Court Opinion

ID: 8057459
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:34:12.323676+00
Date Added: 2024-06-11T16:37:54.397642
License: Public Domain

The opinion of the court was delivered by
Carpenter, J.
Whether a surety is discharged or not may be a legal question, but in the case of a sealed contract it must be when the suretyship appears on the face of the instrument. The solemnity of such instruments forecloses in general all inquiry into the consideration. If bound, as principal, a defendant cannot aver at law in an action upon the instrument, that he is only a surety, though in equity parol evidence is admissible to show who is principal-and who surety. In this state this clear rule of the common law has never been infringed. In Manning v. Shotwell, 2 South. 584, the creditor who had been called upon to sue the principal discontinued the suit, and gave him further time. The court held that this did not form any defence at law to a suit against the makers of a sealed bill.
But independent of this technical objection, which howmver is fatal to the legality of the plea, the defence cannot be maintained. The undertaking of such surety is absolute; It is his business to see whether the principal pays, and not that of the creditor. If he lies by, and the insolvency of the principal intervenes, he must abide by the loss, and cannot throw it on the creditor. Mere delay to require payment, without any binding contract for that purpose, and without fraud, will not discharge a surety ; and upon the facts of this plea there could be no relief éven in Chancery. Supposing the surety can call upon the creditor to do the most he can for his benefit, it must be upon terms that will secure the creditor from all the consequences of risk, delay or expense. Wright v. Simpson, 6 Ves. 734; 2 Story Eq. J. § 849. But no sanction has ever been given in this state to the present attempt to invert the natural order of the obligations created by the contract of surety. The cases of Pain v. Packard, (13 John. 174,) and King v. Baldwin, (17 Ib. 384) are not generally recognized as authority, and have introduced into the state in which decided a new rule between creditor and surety, which we think unnecessary and inexpedient. *635The surely has ample means of relief more in accordance with the nature of his contract. He may compel, in a court of equity, the payment of the debt, and, which is a more obvious and simple course, he may pay the debt himself according to his undertaking, and then sue the principal upon his implied contract for re-imbursement. The present case is one of mere delay, and we do not recognize the ruH that the surety by a simple demand in pais, can remove the duty of active diligence from himself to the creditor. We are all of opinion that the judgment of the Supreme Court must be affirmed.
Randolph, J. I am not prepared to say that a surety may plead no matter in pais, without first going into a court of equity, or that the fact of suretyship must appear upon the face of the instrument itself in all cases, to be made available as a defence in a court of law ; nor do I consider it necessary for the decision of this case to settle either of these points. Could the defendants ask the aid of a court of equity upon the facts presented in their plea ? If not, then it is pretty clear that this court can grant them no relief. In JSden on Injunction, p. 31, the rule is said to be well settled that whenever the creditor, by virtue of some agreement, (not by merely remaining inactive) gives time to the principal debtor, he thereby discharges the surety, and to this extent the rule is sustained by many cases referred to by the author. In Samuel v. Howarth, 3. Merival 277, Lord Elden says the rule is this : that if the creditor, without the consent of the surety, gives time to the principal debtor, by so doing he discharges the surety ; that is, if time is given by virtue of a positive contract between the creditor and the principal, not where the creditor is merely inactive. And the reason given is because he thereby changes the character of the surety.
And the same doctrine is held in Rees v. Barrington, 2 Ves. Jr. 540, and sustained by the numerous cases collected in the note. There must be an agreement or act of the creditor by which the terms of the original agreement are enlarged, or the risk of the surety increased. The defendant’s plea in this case sets up no agreement, no enlargement of time, no act of the creditor by which rights of sureties have been put in jeopardy. *636There was no time, after the bond became due, when the defendants might not have paid the debt, and sued their principal for the money paid for him ; no time when they might not have gone into a court of equity, and compelled the obligee to prosecute the bond, and make his money out of the principal debtor. The mere notice to the obligee, his failure to prosecute, and the subsequent insolvency of the principal, do not amount to an agreement or act of the creditor to enlarge the time, alter the original contract, or increase the risk of the surety, beyond their power of control. I find no case in equity which extends the rule beyond what I have stated, except that of King v. Baldwin, in the Court of Appeals of New York, 17 Johns. 384. But the Supreme Court in that State, prior to this in Paine v. Packard, 13 Johns. 174, had gone far ahead of the rule in equity, and the object of the Court of Appeals in King v. Baldwin, would seem rather to have been to confirm the prior decision of the court of law, and to reverse the opposing opinion, rather than the decision of the Chancellor in the latter case. But although there have been other decisions in New York, confirming the decision of the Court of Appeals, yet they are contrary to principle, and against the current of decisions in England, and the uniform practice in this state, and I neither perceive the wisdom of the change or the necessity therefor. I think that the decision should be affirmed.
The Court, consisting of the Chancellor, and Judges Whitehead, Carpenter, Randolph, Speer, Spencer, Porter, Schenck, Robertson and Sinnickson unanimously, affirmed the judgment of the Supreme Court.
Cited in Paulin v. Kaighn, 3 Dutch. 508; Paulin v, Kaighn, 5 Dutch. 501.