Case Name: Nashville Bank vs. Campbell and others
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1835-03
Citations: 7 Yer. 353
Docket Number: 
Parties: Nashville Bank vs. Campbell and others.
Judges: 
Reporter: Tennessee Reports
Volume: 15
Pages: 353–364

Head Matter:
Nashville Bank vs. Campbell and others.
Suit was brought on a joint and several bond; the defendants plead, ed that they were the sureties of J, and the action was barred as to them, because not brought within two years after the grant of administration, against the administrator of J; to which plea there was a demurrer; Held, that the plea wasbad.
The act of 1789, ch. 23, sec. 4, limiting suits against executors and administrators, is no bar in favor of co-obligors who are sureties, when the other obligor, the principal, is dead, administration taken out, and no suit brought by the obligee or holder against the administrator within two years after the taking out letters of administration. To discharge themselves they must give notice to the holder under the act oí 1801, ch. 18, to proceed against the administrator.
This is an action of debt brought by the Nashville Bank against Daniel Graham, administrator of John M’lvor, deceased, John C. M’Lemore and George W. Campbell. The defendant craved oyer of the writing obligatory, which was read and set forth in these words:
“$3600. — On the 1st July, 1828, we or either of us promise to pay to the IN ash vi lie Bank, or order, tlnrty-six hundred dollars, payable at the principal Bank at Nashville, for value received, witness our hands and seals this 19th day of December, 1827.
JOHN MTV OR, (Seal.)
G. W. CAMPBELL, (Seal.)
JNO. C. M’LEMORE, (Seal)”
And thereupon, they pleaded jointly “that M’lvor departed this life in February, 1830; that in August, 1830, administration of his effects was granted to the defendant, Daniel Graham, who had given due and legal notice of his appointment; that Campbell and M’Lemore were the securities of M’lvor; that no suit was brought against, or demand made of said administrators, within two years after this administration, and notice thereof by the plaintiff; and that the delay to bring the same was not occasioned by the request of said administrator, wherefore the plaintiff is barred,” &c. concluding with a verification. To this plea the plaintiff filed a general demurrer, in which the defendants joined.
The defendant, Graham, then pleaded separately fully administered, on which an issue to the country was formed. On a trial of this issue, the jury found for the defendant, Graham.
The circuit court, on argument of the demurrer, overruled the same and gave judgment that the defendants go hence; from which judgment an appeal in the nature of a writ of error was prosecuted to this court.
J. S. Yerger, for the plaintiff in error.
The only question in this case is, whether the co-obligors, who are sureties in a note, are discharged, when the principal is dead, and the act of 1789 has been pleaded by his administrator, and he discharged.
By the common law, if the obligation were joint, and one died, it became the debt of the survivor; if joint and several, it was so; if several only, the liability of the survivor still continued. Under our statute no change is made in the liability of the parties by death. I mean under the act of 1789. The liability of one may be discharged by the lapse of time, but as to the other, he still continues liable. The bond is-still his; the obligation still continues as before. In this State the note is the obligation of each, whether expressed to be joint, or joint and several, or several only. It is declared by statute to be joint and several; they are all jointly, or each severally liable. It being the note of each man, as well as the note of all, the liability of each manís several and independent of the other. I Haywood & Cobbs5 Rev. 233.
Where the obligors are severally and independently liable^ if one wishes to discharge^ himself as a surety, he must give notice to the holder or obligee to have suit prosecuted against the principal or his representatives. If he does not, he is as much in fault as the holder; in fact, more; he suffers the holder to trust to him. 1 Haywood & Cobbs, 302. So when a principal dies, the surety is as much bound, when he is individually and independently liable, to take notice of the death of the principal, as the obligee or holder, and if suit is not brought and the money recovered of the principal’s representatives, the loss must fall upon the surety, because of his negligence and default in not giving notice to the holder to bring suit. This must be the construction of the act of 1789, in order to protect commerce and the negociation of paper. 1 Haywood & Cobbs, 302. In notes, each maker is presumed to have a consideration paid to him, and in endorsements each endorser is presumed to have received a consideration for his endorsement, which makes it his own individual contract. If the rule contended for applies to makers, it will apply in favor of endorsers, and defeat the negotiability of paper.
