Case ID: miss_12/html/0165-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Clayton", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JULY TERM, 1843.
    William H. Johnson vs. The President, Directors, and Company of The Planters Bank of the State of Mississippi.
    The creditor, in order to preserve his rights against a surety, is not bound to active diligence, and if he merely remain passive, his rights are not impaired.
    If a creditor, by any valid agreement, tie his own hands for even a day, by which, during that day, he could not sue, the surety is released.
    If a creditor, who holds a note against a principal and sureties, fails, after the death of the principal, to present it to the administrator, within the time
    '* prescribed by law, ,to save the bar of the statute, the sureties are not thereby discharged.
    Whether our statute (How. & Hutch. 413,) limiting the period in which claims must be presented against estates of deceased persons, and providing, that on a failure to present, the claim is barred, and the estate discharged from the debt, is anything more than a mere statute of limitations ? Quere ?
    
    A surety on a note, the principal in which is dead, may compel the holder of the note to present it to the administrator in time to save the bar of the statute.
    In error, from the Holmes circuit court.
    The defendants in error sued the plaintiffs in error, William H. Johnson, Sidley M. Lynch, and Thomas T. Lahd, upon the following note :
    $9000. Vicksburg, March 19, 1838.
    Twelve months after date, we, or either of us, promise to pay to the order of the President, Directors, and Company of the Planters Bank of the state of Mississippi, Nine Thousand Dollars; value received;- negotiable and payable at their office, at Yicksburg, Mississippi, for the use of the first drawer.
    Thomas Land.
    William H. Johnson.
    S. M. Lynch.
    Thomas T. Land.
    
      The declaration was filed, and process issued, March 26, 1840. At the return term the defendants appeared, and plead non assumpsit, when the cause was regularly continued from term to term, until the April term, 1842, when leave was given to file additional pleas ; whereupon several special pleas were filed, setting up that Thomas Land, the principal in the note, died before its maturity ; that the other makers were his sureties, and that the. plaintiffs had not presented the note to the administrator of Land, in time to save the bar of the statute ; whereby they were discharged. It is not deemed necessary to set these pleas out in full, as' their form is not questioned by the decision of the court, and the facts set forth in them were offered in evidence under the plea of non assumpsit. The amended pleas were demurred to, and the demurrer sustained.
    The case w.as submitted to the jury on the plea of non assumpsit, who found a verdict for the plaintiffs below. On the trial, the defendants offered to prove, that Thomas Land, whose name is first signed to the note sued on, was the principal obligor ; that the others were mere sureties. That the principal died intestate, on the 16th of June, 1839; that the defendant, William H. Johnson, administered on the estate of Land, on the 20th o'f July, A. D. 1839, and advertised, commencing on that day, for six consecutive weeks, in two public newspapers, published in Mississippi, the ordinary administrator’s notice to creditors of the deceased; that the plaintiffs were residents of the state of Mississippi; that there was n& proof‘that the note sued on had ever been presented to Johnson, the administrator, other than that shown by the record.
    This testimony was rejected, and the case brought by writ of error to this court.
    
