Court Opinion

ID: 7999795
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:48:19.37928+00
Date Added: 2024-06-11T16:35:40.854270
License: Public Domain

Scott, Judge,
delivered the opinion of the court.
The instruction on which the cause went off in the court below, was not based upon any defence set up in the answer of the defendant; but as the point may come up again after an amendment, and as it was the only matter that was argued before us, it may be necessary to express an opinion in relation to it. The question is, whether one who becomes a party to a bond as surety in reality, and who would be regarded as such but for binding himself “ as principal,” can claim the right, or set up the defence, growing out of the relation of principal and security.
There is no rule of law which prohibits a surety from waiving the right belonging to him as such. Such a waiver has nothing in itself offensive to the policy of the law. Nor is there any thing in the situation of the surety in regard to the party with whom he contracts, which excites the vigilance or arouses the jealousy of the law. Usually the surety is less subject to the influence of the person with whom he deals, than any other contracting party. There is nothing of surprise or mistake alleged in the transaction. When the relation of surety has been created, there are certain safeguards thrown around it for its protection; but the law throws no obstacles in the way of a renunciation of those rights. If the surety here has not stripped himself of that relation by the contract he has entqred into, it is not easy to see in what manner that object can be accomplished. He expressly binds himself “ as principal.” Now there must have been some purpose in adopting that word. When the term “ principal” is used in a contract, it must be intended in a sense opposite to that of “ security.” The defendant might have become a mere surety to the contract, but when he renounced that character and expressly bound himself as principal, with what face can he afterwards insist that he is only a surety ? When the plaintiff would not take his obligation as surety, but required him to be bound as principal, where is the justice in depriving him of the fruits of his vigi*594lance, and imposing on him a contract directly contrary to that for which he expressly stipulated ? To hold that the defendant is not bound as principal in this contract, is tantamount to declaring that one who really occupies the relation of surety in a contract, can not be hound as principal — a proposition for which there is no support in the law. We are not without authority on this point. In our highest tribunal, the Supreme Court of the United States, this question has undergone elaborate discussion, and the principle announced there harmonizes with the views here expressed.
. In the case of Spriggs v. The Bank of Mount Pleasant, (10 Pet. 257,) those who were sureties in reality bound themselves “ as principals” to pay a sum of money, and attempted a defence growing out of their relation as sureties. The defence did not prevail. The court said, “ when one who is in reality only security, is. willing to place himself in the situation of a principal, by expressly declaring upon his contract that he binds himself as such, there can not be any hardship in holding him to the character in which he assumes to place himself. As to that particular contract, he undertakes as a partner with the debtor, and has no more right to disclaim the character of principal than the creditor would have to treat him as principal, if he had set out in the obligation that he was only surety.” The same parties afterwards renewed their defence in a court of equity, and the case was up in 14 Pet. 207; the court there remarked that ‘ ‘ all the evidence showing that the party was surety, can have no influence against his direct admission in the obligation that he was a principal; and there being no pretence of any mistake or ^surprise, there can be but one meaning attached to this admission, which is, that as, between the obligors and the bank, .all were principals, whatever might be their relation between themselves. They had undoubtedly a right to waive their character and legal protection as sureties, and assume the character of principals. This admission in the obligation must have been for some purpose; and none can be reasonably assigned, except that it was intended to place *595all the obligors upon the same footing with respect to their liability.”
It may be said that there is a difference between the case under consideration and that to which reference has been made, inasmuch as by the bond before us it appears that the defendant was a mere surety ; whereas, in the case referred to, it did not appear by the terms of the obligation but that all were principals. But, when we reflect that the case in Peters is made to stand on the contract by which the parties bound themselves as principals, the difference amounts to nothing. The court says expressly, “ all the evidence only establishes the fact that the party was surety, and that can have no influence against his direct admission in the obligation that he was principal.”
If what has been maintained above be correct, there can be nothing in the agreement that the plaintiff was bound, by the terms of the contract, to retain in his hands 25 per cent of the money due for the work, until the building was completed and all liens satisfied. It is a begging of the question, and assuming that the defendant was a surety, when, by the terms of his contract, he was a principal. Being a principal, he was not injured by a renunciation by the plaintiff of his right to retain the 25 per cent. The plaintiff was under no obligation to do so, and his neglect can not affect his rights under the contract. The case is, as if a principal in the bond was complaining that the money had not been retained, when it was optional with the obligee whether' he would retain it or not.
The plaintiff is entitled to recover the amount of all valid liens on the building which he has satisfied. If the lien was valid and subsisting, he is entitled to recover its amount, though its payment was not coerced by the process of the law. It could serve no useful purpose to subject the parties to the expense of an. execution.
Judge Ryland concurring,
the judgment will be reversed, and the cause remanded.