All parties to a note or obligation, who are makers, are, as to the obligee or holder, principals; and only sure ties and principals inter se. ■ If they wish to be recognized as only collaterally or accessarily liable, they must pioceed under the act of 1801, ch. 18, when they can make the defence at law, or they must give notice to the holder or obligee to sue, and rely upon their equity; if suit is not brought in a reasonable time after such notice, which, in such a case as the present, would perhaps be the time limited for suit against the principal’s representative, if they do not proceed in one or the other of the above modes, they will be presumed £o acquiesce in, and assent to the delay, and the discharge of the principal's representatives by operation of law, will not protect them. 2 Yerger’s Rep. 476: 7 Bing. R. 508: 16 Eng. Co. L. 90: 3 Cond. Eng. Ch. R. 159, 250: Theo-boldon Surety 151, in 1 Law Library 80, 81, 90, 91.
It will be no defence for a maker to say, I am a surety, and the principal’s representative, not being sued within two years after administration taken out is discharged, and consequently, I am. They are all principals, as against the obligee or holder, and sureties inter se. The discharge is not by act of the parties, either by a release to the principal, or a payment by him, which would be an extinguishment as to all of that debt. It is only an extinguishment as against the holder, of the remedy as to the party who is dead, but not a satisfaction of the debt, or an extinguishment of the liability of those survivors, who were equally and independently liable. The sureties are guilty of laches in not notifying the ob-ligee .or holder of the death of the principal, and requesting him to bring suit against his representatives. By such neglect the sureties forfeit the equity they might have created by notice, and are more in fault than the holder, who cannot be presumed to know them to be sureties until notified, there being no condition to the bond; and it will not be contended that if they were all principals, that the death of one, and no suit brought for iwo years, would discharge the others. See authorities cited above. Theobold on Surety, 116, 117, in 1 Law Library, 68, 69.
The tearing away a seal of one surely on a several bond, is no discharge to his co-sureties. 1 Law Library, 69: Theobold on Surety, 118: 8 Eng. Co. L. R. 183: 16 Eng. Co. L. R. 146: Cóllins vs. Prosser, 1 Bar. and Cress. 682: S. C. 3 Dow. and R. 112. So mere forbearance or passiveness upon the part of the holder to the administrator, there being no contract between them for delay, does not discharge the surety. 3 Cond. Eng. Ch. R. 159: Theobold on Surety, 135, 136, 137, 13S, in 1 Law Library, 80, and cases cited.
The discharge of the administrator of the principal, in order to discharge the sureties, must be when they, the sureties, are only conditionally and collaterally liable, and not where they are liable as principals and equally bound; and though the discharge of the principal’s estate by the lapse of two years without suit brought for the debt by the holder or obligee, operates against the surety as well as the holder, he cannot complain; it raises no equitable, much less a legal defence, because he could have paid the money and brought suit himself, or he could have given notice and compelled the holder to sue; not having done so, he is presumed to have assented to the delay, and cannot, therefore, complain, but must lie down under his own laches. 3 Cond. Eng. Ch. Rep. 159, 250: Theohold on Surety, 151, in 1 Law Library 90, 91.
T. Washington, for the defendants in error.
1st. The act of 1789, ch. 23, sec. 4, bars the demand against the principal in the note. 3Yerger, 12, 431.
2d. Where the relation of principal and surety exists, whatever destroys thé obligation of the principal, destroys also that of the surety, as his undertaking is merely ac-cessary. Theobold on the Contract of Surety, 1,2, 3, 114, et seq.: 1 Pothier on Obligations, 209, et seq. 360; 13 Massachusetts 201, 162: 15 Massachusetts 6, 58: An-7 gel on Limitations, 283.
3d. An accessary obligation necessarily implies a prim cipal one, so that, in strict technicality, whenever the relation of principal and surety exists, there are two contracts, that of the principal, and that of the surety; the latter being collateral to, and dependent upon the former. In the case under consideration, the contract of Campbell and M’Lemore is a constituent part of the contract into which M’lvor entered; but still, in point of fact, they are the sureties of M’lvor, notwithstanding the contract assumes a form which makes them appear to be joint principals or co-obligors, equally bound with M’lvor in every respect. It may, therefore, be contended, in support of the demurrer, that Campbell and M’lvor are estopped, in a court of law, from showing that the said contract was different from what it purports to be upon its face. The answer to that position is,
1. That a release of one joint obligor is a release of the whole, and that an extinguishment of a joint obligation as to one party necessarily operates as such as to all.
2. That there is no difference between'the. effect of such an extinguishment, when brought about by deed of release from the obligee, and when occasioned by operation of law; provided such operation of law takes place by the voluntary act or omission of the obligee. I Bos. and Pul. 630: 2 Thomas’ Coke, 131, 531: 2 Saunders 48, note: Cro. Car. 551.
