Court Opinion

ID: 5554893
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:39:21.41657+00
Date Added: 2024-06-11T08:35:17.878205
License: Public Domain

Harris, J.,
dissenting.
John F. Tucker, of the city of Savannah, bought of Henry Laurens Toomer, of Charleston, South Carolina, on the 1st December, 1857, ninety-one slaves, for the sum of $53,650, upon a credit, payable by installments. For the purchase money, Tucker made his bond, with Dickerson, of Savannah, as security thereto ; and on the same day Tucker executed a mortgage on the slaves so bought and gave the same to Toomer, as cumulative security.
The mortgage was conditioned that upon default of payment, as stipulated by the bond, he, Toomer, might enter and take possession of the slaves and sell and dispose of the same at his pleasure, accounting to him, Tucker, for the overplus.
To this mortgage it does not appear that Dickerson was a party, or that he was induced to become surety on the bond by reason of this cumulative security, or that he had stipulated inany wise in reference to it.
The mortgage being a part of a Carolina transaction, was only recorded, according to the laws of that State, on the 23d December, 1857. The negroes were, shortly after their *443purchase, removed by Tucker to Chatham county, Georgia. But, upon examination of the register of deeds and mortgages of that county, no record of this mortgage was found to have been made up to 1866.
Suit, during the year 1866, was instituted in Chatham Superior Court, on the bond, against Tucker, principal debtor, and Dickerson, his surety. To this action Dickerson, amongst other pleas, set up as a defence, that as surety on the bond he had been discharged from all liability by reason of the failure of Toomer to record the mortgage of Tucker within the time prescribed by the law of Georgia.
. The plea as to loss by emancipation of the slaves, and others, were overruled ; this, as to the failure of Toomer to record the mortgage of Tucker was held good, and under the direction of the Court, a verdict was found for Dickerson. A new trial was moved for by Toomer on various grounds, and was refused. That refusal has been brought, by writ of error, to this tribunal and by the majority has been affirmed. I cannot concur in the charge of the Judge below touching the plea sustained by him, in either his law or reasoning, and therefore dissent from the judgment of my associates.
The whole transaction being a Carolina one, and complete and valid by her laws, and by those laws the surety, Dickerson, being bound by his engagement and liable to respond to Toomer without being entitled to any relief whatever, I am unable to perceive any reason why, upon principles of comity, and especially that of lex loci contractus, in the Courts of Georgia, Toomer should be denied that redress he would have been entitled to had Dickerson been an inhabitant of Carolina.
But I shall not discuss this point in the record. I proceed to examine the main question upon which the affirmance has been made of the decision below, viz: Does the law of Georgia authorize the discharge of a surety on a bond because the creditor, who has taken of the principal debtor a cumulative security, in the form of a mortgage by that debtor on the property he purchased, failed to record (within the time prescribed by the law of Georgia) that mortgage?
*444It is not pretended by those who hold the affirmative that their decision has been made in conformity to the principles of the common law, but in accordance with the decisions of this Court and the Code of Georgia, which they assert have changed the common law. When asked for those decisions and portions of the Code making the changes alleged by them, they cite Jones vs. Whitehead, 4 Kelly R., 399, and sec. 2126 of the Code.
Let us subject these references to such an examination as the importance of the question considered demands. The first remark I make upon the case from 4 Geo. R., is that it was made under the act of 1831. Prince Dig., 471. That act gave the right to a surety on any note or other instrument, after it had become due, to require the holder or creditor to proceed to collect the same within three months; if the holder failed to comply with such requirement, the surety Avas declared to be’no longer liable. Until this act, there Avas no such right belonging to a surety, and no such consequences as his discharge could have resulted. This was a change in the common Iuav of a most important character. Before that act, the substance of which is incorporated .in section 2128 of the Code, a surety on bond or note could not have availed himself, when sued on it, of any such defence as that he had given notice to or required the holder to sue the principal in the bond or note, and that he had failed or refused. The surety could, previously, only have protected himself against apprehended insolvency of his principal by paying up the bond or note to the creditor and then at his, surety’s, own expense suing his principal.
