Case Name: Thompson vs. Watson and Gibson
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1837-12
Citations: 10 Yer. 362
Docket Number: 
Parties: Thompson vs. Watson and Gibson.
Judges: 
Reporter: Tennessee Reports
Volume: 18
Pages: 362–369

Head Matter:
Thompson vs. Watson and Gibson.
Nashville,
December, 1837.
A surety or endorser may, notwithstanding the act of 1801, c 18, insist upon any matter in discharge of’himself, which constituted a distinct ground of equitable relief, before the passage of that act.
Where the complainant, the accommodation endorser on a bill single, verbally notified the holder to sue the maker and prior endorsers at a time when-, if suit had been brought, the money could have probably been made, but which he neglected to do until they became insolvent, it was held, (notwithstanding a judgment by default had been taken against the complainant,) that he was discharged in equity.
The mere giving time by the creditor to the principal, unless it is founded upon an agreement binding upon the creditor, will not discharge the surety.
The bill in this case, alleged several distinct and independent grounds for equitable relief, all of which were controverted, but as the opinion of the court is wholly founded upon one of the grounds set forth in the bill, the facts in relation to that, as found in the bill, answers and proof, were as follows:
On the 20th January, 1835, the defendants, Watson and Gibson, recovered a judgment by default against the complainant Thompson and George W. Richardson for $489 60 and costs. This judgment was obtained against complainant and Richardson, as endorsers of a bill single, purporting to be executed by James L. Bryant, payable to Hayden Arnold, or order, at the office of discount and deposite of the "Bank of the United States at Nashville, for $450, dated 30th March, 1833, and due four months after date. The bill sin- gie was endorsed by Hayden Arnold as first endorser, George W. Richardson as second, and complainant as third endorser, and was endorsed for the accommodation of Richardson, the second endorser.
The note when endorsed by Thompson was without date. It was executed and endorsed about a year before March, 1833, the time it bears date, but was delivered at that time to defendants for valuable consideration.
At the time the. note fell due, Bryant,’ Arnold and Richardson (particularly the two first) were merchants in good standing and credit. In the month of August, 1833, Thompson notified Watson and Gibson to proceed to collect theif money on the note, otherwise he would be no longer responsible. In the month of November afterwards be wrote to Stephen Adams to give a similar notice, which notice Mr. Adams verbally gave to defendants. At the time Thompson notified them to sue, both in August and November, Bryant, Arnold and Richardson were all in good standing and credit; and if at that time suit had been brought or steps had been taken to secure the debt, it might have been done. It was not done until the spring or summer following, when all the parties but the complainant had become insolvent. No reason was alleged in the bill, as to this point, why the defence'’’ insisted on was not made at law: The answer insisted on this as a defence to the bill. The chancellor was of opinion the complainant was entitled to relief, and decreed a perpetual injunction against the judgment at law. From the decree the defendants appealed to this court.
J. Campbell, for complainant.
1. The complainant had a right to call on Watson and Gibson to sue, or to proceed to collect their debt from those who were liable on the note before him. Act of 1801, c 18, § 1, 2, 3. If the creditor fails to sue when called on, the surety may avail himself of the defence either at law or in equity. Hancock vs. Bryant and Hunt, 2 Yer. Rep. 476: Pain vs. Packard, 13 J. R. 174: King vs. Baldwin, 17 J. R. 384.
2. Whatever will discharge the sureties will discharge the endorsers. Theobold on Principal and Surety, 180, margin-r J ° 107, at top.
3. The omission of the surety to defend at law, where he pas gjven notice to the creditor to sue the principal debtor, and he has neglected or refused to do so, to the injury of the surety, will not prejudice the sureties right in equity. Pain vs. Packard, 13 John. Rep. 174: King vs. Baldwin, 17 John. Rep. 384: Hancock vs. Bryant, 2 Yerger’s Rep. 476.
4. The date of the note was left blank, and was afterwards filled up, without a re-delivery; this renders it void.
Geo. S. Yerger, for defendants.
1. Does notice from a surety to the creditor to proceed against the principal debtor, and his failure to do so, discharge the surety? I maintain that it does not, The true rule is laid down by Chancellor Kent. King vs. Baldwin, 2 John. Ch. Rep. 554.
Mere delay to sue the principal, although the creditor has been notified to proceed, is not sufficient to exonerate the surety from liability; delay to proceed against the principal, in order to have this effect, must be delay for value, i. e. a contract for delay. M’Lnnore vs. Powell, 12 Wheaton’s Reports: Johnston vs. Searcy, 4 Yerger’s Rep. .182, 491: 1 M’Cord’s Ch. Rep. 454: 9 Wheaton’s Rep. 720.