3. That by the .act of 1789, ch. 57, sec. 5, this contract is both joint and several, and that, if it could be enforced by the bank against Campbell and M’Lemore, after having discharged M’lvor by' its own negligence, it would result, that it is in the power of the obligee to change a contract that is both joint and several, into a joint one only, nay, into a contract by two instead of three. That being the case, the obligor, whose liability is retained, would be deprived of any recourse against him who might be discharged for a contribution; for, if discharged from the obligation of bis contract to the obli-gee, no consequences could take place by which to charge him in relation to his co-oBligor.
4th. There can be no doubt but that equity would, at any period of the history of the law, have interfered in such a case to relieve a co-obligor, who was, in point in fact, only a surety, from the rigorous consequences of the doctrine of estoppel, where the form of his contract did not express the true relation in which he stood; and where that doctrine was insisted upon to his prejudice, by an obli-gee, who, by his own act of injustice, had created the necessity for its application, and also the hardship complained of. Courts of law, of late, have taken much more extensive cognizance of the rights and obligations of sureties than formerly. By express act of assembly in this State, if the relation of principal and surety do not appear upon the face of a bond or other instrument, it may be inquired of in a court of law, and upon being ascertained, a summary remedy is given against the principal. Act of 1809, ch. 69,sec. 2: 1801, ch. 15,sec. 1,2,3: 1801, ch. 18. Following out these principles of legal policy, the ordinary powers of a court of law are competent to afford relief in this case.
F. B. Fogg and Edwin II. Ewing followed on the same side.
James Campbell, for the plaintiff in error,
in reply. 1st. The note sued on is a joint and several obligation, in which all are principals, and none of them securities; and defendants, Campbell and M’Lemore, cannot say, in opposition to their bond, they are securities only; they are estopped by their deed. Theobold on Principal and Surety, 69, at top, or 117 marginal; also 98, at top, or 165 marginal. See also Armstrong vs. M’Connell, (1 Yerger’s Reports, 33,) where the court decide, you can not enquire into the consideration of a sealed instrument at law, which is the same principle, in substance, as the one above laid down. Powell on Con. 332 — 33. Nor can you receive parol evidence to explain it. Powell on Contracts, 431. In equity, it may be received to show fraud or mistake. Powell on Contracts, 432.
2d. Admitting M’lvor was principal and Campbell and M’Lemore securities only, the extinction of the obligation, as it respects the principal, is no extinguishment of it as relates to the securities, where that extinguishment is produced by operation of law. As an illustration of this rule, take the very note which has just been read;, suppose it to be a joint note only, instead of being joint and several, and that Campbell and M’Lemore had signed as securities, and not as principals. M’lvor, the principal,, dies; by the common law, the obligation is extinguished as to him and his representatives, but so far from its being extinguished as to the surviving obligors, Campbell and M’Lemore, they are the persons, and the only persons, that are liable. Bac. Abr. Obligation, D 4, and the authorities there referred to. Chitty on Pleading, 37.
Take also the case where the principal is an infant^ and he pleads his infancy. The bond is the act of the infant. He cannot plead non est factum. The bond, as it respects the infant, is not void but voidable. He pleads his infancy, and the obligation is extinguished as to him; does that release his securities who are bound in the bond with him.
Take also the case where the principal becomes bankrupt, and he pleads his discharge under the bankrupt law. The debt is extinguished as to the bankrupt principal, but the securities are not thereby released. Nor is the security released, though the creditor proves his debt and enables the bankrupt to obtain his certificate after being notified by the security not to do it. See Brown vs. Carr and others, 3 Condensed E. C. R. 250.
Suppose Campbell and M’Lemore had given their sep arate note for M’lvor’s debt, and M’lvor had contracted with them to pay the amount, Campbell and M’Lemore could not rely on the statute of limitations, because if they did not sue M’lvor it was their own fault; so here if Campbell and M’Lemore did not notify the creditor to sue, it was their fault.
3d. The obligation, even as it respects M’lvor, is not extinguished by the lapse of two years. The remedy of the plaintiff against M’lvor’s property in Tennessee is gone; hut if M’lvor has property in Virginia, or any other State where there was no statute like ours, the plaintiff could take this note where the property is and recover the amount. The statute of limitations operates upon the remedy only. The lex fori, and not the lex loci, is the rule of its operation.
