberal construction beyond the fair import of the terms. . . . It is to be construed according to what is fairly to be presumed to have been the understanding of the parties, without any strict technical nicety. The presumption is, of course, to be ascertained from the facts and circumstances accompanying the entire transaction.” 6 Enc. U. S. Sup. Ct. Rep. 584 E.
Search has been made in vain for a guaranty identical or closely analogous in terms. An exhaustive reading of authority convinces that each case must be decided under its peculiar facts, and largely upon general principles. It was well said in White’s Bank v. Miles, 73 N. Y. 335, 29 Am. Rep. 157, at page 161: “Precedents do not help much in the construction of such instruments. The dividing line between those which are limited [guaranties] and those which are continuous is not always plainly seen, and cases apparently quite similar are sometimes found upon one side of it and sometimes upon the other. Where there is uncertainty upon the face of the instrument, its construction must necessarily depend upon the circumstances, which throw light upon it, and hence the diversity.” Exactly our conclusions. A few of the many adjudicated guaranties may be briefly set out to illustrate the difficulty of applying precedent. For instance, in Hotchkiss v. Barnes, 34 Conn. 28, 91 Am. Dec. 113, the guaranty reads: “You can let Day have what goods he calls for, and I will see that the same are settled for. Yours truly, H. S.
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Goss, J.
This action is brought upon contract upon an alleged written guaranty. It reads as follows:
This agreement made and entered into this 29th day of September, a. d. 1911, by and between A. M. Iverson and J. H. Lockwood, of Rugby, North Dakota, now owners of the Citizens State Bank of Rugby, [387]*387parties of the first part, and Harold Thorson, of Drake, North Dakota, party of the second part,
Witnesseth, That the said parties of the first part for and in consideration of the sum of Eight Thousand Dollars to them in hand paid in Bills Receivable of the said Bank, such as the party of the second part may select, have bargained and sold unto the said party Eighty (80) shares of capital stock of the said Citizens State Bank of Rugby, North Dakota, hereby agree to deliver to the said party of the second part commission notes and mortgages securing the same to the amount of $10,145.
The said parties of the first part further agree to transfer their good will to the said bank, and not to engage in any banking business in the city of Rugby, North Dakota, for a period of five years, nor to make any real estate loans for sale or on commission.
The said parties of the first part further agree to have all bills receivable now in said bank, which are past due or payable on demand, either renewed and secured or paid.
This decision must depend upon the construction to be given to the last paragraph. Plaintiffs contend that by the words “parties of the first part further agree to have all bills receivable now in said bank, which are past due or payable on demand, either renewed and secured or paid,” — defendants have agreed that they will pay all said paper not renewed and secured. Defendants insist that the construction should be that they will have said paper renewed and secured, or paid by the makers. If the plaintiffs are right, this suit is maintainable upon the written contract. If defendants be correct, they can be responsible only to the amount of the actual damage any breach of their contract in failing to procure the makers to pay the notes may have caused plaintiffs, and which damages would be measured by the difference between the actual value of the notes and the amount due upon them, together with the necessary expense of endeavoring to enforce payment.
