Court Opinion

ID: 7892002
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:56.915162+00
Date Added: 2024-06-11T16:31:56.743569
License: Public Domain

Ellis, J.
(concurring specially) : Since the decision ■ in Stove Works v. Caswell, supra, it has been properly accepted as the law in this state that
“Where property is sold, and the purchaser agrees to pay the consideration therefor, or a portion thereof, to a creditor of the vendor, the purchaser, as between himself and the vendor, becomes the principal debtor, and the vendor only a surety; and if the creditor afterward and because of this arrangement accepts the *113purchaser as a debtor, he must accept him in the same manner, and as his principal debtor, with the vendor only as a surety.”
The rule that if the creditor accepts the purchaser as a debtor at all he must adopt the relation which then exists between such purchaser and his vendor, and be bound by it, does not prevail in some of our sister states, and if it were an original proposition here I might hesitate to favor its adoption, although quite as cogent reasons exist for as against it. However, for nearly a decade that rule has prevailed in Kansas without complaint from the people, the bench, or the bar, and no effort has been made to abrogate it by legislative enactment. I feel bound to sanction the observance of a decision which has been • generally acquiesced in for so long a period.
Whether a surety should be released from his obligation because a creditor voluntarily allows a debt to become barred by the statute of limitations against the principal debtor is also a proposition about which the authorities disagree. The general doctrine is that a contract of suretyship 1 ‘ is accessory to an obligation contracted by another person, either contemporaneously or previously or subsequently. It is of the essence of the contract that there be a subsisting valid obligation of a principal debtor. Without a principal there can be no accessory; and by the extinction of the former the latter becomes extinct. This results from the nature of the obligation of suretyship.” (Russell v. Failor, 1 Ohio St. 329, 59 Am. Dec. 631, citing Burge, Suretyship, 3, 6; Theobald, Prin. & Sur. 2.)
Mr. Brandt, in his work on Suretyship and Guaranty, volume 1, section 145, cites the following law:
“ ‘It would be as difficult for me to conceive of a *114surety’s liability continuing after the principal obligation was discharged as of a shadow remaining after the substance was removed.’ . . . ‘It is a corollary, from the very definition of the contract of suretyship, that the obligation of the surety being accessory to the obligation of the principal debtor- or obligor, it is of its essence that there should be a valid obligation of such principal, and that the nullity of the principal obligation necessarily induces the nullity of the accessory. Without a principal there can be no accessory. Nor can the obligation of the surety as such exceed that of the principal.* ”
Upon this proposition the authorities are in general accord. An exception, however, is sought to be made and is generally regarded as existing when the principal is discharged from his obligation by the mere operation of law, and some of the courts and text-writers hold that where the principal is released by reason of the bar of the statute of limitations, the surety is still bound, because, they say, the principal has been released by the operation of law. I cannot give my assent to such an application of the rule. There is a wide distinction between the release of a principal debtor in a court of bankruptcy and his release as the result of the laches of the creditor by the interposition of the statute of limitations. In the first case, without any neglect or wrong on his part, the creditor has been prevented from proceeding against or collecting from the principal debtor, and, in his failure to do so, he has committed no act in derogation of the rights of the surety. In the other case, by failing to proceed against the principal debtor within the time prescribed by the law, he has consented to his release, to the injury of one whose obligation to pay is, in effect, always dependent upon the failure of his principal to do so.
The reason for the rule that a surety is not dis *115charged when his principal is relieved from his obligation by operation of law is that the creditor has, without his fault or neglect, been deprived of his right to recover the debt from the latter. The author last quoted cites with approval the following from the text of the decision in Phillips v. Solomon, 42 Ga. 192, which was a case where the principal had been discharged in bankruptcy. The court said:
“The discharge of the principal, which discharges a surety, must be a discharge by some act or- neglect of the creditor, and a discharge by operation of law being, as it is, against the consent and beyond the power of the creditor, does not discharge the surety.”
It ought to be conceded that where, without justification or excuse, a creditor allows the statute of limitations to run against the obligation of a principal debtor, it cannot truthfully be said that the latter has been discharged “against the consent” and by means “beyond the power of the creditor” to prevent or control.
In the case of Bridges, Administrator, v. Blake et al., 106 Ind. 332, 6 N. E. 833, the court held:
“The extinguishment of the engagement of the principal, however accomplished, releases the surety from liability, and if the debt of the former is barred by the Statute of limitations, a mortgage given by the surety to secure it is not enforceable, although not barred.”
The authorities which hold that the surety is not released when the creditor allows the debt to become barred by the statute of limitations as to the principal ignore any consideration of the duties which the creditor owes to the surety, and fail to attach due importance to the fact that if such a rule were to obtain it would result in imposing many hardships upon the *116latter, from all of which, on account of the nature of his undertaking, he should be exempt.
Without entering at length upon a discussion of the matter, I am content with the reasoning of the court in Auchampaugh, Administrator, v. Schmidt, 70 Iowa, 642, 27 N. W. 805, which case, upon its facts, presents a strong analogy to the one at bar. The court said :
“We come, then, to the question raised by the answer and the admitted evidence of suretyship, and that is as to whether a claim which is barred by the statute of limitations as against the principal debtor is by reason thereof barred also as against a surety. In answer to this question, we have to say that we think that it is.”
The court, after reciting the facts and showing that by reason of his absence from the state the statute had not run as against the surety, further said :
“It would not be denied that a surety upon a note may set up any meritorious defense which the principal, if sued, might set up in his own behalf. Now, when the statute of limitations has run as against the principal, the law excuses him from setting up any meritorious defense which he may have, and allows him to rely upon the technical defense of the statute alone. The theory is that he was not under obligations to preserve any longer the evidence of his meritorious defense, if he had any, and so the court will not inquire whether he had such defense or not. The statute has been very properly denominated the statute of repose. As the surety is allowed to set up any meritorious defense which the principal might have set up, we are not able to see why he should be required to preserve the evidence of such defense after the principal was not bound to do so. Again, when a surety pays a debt, it is his right to look to the principal for reimbursement. But a surety paying a debt, after it had become barred as against the principal, would be remediless. Now, we do not think that a creditor, by his own dilatoriness, should be allowed *117to put the surety in such position. It is not a full answer to say that a surety might have protected himself. It may be conceded that he might. But, practically, sureties often overlook their obligations if their attention is not called to them, and we do not think' that the just protection of the rights of the creditor requires that we should hold so strict a rule against them as that for which the plaintiff contends.”
Having thus indicated some of the principal reasons sustaining the position which I think the court ought to assume upon the controlling propositions in this case, I concur in a judgment of reversal. '