4th. There is no principle better settled than that “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 called upon by the surety, the creditor is under no obligation to sue the debtor.” When the surety requires the bond to be put in suit, if the creditor fails to bring suit he violates his duty, and not before; and for this violation of duty, he is precluded from pursuing the security afterwards. But until he is so notified by the surety, he may rationally suppose that the debtor and security do not want to be sued, and he may extend his indulgence, his good will, his friendly disposition to the obligors without prejudice. See Theobold on Principal and Surety, 80, at top, or 135, 136, marginal: Eyre vs. Everett, 3 Condensed E. C. R. 159, 160, 161; the concluding remarks of the chancellor particularly. Defendants then cannot say we have violated our duty, when it was their duty, if they wanted suit brought, to have notified us of the fact. But it is not pretended they ever wished or required a suit to be brought, and, no doubt, considered it rather a rough salutation when, at last, the writ was served 0n them. See also 15 J. R. 433, Fulton vs. Matthews. The debtor surely is not released till the creditor is guilty of laches, or neglect of duty, and he is not guilty of laches or neglect of duty, until he is notified to proceed and fails to do so; and even then, the security is not exonerated unless he is damnified by the neglect. 13 J. R. 3S3.
5th. If defendants are injured, it has not been by our neglect to sue, but by their not notifying us to sue; but, in truth, the failing to bring suit within two years after administration on M’lvor’s estate, does not, in the slightest degree, affect the rights of Campbell and M’Lemore'. They are not injured by the delay. Their right of action at common law would accrue to them against M’lvor upon the payment of the money due on the note, and not before. See 8 J. R. 249. And their right to a motion would accrue at any time on a judgment being obtained against them, and.if you now render a judgment against them, or they should pay the money at any time hereafter, they have the same right to their suit or motion they ever had.
It is unnecessary to consider how the case would be if M’lvor’s estate had been good at his death, and the plaintiff could have made the'money by suing them, out of the estate, (the estate, by casualty, having since become insolvent, &c.) because that point is not made in the record; but if it were it would not avail, for the delay was at the risk of the securities until we were notified to sue. It was their neglect and not ours. They chose to trust M’lvor the most when they became his securities, and they continued to trust him most by standing his security, and he who trusts most, must suffer most.
The plea or replication, &c. of an estoppel, is only necessary when the matter which constitutes the estoppel docs uot appear in any previous part of the pleadings. 1 jChitty, 592, marginal et seq.
The act of 1809 only authorizes an inquiry into the t r • • i j J . . 1 J , ,. tact oí principal and surety as between the co-obligors.

Opinion:
Peck, J.
delivered the opinion of the court.
It is strenuously urged that the demurrer admits the truth of the plea that McLemore and Campbell stand in the relation of securities to the principal obligor M'lvor, and the action being barred as to Graham, the personal representative, is also barred as to the securities. Does the demurrer admit the fact as contended? The party defendants have set out the instrument on oyer, by which it does not appear that the defendants, McLemore and Campbell, are sureties. On the contrary, the bond appears to be a joint and several obligation; a replication to the matter of the plea, affirming that the obligation was joint, became unnecessary, because by the shewing of the defendants, they set forth the matter as fully as the same could have been replied. Let the question be disguised as it may, it amounts to this: can the co-obligors, Campbell and McLemore, plead the statute of limitations of two years, made for the benefit of executors and administrators? It is clear they cannot. The provision in the act of Assembly in favor of personal representatives can have no interpretation beyond its plain intention; it can have no construction to reach those beyond its purview. Any one of these defendants might have been sued for this debt. Even the seeming hardship vanishes when it is considered, that by the act of 1801, ch. 18. Campbell and McLemore, supposing them to be securities, had the right to give notice to the Bank and coerce suit within twenty days, and in default on the part of the Bank, in commencing the action, the securities would have been excused. If we take legislative provisions for our guide, let us take them altogether, and ascertain their bearings. We will find the provisions all broad enough on the one side to make the surety safe, on the other to secure the rights of creditors; but we are not to for get in thus viewing the subject, that to have the benefits the acts confer, they must be asked for at a proper time and in legal form. Had the administrator, who only stands in the place of M'lvor, neglected to avail himself of the plea of limitations of two years, it would have beenlost to him; so too, the neglect of M'Lemore and Campbell-to require the institution of a suit in the manner pointed out. The right is lost by their laches.
This is not a case of conditional liability; there is no stipulation to become liable in default of M'lver; the liability is direct as to all.
It is not a case of the release of one, for that would be a direct act which would be proof either direct -or implied of satistaction.
In short, when we fix the relation of parties and look, to what has been done by them, the whole case is settled. The representative by the death of the principal, by a rule of express enactment, may stand exonerated; but this is no satisfaction, it is no release of the obligation which is single as to all the obligors.
•Judgment reversed.