To remedy this, which the Legislature deemed an evil, it passed this act.
It is to be carefully remembered that no relief Avhatevcr is given to the surety by the passiveness, omission or neglect of the creditor to sue the principal debtor on such contract. None except in the special case where the surety had required suit to be brought in pursuance of the provisions of this act. If he did not give notice or require suit to be brought, *445he was left upon the precise footing where the act of 1831 found him.
The facts in the case of Jones vs. Whitehead were determinable, properly, only by that act; the question there being whether Whitehead, a co-security with Eeynolds for Jackson, was not entitled to be discharged-, because of Eeynolds having required Jones to sue Jackson and Jones’ failure to comply with such requirement; or, in other words, Eeynolds, a. surety, having been discharged by the failure of Jones to sue Jackson, was not Whitehead, a co-security, by operation of lato, entitled, also, to be discharged, as the discharge of Eeynolds, by operation of law, produced a material change in the contract, prejudicial to Whitehead?
I take the rule stated by Chief Justice Marshal, in Sturges vs. Crowninshield, 4 Wheaton, to be of universal application : “ The positive authority of a decision does not extend beyond the fads on which it was made.” I have quoted this rule with a view to exclude many things which were introduced into the opinion of Chief Justice Lumpkin, which had no direct application to the case in the record, irrellevant to its facts, and which being found there and not carefully analyzed by, those who have quoted them, has caused all the confusion of legal principles, to my mind, so apparent in the decision of this case below, and its affirmance here.
Beyond the change made by the act of 1831, in the principles of the Common Law, I cannot think any was made.
That act, it will not be pretended, has any application to the facts in this record, and can furnish no rule for their decision; nor, legally, can the case of Jones vs. Whitehead, 4 Kelly, decided under it.
That case was decided in 1848. It surely made no change in the Common Law, when it announced as the sum and substance of the English and American adjudications, “ that whenever the creditor does an act whereby injury, or loss, or liability to loss, or increased risk accrues to surety, without his assent, he is entitled to be discharged?”
This summary was not a statement of our Statute Laws, *446for none existed at that time, on this subject; it but grouped together principles of the Common Law which had been extracted from hundreds of decisions.
The Code of Georgia was adopted in 1862, and section 2126 of it was extracted from this summary of Common Law decisions in 4 Kelly. Where then is the change or alteration of the Common Law in that summary, or paragraph of the Code embodying it ? It is a profound mistake into which they have fallen in alleging any change in general principles, except that made by the act of 1831, and that has no just application to this case.
But it is said that the case in 4 Kelly establishes the rule that the omission or failure on the part of the creditor to do an act required by law, discharges the surety. I have stated that the case in 4 Georgia was decided alone on its facts, and those facts brought it strictly within the act of 1831. No such rule can legitimately be deduced from that decision. The surety had required the creditor to proceed to collect the note out of principal debtor, and he failed to comply with such (right in the surety) requisition, and it was failure to comply with that requirement, upon which the decision was necessarily made. This wresting of a particular rule for particular cases, and attempting to give to it the character and force of a general rule, applicable to and controlling cases not within that special rule, itself being an exception, is mischievous in its effects ' and destructive of the sound reason upon which the law reposes.
Before pronouncing that an. omission of creditor to do an act required by law, was established by 4 Kelly, and Dickerson entitled to its benefits, it would have been well in my brethren to have looked into the record to ascertain a fact most essential to bring Dickerson's case within the scope of Jones vs. Whitehead, viz: Where does it appear that Dickerson, the surety on the bond with Tucker, ever required Toomer to proceed to sue it or collect it? Where did ever Dickerson even require the collateral security — the mortgage — to be recorded ?
It should be also borne in mind that the case in 4 Georgia *447grew out of the failure of the creditor to sue the principal debtor on an original Contract, when required by the surety to do it." There was no collateral security in that case, nor is there to be found even among the irrelevant things said obiter a single principle enunciated in reference to the conduct of the holder as to the collateral securities in his hands ! !