This portion of the contract does not purport to be one for absolute indemnity. Defendants are not guarantors of payment, but only of collection. Their agreement is none other than to have the makers of all past-due or demand bills receivable, either renew and secure or pay. Such is clearly the construction to be given. Had the agreement ended [388]*388with tbe' words “renewed and secured,” omitting the words “or paid,” it could not be contended that a guaranty of payment could be implied. The only obligation upon defendants would have been to have, procure, cause, or bring about the renewing and securing of the paper by the makers. Did the parties intend, therefore, to obligate themselves to pay absolutely these debts of others by the addition of the words “or paid ?” To hold that such was their intent necessitates a construction that the words “or paid” was intended as the penalty of what must be declared their guaranty of payment. Suppose the contract had omitted the words “or paid,” and this suit, instead of being brought upon the grounds urged, was instead for damages because the-notes had been allowed by defendant to be paid, instead of renewals with security procured or exacted ? In other words, with these two words omitted, had plaintiffs sued for damages because their money was not kept at interest, what would have been the answer ? Simply that the agreement necessarily implied the alternative of payment by the makers, in case they preferred to pay rather, than renew and secure. The words “or paid” add nothing to the legal import of the contract. The omitted words wore nevertheless understood as necessarily an implied part of the contract. How, then, can the situation be changed when the parties have but mentioned such alternative, instead of leaving it to implication? This fairly tests the question, and concludes it against the plaintiff. 'Appellants concede the alternatives “secure or pay” was both given and intended, but argue that, because the alternative of procuring security was not performed by procuring within a reasonable time renewals and security, said alternative under § 4779, Comp. Laws 1913, ceased, and defendants became liable absolutely to pay as upon a guaranty of payment. The fallacy in this position is that it necessitates an entire change of the nature and legal effect of the contract, which is to be construed and determined as of the time of contracting, and not retrospectively, dependent on how’ it was performed or violated, no reference to practical construction being here had. Whether it be a contract guarantying payment, or merely guarantying collection, it is the same now as when executed, and if then it only guaranteed collection, it can never be held to guarantee payment simply because in terms it granted an alternative. That an alternative was given does not authorize the ‘addition, by construction, of a penalty not contracted for. To do so [389]*389would be nothing short of making a contract for the parties which they have not seen fit to malee for themselves.
There are various rules for construction and interpretation of guaranties. In Bell v. Bruen, 1 How. 169, 11 L. ed. 89, it is said that construction of a guaranty should be adopted “which, under all the circumstances of the case, ascribes the most reasonable, probable, and natural conduct, to the parties.” Ibid.; Lawrence v. McCalmont, 2 How. 450, 11 L. ed. 335; London & S. F. Bank v. Parrott, 125 Cal. 482, 13 Am. St. Rep. 64, 58 Pac. 164; Crane Co. v. Specht, 39 Neb. 132, 42 Am. St. Rep. 562, 51 N. W. 1015; Swift & Co. v. Jones, 135 Fed. 438. This is at least a safe and sane general proposition.' Also it should be remembered that a guaranty is an engagement to' pay the debt of another, and “there is certainly no reason for giving it an expanded signification or liberal construction beyond the fair import of the terms. . . . It is to be construed according to what is fairly to be presumed to have been the understanding of the parties, without any strict technical nicety. The presumption is, of course, to be ascertained from the facts and circumstances accompanying the entire transaction.” 6 Enc. U. S. Sup. Ct. Rep. 584 E.
Search has been made in vain for a guaranty identical or closely analogous in terms. An exhaustive reading of authority convinces that each case must be decided under its peculiar facts, and largely upon general principles. It was well said in White’s Bank v. Miles, 73 N. Y. 335, 29 Am. Rep. 157, at page 161: “Precedents do not help much in the construction of such instruments. The dividing line between those which are limited [guaranties] and those which are continuous is not always plainly seen, and cases apparently quite similar are sometimes found upon one side of it and sometimes upon the other. Where there is uncertainty upon the face of the instrument, its construction must necessarily depend upon the circumstances, which throw light upon it, and hence the diversity.” Exactly our conclusions. A few of the many adjudicated guaranties may be briefly set out to