      Brooke, for plaintiff in error.
    The question raised by the demurrer to the plea in this case is, whether the omission of the plaintiff to present his claim to the administrator of the principal obligor in the note, within the time prescribed by law, operates as a release to the coobligors. The facts stated in the plea are in substance as follow : Thomas Land, the first maker of the note, died; his estate was regularly declared to be insolvent by the administrator, and notice published by him to creditors, to present their claims within eighteen months, or that the same would be barred. This claim was not so presented; to this plea there is a demurrer, which raises the question above stated. The sustaining this demurrer is the error assigned.
    Considering the makers of the note as all principals and joint contractors, the rule will apply, that a release to an obligor is a release to all. 4 J. C. R. 123, 129. 6 J. C. R. 242. A release may be by operation of law, as well as by deed. Gow on Part. 202, 203. 10 Johns. R. 459. Collier oil Part. 235.
    Considering the present defendants as sureties merely, which is alleged in the plea, and confessed by the demurrer, then the omission of the plaintiff to present his claim, is such an act as will release the sureties.
    A surety is released when the creditor commits himself, by forbearance to sue or act. 2 Pirtle’s Dig. 247, 248. 1 Call, 18. IMun. 283. 15 Johns. R. 433. Chit, on Bills, 371, 379. 2 Pirtle, 432, 433. It is presumed that an act of omission will be as equally fatal to the plaintiff as a positive act of commission, when the consequences of both acts are the same ; that is, the tying up the hands of the creditor, so as to prevent his suing the principal. The reason why, in the case of joint contracts, a release to one operates as a release to all is, that a release supposes satisfaction, and there ought not to be more than one satisfaction of the same debt. Now the act referred to requiring creditors to present their claims against the estates of decedents, within a certain specified time, or that they would be barred, is, in effect, a statute of limitation ; and the reason upon which all statutes of limitation are based is, that payment is presumed from lapse of time, and this is a presumption that the law does not permit to be rebutted. In this case, then, the law presumes payment by the administrator of the estate of Thomas Land, and will not permit further satisfaction by the sureties or co-obligors.
    
      This caséis distinguishable from the case of K.err v, Brandon, 2 How. 710:
    .1. Because the pleas were by the defendant, as administrator, when he was sued in his own right.
    2. Because that was not such a claim as could be presented as prescribed by law; being a claim for damages, for a breach of duty, as a public officer.
    
      E. Mason, for defendants in error.
    This case is one where the defendants, joint makers of a promissory note, seek to avail themselves of the non-presentation of the note to the administrator of the principal obligor, as averred in the plea within the prescribed time, by means of which non-presentation within the time prescribed, (see 115th sec. Orphan Courts Law,) the estate of said principal obligor was released. That a demurrer was properly filed to this first special plea we presume has already been decided in this court; the defendants here are sued in their individual character alone, and not as administrators; and, sued thus in their individual capacity, could not be affected by presentation or non-presentation of the note within the prescribed time to Land’s administrator. 2 How. 910, and 1 Ibid. 115. So far as regards the rights of sureties, they are well settled; that there is no obligation on the part of the obligee for active diligence against the principal, see 7 Johns. 332; 2 Johns. Ch. Rep. 562. The surety stands as a guarantee, and it is his business to see that the principal pays, and not the creditor. Hays v. Ward, 4 Johns. Ch. Rep. 131; 6 Yessey, 734.
    A surety may pay the debt, and be substituted to the obligee’s rights, and in the case at bar had that means of saving himself, or might have presented the note himse/f to the administrator, if he thought proper; or, possibly, have required the obligee so to do, by paying the money and indemnifying against all expense, so that he, the surety, should have the benefit of such presentation, as in cases of bankruptcy. 6 Yes. 734. If such be the rule of law, as it respects principal and surety, the demurrer was properly sustained to the first special plea.
    
      To the second plea of a release for the same cause, the evidence was properly rejected by the court; for the same reasons, and because the very facts offered to be given in evidence made it appear that William H. Johnson, defendant, and William H. Johnson, administrator of Land, were one and the same; and thus notice was given, coming exactly within the case of Smith v. Smith’s Administrators, 3 How. 216 and also Wren v. Span, 1 How. 115.
    And further, a surety may, by depositing the amount due, and saving the creditor from expense, even compel the creditor to prove, under a commission of bankruptcy, for benefit of the surety. 1 Cooke’s Bank. Laws ; 6 Yes. 734. Nor will delay in calling upon the principal absolve the securities, unaccompanied with any binding contract for that purpose ; 7 Johns. Rep. 332 ; Wright v. Simpson, 6 Yes. 734; and the risk of the insolvency of the principal obligor is one assumed by the surety.
    The surety in this case, if necessary, may have proved the note against the estate, or compelled the creditor so to do for his benefit, as in the case of bankruptcy.
    
