Grant, C. J.
(after stating the facts). It is urged on the part of the plaintiff that this was a continuing guaranty, covering both past' and future indebtedness, that such is the plain intent appearing upon the face of the guaranty, and that therefore parol evidence of conversations at and prior to the time of its execution and of the surrounding circumstances is inadmissible as tending to change the plain terms of the contract. This contention cannot be maintained. The contract is ambiguous. It is impossible to tell to what account it referred. If the-guaranty included solely a pre-existing account, it was without consideration and void. 1 Brandt on Suretyship & Guaranty (3d Ed.), § 97, and authorities cited; Walrath v. Thompson, 4 Hill (N. Y.), 200. If it referred to a future account, or if it included the past and also a future account, there would be a valuable consideration for the promise of guaranty. Parol evidence was therefore admissible to explain the ambiguity, and determine
[252] what account was intended to be covered by the guaranty. Columbus Sewer Pipe Co. v. Ganser, 58 Mich. 385; Walrath v. Thompson, supra; White’s Bank of Buffalo v. Myles, 73 N. Y. 335; 1 Brandt on Suretyship & Guaranty (3d Ed.), § 97. The mouths of the two persons, Mr. Lloyd and Mr. Smedley, who made the contract, being closed by the death of one, we must look to find other evidence of what the parties intended. Persons are presumed to know the law, and we cannot, therefore, assume that the parties to this contract intended to include only an account wholly pre-existing, and thus make a void contract.
One Fred Van Fleet was at the time of the transaction connected with the Sail & Sweep Publishing Company. He saw Mr. Lloyd, the manager of the company, about the publication of the July number. He testified that Mr. Lloyd asked to be secured, not for the old account, but for the expense of publishing the July number, before he published it; that witness went to see Mr. Smedley; that while in Mr. Smedley’s office Mr. Smedley had a telephonic conversation with Mr. Lloyd; and that, after this conversation, Mr. Smedley agreed to take care of the bill for publishing the July number. This is the only testimony of any probative force to show the intent of the parties, except that the plaintiff in January following took a guaranty for $2,800 from Smedley and Murray. There is nothing in the record to impeach or cast discredit upon the testimony of Mr. Yan Fleet. We think, therefore, that the trial judge was correct in holding that the guar- • anty covered only the expense of the July issue, and that he was correct in directing a verdict for that amount, unless the record showed that the amount had been paid. Was it paid ? The answer to that question depends upon how payments subsequently made should be applied. Plaintiff made no election. It kept a running account with the Sail & Sweep Publishing Company, charging it in the continuous account for work done, and crediting it on the same account with payments. Such was the status
[253] when this suit was commenced. We held in Grasser & Brand Brewing Co. v. Rogers, 112 Mich. 112, that, where payments are made and credited generally upon an account, they will, in an action against a surety, be applied upon the indebtedness in the order of the creation of the several items. See, also, Gard v. Stevens, 12 Mich. 292.
. Applying this rule — and we see no occasion to depart from it — the plaintiff’s account, guaranteed by the defendant, was paid, and he was entitled to have a verdict in his favor. For this reason, the judgment will be reversed, and no new trial ordered.
Blair, Ostrander, and Brooke, JJ., concurred. Montgomery, J., concurred in the result.
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