illustrate the difficulty of applying precedent. For instance, in Hotchkiss v. Barnes, 34 Conn. 28, 91 Am. Dec. 113, the guaranty reads: “You can let Day have what goods he calls for, and I will see that the same are settled for. Yours truly, H. S. Barnes.” Held, under the explanatory circumstances, to be a continuing guaranty. On the contrary, in the [390]*390guaranty in S. Hamill Co. v. Woods, 94 Iowa, 246, 62 N. W. 735, the following is held not to be a continuing guaranty: “Messrs. Hamill & Co. Keokuk, Iowa: I agree to be responsible personally for any goods you may let Robert Breed have, and I will see the same is paid the same as if it was my own debt. [Signed] Annie Woods.” This language was held “not so clear as to indicate its meaning conclusively,” and parol evidence was allowed to show the circumstances under which it was executed. Likewise in the recent case of Merchants’ Nat. Bank v. Cole, 83 Ohio St. 50, 93 N. E. 465, Ann. Cas. 1912A, 779, the following was held to be not necessarily a continuing guaranty, and explainable by parol as to the circumstances and the subject-matter. It would seem to be equally, if not more, clear, certain, explicit, and definite than the one in this contract. The guaranty referred to reads: “I hereby guarantee the payment of all notes of F. E. & G. H. Cole held by the Merchants National Bank; also all renewals of same, or any new loans •made to either F. E. or Gr. II. Cole by the said bank. [Signed] Lucy A. Cole.” It was held to not necessarily include certain new loans made by said bank to said parties. The annotator to Ann. Cas. 1912A, 779, has collected and reviewed scores of cases. And under our own decisions in case of any doubt as to the construction to be adopted, proof , of explanatory circumstances is permitted. Foster County State Bank v. Hester, 18 N. D. 135, 119 N. W. 1044, Hazelton Boiler Co. v. Fargo Gas & Electric Co. 4 N. D. 365, 61 N. W. 151. In the latter case the court explicitly held the contract to be so clear and unambiguous as to obviate the necessary for extrinsic evidence to understand it, but nevertheless it was held to be explainable by the surrounding facts and circumstances. This is perhaps an extreme holding, but it illustrates the reluctance to construe a contract from its terms alone, where any ambiguity arises, or where it is “in any respect ambiguous or uncertain.” Comp. Laws 1913, § 5909. See also §§ 5896 — 5907, Comp. Laws 1913.
But if there be ambiguity in this contract, it is as to whether the paragraph in question amounts to any guaranty whatever. If judicial notice be taken of banking usages, and rules of the state banking- department relative to bad debts. (Comp. Laws 1913, §§ 4146-5191), in connection with the time of the year and that the bank was necessarily to be kept a solvent and going institution, grave doubt might arise as to whether any guaranty whatever was understood to be taken or [391]*391given by tbe agreement “to have all bills receivable, past due or payable on demand, either renewed and secured or paid.” But counsel for respondent have simplified the question by conceding that so far as this case is concerned it may be taken as a guaranty of collection, and have briefed upon that basis. The guaranty is certainly not one of payment.
In the brief of appellants, it is urged that “no sane business man would either buy the $8,000 worth of capital stock of this bank, or take it as a gift, unless such an assurance as a guaranty of payment of past-■due paper was made.” It is unnecessary to speculate as to what should have been contracted for, to determine what has actually been agreed to. It may be remarked, however, that the written contract provides considerable security to the purchasers by its stipulation that they may pay the purchase price of these eighty shares of capital stock by delivering defendants $8,000 face value of such bills receivable of the bank as the purchasers should select and turn over to the sellers as the purchase price. Needless to say, no gilt-edged securities would be delivered to the sellers as said purchase price, if there be worthless paper to turn back. But this was not all. The contract further provides that $10,450 in commission notes and mortgages securing the same should be delivered with the bank on the purchase; $18,450 of indemnity is thus taken. Had more been sought, it should have been plainly stipulated for. That the purchasers knew how to prepare a contract and express themselves therein is evident by these very provisions. It is but reasonable to conclude that had there been any intent either to exact or to give any such broad guaranty as one of payment of all past-due and demand paper remaining unsecured, usual banking custom would have been followed, and plain and unequivocal guaranties of payment taken and given, either by contract or by -indorsement upon said commercial paper.
The contract amounts in legal effect to but a guaranty of collection. It affords no basis for a recovery as upon a guaranty of payment. Dismissal of this action is affirmed.