      A. Hays, for defendant in error.
    All the matters worthy of notice, in this cause, are in relation to the demurrer to the second plea of the original defendants. These are the following substantial objections to the said second plea: 1. It is a plea puis darrein continuance. Great certainty is requisite in pleas of this description. The plea states that the cause of defence relied on originated on the-day of --, 1841; that is to say, some time between the 9th of October, 1840, and the April term of said court, 1841, and the plea is offered at the April term, 1842. The substantial facts of the plea are — 'That Thomas Land, deceased, was the principal obligor; that these defendants were securities; that William H. Johnson, one of the defendants, had administered on the estate of said Land on the 20th of July, 1839 ; that said Johnson, according to the statute, in such case made and provided, had made publication for creditors to present their claims against said estate, or they would be barred; that this claim of plaintiffs was not presented until after the expiration of eighteen months from and after such publication, which transpired between October, 1840, and April, 1841; defendants, Land and Lynch had, previous to 1840,'pleaded, and Johnson now joins them in this form of a plea, and is subject to the same incidents. It is now alleged by defendants in error, that a plea of this kind could not be pleaded after the April term, 1841, because a term had intervened after the cause of defence arose, and before the filing of a plea in this case two terms had intervened, to wit, the October term, 1841, and the April term, 1842.
    2. The record and plea show that a good presentation was made to said Johnson. Said defendant acted in the double capacity of administrator of said estate, and as co-obligor to said bond, who was served with process in this action about twelve months before the expiration of the eighteen months required in said publication. The plea admitting the existence of this action at the October term. 1840, and the process, had been served as far back as the 27th of March, 1840. 1 How. 119; 3 Ibid. 216.
    3. The plea does not aver that these defendants are discharged from their said obligation, by reason of anything contained in said plea; although said claim may be barred, as against the estates of said Thomas Land. 1 How. 119.
    4. If the suit should, in fact, be barred as to the administrator of said Thomas Land, deceased, it is no bar to the action against his co-obligors, because, in this state, all obligations are joint and several; besides, a remedy may be lost by operation of law against a principal, and yet continue in full force against a co-obligor or security. 2 How. 910, 911; 7 Yerg. 353; Theob. on Surety, 113, irj 1 Law Lib. 67.
    5. The policy of this statute, barring claims against decedent estates, was intended to protect such estates’ against fraud and imposition, and for the security of administrators themselves, and not for the purpose of protecting others differently situated. If the statute intended to protect co-obligors, why did it not say so 1
    
    6. The plea shows that all of the defendants had timely notice of the existence of this claim, so that they might have proceeded against the estate of Thomas Land before the claim was barred.
   Mr. Justice Clayton

delivered the opinion of the court.

The only question presented for consideration in this case, is whether if a creditor, who holds a note against a principal and sureties, after the death of the principal fails to present it to the administrator within the time prescribed by law, the sureties are thereby discharged.

The general rule is, that the obligation of the surety becomes extinct, by the extinction of the obligation of the principal debtor. An exception to this rule takes place, whenever the extinction of the obligation of the principal, arises from causes which originate in the law, and not in the voluntary act of the creditor. As in bankruptcy. Theob. on Prin. and Surety, 67; Brown v. Carr, 7 Bing. 508. The creditor, in order to preserve his rights against the surety, is not bound to active diligence, and if he merely remains passive, his rights are not impaired. He must do no act which is calculated to injure the surety; he must always be in a situation to proceed if he is required to do so. If he ties his own hands by any valid agreement, for even a day, by which during that day he could not sue, the surety is entitled to be released. But this arises from his own act, placing it out of his power to bring suit, if he were called upon to do so. The rule is thus strongly stated by Theobald, p. 80: “ Forbearance or mere passiveness for any length of time, on the part of the creditor towards the debtor, will not discharge the surety, because until required to sue by the surety, the creditor is under no obligation to do so.” There must be a contract between the creditor and principal debtor, so as to prevent the surety from having the same remedy against the principal, as he might have had upon the original contract. Heath v. Kay, 1 Y. & J. 434; McLemore v. Powell, 12 Wheat.; Newell and Pierce v. Hamer, 4 Howard, 684.