This case here belongs exclusively to that branch of the Common Law which prescribes the duties and relative rights of creditor and surety touching collateral securities in hands of creditor.
To sustain the new rule of law which my brethren have announced, they have cited with approbation the English case of Capel vs. Baker, 2 S. and S. It is .strange that that case, made under the guidance of Common Law principles, should be quoted by them to sustain the assertion that our decisions and Code had altered the Common Law. That case, so far from lending any aid to the decision here, is a most perfect demonstration of its being erroneous. By reference to the report of it, the head note is in the following words : “ If, by the neglect of the creditor., the benefit of some of the securities for the debt is lost, the surety is pro tanto discharged.”
White sold, by indenture, an annuity to Butler, the defendant, and secured the payment of the same, as it might fall due, by a warrant of attorney to confess judgment for him in the sum of ¿63,000, by a demise of leasehold premises and by an assignment of two trows or ships belonging to said White, which in said indenture were covenanted to be British built and respectively registered according to the laws in force. In pursuance of the agreement in the indenture contained, a bond was made by White, with plaintiff, Capel, as surety, in the penalt)' of ¿63,000, in which bond was recited the agreement for the sale of the annuity, the indenture and securities given. The formalities required by the ship register acts were not complied with upon the assignment of the vessels. White, to whom the vessels belonged, talcing advantage, of the omission, sold the vessels and applied the proceeds to his own use.
The Vice Chancellor, Sir John Leach, held that as the *448value of the two vessels were lost to the surety on the bond, by the neglect of Butler, he, the surety, was entitled to relief to the extent of the value thereof And this case has been relied on to support the new doctrine that the omission of a creditor to record a mortgage within the time required by law, discharges the surety entirely ! ! !
In this case it is to be noted that the surety on the bond, when entering into it as a joint obligor, stipulated for the registry, respectively, of the vessels, with the creditor, and but for that stipulation in regard to such a collateral security, he could not, as surety on the bond, in the English Courts have been entitled to any relief whatever which arose from the creditor’s neglect.
Dickerson, the surety here, unlike Capel there, was no-party to the taking of the mortgage of Tucker — made no stipulation about it — yet he gets a relief far beyond what was accorded Capel, upon what reason it is difficult to discover, unless in the benignity of our Courts, as he failed from imbecility or carelessness to protect himself, as Capel did, it became their bounden duty to shield, by the most liberal interpretation of our laws, all sureties from accountability to that abominable and accursed race of Shylocks, commonly called creditors !!
I have said that by section 2126 of the Code no change in the principles of the Common Law was made, and this is demonstrated by the summary made of them in 4 Georgia, and its identity with section 2126.
Repeating an idea which should be kept constantly in view, that that summary and section 2126 have reference solely to the relative rights of creditor and surety as to the original contract to which the surety is a party promissor, and have none whatever as to collateral securities in the hands of the creditor, I proceed to point out portions of the opinion of Judge ¡Lumpkin in 4 Georgia which probably have misled my associates.
“ By releasing one of the sureties, the creditor changed the terms and the legal effect of the contract, and that, too, with-r out the consent of the other parties.” Why speak of a re*449lease of surety, made by operation of lato, as if it was the act of the creditor, whén there was no act of the creditor, in that case ? Undoubtedly a release by the act of the creditor of one of the sureties discharges the other, and the- general principal is right, but the facts did not demand its enunciation there. The co-security, Whitehead, was discharged under the provisions of the act of 1831, simply because Jones, the creditor, failed to sue the principal debtor on the note after the surety, Reynolds, had required him to proceed. The discharge, in this case, did not spring from any act of Jones, but from the operation of a special law, providing relief to a surety, where his right had been disregarded. There was no release by the creditor.
