Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1868-01-25
LEGAL.
ReeEsi0ns of the Supreme Court of
Tennessee, at Nashville, December
Term, 1867.

The refusal OF creditor to accept compliance
with a contract upon the part of principal.
for the performance of which only surety Is
bound. is such a fraud upon the rights of the
surety as will in equity discharge him from his
obligations" 10
The ast of Congress declaring United States
Treasury notes legal tender in the payment
of debts. is valid and binding"
=" To hold the acts of the Legislature. State or
natiOnel, ipOperatiye until sanctioned or pro-
mnlgated by the courts Of the cOuRtry, would
be monstrous
johnson and Taylor rs. Iyey
The material facts disclosed by the record in
this cause are briefly these On the TWEEN
tieth of September. one f. A. Holland. the
W. ii. johnson, seven hundred dollars, IN
gold. in consideration of which John
son as principal and, compliments as Sc,
eurities, executed note payable to me salo
Z. A. Holland. dne one day after date and bear
ing interest at the rate of ten per cent: Per.
annum I; afterwards, on the first day of January,l
1861 the said E. A. Holland Endorsed and de-
liyered said note to the defendant. About This
time johnson the principal, became inselvent
and has been so ever since. subsequently, the.
complainants became uneasy in consequence of
their liability, and urged johnson to pay the
money. Thareupon johnson procured the money
from his son-in-l Jaw, Garrett, with whom ne was
in partnership in farming and ma KING WHISKY.
and on the l4th day of January, 1861. went 10
the house of the defendant and rendered TO HIM
the full amount of the note. including principal
and interest, in legal-tender treasury notes OF
| the InlteQ states, WHICH WIS iClucSN
by the defendant. alone upon the ground
the msney rendered was not .goid anu
silver johnson told him at the same
time that he was in falling circumstances ana
| wanted TO pay the money. take up the (his) note
and release his surties. and If be (lyey) did not
| take the money he might consider the surlhes
released. Ivey said he would take.no money
| on the note but gold and silver Afterwards.
| about the 1st of August, 1864 the complaints
still being uneasy, and anxious to be released,
| appealed to Garrett, the son-in-law of W. h.
Johnston to make some arrangement to pay
| said note who agreed with them and w. II
| johnson, that he would get the money and pay
| the debt, and thereupn told complainant lay
lor to tell the parties who had the note 70 bring
ii M TO his house and he would pay il all OF IT
| they would take it, and if not, he would pay the
interest which had accrued on 1t, and soon there-
| after Mrs. Buckley, formerly Mrs. +; A. HOl-
| land, to whom the note was made payable TOOK
| the note to Garrett when he rendered to her the
| full amount due upon the note, including
both principal and interest IN legal ten"
der United States Treasury notes. ~ pursuance
| plainants and g. IL johnson. He told her that
| johnson, the principal debtor. had nothing, and
| that he rendered her the money IN order 20 re-
! lease the complainnnts from their liability
| Mrs Binkley, who then claimed the note as Der
| own, but who was most probably acting as the
| agent of her father, refused to receive any KIND
| of money except gold and silver IN payment oil
| any part of the principal of the note, but con-
| sented to receive payment of the interest which
| had accrued ia the kind OF money rendered. ana
| thereupon Garrett paid her $3.50 3D. which was
| placed as a credit on the note.
| Some several months thereafter, Mrs, Blink
| ley again presented the note to Garrett for pay
| ment of more interest, when he again offered
| te nav her the whole amount due on the note
| in United States Treasury notes. which she again
| refused, upon the ground that the money ten
| dered was not gold and silver. And thus mat
| tiers stood until about the 10Th OF September,
/ 1866 when the defendant instituted suit in the
| Circuit Court of Robertson county, upon said
] note against the principal and securities
| W. II. johnson is insolvent. and if the COM
plaiuants are liable on account of said surety
| ship, they will be compelled to pay said note.
| Under this general state of facts, the complain
ants file this BILL seeking to enjoln said action
| Mt Law. and TO be discharged from their liability.
| The Chancellor refused the relief and decresd
| against the compliments and the surety in the
| injunction bond from which they have appealed
This relief is sought upon two grounds. 1st.
| 1t is alleged that cOmplainants notified the &C.