The remedy for the surety, if the creditor will not sue, is to file a bill making the creditor and principal debtor parties, and thereby compelling the latter to pay it. 1 Story’s Eq. § 639: Wright vs. Simpson, 6 Yesey, 734: Jfesbit vs. Smith, 2 Bro. Ch. Rep. 579: Hays vs. Ward, 4 John. Ch. Rep. J23: King vs. Baldwin, 2 John. Ch. Rep.
The case of Hancock vs. Bryant and Hunt, 2 Yerger’s Reports, does not settle the law upon the point. In that case Catron, Ch. J. dissented; it is founded upon King vs. Baldwin, 17 John. Rep. This latter case ought not to be regarded as a controlling authority, it was decided by a bare majority of one senator against the opinion of chancellor Kent and a majority of the judges of the supreme court of New York, and is based upon fallacious and unsound reasons. (Here the counsel examined and commented upon the reasons given for the decision.) It is contrary to the rule laid down by judge Story and the English chancellors, and has been generally disapproved of by every American court when the subject has been examined. Vide 5 Pickering’s Rep. 307: 4 Pickering’s Rep. 382: 2 Pickering’s Rep. 614: 4 Vermont Rep. 131: cited Chitty on Bills, (last edition,) appendix 816: 1 Dev. Rep. 484: 1 Watts’ Rep. 146 — 7.
2. But, admitting the cases of King vs. Baldwin and Hancock vs. Bryant and Hunt to be law, they do not apply to this case; this is not the case of a surety. An accommodation endorser, although for some purposes he is considered in the nature of a surety, yet, he has not that character upon a question of this kind. The endorsement is a distinct and independent contract. 6 Cranch’s Reports. It is not a guaranty that the principal shall pay, hut it is a distinct undertaking that if the maker does not pay the note at maturity, the endorser will; when he pays it, the note is not extinguished, but it becomes his property and he may sue upon it. The distinction between a mere surety, and an accommodation endorser, is well settled. The rule laid down in King vs. Baldwin does not, even in the courts of New York, apply to the, case of an accommodation endorser. 16 John. Reports, 152: Beard-sly vs. Warren, 6 Wendal, 613: 3 Wendal’s Rep. 216: Proulvs. Lennox, 3 Wheaton’s Rep. 580.
3. The act of 1801, c 18, § 1, 2, 3, does not affect this case. To make a notice available under that act, it must be in writing; in this case it was only verbal. This court has solemnly decided upon two occasions that where the provisions of the statute require a notice or contract to be in writing, the courts cannot, without repealing the legislative enactment, dispense with it. Patton vs. McClure, Martin and Yerger’s Rep; Newnanvs. Carroll, 3 Yerger’s Rep. 26.
4. The date of the bill single was left in blank, and was filled up at the time of its delivery by Richardson. This it is said renders it void.
Bills single, by our act of 1762, c 9, are placed upon a footing with bills of exchange and promissory 'notes, and must be governed by the same rules. Blanks left for names, dates, &c. in promissory notes and bills of exchange, &c. do not avoid them. Chitty on Bills, (last edition) 170, 313, and Mitchell vs. Culver, 7 Cowen’s Rep. 336 , 337, and ' r fo that case.
^ The endorsement in this case was not under seal, and jf re]jef sought by this bill is available at all, the defence could have been made at law, and no legal reason is shown why it was not made. 7 John. Ch. Rep. 332: 2 Page’s Rep. 499: 2 John. Ch. Rep. 555: 1 Hill’s Equity Rep. 99: 3 Starkie’s Ev. 1389. And, although equity may have a concurrent jurisdiction, yet if the case originated in a court of law,, the defence must be made there unless some reasonable cause is shown why it was not. Green vs. Thompson, 3 Yerger’s Rep: 8 Con. Ch. Rep. 65: 10 Peter’s Rep. 498.

Opinion:
Reese, J.
delivered the opinion of the court.