Again: “We desire, however, to place this judgment upon a broader, firmer foundation than mere grammatical learning or technical rules.” The act of 1831 — a departure from Common Law principles — furnished the sole rule for the decision of Jones vs. Whitehead. What necessity required the enunciation of other principles of the Common Law, however abstractedly true, when they had not the slightest pertinency to the facts in that record ? Thus : “ we believe, however, that the following propositions may be assumed as the sum and substance of the English and American adjudications upon this subject, namely : that whenever the creditor does an act whereby injury, or loss, or liability to loss, or increased risk accrues to the surety without his assent, he is discharged, and the Courts uniformly refuse to require the surety to show that he has in fact been damnified, holding that he is entitled to judge for himself what is for his own benefit, that of that he is the only judge, and that another party cannot decide for him without discharging him.”
I freely concede that this summary comprehends nearly the whole law touching the acts of creditors in reference to original contracts, whereby a surety thereto may be affected and the consequences which in law ensues from such acts, but I ask what act of Jones was there in the case he was deciding, upon which he predicated this statement of legal principles *450and their consequences ? I am unable to perceive anything which authorizes it.
Again : “ The estalished rule in equity is, if the creditor tahe any step or do any act by which he essentially jeopardizes the safety of the surety, the latter is discharged.” This is virtually included in the general summary just quoted, and needs no other comment than what has been made.
In the infancy of this tribunal, the learned and very able Chief Justice who delivered the opinion in 4 Georgia, entertained and acted upon,the conviction that the Court could best subserve the purposes of its institution, by deciding in a case before it all the principles of law which he supposed had any pertinency to the subject whether, directly or indirectly, involved, under the honest but most mistaken impression that by so doing he would greatly lessen, perhaps close up, the fountains of future litigation. The case in 4 Georgia is fairly entitled to a conspicuous place in that class of decisions. It has, by the introduction into it of legal principles wholly inapplicable to its facts, led to serious misapprehensions and misapplications of those legal principles unnecessarily introduced, as is apparent from the decision in this case.
That no change was made of the principles of the Common Law by section 2126, is evident from that section being but an extract of what he said in 4 Kelly. Without such change as has been mistakenly assumed and acted on, it was obviously the duty of the majority here to let this case be controlled by those principles.
At Common Law the distinction between the acts of a creditor in reference to the original note or contract, to which the surety is a promisor, and that of the failure or negligence of creditor to act, is clearly marked. If the creditor by any act of his, releases one surety or compounds with him, the co-security Avill be discharged, as the act of the creditor changes the original contract.
If the creditor, by any act, changes or varies the original contract, so as to make a new one of it, the surety not having assented to the act, is discharged.
If the creditor grants indulgence to the principal debtor *451for a consideration, without assent of the surety, the surety is discharged. Or if the creditor, by any act of his, disables himself from pressing the collection of his debt out of the principal debtor, the surety is discharged thereby. And generally if the creditor does any act whereby injury or loss ensues to the surety, or any act which subjects the surety to liability to loss, or any act which subjects the surety to increased, rislc, without the assent of the surety, the surety in each and all these cases, is discharged thereby from all liability, and if sued on the original contract, may show in his defence any one of these acts of the creditor, and upon proof of it, will be discharged without being required to show that he was actually damnified by such act, for the law has declared that in reference to these acts of the creditor the surety is entitled to judge for himself of what is for his benefit, and that he is of it the only-judge, and that the creditor cannot in such cases decide for the surety without discharging him.
Beyond this class of cases, all arising from the acts of the creditor, and in reference to the original contract, there is not to be found, I apprehend, a decision at Common Law discharging a surety. '
Failure or omission to act furnishes, at Common Law, with reference to the remedies of a creditor or contract itself, no defence to a surety whatever. The remedies of the creditor, under the contract against the debtor or his estate, are not held as trusts for the surety. The surety will not be discharged by any degree of passive neglect in not enforcing them. Williams vs. Price, 1 S. & S., 581. Goodloe vs. Clay, 6 B. Monroe, 236. A surety will not be discharged by failure of the creditor to retain or keep a hold on land of the principal by entering judgment or reviving judgment as long as the loss arises from the inaction of the creditor. The inaction of the creditor, resulting in loss of a lien which would otherwise have been available for the payment of the debt of the principal, furnishes no ground for the discharge of the surety. United States vs. Simpson, 3 Penn. R., 437. Mandorf vs. Singer, 5 Watts, 179. Farmers’ Bank Ohio vs. Reynolds, 13 Ohio, 84.
