Case ID: tenn_18/html/0111-01.html
Source: Caselaw Access Project
Author: {"author": "Geeen J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Peay vs. Poston.
    Nashville,
    December 1836.
    When a judgment is obtained against the principal and surety in a note or lili sin-fie, and the party who obtained the judgment agreed with tie principal to stay execution for six months: Held, that such agreement will not disshaige the surety.
    The facts in this case presented several questions, which were argued at the bar, but as the court, in its opinion, has noticed but one, it is unnecessary to state any facts but those upon which the opinion was founded.
    From the bill answer and evidence it appeared that Charles Baily as principal, and complainant as his surety, executed a note for $3G8, which note was assigned to defendant, Pos-ton, who brought suit thereon, returnable to the January term, 182G, of the county court of Montgomery. At the return term Baily confessed judgment, and Poston agreed to slay execution against him for six months, and judgment bjr default was taken against complainant. An execution having been issued against the complainant, he filed his bill to enjoin it. The court below decreed in favor of the complainant, and perpetually enjoined defendant from collecting the debt from complainant. Fiom this decree an appeal was prayed and granted.
    
      Titos. Washington, for complainant.
    Peny, as a surety, is exonerated under the circumstances stated in the bill, and admitted by the answer.
    In the first place, there was a consideration for the agreement made by the creditor with the principal. That consideration consisted in the earlier acquirement of the judgment lien-by Poston, in consequence of the confession of judgment by Baily, the principal, at the appearance term; and in the waiver of any defence, and the release of errors, by the confession of judgment. JWcLemorevs. Poucll, 12 Whe. ¿54: Act of 1801, c 4, § G4. It is the right of the surety, when he apprehends danger, to compel the creditor to sue the principal, and obtain and enforce judgment. Hays vs. Ward, 4 John. Ch. Rep. 123.
    This right, Peay was deprived of in this instance, by the agreement made between the creditor and the principal; which being founded upon a consideration, was binding upon the creditor, and therefore legally prevented him from doing that, which the surety would otherwise have had the power to compel him to do.
    It is not upon the ground of actual injury sustained by the surety, in such cases, that he is entitled to relief; nor is it necessaiy for him to show actual injury. It is upon the ground of potential injury, resulting from the violation by the principal, of any of his, the surety’s rights; or from any act done by the principal, whereby the surety might in any way be misled or prevented from exercising his rights. The cases of Lennox vs. Prout,3 Wliea. 520-, and Bay vs. Tctlmadge, 5 John. Ch. Rep. do not apply.
    
      A. M- Clayton, for defendant.
    After the judgment, Peay became a principal debtor, and consequently has no right to relief. .Boy vs. Talmadge, 5 J. C. R. 305: Lennox vs. Prout, 3 Wheaton: Nayler vs. Moody, 3 Blackford Rep. 92. Poston alledges in his answer, that he was the assignee of the note, and took it without knowing but that all the ob-ligors were principals. He cannot for this reason be liable to Peay for indulgence granted to Bailey, unless it be proved that he bad notice of the relation of the parties, as principal .and surety. 3 Paige, G57: 1 Johns. Ch. Rep. 414.
    2. If the delay is not greater than the defendant could have obtained by making defence to the action, the surety is not discharged. Theobald on Prin. and Surety, 128. This decision-was made in reference to bail, but the principles of the contract of hail are the same as those of the common contract of surety, ib. 122.
   Geeen J.

delivered the opinion of the court.

This biil is filed by Peay, to enjoin a judgment obtained against him by the defendant, in the county court of Montgomery. It appears that Poston held by assignment a note for $268, executed by Charles Baily, together with the complainant and Henry Small as his securities. A suit was brought against Baily and Peay to January term of the county court of Montgomery county, 1826. At the return term, judgment final was taken by default against the complainant. Execution was not issued until after the October Neither Poston nor Baily informed Peay of the agreement to ... , r J e . , J ° indulge or the coniession ol judgment.

It is' contended upon these facts, that the complainant is discharged in equity from any liability for this debt, because of the indulgence which was gjven by the defendant to the principal obligor in the note.

The principles of the case of McLemore vs. Powell, 12 Wheat. 557, as applicable to the present case, is an authority against the complainant. It is true the court say, that if the holder of a bill of exchange enters into a valid contract for delay without the assent of the endorser, it is to his .prejudice, and he is thereby discharged. But why is it to his prejudice? Because, say the court, uhe thereby suspends his own remedy on the bill for the stipulated period; and if the endorser were to pay the bill, he could only be subro-gated to the rights of the holder, and the drawer could or might have the same equities against him, as against the holder himself.

Now this reason why the contract for delay should discharge the surety, does not exist in the present case. The agreement of Poston to stay the’execution against Baily, did aiot prevent Peay from obtaining-, judgment against Baily by virtue of the act of 1809, c 59. By that act, a surety, against whom a judgment may be rendered, may obtain judgment against his principal immediately, for the amount for which he has been so made liable.

The contract between the creditor and the principal debtor for a delay of execution after judgment, cannot affect the remedies of the surety, and he is not injured by it. If, instead of six months, Poston had agreed to wait with Baily ten years, we do not see that Peay would have been injured thereby. The means of securing himself would have been as open to him as though no delay had been agreed upon. It would therefore be against reason, that he should be released in consequence of an act no way injurious to him. This is in principle like the case oflhe holder of a bill, agreeing with the .drawer for delay, without consideration. Such agree-not being binding upon him, the endorser, by paying bill might reinstate himself in the ownership of it, and thereby entitle himself to a personal remedy on the bill against all antecedent parties. 12 Wheat. 556. And because he has this remedy to secure himself, it is correctly holden, that such agreement for delay does not discharge him. The reason for discharging a party in such case would be stronger than in the one under consideration; because in that case he must pay the money before he could have a remedy against the antecedent parties; but here he is required to do no such thing, but may forthwith upon the rendition of judgment against himself obtain one by motion against his principal.

It is alledged the complainant was misled, and induced to neglect his interest, by the commencement of the suit by Poston, and his supposition, that he would prosecute it rigorously to execution. If that be true, it was his own fault. He had no right to depend on the plaintiff in that case. He had the means of securing himself at his own command; and if he failed to do so, blame can attach to no one but himself.

In addition to the above view of the case, it may be observed that had the agreement for delay not been made, Baily would probably have kept off the judgment, by defending the action, as long as the six months agreed on. And when the delay agreed on is not greater than could be obtained by defending the action, it would be against reason as wrell as authority to discharge the surety, for such agreement would do him no injury. Theob. oñ Prin. and Sur. 216: Law Lib. 128. We are of opinion that the decree of the circuit court is erroneous, and that it be reversed, and that the defendant have judgment against the complainant and his security for the injunction.

Decree reversed.