Watson and Gibson obtained at law a judgment by default against complainant and one George W. Richardson, as endorser of a biH single, purporting to be executed by James L. Bryant, as maker, and made payable to Hayden Arnold, at the branch bank of the United States at Nashville, dated in March, 1833, and due four months after date. It is endorsed by Hayden Arnold, as first endorser, by George W. Richardson, as second endorser, and by complainant as third endorser. It is satisfactorily proved in this case, that at the request and for the accommodation of Geo. W. Richardson, and without consideration, Bryant, Arnold and complainant, about a year before the date of the bill single, became parties, thereto, for the purpose of its being negotiated in the branch bank of the United States, to meet and satisfy some existing liability of Richardson, the bill single being then left undated. At the time it bears date, it was passed to Watson and Gibson by Richardson in payment of a pre-existing debt. In August, 1833, Thompson, the complainant, verbally requested Watson and Gibson to commence suit upon the note, and in the month of November afterwards he wrote to Stephen Adams, requesting him to notify Watson and Gibson that he did not wish to continue liable as endorser, and that they should forthwith institute suit upon the bill single; Adams did this, by showing to them the letter of complainant. They replied that Richardson had been asking time till Christmas, and that they believed him to be an honest man, -and had confidence it n • , , i that he would pay. Suit was not brought till the spring or summer of 1834, at which time all the parlies to the note, but the complainant, had become insolvent. But the proof makes it probable that in August or November, 1S33, the debt could have been collected from Bryant, Arnold and Richardson. The answer admits the veibal demand to bring suit in August, 1833, and the notice to the same effect given through Adams in November. Questions relating to the insertion of a date in a sealed instrument — to the use of the bill at one time, for a purpose different from that for which it was created at an earlier time — to the effect of the accommodation character of the paper, if known to the defendants when they received it in payment of a pre-existing debt, and especially, as to the effect of any or of all these matters upon the jurisdiction of a court of chancery after a trial at law, have been raised and elaborately discussed by the counsel. But we have deemed it proper to limit our consideration of the case to the enquiry, whether the complainant be entitled to relief in this court, upon the ground that in August or November, 1833, the defendants were requested and urged to bring suit upon the bill at a time when, in all probability, the money could have been made of those first liable, but which they omitted and refused to do until all but the complainant, became insolvent. This enquiry has been settled in the affirmative by a case fully in point decided by the supreme court of this State, the case of Hancock vs. Bryant and Hunt, 2 Yerger's Rep. 476. This case has to sustain it. the authority of King vs. Baldwin, 17 John. Rep. 384; which latter case was founded upon that of Pain vs. Packard in the same State. But the authority of the case of King vs. Baldwin has been questioned in the argument, and indeed denied on the ground that a majority of senators against the weight, and numbers, and talent of the bench decided the case; and upon the further ground that it has been questioned and impugned in Pennsylvania, Vermont, &c. And we are also called upon to overrule the case of Hancock vs. Bryant, which, it is said, has not met with the approbation of the profession. It is not necessary that we should state whether, if the question were res integra, it would receive at our hands a . . ° ' , , , W e nave had occasion more than once to ex-pregs oul, gense 0f tiie importance of adhering with some uni-fortuity to decisions when once made, deeming fluctuation of judicial opinion an evil of such magnitude as not to find its equipoise of good, in any fancied or real approximation to greater correctness. In New York, the case of King vs. Baldwin, though decided perhaps against the opinion of a majority of the profession on the bench and at the bar, remains, after the lapse of eighteen years, undisturbed, and exacts the acquiescence, if not the approbation of the profession in that Slate. Yet the principle maintained in the cases of Pain vs. Packard and King vs. Baldwin, unlike the case of Hancock vs. Bryan, has no statutory ground upon which to stand. It would be a matter of more difficulty, therefore, to overthrow the authority of our own case 'than the New York one. Before our statute of 1801, c 18, a surety might have filed, as he still may, his bill against his principal and the creditor, alleging the apprehended insolvency, or removal of the former, and have compelled payment of the debt. By that act, when a security or the assignor of a bill, bond or note may entertain similar apprehensions, he can give notice in writing to the creditor to put the instrument in suit against the principal or drawer, and if for thirty days this be omitted by the creditor, he shall thereby forfeit the right he would otherwise have had to demand and receive the amount due from such assignor or security.
Section 4th provides that when sued at law, the assignor or security may give the act in evidence, if by two witnesses he prove in open court a copy of the notice. But not having it in his power in a court of law to make this full proof and formal defence, the security may in chancery, according to the case of Hancock vs. Bryant, insist upon the equity which he had before the statute and by the statute, and show that he requested the creditor to bring suit, which he refused and omitted to do, and that such refusal and omission had operated upon him an injury. This, it is said, shall affect the conscience of the creditor. Such is the principle of the case of Hancock vs. Bryant, and this case, which we do not feel at liberty to overrule, is decisive of the one belore the , , , , . . " , " " court. In yielding to the authority of Hancock vs. Bryant, we do not mean to question the principle determined in the case of Johnson vs. Searcy, 4 Yerger's Reports, 182, and in still more recent cases, to wit: that the mere giving of time by the creditor to the principal, and not upon an agreement which would bind the former, shall not exonerate the security. To that principle we give our full assent. The case before the court, and the case of Hancock vs. Bryant rest upon am other ground, upon the express request of the surety to sue, upon the refusal or omission of the creditor to comply with such request to the injury of the surety or endorser. In this case the request to sue is not only admitted by the defendants in their answer, but is likewise proved, it is satisfactorily proved also, that the refusal or omission of the defendants to comply with this request, produced injury to the complainant, because, in the meantime, those who were liable before him and to him, became insolvent. The decree will be affirmed.
Decree affirmed.