It is thus shown to be settled law, that nothing is required of the creditor, except that he should not increase the hazard of the surety, or do any act that would place it out of his power to bring suit if called on to do so. In addition to the means which the rules of the common law and of equity, place within the reach of the surety for his indemnity, we have a statute which provides that on payment or tender of the amount due to the creditor, the surety shall have right to demand an assignment of the instrument, on which he may bring suit. H. & H. 374.

The creditor would often not give the credit without security, he takes it for his own indemnity, the surety knows his own risk. If he desires to lessen that risk he may file a bill to compel the bringing of the suit, or by payment he may have an assignment of the instrument. But while both remain passive, the operation of the law will not discharge the surety. We have seen that this is the rule, in reference to cases of bankruptcy ; there is another strong illustration in the instance of joint obligations at common law. In such case, if the principal obligor died, his representatives could not be sued, but the surety only. The action as to the estate of the decedent was entirely gone, but continued as to the survivor, even though that survivor were a mere surety. And unless in a few special and excepted cases, of which partnership contracts formed one, there was no remedy against the representatives of the decedent, even in equity. Rawstone v. Parr, 3 Russell, 424; 1 Rob. Prac. 49; 2 Williams on Executors, 1072.

This particular case is changed since the passage of the act in regard to joint obligations ; but it shows the principle which applies in cases of discharge by mere operation of law, and that the surety may continue bound, notwithstanding the discharge of the principal.

Equity will sometimes give relief, either total or partial, according to circumstances, to a surety when he has been prejudiced by the act- of the creditor. As where a levy has been made on property of the principal which is released by the creditor from motives of kindness to the debtor, there equity will relieve to the extent of the value of the property levied on and discharged. But this is on the ground of the active interference of the creditor. Cooper, et al. v. Wilcox, et al. 2 Dev. & Bat. Eq. R. 91; Mayhew v. Crickett, 2 Swanst.; Capel v. Butler 1 Eng. Con. Ch. R. 543.

In Tennessee, under a statute in many respects like the one under consideration, it has been holden, that a failure to proceed by the creditor in the specified time, does not discharge the surety, and that after judgment against him, he may recover of the estate. 9 Yerger, 57. It may be well to observe, however, that there is this difference between our statute, and that of Tennessee. Ours not only directs that the claim shall be barred, but also that the estate shall be discharged. The Tennessee act is in terms simply a statute of limitátions, directing that the claim shall be barred in law and in equity. Whether ours is more than a statute of limitations, it is not necessary now to determine. It may be well to remark, though, that in New York it has been decided that a similar law of the island of St. Croix, is only a statute of limitations, and that a claim growing up under it is, when sued on in New York, governed by the statute of limitations of that state. Every one at all acquainted with the conflict of laws will see the force and point of this decision. Lincoln v. Battelle, 6 Wend. 475. But whether our act be one merely of limitations, or something more, cannot affect this question, because we have seen that in cases of bankruptcy, of joint obligations, and of discharges by mere operation of law of the principal, the surety remains bound. Of course where the statute of limitations has run as to both, both are released.

The sureties may, in such cases, compel the presentment-of the claim in due time, and thus preserve their recourse against the estate beyond doubt. If they fail to do so, they are in fault, in neglecting to protect their own interest, and have no right to throw the consequences of their negligence upon the creditor. See Nashville Bank v. Campbell, et al. 7 Yer. 353.

This precise point has already been determined by this court. Kerr v. Brandon, 2 How. 910; but to endeavor to satisfy the bar we have gone^more'fully into the reasoning, than was done on that occasion.

The judgment is affirmed.

A petition for a rehearing was filed in this case; but the court adhered to its former opinion, and refused to grant the rehearing.