*452A surety cannot resist a suit on the contract to which he is a party, either at law or in equity, on the ground that the creditor has omitted to take measures against the principal debtor, and that in consequence all opportunity of collecting the debt from him is lost. King vs. Baldwin, 2 John Ch. R., 554; 18 Pickering, 238. The general rule is that the creditor may abstain from active measures against the principal. He may even relinquish measures taken to enforce the collection of the debt, provided he does nothing which impairs or prejudices the remedies or rights of the surety, or interposes any obstacle to the collection of the debt. Lenox vs. Prout, 3 Wheaton, 520.
The cases referred to sufficiently attest the uniformity with which these Common Law principles have been acted on in England and America. I add that our Code has distinctly re-enacted them, as will be evident from a careful examination of Article 2, p. 418. Section 2126, recognizes the distinction clearly between the acts of the creditor touching the original contract, and the failure or negligence of the creditor in reference to it. Thus a mere failure by the creditor to sue as soon as the law allows, or negligence to prosecute with vigor, his legal remedies, unless for a consideration, will not discharge a surety. It cannot have escaped the notice of the bar,, that in the Code there is no paragraph as to the duties of the creditor in reference to collateral securities in their hands and the measure of relief to a surety on original contract from malfeasance or misfeasance of the creditor in regard to them.
This absence makes it necessary that we should collect from the report those rules, and present them, for if Dickerson has a right to any relief whatever, it is to be derived only from them. If a creditor, by his action, releases the lien of a judgment or mortgage, or withdraws a levy made on the jproperty of the principal debtor, or surrenders a security held by him to the prejudice of the suretj' without his assent, the surety may claim a credit on his engagement to the full amount or value of the property or security *453surrendered. 2 Watts Repts., 136. 8 Levy & Rawle, 452. 16 Levy & Rawle, 252.
Where securities or liens are given to a creditor to secure a debt, he cannot relinquish any one of them thus given, to the prejudice of the surety on the original contract, thus secured, without discharging the surety to an extent corresponding with the value of the security surrendered. Thus in case of Williams vs. Price, 1 S. & S., 581, a judgment had been assigned to the creditor as a collateral security, execution had issued and been placed in the hands of the sheriff, the creditor directed the sheriff not to levy it, whereby other executions obtained a priority, it was held that the surety was discharged pro tanto of the debt on account of which the judgment had been assigned.
The parting with a security is immaterial, unless the surety shows that he has suffered thereby and the extent of it, otherwise he can have no relief. Ward vs. Vass, 7 Leigh, 135.
The lien acquired by levy, if relinquished by a creditor to the injury of the surety, discharges him to the extent of the value of property levied. 6 Alabama, 718; 2 Geo. R., 290; 2 Geo. R., 405.
Finally, I take it, that no rule is better settled than that the negligence, or even malfeasance, of a créditor as to securities held by him, can only be material when his conduct has resulted in actual injury, and that the surety in such case will be discharged only to the extent of the injury siistained by such culpable neglect or malfeasance. 6 S. & Marshal, 24. 5 Harris, 297. 1 S. & S., 581.
In Hampton vs. Levy, 1 McCord Ch. R., 107, and in Levy vs. Brevard, 3 Stobhart, Eq. R., 50, liens by mortgage were given to the creditor by the principal debtor, the creditor omitted to record the mortgages held as collateral securities, and thereby they were postponed by law (as in Georgia) to subsequent incumbrances. It was held that the omission to record could not be set up as a defence by the surety to an action against him. These cases are parallel-in every particular with the case of Toomer vs. Tucker, and Dickerson security.