PENDANT about the first OF the year 1864. TO sue
upon said note, and that they would not longer
be liable on account of their suretyshlp, and
that in consequence of his failure to do so, they
are released. This allegation in the bill AZ de-
MED in the answer, and there IS no proof what
| ever to sustain it, Consequently the complain
ants are not entitled to relief upon this ground,
even if the facts alleged would entitle them to
the relief sought. I'd. The relief IS sought upon
the ground that the creditor refused 70 receive
This il is insisted, and We think correctly, us
charged the suretleS, I|.. I.
A contract by which one person becomes re-
sponsible for the debt of another, i5 in Its gem
eral nature a collateral engagement for another,
as distinguished from an original and dfreci
agreement for the party's own act, and 4 In the
nature of an accessory to principal obligation
Chitty on con-, 4ygi 623
The contract for suretyship imparts entire
| good faith and confidence between the partie:
| in regard to the whole transaction, Any con
cealment of material facts, or any express OF
implied misrepresentation of such facts, or any
| undue advantage taken OF the surety ny tnt
creditor, either By surprise or by Withholding
proper information. will undoubtedly 1urnlst
a sufficient ground to invahdate the con
| tract, upon the same ground the credIoi
is. in all subsequent transactions win TN
debtor, bound to equal good faith TO the surety
| If he does any act injurious to the surety, 81
| inconsistent with his rights, the surety II
all such cases will be discharged and II thu
| creditor has any securely from the debtor
and he parts with u without commanleai !.
with the surety, or by his gross negligence 1t l
lost that will operate 10 discharge the surety
at least TO the value of the security; and |
makesnO difference whether the security exlstet
: at the date of suretyship or not see kedheldl
Ed. of Story,s Eq. Jur., vol. ], sections 524 ~
and 326, and authorities cited also, Bond et ~
, u.s. Ray ct al, 9Th Hum. 4a2.
In the absence of any express adjudication
within our knowledge upon the precise question
: presented, it must be determined by genera
principles of equity.
, We have seen that the contract of the suret
is in the nature of n collateral engagement
/ | for another. and imports entire good falt
between the parties in regard to tn
whole transaction. That any fraud or imposi
ton upon the surety by the creditor. will inval
, | idate the contract. That the creditor is boun
. TO equal good faith tn the surety in all snbse
. | quent transactions with the debtor. and II h
does any act injurious TO the surety or lneonsls
g | tent with his rights, the surety will be dis
| charged.
; The contract of the complainants in this cas-
! was in its very nature an undertaking upon thel
!. part to pay the money in the event their prine
. | mel Iohnson failed TO do so. They had no pow
/, er to compel the creditor to receive the none
I, rendered by johnson. But when 1t was tender
u ed in payment OF the debt, the credltor va
bound, in good faith and in discharge his dr
ties TO the suretes, to have received 1t; and h
refusal to accept compliance with the contrat
upon the part of the principal, for the perform
ance of which only the suretles were boun'
was such fraud upon the rights of the sureti,
y rs will in equity discharge them from their OF
r legations, and we think, would be so upon priI
! ciple whether the principal debtor was soISel
, or insolvent. but more especially 1t Is so Whel
y | he was insOlvent, and that TACT known 10 u
v | creditor at the time.
We cannot imagine how it can in any case
Is made more clearly to appear than it does IN To
r. case. that the conduct Of the creditor has bes
Of injurious to the sureties, II they be held 81
liable upon the contract. Had he accepted 4
" CHARGED from all liability Whilst by his 7
K fusai if the contract be still binding upon u
!, sureties, they will be compelled tediseharge Il
. debt of an insOlvent principal. Thls At seems
in be most inequitable.
We have repeatedly holden that the act
!" Congress declaring United States Treasury not
le a legal tender in the payment Of debts was val
i'll and binding. 4G
The correctness of these decisions have n
y been questioned in argument. but it Is insist
Id that inasmuch as the question has net been juC
n cialIv determined in this State prior TO the IA
of January. 1864, the date of the tender IN Il
ease. therefore an offer to pay in those notes
not constitute q valid tender. This proposlu
II certainly cannot be maintained so to no
would be 10 effect to transfer the law maxi
-. | power from the Legislature to the Judicial
20 partment OF the government. To hold the q
or | Of the legislature, State or national. are II
We | perative until sanctioned or promulgated BY I
:, courts Of the country would, in our opinion,
Sc | monstrOus-
nd 1t follows, from the view we have taken of t
a case, the decree Of the Chancellor is erTOneo
n. and must be reverted, and adeeree entered
- the complainant
a HAWKINS, Judge
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