Court Opinion

ID: 8186156
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:08:38.139452+00
Date Added: 2024-06-11T16:40:25.344141
License: Public Domain

Winslow, J.
As to the defendant Hartzheim there can be no doubt that the verdict was rightly directed. His liability was that of a surety alone, and, upon very familiar principles of law, he was discharged if the time of payment of the note was definitely extended by a valid agreement without his consent. Weed Sewing Machine Co. v. Oberreich, 38 Wis. 325. Whatever may be the fact as to Sartzheim's presence at the time of the first extension of the note, it appears without dispute that the note was definitely extended in consideration of the prepayment of interest a number of times afterwards, without his presence or consent. The payment of interest in advance is a sufficient consideration for the agreement of extension of time. Batavian Bank v. McDonald, 77 Wis. 486.
As to Yankey, however, the question is different. The evidence seems to show satisfactorily that he was the acting officer of the corporation, not only in executing and delivering the note originally, but in paying the interest in advance *44at the time of each extension. There is certainly sufficient evidence to justify a jury in finding that he, in legal effect, requested each extension of time, and paid the advance interest in order to secure such extension. It is true that he made such requests and payments in his capacity as an officer of the corporation and on its behalf, and that nothing was said as to his individual liability as guarantor; and the question presented is whether, having requested and consented to the extension on behalf of the corporation, he can be heard to say that he did not thereby consent to the extension in his individual capacity as guarantor.' Of course, the obligations of a surety are strietisswii jwris. He may stand upon the letter of his contract. He may have knowledge that an extension has been granted to his principal, and the law does not impose on him the duty to speak. 2 Brandt, Suretyship & G. § 345. But the surety is bound by the rules of good faith and fair dealing, as well as other men. If he, as agent for the principal. debtor, requests and obtains an extension of time, and pays the consideration for such extension, and nothing is said as to his liability as surety, it is very obvious that the creditor would naturally and almost inevitably conclude that he consents to the extension individually, as well as in his capacity as agent. How many bankers or business men would reason thus, “ Ycmhey has consented to the extension as treasurer of the corporation, but has not consented in his individual capacity, and I must now ask him if he consents as Mr. Yanhey ”? We think very few would think of drawing such fine lines of distinction. After Yanhey requested and procured the extension on behalf of the corporation, and gave no- notice, to the creditor that he did not consent to an extension in his character as surety, we think that well-known rules of estoppel must be held to prevent him from asserting that he is discharged as surety because of lack of consent. He has actively induced a change of position on the part of his creditor, which *45lie will not be allowed to take advantage of, to his creditor’s injury.
Another question here arises, namely, as to the effect of the discharge of Hartzheim upon the liability of Yankey. While his discharge is, in effect, a discharge by operation of law, still it resulted from the act of the creditor in extending the time of payment without the surety’s consent; consequently, it must be given the same effect as a voluntary release. Robertson v. Smith, 18 Johns. 459. There is no doubt but that the provisions of sec. 4204, Stats. 1898, apply to joint sureties as well as to principal debtors, save in so far as they are limited by the proviso and by the terms of sec. 4205. Neither of these limitations includes the present case. Therefore the release of Hartzheim will operate to relieve his co-surety from liability for one half of the debt, that being the proportion which Ha/rtzheim ought to have paid as between himself and Ycmlcey had he not been released. There must be' a new trial as to Ycmlcey, but his liability in no event can exceed one half of the note and interest.
By the Gourt.— As to Hartzheim, the judgment is affirmed, with costs, and as to Ycmlcey it is reversed, with costs, and the action is remanded for a new trial.
Baudben, J., took no part.