*454From the English and American decisions, we may extract these general propositions :
1. That the creditor has nothing more to do in regard to the original contract, held by him, than to refrain from acting in a way to injure the surety — that he may remain quiet and inactive, (in all cases, except when required to sue under paragraph 2128,) and the surety will not be discharged.
2. That as to remedies belonging to the creditor, he may remain passive, as they are not held as trusts for the surety, and the surety cannot entitle himself to any relief from the inaction of the creditor in regard to them.
3. That as respects collateral securities held as trust for the indemnity of the surety, the creditor cannot surrender any lien so held, or by malfeasance or misfeasance do any injury to the surety, without discharging the surety, in proportion to the actual injury he has sustained.
It is a fact which cannot be disputed that Dickerson, the security, complains of no act of Toomer in reference to the bond to which he was a joint and several obligor; there being no act of the creditor, there is no principle of law or equity to be found even in the most wretched system that exists that would discharge the surety from all liability.
Dickerson’s claim to relief stands alone on the neglect of Toomer to record the mortgage of Tucker, given as a cumulative surety.
Considering that mortgage as a collateral security for the indemnity of Dickerson as security on the bond, in Toomer’s hands — if by Toomer’s culpable neglect in failing to record the mortgage in Georgia, Dickerson has sustained any actual injury, (and that he must show) that injury thus sustained is the exact measure of the relief to which, in all cases of collateral securities, he is entitled; or the adjudications I have referred to are not law.
The record shows no actual loss or injury in any respect as having been sustained by Dickerson, nor does it even show that any judgments or liens were obtained against Tucker, •to which the mortgage held by Toomer was postponed in consequence of failure to record the mortgage.
*455I cannot account for the decision below and affirmed here, but from the confounding the act of the creditor with the neglect or omission of creditor to act. The poles of the earth are not wider apart. With full as much reason can my associates maintain that darkness is light, cold is heat, rest is motion. Whenever these correlatives can, byj udicial decision, be made identical, then I may cease to think there is a difference between the action of a creditor and the non-action of a creditor, but not till then.
By thus confounding inaction with action, they have interpreted section 2126 of the Code as if it read thus: — Any act of the creditor (or omission of creditor to do an act required by law) either before or after judgment against the principal which injures the surety — (or any omission to record a mortgage held by creditor as collateral security) vdiich increases surety, risk, etc., etc.
To thus interpolate section 2126 is to interpolate principles of law neither authorized nor intended by the Legislature. I have placed in parenthesis such interpolations that it may be seen üiat I have done no injustice. Without such words interpolated, it was utterly impossible to have perverted the clear and well defined principles of the Common Law embodied in this section, so as to authorize the discharge of the surety. There is, perhaps, no better mode of testing the soundness of a decision than to run out the principle on which it rests to its legitimate consequences. The decision here asserts the broad principle, and without an exception or qualification, that th e failure of a creditor to record a mortgage within the time prescribed by our statutes, subjected Dickerson, the surety on the bond — for whose benefit this cumulative security was held by Toomer — to an increased risk, and thereby Dickerson was absolutely discharged from all liability on the bond. Is not the inevitable consequence from this, that however small the collateral security by mortgage may be held by creditor, the failure to record it discharges the surety on the original contract, no matter how much larger it may be than such mortgage; or in other words, if the surety is bound in a bond for fifty thousand dollars, and a mortgage *456is given by the principal debtor to secure fifty dollars only, and the creditor fails to record the mortgage — the surety’s risk being increased thereby — he is discharged entirely from his .obligation on his bond to pay fifty thousand dollars. This absurd and most iniquitous result is the fruit of a mistake of law.
’Twas only a few years since that this Carolinian had to bear in common with the people of his State the terrible wrath, in an age of Christianity and- high civilization, of a military leader who emulated and transcended in barbaric ferocity the example of Attilla — and this was borne with the fortitude which patriotism only could inspire — but to be stripped by the mistaken judgment of a Georgia Court of the little left him by the marauder, is a cruel fate, which even the most exalted religious philosophy does not command him to endure without complaint.